Labor Law

Prepared by: Atty. Oswald B. Lorenzo

CONSTITUTIONAL MANDATES ON LABOR

What are the Constitutional provisions that specifically touch on labor?

1. Article II, Section 18 of the 1987

Constitution provides that “The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.”

2. Article XIII, Section 3 of the 1987 Constitution provides that “The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organizations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth.

What are the Constitutional Provisions Related to Labor?

Article II

Section 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all. Section 10. The State shall promote social justice in all phases of national development. Section 11. The State values the dignity of every human person and guarantees full respect for human rights. Section 13. The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. Section 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men. Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. Section 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments.

Article III Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws. Section 4. No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances. Section 8. The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged.

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ARTICLE XIII -- SOCIAL JUSTICE AND HUMAN RIGHTS

Section 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good. To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments. Section 2. The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance.

LABOR

Sec. 3. “The state shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. “The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in setting disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. “The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth.” (Section 3 (Labor), Article XIII [Social Justice and Human Rights] of the 1987).

Article II, Section 18“The State affirms labor as a primary

social economic force. It shall protect the rights of workers and promote their welfare.”

What are the State Policies on Labor Relations?

Article 211, Labor Code provides:1. Promote and emphasize the

primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes;

2. Promote free trade unionism as an instrument for the enhancement of democracy and the promotion of social justice and development;

3. Foster the free and voluntary organization of a strong and united labor movement;

4. Promote the enlightenment of workers concerning their rights and obligations as union members and as employees;

5. Provide an adequate administrative machinery for the expeditious settlement of labor or industrial disputes;

6. Ensure a stable but dynamic and just industrial peace; and

7. Ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare.

What are the basic principles in the constitution and labor-related laws on protection to labor?

The state shall afford full protection to labor, promote full employment, equal work opportunities without bias or discrimination, regulate the


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relations of employers and employees, and assure workers rights

In case of doubt or ambiguity, labor laws and rules are to be construed in favor of labor (Art. 4, Labor Code)

o In interpreting the Constitution’s protection to labor and social justice provisions and the labor laws and rules and regulations implementing the Constitutional mandate, the SC adopts the liberal approach which favors the exercise of labor rights. (Meralco vs. NLRC, G.R. No. 78763. Jul.12, 1989)

o While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute shall be automatically resolved in favor of labor. It is mandated that there be equal protection and respect not only the laborer’s side but also the management and/or employer’s side. The law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer. (Colgate Palmolive Philippines vs Ople, G.R. No. 73681. June 30,1988)

To whom does the Labor Code apply?

General Rule: The Code applies to all workers, whether agricultural or non-agricultural, including employees in a government corporation incorporated under the corporation code;

Exceptions: (GC-FICL)

1. Government employees; 2. Employees of government

Corporations created by special or original charter;

3. Foreign governments; 4. International Agencies, employees of

intergovernmental or international organizations;

5. Corporate officers/Intra-corporate disputes which fall under PD 902-A and now fall under the jurisdiction of, the Regular Courts pursuant to the Securities Regulation Code; and

6. Local water districts except where NLRC jurisdiction is invoked.

Who is a worker/employee?

Article 13 – A worker is any member of the labor force, whether employed or unemployed. A person who works for an employer for a fee; a person working for salary or wages.

Note the term employee under Article 212 of the Labor Code: Not limited to the employees of a particular employer, it shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent or regular employment.

What is the doctrine of Management Prerogatives?

Under the doctrine of management prerogative, every employer has the inherent right to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work" assignments, working methods, the time, place and manner of work, work supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of employees (Rural Bank of Cantilan . v. Julve, GR No. 169750, February 27, 2007.)


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It is however subject to limitations provided by (1) law; (2) contract or collective bargaining agreements; and (3) general principles of fair play and justice. (Mendoza v. Rural Bank of Lucban, GR No. 155421, July 7, 2004.)

EMPLOYER-EMPLOYEE RELATIONSHIP

1. FOUR FOLD TESTIn determining whether a given set of

circumstances constitute or exhibit an employer-employee relationship, the accepted rule is that the elements or circumstances relating to the following matters shall be examined and considered:

selection and engagement of the employees

payment of wages power of dismissal power to control the employees’

conduct

2. The “control test” is the most crucial and determinative indication of the presence or absence of an employer-employee relationship. Absence of such despite the presence of the other three elements will not suffice for the relationship to exist.

Not every form of control will have the effect of establishing an employer-employee relationship. A line should be drawn between:

Rules that merely serves as guidelines, which only promote the result. In such case, no employer-employee relationship exist.

Rules that fix the methodology and bind or restrict the party hired to the use of such means of methods. These address both the result and means employed to achieve it and hence, employer-employee relationship exist.

3. Cases where employer-employee relationship EXISTS:

Jeepney drivers on boundary system (Martinez vs. NLRC, 272 SCRA 793)

Drivers or helpers of salesman (Alhambra Industries vs. CIR, 355 SCRA 553)

Handicraft workers on “pakyaw system” (Dy Keh Beng vs. Int’l. Labor, 90 SCRA 161)

Musicians who were engaged by musical director for background music in making of movies (LVN vs. Phil. Musicians Guild, 1 SCRA 132)

Tailors, pressers and stitchers in COD tailoring department (Rosario Bros vs. Ople)

4. Cases where employer-employee DOES NOT EXIST:

Insurance company vis-à-vis commission agents (Insular Life vs. NLRC, 179 SCRA 459)

Company vs. Collecting agents on commission basis (Singer Sewing Machine vs. Drilon, 193 SCRA 270)

Softdrinks company vs. independent contractors selling softdrinks (Mafinco vs. Ople, 70 SCRA 139)

Shoe shine boys (Besa vs. Trejano, 146 SCRA 501)

PROBATIONARY EMPLOYMENT

Probationary employment exists where the employee, upon his engagement is made to undergo a trial period during which the employer determines his fitness to qualify for regular employment based on reasonable standards made known to him at the time of his engagement (Art 282, LC).

In all cases involving employees on probationary status, the employer shall make known to


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the employee at the time he is hired, the standards by which he will qualify as a regular employee (A.M. Oreta & Co., Inc. vs. NLRC). As a general rule, in the event the employer neglects or fails to inform the employee at the time of engagement the standard for him to qualify as a regular employee, he cannot be terminated for failure to comply with the criteria for regularship. The employee concerned can only be removed for just or authorized causes.

A probationary employee may be terminated on two grounds:

for just cause when he fails to qualify as a

regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement

4. An employee who is allowed to work after a probationary period shall be considered a regular employee (Art.281, LC). However, the employer and employee may, by agreement, extend the probationary period of employment beyond six (6) months (Mariwasa Manufacturing, Inc. vs. Leogardo).

Voluntary Resignation, ONCE ACCEPTED, cannot be withdrawn without the consent of the employer.

KINDS OF EMPLOYMENT

1. REGULAR EMPLOYMENTAn employee is deemed to be regular

where he has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, the provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties (Art. 280, LC)

The primary standard is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety.

2. TERM EMPLOYMENTIt is a contract of employment for a

definite period which terminates by its own terms at the end of such period (Brent School vs. Zamora, 181 SCRA 702).

Criteria for fixed term employment contracts so that the same will not circumvent security of tenure (Phil. National Oil Company-Energy Development Corp. vs. NLRC, et.al., 239 SCRA 272):

The fixed period of employment was knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or

It satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter.

3. PROJECT EMPLOYMENTIt is one wherein the employee is

assigned to carry out a “specific project or undertaking,” the duration and scope of which were specified at the time the employees were engaged for that project.

2 Distinguishable Types of Project Activities (ALU-TUCP vs. NLRC, 234 SCRA 328):

1. A particular job or undertaking that is WITHIN THE


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REGULAR OR USUAL BUSINESS of the employer company, but which is DISTINCT and SEPARATE, and IDENTIFIABLE as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times.

e.g. A construction company which has construction projects in Manila, Mandaluyong and Baguio.

2. A particular job or undertaking that is NOT WITHIN THE REGULAR BUSINESS of the corporation. Such a job or undertaking must also be IDENTIFIABLY SEPARATE and DISTINCT from the regular business. The job or undertaking also begins and ends at determined or determinable times.

e.g. A steel-making company undertakes projects related to breeding and production of fish or cultivation of vegetables.

General Rule: LENGTH OF SERVICE is not controlling in project employment (Hilario Rada vs. NLRC, 205 SCRA 69). Exception: Although the work to be performed is only for a SPECIFIC PROJECT or SEASONAL, where a person thus engaged has been performing the job for at least one year, even if the performance is not continuous or is merely intermittent, the law deems the REPEATED and CONTINUING NEED FOR ITS PERFORMANCE as being sufficient to indicate the necessity or desirability of that activity to the business or trade of the employer. The employment of such person is also then deemed to be REGULAR WITH RESPECT TO SUCH ACTIVITY and WHILE SUCH ACTIVITY EXISTS (Magsalin, et.al. vs. National Organization of Working Men, et al., May 9, 2003).

4. SEASONAL EMPLOYMENTSeasonal workers are those who are

called to work from time to time according to the occurrence of varying need during a season, and are laid off after completion of the required phase of work.

Seasonal workers who works for more than one season are deemed to have acquired regular employment.

Seasonal workers during the off season are merely considered on leave.

They are also entitled to separation pay.

5. CASUAL EMPLOYMENTIt is one wherein an employee is

engaged to perform activities which are not necessary or desirable in the usual trade or business of the employer.

Pre-week in Labor Law and Social Legislation - JOBL NOTES

JOB CONTRACTING AND LABOR-ONLY CONTRACTING

1. Labor-only contracting1) the person supplying workers to

an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; and

2) the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer (Baguio, et.al vs. NLRC, et al., 202 SCRA 465)

2. Job Contracting1) the contractor caries on an

independent business and undertakes the contract work on his own account and under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and

2) the contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and


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other materials which are necessary in the conduct of his business.

3. What is the effect of a finding that a contractor is a labor-only contractor?

A finding that a contractor is “LABOR-ONLY” contractor is equivalent to declaring that there is an employer-employee relationship between the principal and employees of the labor-only contractor.

In such cases, the person or intermediary shall be considered merely as an agent of the employer, who shall be responsible to the workers for a more comprehensive purpose, not only for unpaid wages but for all claims under the Labor Code and ancillary Laws (San Miguel Corp. vs. MAERC Integrated Service, Inc., et al., G.R. No. 144672, July 10, 2003).

In contrast, the liability of a principal in LEGITIMATE JOB CONTRACTING is for a limited purpose, where he becomes jointly and severally liable with the job contractor only for the payment of the employees’ wages but subject to reimbursement from the independent job contractor.

4. What is the effect for failure of owner of project to require the contractor to post bond?

The owner of the project must answer for whatever liabilities the contractor may have incurred to his employees; without prejudice on the part of the project owner to seek reimbursement from the contractor. (Baguio, et al. vs. NLRC)\

NEW: THE LAW ON LABOR-ONLY CONTRACTING (PROHIBITED) AND INDEPENDENT OR JOB CONTRACTING (PERMITTED)

DOLE Department Order 18-A (Rules on Contracting and Subcontracting Arrangements)

Department Order No. 18-A Series of 2011

RULES IMPLEMENTING ARTICLES 106 TO 109 OF THE LABOR CODE, AS AMENDEDBy virtue of the power vested in the Secretary of Labor and Employment under Articles 5 and 106 to 109 of the Labor Code of the Philippines, as amended, the following regulations governing contracting and subcontracting arrangements are hereby issued:Section 1. Guiding principles. Contracting and subcontracting arrangements are expressly allowed by law and are subject to regulations for the promotion of employment and the observance of the rights of workers to just and humane conditions of work, security of tenure, self-organization and collective bargaining. Labor-only contracting as defined herein shall be prohibited.

Section 2. Coverage. These Rules shall apply to all parties of contracting and subcontracting arrangements where employer-employee relationships exist. It shall also apply to cooperatives engaging in contracting or subcontracting arrangements.

Contractors and subcontractors referred to in these Rules are prohibited from engaging in recruitment and placement activities as defined in Article 13(b) of the Labor Code, whether for local or overseas employment.

Section 3. Definition of terms. The following terms as used in these Rules, shall mean:(a) “Bond/s” refers to the bond under Article 108 of the Labor Code that the principal may require from the contractor to be posted equal to the cost of labor under contract. The same may also refer to the security or guarantee posted by the principal for the payment of the services of the contractors under the Service Agreement.

(b) “Cabo” refers to a person or group of persons or to a labor group which, in the guise of a labor organization, cooperative or any entity, supplies workers to an employer, with or without any monetary or other consideration, whether in the capacity of an


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agent of the employer or as an ostensible independent contractor.

(c) “Contracting” or “Subcontracting” refers to an arrangement whereby a principal agrees to put out or farm out with a contractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal.

(d) “Contractor” refers to any person or entity, including a cooperative, engaged in a legitimate contracting or subcontracting arrangement providing either services, skilled workers, temporary workers, or a combination of services to a principal under a Service Agreement.

(e) “Contractor’s employee” includes one employed by a contractor to perform or complete a job, work, or service pursuant to a Service Agreement with a principal. It shall also refer to regular employees of the contractor whose functions are not dependent on the performance or completion of a specific job, work or service within a definite period of time, i.e., administrative staff.

(f) “In-house agency” refers to a contractor which is owned, managed, or controlled directly or indirectly by the principal or one where the principal owns/represents any share of stock, and which operates solely or mainly for the principal.

(g) “Net Financial Contracting Capacity (NFCC)1” refers to the formula to determine the financial capacity of the contractor to carry out the job, work or services sought to be undertaken under a Service Agreement. NFCC is current assets minus current liabilities multiplied by K, which stands for contract duration equivalent to: 10 for one year or less; 15 for more than one (1) year up to two (2) years; and 20 for more than two (2) years, minus the value of all outstanding or ongoing projects including contracts to be started.

1 Refers to the formula set out in the Implementing Rules and Regulations of Republic Act No. 9184, or An Act Providing for the Modernization, Standardization and Regulation of the Procurement Activities of the Government and For Other Purposes.

(h) “Principal” refers to any employer, whether a person or entity, including government agencies and government-owned and controlled-corporations, who/which puts out or farms out a job, service or work to a contractor.

(i) “Right to control” refers to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end.

(j) “Service Agreement” refers to the contract between the principal and contractor containing the terms and conditions governing the performance or completion of a specific job, work or service being farmed out for a definite or predetermined period.

(k) “Solidary liability” refers to the liability of the principal, pursuant to the provision of Article 109 of the Labor Code, as direct employer together with the contractor for any violation of any provision of the Labor Code.

It also refers to the liability of the principal, in the same manner and extent that he/she is liable to his/her direct employees, to the extent of the work performed under the contract when the contractor fails to pay the wages of his/her employees, as provided in Article 106 of the Labor Code, as amended.

(l) "Substantial capital” refers to paid-up capital stocks/shares of at least Three Million Pesos (P3,000,000.00) in the case of corporations, partnerships and cooperatives; in the case of single proprietorship, a net worth of at least Three Million Pesos (P3,000,000.00).


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(m) “Trilateral Relationship” refers to the relationship in a contracting or subcontracting arrangement where there is a contract for a specific job, work or service between the principal and the contractor, and a contract of employment between the contractor and its workers. There are three (3) parties involved in these arrangements: the principal who decides to farm out a job, work or service to a contractor; the contractor who has the capacity to independently undertake the performance of the job, work or service; and the contractual workers engaged by the contractor to accomplish the job, work or service.

Section 4. Legitimate contracting or subcontracting. Contracting or subcontracting shall be legitimate if all the following circumstances concur:

(a) The contractor must be registered in accordance with these Rules and carries a distinct and independent business and undertakes to perform the job, work or service on its own responsibility, according to its own manner and method, and free from control and direction of the principal in all matters connected with the performance of the work except as to the results thereof;

(b) The contractor has substantial capital and/or investment; and

(c) The Service Agreement ensures compliance with all the rights and benefits under Labor Laws.

Section 5. Trilateral relationship in contracting arrangements; Solidary liability. In legitimate contracting or subcontracting arrangement there exists:

(a) An employer-employee relationship between the contractor and the employees it engaged to perform the specific job, work or service being contracted; and

(b) A contractual relationship between the

principal and the contractor as governed by the provisions of the Civil Code.

In the event of any violation of any provision of the Labor Code, including the failure to pay wages, there exists a solidary liability on the part of the principal and the contractor for purposes of enforcing the provisions of the Labor Code and other social legislation, to the extent of the work performed under the employment contract.

However, the principal shall be deemed the direct employer of the contractor’s employee in cases where there is a finding by a competent authority of labor-only contracting, or commission of prohibited activities as provided in Section 7, or a violation of either Sections 8 or 9 hereof.

Section 6. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, labor only contracting shall refer to an arrangement where:

(a) The contractor does not have substantial capital or investments in the form of tools, equipment, machineries, work premises, among others, and the employees recruited and placed are performing activities which are usually necessary or desirable to the operation of the company, or directly related to the main business of the principal within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal; or

(b) The contractor does not exercise the right to control over the performance of the work of the employee.

Section 7. Other Prohibitions. Notwithstanding Section 6 of these Rules, the following are hereby declared prohibited for being contrary to law or public policy:

A. Contracting out of jobs, works or services when not done in good faith and not justified


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by the exigencies of the business such as the following:(1) Contracting out of jobs, works or services when the same results in the termination or reduction of regular employees and reduction of work hours or reduction or splitting of the bargaining unit.

(2) Contracting out of work with a “Cabo”.

(3) Taking undue advantage of the economic situation or lack of bargaining strength of the contractor’s employees, or undermining their security of tenure or basic rights, or circumventing the provisions of regular employment, in any of the following instances:(i) Requiring them to perform functions which are currently being performed by the regular employees of the principal; and

(ii) Requiring them to sign, as a precondition to employment or continued employment, an antedated resignation letter; a blank payroll; a waiver of labor standards including minimum wages and social or welfare benefits; or a quitclaim releasing the principal, contractor or from any liability as to payment of future claims.

(4) Contracting out of a job, work or service through an in-house agency.

(5) Contracting out of a job, work or service that is necessary or desirable or directly related to the business or operation of the principal by reason of a strike or lockout whether actual or imminent.

(6) Contracting out of a job, work or service being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization as provided in Art. 248 (c) of the Labor Code, as amended.

(7) Repeated hiring of employees under an employment contract of short duration or under a Service Agreement of short duration with the same or different contractors, which

circumvents the Labor Code provisions on Security of Tenure.

(8) Requiring employees under a subcontracting arrangement to sign a contract fixing the period of employment to a term shorter than the term of the Service Agreement, unless the contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the time of engagement.

(9) Refusal to provide a copy of the Service Agreement and the employment contracts between the contractor and the employees deployed to work in the bargaining unit of the principal’s certified bargaining agent to the sole and exclusive bargaining agent (SEBA).

(10) Engaging or maintaining by the principal of subcontracted employees in excess of those provided for in the applicable Collective Bargaining Agreement (CBA) or as set by the Industry Tripartite Council (ITC).

B. Contracting out of jobs, works or services analogous to the above when not done in good faith and not justified by the exigencies of the business.

Section 8. Rights of contractor’s employees. All contractor’s employees, whether deployed or assigned as reliever, seasonal, week-ender, temporary, or promo jobbers, shall be entitled to all the rights and privileges as provided for in the Labor Code, as amended, to include the following:(a) Safe and healthful working conditions;

(b) Labor standards such as but not limited to service incentive leave, rest days, overtime pay, holiday pay, 13th month pay, and separation pay as may be provided in the Service Agreement or under the Labor Code;

(c) Retirement benefits under the SSS or retirement plans of the contractor, if there is any;

(d) Social security and welfare benefits;


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(e) Self-organization, collective bargaining and peaceful concerted activities; and

(f) Security of tenure.

Section 9. Required contracts under these Rules.(a) Employment contract between the contractor and its employee.

Notwithstanding any oral or written stipulations to the contrary, the contract between the contractor and its employee shall be governed by the provisions of Articles 279 and 280 of the Labor Code, as amended. It shall include the following terms and conditions:i. The specific description of the job, work or service to be performed by the employee;

ii. The place of work and terms and conditions of employment, including a statement of the wage rate applicable to the individual employee; and

iii. The term or duration of employment that must be co-extensive with the Service Agreement or with the specific phase of work for which the employee is engaged.

The contractor shall inform the employee of the foregoing terms and conditions of employment in writing on or before the first day of his/her employment.

(b) Service Agreement between the principal and the contractor. The Service Agreement shall include the following:i. The specific description of the job, work or service being subcontracted.

ii. The place of work and terms and conditions governing the contracting arrangement, to include the agreed amount of the services to be rendered, the standard administrative fee of not less than ten percent (10%) of the total contract cost.

iii. Provisions ensuring compliance with all the rights and benefits of the employees under

the Labor Code and these Rules on: provision for safe and healthful working conditions; labor standards such as, service incentive leave, rest days, overtime pay, 13th month pay and separation pay; retirement benefits; contributions and remittance of SSS, Philhealth, PagIbig Fund, and other welfare benefits; the right to self-organization, collective bargaining and peaceful concerted action; and the right to security of tenure.

iv. A provision on the Net Financial Contracting Capacity of the contractor, which must be equal to the total contract cost.

v. A provision on the issuance of the bond/s as defined in Section 3(m) renewable every year.

vi. The contractor or subcontractor shall directly remit monthly the employers’ share and employees’ contribution to the SSS, ECC, Philhealth and Pagibig.

vii. The term or duration of engagement. The Service Agreement must conform to the DOLE Standard Computation and Standard Service Agreement, which form part of these Rules as Annexes “A” and “B”.

Section 10. Duties of the principal. Pursuant to the authority of the Secretary of Labor and Employment to restrict or prohibit the contracting of labor to protect the rights of the workers and to ensure compliance with the provisions of the Labor Code, as amended, the principal, as the indirect employer or the user of the services of the contractor, is hereby required to observe the provisions of these Rules.

Section 11. Security of tenure of contractor’s employees. It is understood that all contractor’s employees enjoy security of tenure regardless of whether the contract of employment is co-terminus with the service agreement, or for a specific job, work or service, or phase thereof.

Section 12. Observance of required standards of due process; requirements of notice. In all


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cases of termination of employment, the standards of due process laid down in Article 277(b) of the Labor Code, as amended, and settled jurisprudence on the matter2, must be observed. Thus, the following is hereby set out to clarify the standards of due process that must be observed:

2 King of Kings Transport, Inc., Claire dela Fuente, and Melissa Lim, vs. Santiago O. Mamac, G.R. No. 166208, (29 June 2007); and Felix B. Perez and Amante G. Doria v. Philippine Telegraph and Telephone Company and Jose Luis Santiago, G.R. No. 152048, (7 April 2009), (en banc Decision).

I. For termination of employment based on just causes as defined in Article 282 of the Code, the requirement of two written notices served on the employee shall observe the following: (A) The first written notice should contain:(1) The specific causes or grounds for termination;

(2) Detailed narration of the facts and circumstances that will serve as basis for the charge against the employee. A general description of the charge will not suffice;

(3) The company rule, if any, that is violated and/or the ground under Art. 282 that is being charged against the employee; and

(4) A directive that the employee is given opportunity to submit a written explanation within a reasonable period.

“Reasonable period” should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employee an opportunity to study the accusation, consult a union official or lawyer, gather data and evidence, and decide on the defenses against the complaint.

(B) After serving the first notice, the employer should afford the employee ample opportunity to be heard and to defend himself/herself with the assistance of his/her representative if he/she so desires, as

provided in Article 277(b) of the Labor Code, as amended.

“Ample opportunity to be heard” means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him/her and submit evidence in support of his/her defense, whether in a hearing, conference or some other fair, just and reasonable way. A formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it.

(C) After determining that termination of employment is justified, the employer contractor shall serve the employee a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) the grounds have been established to justify the severance of their employment. The foregoing notices shall be served on the employee’s last known address.

II. For termination of employment based on authorized causes defined in Article 283 of the Labor Code, the requirement of due process shall be deemed complied with upon service of a written notice to the employee and the appropriate regional office of the Department of Labor and Employment at least thirty days before the effectivity of the termination, specifying the ground or grounds for termination.

III. If the termination is brought about by the completion of the contract or phase thereof, no prior notice is required. If the termination is brought about by the failure of a probationary employee to meet the reasonable standards of the employer, which was made known to the employee at the time of his/her employment, it shall be sufficient that a written notice is served upon the employee within a reasonable time prior to the expiration of the probationary period.

Section 13. Effect of termination of


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employment. The termination of employment of the contractor employee prior to the expiration of the Service Agreement shall be governed by Articles 282, 283 and 284 of the Labor Code.

In case the termination of employment is caused by the pre-termination of the Service Agreement not due to authorized causes under Article 283, the right of the contractor employee to unpaid wages and other unpaid benefits including unremitted legal mandatory contributions, e.g., SSS, Philhealth, Pag-ibig, ECC, shall be borne by the party at fault, without prejudice to the solidary liability of the parties to the Service Agreement.

Where the termination results from the expiration of the service agreement, or from the completion of the phase of the job, work or service for which the employee is engaged, the latter may opt for payment of separation benefits as may be provided by law or the Service Agreement, without prejudice to his/her entitlement to the completion bonuses or other emoluments, including retirement benefits whenever applicable.

Section 14. Mandatory Registration and Registry of Legitimate Contractors. Consistent with the authority of the Secretary of Labor and Employment to restrict or prohibit the contracting out of labor to protect the rights of workers, it shall be mandatory for all persons or entities, including cooperatives, acting as contractors, to register with the Regional Office of the Department of Labor and Employment (DOLE) where it principally operates.

Failure to register shall give rise to the presumption that the contractor is engaged in labor-only contracting.

Accordingly, the registration system governing contracting arrangements and implemented by the Regional Offices of the DOLE is hereby established, with the Bureau of Working Conditions (BWC) as the central registry.

Section 15. Requirements for registration. The application for registration as a contractor shall be filed at the DOLE Regional Office in the region where it seeks to principally operate. The applicant shall provide in the application form the following information:(a) The name and business address of the applicant and the areas where it seeks to operate;

(b) The names and addresses of officers, if the applicant is a corporation, partnership, cooperative or a labor organization;

(c) The nature of the applicant’s business and the industry or industries where the applicant seeks to operate;

(d) The number of regular workers and the total workforce;

(e) The list of clients, if any, the number of personnel assigned to each client, if any, and the services provided to the client;

(f) The description of the phases of the contract, including the number of employees covered in each phase, where appropriate; and

(g) Proof of compliance with substantial capital requirement as defined in Section 3(l) of these Rules.

The application shall be supported by:(a) A certified true copy of a certificate of registration of firm or business name from the Securities and Exchange Commission (SEC), Department of Trade and Industry (DTI), Cooperative Development Authority (CDA), or from the DOLE if the applicant is a labor organization;

(b) A certified true copy of the license or business permit issued by the local government unit or units where the contractor operates;

(c) A certified listing, with proof of ownership or lease contract, of facilities, tools,


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equipment, premises implements, machineries and work premises, that are actually and directly used by the contractor in the performance or completion of the job, work or service contracted out. In addition, the applicant shall submit a photo of the office building and premises where it holds office;

(d) A copy of audited financial statements if the applicant is a corporation, partnership, cooperative or a labor organization, or copy of the latest ITR if the applicant is a sole proprietorship; and

(e) A sworn disclosure that the registrant, its officers and owners or principal stockholders or any one of them, has not been operating or previously operating as a contractor under a different business name or entity or with pending cases of violations of these Rules and/or labor standards, or with a cancelled registration. In case any of the foregoing has a pending case, a copy of the complaint and the latest status of the case shall be attached.

The application shall be verified. It shall include a DOLE certification of attendance to orientation seminar on these Rules and an undertaking that the contractor shall abide by all applicable labor laws and regulations.

Section 16. Filing and processing of application. The application with all supporting documents shall be filed in triplicate in the Regional Office where the applicant principally operates. No application for registration shall be accepted unless all the requirements in the preceding Section are complied with.

Section 17. Verification inspection. Within two (2) working days upon receipt of the application with complete supporting documents, the authorized representative of the Regional Director shall conduct a verification inspection of the facilities, tools, equipment, and work premises of the applicant.

Section 18. Approval or denial of the

application. The Regional Office shall deny or approve the application within one (1) working day after the verification inspection.

Applications that fail to meet the requirements set forth in Section 15 of these Rules shall be denied.

Section 19. Registration fee. Payment of registration fee of Twenty-Five Thousand Pesos (P25,000.00) shall be required upon approval of the application.

Upon registration, the Regional Office shall return one set of the duly-stamped application documents to the applicant, retain one set for its file, and transmit the remaining set to the Bureau of Working Conditions (BWC) within five (5) days from registration.

Section 20. Validity of certificate of registration of contractors. The contractor shall be deemed registered only on the date of issuance of its Certificate of Registration.

The Certificate of Registration shall be effective for three (3) years, unless cancelled after due process. The same shall be valid in the region where it is registered.

In case the contractor has Service Agreements or operates outside the region where it is registered, it shall request a duly authenticated copy of its Certificate of Registration from the registering Regional Office and submit the same to the DOLE Regional Office where it seeks to operate, together with a copy of its Service Agreement/s in the area, for purposes of monitoring compliance with these Rules.

Section 21. Renewal of registration. All registered contractors shall apply for renewal of their Certificates of Registration thirty (30) days before the expiration of their registration to remain in the roster of legitimate service contractors. The applicant shall pay a registration renewal fee of Twenty-Five Thousand Pesos (P25,000.00) to the DOLE Regional Office.


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Copies of all the updated supporting documents in letters (a) to (e) of Section 15 hereof shall be attached to the duly accomplished application form, including the following:

(a) Certificate of membership and proof of payment of SSS, Philhealth, BIR, ECC and Pag-Ibig contributions for the last three (3) years, as well as loan amortizations; and

(b) Certificate of pending or no pending labor standards violation case/s with the National Labor Relations Commission (NLRC) and Department of Labor and Employment (DOLE). The pendency of a case will not prejudice the renewal of the registration, unless there is a finding of violation of labor standards by the DOLE Regional Director.

Section 22. Semi-annual reporting. The contractor shall submit in triplicate its subscribed semi-annual report using a prescribed form to the appropriate Regional Office. The report shall include:

(a) A list of contracts entered with the principal during the subject reporting period;

(b) The number of workers covered by each contract with the principal;

(c) Proof of payment of remittances to the Social Security System (SSS), the Pag-Ibig Fund, Philhealth, Employees Compensation Commission (ECC), and Bureau of Internal Revenue (BIR) due its employees during the subject reporting period and of amortization of declared loans due from its employees; and

(d) A certified listing of all cases filed against the contractor before the NLRC

The Regional Office shall return one set of the duly-stamped report to the contractor, retain one set for its file, and transmit the remaining set to the Bureau of Working Conditions (BWC) within five (5) days from receipt thereof.

Section 23. Grounds for cancellation of registration. The Regional Director shall, upon a verified complaint, cancel or revoke the registration of a contractor after due process, based on any of the following grounds:

(a) Misrepresentation of facts in the application;

(b) Submission of a falsified or tampered application or supporting documents to the application for registration;

(c) Non-submission of Service Agreement between the principal and the contractor when required to do so;

(d) Non-submission of the required semi-annual report as provided in Section 22 (Semi-annual reporting) hereof;

(e) Findings through arbitration that the contractor has engaged in labor-only contracting and/or the prohibited activities as provided in Section 7 (Other Prohibitions) hereof;

(f) Non-compliance with labor standards and working conditions;

(g) Findings of violation of Section 8 (Rights of contractor’s employees) or Section 9 (Required contracts) of these Rules;

(h) Non-compliance with SSS, the HDMF, Pag-Ibig, Philhealth, and ECC laws; and

(i) Collecting any fees not authorized by law and other applicable rules and regulations.

Section 24. Due process in cancellation of registration. Complaint/s based on any of the grounds enumerated in the preceding Section against the contractor shall be filed in writing and under oath with the Regional Office which issued the Certificate of Registration.

The complaint/s shall state the following:(a) The name/s and address/es of the complainant/s;


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(b) Name and address of the contractor;

(c) The ground/s for cancellation;

(d) When and where the action complained of happened;

(e) The amount of money claim, if any; and

(f) The relief/s sought.

Upon receipt of the complaint, the Regional Director shall direct the contractor, with notice to the complainant, to file a verified answer/counter affidavit within ten (10) calendar days without extension, incorporating therein all pertinent documents in support of his/her defenses, with proof of service of a copy to the complainant. Failure to file an answer/counter affidavit shall constitute a waiver on the part of the respondent. No motion to dismiss shall be entertained.

The Regional Director or his duly authorized representative may conduct a clarificatory hearing within the prescribed ten (10) calendar days within which to file a verified answer/counter affidavit.

Within the said ten (10) calendar days period, the contractor shall make the necessary corrections/rectifications on the violations that are immediately rectifiable upon its own initiative in order to be fully compliant.

The Regional Director may avail himself of all reasonable means to ascertain the facts of the case, including conduct of inspection, where appropriate, and examination of informed persons.

The proceedings before the Regional Office shall be summary in nature.

The conduct of hearings shall be terminated within fifteen (15) calendar days from the first scheduled clarificatory hearing. The Regional Director shall resolve the case within ten (10)

working days from the date of the last hearing. If there is no necessity to conduct a hearing, the case shall be resolved within ten (10) working days from receipt of the verified answer/counter affidavit.

Any motion for reconsideration from the Order of the Regional Director shall be treated as an appeal.

Section 25. Appeal. The Order of the Regional Director is appealable to the Secretary within ten (10) working days from receipt of the copy of the Order. The appeal shall be filed with the Regional Office which issued the cancellation Order. The Office of the Secretary shall have thirty (30) working days from receipt of the records of the case to resolve the appeal. The Decision of the Secretary shall become final and executory after ten (10) days from receipt thereof by the parties. No motion for reconsideration of the Decision shall be entertained.

Section 26. Effects of cancellation of registration. A final Order of cancellation shall divest the contractor of its legitimate status to engage in contracting/subcontracting.

Such Order of cancellation shall be a ground to deny an application for renewal of registration to a contractor under the Rules.

The cancellation of the registration of the contractor for engaging in labor-only contracting or for violation of any of the provisions of these Rules involving a particular Service Agreement will not, however, impair the validity of existing legitimate jobcontracting arrangements the contractor may have entered into with other principals prior to the cancellation of its registration. Any valid and subsisting Service Agreement shall be respected until its expiration; thereafter, contracting with a delisted contractor shall make the principal direct employer of all employees under the Service Agreement pursuant to Articles 106 and 109 of the Labor Code.

Section 27. Effects of finding of labor-only


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contracting and/or violation of Sections 7. 8 or 9 of the Rules. A finding by competent authority of labor-only contracting shall render the principal jointly and severally liable with the contractor to the latter's employees, in the same manner and extent that the principal is liable to employees directly hired by him/her, as provided in Article 106 of the Labor Code, as amended.

A finding of commission of any of the prohibited activities in Section 7, or violation of either Sections 8 or 9 hereof, shall render the principal the direct employer of the employees of the contractor or subcontractor, pursuant to Article 109 of the Labor Code, as amended.

Section 28. Retaliatory measures. Pursuant to Article 118 of the Labor Code, as amended, it shall be unlawful for the principal, contractor, or any party privy to the contract or services provided to refuse to pay or reduce the wages and benefits, and discharge or in any manner discriminate against any worker who has filed any complaint or instituted any proceeding on wages (under Title II, Book III of the Labor Code), labor standards violation, or has testified or is about to testify in such proceedings.

Section 29. Enforcement of labor standards and working conditions. Consistent with Article 128 (Visitorial and Enforcement Power) of the Labor Code, as amended, the Regional Director through his/her duly authorized representatives, shall conduct routine inspection of establishments engaged in contracting arrangement regardless of the number of employees engaged by the principal or by the contractor.

They shall have access to employer’s records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of the Labor Code and of any labor law, wage order, or rules and

regulations issued pursuant thereto.

The findings of the duly authorized representative shall be referred to the Regional Director for appropriate action as provided for in Article 128, and shall be furnished the collective bargaining agent, if any.

Based on the visitorial and enforcement power of the Secretary of Labor and Employment in Article 128 (a), (b), (c), and (d), the Regional Director shall issue compliance orders to give effect to the labor standards provisions of the Labor Code, other labor legislation, and these Rules.

Section 30. Duty to produce copy of contract between the principal and the contractor. The principal or the contractor shall be under an obligation to produce a copy of the Service Agreement in the ordinary course of inspection. The contractor shall likewise be under an obligation to produce a copy of any contract of employment when directed to do so by the Regional Office Director or his/her authorized representative.

Section 31. Tripartite implementation and monitoring of compliance; Use of registration fees. A region-based tripartite monitoring team on the observance of labor standards in contracting and subcontracting arrangements shall be constituted as a subcommittee of the Regional Tripartite Industrial Peace Council (RTIPC) within fifteen (15) days from the effectivity of these Rules. It shall submit a quarterly regional monitoring report to the DOLE Secretary and to the National Tripartite Industrial Peace Council (NTIPC). The Bureau of Working Conditions (BWC) shall ensure the implementation of this provision, and shall conduct capacity building to the members of the regional tripartite monitoring team.

For this purpose, a portion of the collected registration fees shall be used in the operation of the region-based tripartite monitoring team, including in the development of an internet-based monitoring system and database. It shall likewise be used


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for transmittal of the monthly report of all registered contractors to the Bureau of Local Employment (BLE), and in generating labor market information.

Section 32. Oversight function of the National TIPC. The National Tripartite Industrial Peace Council (NTIPC) as created under Executive Order No. 49, Series of 1998, as amended, shall serve as the oversight committee to verify and monitor the following:

(a) Engagement in allowable contracting activities; and

(b) Compliance with administrative reporting requirements.

Section 33. Collective bargaining and/or Industry Tripartite Council (ITC). Nothing herein shall preclude the parties in collective bargaining agreements (CBAs) to determine the functions that can or cannot be farmed out or contracted out to a legitimate contractor, including the terms and conditions of the workers’ engagement under the arrangement, provided the provisions of these Rules are observed.

In industries with established Industry Tripartite Councils (ITCs), the tripartite partners may agree, through a voluntary code of good practices, on the functions or processes that can or cannot be contracted out to a legitimate contractor.

Section 34. Financial Relief Program; Tripartite Co-Regulation Engagement. A Financial Relief Program or Unemployment Assistance Fund shall be established for employees under a Service Agreement or employees in transition from one Service Agreement to the next. For this purpose, the National Tripartite Industrial Peace Council (NTIPC), upon the effectivity of this issuance, shall constitute a Local Service Provider Tripartite Working Group (LSP-TWG) composed of representatives of the stakeholders in the industry. The LSP-TWG shall:

(a) Recommend the mechanics and details in setting up the Financial Relief Program or Unemployment Assistance Fund with proposed funding sources before end of June 2012; and

(b) Draw-up the terms of a Tripartite Co-Regulation Engagement in ensuring full compliance with labor laws for approval/endorsement by the NTIPC, including a proposed Table of Progressive Rate of Increases in the minimum capitalization requirement at reasonable intervals to ensure that only legitimate contractors can engage in subcontracting arrangement.

Section 35. Enrollment in DOLE programs on improving compliance with labor standards. For purposes of ensuring compliance with labor standards, the principal and subcontractors covered by these Rules are encourage to enroll and participate in the DOLE Kapatiran Work Improvement for Small Enterprise (WISE)-TAV Program (Department Advisory No. 06, dated 07 March 2011) and/or in the Incentivizing Compliance Program (Department Order No. 115-11).

Section 36. Contracting or subcontracting arrangements in the Construction and Other Industries. Contracting or subcontracting arrangements in the Construction Industry, under the licensing coverage of the Philippine Construction Accreditation Board (PCAB), shall be covered by the applicable provisions of these Rules and shall continue to be governed by Department Order No. 19, Series of 1993 (Guidelines Governing the Employment of Workers in the Construction Industry); Department Order No. 13, Series of 1998 (Guidelines Governing the Occupational Safety and Health in the Construction Industry); and DOLE-DPWH-DILG-DTI and PCAB Memorandum of Agreement-Joint Administrative Order No. 1, Series of 2011 (on coordination and harmonization of policies and programs on occupational safety and health in the construction industry).

In industries covered by a separate regulation


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of the DOLE or other government agency, contracting or subcontracting therein shall be governed by these Rules unless expressly provided otherwise.

Section 37. Prohibition on DOLE officials or employees. Any official or employee of the DOLE or its attached agencies is prohibited from engaging or having any interest in any contracting or subcontracting business.

Section 38. Non-impairment of existing contracts; Non-diminution of benefits. Subject to the provisions of Articles 106 to 109 of the Labor Code, as amended, the applicable provisions of the Civil Code and existing jurisprudence, nothing herein shall impair the rights or diminish the benefits being enjoyed by the parties to existing contracting or subcontracting arrangements.

The effectivity of Certificates of Registration acquired under Department Order No. 18, Series of 2002, issued on 21 February 2002, shall be respected until expiration.

Section 39. Supersession. All rules and regulations issued by the Secretary of Labor and Employment inconsistent with the provisions of these Rules are hereby superseded.

Section 40. Separability Clause. If any provision or portion of these Rules are declared void or unconstitutional, the remaining portions or provisions hereof shall continue to be valid and effective.

Section 41. Effectivity. This Department Order shall be effective fifteen (15) days after completion of its publication in a newspaper of general circulation.

Manila, Philippines, 14 November 2011.

ROSALINDA DIMAPILIS-BALDOZ SecretaryDEPARTMENT CIRCULAR NO. 01 SERIES OF 2012

Republic of the PhilippinesDEPARTMENT OF LABOR AND EMPLOYMENTlntramuros, ManilaDepartment Circular No. 01 Series of 2012Clarifying the Applicability of Department Order N04 18-A, Series of 2011, to Business Processing Outsourcing (BPO)/Knowledge Process Outsourcing (KPO) and the Construction Industry

1. Purpose. This Circular is being issued in response to queries on whether firms or companies in the Business Process Outsourcing (BPO) or Knowledge Process Outsourcing (KPO) and in the Construction Industry are covered by Department Order No. 18-A, Series of 2011, or the Rules Implementing Articles 106 to 109 of the Labor Code of the Philippines, as amended.2. Existing Rules under Department Order No.18-A, Series of 2011.2.1. In the implementation of Articles 106 to 109 of the Labor Code, as amended, Department Order No. 18-A, Series of 2011, states in Section 3(c) that contracting or subcontracting is “an arrangement whereby a principal agrees to put out or farm out with a contractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal".Additionally, it defines trilateral relationship in Section 3 (m) to refer to the relationship in a contracting or subcontracting arrangement where there is a contract for a specific job, work or service between the principal and the contractor, and a contract of employment between the contractor and its workers. There are three (3) parties involved in contracting or subcontracting arrangements, the principal who decides to farm out a job, work or service to a contractor; the contractor who has the capacity to independently undertake the performance of the job, work or service; and the workers


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engaged by the contractor to accomplish the job, work or service.2.2. Further, Section 36 of D.O.18-A, Series of 2011, provides that contracting or subcontracting arrangements in the Construction Industry, under the licensing coverage of the Philippine Contractors (Construction) Accreditation Board (PCAB), shall be covered by the applicable provisions of these Rules and shall continue to be governed by Department Order No. 19, Series of 1993 (Guidelines Governing the Employment of Workers in the Construction Industry); Department Order No. 13, Series of 1998 (Guidelines Governing the Occupational Safety and Health in the Construction Industry); and DOLE-DPWH-DILG-DTI and PCAB Memorandum of Agreement-Joint Administrative Order No. 1, Series of 2011 (on coordination and harmonization of policies and programs on occupational safety and health in the construction industry). While other industries covered by a separate regulation of the DOLE or other government agency, contracting or subcontracting therein shall be governed by these Rules unless expressly provided otherwise.2.3. Section 2, subparagraph 2.5 of Department Order No. 19, Series of 1993, or the Guidelines Governing the Employment of Workers in the Construction Industry provides:"Contracting and subcontracting. — The practice of contracting out certain phases of a construction project is recognized by law, particularly wage legislations and wage orders, and by industry practices. The Labor Code and its Implementing Regulations allow the contracting out of jobs under certain conditions. Where such job contracting is permissible, the construction workers are generally considered as employees of the contractor or subcontractor, as the case may be, subject to Article 109 of the Labor Code, as amended."3. Applicability of the D.O.18-A, Series of 2011 to BPO.3.1. DO 18-A, Series of 2011, clearly speaks of a trilateral relationship that characterizes the covered contracting/subcontracting arrangement. Thus, vendor-vendee

relationship for entire business processes covered by the applicable provisions of the Civil Code on Contracts is excluded.3.2 D018-A, Series of 2011, contemplates generic or focused singular activity in one contract between the principal and the contractor (for example, janitorial, security, merchandising, specific production work) and does not contemplate information technology-enabled services involving an entire business processes (for example, business process outsourcing, knowledge process outsourcing, legal process outsourcing. hardware and/or software support, medical transcription, animation services, back office operations/support). These companies engaged in business processes (“BPOs”) may hire employees in accordance with applicable laws, and maintain these employees based on business requirements, which may or may not be for different clients of the BPOs at different periods of the employees’ employment.4. Applicability of D.O.18-A, Series of 2011 to the Construction Industry; Coordination with PCAB-CIAP.4.1 Licensing and the exercise of regulatory powers over the construction industry is lodged with the Philippine Contractors Accreditation Board (PCAB), which is under the Construction Industry Authority of the Philippines (CIAP), pursuant to the provisions of Presidential Decree No. 1746, Series of 1980, and not with the Department of Labor and Employment or any of its regional offices.PCAB registers all contractors, whether general or subcontractors, in the Construction Industry and regulates the same including ensuring compliance with DOLE Department Order No. 13, Series of 1998 (Guidelines Goveming the Occupational Safety and Health in the Construction Industry); and DOLE-DPWH-DILG-DTI and PCAB Memorandum of Agreement-Joint Administrative Order No. 1, Series of 2011 (on coordination and harmonization of policies and programs on occupational safety and health in the construction industry).Thus, the DOLE, through its regional offices, shall not require contractors licensed by PCAB in the Construction Industry to register under


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D.O. 18-A, Series of 2011. Moreover, findings of violation/s on labor standards and occupational health and safety standards shall be coordinated with PCAB for its appropriate action, including the possible cancellation/suspension of the contractor's license.5. Effectivity. This Circular shall take effect immediately after its publication in a newspaper of general circulation.Manila, Philippines. 13 March 2012.

ROSALINDA DlMAPlLlS-BALDOZ - - Secretary

MANAGEMENT PREROGATIVE

1. What are included in the term “management prerogatives?

a. right to CONDUCT businessb. right to PRESCRIBE RULESc. right to SELECT and HIRE employeesd. right to TERMINATE employeese. right to FAIR RETURN OF

INVESTMENT and EXPANSION of business

2. Transfer of Employees As a general rule, the

employer has the inherent right to transfer or assign an employee subject only to the condition that it not be motivated by 1) discrimination or 2) bad faith (PT&T vs. Laplana, 199 SCRA 485).

An employee’s right to security of tenure does not give him such vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him. It is the prerogative of management to transfer an employee where he can be most useful to the company (Blue Dairy Corporation vs. NLRC, 314 SCRA 401).

Transfer, even if due to promotion, cannot be done without employee’s consent.

Re-assignment pending administrative investigations of irregularities allegedly committed by an employee fall within the ambit of management prerogative. The purpose is no

different from that of preventive suspension which management could validly impose as disciplinary measure for the protection of the company’s property pending investigation of any malfeasance or misfeasance committed by the employee (Consolidated Food Corp. vs. NLRC, 315 SCRA 129).

3. When is there constructive dismissal?

A transfer amounts to constructive dismissal when the transfer is unreasonable, inconvenient, or prejudicial to the employee, and involves a demotion in rank or diminution of salaries, benefits and other privileges.

4. Management is at liberty, absent any malice on its part, to abolish positions which it deems no longer necessary.

It is management prerogative to merge job functions in line with streamlining of the company to cut costs even if an employee would thereby lose his employment due to abolition of his position.

Labor laws discourage interference with an employer’s judgment in the conduct of his business.

5. Limitations in the exercise of management prerogatives:

1) imposed by LAW2) provisions in the COLLECTIVE

BARGAINING AGREEMENT3) general principles of FAIR PLAY and

JUSTICE

Q: What is management prerogative?


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ANSWER: Management prerogative simply means that except as otherwise limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, 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 employees, work supervision, lay-off of workers and discipline, dismissal and recall of workers.

Q: What are the limitations on management prerogative?

A: The following are the limitations on the exercise of management prerogative:

It must be exercised in good faith; It must not be tainted with unfair

labor practice; The exercise of management

prerogative must be within the limitations set by law;

It must also be within the limitations set by the Collective Bargaining Agreement; and

The exercise must be consistent with the principles of fair play and justice.

MANAGEMENT PREROGATIVE

Concept of Management Prerogative.

Management Prerogative Defined. This refers to an employer's right to freely regulate all aspects of employment through the adoption of strategies or schemes geared toward attaining profit, subject, however, to limitations set by law, the CBA and the principles of fairness and justice and must be effected in good faith and not tainted by unfair labor practice.

Supreme Court Rulings On Management Rights.

a. In NORKIS TRADING CO., INC., ET AL. vs. NATIONAL LABOR RELATIONS COMMISSION,

ET AL; G.R. No. 168159. August 19, 2005 the employers are allowed, under the broad concept of management prerogative, to regulate all aspects of personnel administration 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 employees, work supervision, lay-off of workers, and the dismissal and recall of workers.

b. The Supreme Court in Garcia vs. National Labor Relations Commission, 243 SCRA 632, reiterated the existing doctrine that the Constitution also protects management from oppression and destruction in this wise: "(t)he Constitutional policy of providing full protection to labor is not intended to oppress or destroy management xxxx. The unfledging commitment of this Court to the cause of the labor will not prevent Us from sustaining the employer, when it is in the right xxxx."

c. In Philippine Geothermal, Inc. vs. The National Labor Relations Commission, 236 SCRA 371, the Supreme Court balanced the conflicting interests of both labor and management and placed the parties in relatively equal positions.

d. Likewise, in earlier cases, the Court ruled that the law in protecting the rights of the employees does not authorize the oppression nor self-destruction of the employer. It should be made clear that when the law tilts the scales of justice to put the two (2) parties in favor of labor, it is but recognition of the inherent inequality between labor and management. The evident intent is to balance the scale of justice to put the two parties on relatively equal positions. There may be cases where the circumstances warrant favoring labor over the interests of management but never should the scale be so tilted if the result is an injustice to the employer. (Justicia nemeni neganda est (Justice is to be denied to none).

RELATED SC DECISIONS


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1. In a 1996 case, the Supreme Court ruled in Home Owners Savings and Loan Association, Inc. vs. NLRC and Marilyn Cabatbat, G.R No.97067, 26 September 1996, that an "(a)n owner of a business enterprise is given considerable leeway in managing because it is deemed important to society as a whole that he should succeed." Our law, therefore, recognizes certain rights as inherent in the management of business enterprises. These rights are collectively called management prerogatives or acts by which directing the business is able to control the variables thereof, so as to enhance the chances of making a profit. Together, they may taken as the freedom to administer the affairs of a business enterprise such that the costs of running it would be below the expected earnings or receipts. In short, the elbow room in the quest for profits"(Citing Chu vs. NLRC, 232 SCRA 764 [1994]. 2. The scope of these prerogatives was laid down in a number of cases, one of which was San Miguel Brewery Sales Force Union (PTGWO) vs. Ople, 170 SCRA 25 (1989), where the Court held that "(e)xcept as limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, 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 employees, work supervision, lay-off of workers and the discipline, dismissal and recall of work." (Based on National Labor Union (NLU) vs. Insular La Yebana Co., 2 SCRA 924, Republic Savings Bank vs. CIR, 21 SCRA 226, 235). 3. As a general rule, it is recognized "that normally it is the prerogative of the employer to transfer and re-assign its employees according to the requirements of its business (Pocketbell Philippines, Inc. vs. NLRC, et. al., G.R. No. 106843, 20 January

1995; Phil. Telegraph and Telephone Co. vs. Laplana, 199 SCRA 485 [1991] ). 4. This same ruling was the Court's position in Interwood Employees Association vs. International Hardwood and Veneer Co. of the Phil., 99 Phil. 82 (1956) and in Yuco Chemical Chemical Industries, Inc. vs. MOLE, 185 SCRA 727 (1990), which upheld "the employer's right to transfer its personnel for valid reasons".

5. In Isabelo, et. al., vs. NLRC, G.R. No. 113366-68, 24 July 1997 the Court ruled that it is the employers prerogative, based on its assessment and perception of its employees' qualifications, aptitudes and competence, to move them around in the various areas of its business operations in order to ascertain where they will function at maximum benefit to the cmpany. An employee' right to tenurial security does not give him that vested right as would deprive the company of its prerogative to change his assignment or transfer him where he is most useful.

6. In Cosico vs. NLRC, G.R. No. 118432, 23 May 1997, the Court recognized the right of management to abolish a position which it deems is no longer necessary and absent any findings of malice and arbitrariness on the part of management, The Court will not efface such privilege if only to protect the person holding that office. Moreover the abolition of the position was seen as a cost-effective measure to cut operational expenses so as not to incur further losses already suffered by the Company's Manila office on account of a low passenger yield. The deletion therefore, of the petitioner's position should be accepted and validated as a valid exercise of management prerogative. 7. For a transfer of an employee not to be considered a constructive dismissal, the employer must be able to show that such transfer is not unreasonable, inconvenient or prejudicial to the employee, nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits (Jarcia Machine Shop and Auto Supply, Inc. vs.


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NLRC and Agapito Tolentino, G.R. No. 118045, 02 January 1997).

8. However, the Court in PT and T vs. Laplana, 199 SCRA 485 (1991), set certain limitations to these rights of management and ruled thus: "(b)ut like all other rights, there are limits. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion and putting to mind the basic elements of justice and fair play. Having the right the same must be exercised. Thus it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. Nor than the real reason is to penalize an employee for his union activities and thereby defeat his right to self-organization. But the transfer can be upheld when there is no showing that it is unnecessary, inconvenient and prejudicial to the displaced employee."

Limitations to the Exercise of Management Prerogative.

(a) In Master Iron Labor Union vs. NLRC, 219 SCRA 47 (1993), the Supreme Court ruled that the hiring, firing, transfer, demotion and promotion of employees, are traditionally identified as management prerogative. However, these prerogatives are not absolute. They are subject to limitations found in law, a collective bargaining agreement, or general principles of fair play and justice. (Similarly ruled in Phil. Airlines, Inc. (PAL) vs. NLRC, G.R. No. 85985, 03 August 1993).

(b) In the PAL case, supra, the Supreme Court rendered a ruling on the employee's participation in decision making. Hence, a distinction must be made between management functions regarding business operations per se and those affecting the right of employees. In this regard, management should see to it that its employees be, at least, properly informed of its decisions or modes of action.

(c) The Supreme Court in Business Day Information System and Services, Inc. vs.

NLRC 221 SCRA 9 (1993), reiterated the limitations in management's exercise of its prerogative, and ruled as "not absolute and must be exercised in good faith" as held in the Master Iron and PAL cases (a and b above).NOTE: If the implementation of the provisions of company rules and policies, the same results in the deprivation of the employees means of livelihood, which in the constitutional sense a property right, the latter right serves as a limitation thereto.

Related Cases:

1. Aurelio vs. NLRC et.al. G.R. No. 99034, 14 April 1993. - The prerogative of management to conduct its business affairs to achieve its purpose cannot be denied. Management is at liberty, absent any malice on its part to abolish positions which it deems no longer necessary.

2. Almodiel vs. NLRC, G.R. No. 100641, 14 June 1993. - On the Right to Hire. The determination of the qualification and fitness of the workers for hiring and firing, promotion or reassignment are exclusive prerogative of management.

3. Garcia vs. Manila Times/La Vanguardia Publishing, Inc. and NLRC, G.R. No. 99390, 05 July 1993. - On Discipline As a Management Function. The Court will uphold such management right if exercise in good faith and not for the purpose of defeating the rights of the employees.

Q. What are included in the term “management prerogatives?

a. right to conduct businessb. right to prescribe rulesc. right to select and hire employeesd. right to terminate employeese. right to fair return of investment

and expansion of business

JURISPRUDENCE ON TRANSFER OF EMPLOYEES As a general rule, the employer has the inherent right to transfer or assign an


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employee subject only to the condition that it not be motivated by 1) discrimination or 2) bad faith (PT&T vs. Laplana, 199 SCRA 485).

An employee’s right to security of tenure does not give him such vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him. It is the prerogative of management to transfer an employee where he can be most useful to the company (Blue Dairy Corporation vs. NLRC, 314 SCRA 401).

Transfer, even if due to promotion, cannot be done without employee’s consent.

Re-assignment pending administrative investigations of irregularities allegedly committed by an employee fall within the ambit of management prerogative. The purpose is no different from that of preventive suspension which management could validly impose as disciplinary measure for the protection of the company’s property pending investigation of any malfeasance or misfeasance committed by the employee (Consolidated Food Corp. vs. NLRC, 315 SCRA 129).

3. Management is at liberty, absent any malice on its part, to abolish positions which it deems no longer necessary. It is management prerogative to merge job functions in line with streamlining of the company to cut costs even if an employee would thereby lose his employment due to abolition of his position. Labor laws discourage interference with an employer’s judgment in the conduct of his business.

Q: Explain the concept of management prerogative.

A: Management prerogative simply means that except as otherwise limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, 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 employees, work supervision, lay-off of workers and discipline, dismissal and recall of workers.

>>>RIGHT TO SELF-ORGANIZATION<<<

1. What is the rationale for unionization?The interest of the individual worker

can better be protected on the whole by a strong union aware of its moral and legal obligations to represent the rank-and-file faithfully, and secure for them the best wages and working terms and conditions.

2. Right to join union includes “right not to join” (Victorino vs. Elizalde Rope Workers, 59 SCRA 54)

Corollary to the right to join is the prerogative not to join, affiliate with or assist a labor union. Therefore, to become a union member, an employee must, as a rule, not only signify the intent to become one, but also take some positive steps to realize the intent.

3. Employees who CANNOT form, join or assist labor organizations:

a. Managerial employeesb. Confidential employeesc. Government employees, including

GOCCs with original charterd. employees who are MEMBERS of a

cooperativee. employees of International

Organizations or Specialized Agencies which are registered with the United Nations and which enjoy diplomatic immunity

f. Aliens without valid working permits; or Aliens with valid working permits but are nationals of a country which do not grant Filipinos to exercise the right of self-organization and to join or assist labor organizations.


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4. a) Distinguish Certification Election from Consent Election b) Distinguish Re-run election from Run-off election c) Distinguish Contract Bar Rule,

Certification Year Rule and Deadlock Bar Rule

a) Certification election is the process of determining the sole and exclusive bargaining agent of the employees in an appropriate bargaining unit for purposes of collective bargaining while Consent Election is an agreed one, the purpose being merely to determine the issue of majority representation of all the workers in the appropriate collective bargaining unit.

b) Re-run is held in two instances: 1) if one receives a plurality of vote and the remaining choices results in a tie; 2) if all choices received the same number of votes; while Run-off takes place between the unions who received the two highest number of votes where not one of the unions obtained the majority of the valid votes cast, provided the total union votes is at least 50% of the votes cast.

c) In Contract Bar Rule, certification election can only be entertained during the FREEDOM PERIOD, within 60 days prior to the expiry date of the 5th year of the CBA. In Certification Year or One-year ban rule, no certification election may be held within 1 year from the DATE OF THE ISSUANCE OF A FINAL CERTIFICATION ELECTION RESULT. And the Deadlock Bar Rule simply provided that a petition for certification election can only be entertained if there is NO PENDING BARGAINING DEADLOCK SUBMITTED TO CONCILIATION or HAD BECOME THE SUBJECT OF A VALID NOTICE OF STRIKE OR LOCKOUT.

5. ROLE OF THE EMPLOYER IN A CERTIFICATION ELECTION

General rule: The employer is NOT A PARTY in a certification election, which activity is the sole concern of workers.

Exception: Where the employer has to FILE A PETITION FOR CERTIFICATION ELECTION pursuant to Art. 258 of LC because it was requested to bargain collectively. Even then, it becomes a neutral bystander. Exception to the exception: In the event a union files a petition for certification election when it is precluded from doing so due to any of the following reasons: 1) CONTRACT BAR RULE, 2) DEADLOCK BAR RULE or 3) CERTIFICATION YEAR RULE, the employer can nevertheless actively participate in the proceedings and oppose the petition for certification election.

6. What are the mandatory requirements for a local can enjoy Book V rights?

General rule: A local can enjoy Book V rights accorded to a legitimate labor organization only upon submission of the following to the Bureau of Labor Relations (BLR)

a charter certificate, within 30 days from its issuance by the labor federation or national union; and

the constitution and by-laws, a statement on the set of officers, and the books of accounts, all of which are certified under oath by the secretary or treasurer, as the case may be, of such local or chapter, and attested to by its president.

Exception: ESTOPPEL (ALU vs. Quisumbing, 305 SCRA 762). A party is estopped from challenging the personality of an unregistered local union as the holding of the certification election was “by agreement of the parties.” Hence, it thereby acknowledged the LEGAL EXISTENCE of the unregistered local union by entering into such an agreement.

7. Whether or not a petition to cancel/revoke registration is a prejudicial question to the petition for certification election?

An order to hold a certification election is proper despite the pendency of the petition for cancellation of the registration


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certificate of the union. The rationale for this is that at the time the union filed its petition, it still had the legal personality to perform such act absent an order directing the cancellation (Pepsi Cola Products Phils. vs. Secretary of Labor, 312 SCRA 104).

8. Can the legitimacy of a labor union, which has been issued duly issued a certificate of registration, be questioned in the certification election proceedings?

CANCELLATION OF UNION AND THE FEDERATION’S REGISTRATION

Q. What are the grounds for the cancellation of a union’s registration?

A

NOTES:

THE NEW GROUNDS FOR CANCELLATION BASED ON RA NO. 9481, JUNE, 2007

SEC. 3. Article 238 of the Labor Code is hereby amended to read as follows:

"ART. 238. Cancellation of Registration. - The certificate of registration of any legitimate labor organization, whether national or local, may be cancelled by the Bureau, after due hearing, only on the grounds specified in Article 239 hereof."

SEC. 4. A new provision is hereby inserted into the Labor Code as Article 238-A t o read as follows:

"ART. 238-A. Effect of a Petition for Cancellation of Registration. - A petition for cancellation of union registration shall not suspend the proceedings for certification election nor shall it prevent the filing of a petition for certification election. In case of cancellation, nothing herein shall restrict the right of the union to seek just and equitable remedies in the appropriate courts."

Article 239 of the Labor Code is amended to read as follows: "ART. 239. Grounds for Cancellation of Union Registration. - The following may constitute grounds for cancellation of union registration:

(a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification;

(b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, and the list of voters;

(c) Voluntary dissolution by the members."

A new provision, Article 239-A is inserted into the Labor Code to read as follows: "ART. 239-A. Voluntary Cancellation of Registration. - The registration of a legitimate labor organization may be cancelled by the organization itself. Provided, That at least two-thirds of its general membership votes, in a meeting duly called for that purpose to dissolve the organization: Provided, further, That an application to cancel registration is thereafter submitted by the board of the organization, attested to by the president thereof."

No. After a certificate of registration is issued to a union, its legal personality cannot be subject to collateral attack. It may be questioned only in an independent petition for cancellation (Tagaytay Highlands International Golf Club, Inc. vs. Tagaytay Highlands Employees Union-PTGWO, G.R. No. 142000, January 22, 2003).

9. What is the SUBSTITUTIONARY DOCTRINE?


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It is a principle in labor law which states that even during the effectivity of a collective bargaining agreement executed between the employer and employees thru their agent, the employees can change said agent BUT THE CONTRACT CONTINUES TO BIND THEM UP TO ITS EXPIRATION DATE. The principle applies to a situation when there occurs a shift in employees’ union allegiance after the execution of a collective bargaining contract.

COLLECTIVE BARGAINING AGREEMENT (CBA)

What is a Collective Bargaining Agreement (CBA)?

Collective Bargaining Agreement (CBA) refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. The CBA is deemed the law between the parties during its lifetime. Its provisions are construed liberally.

What are the legal principles applicable to Collective Bargaining Agreement (CBA)?

A proposal not embodied in CBA is not part thereof.

Minutes of CBA negotiation - no effect if its contents are not incorporated in the CBA.

Making a promise during the CBA negotiation is not considered bad faith.

Adamant stance resulting in impasse, not bad faith.

The DOLE Secretary cannot order inclusion of terms and conditions in CBA which the law and the parties did not intend to reflect therein.

Signing bonus, not demandable under the law.

Allegations of bad faith, wiped out with signing of CBA.

Is the collective bargaining procedure in Article 250 mandatory?

In National Union of Restaurant Workers vs. CIR, [10 SCRA 843], it was held that failure to reply within ten (10) calendar days does not constitute refusal to bargain. The requirement under the law that a party should give its reply within said period is merely procedural and non-compliance therewith is not unfair labor practice.

Recently, however, there has been a shift in the interpretation of the provision of Article 250. According to the pronouncement in General Milling Corporation vs. CA, [G. R. No. 146728, February 11, 2004], the procedure in collective bargaining prescribed by the Labor Code under Article 250 is mandatory because of the basic interest of the State in ensuring lasting industrial peace. It underscored the fact that the other party upon whom the proposals was served “shall make a reply thereto not later than ten (10) calendar days from receipt of such notice.” Consequently, the employer’s failure to make a timely reply to the proposals presented by the union is indicative of its bad faith and utter lack of interest in bargaining with the union. Its excuse that it felt the union no longer represented the workers, was mainly dilatory as it turned out to be utterly baseless. Consequently, the employer in this case was held guilty of unfair labor practice under Article 248 [g] of the Labor Code.

In Colegio de San Juan de Letran vs. Association of Employees and Faculty of Letran, [G. R. No. 141471, September 18, 2000], petitioner-school was declared to have acted in bad faith because of its failure to make a timely reply to the proposals presented by the union. More than a month after the proposals were submitted by the union, petitioner still had not made any counter-proposals. This inaction on the part of petitioner prompted the union to file its second notice of strike on March 13, 1996. Petitioner could only offer a feeble explanation that the Board of Trustees had


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not yet convened to discuss the matter as its excuse for failing to file its reply. This is a clear violation of Article 250 of the Labor Code governing the procedure in collective bargaining. The school’s refusal to make a counter-proposal to the union’s proposed CBA is an indication of its bad faith. Its actuation shows a lack of sincere desire to negotiate rendering it guilty of unfair labor practice.

The same holding was made in Kiok Loy vs. NLRC, [141 SCRA 179, 186 (1986)] where the company’s refusal to make any counter-proposal to the union’s proposed CBA was declared as an indication of its bad faith. Where the employer did not even bother to submit an answer to the bargaining proposals of the union, there is a clear evasion of the duty to bargain collectively. (See also The Bradman Co., Inc. vs. Court of Industrial Relations, 78 SCRA 10, 15 [1977]).

What are the kinds of bargaining under the latest implementing rules?

The Rules to Implement the Labor Code, as amended in 2003, provide for two (2) kinds of bargaining, namely:

1. Single-enterprise bargaining; and2. Multi-employer bargaining.

What is single enterprise bargaining?

Single-enterprise bargaining involves negotiation between one certified labor union and one employer. Any voluntarily recognized or certified labor union may demand negotiations with its employer for terms and conditions of work covering employees in the bargaining unit concerned. (Section 3, Rule XVI, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003]).

What is multi-employer bargaining?

Multi-employer bargaining involves negotiation between and among several certified labor unions and employers. Any legitimate labor unions and employers may agree in writing to come together for the purpose of collective bargaining, provided:

(a) only legitimate labor unions which are incumbent exclusive bargaining agents may participate and negotiate in multi-employer bargaining;(b) only employers with counterpart legitimate labor unions which are incumbent bargaining agents may participate and negotiate in multi-employer bargaining; and(c) only those legitimate labor unions which pertain to employer units which consent to multi-employer bargaining may participate in multi-employer bargaining. (Section 5, Rule XVI, Book V, Ibid.).

What is meant by “duty to bargain collectively” when there has yet been a CBA?

Article 251 contemplates a situation where there is yet no CBA or other voluntary arrangements or modes providing for a more expeditious manner of collective bargaining. Accordingly, the law itself mandates that the procedures in collective bargaining laid down in the Labor Code, specifically Article 250 thereof, among other pertinent provisions, should be followed by the employer and the representatives of the employees in their collective bargaining efforts. Essentially, the duty to bargain in this situation still requires the performance of the obligation by the employer and the union to meet, convene and confer for collective bargaining purposes. The basic requisites of collective bargaining such as the existence of employer-employee relationship, majority status of the bargaining union and the demand to negotiate an agreement, should likewise be fully satisfied before such negotiations may be validly held. The advantage of negotiating a CBA for the first time lies in the fact that both parties are not restricted or encumbered by any previous agreement on any of the issues that may be raised in the course thereof. They are free to


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take positions on anything, without having to worry about possible past agreements affecting the current ones for discussion.

What is meant by “duty to bargain collectively” when there exists a CBA?

When there is a collective bargaining agreement, the duty to bargain collectively shall mean that neither party shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties.

What are the mandatory requisites of publication, ratification and registration of the CBA?

a. Posting of CBA.

The general rule is that the CBA is required to be posted in two (2) conspicuous places in the work premises, for a period of at least five (5) days prior to its ratification.

In the case of multi-employer bargaining, two (2) signed copies of the CBA should be posted for at least five (5) days in two (2) conspicuous areas in each workplace of the employer units concerned. Said CBA shall affect only those employees in the bargaining units who have ratified it. (Section 7, Rule XVI, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003]).

b. Posting is mandatory.

This requirement on the posting of the CBA as above-described is considered a mandatory requirement. Non-compliance therewith will render the CBA ineffective. (Associated Trade Unions [ATU] vs. Trajano, G. R. No. L-75321, June 20, 1988).

c. Posting is responsibility of employer.

The posting of copies of the CBA is the responsibility of the employer which can easily comply with the requirement through a mere mechanical act. (Associated Labor Union [ALU] vs. Ferrer-Calleja, G. R. No. 77282, May 5, 1989).

d. Ratification by majority of the members of the bargaining unit.

The ratification of the CBA should be made not by the majority of the members of the bargaining union but by the majority of the members of the bargaining unit which is being represented by the bargaining union in the negotiations.

e. Registration of CBA.

The CBA shall be registered with the Department of Labor and Employment in accordance with the Rules to Implement the Labor Code, as amended in 2003. (Section 7, Rule XVI, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003]).

What is the consequence of refusal of party to negotiate the CBA?

The refusal of the employer to bargain with the collective bargaining representative, by ignoring all notices for negotiations and requests for counter-proposals so much so that the union had to resort to conciliation proceedings, may indicate bad faith. (Kiok Loy vs. NLRC, G. R. No. 54334, Jan. 22, 1986, 141 SCRA 179).

For refusing to send a counter-proposal to the union and to bargain anew on the economic terms of the CBA, the company commits an unfair labor practice act under Article 248 [g] of the Labor Code (violation of the duty bargain collectively). As held in General Milling Corporation vs. CA, [G. R. No. 146728, Feb. 11, 2004], the union lived up to this obligation when it presented proposals


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for a new CBA to the management within three (3) years from the effectivity of the original CBA. But the employer failed in its duty under Article 252. What it did was to devise a flimsy excuse, by questioning the existence of the union and the status of its membership to prevent any negotiation.

According to Colegio De San Juan De Letran vs. Association of Employees and Faculty of Letran, [G.R. No. 141471, Sept. 18, 2000, 340 SCRA 587, 595], the management’s refusal to make a counter-proposal to the union’s proposal for CBA negotiation is an indication of its bad faith. Where the employer did not even bother to submit an answer to the bargaining proposals of the union, there is a clear evasion of the duty to bargain collectively.

What is the effect of the refusal of party to sign the CBA?

A party to a fully-concluded CBA may be compelled to sign it, especially if said refusal to sign is the only remaining hitch to its being implemented. Such refusal is considered unfair labor practice. (Roadway Express vs. General Teamster, 320 F 2d, 859).

What is the effect if there is no meeting of the minds?

In University of the Immaculate Concepcion, Inc. vs. The Hon. Secretary of Labor and Employment, [G. R. No. 146291, January 23, 2002], the petitioner presented to the union a draft of the CBA allegedly embodying all the terms and conditions agreed upon during the conciliation sessions held by the NCMB. Petitioner contended that the union was bound to comply with the terms contained in the draft-CBA since said draft allegedly contains all the items already agreed upon before the NCMB. The Supreme Court disagreed. In affirming the finding of the Court of Appeals that there was still no new CBA because the parties had not reached a meeting of the minds, the Supreme Court ratiocinated, thusly:

“As in all other contracts, there must be clear indications that the parties reached a meeting of the minds.

“In this case, no CBA could be concluded because of what the union perceived as illegal deductions from the 70% employees’ share in the tuition fee increase from which the salary increases shall be charged. Also, the manner of computing the net incremental proceeds was yet to be agreed upon by the parties.

“Petitioner insisted that a new collective bargaining agreement was concluded through the conciliation proceeding before the NCMB on all issues specified in the notice of strike. Although it is true that the university and the union may have reached an agreement on the issues raised during the collective bargaining negotiations, still no agreement was concluded by them because, among other reasons, the DOLE Secretary, who assumed jurisdiction on January 23, 1995 only was set to resolve the distribution of the salary increase of the covered employees. The Court of Appeals found that ‘there are many items in the draft-CBA that were not even mentioned in the minutes of the July 20, 1994 conference.’

“Considering the parties failed to reach an agreement regarding certain items of the CBA, they still have the duty to negotiate a new collective bargaining agreement in good faith, pursuant to the applicable provisions of the Labor Code.”

Can a CBA be negotiated and concluded during suspension of operation?

There is no legal basis to claim that a new CBA should not be entered into or that collective bargaining should not be conducted during the effectivity of a temporary suspension of operations which an employer can lawfully do under Article 286 of the Labor Code. In the absence of any other information, the plain and natural presumption is that the employer would resume operations after six (6) months and, therefore, it follows that a new CBA will be


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needed to govern the employment relations of the parties, the old one having already expired.

Consequently, it was held in San Pedro Hospital of Digos, Inc. vs. Secretary of Labor, [G. R. No. 104624, Oct. 11, 1996, 263 SCRA 98], that while the employer cannot be forced to abandon its suspension of operations even if said suspension be declared unjustified, illegal and invalid, neither can the employer evade its obligation to bargain with the union, using the cessation of its business as reason therefor. For, as already indicated above, the employer-employee relationship is merely suspended (and not terminated) for the duration of the temporary suspension. Using the suspension as an excuse to evade the duty to bargain is further proof of its illegality. It shows abuse of this option and bad faith on the part of the employer. And since it refused to bargain without valid and sufficient cause, the DOLE Secretary, in the exercise of his powers under Article 263 [i] of the Labor Code to decide and resolve labor disputes, properly granted the wage increase and imposed the union shop provision.

Can a CBA be negotiated and concluded in case of closure of business?

An employer which has already decided to close shop cannot be compelled to enter into a new CBA. The Supreme Court said in the same case of San Pedro Hospital [supra] that it cannot impose upon the employer the directive to enter into a new CBA with the union for the very simple reason that to do so would be to compel the employer to continue its business when it had already decided to close shop, and that would be judicial tyranny on its part.

Can a CBA proposed by the union be imposed lock, stock and barrel on employer who refused to negotiate a CBA?

The Supreme Court, following the provision of Article 253 which imposes on both parties to keep the status quo and to continue in full force and effect the terms and conditions of

the existing agreement during the 60-day period [prior to its expiration date] and/or until a new agreement is reached by the parties, has lately consistently ruled that the CBA, as proposed by the union, may be unilaterally imposed on the employer in the event the latter fails to discharge its duty to bargain collectively by refusing to make any counter-proposals to the proposals of the union or engaging in bad faith bargaining.

Article 253 basically mandates the parties to keep the status quo while they are still in the process of working out their respective proposals and counter proposals. The general rule is that when a CBA already exists, its provision shall continue to govern the relationship between the parties until a new one is agreed upon. The rule necessarily presupposes that all other things are equal. That is, that neither party is guilty of bad faith. However, when one of the parties abuses this grace period by purposely delaying the bargaining process, a departure from the general rule is warranted.

Under this situation, the employer which violates the duty to bargain collectively, loses its statutory right to negotiate or renegotiate the terms and conditions of the draft CBA proposed by the union. Hence, the proposals of the union may be adopted as the CBA and, consequently, imposed on the employer, lock, stock and barrel.

General Milling Corporation vs. CA.

In General Milling Corporation vs. CA, [G. R. No. 146728, Feb. 11, 2004], the Supreme Court imposed on the employer the draft CBA proposed by the union for two years commencing from the expiration of the original CBA. This was because of the employer’s refusal to counter-propose to the union’s proposals which constitutes unfair labor practice under Article 248 [g] of the Labor Code.

Kiok Loy vs. NLRC.


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In the case of Kiok Loy vs. NLRC, [No. L-54334, January 22, 1986, 141 SCRA 179, 188], the Supreme Court found that petitioner therein, Sweden Ice Cream Plant, refused to submit any counter proposal to the CBA proposed by its employees’ certified bargaining agent. It ruled that the former had thereby lost its right to bargain the terms and conditions of the CBA. Thus, the High Court did not hesitate to impose on the erring company the CBA proposed by its employees’ union - lock, stock and barrel.

Divine Word University of Tacloban vs. Secretary of Labor and Employment.

Likewise, in Divine Word University of Tacloban vs. Secretary of Labor and Employment, [213 SCRA 759, September 11, 1992], petitioner therein refused to perform its duty to bargain collectively. Thus, the High Tribunal upheld the unilateral imposition on the university of the CBA proposed by the Divine Word University Employees Union.

Distinction between the aforesaid cases, disregarded.

As strictly distinguished from the facts of General Milling [supra], there was no pre-existing CBA between the parties in Kiok Loy and Divine Word University of Tacloban. Nonetheless, the Supreme Court deemed it proper to apply in General Milling the rationale of the doctrine in the said two cases. To rule otherwise, according to the Court, would be to allow General Milling to have its cake and eat it, too.

What is “freedom period”?

“Freedom period” is the last sixty (60) days of the lifetime of a collective bargaining agreement immediately prior to its expiration It is so called because it is the only time when the law allows the parties to serve notice to terminate, alter or modify the existing agreement. It is also the time when the majority status of the bargaining union or agent may be challenged by another union by

filing appropriate petition for certification election.

What is “automatic renewal clause”?

“Automatic renewal clause” means that at the expiration of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed.

What is the effect of CBA renewal or registration before or during 60-day period? The representation case shall not be adversely affected by a CBA registered before or during the last sixty (60) days of a subsisting agreement or during the pendency of the representation case. (Samahan ng Manggagawa sa Pacific Plastic vs. Laguesma, G. R. No. 111245, Jan. 31, 1997, 267 SCRA 303, 310).

It is well-settled that the sixty-day freedom period based on the original CBA shall not be affected by any amendment, extension or renewal of the CBA for purposes of certification election. (ALU vs. Calleja, 179 SCRA 127 [1989]).

In the case of Warren Manufacturing Workers Union [WMWU] vs. Bureau of Labor Relations, [159 SCRA 387 (1988)], it was held that an agreement prematurely signed by the union and the company during the freedom period does not affect the petition for certification election filed by another union. (See also Oriental Tin Can Labor Union vs. Secretary of Labor and Employment, G. R. No. 116751, Aug. 28, 1998, 294 SCRA 640).

The reason is, with a pending petition for certification, any such agreement entered into by management with a labor organization is fraught with the risk that such a labor union may not be chosen thereafter as the collective bargaining representative. Any other view would render nugatory the clear statutory policy to favor certification election as the means of ascertaining the true


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expression of the will of the workers as to which labor organization would represent them. (Vassar Industries Employees Union [VIEU] vs. Estrella, No. L-46562, March 31, 1978, 82 SCRA 280, 288; Today’s Knitting Free Workers Union vs. Noriel, L-45057, Feb. 28, 1977, 75 SCRA 450).

What is the term (lifetime) of a CBA?

Representation aspect (sole and exclusive status of certified union): - The term is 5 years which means that no petition questioning the majority status of the incumbent bargaining agent shall be entertained by DOLE and no certification election shall be conducted outside of the 60-day freedom period.

All other provisions (which refer to both economic and non-economic provisions except representation): Shall be renegotiated not later than three (3) years after its execution.

May CBA negotiations be suspended for 10 years?

Yes. The Supreme Court, in the case of Rivera vs. Espiritu. (G.R. No.135547, January 23, 2002), ratiocinated, thus:

“The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations undertaken in the light of the severe financial situation faced by the employer, with the peculiar and unique intention of not merely promoting industrial peace at PAL, but preventing the latter's closure. We find no conflict between said agreement and Article 253-A of the Labor Code. Article 253-A has a two-fold purpose. One is to promote industrial stability and predictability . Inasmuch as the agreement sought to promote industrial peace at PAL during its rehabilitation, said agreement satisfies the first purpose of Article 253-A. The other is to assign specific timetables wherein negotiations become a matter of right and requirement. Nothing in Article 253A, prohibits the parties from waiving or

suspecting the mandatory timetables and agreeing on the remedies to enforce the same.

“In the instant case, it was PALEA, as the exclusive bargaining agent of PAL 's ground employees, that voluntarily entered into the CBA with PAL. It was also PALEA that voluntarily opted for the 10-year suspension of the CBA. Either case was the union's exercise of its right to collective bargaining. The right to free collective bargaining, after all, includes the right to suspend it.

“The acts of public respondents in sanctioning the 10-year suspension of the PAL-PALEA CBA did not contravene the "protection to labor" policy of the Constitution. The agreement afforded full protection to labor; promoted the shared responsibility between workers and employers; and they exercised voluntary modes in settling disputes, including conciliation to foster industrial peace.".

What is meant by “retroactivity” of CBA?

a. Rules involving CBAs concluded by the parties through negotiation (not concluded through arbitral award).

The collective bargaining agreement or other provisions of such agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in the collective bargaining agreement shall retroact to the day immediately following such date.

If any such agreement is entered into beyond six (6) months, the parties shall agree on the date of effectivity thereof.

b. Rule involving CBAs concluded through arbitral awards by DOLE Secretary, NLRC or Voluntary Arbitrator (Jurisprudence varies).


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In case of arbitral awards, the retroactivity of the CBA provided under Article 253-A of the Labor Code (enumerated above) has no application. Thus, the Supreme Court ruled:

In St. Luke's Medical Center, Inc. vs. Torres, [223 SCRA 779 (1993)], the effectivity date was made retroactive to the date of the expiration of the previous CBA.

In Pier 8 Arrastre and Stevedoring Services, Inc. vs. Roldan-Confesor, [241 SCRA 294, 307 (1995)], the effective date of the new CBA should be the date the Secretary of Labor and Employment has resolved the labor dispute.

In Manila Electric Company vs. Quisumbing, [G. R. No. 127598, January 27, 1999, 302 SCRA 173, 209], the effectivity date was made prospective per its January 27, 1999 ruling. Later, per its February 22, 2000 ruling in the same case which was rendered upon motion for reconsideration, the effectivity of the CBA was made retroactive. But later, in its August 1, 2000 ruling which was rendered after a Motion for Partial Reconsideration was filed by Meralco, the Supreme Court finally changed the effectivity date thereof. It held that the arbitral award should retroact to the first day after the six-month period following the expiration of the last day of the CBA, i.e., from June 1, 1996 to May 31, 1998.

LATEST RULING: In the case of LMG Chemicals Corporation vs. Secretary of DOLE, (G. R. No. 127422, April 17, 2001), the Supreme Court ruled that retroactivity of CBA in arbitral awards is subject to the discretion of the DOLE Secretary

What are the remedies in case of CBA deadlock?

In case of a deadlock in the negotiation or renegotiation of the collective bargaining agreement, the parties may exercise the following rights under the Labor Code:Conciliation and mediation by the NCMB, DOLE.Declaration of a strike or lockout, as the case may be.

Referral of case to compulsory or voluntary arbitration.

COLLECTIVE BARGAINING

1. What is Collective Bargaining Agreement (CBA)?

It refers to a contract executed upon request of either the employer or the exclusive bargaining representative incorporating the agreement reached after negotiations with respect to wages, hours of work and all other terms and conditions of employment.

2. Mandatory aspects of bargaining:a. Wages, hours of work and other

terms and conditions of employmentb. CBA should not provide for benefits

below the standard prescribed by law, award or order.

c. CBA should include the mandatory provisions such as grievance procedure, family planning, “no strike-no lockout” clause, cooperative scheme, Labor Management Council

3. What is the “duty to bargain collectively” under Art. 252 of the LC?

It means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours of work and all other terms and conditions of employment, but such duty does not compel any party to agree to a proposal or to make any concession.

4. What is the effect for failure to exhaust all steps in the grievance machinery?

For failing to exhaust all the steps in the grievance machinery and arbitration proceedings provided in the CBA, the notice of strike should be dismissed and the union ordered to proceed with the grievance and arbitration proceedings.


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5. ULP in Collective Bargaininga. Bargaining in bad faithb. Refusal to bargainc. Individual bargainingd. Gross violation of CBA provisions

6. DIFFERENT KINDS OF UNION SECURITY ARRANGEMENTS (EXCEPTIONS TO ULP ON INTERFERENCE ON THE EMPLOYEES’ EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION):A. CLOSED-SHOP AGREEMENT - the employer undertakes not to employ any individual who is not a member of the contracting union and the said individual once employed must, for the duration of the agreement, remain a member of the union in good standing as a condition for continued employment.

does not have any retroactivity apply only to new hires

EXCEPTIONS: employees belonging to any

religious sect which prohibit affiliation of their members with any labor organization are not covered by such agreement—The free exercise of religious belief is superior to contract rights (Victoriano vs. Elizalde Rope Workers).

members of the rival union are not covered by such arrangement.

SEMI-CLOSED SHOP AGREEMENT- has no requirement for the employee to remain as member of the contracting union in good standing as a condition for continued employment.

B. UNION SHOP AGREEMENT -stipulation whereby any person can be employed by the employer but once employed such employee must, within a specific period, become a member of the contracting union and remain as such in good standing for continued employment for the duration of the CBA [take note of the exceptions in the preceding number.]

C. MAINTENANCE OF MEMBERSHIP CLAUSE - the agreement DOES NOT require non-members to join the contracting union BUT provides that those who are members thereof at the time of the execution of the CBA and those who may thereafter on their own volition become members must for the duration of the agreement maintain their membership in good standing as a condition for continued employment in the company for the duration of the CBA.

D. PREFERENTIAL SHOP AGREEMENT – an agreement whereby the employer merely agrees to give preference to the members of the bargaining union in hiring, promotion or filing vacancies and retention in case of lay-off. The employer has the right to hire from the open market if union members are not available.

E. AGENCY SHOP AGREEMENT - an agreement whereby employees must either join the union or pay to the union as exclusive bargaining agent a sum equal to that paid by the members. This is directed against “FREE RIDER” employees who benefit from union activities without contributing support to the union, to prevent a situation of non-union members enriching themselves at the expense of union members.

Employee members of another/rival union are not considered free riders since when the union [agent] bids to be the bargaining agent, it voluntarily assumed the responsibility of representing all the employees in the appropriate bargaining unit.

UNFAIR LABOR PRACTICE

1. What is the test to determine whether or not an employer is guilty ULP?

The test of whether an employer has interfered with and coerced employees is whether the employer has engaged in conduct which it may reasonably be said tends to interfere with the free exercise of


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employees’ rights to self-organization and it is not necessary that there be direct evidence that any employee was in fact intimidated or coerced by statements of threats of the employer if there is reasonable interference that anti-union conduct of the employer does have an adverse effect on self-organization and collective bargaining. (De Leon vs. NLRC, 358 SCRA 274)

2. Some cases of ULP of EMPLOYERS: From the employer’s refusal to

bargain, to their act of economic inducements resulting in the promotion of those who withdrew from the union, the use of armed guards to prevent the organizers to come in and the dismissal of union officials and members (Hacienda Fatima vs. National Federation Sugarcane Workers-Food and General Trade, G.R. No. 149440)

Where the workers were dismissed because they refused to resign from a union and affiliate with a rival union which was being aided and abetted by the Company (Development Corporation vs. CIR, 80 SCRA 434)

Two union officers were provoked into a pre-arranged fight by two recently-hired employees, pursuant to the strategy of the company designed to prevent an apparently lawful cause for their dismissal (Visayan Bicycle Co. vs. National Labor Union, 14 SCRA 5)

3. Some cases of ULP of LABOR ORGANIZATIONS:

Workers were reluctantly dismissed from employment upon insistent demand by the union (Salunga vs. Court of

Industrial Relations, 21 SCRA 216)

Union demanded the dismissal from employment on the basis of the union security clause of the CBA and the employer acceded by placing the employee on forced leave (Manila Mandarin Employee Union vs. NLRC, 154 SCRA 368)

The strike was staged in violation of the existing CBA provisions on NO Strike/No Lockout Clause (Union of Filipino Employees vs. Nestle Philippines, 192 SCRA 396)

4. What is BOULWARISM?It occurs when:

the employer directly bargains with the employee disregarding the union.

Employer submits its proposals and adopts a take it or leave it stand. This is not negotiation because the take it or leave it stand implies threat.

STRIKES, LOCKOUT AND PICKETING

1. “ASSUMPTION ORDER” OF THE SECRETARY, ITS LEGAL IMPLICATIONS

Under Art. 263(g) of the Labor Code, such assumption shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption order. If one had already taken place at the time of assumption, all striking or lockout employees shall immediately return to work and the employer shall immediately resume operations and re-admit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as he may issue to enforce the same. The mere issuance of an assumption order by the Secretary of Labor automatically carries with it a return to work order, even if the directive to return to work is not expressly stated in


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the assumption order. Those who violate the foregoing shall be subject to disciplinary action or even criminal prosecution.

Under Art. 264 of the Labor Code, no strike or lockout shall be declared after the assumption of jurisdiction by the Secretary.

Power of Sec. of Labor is plenary and discretionary. (St. Luke’s Medical Center vs. Torres, 29 June 1993)

2. TESTS IN DETERMINING THE LEGALITY OF A STRIKE

Purpose Test (bargaining deadlock and/or unfair labor practice)

Compliance with Procedural and substantive requirements of law

notice of strike 30/15-day cooling-off period strike vote 7 – day strike ban

Means employed test - A strike may be legal at its inception but eventually be declared illegal if the strike is accompanied by violence which violence is widespread, pervasive and adopted as a matter of policy and not merely violence which is sporadic which normally occur in a strike area.


The three tests must concur. Non-compliance with any of the aforementioned requisites renders the strike illegal.

3. STRIKERS WHO ARE NOT ENTITLED TO REINSTATEMENT

1. Union officers who knowingly participate in an illegal strike; and

2. Any striker/union member who knowingly participates in the commission of illegal acts during the strike.

Those union members who joined an illegal strike but have not committed any illegal act shall be reinstated but without any backwages.

4. DEFIANCE OF RETURN TO WORK ORDER IN A STRIKE CASE WHICH IS UNDER ASSUMPTION OF JURISDICTION, ITS IMPLICATIONS:

In the case of Telefunken Semiconductors Employees Union FFW v. CA, G.R. No. 143013-14, December 18, 2000, the Supreme Court held that the strike of the Union cannot be viewed as anything but illegal for having been staged in open and knowing defiance of the assumption and return-to-work orders. The necessary consequence thereof are also detailed by the Supreme Court in its various rulings. In Marcopper Mining Corp. v. Brillantes (254 SCRA 595), the High Tribunal stated in no uncertain terms that -

“by staging a strike after the assumption of jurisdiction or certification for arbitration, workers forfeited their right to be readmitted to work, having abandoned their employment, and so could be validly replaced.”

5. What are the grounds for declaration of strike?

1. deadlock in collective bargaining (ECONOMIC); and/or

2. unfair labor practices (POLITICAL)

6. What are considered ILLEGAL STRIKES?A. SIT-DOWN STRIKE - is characterized by a temporary work stoppage of workers who thereupon seize or occupy property of the employer or refuse to vacate the premises of the employer. ILLEGAL- amounts to a criminal act because the employees trespass on the premises of the employer.B. WILDCAT STRIKE- is a work stoppage that violates the labor contract and is not authorized by the


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union. ILLEGAL- It is not valid because it fails to comply with certain requirements of the law, to wit: notice of strike, vote, and report on strike vote.C. SYMPATHETIC STRIKES- are work stoppages of workers of one company to make common cause with other strikers of other companies, without demands or grievances of their own against the employer. ILLEGAL - because there is no labor dispute between the workers who are joining the strikers and the latter’s employer.D. SECONDARY STRIKES- are work stoppages of workers of one company to exert pressure on their employer so that the latter will in turn bring pressure upon the employer of another company with whom another union has a labor dispute. ILLEGAL- because there is no labor dispute involved.E. “WELGA NG BAYAN” ILLEGAL because it is a political strike and therefore there is neither a bargaining deadlock nor any ULP. It is a political rally.


7. General Rule: A strike staged by workers, inspired by good faith, DOES NOT automatically make the same illegal (PNOC Dockyard and Engineering Corporation vs. NLRC, 291 SCRA 231).

Exception: Good faith is NO LONGER A DEFENSE if no procedural compliance for valid strike (Grand Boulevard Hotel vs. Genuine Labor Organizations, G.R. No. 153664)

8. What is “INNOCENT BYSTANDER RULE”?An innocent bystander”, who seeks to

enjoin a labor strike, must satisfy the court that aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely different from, without any connection whatsoever to, either party to the dispute and, therefore, its

interests are totally foreign to the context thereof (MFS Tire and Rubber, Inc. vs. CA).

TERMINATION OF EMPLOYMENT

1. What are the JUST CAUSES FOR DISMISSAL?

1. Serious MISCONDUCT OR WILLFUL DISOBEDIENCE by the employee of the lawful orders of his employer or representative in connection with his work; Misconduct- transgression of some

established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. (Dept. of Labor Manual, Sec. 4353.01)

2. Gross and habitual NEGLECT by the employee of his duties;

3. FRAUD OR WILLFUL BREACH by the employee of the trust reposed in him by his employer or duly organized representative Fraud must be committed against

the employer or his representative and in connection with the employee’s work. (Dept. of Labor Manual, Sec. 4353.01 [3])

4. Commission of a CRIME OR OFFENSE BY THE EMPLOYEE AGAINST THE PERSON OF HIS EMPLOYER or any immediate member of his family or his duly authorized representative; and Conviction or prosecution is not

required.5. Other causes ANALOGOUS to the

foregoing. A cause must be due to the

voluntary or willful act or omission of the employee. (Nadura v. Benguet Consolidated, G.R. No. L-17780)

NOTES:


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Q. What are the just causes for dismissal under the Labor Code?

A. They are:1. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;Serious misconduct is generally characterized as improper and wrongful conduct. According to the DOLE Manual (Sec. 4353.01), serious misconduct is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character and implies wrongful intent and not mere error in judgment.

NOTES: In order for misconduct be a valid ground for dismissal, the wrongdoing must be one that is serious. Moreover, based on jurisprudence, the act of misconduct although serious in nature, should be in connection with the employee’s work. Otherwise, the dismissal effected by the employer based on this ground will be declared illegal.

Q. Give examples of acts upheld by the Supreme Court as Serious Misconduct:

A: They are as follows:(a) Drinking Liquor and Sexual Intercourse Within Company Premises. A Security coordinator bringing in Liquor within company premises and drinking with a guard on duty and had sexual intercourse with two (2) female security guards (Stanford Microsystems, Inc. vs. NLRC, et. al., G.R. No. L- 74187, 28 January 1988).

(b) Fighting Within Work Premises and During Work Hours. This pertains to the case of a seaman who assaulted a crew member with a knife. This was held as serious misconduct because of its deleterious and pervasive effect to the employees interest (Gold City Integrated Port Services, Inc. vs. NLRC, et. al., G. R. No. 86000, 21 September 1990).

©. Utterance of Offensive, Insulting and Obscene Words Against Superior and Reason. Such act was ruled as serious misconduct because it destroys the morale of his fellow employees and is a violation of company’s rules and regulations (Asian Design and Mfg. Corp. vs. Deputy Minister (now Secretary of Labor), et. al., G.R. No. 70552, 12 May 1986).

(d) Employee Hurls Unfounded Accusations Against Employer in Union Newspaper. This case pertains to an employee writing in a union newspaper that management was exerting political pressure, on a public official to frustrate legitimate activities of the employees. The Court ruled herein that the act of the employee is inimical to the interest of the employer as such publication sullied its reputation and therefore a serious misconduct.(Lopez vs. Chronicle Publications, 12 SCRA 694)

(e) Perjurious Statement to Favor Another Employee (Manila Times vs. Inciong, 122 SCRA 873 ). (.f) Instigation of Labor Unrest (EEI vs. MRC, 133 SCRA 752).

(g) Assaulting an Agent of a Person in Authority (National Service Corporation vs.Leogardo, 130 SCRA 502).

(h) Shouting Invectives. The utterances of an employee of “putang ina mo” directed to a company lady doctor because the latter failed to grant the employee’s request for a sick leave , was ruled to an act of serious misconduct. (De la Cruz vs. NLRC, et. al., G.R. No. 82703, 15 September 1989).

(i) Gambling Inside Company Premises or Compound and Reason. This was ruled as serious misconduct because it was considered as a prohibited act and violative of the Company Rules that warrant termination. Hence. An act of serious misconduct (Dimalanta vs. Secretary of Labor, et. al., G. R. No.83854, 24 May 1988).

(j) Misleading and Deceiving a Customer For Personal Pecuniary Interest or Gain. An employee who


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makes representation to a customer that telephone line repair will take a long time to undertake, but if he will pay P160.00, the same can be facilitated . After the customer informed PLDT management , the private respondent was dismissed. In this case the Court ruled that the employee committed an act inimical to the employer. Although the private respondent Abucay presented an affidavit of retraction by the customer the Court disregarded the as an afterthought and of no probative value(PLDT VS. NLRC, et. al., G.R. no. 74562, 31 May I987)

(k) Intoxication. As a rule, drinking liquor which interferes with one’s work is serious misconduct. Stated otherwise, if intoxication resulting from drinking liquor does not interfere with one’s work, the same is not deemed as serious misconduct. In Philippine Air Lines (PAL) vs. NLRC, et. al., G.R. No. L-62961, 02 September 1983, an airline captain forced two (2) co-pilots to drink six (6) bottles of beers each and thereafter ordered them to stand erect and then hit both on the stomach, was dismissed for serious misconduct. The obvious reason in his case was the fact of knowledge by the captain that the two pilots will have flight duties the next morning

(l) Security Guard Caught Sleeping on Duty Coupled with Gross Insubordination and Challenging Superiors to a Fight is Serious Misconduct ( Luzon Stevedoring Corp. vs. CIR, et. al., G. R. No. 18683, 31December 1965).

(m) Circulation of Manifesto Against School Direc-tress and Principal. In this case the Court upheld serious misconduct as a ground for dismissal for reason that said act disrupted the good order and decorum of the school. Although the employee who circulated the Manifesto admitted authorship thereof, the same was disclaimed by the majority of the teachers that the school interfered with the exercise of their right to self-organization or that they were blacklisted (St. Mary’s College, et. al., vs.

NLRC, et. al., G.R. No. 75602, 29 December 1989).

(n) Selling of the Products of a Competitor Company. In Elizalde International (Phils.), Inc. vs. Court of Appeals, 103 SCRA 247), the Court upheld the dismissal of the employee based on serious misconduct because said act is a violation of his employment contract with his employer.

(o) Violation of a Bank’s Policy On Temporary Over-drafts and Drawings Against Uncollected Deposits. This was a valid ground for the dismissal of a bank’s employee on the ground of serious misconduct (Associated Citizens Bank vs. Ople, 103 SCRA 130).

(p) Discrimination Against and Uttering Words Belittling Filipinos By an Alien Hotel Manager. It was held by the Court in Riker vs. Hon. Blas Ople, et. al, G.R. No.50492, 27 October 1987, that such acts constitute serious misconduct by the alien hotel manager, aside from abuse in ordering food in the hotel more than he can consume.

q) Immoral Conduct. The act by a male worker embracing a female co-employee after working time inside a dormitory within the company compound was ruled as serious misconduct.

NOTE: This infraction although committed outside of the worker’s office hours but inside the company premises, was deemed as serious misconduct flowing from an immoral conduct (Navarro vs. Judge I. D. Damasco, et. al., G.R. No. 101675, 14 July 1995).

Q. Explain Willful Disobedience.

A. Based on jurisprudence, the case instructive of willful disobedience is BLTB Co. vs. The Court of Appeals, 71 SCRA 470, wherein the Court laid down the test for willful disobedience as a valid ground for effecting dismissal.

The Court ruled in this wise: “To constitute as a valid cause for dismissal, the disobedience must be


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willful and intentional, willfulness being characterized by a wrongful and perverse mental attitude rendering the employee’s act inconsistent with proper subordination. The rules, instructions or commands must be reasonable and lawful. They must be known to the employee and must pertain to the duties which the employees have been engaged to discharge.”

The prime consideration being looked into by labor tribunals, in order that this ground is to be upheld as a just cause for dismissal, is that, the lawful orders of the employer should have been deliberately and willfully disobeyed by the employee.

One case of note, on willful disobedience, is Nuez vs. NLRC, et. al., G.R. No. 107574, 28 December 1994, wherein the Court reiterated the well-recognized right of management to regulate all aspects of employment as well as the corresponding obligation of the workers to obey company rules and regulations. This is one ground where the employers are accorded the right to dismiss employees who deliberately disobey or disregard company rules. What’s more, an employer cannot be compelled to continue retaining a worker found guilty of maliciously committing acts detrimental to the former’s interest. For if the rule would be otherwise, this would render a mockery of the regulations that employees are required to observe. (Reference Cases: )

Q. What are the Elements/Requisites for Validity of Rules and Regulations Issued by the Company?A: These are: (a) the orders, regulations and instructions must be lawful and reasonable; (b) they must be sufficiently be made known to the employees; and (c) they must be in connection with the duties which the employee has been engaged to discharge (Family Planning Organization of the Philippines, Inc. vs. NLRC, et. al., G. R. No. 75907, 23 March 1992).

NOTE: In order that the employer’s ground based on willful disobedience be upheld as a lawful and valid ground for dismissal, the foregoing requisites should concur because absence of any of the requisites, al strictly speaking the disregard or failure to follow the orders and instructions of the employer is “disobedience”, it not “willful disobedience” as contemplated by law and jurisprudence.

Q. What are the requisites for Willful Disobedience As a Just Cause for Dismissal? A. In order for the ground of “willful disobedience” will pass as a just cause for termination o employment, the following requisites should concur, notably: (a) The assailed conduct of the employee must have been willful, deliberate or intentional, the willfulness being characterized by a “wrongful and perverse attitude”;

(b) the order (rule or instruction) must have been reasonable and lawful and made known to the employee; and

(c) the deliberate disregard or disobedience must pertain to the duties which the employee had been engaged to discharge. (Based on Nuez vs. NLRC [supra]; Aguilar vs. NLRC, et. al,. 216 SCRA 207 and BLTB vs. CA, 71 SCRA 470).

Q. Give some jurisprudence on Willful Disobedience.

A. Wrongful Acts Ruled as Willful Disobedience:

(a) A security guard smoking in a combustible area is a valid rule and is a ground for dismissal.

(b) An employee dismissed because he violated the no-gambling policy of the company was ruled as valid (Dimalanta vs. Secretary of Labor [supra]).

(c) In Soco vs. Mercantile Corporation, et. al., G.R. No. 83854, 24 May 1989, the Court sustained the dismissal of an employee for violation of the rule against the unauthorized use of a


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company-owned vehicle for private purposes without the prior authority of the employer.

No Willful Disobedience Found:

(a) In Manebo vs. NLRC, et. al., G.R. No. 10721, 10 January 1994, the Court ruled that the alleged “willful disobedience” leveled against an employee of an unreasonable order or one not connected to his duties, cannot be a valid ground for dismissal.

2. Gross and habitual neglect by the employee of his duties;

As a ground for the dismissal, the neglect of duty herein referred to, as a general rule, must be one which is characterized as gross and habitual. Otherwise, any other negligent act will be merely considered as isolated act of negligence and may be an unjustified ground for the dismissal of an employee. However, in Fuentes vs. NLRC, et. al., G. R. No. 75955, 28 October 1988, it was ruled that the element of habituality as a consequence of an employee’s negligent act when the amount involved is substantial may be disregarded.

In Citibank N. A. vs. Gatchalian, et. al., G. R. No. 111222, 18 January 1995, the Court stated that gross negligence evinces a thoughtless disregard of consequences without exerting any effort to avoid them. Moreover, gross negligence may also mean want or absence of or failure to exercise slight care or diligence, or the entire absence of care.

3. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly organized representative

Fraud as a Ground for Dismissal. Fraud refers to any act, omission, or concealment justly reposed and is injurious to another. To constitute a just

cause for terminating the employee’s services, the fraud must be committed against the employer or his duly authorized representative and in connection with the employee’s work. Otherwise stated, the fraud committed by an employee against a third person not in connection with his work and which does not in any way involve his employer, is not a valid ground that will justify the dismissal of the employee (Based on the cases of Lepanto Consolidated Mining vs. Court of Appeals, G.R. No. L-15171, 29 April 1961 and the Philippine Education Co. vs. Union of Philippine Education Employees, G.R. No. L-13778, 29 April 1960;).

NOTE: Fraud must be committed against the employer or his representative and in connection with the employee’s work. ((Dept. of Labor Manual) Q. Explain Willful Breach of Trust.

A. An employee to whom trust or confidence is reposed in connection with his duty or work assignment and shall willfully breach the same, may be dismissed by the employer on said ground. This ground is akin to loss of trust and confidence as a ground for dismissal. If the breach of trust is not willful or intentional , the dismissal based on this ground may not be justified.

Q. Explain Loss of Trust and Confidence.

A. In China City Restaurant Corporation vs. NLRC, 217 SCRA 443 and related cases, the Court set forth the guidelines in order that this ground for dismissal be justified. These are: (1) the loss of confidence must not be simulated; (2) that this ground should not be used as a subterfuge for causes which are improper, illegal or unjustified; (3) that the loss of confidence must not arbitrarily asserted in the face of overwhelming evidence to the contrary; and (4) that the ground must be genuine,


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not a mere afterthought to justify earlier action taken in bad faith by management. 4. Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; NOTE: Conviction or prosecution is not required.

5. Other causes analogous to the foregoing.Abandonment As an Analogous Ground, Elements.

a. Abandonment is defined in the case of R Transport Corporation vs. Ejandra, 428 SCRA 725, May 20, 2004, as:

“According to petitioner, private respondent abandoned his job and lied about the confiscation of his license. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason and (2) a clear intention to sever the employer-employee relationship. Of the two, the second element is the more determinative factor and should be manifested by some overt acts. Mere absence is not sufficient. It is the employer who has the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment without any intention of returning.

Q. How should a charge of abandonment be substantiated?

A. This is the ruling of the Supreme Court in Hantex Trading Co., Inc. vs. Court of Appeals, 390 SCRA 181, September 27, 2002, thus:

“At any rate, petitioners undoubtedly could have presented better evidence to buttress their claim of abandonment. After all, being the employers, they are in possession of documents relevant to this

case. For instance, they could have at least presented in evidence copies of respondent’s daily time records, which are on-file in its office, to prove the dates respondent was on AWOL (absence without leave); or any letter wherein they required respondent to report for work and explain his unauthorized absences. But, as it is, petitioners’ defense of abandonment cannot be given credence for lack of evidentiary support.”

NOTE:. A cause must be due to the voluntary or willful act or omission of the employee. (Nadura v. Benguet Consolidated, G.R. No. L-17780)

Q. What is the procedure on due process to be observed by the employer before an employee is dismissed?A. For termination of the employment based on the any of the just causes for termination, the requirements of due process that an employer must comply with are:

Written notice should be served to the employee specifying the ground or grounds for termination and giving the said employee reasonable opportunity within which to explain;

A hearing or conference should be held during which the employee concerned, with the assistance of counsel, if the employee so desires, is given the opportunity to respond to the charge, present his evidence and present the evidence presented against him;

A written notice of termination, if termination is the decision of the employer, should be served on the employee indicating that upon due consideration of all the circumstances, grounds have


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been established to justify his termination.

NOTES: For termination of employment based on authorized causes, the requirements of due process shall be deemed complied with upon service of a written notice to the employee and the appropriate Regional office of the Department of Labor and employment at least thirty days before the effectivity of the termination specifying the grounds for termination.Under the AGABON AND JAKA CASES, which reinstated the so-called WENPHIL DOCTRINE if the services of the

employee was terminated due to a just or authorized cause but the affected employee’s right to due process has been violated, the dismissal is legal but the employee is entitled to nominal damages by way of indemnification for the violation of the right. SERRANO vs. ISETANN et. al. is abandoned wherein then it was ruled that if the employee is dismissed under just or authorized cause but the affected employee’s right to due process has been violated, his dismissal becomes ineffectual. Therefore, the employee is entitled to backwages from the time he was dismissed until the determination of the justness of the cause of the dismissal.

2. What are the AUTHORIZED CAUSES OF TERMINATION BY THE EMPLOYER?

1. installation of labor-saving devices (AUTOMATION)

2. REDUNDANCY (superfluity in the performance of a particular work) redundancy, for purposes of the

Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. (Wiltshire File Co. Inc. vs. NLRC)

3. RETRENCHMENT to prevent losses (there is excess of employees and employer wants to prevent financial losses). Requirements:

(a) substantial losses which are not merely de minimis in extent;(b) imminence of such substantial losses;(c) retrenchment would effectively prevent the expected and additional losses;(d) the alleged losses and expected losses must be proven by sufficient and convincing evidence. 1. closing or CESSATION OF OPERATION

of the establishment or undertaking UNLESS the closing is for the purpose of circumventing the provisions of the Labor Code.

2. DISEASEa. the disease is incurable within 6

months and the continued employment of the employee is prohibited by law or prejudicial to his health as well as to the health of his co-employees

b. with a certification from public heath officer that the disease is incurable within 6 months despite due medication and treatment.

Q. What are the authorized causes of termination by the employer?A. They are as follows:

1. installation of labor-saving devices (automation)2. redundancy (superfluity in the performance of a particular work). This exists where the services of an employee are in excess of what is reasonably demanded by the actual requirement of the enterprise.

It was further ruled that a position is redundant where “it is superfluous, and superfluity of a position may be the outcome of a number of factors, such as over hiring of workers, decreased volume of business, or dropping of a particular line or service activity previously undertaken by the enterprise.


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NOTES: redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. (Wishire File Co. Inc. vs. NLRC)Reorganization as a cost-saving device is acknowledged by jurisprudence. An employer is not precluded from adopting a new policy conducive to a more economical and effective management, and the law does not require that the employer should be suffering financial losses before he can terminate the services of the employee on the ground of redundancy (DOLE PHILIPPINES, INC et al., vs. NATIONAL LABOR RELATIONS COMMISSION et al.)

3. Retrenchment to prevent losses (there is excess of employees and employer wants to prevent financial losses)

Q. Under what conditions may an employer retrench its employees?A. The conditions are: (a) substantial losses which are not merely de minimis in extent; (b) imminence of such substantial losses;(c) retrenchment would effectively prevent the expected and additional losses;(d) the alleged losses and expected losses must be proven by sufficient and convincing evidence. (NDC - Guthrie Plantations, Inc., Vs. National Labor Relations Commission, Et. Al)

4. Closure or cessation of operation of the establishment or undertaking UNLESS the closing is for the purpose of circumventing the provisions of the Labor Code.

5. Diseasea. the disease is incurable within 6

months and the continued employment of the employee is prohibited by law or prejudicial to his health as well as to the health of his co-employees

b. with a certification from public health officer that the disease is incurable within 6 months.

c. Before an employer could dismiss an employee based on a disease, Section 8 of Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code requires a certification by a competent public health authority that the disease is of such a nature or at such stage that it cannot be cured within a period of 6 months even with proper medical treatment. (Cathay 44Pacific Airways vs. NLRC and Martha Singson)

Q. What are some jurisprudence regarding the authorized causes?A.RetrenchmentRequisites For Losses to Be a Valid Ground For Retrenchment: (a) Losses expected should be substantial and not merely de minimis in extent; (b) Losses must be imminent; (c) The retrenchment must be reasonably necessary to prevent expected losses; (d) The expected imminent losses (or losses actually incurred) must be proven by sufficient and convincing evidence (Based on Catatista vs. NLRC, 247 SCRA 46).

Serious Business LossesAre terminated employees of a company due to serious business losses entitled to separation pay benefits accorded by Art. 283 of the Code? No. This issue was squarely ruled by the Supreme Court en banc in the case North Davao Mining Corporation, Inc., et. al., vs. NLRC, G.R. No. 112546, 13 March 1996, when it succinctly declared that the employer is not liable to pay separation pay when the closure or cessation of business operations is due to serious business losses or financial reverses. Payment of separation pay under Art. 283 of the labor Code is justified if the closure or cessation of business operations is not due to serious business losses or financial; reverses. In this case, the Court stated that “one cannot squeeze blood out of a


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dry stone” nor “water out of parched land.”In two earlier cases notably: Bank Filipino Savings and Mortgage Bank, et. al., vs. NLRC, et. al., G. R. No. 82135, 20 August 1990 and International Hardware, Inc. vs. NLRC, G. R. No. 80770, 10 August 1989, the Court ruled that the employees of the bank are entitled to separation pay citing Art. 283 even if the closure was due to serious business losses which was based on social justice and equity.

Sale or Transfer of Business

It is generally recognized rule that the sale or transfer of business is recognized as within the sphere of management prerogative and if exercised in good faith and not tainted with unfair labor practice, the same should be upheld as a valid transaction. On the basis of jurisprudence, it is likewise recognized that the buyer or the transferee of business, as a rule, is not liable to absorb the employees of the transferor corporation. This is so, because there is no law requiring a bona-fide purchaser of an on-going concern to absorb in its employ, the employees of the latter and to continue enjoying them. Unless the sale or transfer was made in bad faith, the liabilities of the old owner of the business establishment to his employees before the sale, are not enforceable against the buyer or transferee thereof (Yu, et. al., vs. The National Labor Relations Commission, et. al., G. R. Nos. 111810-11, 16 June 1995 and companion cases).The only exception herein is when there is stipulation in the sale or transfer of business or assets providing for the absorption or retention by the new buyer or owner of the employees of the old owner-employer. Such stipulation are deemed to be binding , valid and enforceable by the affected employees.If, however , the sale or transfer of business was tainted or clothed by bad faith, while the purchaser or new owner is

not duty bound legally to absorb the employees of the seller of the assets or the enterprise, the parties may be held liable to the employees. Thus, the transaction between the seller and the buyer-transferee corporations must be motivated in good faith as an element for exemption from liability(Associated Labor Unions-Vimcontu, et. al., NLRC, et. al., G. R. No. 74861 and ALU-Vimcontu, et. al., vs. Mobil Oil Philippines, et. al., G. R. No. 75667, 29 December 1991).

Q. How much can an employee terminated for an authorized cause get as separation pay?

A. It depends on the authorized cause:If the cause is automation, the separation pay is equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher.If the cause is redundancy, the separation pay is equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher.If the cause is retrenchment, the separation pay is equivalent to one month pay or at least one-half month pay for every year of service, whichever is higher.If the cause is closure or cessation of operations not due to serious business losses or financial reverses, the separation pay is equivalent to one month pay or at least one-half month pay for every year of service, whichever is higher.If the cause is disease, the separation pay is equivalent to at least one-month salary or to ½ month salary for every year of service, whichever is greater. A fraction of at least 6 months shall be considered one (1) whole year.

NOTES: ARTICLE 283 governs the grant of separation benefits ‘in case of closures or cessation of operation’ of business establishments NOT due to serious business losses or cessation of operation


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[North Davao Mining Corp. vs. NLRC, et al]. Therefore, the employee is not entitled to such benefit if the closure was due to SERIOUS BUSINESS LOSSES.When termination of employment is brought by the failure of an employee to meet the standards of the employer in case of probationary employment, it shall be sufficient that a written notice is served the employee within a reasonable time from the effective date of termination.When termination is brought about by the completion of the contract or phase thereof, no prior notice is required

Q. May termination be made by the employee?A. Yes. But the manner depends where there is just cause or not.a. WITHOUT A JUST CAUSE- by serving a WRITTEN NOTICE on the employer at least one month in advance. . The employer upon whom no such notice was served may hold the employee liable for damages.b. WITH A JUST CAUSE - An employee may put an end to establish WITHOUT SERVING ANY NOTICE on the employer.


3. TERMINATION BY EMPLOYEEWITHOUT JUST CAUSE- by serving a

WRITTEN NOTICE on the employer at least one month in advance. The employer upon whom no such notice was served may hold the employee liable for damages.

WITH JUST CAUSE - An employee may put an end to employment WITHOUT SERVING ANY NOTICE on the employer for any of the following just causes:1. SERIOUS INSULT by the employer or

his representative on the hour and person of the employee;

2. Inhuman and UNBEARABLE TREATMENT accorded the employee by the employer or his representative;

3. Commission of a CRIME OR OFFENSE by the employer or his representative against the person of the employee or any of the immediate members of his family; and

4. Other causes ANALOGOUS to any of the foregoing.

4. DISMISSAL, PRESENCE OF JUST/AUTHORIZED CAUSE AND DUE PROCESS

Four possible situations under AGABON vs. NLRC, November 17, 2004:

If dismissal is for a just/authorized cause and due process was observed- dismissal is valid and employer will not suffer any liability.

If dismissal is without just/authorized cause but due process was observed – dismissal is illegal, apply Art 279 regarding reinstatement and backwages.

If dismissal is without just/authorized cause and without due process- dismissal is illegal, apply Art. 279 regarding reinstatement and backwages.

Dismissal is for just/authorized cause but due process was not observed – Dismissal is valid. However, Sanctions must be imposed on the employer. Such sanctions must be stiffer than that imposed in Wenphil.

Under the WENPHIL DOCTRINE, if the services of the employee was terminated due to a just or authorized cause but the affected employee’s right to due process has been violated, the dismissal is legal but the employee is entitled to damages by way of indemnification for the violation of the right.

SERRANO vs. ISETANN et al. abandoned the Wenphil doctrine and ruled that if the


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employee is dismissed under just or authorized cause but the affected employee’s right to due process has been violated, his dismissal becomes ineffectual. Therefore, the employee is entitled to backwages from the time he was dismissed until the determination of the justness of the cause of the dismissal.

The most recent case of AGABON vs. NLRC abandoned the Serrano doctrine and REINSTATED THE WENPHIL DOCTRINE. The sanctions however must be stiffer than that imposed in Wenphil.

The Court in the case of JAKA FOOD PROCESSING CORP. vs. PACOT et al., March 28, 2005, said that “If the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and

If the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employer’s exercise of his management prerogative.”

5. What is the TOTALITY OF INFRACTIONS DOCTRINE?

Where the employee has been found to have repeatedly incurred several suspensions or warnings on account of violations of company rules and regulations, the law warrants their dismissal as akin to “HABITUAL DELINQUENCY” (Villeno vs. NLRC, 251 SCRA 494)

6. When is the STRAINED RELATIONSHIP RULE APPLICABLE?

Strained relationship may be invoked ONLY AGAINST EMPLOYEES WHOSE POSITIONS DEMAND TRUST AND CONFIDENCE or whose DIFFERENCES WITH THEIR EMPLOYER ARE OF SUCH NATURE OR DEGREE AS TO PRECLUDE REINSTATEMENT (Dimabayao vs. NLRC, 303 SCRA 655).

It does not apply to ULP cases where the employee was dismissed for union activities.

7. RETIREMENT (R.A 7641, approved on December 9, 1992 – it has a retroactive effect being a curative social legislation)

a) Compulsory – upon reaching 65 years of age; with at least 5 years of service

b) Optional – upon reaching 60 years of age; with at least 5 years of service; at the option of the employee

Components of Retirement Pay: 15 days based on the

employee’s latest salary 1/12 of the 13th month pay cash equivalent of the 5 days

service incentive leaveComputation: 22.5 days x number of years of service

{22.5 days: 15 days plus 2.5 days representing 1/12 of the 13th month pay plus 5 days of service incentive leave}

JURISDICTIONS, REMEDIES, ACTIONS AND PROCEEDINGS

1. LABOR ARBITERSOriginal and exclusive jurisdiction to hear and decide, within 30 calendar days:

ULP cases; TERMINATION disputes; If accompanied WITH A CLAIM

FOR REINSTATEMENT, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;

Claims for actual, moral, exemplary and other forms of DAMAGES arising from employer-employee relations;

CASES ARISING FROM ANY VIOLATION OF ART 264 of this Code, including questions involving the legality of strikes and lockouts;


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Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, ALL OTHER CLAIMS ARISING FROM EMPLOYER-EMPLOYEE RELATIONS, including those of persons in domestic or household service, involving an amount exceeding P5, 000.00 regardless of whether accompanies with a claim for reinstatement; and

MONETARY CLAIMS OF OVERSEAS CONTRACT WORKERS under the Migrant Workers Act of 1995.

Claims of employees against GOCCs WITHOUT ORIGINAL CHARTER and has been incorporated under the Corporation Code.

(NOTE: Although the provision speaks of EXCLUSIVE AND ORIGINAL JURISDICTION OF labor arbiters, the cases enumerated may instead be submitted to a voluntary arbitrator by agreement of the parties under Art. 262. The law prefers voluntary over compulsory arbitration.)

2. NLRC DIVISIONOriginal and exclusive:

Cases certified to it for compulsory arbitration by the Secretary of Labor under Art. 263 – CERTIFIED CASES;

INJUNCTION CASES under Art. 218 and 264; AND

CONTEMPT CASES

Exclusive appellate: Cases DECIDED BY LABOR ARBITERS

under Art 217b of the Labor Code and Sec 10 RA 8012 (Migrant Workers Act); and

Cases DECIDED BY THE REGIONAL OFFICES OF DOLE IN THE EXERCISE OF ITS ADJUDICATORY FUNCTION under Art 129 of the Labor Code over monetary claims of

workers amounting to not more that P5,000.00

3. BUREAU OF LABOR RELATIONSOriginal and exclusive

INTRA- union conflicts INTER- union conflicts all DISPUTES, GRIEVANCES OR

PROBLEMS ARISING FROM OR AFFECTING LABOR MANAGEMENT RELATIONS IN ALL WORKPLACES WHETHER AGRICULTURAL OR NON-AGRICULTURAL.

(Note: The parties may however, by agreement, settle their differences by submitting their case to a voluntary arbitrator rather than taking the case to the BLR.)

4. NATIONAL CONCILIATION AND MEDIATION BOARD

(Absorbed the conciliation, mediation and voluntary arbitration functions of the BLR.)

Functions: Formulate policies, etc.

pertaining to effective mediation and conciliation of labor disputes.

Perform preventive mediation and conciliation functions

Coordinate and maintain linkages with other sectors or institutions concerned with matters relative to the prevention and settlement of labor disputes.

Formulate policies, etc, pertaining to the promotion of cooperative and non-adversarial schemes, grievance handling, voluntary arbitration and other voluntary modes of dispute settlement.

Administer voluntary arbitration program

Provide counseling and preventive mediation assistance


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Monitor and exercise technical supervision over Board programs implemented in the regional offices.

Perform such other functions as may be provided by law or assigned by the Secretary of Labor.

5. GRIEVANCE MACHINERY Interpretation and

implementation of CBA Interpretation and enforcement

of company personnel policies

6. VOLUNTARY ARBITRATOR Unresolved grievances from the

Grievance machinery: Interpretation and

implementation of CBA Interpretation and enforcement

of company personnel policies Wage distortion issues arising

from the application of any wage orders in organized establishments

Unresolved grievances arising from the interpretation and implementation of productivity incentive programs.

Other labor disputes by agreement of the parties


7. MED-ARBITER

1. Hear, conciliate, and decide representation cases2. Assist in the disposition of intra or inter-union disputes.

8. VOLUNTARY ARBITRATORS, APPEAL OF DECISION

Appeals from decisions of voluntary arbitrators may be filed with the Court of

Appeals, under Rule 43 of the Revised Rules of Court. Motion for Reconsideration no longer allowed by Book V Rules from decisions of Voluntary arbitrators.

9. How is an appeal perfected from Labor Arbiter to NLRC?

An appeal to the NLRC is perfected once an appellant FILES THE MEMORANDUM OF APPEAL, PAYS THE REQUIRED APPEAL FEE and when a monetary award is involved, the latter POSTS AN APPEAL BOND or SUBMITS A SURETY BOND issued by a reputable bonding company (Soliman Security Services vs. CA, 384 SCRA 514)

SUMMURY PF PROCEDURES IN VARIOUS LABOR AGENCIES

THE LAW ON VISITORIAL, INSPECTION AND THE ENFORCEMENTPOWER OF THE SECRETARY OF LABOR AND HIS DULY AUTHORIZED REPRESENTATIVE

Q: Describe briefly the Visitorial Power of the Secretary of Labor.

A: The visitorial power of the Secretary of Labor or any of his duly authorized representative refers to the power to have access to employer’s records and premises at any time of the day or night whenever work is being undertaken therein.

It includes the right to copy therefrom, to question any employee & investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of the Code and of any labor law, wage order, or rules and regulations.

The Secretary’s “duly authorized representative” herein is the Regional Director, the Labor Regulations Officer or the Labor Employment or Enforcement or Safety Officer.

Q: Briefly describe the enforcement power of the Secretary of Labor.


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A: This refers to the power of the Secretary of Labor to compel the employer to comply with labor standards upon findings of violations discovered in the course of the exercise of his visitorial power.

Among these powers are the power to:

Issue Compliance Orders based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection

Issue Writs of Execution for the enforcement of orders except in cases where the employer contests the findings of the said labor officers and raises issues supported by documentary proofs which were not considered in the course of inspection

Order Work Stoppage/Suspension of Operations when non-compliance with the law or implementing rules and regulations poses grave & imminent danger to the health and safety of the workers in the workplace.

Conduct hearings within 24 hours to determine whether

an order for stoppage of work/suspension of operations shall be lifted or not.

employer shall pay the employees concerned their salaries in case the violation is attributable to his fault

The Secretary may require employers to keep and maintain Employment Records as may be necessary in aid of his visitorial and

enforcement powers (exercised through the regional directors of DOLE).

The exercise of the above mentioned powers requires an existing employer-employee relationship.

Q: A, B and C are employees of ABC Corporation. They filed complaints for non-payment of salaries, which is in the nature of a labor standards violation case, in the amount of P 4,000.00, P 7,500.00 and P 10,000.00, respectively.

Does the Secretary of Labor have jurisdiction over the claims of A, B and C?

A: Yes. The Secretary of Labor, through the Regional Director, has jurisdiction over the claims of A, B and C who are still presently employed by ABC Corporation . Republic Act No. 7730 removed the limit of P 5,000.00 in 1994 based on the Supreme Court ruling ruling in Servandos, Inc. vs. The Secretary of Labor.

Q: What will be the procedure to be followed in the case presented in the preceding problem?

A: The procedure shall be as follows:

a) An inspection order will be issued by the Regional Director to a Labor Regulations Officer.

b) The Labor Relations Officer will then inspect the premises of the employer, and ask that the records be produced. He will also conduct inquiries from the employees.

c) If the Labor Relations Officer finds that there were indeed violations of Labor Standard Laws, he will furnish a report to the Regional Director and to the employer.

d) If the employer does not do anything within the reglementary period within which to contest the findings, the Regional Director continues to have jurisdiction over the claims.

Q: What must the employer do in order to divest the Regional Director of his


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jurisdiction over the case and transfer it to the Labor Arbiter?

A: In order to divest the Regional Director of his jurisdiction, the employer must:

a) contest the findings of the Labor Relations Officer;

b) raise the issue that there is a need to thresh out evidentiary matters;

c) show that such evidentiary matters cannot be obtained in the ordinary course of inspection.

THE JURISDICTION OF THE REGIONAL DIRECTOR ( ART. 129 Labor Code) AND THE LABOR ARBITER (ART. 217 (a) (6), Labor Code) IN THE ADJUDI9CATION OF MONEY CLAIMS.

Q: Describe briefly the adjudicatory power of the Secretary of Labor exercised through the Regional Director.

A: The Regional Director or any of his duly authorized hearing officer is empowered through summary proceeding and after due notice, to hear and decide cases involving recovery of wages and other monetary claims and benefits, including legal interests.

REQUISITES:

1. The claim is presented by an employee or person employed in domestic or household service or househelper;

2. The claim arises from employer-employee relations;

3. The claimant does not seek reinstatement; and

4. The aggregate money claim of each employee or househelper does not exceed P5, 000.00

In the absence of any of the above mentioned requisites, it is the labor arbiter who shall have exclusive jurisdiction over claims arising from employer – employee relations, except claims for employees’ compensation, SSS, medicare and maternity benefits, pursuant to Article 217 of the Labor Code as amended.

Labor Arbiter’s jURISDICTION

Q. What are cases within the jurisdictional mandate of the Labor Arbiters?A. The exclusive and original jurisdiction of labor arbiters is based on Art. 217 (a) (6),which provides :- Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within 30 calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:

1. ULP cases;2. TERMINATION disputes;3. If accompanied WITH A CLAIM FOR REINSTATEMENT, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;4. Claims for actual, moral, exemplary and other forms of DAMAGES arising from employer-employee relations;5. Cases arising from any violation of Art 264 of this Code, including questions involving the legality of strikes and lockouts; 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding P5,000.00 regardless of whether accompanies with a claim for reinstatement; 7. Monetary claims of overseas contract workers under the Migrant Workers Act of 1995; and8. Claims of employees against GOCCs if the latter does not have an original charter and has been incorporated under the Corporation Code.

NOTES: Although the provision speaks of EXCLUSIVE AND ORIGINAL JURISDICTION of labor arbiters, the cases enumerated may instead be submitted to a voluntary arbitrator by agreement of the parties under Art 262.


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The law prefers voluntary over compulsory arbitration.

JURISPRUDENCE:

EDUARDO G. EVIOTA vs. COURT OF APPEALS [2004]Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter. A money claim by a worker against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter only if there is a “reasonable causal connection” between the claim asserted and employee-employer relation. Absent such a link, the complaint will be cognizable by the regular courts of justice

Q. What cases must be disposed of by the labor arbiter by referring the same to the grievance machinery and voluntary arbitration?A. Cases which must be disposed of by the labor arbiter by referring the same to the grievance machinery and voluntary arbitration: a. Disputes on the interpretation or implementation of CBA andb. those arising from the interpretation or enforcement of company personnel policies.

NOTES: The Labor Arbiter and the NLRC

have no jurisdiction over claims filed by employees against international agencies such as IRRI, WHO etc. unless they expressly waive their immunity. (Lasco vs. Unrfnre)

They also have no jurisdiction over illegal dismissal cases of corporate officers which fall under PD 902-A and now fall under the jurisdiction of the regular courts pursuant to the new Securities Regulation Code. [formerly under the jurisdiction of the Securities and Exchange Commission

(SEC) (Dily-Daly Nakpil vs NLRC)]

Q. What is compulsory arbitration?A. Compulsory arbitration is the process of settlement of labor disputes by a government agency which has the authority to investigate and make and award binding to the parties.The NLRC may conduct compulsory arbitration only in national interest cases referred to it by the DOLE Secretary. Q. What is the meaning of the excepting phase “except as otherwise provided under this Code” in Art. 217 (a) of the Labor Code, as amended?A. It simply means that any or all the cases mentioned in the same article as falling within the jurisdiction of the Labor Arbiters can, by agreement of the parties, be presented and decided with finality by a voluntary arbitrator or panel of voluntary arbitrators.

Q. What are cases within the original and exclusive jurisdiction of the NLRC Division?A. The cases that are within the exclusive and original jurisdiction of the NLRC, are as follows:1. Cases CERTIFIED to it for compulsory

arbitration by the Secretary of Labor under Art. 263 (g), which are ed cases denominated as certified cases;

2. Injunction cases under Art. 218 and 264; and

3. Contempt cases

JURISDICTION OF THE NLRC

Q. What cases are within the exclusive appellate jurisdiction of the NLRC?A. They are:1.Cases decided by labor arbiters under Art 217b of the Labor Code and Sec 10 RA 8012(Migrant Workers Act); and2. Cases decided by the regional office of DOLE in the exercise of its adjudicatory function under Art 129 of the Labor Code over monetary claims of workers amounting to not more that p5,000.00


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Q. What are the Labor Code provisions related to Art. 217 of the Labor Code, as amended?A. See Articles 261 and 262 on Voluntary Arbitration.

Q. What are the powers of the Commission under the Art. 218 of the Labor Code, as amended?

A. The powers of the Commission are outlined hereunder, thus: 1, Rule-making power [promulgation of rules & regulations governing disposition of cases before any of its divisions/regional offices]

Power to issue compulsory processes [administer oaths, summon parties, issue subpoenas]

Power to investigate matters and hear disputes within its jurisdiction [adjudicatory power—original & appellate jurisdiction over cases]

Contempt power [218]; and Power to issue injunctions and

restraining orders

CONTEMPT POWER

Q. Are the NLRC Divisions or the Labor Arbiters clothed with contempt powers?A. Yes. Under the NLRC Rules of Procedure, the NLRC Divisions or the Labor Arbiters may summarily adjudge any person guilty of DIRECT CONTEMPT.

Likewise, the Commission or the Labor Arbiter may also cite any person for INDIRECT CONTEMPT upon grounds and in the manner prescribed under Rule 71 of the Rules of Court.

Q. Explain why contempt cases are both within the appellate and original jurisdiction of the NLRC.A. Under its contempt power, the NLRC can hold any person liable for direct or indirect

contempt. In this instance, the contempt case is within the original jurisdiction of NLRC.

Likewise, Any person adjudged guilty of direct contempt by a Labor Arbiter may, within a period of 5 calendar days from notice of the judgement, appeal to the Commission. In this instance, the contempt case is within the appellate jurisdiction of the NLRC

Q. What is the procedure for the issuance of restraining order/ injunction?A. The procedure shall be as follows:a. filing of a verified petition b. hearing after due and personal notice has been served in such manner as the Commission shall direct, to:

all known persons against whom the relief is sought and

also to the Chief Executive or other public officials of the province or city within which the unlawful acts have been threatened or committed charged with the duty to protect the complainant’s property

c. reception at the hearing of the testimonIES of witnesses with opportunity for cross- examination, in support of the allegations of the complaint made under oath as well as testimony in opposition theretod. finding of fact of the Commission to the effect that :

prohibited or unlawful acts have been threatened and will be committed, or have been committed and will be continued unless restrained, but no injunction or temporary restraining order shall be issued on account of any threat, prohibited or unlawful act, except against the persons, association or organization making the threat or committing the prohibited or unlawful act or actually authorizing or ratifying the same after actual knowledge thereof.


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That substantial and irreparable injury to the complainant’s property will follow

That as to each item of relief to be granted, greater injury will be inflicted upon complainant by the denial of the relief than will be inflicted upon the defendants by the granting of the relief

That complainants has no adequate remedy at law

That public officers charged with the duty to protect complainant’s property are unable or unwilling to furnish adequate protection.

e. Posting of a bond

Q. What is irreparable injury?

A. An injury which cannot be adequately compensated in damages due to the nature of the injury itself or the nature of the right or property injured or when there exists no pecuniary standard for the measurement of damages.

Q. What is “adequate remedy?”

A. One that affords relief with reference to the matter in controversy and which is appropriate to the particular circumstances of the case.

NOTE: The power of the NLRC to enjoin or restrain the commission of any or all prohibited or unlawful acts under Art. 218 of the Labor Code can only be exercised in a labor dispute.

Q. What are the requisites before a TRO may be issued ex parte?

A. They are the following: 1. The complainant shall allege that, unless a

TRO is issued without notice, a substantial and irreparable injury to complaint’s property will be unavoidable;

2. testimony under oath is sufficient, if sustained, to justify the Commission in issuing a temporary injunction upon hearing after notice;

3. The complainant shall first file an undertaking with adequate security/bond in an amount to be fixed by the Commission sufficient to recompense those enjoined for any loss, expenses or damage caused by the improvident or erroneous issuance of such order or injunction, including all reasonable costs, together with a reasonable attorney’s fee, and expense of defense against the granting of any injunctive relief sought in the same proceeding and subsequently denied by the Commission.

The TRO shall be effective for no longer than 20 days and shall become void at the expiration of said 20 days counted from the date of the posting of the bond.

It may be lifted or it may be upgraded to a permanent injunction.

The procedural and substantial requirements of Art 218 (e) must be strictly complied with before an injunction may issue in a labor dispute.

THE NLRC’S INJUNCTION POWER

Q. Is the NLRC Division empowered to issue injunctions and temporary restraining orders?A. Yes. But the authority of the NLRC to issue injunction is conditioned upon the existence of a labor dispute. Absent a labor dispute, the authority to issue injunction belongs to the regular courts.

Q. Is the Labor Arbiter granted the power to issue injunctions and temporary restraining orders?A. No. Such power is reserved only to the Commission.


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Q.In labor disputes, who can issue injunction/TRO?A. The President, Secretary of Labor, NLRC, the Regional Directors and the Med-Arbiters.

Q. What is the ruling of the Supreme Court on the issuance of injunctions and temporary restraining orders ex parte?A. The issuance of a temporary restraining order ex parte is not per se prohibited. Its issuance, however, should be characterized by care and caution. The law requires that it be clearly justified by considerations of extreme necessity. (Bisig ng Manggagawa sa Concrete Aggregates, Inc. v NLRC, GR No. 105090, September 16, 1993).

THE BUREAU OF LABOR RELATIONSAND THE NCMB

Q. What is the jurisdictional mandate of the Bureau of Labor Relations (BLR)? A. The Bureau of Labor Relations, together with the Labor Relations Divisions in the DOLE Regional Offices of the Department of Labor and Employment, shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on the following matters.

(a) On all intra and inter-union conflicts; and

(b) All disputes, grievances or problems arising from or affecting labor-management relations in all workplaces whether agricultural or non-agricultural, except from those arising from the implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration.

NOTES: Under the last paragraph of Art. 226, the Bureau shall have fifteen (15) days to act on all labor cases before it, subject to extension by agreement of the parties (as amended by Sec. 14, Rep. Act. 6715).

Pursuant to E.O. No. 126, the NATIONAL CONCILIATION AND MEDIATION BOARD (NCMB) has absorbed the conciliation, mediation and voluntary arbitration functions of the BLR.The jurisdiction over labor-management problems or disputes is also exercised by other offices such as the DOLE regional offices, and the Office of the Secretary, NLRC, POEA, OWWA, SSS-ECC, the regional wage and productivity boards, NWPC, and even the regular courts over intra-corporate disputes.

Q. What cases are within the exclusive and original jurisdiction of the BLR?A. The BLR has jurisdiction to act at its own initiative or upon the request of either or both parties on all:1. intra- union conflicts2. inter- union conflicts3. all disputes, grievances or problems

arising from or affecting labor management relations in all workplaces whether agricultural or non-agricultural.

NOTES: The parties however, may opt by agreement, to settle their differences by submitting their case to a voluntary arbitrator rather than taking the case to the BLR. The BLR has no jurisdiction on those arising from the implementation or interpretation of collective bargaining agreements which shall be subject of grievance procedure and/or voluntary arbitration.

INTER/INTRA-UNION DISPUTES(Sec. 1 Rule XI of Dept. Order No. 40-03)

Q. What are intra-union disputes? A. Intra-union disputes refer to any conflict between and among union members, including grievances arising from any violation of the rights and conditions of membership, violation of or disagreement over any provision of the union’s constitution and by-laws, or disputes arising from chartering or affiliation.


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Q. Who is a Med-Arbiter? A. A MED-ARBITER is an officer in the DOLE regional office or bureau authorized to hear, conciliate, and decide representation cases or assist in the disposition of intra or inter-union disputes. Q. What is the coverage of inter/intra-union disputes under Sec. 1 Rule XI DO 40-03? A. The coverage of inter/intra-union disputes include:

cancellation of registration of a labor organization filed by its members or by any other labor organization;

conduct of election of union and worker’s association officers/nullification of election of union and worker’s association officers;

audit/accounts examination of union or worker’s association funds;

deregistration of CBA; validity/invalidity of union

affiliation or disaffiliation; validity/invalidity of

acceptance/non-acceptance for union membership;

validity/invalidity of impeachment/ expulsion of union and worker’s association officers;

validity/invalidity of voluntary recognition;

opposition to application for union and CBA registration;

violations of or disagreements over any provision in a union or worker’s association constitution and by-laws;

disagreements over chartering or registration of labor organizations and CBAs;

violations of the rights and conditions of union or worker’s association membership;

violations of the rights of legitimate labor organizations, except interpretation of CBAs;

such other disputes or conflicts involving the rights to self-organization, union membership, and collective bargaining –

1. between and among legitimate labor organizations2. between and among members of a union or worker’s association

Q. What is further included in the extended coverage pursuant to Section 2, Rule XI under DO 40-03 or the New Book V Rules?A. This includes other related labor relations disputes shall include any conflict between a labor organization and the employer or any individual, entity, or group that is not a labor organization or worker’s association.

cancellation of registration of unions and workers associations; and

a petition for interpleader

Q. What are the special requirements as to the filing of cases?A. On those involving entire membershipThe complaint must be signed by at least 30% of the entire membership of the union andIt must also show exhaustion of administrative remedies.

On those involving a member only - In such case only the affected member may file the complaint.NOTES: Redress must first be sought within the union itself in accordance with its constitution and by-laws EXCEPT under any of the following circumstances:a. futility of intra-union remediesb. improper expulsion procedurec. undue delay in appeal as to constitute substantial injusticed. the action is for damagese. lack of jurisdiction of the investigating bodyf. action of the administrative agency is patently illegal, arbitrary, and oppressive


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g. issue is purely a question of lawh. where the administrative agency had already prejudged the casei. where the administrative agency was practically given the opportunity to act on the case but it did not. NOTE: Imposition of fees by the union affects the entire membership, and therefore requires that the complaint should be signed by at least 30% of the membership of the union.

Q. What are inter-union

disputes? A. These refer to any conflict

between and among legitimate labor organizations involving representation questions for purposes of collective bargaining or to any other conflict or dispute between legitimate labor organizations based on any violations of their rights as labor organizations.

Q. Who can file cases involving

inter-union disputes?

A. 1. For grounds under Sec. 1: any legitimate labor

organization member(s) thereof specially

concerned2. For grounds under Sec. 2—any party-in-interest These refer to any conflict between and among legitimate labor organizations involving

Q. Where are these cases filed?

A. 1. Regional Office that issued its certificate of registration or certificate of creation of chartered local- If it involves labor unions with independent registrations, chartered locals, worker’s association, its officers or members 2. Directly with the Bureau—If it involves a Federation/National

Unions/Industry Unions, its officers or members

Q. What are the formal requirements?

A. The formal requirements are as follows: in writing verified under oath contains the following

avermentsa. name, address and other personal circumstances of the complainant(s) or petitioner(s);b. name, address and other personal circumstances of the respondent(s) or person(s) charged;c. nature of the complaint or petition;d. facts and circumstances surrounding the complaint or petition;e. cause(s) of action or specific violation(s) committed;f. a statement that the administrative remedies provided for in the constitution and by-laws -have been exhausted or -such remedies are not readily available to the complainant(s) or petitioner(s) through no fault of his/their own or -compliance with such administrative remedies does not apply to complainant(s) or petitioner(s);g. relief(s) prayed for;h. certificate of non-forum shopping; andi. other relevant matters

Q. What are the effects of filing/pendency of inter/intra-union dispute and other labor relations disputes?

A. Under Section 3, Rule XI of DO 40-03or the New Book V Rules the effects are as follows:1. The rights, relationships and obligations of the parties litigants against each other and other parties-in-interest prior to the institution of the petition shall continue to remain during the pendency of the petition and until the date of finality of the decision rendered therein. Thereafter, the rights,


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relationships and obligations of the parties litigants against each other and other parties-in-interest shall be governed by the decision so ordered.2. The filing or pendency of any inter/intra-union disputes is not a prejudicial question to any petition for certification election and shall not be a ground for the dismissal of a petition for certification election or suspension of proceedings for certification election.

Q. Does the Med-Arbiter have the authority to determine the existence of an employer-employee relationship?

A. In the case of MY San Biscuits, Inc. vs. Laguesma G.R. No. 9511, 22 April 1991 the SC ruled that since the BLR has the original and exclusive jurisdiction to decide, inter alia, all disputes, grievances or problems arising from or affecting labor-management relations in all workplaces, necessarily, in the exercise of this jurisdiction over labor-management relations, the Med-Arbiter has the authority, original and exclusive, to determine the existence of an employer-employee relationship. In cases where there is overlapping of jurisdiction, determine the principal issue. The agency that has jurisdiction thereon may decide on the incidental issues.

Q. What are the administrative functions of the BLR?

A. They are as follows:1.The regulation of registration of the labor unions;2. The keeping of a registry of labor unions; 3. The maintenance of a file of CBAs; and4. The maintenance of a file of all settlements or final decisions of the Supreme Court, Court of Appeals, NLRC and other agencies on labor disputes.

Grievance Machinery and Voluntary Arbitration (Art. 260 to 262-B (Inclusive).

Q. What are the Constitutional and Statutory bases of Grievance Machinery and Voluntary Arbitration?

A. They are:1. Constitutional Basis.2. Statutory Basis.

“Art. 260. Grievance Machinery and Voluntary Arbitration. - The parties to a Collective Bargaining Agreement shall include therein provisions that will ensure the mutual observance of its terms and conditions. They shall establish a machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies.

All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days from the date of its submission shall automatically be referred to voluntary arbitration prescribed in the Collective Bargaining Agreement.

For this purpose, parties to a Collective Bargaining Agreement shall name and designate in advance a Voluntary Arbitrator or panel of voluntary Arbitrators, or include in the agreement a procedure for the selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators, preferably from the listing of qualified Voluntary Arbitrators duly accredited by the Board. In case the parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall designate the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be necessary, pursuant to the selection procedure agreed upon in the Collective Bargaining Agreement, which shall act with the same force and effect as if the Arbitrator or panel of Arbitrators has been selected by the parties as described above.”

“Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary Arbitrators. - the Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from


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the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement.

The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matter under the exclusive and original jurisdiction or the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement.”

“Art. 262. Jurisdiction Over Other Labor Disputes. - The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.”

“Art. 262-A. Procedures. - The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have the power to hold hearings, receive evidences and take whatever action is necessary to resolve the issue or issues subject of the dispute, including efforts to effect a voluntary settlement between parties.

All parties to the dispute shall be entitled to attend the arbitration proceedings. The attendance of any third party or the exclusion of any witness from the proceedings shall be determined by the voluntary Arbitrator or panel of Voluntary Arbitrators. Hearing may be adjourned for cause or upon agreement by the parties.

Unless the parties agree otherwise, it shall be mandatory for the Voluntary Arbitrator or panel of Voluntary

Arbitrators to render an award or decision within twenty (20) calendar days from the date of submission of the dispute to voluntary arbitration.

The award or decision of the Voluntary Arbitrator or panel of Voluntary Arbitrators shall contain the facts and the law on which it is based. It shall be final and executory after ten (10) calendar days from receipt of the copy of the award or decision by the parties.

Upon motion of any interested party, the Voluntary Arbitrator or the panel of Voluntary Arbitrators or the Labor Arbiter in the region where the movant resides, in case of the absence or incapacity of the Voluntary Arbitrator or panel of Voluntary Arbitrators, for any reason, may issue a writ of execution requiring either the sheriff of the Commission or regular courts or any public official whom the parties may designate in the submission agreement to execute the final decision, order or award.”

“Art. 262-B. Cost of Voluntary Arbitration and Voluntary Arbitrators fee. - The parties to a collective Bargaining Agreement shall provide therein a proportionate sharing scheme on the cost of voluntary arbitration including the Voluntary Arbitrator’s fee. The fixing of fee of Voluntary Arbitrators, whether shouldered wholly by the parties or subsidized by the Special Voluntary Arbitration Fund, shall take into account the following factors:

(a) Nature of the case;(b) Time consumed in

hearing the case;(c) Professional standing of

the Voluntary Arbitrator;(d) Capacity to pay of the

parties; and(e) Fees provided for in the

Revised Rules of Court.”

Q. What is a grievance machinery? A. It is a mechanism for the

adjustment of controversies or disputes arising from the interpretation or implementation of the CBA and


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the interpretation or enforcement of company personnel policies

Q. What is a grievance?

A. Grievance arises when a dispute or controversy arises over the implementation or interpretation of a CBA or from the implementation or enforcement of company personnel policies, and either the union or the employer invokes the grievance machinery provision for the adjustment or resolution of such dispute or controversy.

Q. What is its nature?

\A. It is a “must” provision in any CBA and no collective agreement can be registered in the absence of such procedure.

It is a part of the continuous process of collective bargaining intended to promote a friendly dialogue between labor and management as a means of maintaining industrial peace.

Q. What is voluntary arbitration?

A. It is a contractual proceedings where parties to a dispute select a judge of their own choice and by consent submit their controversy to him for determination.

All grievances not settled within 7 days from the date of its submission to the grievance machinery shall automatically be referred voluntary arbitration prescribed in the CBA.

NOTE: Although the provision mentions “parties to a collective bargaining agreement,” it does not mean that a grievance machinery cannot be set up in a CBA-less enterprise. In any work place where grievance can arise, a grievance machinery (regardless of name) can be established.In a unionized company, Art. 255 allows an employee, union member or not, to raise a grievance directly to the employer.

Q. How may arbitration be initiated?

A. Through any of the following:1. Submission Agreement – where the parties define the disputes to be resolved; or2. Demand or Notice invoking a collective agreement arbitration clause.

Q. What is the jurisdiction of Voluntary Arbitrators?

A. JURISDICTION OF VOLUNTARY ARBITRATORS:

1. EXCLUSIVE ORIGINAL JURISDICTION CONFERRED BY LAW

a) All grievances arising from the interpretation or implementation of the CBA.

b) Those arising from the interpretation or enforcement of company personnel polices.

c) Hear and decide wage distortion issues arising from the application of any wage orders in organized establishments.

d) Unresolved grievances arising from the interpretation and implementation of the productivity incentive programs under RA 6071 .

NOTE: It is the labor arbiter and not the grievance machinery which has jurisdiction over dismissals pursuant to the union security clause.Violations of CBA, except those which are gross in character, shall no longer be treated as ULP and shall be resolved as grievances.

Q. What is gross violation of the CBA?

A. It is the flagrant and/or malicious refusal to comply with the economic provisions of the CBA.

1. JURISDICTION BY AGREEMENT OF THE PARTIES (Art. 262)

-all other disputes including ULP and bargaining deadlocks

NOTES: The disputes the parties may submit to a Voluntary Arbitrator can include any or all the disputes mentioned in Art. 217 which


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otherwise fall under the exclusive jurisdiction of a labor arbiter.Voluntary arbitration may be viewed as a master procedure to prevent or resolve labor disputesQ. What are the grounds for judicial review of decisions of voluntary arbitrators?

A. They are:1. Lack of jurisdiction2. Grave abuse of discretion3. Violation of due process4. Denial of substantial justice5. Erroneous interpretation of the law

NOTE: A voluntary arbitrator is a “quasi-judicial instrumentality (Sec 9 BP129 as amended by RA 7902);” hence, a petition for certiorari under Rule 65 of the Rules of Court will lie where a grave abuse of discretion or an act without or in excess of jurisdiction of the voluntary arbitrator is shown, which may be filed with the Court of Appeals

.

Q. Compare economic strike from a political strike.A. AS TO THEIR NATURE, an economic strike is a voluntary strike because the employee will declare a strike to compel management to grant its demands. On the other hand, a political strike is an involuntary strike; the labor organization is forced to go on strike because of the ULP committed against them by the employer. It is an act of self-defense since the employees are being pushed to the wall and their only remedy is to stage a strike.

AS TO WHO INITIATES THE STRIKE, an economic strike is initiated by the collective bargaining agent of the appropriate bargaining unit. A political strike is initiated by either the collective bargaining agent or the legitimate labor organization in behalf of its members.

AS TO THE COOLING OFF PERIOD, an economic strike must have a cooling off period of 30 days from the filing of the notice

of strike before the intended date of actual strike subject to the 7-day strike ban. In a political strike, the cooling off period is 15 days from the filing of the notice of strike.

AS TO EXCEPTIONS TO THE COOLING OFF PERIOD, there are no exceptions in an economic strike. On the other hand, in a political strike, the cooling off period may be dispensed with, and the union may take immediate action in case of dismissal from employment of their officers duly elected in accordance with the union’s Constitution and By-laws, which may constitute union busting where the existence of the union is threatened. but it must still observe the mandatory 7-day period before it can stage a valid strike.

AS TO STRIKE DURATION PAY IN CASE THE STRIKE WAS LEGAL, Those participating in an economic strike are not entitled to said pay, based on the principle that a ‘fair day’s wage accrues only for a fair day’s labor.’ On the other hand, those participating in a political strike may be awarded the said pay in the discretion of the authority deciding the case.

Q. What are characteristics of strikes?A. They are as follows:1. there must be an established relationship between the strikers and the person/s against whom the strike is called2. the relationship must be one of employer and employee3. the existence of a dispute between the parties and the utilization by labor of the weapon of concerted refusal to work as a means of persuading or coercing compliance with the working men’s demands4. the contention advanced by the workers that although the work ceases, the employment relation is deemed to continue albeit in a state of belligerent suspension5. there is work stoppage, which stoppage is temporary6. the work stoppage is done through the concerted action of the employees7. the striking group is a legitimate labor organization, and in case of bargaining deadlock, is the employees’ sole bargaining representative.


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Q. What are the tests in determining the legality of a strike?A. They are:1. Purpose Test2. Compliance with Procedural and substantive requirements of law3. Means employed test

Q. What is purpose test?A. It means that the strike must be due to either

bargaining deadlock and/or unfair labor practice.

Q. What are the procedural requirements of law that must be complied with?A. They are:a. notice of strikeb. 30/15-day cooling-off period before the intended date of actual strike subject to the 7-day strike ban. c. strike vote d. 7-day strike ban

Q. What is a cooling off period?A. It is that period of time given the NCMB to mediate and conciliate the parties.It is that span of time allotted by law for the parties to settle theirdisputes in a peaceful manner, before staging a strike or lockout.

Q. What is a strike vote?A. – It is a requirement wherein the decision to declare a strike must be:1. approved by a majority of the total union

membership in the bargaining unit concerned [not of the whole bargaining unit],

2. obtained by secret ballotin meetings or referenda called for the purpose.

Q. What is the purpose of a strike vote?A. To ensure that the intended strike is a majority decisionNOTE: The report on the strike vote must be submitted to the DOLE at least 7 days before the intended strike subject to the cooling-off period.

Q. What is the 7-day strike ban?A. It is the 7 day waiting period before the date of the purported strike [within which the union intending to conduct a strike must at least submit a report to the Department as to the result of the strike vote] intended to give the Department an opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members in addition to the cooling off period before actual strike.

Q. What are cases of note, on strikes?A. They are as follows:

BUKLURAN NG MANGGAGAWA SA CLOTHMAN KNITTING CORP. - SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (BMC-SUPER) et al vs. COURT OF APPEALS[G.R. No. 158158. January 17, 2005; 448 SCRA 642]In order for a strike to be valid, the following requirements laid down in paragraphs © and (f) of Article 263 of the Labor Code must be complied with: (a) a notice of strike must be filed; (b) a strike-vote must be taken; and (c) the results of the strike-vote must be reported to the DOLE. It bears stressing that these requirements are mandatory, meaning, non-compliance therewith makes the strike illegal. The evident intention of the law in requiring the strike notice and strike-vote report is to reasonably regulate the right to strike, which is essential to the attainment of legitimate policy objectives embodied in the law.

CAPITOL MEDICAL CENTER, INC. vs. NATIONAL LABOR RELATIONS COMMISSION [G.R. No. 147080. April 26, 2005]Aside from the mandatory notices embedded in Article 263, paragraphs © and (f) of the Labor Code, a union intending to stage a strike is mandated to notify the NCMB of the meeting for the conduct of strike vote, at least twenty-four (24) hours prior to such meeting. Unless the NCMB is notified of the date, place and time of the meeting of the union members for the conduct of a strike vote, the NCMB would be unable to supervise the


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holding of the same, if and when it decides to exercise its power of supervision.

The purpose of the strike vote is to ensure that the decision to strike broadly rests with the majority of the union members in general and not with a mere minority, and at the same time, discourage wildcat strikes, union bossism and even corruption. A strike vote report submitted to the NCMB at least seven days prior to the intended date of strike ensures that a strike vote was, indeed, taken. In the event that the report is false, the seven-day period affords the members an opportunity to take the appropriate remedy before it is too late. The 15 to 30 day cooling-off period is designed to afford the parties the opportunity to amicably resolve the dispute with the assistance of the NCMB conciliator/mediator, while the seven-day strike ban is intended to give the DOLE an opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members.

The requirement of giving notice of the conduct of a strike vote to the NCMB at least 24 hours before the meeting for the said purpose is designed to (a) inform the NCMB of the intent of the union to conduct a strike vote; (b) give the NCMB ample time to decide on whether or not there is a need to supervise the conduct of the strike vote to prevent any acts of violence and/or irregularities attendant thereto; and (c) should the NCMB decide on its own initiative or upon the request of an interested party including the employer, to supervise the strike vote, to give it ample time to prepare for the deployment of the requisite personnel, including peace officers if need be. Unless and until the NCMB is notified at least 24 hours of the union’s decision to conduct a strike vote, and the date, place, and time thereof, the NCMB cannot determine for itself whether to supervise a strike vote meeting or not and insure its peaceful and regular conduct. The failure of a union to comply with the requirement of the giving of notice to the NCMB at least 24 hours prior to the holding of a strike vote meeting will render the subsequent strike staged by the union illegal.

GRAND BOULEVARD HOTEL vs. GENUINE LABOR ORGANIZATION OF WORKERS IN HOTEL, RESTAURANT AND ALLIED INDUSTRIES [2004]The respondents’ claim of good faith is not a valid excuse to dispense with the procedural steps for a lawful strike. Thus, even if the union acted in good faith in the belief that the company was committing an unfair labor practice, if no notice of strike and a strike vote were conducted, the said strike is illegal. Hence, the need for a union to adhere to and comply strictly with the procedural conditions sine qua non provided for by the law in staging a strike.

Q. What is the means employed test?A. A strike may be legal at its inception but eventually be declared illegal if the strike is accompanied by violence which violence is widespread, pervasive and adopted as a matter of policy and not merely violence which is sporadic which normally occur in a strike area [see prohibited activities under art. 264].

NOTE: The 3 tests must concur. Non-compliance with any of the aforementioned requisites renders the strike illegal.

Q. What is the effect of good faith of strikers on the legality of a strike?A. A strike may be considered legal where the union believed that the company committed ULP and the circumstances warranted such belief in good faith, although subsequently such allegations of ULP are found out as not true. (Bacus vs. Ople)

Q. What is the Totality of Conduct Doctrine?A. The culpability of an employer’s remarks are to be evaluated not only on the basis of their implicit implications but are to be appraised against the background of and in conjunction with collateral circumstances. Under this “doctrine” expressions of opinion by an employer which, though innocent in themselves, frequently were held to be culpable because:a. of the circumstances under which they were uttered


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b. the history of the particular employer’s labor relations of anti-union bias orc. because of their connection with an established collateral plan of coercion or interference.

Q. When can the Secretary of Labor assume jurisdiction over a strike?A. In this instance:1. there exists a labor dispute causing or

likely to cause a strike or lockout in a industry indispensable to the national interest,

2. the Secretary of Labor and Employment may:

a. decide it, orb. certify the same to the NLRC for

COMPULSORY ARBITRATION.

NOTE: What constitutes indispensable industry is based solely upon the discretion of the Secretary of Labor.

JURISPRUDENCE:PHILIPPINE LONG DISTANCE TELEPHONE CO. INC. vs. MANGGAGAWA NG KOMUNIKASYON SA PILIPINAS [G.R. No. 162783. July 14, 2005]When the Secretary exercises the powers granted by Article 263(g) of the Labor Code, he is, indeed, granted great breadth of discretion. However, the application of this power is not without limitation, lest the Secretary would be above the law. Discretion is defined as the act or the liberty to decide, according to the principles of justice and one’s ideas of what is right and proper under the circumstances, without willfulness or favor. Where anything is left to any person to be done according to his discretion, the law intends it must be done with a sound discretion, and according to law. The discretion conferred upon officers by law is not a capricious or arbitrary discretion, but an impartial discretion guided and controlled in its exercise by fixed legal principles. It is not a mental discretion to be exercised ex gratia, but a legal discretion to be exercised in conformity with the spirit of the law, and in a manner to subserve and not to impede or defeat the ends of substantial justice. From

the foregoing, it is quite apparent that no matter how broad the exercise of discretion is, the same must be within the confines of law. Thus, the wide latitude of discretion given the Secretary under Art. 263(g) shall and must be within the sphere of law.As Article 263(g) is clear and unequivocal in stating that ALL striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit ALL workers under the same terms and conditions prevailing before the strike or lockout, then the unmistakable mandate must be followed by the Secretary.

Q. What are the effects of the assumption of jurisdiction of the secretary?A. The effects are as follows:1. automatically enjoins the intended or

impending strike or lockout as specified in the assumption or certification order;

2. if one has already taken place at the time of assumption or certification, all striking or locked-out employees shall immediately return to work; and

3. the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout.

NOTE: A motion for reconsideration does not suspend the effects as the assumption order is immediately executory.

JURISPRUDENCE:

UNIVERSITY of IMMACULATE CONCEPCION, INC., vs. The SECRETARY OF LABOR G.R. No. 151379. January 14, 2005 ; 448 SCRA 190Article 263(g) of the Labor Code aforementioned states that all workers must immediately return to work and all employers must readmit all of them under the same terms and conditions prevailing before the strike or lockout. The phrase “under the same terms and conditions” makes it clear that the norm is actual reinstatement. This is consistent with the idea that any work stoppage or slowdown in that particular industry can be detrimental to the national interest.


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As an exception to the rule, payroll reinstatement must rest on special circumstances that render actual reinstatement impracticable or otherwise not conducive to attaining the purposes of the law.The “superseding circumstances” mentioned by the Acting Secretary of Labor no doubt refer to the final decision of the panel of arbitrators as to the confidential nature of the positions of the twelve private respondents, thereby rendering their actual and physical reinstatement impracticable and more likely to exacerbate the situation. The payroll reinstatement in lieu of actual reinstatement ordered in these cases, therefore, appears justified as an exception to the rule until the validity of their termination is finally resolved. This Court sees no grave abuse of discretion on the part of the Acting Secretary of Labor in ordering the same. Furthermore, the issue has not been raised by any party in this case. Q. What are the only issues that the Secretary of Labor can resolve when he assumes jurisdiction over a labor dispute?A. They are:a. Only issues submitted to the Secretary may be resolved by him. (PAL vs. Sec. of Labor, 23 January 1991).b. Issues submitted to the Secretary for resolution and such issues involved in the labor dispute itself. (St. Scholastica’s College vs. Torres; 29 June 1992)c. Secretary of Labor may subsume pending labor cases before Labor Arbiters which are involved in the dispute and decide even issues falling under the exclusive and original jurisdiction of labor arbiters such as the declaration of legality or illegality of strike. (Int’l Pharmaceuticals vs. Sec of Labor; 09 January 1992).d. Power of Sec. of Labor is plenary and discretionary. (St. Luke’s Medical Center vs. Torres; 29 June 1993; reiterated in PAL vs. Confesor; 10 March 1994).

Q. In case the strike is declared legal, are the strikers entitled to strike duration pay?A. Generally, no, but see exceptions.

GENERAL RULE: Strikers are not entitled to their wages during the period of a strike, even if the strike is legal.EXCEPTIONS:1. In case of a ULP strike, in the discretion of the authority deciding the case [see table for more distinction bet. Economic and ULP strike]2. Where the strikers voluntarily and unconditionally offered to return to work, but the employer refused to accept the offer [e.g. of an “unconditional offer”: “we will return tomorrow” and NOT “willing to return provided]

NOTE: They are entitled to backwages from the date the offer was made

3. Where there is return-to-work order and the employees are discriminated against.

NOTE: They are entitled to backwages from the date of discrimination.

Q. What is the rule on reinstatement of striking workers?A.GENERAL RULE : Striking employees are entitled to reinstatement, regardless of whether or not the strike was the consequence of the employer’s ULP. The reason is that while out on strike, the strikers are not considered to have abandoned their employment, but rather have only ceased from their labor.

NOTE: The declaration of a strike is NOT a renunciation of employment relation.

EXCEPTIONS - The following strikers are NOT entitled to reinstatement:

1. Union officers who knowingly participate in an illegal strike; and

2. any striker/union member who knowingly participates in the commission of illegal acts during the strike.

NOTE: Those union members who joined an illegal strike but have not committed any


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illegal act shall be reinstated but without any backwages.

Q. What is the rule on strikes in hospitals?A. They are:1. It shall be the duty of striking employees or locking-out employer to provide and maintain an effective skeletal workforce of medical and other health personnel for the duration of the strike or lockout. 2. Secretary of Labor may immediately assume jurisdiction within 24 hours from knowledge of the occurrence of such strike or lock-out or certify it to the Commission for compulsory arbitration.

Q. What are prohibited activities as far as labor organizations are concerned?A. No labor organization or employer shall declare a strike or lockout1.without first having bargained collectively in accordance with Title VII of this Book or2. without first having filed the notice required in Art. 263 or3.without the necessary strike or lockout vote first having been obtained and reported to the Department.

Q. What are the instances wherein no strike or lockout may be declared?A. They are:a. AFTER assumption of jurisdiction by the President or the Secretary orb. AFTER certification or submission of the dispute to compulsory or voluntary arbitration orc. DURING the pendency of cases involving the same grounds for the strike or lockout.

Q. What are prohibited activities as far as third persons are concerned?A. No person [3rd persons] all obstruct, impede or interfere with by force, violence, coercion, threats or intimidation1. any peaceful picketing by employees2. during any labor controversy or in the exercise of the right of self- organization or collective bargaining or3. shall aid or abet such obstruction or interference.

Q. What are prohibited activities as far as employers are concerned?A. No employer shall use or employ any STRIKE-BREAKER nor shall any person be employed as a strikebreaker.

Q. What are prohibited activities as far as public officials are concerned?A. No public official or employee, including officers and personnel of the New Armed Forces of the Philippines of the Integrated National Police, or armed persons,

1. shall bring in, introduce or escort in any manner, any individual who seeks to replace strikes in entering or leaving the premises of a strike area, or work in place of the strikers.2. The police force shall keep out of the picket lines unless actual violence or other criminal acts occur therein:Provided, That nothing herein shall be interpreted to prevent any public officers from taking any measure necessary to:a. maintain peace and order,b. protect life and property, and/orc. enforce the law and legal order.

Q. What are prohibited activities as far as persons engaged in picketing are concerned?

A. No person engaged in PICKETING shall: a. commit any act of violence, coercion or intimidation or b. obstruct the free ingress to or egress from the employer’s premises for lawful purposes, or c. obstruct public thoroughfares

Q. What are the consequence of an Illegal Strike?A. Article 264 of the Labor Code, in providing for the consequences of an illegal strike, makes a distinction between union officers and members who participated thereon. Thus, knowingly participating in an illegal strike is a valid ground for termination from employment of a union officer. However, mere participation in an illegal strike is not a sufficient ground for termination of the services of the union members. But the


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employer must still comply with the two-notice rule in dismissing the union officer. [STAMFORD MARKETING CORP. vs. JOSEPHINE JULIAN(2004) ] In Article 264 (a) of the Labor Code it could be gleaned that while a union officer can be terminated for mere participation in an illegal strike, an ordinary striking employee, like petitioners herein, must have participated in the commission of illegal acts during the strike. There must be proof that they committed illegal acts during the strike. Substantial evidence, which may justify the imposition of the penalty of dismissal, may suffice. [ELIZABETH C. BASCON vs. COURT OF APPEALS (2004)]

Q. Compare improved offer balloting from reduced offer balloting?A. In improved offer balloting, a referendum conducted by the NCMB on or before the 30th

day of the strike, for the purpose of determining whether or not the improved offer of the employer is acceptable to the union members. In reduced offer balloting, a referendum conducted by the NCMB for the purpose of determining whether or not the reduced offer of the union is acceptable to the board of directors, trustees or partners.

The purpose of improved offer balloting is determining whether or not the improved offer of the EMPLOYER is acceptable to the union members. The purpose of reduced offer balloting is determining whether or not the improved offer of the UNION is acceptable to the board members.The period of filing for both shall be on or before the 30th day of the strike or the lockout, as the case may be.Improved offer balloting and reduced offer balloting both applies only to economic strikes (deadlock in bargaining).

LABOR STANDARDS

1. PREMATURE TERMINATION OF CONTRACT UNDER R.A. 8042

Illegally dismissed employees are entitled to full reimbursement of his placement fee with interest at 12% per annum PLUS salary for the unexpired portion of his employment (Gallant Maritime)

2. SOLIDARY LIABILITY OF PRINCIPAL/EMPLOYER AND AGENCY

Under Sec. 10 of the MWA of 1995, the liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several.

3. APPRENTICESHIP, LEARNERSHIP, HANDICAPPED WORKERS

Apprenticeship means practical training on the job supplemented by related theoretical instruction. Learnership refers to hiring of persons as trainees in semi-skilled and other industrial occupations which are non-apprenticeable and which may be learned through practical training on the job in a relatively short period of time which shall not exceed 3 months. Handicapped workers are those whose earning capacity is impaired by age or physical or mental deficiency or injury, disease or illness.

APPRENTICESHIP LEARNERSHIPDURATION

Not less than 3 months practical training on the job but not more than 6months

Practical training on the job not to exceed 3 months.

CONCEPTPractical training on the job supplemented by related theoretical

Hiring of persons as trainees in semi-skilled and other industrial occupations which are non-apprenticeable and which may be learned through practical training on the job in a relatively short period of time.

ER’s COMMITMENT TO HIRENo commitment to hire With commitment to employ the learner as

regular employee if he desires upon completion of learnership

EFFECT OF PRETERMINATION


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Worker is not considered an employee

Learner is considered regular employee after 2 months of training and dismissal is without fault of learner

FOCUS OF TRAINING Highly skilled or technical

industries & in industrial occupation

Semi-skilled/industrial occupation (non-apprenticeable)

APPROVAL Requires DOLE approval for

validity Not required

EXHAUSTION OF ADM. REMEDIES IN CASE OF BREACH OF CONTRACT Precondition for filing action Not required

4. THE RULES ON HOLIDAYS

SINGLE HOLIDAY RULEprovided that the employee: worked, was on leave with pay, or was on authorized absence on

the day prior to the regular holiday.

SUCCESSIVE HOLIDAY RULEthe employee must be present the day before the scheduled regular holiday to be entitled to compensation to both; otherwise, he must work on the first holiday to be entitled to holiday pay on the second regular holiday. (Sec.10, Rule IV, Book III, Implementing Rules)

DOUBLE HOLIDAY RULE

If unworked:200% of the basic wage.(NB: to give employee only 100%

would reduce the number of holidays under DO No. 3.)

If worked:400% of the basic wage.

5. HOURS WORKED, WHAT IT INCLUDES All time during which an

employee is required to be on duty or to be at a prescribed workplace;

All time during which an employee is suffered or permitted to work;

Rest periods of short duration during working hours;

Meal period of less than twenty (20) minutes, since it becomes only a rest period and is thus considered as work time

The reasonable time to withdraw their wages from the bank facility if done during working hours, if payment of wages is through banks, ATM or by check.

1. FACILITIES VS. SUPPLEMENTS

FACILITIES SUPPLEMENTSItems of expense necessary for the

laborer’s and his family’s existence and subsistence

Constitute extra remuneration or special privileges or benefits given to or received

by the laborers over and above their ordinary earnings wages

Part of the wage Independent of the wageDeductible from the wage Not wage deductible


LEGAL REQUIREMENTS BEFORE FACILITIES CAN BE DEDUCTED FROM WAGES

Proof must be shown that such facilities are customarily furnished by the trade;

The provision of deductible facilities must be voluntarily accepted in writing by the employee; and

The facilities must be charged at fair and reasonable value.

7. What is a WAGE ORDER?An order issued by the Regional

Tripartite Wages & Productivity Board whenever the conditions in the region so warrant after investigating and studying all pertinent facts and based on the standards and criteria prescribed by the LC, the Regional


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Board proceeds to determine whether to issue the same or not. It shall take effect after 15 days from the its complete publication in at least one newspaper of general circulation in the region.

A wage Order issued by the Board may not be disturbed for a period of 12 months from its effectivity and no petition for wage increase shall be entertained during said period. EXCEPTION: When Congress itself issues a law increasing wages.8. What is WAGE DISTORTION?

The Court summarizes the principles relating to wage distortion, namely:

(a) The concept of wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such employees on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of employees.

(b) Wage distortions have often been the result of government-decreed increases in minimum wages. There are, however, other causes of wage distortions, like the merger of two companies (with differing classifications of employees and different wage rates) where the surviving company absorbs all the employees of the dissolved corporation.

(c) Should a wage distortion exist, there is no legal requirement that, in the rectification of that distortion by readjustment of the wage rates of the differing classes of employees, the gap which had previously or historically existed be restored in precisely the same amount. In other words, correction of a wage distortion may be done by reestablishing a substantial or significant gap (as distinguished from the historical gap) between the wage rates of the differing classes of employees.The reestablishment of a significant difference in wage rates may be the result of resort to grievance procedures or collective negotiations (National Federation of Labor vs. NLRC).

9. What is the ENFORCEMENT POWER OF THE SECRETARY OF LABOR?

Power of the Sec. of Labor to compel employer to comply with labor standards

upon finding of violations discovered in the course of the exercise of the visitorial power. Among the powers are the power to: Issue Compliance Orders, issue Writs of Execution for the enforcement of orders, order Work Stoppage/Suspension of Operations, and conduct hearings within 24 hours.10. STIPULATION AGAINST MARRIAGE (ART. 136)It shall be unlawful for an employer:

1. to require as a condition for employment or continuation of employment that a woman employee shall not get married,

2. to stipulate expressly or tacitly that upon getting married a woman employee shall be deemed resigned or separated,

3. to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.


Article 136 is not intended to apply only to women employed in ordinary occupations, or it should have categorically expressed so. The sweeping intendment of the law, be it on special or ordinary occupations, is reflected in the whole text and supported by Article 135 that speaks of nondiscrimination on the employment of women. (Claudine de Castro Zialcita, et al. vs. PAL).

11. CLASSIFICATION OF CERTAIN WOMEN WORKERS

Under Art. 138, “Any woman who is permitted or suffered to work, with or without compensation in any nightclub, cocktail lounge, massage clinic, bar or other similar establishment, under the effective control and supervision of the employer for a substantial period of time as determined by the Secretary of Labor shall be considered as an employee of such establishment for purposes of labor and social legislation.”


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12. CBA INCREASE VIS-À-VIS WAGE ORDER-MANDATED INCREASE

Having entered into an agreement with its employees, an employer may not be allowed to renege on its obligation under a collective bargaining agreement should, at the same time, the law grant the employees the same or better terms and conditions of employment. Employee benefits derived from law are exclusive of benefits arrived at through negotiation and agreement unless otherwise provided by the agreement itself or by law. (Meycauayan College vs. Drilon, G.R. No. 81144, May 7, 1990).

13. Rules on 13th MONTH PAY Additional income based on

wage required by P.D. 851 which is equivalent to 1/12 of the total basic salary earned by an employee within a calendar year.

May be given anytime but not later than Dec. 24.

Coverage: All rank-and-file employees regardless of their designation or employment status and irrespective of the method by which their wages are paid, are entitled to this benefit, provided, that they have worked for at least one (1) month during the calendar year.

It must always be in the form of legal tender. Free rice, electricity cash and stock dividends, COLA are NOT proper substitutes for the 13th

month pay. Difference of opinion on how

to compute the 13th month pay does not justify a strike.

Note: 13th Month Pay is tax exempt.

14. Is there a need for employment permit as a condition for employment of aliens?

Generally, no. Article 40 of the LC which requires employment permit refers to NON-RESIDENT ALIENS. The employment

permit is required for entry into the country for employment purposes and is issued after a non-determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired. A resident alien does not fall within the ambit of the provision.

15. ILLEGAL RECRUITMENT “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-license or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: 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. Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons individually or as a group. (People vs. Dominga Corrales Fortuna)

BAR SYLLABUS: THEORY OF IMPUTED KNOWLEDGE

Q. WHAT IS THE LIABILITY OF AN

EMPLOYEE OF COMPANY ENGAGED IN ILLEGAL RECRUITMENT

A. An employee of a company or corporation engaged in illegal recruitment may be held as principal, together with his employer, if it is shown that he actively and consciously participated in illegal recruitment (PPL vs. Cabais, 16 March 2001).

Q: When may an employee of a company or corporation engaged in illegal recruitment be held criminally liable?


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A: An employee of a company or corporation engaged in illegal recruitment may be held liable as principal, together with his employer, if it is shown that he actively and consciously participated in illegal recruitment. The culpability of the employee hinges on his knowledge of the offense and his active participation in its commission. Where it is shown, however, that the employee was merely acting under the direction of his superiors and was unaware that his acts constituted a crime, he may not be held criminally liable for an act done for and in behalf of his employer. (People vs Corpus, 01 October, 2003)

BAR SYLLABUS ITEM

Illegal Recruitment Considered As Economic Sabotage.

Illegal recruitment it considered to be economic sabotage when: (a) it is committed by a syndicate, i.e., it is carried out by a group of three or more persons conspiring and/or confederating with one another; or (b) it is committed in large scale, i.e., if it is committed against three or more persons individually or as a group (sec. 6[m], RA 8042).

ILLEGAL RECRUITMENT DEFINED - 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 of authority who in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall likewise include the commission of the following prohibited acts whether committed by a non-licensee or non-holder of authority or a licensee or holder of authority (Sec.6, RA 8042):

a) Those prohibited practices enumerated under Art. 34;

b) Failure to actually deploy without valid reason as determined by DOLE; and

c) Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker’s fault.

Recruitment and placement

activities of agents or representatives appointed by a licensee, whose appointments were not previously authorized by the POEA shall likewise constitute illegal recruitment.

\QUALIFYING CIRCUMSTANCES THAT WOULD MAKE ILLEGAL RECRUITMENT AS AN OFFENSE INVOLVING ECONOMIC SABOTAGE:

BAR SYLLABUS -- When illegal recruitment is committed by a SYNDICATE

Illegal recruitment is committed by

a SYNDICATE if it is carried out by a group of three (3) or more persons more persons individually or as a group and it must be understood as referring to the number of complainants in each case who are complainants therein, otherwise, prosecutions for single crimes of illegal recruitment can be cumulated to make out a case of large scale illegal recruitment.

In other words, a conviction for large scale illegal recruitment must be based on a finding in each case of illegal recruitment of three or more persons whether individually or as a group (People vs. Sps. Karl and Yolanda Reichl; 7 MAR., 2002).

BAR SYLLABUS ITEM-- WHEN ILLEGAL RECRUITMENT IS COMMITTED IN LARGE SCALE

If it is committed against three (3) or

more persons. These circumstances only qualify the offense. They do not define the offense themselves.


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BAR SYLLABUS: RULE ON PRE--TERMINATION OF CONTRACT OF THE OFW

BAR ITEM: SC DECLARED PAR. 5 OF SEC. 10 OF REP. ACT NO. 8042 UNCONSTITUTIONAL

THE CASE OF SERRANO vs. GALANT MARITIME SERVICES, INC., (G.R. No. 167614, 24 March 2009) DECLARED AS NULL AND COID AND UNCONSTITUTIONAL PAR. 5 OF SECTION 10 OF THE MIGRANT WORKERS ACT OF 1995 PERTINENT TO THE UNEXPIRED PORTION OF “THREE MONTHS OR WHICHEVER IS LESS RULE” AS THE SAME WAS NOT BASED ON A VALID DISTINCTION OR CLASSIFICATION)

NOTE: SECTION 7 OF RA 10022 (MARCH, 2010) RESTORED THE UNEXPIRED PORTION OR “THREE MONTHS OR WHICHEVER IS LESS” RULE FOUND IN PAR. 5 OF SEC. 10 OF RA 8042 DECLARED A YEAR EARLIER AS UNCONSTITUTIONAL)

VENUE OF ILLEGAL RECRUITMENT CASES (Sec. 8, Migrant Workers Act)

The complainant may, at his option,

file with the RTC of the province or city: where the offense was

committed; OR where the offended party

resides at the time of the commission of the offense.

JURISDICTION AND APPEAL ON MONEY CLAIMS OF OFW’S –

1. Jurisdiction over money claims

of OFW’s is vested with Labor Arbiters of the NLRC and no longer with the POEA (Sec. 10, R. A. no. 8042).

2. Decisions of Labor Arbiters on money claims of OFW’s are appealable to the appropriate NLRC Division within 10 calendar days from the receipt of said decision.

BAR SYLLABUS ITEM AND GUIDE ANSWER 0N the LIABILITY OF A LOCAL

RECRUITMENT AGENCY AND THE FOREIGN PRINCIPAL

1. Local Agency is solidarily liable with the foreign principal.

2. Severance of relations between local agent and foreign principal does not affect liability of local recruiter.

GUIDE ANSWERS 0N THE CONCEPT OF SOLIDAY LIABILITY

Solidary Liability. Generally, the

liability of a local recruitment agency is joint and several or solidary with the foreign employer/principal. This is based on Rule II, Sec.1(d) of the POEA Rules that requires every applicant for license to operate a private employment agency for overseas recruitment and placement to undertake "joint and solidary liability which may arise in connection with the implementation of the contract of employment." (Based on the case of United Placement International vs. POEA, G.R. No. 102081-83, 12 April 1993). This was the consistent position of the Supreme Court in a line of cases upholding solidary liability.

BAR QUESTION: What is the Reason for Holding the Foreign Employer Solidarily Liable?

Answer: The primary reason is to provide the overseas migrant worker a legal recourse. Should the rule be otherwise, migrant workers with legitimate demands against the foreign-based employer, would be helpless to enforce them because the foreign principal is outside the jurisdiction of our courts and would probably have no properties in this country. Violation of the employment contract would remain unredressed (Hellenic Philippine Shipping, inc. vs. Siete, 195 SCRA 179 [1991]).

Even if the agency and the foreign principal had already severed their agency agreement at the time the worker was injured, the private employment agency may still be sued for violations of the employment


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contract (Catan vs. NLRC, 160 SCRA 691 [1988]).

SC RULINGS AS EXCEPTIONS TO SOLIDARY LIABILITY.

In two (2) cases the Court did not apply solidary liability, notably:

(a) Ilas vs. All Seasons and NLRC, G. R. No. 90394-97, 07 February 1991, where it was ruled that although the recruitment agency is made to assume full and complete responsibility for all acts of its officials and representative done in connection with recruitment or placement, when the name of the agency was only used as a means to enable the recruits to be issued travel exit passes, without the knowledge and consent of the agency, the latter cannot be held liable for the claims of the recruits. In as much as the recruits knew that the documents used in the deployment contract were all fake, they should suffer the consequences of their wrongful acts.

(b) Feagle Construction Corp. vs. Dorado, 196 SCRA 481, where it was similarly ruled that when an overseas worker persuades the local representative of the principal or recruiter to send him abroad to work despite the refusal of the latter to accede to the request since the regular payment of the remuneration of the worker and his security of tenure cannot be assured, and still the worker insists on taking a calculated risk by signing a waiver rendering the local representative or recruiter free from any liability arising from such overseas employment, in such instance, the local representative or recruiter cannot be held jointly and severally liable with the foreign principal or employer for any claim of such worker arising there under.

Enforcement of Bonds. In Del Rosario vs. NLRC, 187 SCRA 777 [1990]) it was held that a judgment against the recruiter should initially be enforced against the cash and surety bonds filed with the POEA.

The obligations guaranteed by the bonds of the recruiter are continuing. In

another case matters concerning bonds to guarantee payment of claims of overseas workers is not within the jurisdiction of the Office of the Insurance Commission but with the POEA, now the Labor Arbiter.

SC RULING ON MODIFICATION OF CONTRACTS

In Philippine National Construction Corporation vs. NLRC, G.R. No. 101535, 22 January 1993, it was ruled therein that any alterations of the employment contract without the approval of the Department of Labor and Employment through the POEA is prohibited by Art. 34[1] of the Labor Code as amended.

This is so because, Article 34 of the Code prohibits the substitution or alteration of employment contracts approved and verified by the POEA for the time of the actual signing thereof up to the period of expiration without the approval of the POEA.

NOTE: Yhe maximum penalty shall be imposed if the person illegally recruited is less than 18 years of age or committed by a non-licensee or non-holder of authority.

BAR SYLLABUS

NEW: "SEC. 7. Penalties (As amended by Rep. Act No. 10022). -

"(a) Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not less than twelve (12) years and one (1) day but not more than twenty (20) years and a fine of not less than One million pesos (P1,000,000.00) nor more than Two million pesos (P2,000,000.00).

"(b) The penalty of life imprisonment and a fine of not less than Two million pesos (P2,000,000.00) nor more than Five million pesos (P5,000,000.00) shall be imposed if illegal recruitment constitutes economic sabotage as defined therein.

"Provided, however, That the maximum penalty shall be imposed if the person illegally recruited is less than eighteen


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(18) years of age or committed by a non-licensee or non-holder of authority.

"(c) Any person found guilty of any of the prohibited acts shall suffer the penalty of imprisonment of not less than six (6) years and one (1) day but not more than twelve (12) years and a fine of not less than Five hundred thousand pesos (P500,000.00) nor more than One million pesos (P1,000,000.00).

"If the offender is an alien, he or she shall, in addition to the penalties herein prescribed, be deported without further proceedings.

"In every case, conviction shall cause and carry the automatic revocation of the license or registration of the recruitment/manning agency, lending institutions, training school or medical clinic."

CLAIMS FOR DEATH AND OTHER BENEFITS

Under Sec. 10 of Migrant Workers Act, the Labor Arbiters have jurisdiction over claims for death, disability and other benefits arising from overseas employment.

Basis of compensation for death generally is whichever is greater between Philippine law or foreign law.

Work-connection is required on these claims.

THE PRINCIPAL FUNCTIONS OF THE POEA:

1. Formulation, implementation, & monitoring of overseas employment of Filipino workers

2. Protection of their rights to fair and equitable employment practices

3. Deployment of Filipino workers through government-to-government hiring

THE REGULATORY FUNCTION OF THE POEA:

The POEA regulates private sector participation in the recruitment and overseas placement of workers through its licensing and registration system.

THE ADJUDICATORY FUNCTIONS OF THE POEA:

All cases which are administrative in character, involving or arising out of violations of rules and regulations relating to licensing and registration of recruitment and employment agencies or entities; and

Disciplinary action cases and other special cases which are administrative in character, involving employers, principals, contracting partners and filipino migrant workers.

GUIDE ANSWERS ON DISCIPLINARY ACTION CASES

THE POEA RETAINED JURISDICTION OVER DISCIPLINARY ACTION CASES WHICH ARE ALSO CONSIDERED AS PRE-EMPLOYMENT CASES

THE VARIOUS GROUNDS FOR DISCIPLINARY ACTION AGAINST OFWs (Under the MWA of 1995, RA 8042):

1. Commission of a felony punishable by the laws of the Philippines or by the host country;

2. Drug addiction or possession or trafficking of prohibited drugs;

3. Desertion or abandonment;4. Drunkenness, especially where the laws

of the host country prohibit intoxicating drinks;

5. Gambling, especially where the laws of the host country prohibit the same;

6. Initiating or joining a strike or work stoppage where the laws 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 money and properties of a fellow worker entrusted for delivery to kins or relatives in the Philippines;

9. Theft or robbery;10. Prostitution;


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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 appropriate government agencies; and

14. Violation of the laws and sacred practices of the host country and unjustified breach of government approved employment contract by a worker.

DISCIPLINARY ACTION CASES CAN BE FILED WITH THE ADJUDICATION OFFICE OR REGIONAL OFFICE OF THE POEA

Complaints for breach of discipline against a contract worker shall be filed with the Adjudication Office or Regional Office of the POEA, as the case may be. The POEA may motu propio undertake disciplinary action against a worker for breach of discipline. It shall establish a system of watching and blacklisting of overseas contract workers. The venue for filing disciplinary action cases is provided under Rule VII of Book VII of the POEA Rules

BAR SYLLABUS ITEM: DIRECT HIRING

Employers cannot directly hire workers for overseas employment except through authorized entities.

BAN ON DIRECT HIRING -- ART. 18

GENERAL RULE: Direct hiring of Filipino workers by a foreign employer is NOT allowed.

EXCEPTIONS: Direct hiring by: a. the members of the diplomatic

corps;b. international organizations; and

c. such other employers as may be allowed by DOLE

REASON OR RATIONALE FOR THE PROHIBITION ON DIRECT HIRING

Filipino workers hired directly by a foreign employer without government intervention may not be assured of the best possible terms and conditions of work. The foreign employer must also be protected as he may chance upon a Filipino worker who does not possess sufficient knowledge for which he is employed.

GUIDE ANSWERS 1. Rationale for the ban is to

ensure full regulation of employment in order to avoid exploitation.

2. Non-resident foreign corporation directly hiring Filipino workers is doing business in the Philippines and may be sued in the Philippines.

NAME HIRES – are individual workers who are able to secure contracts for overseas employment on their own efforts and representations without the assistance or participation or any agency\

BAR SYLLABUS: MANDATOEY FOREIGN EXCHANGE REMITTANCE\\

a. Seamen or mariners --80% of the basic salary

b. Workers for Filipino Contractors and

c.Construction Companie--70% of the basic salary

d. Doctors, engineers, teachers, nurses, and other professionals whose employment contract provide for lodging facilities-- 70% of the basic salary

e. All other professionals without board and lodging--: 50% of the basic salary

f. Domestic and other service of workers--50% of the basic salary

MCQ GUIDE ANSWERS:


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i. 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 of recruits also constitutes recruitment activities.

i. What constitutes as a case of illegal recruitment is not the issuance or signing of receipts for the placement fees, but rather the undertaking of recruitment activities without the necessary license or authority.

i. Absence of receipt to prove payment is not essential to prove recruitment.\

i. Mere impression that recruiter is capable of providing work abroad is sufficient.

i. Only one (1) person recruited is sufficient to constitute recruitment.

i. Non-prosecution of another suspect is not material.

ILLEGAL RECRUITMENT WHEN CONSIDERED AS ECONOMIC SABOTAGE

1. Illegal recruitment is considered economic sabotage when the commission thereof is attended by the qualifying circumstances as follows:

a. By a syndicate – if carried out by a group of 3 or more persons conspiring and

confederating with one another;

a. In large scale – if committed against 3 or more persons individually or as a group.

1. Prescriptive period of illegal recruitment cases – Under Republic Act No. 8042 – Five (5) years except illegal recruitment involving economic sabotage which prescribes in 20 years.

NOTE: Maximum penalty shall be imposed if the person illegally recruited is less than 18 years of age or committed by a non-licensee or non-holder of authority.

SPECIAL LAWS

1. SSS, COVERAGE:Compulsory:

Compulsory upon all employees not over 60 years of age and their employers

In case of domestic helpers, their monthly income should not be less than one thousand pesos

Compulsory upon such self- employed persons as may be determined by the Commission including but not limited to the following (Sec 9-A): All self employed professionals

Partners and single proprietors Actors and actresses directors,

scriptwriters and news correspondents who do not fall within the definition of the term employee in Section 8 (d) of this Act

Professional athletes, coaches, trainers, and jockeys

Individual farmers and fishermen

Voluntary:


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Spouses who devote full time to managing the household and family affairs, unless they are also engaged in other vocation or employment which is subject to mandatory coverage, may be covered by the SSS on a voluntary basis.

Filipinos recruited by foreign based employers for employment abroad may be covered by the SSS on a voluntary basis

Employees separated from employment may continue to pay contributions to maintain his right to full benefits (Sec. 11)

Self-employed with no income (11-A)

By Agreement: Any foreign government, international organization, or their wholly-owned instrumentality employing workers in the Philippines, may enter into an agreement with the Philippine government for the inclusion of such employees in the SSS except those already covered by their respective civil service retirement systems (Sec.8 (j (4), RA 8282).

EFFECTIVE DATE OF COVERAGE UNDER THE SSS

Employer: It shall take effect on the first day of his operation

Employee: On the day of his employment

Self-employed: It shall take effect upon his registration with SSS

Maternity Leave- is the period of time which may be availed of by a woman employee, married or unmarried, to undergo and recuperate from childbirth, miscarriage or complete abortion during which she is permitted to retain her rights and benefits flowing from her employment.

Maternity leave benefit- benefit granted to a female member who has paid at least three (3) monthly contributions in the twelve-month period immediately preceding the semester of her childbirth or miscarriage which is equivalent to one hundred percent (100%) of her average daily salary credit for sixty (60) days or seventy-eight (78) days in case of caesarian delivery.

Paternity leave- refers to the benefits granted to a married male employee allowing him not to report for work for seven (7) days but continues to earn the compensation therefore, or on the condition that his spouse has delivered a child or suffered miscarriage for purposes of enabling him to effectively lend support to his wife in her period of recovery and/or in the nursing of the newly-born child. (Section 3, Republic Act No. 8187; Section 1(a), Revised Implementing Rules and Regulations of R. A. No. 8187 (March 13, 1997)

EMPLOYEES COMPENSATION PROGRAMAND STATE INSURANCE FUND

1. What is the Employees’ Compensation Program (ECP)?

It is the program provided for in Article 166 to 208 of the Labor Code whereby a fund known as the State Insurance Fund is established through premium payments exacted from employers and from which employees and their dependents in the event of work-connected disability or death, may promptly secure adequate income benefit, and medical or related benefits.

2. What are the basic features of the new ECP?

The basic features of the new program are:

It is tax exempt.


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It is funded by monthly contributions of all covered employers.

Compulsory and Wider coverage. All employers and their employees not over 60 years of age are covered. With the inclusion into the system of employers with at least one employee and regardless of the capitalization and the type or nature of their business, more employees are now covered.

Exclusivity of benefits. The benefits are exclusive and in place of all other liabilities of the employer to the employee, his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents.

Integration of benefits. Compensation benefits for work-connected injury, sickness, disability and death have been integrated with those of the SSS/GSIS and Medicare, simplifying and facilitating the processing of claims.

Increase in benefits. An allowed income benefit has been considerably increased; death and permanent disability benefits now consist of a lifetime pension. Burial expenses have also been increased.

Prompt payment of income benefits. The new program does away with in the adversary type of proceedings. The claimant is not required to go to court to establish his claim. In fact, his own employer will file the claim in his behalf. The new simplified system results in the early settlement of claims and the prompt payment of income benefits.

Legal service dispensed with. Legal services are dispensed with in the processing of claims under the system, eliminating the payment of attorney’s fees.

Exclusive jurisdiction. The System has its own adjudication machinery with exclusive original jurisdiction to settle any dispute with respect to coverage, entitlement to benefits, collection and payment of contributions and penalties thereon, or any other matter related thereto, independent of other tribunals except the Supreme Court

A more balanced rehabilitation program. It enables permanently disabled employees to avail themselves of rehabilitation services under the employee’s Compensation Program which can help them regain, as soon as possible, their physical capacity to the maximum level. Disabled workers could therefore remain as useful assets of society and regain their self confidence and self respect. (San Miguel Corporation vs. NLRC, G.R. No. 57473, August 15, 1988).

3. Who are covered under the ECP?

The following are covered under the law: Employers – All employers

belonging to the public or private sector are covered;

Employers – All employees not over sixty (60) years old are covered. Employees who are over sixty (60) years old shall be covered if he has been paying contribution prior to the age of sixty (60) and has not been compulsorily retired. Employees covered by both the GSIS and the SSS shall be


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compulsorily covered by both systems. (Sec. 2, Rule I, Amended Rules on Employees Compensation).

4. Who are Employers?

The term shall mean any person, natural or juridical, domestic or foreign, who carries on the Philippines any trade, business, industry, undertaking or activity of any kind and uses the services of another person who is under his orders as regards the employment.

An employer shall belong to either: The public sector covered by the

GSIS, comprising the National Government, including government-owned or -controlled corporations with original charters, the Philippine Tuberculosis Society, the Philippine National Red Cross and the Philippine Veterans Bank; or

The private sector covered by the SSS, comprising all employers other than those defined in the immediately preceding paragraph (Sec. 3a, Rule I, Amended Rules on Employees Compensation)

5. Who are Employees?

The term shall mean any person who performs services for an employer.

An employee shall belong to either: The public sector comprising the

employed workers who covered by the GSIS, including the members of the Armed Forces of the Philippines, elective officials who are receiving regular salary, and any person employed as casual, emergency temporary, substitute or contractual.

The private sector comprising the employed workers who are covered by the SSS (Sec. 4, Rule I, Ibid).

6. Are Filipinos under foreign employment covered?

Filipinos working abroad in the service of an employer, domestic or foreign, who carries on in the Philippines any trade, business, industry, undertaking or activity of any kind are also covered. They are entitled to the same benefits given to employees working in the Philippines (Sec. 5(a), Rule I, Amended Rules on Employees Compensation).

7. When does such compulsory coverage take effect?

The effectivity dates of coverage are the following:

For employers – First day of operation but not earlier than January 1, 1975;

For employees – First day of employment (Sec. 6, Rule I, Amended Rules on Employees Compensation).

8. What is the registration as requirement?The employer and the employees shall register with the system by accomplishing the prescribed forms. The private sector shall register with the SSS, while the public sector shall register with the GSIS. (Sec. 1, Rule II, Amended Rules on Employees Compensation).9. When is the employee deemed reported?An employee is deemed to have been duly reported for coverage, if the System (SSS or GSIS) has received a report or written communication about him from his employer or an EC (Employer Compensation) contribution paid in his name by his employer before a compensable contingency occurs (Sec. 3


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(b)(3), Rule II, Amended Rules on Employees Compensation).10. What is the penalty for non-registration?

Failure or refusal to register its employees shall make the employer or responsible official who committed the violation liable for a fine of not less than P1, 000.00 nor more than P10, 000.00 and/or imprisonment for the duration of the violation or non compliance or until such time that the rectification of the violation has been made, at the discretion of the Court.In case a compensable contingency occurs after 30 days from employment and before the system receives any report for coverage about the employee or EC contribution on his behalf, his employer shall be liable to the System for the lump sum equivalent to the benefits to which the employee or his dependents may be entitled (Sec. 4, Rule II, Amended Rules on Employees Compensation).

11. What are the grounds for a claim for benefits under the ECP?

They are the following: sickness and the resulting

disability or death by reason of an employment accident; and

sickness and the resulting disability or death by reason of an occupational disease.

12. What is the meaning of compensable sickness?

Sickness means any illness definitely accepted as an occupational disease listed by the Employees’ Compensation Commission, or any illness caused by employment subject to proof by the employee that the risk of contracting the same is increased by working conditions.

For this purpose, the Commission is empowered to determine and approve occupational diseases and work-related illness that may be considered compensable based on peculiar hazards of employment.

However, there are cases where the disease although not listed as occupational, is still compensable such as when the worker was exposed to adverse working conditions, or the risk of contracting the disease was increased by the working conditions (De Guia vs. ECC, 198 SCRA 834; Ibid).

13. Discuss briefly the theory of “increase risk.”

The term sickness as defined includes “any illness caused by employment subject to proof by the employee that the risk of contracting the same is increased by working conditions.” This is a recognition of the theory of increased risk. To establish compensability under the same, the claimant must show substantial proof of a reasonable work-connection and not a direct causal relation. The test of evidence of the relation of the disease with the employment is probability and not certainty. To require otherwise, would not be consistent with the liberal interpretation of the Labor Code and the social justice guarantee.

14. What is an occupational disease?

An occupational disease is one which results from the nature of the employment and by the nature is meant which all employees of a class are subject and which produce the disease as a natural incident of a particular occupation, and attach to that occupant a hazard which distinguishes it from the usual run of the occupation a hazard attending employment in general.This type of disease is characterized by the fact that (a) it occurs in association with particular types of occupation, and (b) the disability due to the injurious exposure grows gradually over a period of time.Familiar examples of this disease are the following: (a) lead poisoning among miners; (b) silicosis among miners; (c)


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bends among drivers; and (d) communicable disease among nurses directly in contact with patients with such disease, is also held to be an occupational disease.

15. Is cancer an occupational disease?

Although the cause of cancer is not yet known, it has already been included as a qualified occupational disease in certain cases. Thus, cancer of the epithelial lining of the bladder is considered occupational when contracted by employees engaged in work involving exposure to alphanaphtylamine, betanaphtylamine, or benzidine or part of the salts, and suramine or magenta.Likewise, cancer of the skin or of the corneal surface of the eye is considered occupational in work involving the use or handling or exposure to tar, pitch, bitumen, mineral oil including paraffin, soot, or any compound or residue of any of its substances.Cancer of the stomach and other lymphatic and forming vessels, or of the nasal cavity and sinuses is recognized as an occupational disease among woodworkers, carpenters, loggers, and employees in pulp, paper and plywood mills; while cancer in the lungs, liver and brain is listed as an occupational disease of vinyl chloride or plastic workers.

16. What is the Doctrine of presumptive compensability and theory of aggravation?

The presumption of compensability and the theory of aggravation established under the Workmen’s Compensation Act (Act No. 3428) as amended have been abandoned under the new Labor Code. However, the Supreme Court held that: “while these doctrines may have been abandoned, the liberalities of the law still subsists.” This decision gave substance to the liberal and compassionate spirit of the law found in Article 4 of the Labor Code

which provides that all doubts shall be resolved in favor of labor.Note that for claims that have accrued prior to the new Labor Code, the above rules should be applied.

17. Is the claimant under the ECP required to present proof of causal relation or aggravation where the cause or origin of the disease is still unknown?

Yes. If the disease not intended by law to be compensated are inadvertently or recklessly included, the integrity of the State Insurance Fund is endangered. Compassion for the victims of diseases not covered by the law ignores the need to show greater concern for the trust fund to which tens of millions of workers and their families look for compensation whenever accidents, disease, and deaths occur.18. What is the old doctrine?

Under the old doctrine, the necessity of proof is present only when the cause of the disease is known. If unknown, there is no duty to present proof, for the requirement that the disease was caused or aggravated by the employment or work applies only to an illness where the cause can be determined or proved (Mora vs. ECC, G.R. No. 62157, 1December 1987.)However, actual proof of causation is not necessary to justify compensability. The degree of proof required to establish work connection between the illness and the employment is only substantial evidence of reasonable work-connection (Cristobal vs. ECC, 181 SCRA 874). The claimant must show that the development of the disease is brought largely by the conditions present in the nature of the job (Zozobrado vs.ECC, 141SCRA 136). In other words, the employee has the burden of proving that his illness is work-related.19. What is the new doctrine?


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The new doctrine provides two (2) approaches to a solution in cases where it cannot be proved that the risk of contracting an illness, not listed as an occupational disease, was increased by the claimant’s working conditions. One approach is that if a claimant cannot prove the necessary work connection because the cause of the disease are still unknown, it must be presumed that working conditions increased the risk of contracting the ailment. On of the order hand, the other approach provides that if there is no proof of the required work connection, the disease is not compensable because the law says so.

20. What are the conditions for compensability of occupational diseases?For an occupational disease and the resulting disability or death to be compensable, all of the following conditions must be satisfied:

The employee’s work must involve the risk described herein;

The disease was contracted as a result of the employee’s exposure to the describe risks;

The disease was contracted within the period of exposure and under such other factors necessary to contract it;

There was no notorious negligence on the part of the employee.

The employer who has failed to provide the adequate protection and safety devices shall be subject to the penalty imposed by Article 200 of the Code. Where he has provided adequate protection and safety devices, there shall be a determination as to whether or not the employee has been notoriously negligent. (Annex “A,” Amended Rules on Employees Compensation).21. What is the crucial test of compensability?The crucial test compensability is the existence of employer-employee relationship which is the jurisdictional

foundation for recovery of compensation under the law. Where the relationship has already been severed, the provisions of the law will not apply. For purposes of determining the existence of employer-employee relationship, the most important test is the power to control the employee’s conduct (Iloilo Chinese Commercial School vs. Fabrigas, L – 16600, 27 December 1961).22. Is employment the sole factor?NO. Under the law, it is not required that employment should be the sole factor in the growth development or acceleration of the illness to entitle him to benefits provided therein. It is enough that his employment had contributed, even in a small degree to the development of the disease (Red Line Transportation Co., Inc. vs. Barriso, 11 SCRA 801; Lao vs. ECC, 97 SCRA 780).

23. Is Hansen’s Disease (leprosy) compensable?

Yes, provided the illness is traceable to employment. Leprosy, like tuberculosis, is a system disease; its specific cause is bacteria and the same can be acquired through body contact with a person harboring the germs; and some of the participating factors leading to the development of the disease are exposure to sudden changes in the environment and temperature and the lessening of the body resistance of the person affected. (Better Buildings, Inc. vs. Pucan, G.R. No. L-42731, February 28, 1985)

24. F.C. worked in the printing department of a government agency. He handled various chemicals for printing, ate without washing his hands, and was exposed to intense heat. He often neglected personal necessity due to inadequate facilities in his place of work. F.C. later died of rectal cancer. Is his death compensable? Why?


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Yes. Although rectal cancer is not listed as an occupational disease, there is ample proof that the risk of contracting the same was increased, if not caused, by the working conditions prevailing in the employer’s premises. (Cristobal vs. Employees’ Compensation Commission, G.R. No. L-49280, April 30, 1980)

25. S., employed as a mechanic in a naval shipyard, died of pyelonephritis (acute pyelogenic infection of the kidney) and bronchopneumonia (infection of the bronchi and lung tissue). Is his death compensable? Why?

No. The diseases are not occupational with respect to the work of the deceased. Besides, the risk of contracting them was not increased by his working conditions. (Sulit vs. Employees’ Compensation Commission, G.R. No. L-48602, June 30, 1980)

26. Is ureterolithiosis (presence of renal stones in the ureter and urinary stones) of a chemical laboratory technician of the NBI compensable under the employees’ compensation program? Explain.

Yes. Though not expressly recognized as an occupational disease, ureterolithiosis may be compensable by reason of the theory of increased risk. It is medically established that environment, water or other liquid intake and the nature of the occupation are important factors in the development or inhibition of the disease.

The work of the NBI laboratory technician exposed her to drugs, insecticides, volotile poisons, fuels and inorganic compounds, and chemical laboratory equipment. Moreover, she attended to filed cases and rendered holiday and night duties once a week and helped the chemist in the examination of incoming cases. She often missed some important health habits such as regularly drinking water and urination in order not to interrupt the flow of concentration.

Despite the abandonment of the presumption of compensability, the present law has not ceased to be a social legislation; the liberality of the law in favor of the working man or woman still prevails. (Employees’ Compensation Commission vs. Court of Appeals, G.R. No. 121545, November 14, 1996)27. Give instances of compensable illnesses.

The following ailments are compensable:

Tuberculosis considered occupational disease or work connected in such occupation as that of a teacher, laborer, driver, land inspector and other similar occupations (Visual vs. ECC, 187 SCRA 623).

Diabetes mellitus contracted by a public school teacher whose work was physically and emotionally stressful (Millora vs. ECC, 143 SCRA 151).

Hepatoma and post-necrotic cirrhosis contracted by a cashier of a bank, who was constantly exposed to various chemicals in the form of carbon paper, erasing fluids, and others and whose assignments involved irregular working hours and expose to different working conditions, body fatigue and psychological stress (Neri vs. ECC, 127 SCRA 672). The DBP cashier was exposed to handling money bills (Ibid).

Cirrhosis contracted by a nursery farm aide who was constantly exposed to plant chemicals and insecticides (San Valentin vs. ECC, 118 SCRA 160).

Cardiovascular disease which includes myocardial infraction in work-related disease (Telefast Communications vs. Castro, G.R. No. 78367, 29 February 1988).

Cancer of the lungs contracted by a librarian who has work for 15


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years during which she was exposed to dusty books and other deleterious substances in the library (Dator vs. ECC, 111 SCRA 632).

Cancer of the liver contracted by a school teacher who has served for twenty-four (24) years (Abadiano vs. GSIS, 111 SCRA 509).

Rheumatoid arthritis contracted by school teacher usually associated with the nature and character of their occupation (Gersalino vs, WCC, 187 SCRA 1).

Senile cataract contracted by a construction worker who was constantly exposed to the sun’s glared and heat as well as excessive dirt and dust (Jarillo vs. ECC, 112 SCRA 264).

28. Give instances of non-compensable illnesses.

The following ailments are not compensable:

Ailments of a telephone operator diagnosed as chronic pylonephritis, diabetes mellitus, anemia metastases (cancer) are not occupational diseases (De Jesus vs. ECC, G.R. No. 56191, 27 May 1986).

Cancer of the pancreas contracted by a bookkeeper (Milano vs. ECC, 142 SCRA 52).

Senile cataract of a district engineer is not listed as occupational disease (Zozodrado vs. ECC, G.R. No. 65856, 17 January 1986).

Pylonephritis and bronchopneumonia contracted by a mechanic (Sulit vs.ECC, 98 SCRA 478).

Peptic ulcer is not included in the list of occupational diseases (Dabatian vs. GSIS G.R. No. 47294, 8 April 1987).

Bells Palsy, anxiety neurosis, peripheral neuritis not listed as occupational diseases (Galanida vs. ECC, G.R. No. 70660, 24 September 1987)

Parotid Carcinoma or cancer of the salivary glands contracted by an accounting clerk is not an occupational disease (Sarmiento vs. ECC, G.R. No. 65680, 11 May 1988).

Glaucoma is no longer compensable (Hatta Hataie vs. ECC, 195 SCRA 580).

29. What an injury?Injury is defined as any harmful changes in human organism from any accident sustained at work while executing an order for the employer.30. What are the conditions for compensability of injuries?

For injury and the resulting disability or death to be compensable, the injury must be the result of an accident that satisfies all of the following conditions:

The employee must have been injured at the place where his work requires him to be;

The employee must have been performing his official functions;

If the injury was sustained elsewhere, the employee must have been executing an order for the employer (Sec. 1(a), Rule III, Amended Rules on Employees Compensation).

Thus an injury or accident is said to arise “in the course of employment” when it takes place within the period of employment, at a place where the employee may be, and while he is fulfilling his duties or is engaged in doing something incidental thereto. Note that “in the course” factor applies to time, place and circumstances (PHHC vs. WCC, L – 18246, 30 October 1964).

31. Distinguish “arising out of” and “in the course of” factors?


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An injury or illness “arise out of” when it results from a risk or hazard which is necessarily or ordinarily or reasonably inherent in or incident to the conduct of such work or business. It refers to the origin or cause of the accident and are descriptive of its character (PASUDECO vs. 16 SCRA 784).“In the course of” takes place when an employee is doing the duty which he is required to perform. It refers to time, place, and circumstances under which accident takes place (Afable vs. Singer Machine Co.,58 Phil. 42).

32. What are the instances of compensable injuries?

The following are instances of compensable injuries:

Peculiar risks. A metro aide while at work on a public street was crushed to death by an automobile. The injury caused by an accident was in pursuance his employment, thus compensable.

Street perils. A caminero’s death or injury performing his work when hit by a fast moving vehicle is held to be compensable (Balajadia vs. Province Supra).

A street sweeper is exposed to the perils of the street thus any injury arising there from is compensable (Balajadia vs. Province, G.R. No. L-41979, 15 October 1934).

Acts of ministration. The injury of the employee who heeded the “call of nature” and sustained injuries in the performance of such act, is deemed compensable. Likewise, acts necessary to the health and comfort of an employee while at work such as satisfaction of thirst, hunger, etc. are incidental to employment and injuries sustained there from

are held to be compensable. (Chua vs. Roman, L-14827, 31 October 1960).

Acts of God. A ships captain’s death because his vessel sank in a marine disaster arising out of employment is thus compensable (Murillo vs. Mendoza, 66 Phil, 689).

A farm worker’s death while administering insecticides to agricultural plants in the open field, and lightning struck him, was held to be compensable.

Assaults. A heated argument ensued between two workers over a work assignment resulting in an assault by one to the other; the injury or death arising there from has been held to be compensable (BLTC vs. Mandaguit, 70 Phil. 685).

However, assault occasional not attributable to employment such as when it sprang from jealousy over a beautiful girl, as the two workers as rivals, was held to be not compensable.

Recreational activities. The injury of the employee who was injured during a company-sponsored recreational activity is deemed compensable. The test is whether such activity is for the benefit or interest of the employer; otherwise it is not compensable. (99 C.J.S. 737; RP vs. Amil, 10 SCRA 669).

An employee won a prize (around the world tour) for having been chosen as the “most outstanding employee of the year.” In the course of such tour he met an accident; the injury is deemed compensable.

Acts for the benefit of the employer. In an attempt to protect the properties of the company, an employee was killed by the burglars. The resulting death is compensable.

In his desire to retrieve the logs being carried away by strong current, the employee, although a good swimmer,


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met his death by drowning as a consequence. This is deemed compensable (Cuevo vs. Barrredo, No. L-45699, 24 February 1938).

Acts during emergency. Whatever injuries are sustained in the course of a rescue work during an emergency arising out of the employment are compensable. Injury suffered by an employee in his attempt to rescue a co-worker arising out of employment, is also a compensable (Estandarte vs. Phil. Motor Alcohol Co., G.R. No. 39722, 1 November 1933).

33. Can injuries sustained off the premises be compensable?

YES. An injury is compensable when it is sustained an employee anytime and anywhere while executing an order for the employer. A well-known rule on the matter is the “coming and going” rule. The following are compensable off-premise injuries:

The employee is on the way to or from work in a vehicle owned or supplied by the employer. Example is the employer’s supplied bus (Talisay-silay Milling Co. vs. WCC, 21 SCRA 366).

The employee is subject to call at all hours or at the moment of the injury. Example: The employer summoned him, while on his way he was injured in an accident.

The employee is traveling for the employer. Example: Traveling workers.

The employee is on his way to further work at time, even though on a fixed salary. Example: The employer required employee to bring some papers at home for overtime purposes; on his way he met an accident (Torbela vs.

ECC, G.R. No. L-42627, 21 February 1980).

The employee is required to bring the car to employer’s business place for use therein (Iloilo Dock and engineering Co. vs. 26 SCRA 102, 105).

The employee is accidentally injured at a point reasonably proximate to the place of work, such injury is deemed to have arisen out of and in the course of his employment. Example: The school principal sustained an injury in a vehicular accident while he was on his way to school and at the time of the accident, he had in his possession official papers he worked on his residence on the eve of his death (Vda. De Torbela vs. ECC, 96 SCRA 260).

34. What is the going and coming rule? Give the exceptions to the rule.

The general rule in workmen’s compensation law known as the going and coming rule, is that in the absence of special circumstances, an employee injured while going to or coming from his place of work is excluded from the benefits of the workmen’s compensation law. Thus, an injury or accident sustained by an employee while using the public streets and highways in going to or returning from the place of employment is not compensable. Such as injury is suffered as a consequence of risk and hazard of employment. Furthermore, the employer is not an insurer against all accidental injuries which might happen to an employee while in the course of employment. (Iloilo Dock and Engineering Co. vs. WCC, 26 SCRA 102, 105)

This rule, however, admits of exceptions, to wit:

where the employee is proceeding to or from his work on the premises of his employer;


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where the employee is about to enter or about to leave the premises of his employer by the way of the exclusive or customary means of ingress and egress (proximity rule);

where the employee is charged, while on his way to of from his place of employment or at his home, or during his employment with some duty or special errand connected with his employment; and

where the employer as an incident of the employment provides the means of transportation to and from the place of employment.

35. Explain and illustrate the proximity rule.

The proximity rule, an exception to the coming and going rule, provides that an injury or accident sustained off the employer’s premise, but while in close proximity thereto and while using a customary means of ingress and egress, is deemed compensable.

Where the employee, while proceeding to work and running to avoid the rain, slipped and fell into a ditch fronting the main gate of the employer's factory, and as a result of which he died the next day, it was held that the accident occurred within the zone of employment and therefore compensable.

36. What defenses may be interposed by the State Insurance Fund against a claim for compensation made by a covered employee or his dependents?

The following defenses may be set up:

The injury is not work-connected or the sickness is not occupational.

The disability or death was occasioned by the employee’s intoxication, willful intention to

injure or kill himself or another, or his notorious negligence.

No notice of sickness, injury or death was given to the employer.

The claim was filed beyond three (3) years from the time the cause of action accrued.

37. Does intoxication bar compensation?

In order to prevent payment of compensation the following conditions must concur:

there must be proof of actual intoxication;

the intoxication must be to such a degree that the employee is incapacitated from substantially engaging in employment and performing his task;

the intoxication must be the proximate cause of the injury;

the intoxication must not only be the proximate cause (Schneider, Workmen’s Compensation Laws, Vol. VI, 493-4; Balbija vs. Time Taxicab, 1219-R, 20 October 1955).

38. Does suicide bar compensation? Since the employee committed the crime by himself, the resulting death is not covered for compensation as in the following cases;

when It results from insanity resulting from compensable injury or disease;

when it occurs during a delirium resulting from compensable injury or disease; and

when it flows from an uncontrollable impulse arising from compensable injury or disease (Horovits, 41 Nebraska Law Journal, 36).


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39. What is notorious negligence? Does it bar compensation?

Notorious negligence is equivalent to gross negligence; it is something more than mere carelessness or lack of foresight; it falls under the designation of evident and manifest negligence and signifies a deliberate act of the employee to disregard his own personal safety. However, mere disobedience to the rules, orders and/or prohibition does not in itself constitute notorious negligence, if no intention can be attributed to the injured to end his life.Notorious negligence resulting in serious injury or death of the employee is not compensable. However, no man in his senses would deliberately cause death. Thus, the presumption is that the laborer by his instinct of self-preservation takes precaution to avoid such danger unless a willful intention is attributed to him to end his life (Dela Cruz vs. Cia. Maritima, G.R. No. 38236, 21 August 1933).

40. What is the liability of the State Insurance Fund?

Whenever other laws provide similar benefits for the same contingency, the employee who qualifies for the benefits shall have the option to choose the law under which the benefit will be paid to him. If the law chosen provides for benefits lesser than those provided by the Labor Code, he shall be entitled only to the difference.The employee cannot avail himself at the same time of similar benefits provided by different laws, except the difference thereof. However, the employer may continue to grant benefits already earned by the employees under any collective bargaining agreement or any other arrangement (Sec. 2, Rule ІV, Amended Rules on Employees Compensation).

41. What are the benefits excluded by the State Insurance Fund?

The following benefits are excluded by the State Insurance Fund:

Gratuity benefits under Section 699 of the Revised Administrative Code, as amended by R.A. No. 1232;

Retirement, disability, sickness, and death benefits under the SSS Law ( R.A. No. 1161, as amended);

Life insurance, disability and retirement benefits under the GSIS Law (Com. Act. No. 186, as amended);

Gratuities and pensions of every personnel for deaths and disabilities incurred in line of duty in accordance with R.A. No. 610, as amended;

Medical benefits administered by the Philippine Medical Care Commission provided in R.A. No. 4864, as amended; and

Other benefits granted by other laws and administered either by the GSIS or SSS.

42. Is Article 173 of the Labor Code, as amended a bar to claim for damages under the Civil Code?

NO. Article 173 of the Labor Code does not bar to claim for damages under Civil Code arising from employer’s negligence, for liability under Article 173 is confined only to illness or injury.

43. Is simultaneous recovery of benefits allowed?

YES. While it is true the SSS Law (R.A. No. 1161, as amended) is “distinct and different” from the labor Code, the provisions of Sections 15 of the SSS law and Article 173 of the Labor Code are in pari materia insofar as they both relate to payment of compensation to covered employees, and insofar also as both provisions barred the simultaneous recovery of benefits under both the SSS Law and the Labor Code, until Article 173


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was amended by P.D No. 1921 in 1984. The amendment introduced by P.D No. 1921 to Article 173 lifted the ban against the simultaneous recovery of benefits under the Labor Code and the SSS law, and is deemed to have repealed by necessary implication the provision of Section 15 of the SSS Law. Since P.D. No. 1921 is the latest expression of the legislative will, it will prevail over Section 15 of the SSS Law. (Opinions of the Secretary of justice dated May 23, 1989 and January 12, 1990 addressed to the SSS).Furthermore, benefits under the State Insurance Fund accrue due to the employees concerned due to hazards involved and are made a burden on the employment itself. On the other hand, social security benefits are paid to SSS members by reason of their membership therein for which they contribute their money to a general fund.It must be noted that under the new Social Security Act (R.A. 8282), the provision of Section 15 of the old SSS law which bars simultaneous recovery of benefits, has already been deleted.

44. Can a claimant who has already recovered from the State Insurance Fund still recover damages in a criminal or civil case in relation thereto?

No. Unless otherwise provided, the liability of the State Insurance Fund under this Title shall be exclusive and in place of all other liabilities of the employer to the employee, his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents. 45. G., who worked in the weaving department of a textile firm, was stabbed to death by L., his fellow employee. L. was convicted of homicide and sentenced to pay indemnity to the heirs of G. If the heirs have already recovered from the State Insurance Fund, can they still hold the employer subsidiarily liable for the

indemnity to be paid by L., in the event the latter is unable to pay the same? Why?

No, the heirs can no longer recover indemnity from the employer. The liability of the State Insurance Fund is exclusive and in place of all other liabilities of the employer to the employee and his dependents or beneficiaries. This includes the subsidiary liability of the employer under the Revised Penal Code. (Generoso vs. Universal Textile Mills, Inc. G.R. No. L-28586, January 22, 1980) 46. What are the liabilities of third parties?

In case the injury or death is caused by circumstances creating a legal liability against a third party other than the employer, the injured employee or his dependents may either claim compensation from the System under the Labor Code or sue for damages in accordance with law. In case the benefit is paid by the system, the latter is subrogated to the rights of the injured employee or his dependent in accordance with the general law. Where the System recovers from such third party damages in excess of those paid or allowed under Title II, Book IV, of the Labor Code, such excess shall be delivered to the injured employee or another person entitled thereto, after deduction of the expenses of the System and the cost of the proceedings.It must be noted that injuries or death caused by a third person are compensable provided the requisites of compensability are present. However, the injured employee cannot claim payment twice for the same injuries, that is, from the third party and from the SSS or GSIS (Alba vs. Bulaong, 101 Phil. 434).

47. S., a driver-mechanic, was killed when he tried to fight unidentified men who carnapped the vehicle of his employers.


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As a consequence of his death, his heirs filed an action for death compensation and damages before the RTC against his employers. The latter, however, contended that the complaint should be dismissed as the appropriate remedy is a claim under the Employees’ Compensation Program. Is the contention of the employers correct? Explain.

No. The employee or his heirs have the choice of cause of action and the corresponding relief, i.e. either an ordinary action for damages based on Article 1171 of the New Civil Code before the regular courts or a special claim for limited compensation under the Employees’ Compensation Program. But the right of choice is qualified in that the employee should be held to the particular remedy in which he stakes his fortune. (Vda. de Severo vs. Go, G.R. No. L-44330, January 29, 1988)






Acts of ministration. The injury of the employee who heeded the “call of nature” and sustained

injuries in the performance of such act, is deemed compensable. Likewise, acts necessary to the health and comfort of an employee while at work such as satisfaction of thirst, hunger, etc. are incidental to employment and injuries sustained there from are held to be compensable. (Chua vs. Roman, L-14827, 31 October 1960).








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In his desire to retrieve the logs being carried away by strong current, the employee, although a good swimmer, met his death by drowning as a consequence. This is deemed compensable (Cuevo vs. Barrredo, No. L-45699, 24 February 1938).







The employee is on his way to further work at time, even though on a fixed salary. Example: The employer required employee to bring some papers at home for overtime purposes; on his way he met an accident (Torbela vs. ECC, G.R. No. L-42627, 21 February 1980).




The general rule in workmen’s compensation law known as the going and coming rule, is that in the absence of special circumstances, an employee injured while going to or coming from his place of work is excluded from the benefits of the workmen’s compensation law. Thus, an injury or accident sustained by an employee while using the public streets and highways in going to or returning from the place of employment is not compensable. Such as injury is suffered as a consequence of risk and hazard of employment. Furthermore, the


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employer is not an insurer against all accidental injuries which might happen to an employee while in the course of employment. (Iloilo Dock and Engineering Co. vs. WCC, 26 SCRA 102, 105)









36. What defenses may be interposed by the State Insurance Fund against a claim

for compensation made by a covered employee or his dependents?



The disability or death was occasioned by the employee’s intoxication, willful intention to injure or kill himself or another, or his notorious negligence.











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Whenever other laws provide similar benefits for the same contingency, the employee who qualifies for the benefits shall have the option to choose the law under which the benefit will be paid to him. If the law chosen provides for benefits lesser than those provided by the Labor Code, he shall be entitled only to the difference.

The employee cannot avail himself at the same time of similar benefits provided by different laws, except the difference thereof. However, the employer may continue to grant benefits already earned by the employees under any collective bargaining agreement or any other arrangement (Sec. 2, Rule ІV, Amended Rules on Employees Compensation).












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YES. While it is true the SSS Law (R.A. No. 1161, as amended) is “distinct and different” from the labor Code, the provisions of Sections 15 of the SSS law and Article 173 of the Labor Code are in pari materia insofar as they both relate to payment of compensation to covered employees, and insofar also as both provisions barred the simultaneous recovery of benefits under both the SSS Law and the Labor Code, until Article 173 was amended by P.D No. 1921 in 1984. The amendment introduced by P.D No. 1921 to Article 173 lifted the ban against the simultaneous recovery of benefits under the Labor Code and the SSS law, and is deemed to have repealed by necessary implication the provision of Section 15 of the SSS Law. Since P.D. No. 1921 is the latest expression of the legislative will, it will prevail over Section 15 of the SSS Law. (Opinions of the Secretary of justice dated May 23, 1989 and January 12, 1990 addressed to the SSS).Furthermore, benefits under the State Insurance Fund accrue due to the employees concerned due to hazards involved and are made a burden on the employment itself. On the other hand, social security benefits are paid to SSS members by reason of their membership therein for which they contribute their money to a general fund.It must be noted that under the new Social Security Act (R.A. 8282), the provision of Section 15 of the old SSS law which bars simultaneous recovery of benefits, has already been deleted.


No. Unless otherwise provided, the liability of the State Insurance Fund under this Title shall be exclusive and in place of

all other liabilities of the employer to the employee, his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents. 45. G., who worked in the weaving department of a textile firm, was stabbed to death by L., his fellow employee. L. was convicted of homicide and sentenced to pay indemnity to the heirs of G. If the heirs have already recovered from the State Insurance Fund, can they still hold the employer subsidiarily liable for the indemnity to be paid by L., in the event the latter is unable to pay the same? Why?

No, the heirs can no longer recover indemnity from the employer. The liability of the State Insurance Fund is exclusive and in place of all other liabilities of the employer to the employee and his dependents or beneficiaries. This includes the subsidiary liability of the employer under the Revised Penal Code. (Generoso vs. Universal Textile Mills, Inc. G.R. No. L-28586, January 22, 1980) 46. What are the liabilities of third parties?

In case the injury or death is caused by circumstances creating a legal liability against a third party other than the employer, the injured employee or his dependents may either claim compensation from the System under the Labor Code or sue for damages in accordance with law. In case the benefit is paid by the system, the latter is subrogated to the rights of the injured employee or his dependent in accordance with the general law. Where the System recovers from such third party damages in excess of those paid or allowed under Title II, Book IV, of the Labor Code, such excess shall be delivered to the injured employee or another person entitled thereto, after deduction of the expenses


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of the System and the cost of the proceedings.It must be noted that injuries or death caused by a third person are compensable provided the requisites of compensability are present. However, the injured employee cannot claim payment twice for the same injuries, that is, from the third party and from the SSS or GSIS (Alba vs. Bulaong, 101 Phil. 434).

47. S., a driver-mechanic, was killed when he tried to fight unidentified men who carnapped the vehicle of his employers. As a consequence of his death, his heirs filed an action for death compensation and damages before the RTC against his employers. The latter, however, contended that the complaint should be dismissed as the appropriate remedy is a claim under the Employees’ Compensation Program. Is the contention of the employers correct? Explain.

No. The employee or his heirs have the choice of cause of action and the corresponding relief, i.e. either an ordinary action for damages based on Article 1171 of the New Civil Code before the regular courts or a special claim for limited compensation under the Employees’ Compensation Program. But the right of choice is qualified in that the employee should be held to the particular remedy in which he stakes his fortune. (Vda. de Severo vs. Go, G.R. No. L-44330, January 29, 1988)

48. Who are entitled to benefits under the employees’ compensation program?

The covered employee, his dependents, and in case of his death, his beneficiaries.

49. Who are the dependents of the employee?

Dependents include the following: the legitimate, legitimated or

legally adopted child who is:

unmarried, not gainfully employed, and not over eighteen years of age, or over eighteen but not over

twenty-one years of age provided that he is enrolled in school,

or over twenty-one years of age provided that he is congenitally incapacitated and incapable of self-support due to physical or mental defect which is congenital or acquired during minority;

the legitimate spouse living with the employee; and

the legitimate parents of said employee wholly dependent upon him for regular support.

Sexual harassment in a work-related or employment environment- in a work-related or employment environment, sexual harassment is committed when:

the sexual favor is made a condition in the hiring or in the employment, re-employment or continued employment of said individual or granting said individual favorable compensation, terms, conditions, promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or classifying the employee which in any way would discriminate, deprive or diminish employment opportunities or otherwise adversely affect said employee;

the above acts would impair the employee’s rights or privileges under existing labor laws; or

the above acts would result in an intimidating, hostile, or offensive environment for the


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employee. (Section 3(a), Republic Act No. 7877)

Sexual harassment in an education or training environment- in an education or training environment, sexual harassment is committed:

against one who is under the care, custody or supervision of the offender;

against one whose education, training, apprenticeship or tutorship is entrusted to the offender;

when the sexual favor is made a condition to the giving of a passing grade, or the granting of honors and scholarships, or the payment of a stipend, allowance or other benefits, privileges, or considerations; or

when the sexual advances result in an intimidating, hostile or offensive environment for the student, trainee or apprentice. (Section 3(b), Republic Act No. 7877)


2. GSIS, COMPULSORY MEMBERSHIP Compulsory for all employees (as

defined in Section 2 (d) of GSIS Law) receiving compensation who have not reached the compulsory retirement age, irrespective of employment status, EXCEPT MEMBERS OF THE ARMED FORCES AND THE PNP, subject to the condition that they must settle first their financial obligations with the GSIS and contractuals who have no employer and employee relationship with the agencies they serve.

EXCEPT FOR THE MEMBERS OF THE JUDICIARY AND CONSTITUTIONAL COMMISSIONS WHO SHALL HAVE LIFE INSURANCE ONLY, all members of the GSIS shall have life insurance, retirement and all other social security protection such as

disability, survivorship, separation and unemployment benefits (Sec. 3, RA 8291)

THE SOLO PARENTS' WELFARE ACT OF 2000

Q. What is parental leave?

Answer: Republic Act No. 8972 (An Act Providing for Benefits and Privileges to Solo Parents and Their Children, Appropriating Funds Therefor and for Other Purposes), otherwise known as “The Solo Parents’ Welfare Act of 2000,” was approved on November 7, 2000 providing for parental leave of seven (7) days. It is defined as follows:

“(d) ‘Parental leave’ - shall mean leave benefits granted to a solo parent to enable him/her to perform parental duties and responsibilities where physical presence is required.”

It bears noting that this leave privilege is an additional leave benefit which is separate and distinct from any other leave benefits provided under existing laws or agreements. Thus, under Section 8 thereof, it is provided:

“Sec. 8. Parental Leave. - In addition to leave privileges under existing laws, parental leave of not more than seven (7) working days every year shall be granted to any solo parent employee who has rendered service of at least one (1) year.” Q. What is meant by flexible work schedule under R. A. No. 8972?

Answer: Under Republic Act No. 8972, solo parents are allowed to work on a flexible schedule, thus:

“Sec. 6. Flexible Work Schedule. – The employer shall provide for a flexible working schedule for solo parents: Provided, That the same shall not affect individual and company productivity: Provided, further, That any employer may request exemption from the above requirements from the DOLE on certain


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meritorious grounds.” (Section 6, Republic Act No. 8972).

The phrase “flexible work schedule” is defined in the same law as follows:

(e) “Flexible work schedule” - is the right granted to a solo parent employee to vary his/her arrival and departure time without affecting the core work hours as defined by the employer. (Section 3[e], Republic Act No. 8972).Entitlement

Q: How many days are entitled to a solo parent? Answer: A Male or Female Solo Parent is entitled to 1 – 7 days of leave each year.

Q: Who is considered a solo parent under Republic Act 8972\

A: The following are considered a solo parent:1. A woman who gives birth as a result of rape; 2. A widow or widower;3. A spouse of convict in jail;4. A spouse of insane;5. A spouse after legal separation with custody of children;6. A spouse after declaration of nullity of marriage with custody of children;7. A spouse abandoned for at least one year;8. An unmarried mother or father with custody of children;9. Any person who solely provides pastoral care and support to a child; and10. Any family member who assumes responsibility of a parent who abandons. (R.A. NO. 8972, 11/7/2000)

GUIDE ON THE BATTERED WOMAN’S LEAVE

Q: How many days leave is entitled to a battered woman under R.A. 9262?

A: A battered woman is entitled to ten (10) days leave with pay in addition to other paid leaves under the labor code, other laws and company policies.

\BATTERED WOMAN DEFINED

Q: Who is considered a Battered Woman?

A: A Battered Woman is one who is a victim of any act or series of acts of violence committed by any person which resulted to her physical, sexual or psychological suffering.

Q: How does a battered woman apply for such leave?

A: The woman employee has to submit a certification from the barangay captain or kagawad or prosecutor or the clerk of court that an action under R.A. No. 9262 has been filed and is pending.

Usage of the 10-day leave is at the option of the woman employee. It shall cover the day or days when she will have to attend to medical and legal concerns. Leaves not availed of are non-cumulative and not convertible to cash (R. A. No. 9262, the anti-violence against women and their children act of 2004; 3/8/04).

SOLO PARENTS' WELFARE ACT OF 2000




It bears noting that this leave privilege is an additional leave benefit which is separate and distinct from any other leave benefits


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provided under existing laws or agreements. Thus, under Section 8 thereof, it is provided:



“Sec. 6. Flexible Work Schedule. – The employer shall provide for a flexible working schedule for solo parents: Provided, That the same shall not affect individual and company productivity: Provided, further, That any employer may request exemption from the above requirements from the DOLE on certain meritorious grounds.” (Section 6, Republic Act No. 8972).


(e) “Flexible work schedule” - is the right granted to a solo parent employee to vary his/her arrival and departure time without affecting the core work hours as defined by the employer. (Section 3[e], Republic Act No. 8972).Entitlement

Q: How many days are entitled to a solo parent? Answer: A Male or Female Solo Parent is entitled to 1 – 7 days of leave each year.

Q: Who is considered a solo parent under Republic Act 8972\

A: The following are considered a solo parent:1. A woman who gives birth as a result of rape;

2. A widow or widower;3. A spouse of convict in jail;4. A spouse of insane;5. A spouse after legal separation with custody of children;6. A spouse after declaration of nullity of marriage with custody of children;7. A spouse abandoned for at least one year;8. An unmarried mother or father with custody of children;9. Any person who solely provides pastoral care and support to a child; and10. Any family member who assumes responsibility of a parent who abandons. (R.A. NO. 8972, 11/7/2000)

GUIDE ON THE BATTERED WOMAN’S LEAVE

Q: How many days leave is entitled to a battered woman under R.A. 9262?

A: A battered woman is entitled to ten (10) days leave with pay in addition to other paid leaves under the labor code, other laws and company policies.\BATTERED WOMAN DEFINED

Q: Who is considered a Battered Woman?

A: A Battered Woman is one who is a victim of any act or series of acts of violence committed by any person which resulted to her physical, sexual or psychological suffering.

Q: How does a battered woman apply for such leave?

A: The woman employee has to submit a certification from the barangay captain or kagawad or prosecutor or the clerk of court that an action under R.A. No. 9262 has been filed and is pending.

Usage of the 10-day leave is at the option of the woman employee. It shall cover the day or days when she will have to attend to medical and legal concerns. Leaves not availed of are non-cumulative and not convertible to cash (R. A. No. 9262,


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the anti-violence against women and their children act of 2004; 3/8/04).

Briefly state the laws on employment of minors.

A: As a general rule, no child below 15 shall be employed. The exceptions to the rule are:

1. When the child works directly under the sole responsibility of his/her parents or legal guardian who employs members of his/her family only under the following conditions:

employment does not endanger the child’s life, safety, health and morals;

employment does not impair the child’s normal development; and

the parent/legal guardian provides the child with the primary and/or secondary education prescribed by DECS.

2. Where the child’s employment or participation in public entertainment or information through cinema, theater, radio, or television is essential, provided that:

employment does not involve advertisements or commercials promoting alcoholic beverages, intoxicating drinks, tobacco and its by-products or exhibiting violence;

There is a written contract approved by the DOLE; and

The conditions prescribed for the employment of minors {above stated} are met.

Q: What are considered hazardous work places? A: The following are considered hazardous places:

1. where the nature of the work exposes the workers to dangerous environmental elements, contaminants or work conditions;

2. where the workers are engaged in construction work, logging, fire-fighting, mining, quarrying, blasting, stevedoring, dock work, deep-sea fishing, and mechanized farming;

3. where the workers are engaged in the manufacture or handling of explosives and other pyrotechnic products;

4. where the workers use or are exposed to heavy or power-driven machinery or equipment; and

5. where the workers use or are exposed to power-driven tools,

CHILD LABORChild laborers are persons aged below

15, or from 15 to below 18 years, performing work or service that is hazardous or deleterious in nature, or exploitative, or unsupervised by the child’s parent or guardian, or that interferes with normal development, or deprives that child’s right to health and education.

However, not all children who work are engaged in child labor. Work performed by any person below 15 years of age is not considered child labor if it falls under allowable situations under Republic Act No. 7658. Light work that is occasional, legal and respects the child’s right to health and education is not child labor.

Note on CHILD LABOR:

Republic Act 9231, Sec. 3 (July 28, 2003), allows a child below 15 years of age to work for not more than 20 hours a week, provided: (a) that the work shall not be more than 4 hours at any given day; (b) he does not work between 8PM and 6AM of the following day; and (c) the work is not hazardous or deleterious to his health or morals. A child 15 years but below 18 years shall not work for more than 8 hours a day and in no case beyond 40 hours a week and he is not allowed to work from 10PM to 6AM.


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New: NIGHT WORKERS

RUN-OFF ELECTION Double majority rule: Before a

labor union can be declared a winner, a majority of the eligible voters must have cast their votes (include spoiled ballots) and a majority of the valid votes cast is for such union (exclude spoiled ballots but include challenged votes).

Run-off election is proper when: there is a valid election

because a majority of the eligible voters voted (1st

majority) the said election presented at

least 3 choices not one of the choices obtained

the majority of the valid votes cast (2nd majority)

total votes cast for the contending unions is at least 50% of the votes cast

the unions obtaining the two highest votes will participate in the run-off, take note that “NO UNION” shall not be a choice in the run-off election

the union obtaining the majority of the total votes cast shall be declared winner in the run-off election

GUIDE TO CORRECT ANSWERS FOR MCQ

Constitutional mandate.

“The state shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be

entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law.

“The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in setting disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace.

“The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth.” (Section 3 (Labor), Article XIII [Social Justice and Human Rights] of the 1987).

1. Declaration of basic principles.

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

1. Labor contracts are not ordinary contracts as the relation between capital and labor is impressed with public interest.

2. In case of doubt, labor laws and rules shall be interpreted in favor of labor.

3. Labor Code applies to all workers, whether agricultural or non-agricultural.

4. Applicability of Labor Code to government-owned or controlled corporations:

When created with original or special charter – Civil Service laws, rules and regulations;


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When created under the Corporation Code applies.

RECRUITMENT AND PLACEMENT OF WORKERS

1. Relevant law – Migrant Workers and Overseas Filipinos Act of 1995 (R. A. No. 8042).

2. Free placement services by public employment offices for domestic/overseas work.

Entities authorized to engage in recruitment and placement

a. public emplyment offices;b. Philippine Overseas Employment

Administration (POEA);c. Private recruitment entities;d. Private employment agencies;e. Shipping or manning agents or

representatives;f. Such other persons or entities as

may be authorized by the Secretary of Labor and Employment; and

g. Construction contractors.

Money claims of OFW’s – jurisdiction and appeal

1. Jurisdiction over money claims of OFW’s is vested with Labor Arbiters of the NLRC and not with POEA (R. A. no. 8042).

2. Decisions of Labor Arbiters in money claims of OFW’s are appealable to NLRC.

Liability of local recruitment agency and foreign principal

1. Local Agency is solidarily liable with foreign principal.

2. Severance of relations between local agent and foreign principal does not affect liability of local recruiter.

Claims for Death and other Benefits1. Labor Arbiters have jurisdiction

over claims for death, disability and other benefits arising from employment.

2. Basis of compensation for death generally is whichever is greater between Philippine law or foreign law.

3. Work-connection required.

Disciplinary Action Cases [POEA retains jurisdiction over disciplinary action cases]

Direct-hiring1. Employers cannot directly hire

workers for overseas employment except through authorized entities (see enumeration above).

2. Rationale for the ban – to ensure full regulation of employment in order to avoid exploitation.

3. Non-resident foreign corporation directly hiring Filipino workers is doing business in the Philippines and may be sued in the Philippines.

Illegal recruitment –1. Illegal recruitment under Article

38 applies to both local and overseas employment.

2. Illegal recruitment- may be committed by any person whether licensees or non-licensees or holders or non-holders of authority.

3. Elements of illegal recruitment:a. First element: recruitment

and placement activities.

Any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether from profit or not, when undertaken by a non-licensee or non-holder of authority: Provided, That any such licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed as engaged in such act.

a. Second element: Non-licensee or non-holder of authority –


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means any person, corporation or entity which has not been issued a valid license or authority to engage in recruitment and placement by the Secretary of Labor and Employment, or whose license or authority has been suspended, revoked or canceled by the POEA or the Secretary of Labor and Employment.

Note:i. Mere impression that recruiter is

capable of providing work abroad is sufficient.

i. “Referral” of recruits also constitutes recruitment activity.

ii. Absence of receipt to prove payment is not essential to prove recruitment.

iii. Only one (1) person recruited is sufficient to constitute recruitment.

iv. Non-prosecution of another suspect is not material.

1. Illegal recruitment, when considered economic sabotage – when the commission thereof is attended by the qualifying circumstances as follows:a. By a syndicate – if carried out

by a group of 3 or more persons conspiring and confederating with one another;

b. In large scale – if committed against 3 or more persons individually or as a group.

1. Prescriptive period of illegal recruitment cases – Under Republic Act No. 8042 – Five (5) years except illegal recruitment involving economic sabotage which prescribes in 20 years.

Employment of non-resident aliens

1. Non-resident aliens should secure Alien Employment Registration Certificate (AERC).

2. There should be understudies.3. Alien employee should not

transfer to another job or charge his employer.

TRAINING AND EMPLOYMENT OF SPECIAL WORKERS:

APPRENTICES1. Apprenticeship program to be

implemented and administered by TESDA.

2. “Apprenticeship” means any training on the job supplemented by related theoretical instruction involving apprenticeable occupations and trades as may be approved by the Secretary of Labor and Employment. An “apprentice” is a worker who is covered by a written apprenticeship agreement with an employer.

3. Qualifications of apprentices:a. be at least fifteen (15) years

of age, provided those who are at least fifteen (15) years of age but less than eighteen may be eligible for apprenticeship only in non-hazardous occupation;

b. be physically fit for the occupation in which he desires to be trained;

c. possess vocational aptitude and capacity for the particular occupation as established through appropriate tests; and

d. possess the ability to comprehend and follow oral and written instructions.

1. Wage rate of apprentices – 75% of the statutory minimum wage.

2. Apprentices become regular employees if program is not approved by DOLE.


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3. Ratio of theoretical instructions and on-the-job training – 100 hours of theoretical instructions for every 1,000 hours of practical training on-the-job.

LEARNERS1. “Learners” is a person hired as a

trainee in industrial occupations which are non-apprenticeable and which may be learned through practical training on the job for a period not exceeding three (3) months, whether or not such practical training is supplemented by theoretical instructions.

2. Pre-requisites before learners may be validly employed:a. when no experienced

workers are available;b. the employment of learners is

necessary to prevent curtailment of employment opportunities; and

c. the employment does not create unfair competition in terms of labor costs or impair or lower working standards.

1. Wage rate of learners –75% of the statutory minimum wage.

HANDICAPPED WORKERS1. Handicapped workers are those

whose earning capacity is impaired:a. by age; orb. physical deficiency; orc. mental deficiency; ord. injury

1. If disability is not related to the work for which he was hired, he should not be so considered as handicapped worker. He may have a disability but since the same is not related to his work, he cannot be considered a handicapped worker insofar as that particular work is concerned.

2. Wage rate – 75% of the statutory minimum wage.

CONDITIONS OF EMPLOYMENT1. Employees covered – applicable

to all employees in all establishments whether operated for profit or not.

2. Employees not covered:a. Government employees;b. Managerial employees;c. Other officers or

members of a managerial staff;

d. Domestic servants and persons in the personnel service of another;

e. Workers paid by results;f. Non-agricultural field

employer;g. Members of the family of

the employer;1. More specially, the above

excluded groups of employees are not covered by the following provisions of Title I, Book III of the Labor Code:

Article 83 - Normal hours of work;Article 84 - Hours worked;Article 85 - Meal periods;Article 86 - Night shift differential;Article 87 - Overtime work;Article 88 - Undertime not offset by overtime;Article 89 - Emergency overtime work;Article 90 - Computation of additional compensation;Article 91 - Right to weekly rest period;Article 92 - When employer may require work on a rest day;Article 93 - Compensation for the rest day, Sunday or holiday work;Article 94 - Right to holiday pay;Article 95 - Right to service incentive leave; andArticle 96 - Service charges.


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1. Existence of employer-employee relations is necessary.

a. Employment relationship; contractual and voluntary in nature.

b. Existence of employment relationship is both a question of fact and law.

1. Test of employment relationship (there is no uniform test) but the four (4) elements of the employer-employee relationship are as follows:

(a) Selection and engagement of employee;

(b) Payment of wages;(c) Power of dismissal; and(d) Power of control (the

most important test).1. Quantum of evidence required to

prove employment relationship – mere substantial evidence (e. g. I. D. card, Cash Vouchers for salaries, inclusion in payroll, reporting to SSS).

Normal hours of work1. “Normal” hours of work of

employees-eight (8) hours per day.

2. “Work day” means consecutive-hour period which commences from the time the employee regularly starts to work. It does not necessarily mean the ordinary calendar day from 12:00 midnight unless the employee starts to work at this unusual hour.

3. “Work week” is a week consisting of 168 consecutive hours or 7 consecutive 24-hour work days beginning at the same hour and on the same calendar day each calendar week.

4. Reduction of eight-hour working day – not prohibited by law provided there is no reduction in pay of workers.

5. Shortening of work week – allowed provided employees

voluntarily agree thereto; there is no diminution in pay; and only on temporary duration.

6. Hours of work of part-time workers – payment of wage should be in proportion only to the hours worked.

7. Hours of work of hospital and clinic personnel – The Supreme Court has voided Policy Instructions No. 54 in San Juan de Dios Hospital Employees Association vs. NLRC (G. R> No. 12638683, Nov. 28, 1997). Consequently, the rule that hospital employees who worked for only 40 hours/5 days in any given workweek should be compensated for full weekly wage for 7 days is no longer applicable.

Home worked1. The following are the

compensable hours worked:

a. All time during which an employee is required to be on duty or to be at the employer’s premises or to be at a prescribed workplace; and

b. All time during which an employee is suffered or permitted to work.

1. Coffee breaks and rest period of short duration – considered compensable hours worked.

2. Waiting time – considered compensable if waiting is an integral part of the employer’s work or he is required or engaged by the employer to wait.

3. Sleeping while on duty is compensable if the nature of the employee’s work allows sleeping without interrupting or prejudicing work or when there is an agreement between the employee and his employer to that effect. For example, a truck helper may sleep after


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performing his task and while his truck is travelling on its way to its assignment. But the same may not be done by the driver.

4. Working while on call – compensable if employee is required to remain on call in the employer’s premises or so close thereto that he cannot use the time effectively and gainfully for his own purpose.

5. Travel time:a. Travel from home to work – not compensable working time.b. Travel that is all in the day’s work – compensable hours worked.

a. Travel away from home – compensable hours worked.

1. Attendance in lectures, meetings, and training periods sanctioned by employer-considered hours worked.

2. Power interruptions or brown-outs, basic rules:

Brown-outs of short duration not exceeding twenty (20) minutes – compensable hours worked.

Brown-outs running for more than twenty (20) minutes may not be treated as hours worked provided any of the following conditions are present:

a. The employees can leave their workplace or go elsewhere whether within or without the work premises; or

b. The employees can use the time effectively for their own interest.

1. Attendance in CBA negotiations or grievance meeting – compensable hours worked.

2. Attendance in hearings in cases filed by employee – not compensable hours worked.

3. Participation in strikes – not compensable working time.

Meal period

1. Every employee is entitled to not less than one (1) hour (or 60 minutes) time-off for regular meals. Being time-off, it is not compensable hours worked and employee is free to do anything he wants, except to work. If he required to work while eating, he should be compensated therefor.

2. If meal time is shortened to not less than twenty (20) minutes – compensable hours worked. If shortened to less than 20 minutes, it is considered coffee break or rest period of short duration and, therefore, compensable.

Night shift differential1. Night shift differential is

equivalent to 10% of employee’s regular wage for each hour of work performed between 10:00 p.m. and a.m. of the following day.

2. Night shift differential and overtime pay, distinguished. When the work of an employee falls at nighttime, the receipt of overtime pay shall not preclude the right to receive night differential pay. The reason is, the payment of the night differential pay is for the work done during the night; while the payment of the overtime pay is for work in excess of the regular eight (8) working hours.

3. Computation of Night Shift Differential Pay.

a. Where night shift (10 p.m. to 6 a.m.) work is regular work.1. On an ordinary day: Plus 10%

of the basic hourly rate or a total of 110% of the basic hourly rate.

2. On a rest day, special day or regular holiday: Plus 10% of the regular hourly rate on a rest day, special day or regular holiday or a total of


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110% of the regular hourly rate.

b. Where night shift (10 p.m. to 6a.m.) work is overtime work

1. On an ordinary day: Plus 10% of the overtime hourly rate on an ordinary day or a total of 110% of the overtime hourly rate on an ordinary day.

2. On a rest day or special day or regular holiday: Plus 10% of the overtime hourly rate on a rest day or special day or regular holiday.

a. For overtime work in the night shift. Since overtime work is not usually eight (8) hours, the compensation for overtime night shift work is also computed on the basis of hourly rate.1. On an ordinary day. Plus 10%

of 125% of basic hourly rate or a total of 110% of 125% of basic hourly rate.

2. On a rest day or special day or regular holiday. Plus 10% of 130% of regular hourly rate on said days or a total of 110% of 130% of the applicable regular hourly rate.

Overtime work1. Work rendered after normal eight

(8) hours of work is called overtime work.

2. In computing overtime work, “regular wage” or basic salary” means “cash” wage only without deduction for facilities provided by the employer.

3. “Premium pay” means the additional compensation required by law for work performed within 8 hours on non-working days, such as rest days and special days.

4. “Overtime pay” means the additional compensation for work performed beyond 8 hours. Every employee entitled to premium

pay is also entitled to the benefit of overtime pay.

5. Illustrations on how overtime is computed:a. For ovetime work performed

on an ordianry day, the overtime pay is plus 25% of the basic hourly work.

b. For overtime work performed on a rest day or on a special day, the overtime pay is plus 30% of the basic hourly rate which includes 30% additional compensation as provided in Article 93 [a] of the Labor Code.

c. For overtime work performed on a rest day which falls on a special day, the overtime pay is plus 30% of the basic hourly rate which includes 50% additional compensation as provided in Article 93 [c] of the Labor Code.

d. For overtime work performed on a regular holiday, the overtime pay is plus 30% of the basic hourly rate which includes 100% additional compensation as provided in compensation.

e. For overtime work performed on a rest day which falls on a regular holiday, the overtime pay is plus 30% of the basic hourly rate which includes 160% additional compensation.

Undertime not offset by overtime1. Undertime work on any particular

day shall not be offset by overtime on any other day.

2. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required by law such as overtime pay or night shift differential pay.


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Emergency overtime work1. The general rule remains that no

employee may be compelled to render overtime work against his will.

2. Exceptions when employee may be compelled to render overtime work:a. When the country is at war or

when any other national or local emergency has been declared by the National Assembly or the Chief Executive;

b. When overtime work is necessary to prevent loss of life or property or in case of imminent danger to public safety due to actual or impending emergency in the locality caused by serious accident, fire, floods, typhoons, earthquake, epidemic or other disasters or calamities;

c. When there is urgent work to be performed on machines, installations or equipment, or in order to avoid serious loss or damage to the employer or some other causes of similar nature;

d. When the work is necessary to prevent loss or damage to perishable goods.

e. When the completion or continuation of work started before the 8th hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer; and

f. When overtime is necessary to avail of favorable weather or environmental conditions where or quality of work is dependent thereon.

1. When employee refuses to render emergency overtime work under any of the foregoing conditions, he may be dismissed

on the ground of insubordination or willful disobedience of the lawful order of the employer.

WEEKLY REST PERIODS1. Every employer shall give his

employees a rest period of no less than 24 consecutive hours after every 6 consecutive normal work days.

2. If business is open on Sundays/holidays, rest day may be scheduled on another day.

3. Preference of employee as to his rest day should be respected if based on religious grounds.

4. Waiver of compensation for work on rest days and holidays is not valid.

When employer may require work on a rest day.

a. In case of actual or impending emergencies cause by serious accident, fire, flood, typhoon, earthquake, epidemic or other disaster or calamity to prevent loss of life and property, or in case of force majeure or imminent danger to public safety;

b. In case of urgent work to be performed on machineries, equipment, or installations, to avoid serious loss which the employer would otherwise suffer;

c. In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be expected to resort to other measures;

d. To prevent serious loss of perishable goods;

e. Where the nature of the work is such that the


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employees have to work continuously for seven (7) days in a week or more, as in the case of the crew members of a vessel complete a voyage and in other similar cases; and

f. When the work is necessary to avail of favorable weather or environmental conditions where performance or equality of work is dependent thereon.

Compensations for rest day, Sunday or holiday work

a. Premium pay for work on scheduled rest day.

A covered employee who is made or permitted to work on his scheduled rest day shall be paid with an additional compensation of at least thirty percent (30%) of his regular wage.

a. Premium pay for work on Sunday when it is employee’s rest day.

A covered employee shall be entitled to such additional compensation of thirty percent (30%) of his regular wage for work performed on a Sunday only when it is his established rest day.

a. Premium pay for work performed on Sundays and holidays when employee has no regular workdays and no scheduled regular rest day.

Where the nature of the work of the employee is such that he has no regular workdays and no regular rest days can be scheduled, he shall be paid an additional compensation of at least thirty percent (30%) of his regular wage for work performed on Sundays and holidays.

a. Premium pay for work performed on special holidays (now special days) which fall on employee’s scheduled rest day.

Work performed on any special holiday (now special day) shall be paid with an additional compensation of at least thirty percent (30%) of the regular wage of the employee. Where

such holiday work falls on the employee’s scheduled rest day, he shall be entitled to additional compensation of at least fifty percent (50%) of his regular wage.

a. Higher rate provided in agreements.

Where the collective bargaining agreement or other applicable employment contract stipulates the payment of higher premium pay than that prescribed by law, the employer shall pay such higher rate.

HOLIDAY PAY1. Holiday pay; meaning and

purpose:Holiday pay is a premium given to employees pursuant to law even if he is not suffered to work on a regular holiday.

If worker did not work on regular holiday, he is entitled to 100% of his basic pay;

If he worked, he is entitled to 200% thereof.

1. List of regular holidays and special days:

A. Regular holidays. New Year’s Day -

January 1Maundy Thursday -

Movable dateGood Friday -

Movable dateAraw ng Kagitingan[Bataan and Corregidor Day] - April 9Labor Day -

May 1Independence Day -

June 12National Heroes Day - Last Sunday of AugustBonifacio Day -

November 30Christmas Day -

December 25Rizal Day -

December 30

A. Nationwide special days.


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All Saint’s Day -November 1

Last Day of the Year -December 31

3. Distinction between “regular holidays” and “special days”:

a. A covered employee who does not work during regular holidays is paid 100% of his regular daily wage; while a covered employee who does not work during a special day does not receive any compensation under the principle of “no work, no pay.”

b. A covered employee who works during special days is paid 200% of his regular daily wage; while a covered employee who works during special days is only paid an additional compensation of not less than 30% of the basic pay or a total of 130% and at least 50% over and above the basic pay or a total of 150% if the worker is permitted or suffered to work on special days which fall on his scheduled rest day.

4. “Special holidays” are now known as “special days.”

1. Principle of “no work, no pay” applies to special days but not to unworked regular holidays where the employees are always paid the equivalent of 100% of their basic pay.

2. Premium pay for work performed during special days – 30% on top of basic pay.

3. Premium pay for work performed during special days falling on scheduled rest day – 50% over and above the basic pay.

4. Effect of absences on entitlement to regular holiday pay:

a. Employees on leave of absence with pay – entitled to regular holiday pay.

b. Employees on leave of absence without pay on the day immediately preceding a regular holiday may not be paid the required holiday pay if he has not worked on such regular holiday.

c. Employees on leave while on SSS or employee’s compensation benefits – Employers shall grant the same percentage of the holiday pay as the benefit granted by competent authority in the form of employee’s compensation or social security payment, whichever is higher, if they are not reporting for work while on such benefits.

d. When the day preceding regular holiday is a non-working day or scheduled rest day – employees shall not be deemed to be on leave of absence on that day, in which case, he shall be entitled to the regular holiday pay if he worked on the day immediately preceding the non-working day or rest day.

1. Rule in case of successive regular holidays – an employee may not be paid for both holidays if he absents himself from work on the day immediately preceding the first holiday, unless he works on the first holiday, in which case, he is entitled to his holiday pay on the second holiday.

2. Rule in case of two regular holidays falling on the same day (e. g., Araw ng Kagitingan and Good Friday falling on April 9,


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1993) –if employee did not work: 200% of basic pay; If employee worked: 300% of basic pay.

Service incentive leave1. Every covered employee who has

rendered at least one (1) year of service shall be entitled to a yearly service incentive leave of five (5) days with pay.

2. Meaning of “one year of service” – service within twelve (12) months, whether continuous or broken, reckoned from the date the employee started working, , including authorized absences and paid regular holidays, unless the number of working days in the establishment as a matter of practice or policy, or that provided in the employment contract, is less than twelve (12) months, in which case, said period shall be considered as one (1) year for the purpose of determining entitlement to the service incentive leave.

3. Service incentive leave is commutable to cash if unused at the end of the year.

4. The basis of computation of service incentive leave is the salary rate at the date of commutation.

5. Grant of vacation leave or sick leave may be considered substitute for service incentive leave. (Note: there is no provision in the Labor Code granting vacation or sick leave).

Service charges1. Coverage – The rule on service

charges applies only to establishments collecting service charges, such as hotels, restaurants, lodging houses, night clubs, cocktail lounges, massage clinics, bars, casinos and gambling houses, and similar enterprises, including those entities operating

primarily as private subsidiaries of the government. It applies to all employees of covered employers, regardless of their positions, designation or employment status, and irrespective of the method by which their wages are paid.

2. Distribution of service charges (Percentage of sharing):

a. eighty-five percent (85%) for the employees to be distributed equally among them; and

b. fifteen percent (15%) for the management to answer for losses and breakages and distribution to managerial employees.

1. The P2,000.00 salary ceiling for entitlement thereto is no longer applicable.

2. The shares shall be distributed to employees not less often than once every 3 weeks or twice a month at intervals not exceeding 16 days.

WAGES1. Attributes of wage:

a. It is the renumeration or earnings, however designated, for work done or to be done or for services rendered or to be rendered.

b. It is 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;

c. It is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered; and


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d. It includes the fair and reasonable value, as determined by the Secretary of Labor and Employment, of board, lodging, or other facilities customarily furnished by the employer to the employee. “Fair and reasonable value” shall not include any profit to the employer, or to any person affiliated with the employer.

1. “Wage”, “salary” and “pay”; distinction – they are synonymous in meaning and usage.

2. Commission – may or may not be treated as part of wage depending on the circumstances.

3. Actual work is the basis of claim for wages (No work, no pay”).

Facilities 1. “Facilities” shall include articles or

services for the benefit of the employee or his family but shall not include tools of the trade or articles or services primarily for the benefit of the employer or necessary to the conduct of the employer’s business.

2. Value of facilities – the fair and reasonable value of board, lodging and other facilities customarily furnished by an employer to his employees both in agricultural and non-agricultural enterprises.

Supplements1. “Supplements” means extra

renumeration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages.

2. “Facilities” and “supplements”, distinction: The benefit or privilege given to the employee which constitutes an extra renumeration over and above his basic or ordinary earning or wage, is supplement; and when said

benefit or privilege is part of the laborer’s basic wage, it is a facility. The criterion is not so much with the kind of the benefit or item (food, lodging, bonus or sick leave) given but its purpose. Thus, free meals supplied by the ship operators to crew members, out of necessity, cannot be considered as facilities but supplements which could not be reduced having been given not as a part of wages but as necessary matter in the maintenance of the health and efficiency of the crew personnel during the voyage.

3. Rule on deductibility. – Facilities may be charged to or deducted from wages. Supplements, on the other hand, may not be so charged.

Gratuity and allowances.1. “Gratuity” is a gift given by the

employer in appreciation of certain favors or services rendered. It is not part of wages since, strictly speaking, it is not intended as compensation for actual work. It is further not demandable as a matter of right.

2. “Allowances” are not part of wages. Therefore, in the computation of the amount of retirement and other benefits, allowances shall not be included therein.

Bonus1. Bonus, not generally

demandable.- bonus is an amount granted and paid ex gratia to the employee for his industry or loyalty, hence, generally not demandable or enforceable. If there is no profit, there should be no bonus. If profit is reduced, bonus should likewise be reduced, absent any agreement making such bonus


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part of the compensation of the employees.

2. Bonus; when demandable and enforceable. On the basis of equitable considerations, long practice, agreement (e. g. CBA) and other peculiar circumstances, bonus may become demandable and enforceable. Consequently, if bonus is given as an additional compensation which the employer agreed to give without any condition such as success of business or more efficient or more productive operation, it is deemed part of wage or salary, hence, demandable.

3. Unlike 13th month pay, bonus may be forfeited in case employee is found guilty of an administrative charge.

13th month pay

1. “Thirteenth-month pay” shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year.

2. All rank-and-file employees are entitled to a 13th-month pay regardless of the amount of basic salary that they receive in a month and regardless of their designation or employment status, and inspective of the method by which their wages are paid, provided that they have worked for at least one (1) month during a calendar year.

3. Exempted employers –a. the government and any of its

political subdivision, including government-owned and controlled corporations, except those corporations operating essentially as private subsidiaries of the government.

b. Employers already paying their employees 13th-month pay or more in a calendar

year or its equivalent at the time of this issuance.

c. Employers of household helpers and persons in the personal service of another in relation to such workers.

d. Employers of those are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case, the employer shall be covered by the 13th month pay law insofar as such workers are concerned.

1. The term “its equivalent” shall include Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less than 1/12th

of the basic salary but shall not include cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employee, as well as non-monetary benefits. Where an employer pays less than 1/12th

of the employee’s basic salary, the employer shall pay the difference.

2. Time of payment. – The required 13th month pay shall be paid not later than December 24 of each year.

3. 13th-month pay for employees with multiple employers. – Government employees working part-time in a private enterprise, including private educational institutions, as well as employees working in two or more private firms, whether on full or part-time basis, are entitled to the required 13th-month pay from their private employers


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regardless of their total earnings from each or all their employers.

4. 13th month pay is tax exempt (R. A. 7833).

5. May payment of bonus be credited as payment of 13th-month pay?

a. Marcopper Mining Corp. vs. Ople, et. al. case – No

b. NFSW vs. Ovejera, et. al. case – Yes

c. DOLE Philippines vs. Leogardo, et. al. case – Yes

d. Brokenshire Memorial Hospital, Inc. vs. NLRC, et. al. case –No

e. United CMC Textile Workers union vs. Valenzuela, et. al. case – No

f. Universal Corn Products vs. NLRC, et. al. case – Yes

g. FEU Employees Labor Union vs. FEU case (involving transportation allowance which was treated as compliance with 13th month pay)

h. Framanlis Farms, Inc. vs. Minister of Labor, et. al. case – No

i. Kamaya Point Hotel vs. NLRC, et. al. case – Yes

j. UST Faculty Union vs. NLRC, et. al. case – No

14th month paythere is no law mandating the

payment of 14th-month pay. It is, therefore, in the nature of a bonus which may not be imposed upon the employer. It is a gratuity to which the recipient has no right to make a demand. Kamaya Point Hotel vs. NLRC, et. al., G. R. No. 75289, August 31, 1989, 177 SCRA 160).

MINIMUM WAGERegional minimum wages

1. The minimum wage rates for agricultural and non-agricultural

workers and employees in every region shall be those prescribed by the Regional Tripartite Wages and Productivity Boards (RTWPB) which shall in no case be lower than the statutory minimum wage rates.

2. The term “statutory minimum wages” refers simply to the lowest basic wage rate fixed by law that an employer can pay his workers.

3. The basis of the minimum wage rates prescribed by law shall be the normal working hours which shall not be more than eight (8) hours a day.

Prohibition against elimination or diminution of benefits

This principle mandates that the reduction or diminution or withdrawal by employers of any benefits, supplements or payments as provided in existing laws, individual agreements or collective bargaining agreements between workers and employers or voluntary employer practice or policy, is not allowed.

PAYMENT OF WAGES

Forms of payment of wages1. Under the Civil Code, it is

mandated that the laborer’s wages shall be paid in legal currency. Under the Labor Code and its implementing rules, as a general rule, wages shall be paid in legal tender and the use of tokens, promissory notes; vouchers, coupons or any other form alleged to represent legal tender is prohibited even when expressly requested by the employee.


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1. Exceptions; payment by check or money order, or through automatic teller machines (ATM card) or other similar electronic devices, provided the following concur:

a. there is a bank or other facility for encashment within a radius of one (1) kilometer from the workplace;

b. the employer or any of his agents or representatives does not receive any pecuniary benefit directly or indirectly from the arrangement;

c. the employees are given reasonable time during banking hours to withdraw their wages from the bank which time shall be considered as compensable hours worked if done during working hours; and

d. the payment by check or through ATM Card is with the written consent of the employees concerned, if there is no collective agreement authorizing the payment of wages by bank checks.

Time of payment of wages1. Time of payment; exception.- The

general rule is, wages shall be paid not less often than once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days. No employer shall make payment with less frequency than once a month. The exception to above rule is when payment cannot be made with such regularity due to force majeure or circumstances beyond the employer’s control, in which case, the employer shall pay the wages immediately after such

force majeure or circumstances have ceased.

Placement of payment of wages1. As a general rule, the place of

payment shall be at or near the place of undertaking.

2. Exceptions:

a. When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible;

b. When the employer provides free transportation to the employees back and forth; and

c. Under any other analogous circumstances, provided that the time spent by the employees in collecting their wages shall be considered as compensable hours worked.

1. Payment of wages in bars, massage clinics or nightclubs is prohibited except in the case of employees thereof.

2. Payment through banks – allowed in business and other entities with twenty five (25) or more employees and located within one (1) kilometer radius to a commercial, savings or rural bank.

Direct payment of wages1. General rule: payment of wages

shall be made directly to the employee entitled thereto and to nobody else.

2. Exceptions.a. Where the employer is

authorized in writing by the employee to pay his wages to a member of his family;


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b. Where payment to another person of any part of the employee’s wages is authorized by existing law, including payments for the insurance premiums of the employee and union dues where the right to check-off has been recognized by the employer in accordance with a collective agreement or authorized in writing by the individual employees concerned; or

c. In case of death of the employee, in which case, the same shall be paid to his heirs without necessity of intestate proceedings.

Contracting or subcontracting1. Parties.- There are 3 parties:

principal, the contractor or subcontractor, and the workers engaged by the latter. The principal and the contractor or subcontractor may be a natural or jurisdictional person.

“Principal” refers to any employer who puts out or farms out a job, service, or work to a contractor or subcontractor, whether or not the arrangement is covered by a written contract.

“Contractor” or “Subcontractor” refers to any person or entity engaged in a legitimate contracting and subcontracting arrangements.

“Contractual employee” includes one employed by a contractor subcontractor to perform or complete a job, work or service pursuant to an arrangement between the latter and a principal called “Contractor” or “Subcontractor”.

1. Contracting or Subcontracting; definition.- It refers to 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 within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal.

2. Contracting or Subcontracting; when legitimate. It shall be if the following circumstances concur:

(i) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility, according to its own manner and method, and free from the control and directions of the principal in all matters connected with the performance of the work except as to the results thereof;

(ii) The contractor or subcontractor has substantial capital or investment; and

(iii) The agreement between the principal and the contractor or subcontractor assures the contractual employees’ entitlement to all labor and occupational safety and health standards, free exercise of the right of self-organization, security of tenure, and social and welfare benefits.

4. Permissible contracting or subcontractingThe principal may engage the services of a contractor or subcontractor for the performance of any of the following:


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(a) Works or services temporarily or occasionally needed to meet abnormal increase in the demand of products or services, provided that the normal production capacity or regular workforce of the principal cannot reasonably cope with such demands;

(b) Works or services temporarily or occasionally needed by the principal for undertaking requiring expert or highly technical personnel to improve the management or operations of an enterprise;

(c) Services temporarily needed for the introduction or promotion of new products, only for the duration of the introductory or promotional period;

(d) Works and services not directly related or not integral to the main business or operation of the principal, including casual work, janitorial, security, landscaping, and messengerial services and work not related to manufacturing processes in manufacturing establishments;

(e) Services involving the public display of manufacturers’ products which do not involve the act of selling or issuance of receipts or invoices;

(f) Specialized works involving the use of some particular, unusual or peculiar skills, expertise, tools or equipment the performance of whish is beyond the competence of the regular workforce or production capacity of the principal; and

(g) Unless a reliever system is in place among the regular workforce, substitute services for absent regular employees provided that the period of service shall be coextensive with the period of absence and the same is made to the substitute

employee at the time of engagement. The phrase “absent regular employees” includes those who are serving suspensions or other disciplinary measures not amounting to termination of employment meted out by the principal but excludes those on strike where all the formal requisites for the legality of the strike have been prima facie complied with based on the records filed with the National Conciliation and Mediation Board. (Section 6, Rule VIII-A, Book III, Rules to Implement the Labor Code, as amended by Department Order No. 10, Series of 1997).

1. Prohibitions. The following are hereby declared prohibited for being contrary to law or public policy:

(a) Labor-only contracting;(b) Contracting out of work which

will either displace employees of the principal from their jobs or reduce their regular working hours;

(c) Contracting out of work with a “cabo”. [A “cabo” refers to a person or group of persons or to a labor group which, in the guise of a labor organization, supplies workers to an employer, with or without any monetary or other consideration whether in the capacity of an agent of the employer or as an ostensible independent contractor.]

(d) Taking undue advantage of the economic situation or lack of bargaining strength of the contractual employee, or undermining his security of tenure or basic rights, or circumventing the provisions or regular employment in any of the following instances:

(i) In addition to his assigned function, requiring the contractual employee to perform functions which are currently being


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performed by the regular employee of the principal or of the contractor or subcontractor;

(ii) Requiring him to sign as a precondition to employment or continued employment an antedated resignation letter; a blank payroll; a waiver of labor standards including minimum wages and social welfare benefits; or a quitclaim releasing the principal, contractor or subcontractor from any liability as to payment of the future claims; and

(iii) Requiring him to sign a contract fixing the period of employment to a term shorter than the term of the contract between the principal and the contractor or subcontractor, unless the latter contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the time of engagement.

(a) Contracting out of a job, work or service through an in-house agency as defined herein;

(b) Contracting out of a job, work or service directly related to the business or operation of the principal by reason of a strike or lockout whether actual or imminent; and

(c) Contracting out of a job, work or service when not justified by the exigencies of the business and the same results in the reduction or splitting of the bargaining unit.

Labor-only contractingThere is “labor-only contracting”

when contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal and the following elements are present:

(i) The contractor or subcontractor does not have substantial capital or investment to actually perform a job, work or service under its own account and responsibility; and(ii) The employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal.

In-house agencySimilarly prohibited under the law is

the operation of an “in-house agency” whereby a contractor or subcontractor is engaged in the supply of labor which:

(i) is owned, managed or controlled by the principal; and

(ii) operates solely for the principal owning, managing, or controlling it.

A finding that a contractor is a “labor-only” contractor is equivalent to a finding that there exists an employer-employee relationship between the owner of the project and the employee of the “labor-only” contractor since that relationship is defined and prescribed by law itself.

Indirect Employer; liability1. The principal is considered the

indirect employer of the workers supplied by independent contractor or subcontractor.

2. The nature of the liability of the principal is joint and solidarily with the contractor or subcontractor in case the latter failed to pay the wages of the employees.

Worker preference in case of bankruptcy1. The right to perform given to

workers under Article 110 cannot exist in any effective way prior to the time of its presentation in distribution proceedings. Article 110 applies only in case of bankruptcy or judicial liquidation of the employer.

2. Judicial proceedings in rein is required for creditors’ claims


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against debtors to become operative.

3. To contend that Article 110 of the Labor Code is applicable also to extrajudicial proceedings would be putting the worker in a better position than the State which could only assert its own prior preference in case of a judicial proceeding.

4. The right of preference as regards unpaid wages recognized by Article 110 of the Labor Code does not constitute a lien on the property of the insolvent debtor in favor of the workers but a right to a first preference in the discharge of the funds of the judgment debtor.

5. Article 110 of the Labor Code does not purport to create a lien in favor of workers or employees for unpaid wages upon all of the properties or upon any particular property owned by their employer. Claims for unpaid wages do not, therefore, fall at all within the category of specially preferred claims established under articles 2241 and 2242 of the Civil Code, except to the extent that such claims for unpaid wages are already covered by Article 2241, number 6: “claims of laborers and other workers engaged in the construction, reconstruction or repair of buildings, canals and other works, upon said buildings, canals or other works.” To the extent that claims for unpaid wages fall outside the scope of Article 2241, number 6 and 2242, number 3, they would come within the ambit of the category of ordinary preferred credits under Article 2242.

6. Mortgage credit.- A mortgage credit id a special preferred credit under Article 2241 of the Civil

Code while workers’ preference is an special preferred credit.

7. Preference of taxes. In one case, it has held that there is no merit in the contention of the NLRC that taxes are also absolutely preferred claims only with respect to movable and immovable properties on which they are due. The claim of the government predicated on a tax lien is superior to the claim of a private litigant predicated on a judgment. the tax lien attaches not only from the service of the warrant of distraint property but from the time of the tax become due and payable.

Attorney’s fees1. In cases of unlawful withholding

of wages, the employer may be assessed attorney’s fees equivalent to ten percent (10%) of the amount of wages recovered.

2. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorney’s fees which exceed ten percent (10%) of the amount of wages recovered.

3. The attorney’s fees may be awarded only when the withholding of wages is declared unlawful.

4. The basis of the 10% attorney’s fees is the amount of wages recovered. Should there be any other monetary awards given in the proceedings, the same may not be assessed or subjected to the 10% attorney’s fees.

PROHIBITIONS REGARDING WAGES

Non-interference in disposal of wages1. Employers are not allowed to

interfere in the disposal of wages of employees.


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Wage deductionDeductions from the wages of the

employees may be made by the employer in any of the following cases:

a. When the deductions are authorized by law, (e. g. SSS, Pag-IBIG), including deductions for the insurance premiums advanced by the employer in behalf of the employee as well as union dues where the right to check-off has been recognized by the employer or authorized in writing by the individual employee himself;

b. When the deductions are with the written authorization of the employees for payment to a third person and the employer agrees to do so, provided that the latter does not receive any pecuniary, directly or indirectly, from the transaction;

c. Withholding tax mandated under the National Internal Revenue Code;

d. Withholding of wages because of employee’s debt to the employer which is already due;

e. Deductions made pursuant to a judgment against the worker under circumstances where the wages may be the subject of attachment or execution but only for debts incurred for food, clothing, shelter and medical attendance.

f. When deductions from wages are ordered by the court;

g. Deductions made for agency fee from non-union members who accept the benefits under the CBA negotiated by the bargaining union. This form of deduction does not require the written authorization of the non-union member.

Deposits for loss or damageNo employer shall require his worker

to make deposits from which deductions shall

be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deductions or requiring deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor and Employment in appropriate rules and regulations.

Withholding of wages and kickbacks prohibited

It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the worker’s consent.

Deductions to ensure employmentIt shall be unlawful to make any

deduction from the wages of any employee for the benefit of the employer or his representative or intermediary as consideration of a promise of employment or retention in employment.

Retaliatory measuresIt shall be unlawful for an employer to

refuse to pay or reduce the wages and benefits, discharge or in any manner discriminate against any employee who has filed any complaint institute any proceeding or has testified or is about to testify in such proceedings.

False reportingIt shall be unlawful for any person to

make any statement, report, or record filed or kept pursuant to the provisions of this Code knowing such statement, report to be false in any material respect.

Wage Order1. “Wage order” refers to the Order

promulgated by the Regional Tripartite Wages and Productivity Board (RTWPB) pursuant to its wage fixing authority.


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2. Necessity for wage order.- Wherever conditions in a particular region so warrant, the RTWPB shall investigate and study all pertinent facts and based on the standards and criteria herein prescribed, shall proceed to determine whether a Wage Order should be issued.

3. Affectivity of wage order.- Any Wage Order shall take effect after fifteen (15) days from its complete publication in at least one (1) newspaper of general circulation in the region.

4. Appeal to the National Wages and Productivity Commission.- Any party aggrieved by the Wage Order issued by the RTWPB may appeal such order to the Commission within ten (10) calendar days from the publication of such order. The filing of the appeal does not stay the order or suspend the affectivity thereof unless the person appealing such order shall file with the Commission, an undertaking with a surety or sureties satisfactory to the Commission for the payment to the employees affected by the order of the corresponding increase, in the event such order is affirmed.

Standards/Criteria for minimum wage fixing1. in the determination of regional

minimum wages, the Regional Board shall, among other relevant factors, consider the following:(a) The demand for living wages;(b) Wage adjustment vis-à-vis

the consumer price index;(c) The cost of living and changes

or increases therein;(d) The needs of workers and

their families;(e) The need to induce industries

to invest in the countryside;

(f) Improvements in standards of living;

(g) The prevailing wage levels;(h) Fair return of the capital

invested and capacity to pay of employers;

(i) Effects on employment generation and family income; and

(j) The equitable distribution of income and wealth along the imperatives of economic and social development.

Wage distortion“Wage distortion” is a situation where

an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length or service, or other logical bases of differentiation.

The issue of whether or not a wage distortion exists is a question of fact that is within the jurisdiction of the quasi-judicial tribunals.

ADMINISTRATION AND ENFORCEMENTDistinctions between Article 128 (b), Article 129 and Article 217

For purposes of clarification, the following are the major distinctions regarding the jurisdictions over money claims of the Secretary of Labor and Employment under Article 128 [b], the Regional Director of the Department of Labor and Employment under Article 129 and the Labor Arbiter under Article 217 of the Labor Code.

1. On the nature of the powers granted and proceedings.

Article 128 [b] involves the exercise by the Secretary of Labor and Employment or his duly authorized representatives, of the visitorial and enforcement powers provided therein.

Article 129 involves the exercise by the Regional Director of the Department of Labor and Employment or any of the duly


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authorized hearing officers of the Department, of adjudicatory powers over cases concerning recovery of wages, simple money claims and other benefits not exceeding P5,000.00 and not accompanied by any claim for reinstatement.

Article 217 involves the exercise by the Labor Arbiter of its quasi-judicial power to hear and decide claims involving an amount exceeding P5,000.00 regardless of whether accompanied with a claim for reinstatement.

2. On the person or officer granted the powersArticle 128 [b] grants the power to specifically to the Secretary of Labor and Employment or his duly authorized representative.

The Regional Directors shall be the duly authorized representatives of the Secretary of Labor and Employment in the administration and enforcement of labor standards within their respective territorial jurisdictions. (Section 3, Rule I, Rules on the Disposition of Labor Standards Cases in the Regional Offices, September 16, 1987).

Article 129 grants the power specifically to the Regional Director of the Department of Labor and Employment or any of the duly authorized hearing officers of the Department.Article 217 grants the power specifically to the Labor Arbiters of the National Labor Relations Commission.

3. On the subject matter.Article 128 [b] applies only to inspection cases involving findings of the labor employment and the enforcement officers or industrial safety engineers regarding violations of labor standards provisions of the Labor Code and other labor legislations.

The term “labor standards” refers to the minimum requirements prescribed by existing laws, rules and regulations and other issuances relating to wages, hours of work, cost of living allowances and other monetary and welfare benefits, including those set by

occupational safety and health standards. (Section 7, Rule 1, Rules on the Disposition of Labor Standards Cases in the Regional Offices, September 16, 1987).

Article 129 applies only to cases initiated by complaint filed by any interested party involving the recovery of wages and other monetary claims and benefits (including interest) but the amount of which should not exceed P5,000.00 and should not include a claim for reinstatement.

Article 217 applies only to cases of claims involving an amount exceeding P5,000.00 whether or not accompanied with a claim for reinstatement.

4. On the party initiating the action.Article 128 [b] contemplates situations where the case for violation of labor standards laws and other labor regulations, arose from the routine inspection conducted by the labor employment and enforcement officer or industrial safety engineers of the Department of Labor and Employment, with or without a complaint initiated by an interested party. Here, it is generally the Department of Labor and Employment which initiates the action.

Article 129 contemplates situations where there is a complaint initiated by an interested party for recovery of wages, simple money claims and other benefits. Here, it is the complainant who initiates the action.

Article 217 contemplates situations where a complaint is initiated by a worker, whether agricultural or non-agricultural. Here, it is the complainant who initiates the action.

1. On the existence of employer- employee relationship.

Article 128 [b] is applicable only when the employer-employee relationship still exists. In case the relationship no longer exists, claims for payment of monetary benefits fall within the exclusive and original jurisdiction of the Labor Arbiters. Accordingly, if on the face of the complaint, it can be ascertained that employer-employee relationship no longer


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exists, the case, whether or not accompanied by an allegation of illegal dismissal, shall immediately be endorsed by the Regional Director to the appropriate Branch of the National Labor Relations Commission. (Section 3, Rule II, Rules on the Disposition of Labor Standards Cases in the Regional Offices, September 16, 1987).

Article 129 is applicable whether the employer-employee relationship still exists or not for as long as the claim arose from said relationship.

Article 217 is applicable irrespective of whether or not the employer-employee relationship still exists for as long as the claim arose from said relationship.

6. On the remedy of appeal, how taken.Article 128 [b] grants appeal from the order issued by the duly authorized representative of the Secretary of Labor and Employment to the latter.

Article 129 grants appeal from the decision of the Regional Director or Hearing Officer to the National Labor Relations Commission.

Article 217 grants appeal from the decision of the Labor Arbiter to the National Labor Relations Commission.

7. On the reglementary period of appeal.Article 128 [b] prescribes no specific reglementary period for appeal. The law is silent on this matter. However, under the Rules on the Disposition of Labor Standards Cases in the Regional Offices promulgated on September16, 1987 by the Secretary of Labor and Employment, the reglementary period is fixed at ten (10) calendar days from receipt of the order. (Section 1, Rule IV, Rules on the Disposition of Labor Standards Cases in the Regional Offices, September 16, 1987).

Article 129 prescribes the reglementary period of five (5) calendar days from receipt of a copy of the decision or resolution, within which to perfect the appeal.

Article 217 does not contain any provision on the reglementary period for appeal. However, Article 223 prescribes the reglementary period of ten (10) calendar days from receipt of the decision, award or order of the Labor Arbiter, within which to perfect appeal.

1. On requirement of posting of bond to perfect the appeal.

Article 128 [b] requires that in case the order subject of the appeal involves monetary award, an appeal by the employer may be perfected only upon the posting of cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from.Article 129 is silent on the requirement of bond, hence, this is not required to perfect the appeal.

Article 127 does not embody the provision requiring posting of bond to perfect the appeal but Article 223. A bond may stay the execution of monetary awards but not the order of reinstatement which is executory even pending appeal.

1. On the grounds for appeal. Article 128 [b] does not specify the grounds for appeal. But the Rules on the Disposition of Labor Standards Cases in the Regional Offices which issued by the Secretary of Labor and Employment on September 16, 1987, to implement Article 128 [b] (prior to its amendment by Republic Act No. 7730 on June 2, 1994), enumerates the following grounds:

a. there is a prima facie evidence of abuse of discretion on the part of the Regional Director;

b. the Order was secured through fraud, coercion or graft and corruption;

c. the appeal is made purely on questions of law; or

d. serious errors in the findings of facts were committed which, if not corrected, would cause grave


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or irreparable damage to the appellant.

Article 129 expressly makes reference to the grounds provided in Article223 of the Labor Code as applicable to appeals brought under this Article.

Article 217 does not contain the grounds but those mentioned in Article 223 are applicable to appeals from decisions, awards or orders of the Labor Arbiter.

10. On period to decide appeal and finality of decisions.Article 128 [b] does not prescribe the period within which to decide the appeal and when such decision will become final and executory. However, its implementing rules, while not providing the period within which the decision should be rendered, mention that the decisions, orders or resolutions of the Secretary of Labor and Employment shall become final and executory after ten (10) calendar days from receipt thereof. (Section 5, Rules on the Disposition of Labor Standards Cases in the Regional Office).

Article 129 mentions expressly that the NLRC should resolve the appeal within ten (10) calendar days from the submission of the last pleading required or allowed under its rules contrary to Article 223 which provides for twenty (20) calendar days. With respect to the finality of the decision on the appealed case. Article 223 provides that the same shall be final and executory after ten (10) calendar days from receipt thereof by the parties.

Article 217 does not embody the provision on the period to decide appealed cases or the period within which such decision shall become final and executory. These matters are provided under Article 223 of the Labor Code.

EMPLOYMENT OF WOMEN

Facilities for womenEmployers are required to:

(a) Provide seats proper for women and permit them to use such seats when they are free from work and during working hours, provided they can perform their duties in this position without detriment to efficiency;

(b) To establish separate toilet rooms and lavatories for men and women and provide at least a dressing room for women;

(c) To establish a nursery in a workplace for the benefit of the women employees therein; and

(d) To determine appropriate minimum age and other standards for retirement or termination in special occupations such as those of flight attendants and the like.

Maternity leave benefits (Pregnant women, whether married or not, are entitled)

1. A female member who has paid at least 3 monthly contributions in the 12-month period immediately proceeding the semester of childbirth or miscarriage shall be paid a daily maternity benefit of 100% of her average daily salary credit for 60 days or 78 days in case of caesarian delivery. This payment of daily maternity benefit shall be a ___ to the recovery of sickness benefit for the same compensable period.

2. The maternity leave shall be extended without pay on account of illness medically certified to arise out of the pregnancy, delivery, abortion or miscarriage, which renders the woman unfit for work, unless she has earned unused leave credits from which such extended leave may be charged.

3. The maternity leave shall be paid by the employer only for the first four (4) deliveries by a woman


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employee after the effectivity of this Code.

Paternity leaveEvery married employee in the

private and public sectors shall be entitled to paternity leave of 7 days (for each delivery) with full pay for the first 4 deliveries of the legitimate spouse with whom he is cohabiting. If paternity leave is not availed of, it is not convertible to cash.

Discrimination against woman prohibitedIt shall be unlawful for any employer:(1) To deny any woman employee

the benefits provided for in the law or to discharge any woman employed by him for the purpose of preventing her from enjoying any of the benefits provided under the Labor Code.

(2) To discharge such woman on account of her pregnancy, or while on leave or in confinement due to her pregnancy;

(3) To discharge or refuse the admission of such woman upon returning to her work for work of equal value.

(4) To pay lesser compensation to a female employee with respect to promotion, training opportunities, study and scholarship grants solely on account of their sexes.

Stipulation against marriageIt shall be unlawful for an employer to

require as a condition of employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.

Woman working in nightclubs, massage clinics, etc.

Any woman who is permitted or suffered to work, with or without compensation, in any night club, cocktail lounge, massage clinic, bar or similar establishments under the effective control or supervision of the employer for a substantial period of time as determined by the Secretary of Labor and Employment, shall be considered as an employee of such establishment for purposes of labor and social legislation.

They are considered regular employees of said establishments except when the night club operator does not control nor direct the details and manner of their work in the entertainment of nightclub patrons and, having no fixed hours or work, they may come and go as they please.

EMPLOYMENT OF MINORS1. prohibition against child

discrimination.- No Employer shall discriminate against any person in respect to terms and conditions of employment on account of his age.

2. Relevant law: Republic Act No. 7610 – The Special Protection of Cild Against Child Abuse, Exploitation and Discrimination Act.

Minimum employment age.1. No child below fifteen (15) years

of age shall be employed, except when he works directly under the sole responsibility of his parents or guardian, and his employment does not in any way interfere with his schooling.

2. Any person between fifteen (15) and eighteen (18) years of age may be employed for such number of hours and such periods of the day as determined by the Secretary of Labor and Employment in appropriate regulations.

3. The foregoing provisions shall in no case allow the employment of a person below eighteen (18) years of age in an undertaking


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which is hazardous or deleterious in nature as determined by the Secretary of Labor and Employment.

Employment of househelpers1. “Househelper” or “domestic

servant” shall refer to any person, whether male or female, who renders services in and about the employer’s home and which services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the employer’s family.

2. Household services include the services of family drivers, cooks, nursemaids or family servants, but not the services of laborers in a commercial or industrial enterprise.

3. The original contract of domestic service shall not last for more than two (2) years but it may be mutually renewed for such periods by the parties.

4. The minimum wage rates of househelpers shall be the basic cash wages which shall be paid to the househelpers in addition to lodging, food and medical attendance.

5. Time and manner of payment of wages.- Wages shall be paid directly to the househelper to whom they are due at least once a month. No deductions therefrom shall be made by the employer unless authorized by the househelper himself or by existing laws.

6. Assignment to non-household work. – No househelper shall be assigned to work in a commercial, industrial or agricultural enterprise at a wage or salary rate lower than that provided for agricultural or non-agricultural workers as prescribed herein.

7. Opportunity for education. – If the househelper is under the age of eighteen (18) years, the employer shall give him or her an opportunity for at least elementary education. The cost of education shall be part of the househelper’s compensation, unless there is a stipulation to the contrary.

8. Treatment of househelpers – just and humane manner and no physical violence.

9. The employer shall furnish the househelper, free of charge, suitable and sanitary living quarters as well as adequate food and medical attendance.

10. Indemnity for unjust termination of services.- If the period of household service is fixed, neither the employer nor the househelper may terminate the contract before the expiration of the term, except for a just cause. If the househelper is unjustly dismissed, he or she shall be paid compensation already earned plus that for fifteen (15) days by way of indemnity. If the househelper leaves without a justifiable reason, he or she shall forfeit any unpaid salary due him or her not exceeding fifteen (15) days.

EMPLOYMENT OF HOMEWORKERS & FIELD PERSONNEL

1. An industrial homeworker is a worker who is engaged in industrial homework, a system of production under which work for an employer or contractor is carried out by a homeworker at his/her home. The materials may or may not be furnished by the employer or contractor.

2. A field personnel is a non-agricultural employee who regularly performs his duties away from the principal place of


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business or branch office of the employer an whose actual hours or work in the field cannot be determined with reasonable certainty.

\LABOR LAWS OF THE PHILIPPINES

PART TWOLABOR RELATIONS LAW

Labor Relations- refers to that part of labor law which regulates the relations between employers and workers. Example: Book V’ of the Labor Code which deals with labor organizations, collective bargaining, grievance machinery, voluntary arbitration, conciliation and mediation, unfair labor practices, strikes, picketing and lockout.

Labor Standards- refers to that part of the labor law which prescribe the minimum terms and conditions of employment which the employer id required to grant to its employees. Examples: Books one to four of the Labor Code as well as Book VI thereof which deals with working conditions, wages, hours of work, holiday pay and other benefits, conditions of employment of women, minors, househelpers, and homeworkers, medical and dental services, occupational health and safety, termination of employment and retirement.

JURISDICTION OF LABOR ARBITERS, NLRC, VOLUNTARY ARBITRATORS & BUREAU OFLABOR RELATIONS

JURISDICTION OF LABOR ARBITERS

Original and Exclusive Jurisdiction over the following:1. Unfair Labor practices;2. Termination disputes;3. Cases that workers may file involving

wages, rates of pay, hours of work and other terms and conditions of employment, if accompanied with claim for reinstatement;

4. Claims for actual, moral, exemplary and other forms of damages arising from the from the employer—employee relations;

5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and

6. Except claims for Employees’ Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer—employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5, 000.00) regardless of whether accompanied with a claim for reinstatement.

Jurisdiction of NLRC The National Labor Relations Commission exercises two (2) kinds of jurisdiction:1. original jurisdiction; and2. exclusive appellate jurisdiction

1. Original Jurisdictiona. Injunction in ordinary labor disputes to

enjoin or restrain any actual threatened commission of any or all prohibi9ted or unlawful acts or to require the performance of a particular act in any labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party.

b. Injunction in strikes or lockouts under Article 264 of the Labor Code.

c. Certified labor disputes causing or likely to cause a strike or lockout in an industry indispensable to the national interest, certified by the Secretary of Labor and Employment for compulsory arbitration.

2.Exclusive Appellate jurisdiction.a. All cases decided by the Labor Arbiters

including contempt cases.b. Cases decided by the DOLE Regional

directors or his duly authorized Hearing Officers involving recovery of wages, simple money claims and other benefits not exceeding P5, 000 and not accompanied by for reinstatement.


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Distinction between jurisdiction of Labor Arbiters and NLRC.

The NLRC has exclusive appellate jurisdiction over all cases decided by the Labor Arbiters. The NLRC does not have original jurisdiction over the cases over which Labor Arbiter has original and exclusive jurisdiction (see above enumeration). If a claim does not fall within the exclusive original jurisdiction of the Labor Arbiter, the NLRC cannot have appellate jurisdiction thereover.

Intra-corporate disputes.-Labor Arbiters have no jurisdiction over termination of corporate officers and stockholders which, under the law, is considered intra corporate disputes. The Regional Trial Court (not SEC) now have jurisdiction under R. A. 8799 (Securities Regulations Act of 2000)). Jurisdiction of RTC includes adjudication on monetary claims (such as unpaid salaries, leaves, 13th

month pay, bonuses, etc.), damages and attorney’s fees.

Government Corporations.- Labor Arbiters have jurisdiction over cases involving employees of government-owned or controlled corporations without original charters (organized under the corporation code). They have no jurisdiction if entity has original charter.

Immuned entities—Labor Arbiter have no jurisdiction over labor cases involving from suit. Exception: when said entities propriety activities (as distinguished from governmental functions).

Ecclesiastical affairs. —Labor Arbiters have jurisdiction over labor cases involving dismissal

of priests and religious ministers but not over purely ecclesiastical (such as excommunication). In Austria vs. Hon. NLRC, et. Al., G. R.No.124382, August 16,1999, it was held that the fact that a case involves the church and its religious minister does not ipso fact give the case religious significance. Simply stated, what is involved in an illegal dismissal case is the relationship of the church as an employee-a purely secular matter not related to the practice of faith, worship or doctrines of the church, in this case the minister was not excommunicated or expelled from the membership of the church but was terminated from employment based on the grounds cited in Article 282 of the Labor Code.

Money claims under pars. (a), [3] and [6] of Article 217; classification.

Money claims falling within the original jurisdiction of the Labor Arbiters may be classified as follows:

1) any money claim, regardless of amount,, accompanied with a claim for reinstatement (which presupposes from a termination case); or

2) any money claim, regardless of whether accompanied with a claim reinstatement,, exceeding the amount five thousand pesos (P5,000.000) per claimant (which does not necessarily involve termination employment)

Money claims cognizable by the DLOE Regional Directors and not by Labor Arbiter: requisites.

1. the claim must arise from employer—employee relationship;


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2. the claimant does not seek reinstatement; and

3. the aggregate money claim each employee does not exceed P5, 000.00.

Receivership or liquidation of business, effect on jurisdiction of Labor Arbiter.The jurisdiction conferred upon Labor Arbiters and the NLRC would not be lost simply because the assets of a former employer had been placed under receivership or liquidation.

Wage distortion cases.- Labor Arbiters have jurisdiction over wage distortion cases only in unorganized establishment, jurisdiction is vested with voluntary arbitrators.

Money claims OFW’s.- Labor Arbiters have jurisdiction over all monetary claims of overseas workers.

Strikes and Lockouts.-Labor Arbiters have jurisdiction over legality of strikes and lockouts, except strikes and lockouts in industries indispensable to the national interest, in which case, either NLRC (in certified) or DOLE Secretary (in assumed cases) has jurisdiction.

JURISDICTION OF VOLUNTARY ARBITRATORSOriginal and Exclusive jurisdiction

over the following:

1. all unresolved grievances arising from the interpretation or implementation of the collective bargaining agreement after exhaustion of the grievance procedure; and

2. all unresolved grievances arising from the implementation or interpretation of company personnel policies.

All grievances which are settled or resolved within seven (7) calendar days from the date of the submission for resolution to the last step of the grievance machinery, shall automatically be referred to voluntary

arbitration prescribed in the Collective Bargaining Agreement (CBA).

Cases cognizable by voluntary Arbitrator but filed with NLRC and DOLE Regional Offices.-They shall immediately be disposed and referred to the Grievance Machinery or Voluntary arbitration provided in the Bargaining Agreement (CBA)

Jurisdiction over any other labor disputes, irrespective of the nature of the case, is vested on Voluntary Arbitrators by agreement of the parties.

JURISDICTION OF BUREAU OFLABOR RELATIONS (BLR)

Original and exclusive jurisdiction over the following:

1. “ Inter-union disputes” or “ represented disputes” which refer to cases involving petition for certification election filed by a duly registered labor organization which is seeking to be recognized as the sole and exclusive bargaining agent of the rank-and-file employees in the appropriate bargaining unit of a company, firm or establishment.

2. “Intra-union disputes” or “representation disputes” which refer to disputes or grievances arising from any violation or disagreement over any provision of the constitution and-by laws of the union, including any violation of the rights and conditions of union membership provided for in the Labor Code.

3. All disputes, grievances or problems arising from or affecting labor-management relations in all workplaces, except those arising from interpretation or implementation of the CBA which are subject of grievances procedure and/or voluntary arbitration.{Note: The BLR has the following administrative functions: (1) registration of labor unions; (2) keeping of registry of labor


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unions; and (3) maintenance and custody of CBA’s.]APPEALS

APPEAL TO NLRC FROM DECISIONS OF LABOR ARBITERS

Four ((4) grounds for appeal:

(a) If there is a prima facie evidence of abuse of discretion on the pat of the labor Arbiter;

(b) If the decision order or award secured through fraud coercion, including graft and corruption;

(c) If made purely on question of law; and

(d) If serious errors in the finding of facts are raised which would cause grave or irreparable damage or injury to the appellant.

Requisites for perfection of Appeal.

a. the appeal should be filed on a reglementary period;

b. the Memorandum of Appeal should be under oath;

c. payment of appeal fee;d. posting of cash surety bond, if judgment

involves monetary award; ande. proof of service to the adverse party.

Reglementary period- 10 calendar days.

a. Saturdays, Sundays and Legal Holidays included in reckoning 10-day reglementary period.

b. Exceptions to 10-day calendar day period rule.

1. Appeal filed before the Vir-Jen case (G. R. Nos. 58011-12, July 20,1982) at a time when the rule was 10 working days.

2. 10th day falling on a Saturday.3. 10th day falling on a Sunday or Holiday.4. Reliance on erroneous notice of decision.5. Appeal on the decision of Labor Arbiter

on third—party claim (10 working days).

6. Appeal from the decision of Labor Arbiter in direct contempt cases (5 calendar days).

7. When allowing the appeal “in interest of justice.”

8. Allowing the appeal for other compelling reasons (due to typhoon falling on the 10th day; or excusable negligence).

a. the 10 calendar day reglementary period to appeal is not extendible.

b. Motion for Reconsideration of Labor Arbiter’s decision is not allowed.

c. 10 calendar-day period so counted from receipt of decision by counsel of party.

d. Failure to Appeal or perfect appeal within 10-calendar day reglementary period will make the Labor Arbiter’s decision final and executory.

e. Date of mailing is date filing.f. Receipt of one of two counsels is receipt

by the party.g. Effect of perfection of appeal-Labor

Arbiter loses jurisdiction.h. Lack of verification of the memorandum

of appeal is not fatal nor jurisdictional.i. Failure to pay appeal docketing fee; not

fatal to the validity of appeal.j. Submission of new or additional

evidence on appeal may be allowed.k. New issues or change of theory on

appeal is not allowed.

Reinstatement aspect of the Labor Arbiter’s decision.-It is immediately executory even pending appeal. Such awards does not require a writ of execution. The employer is duty-bound to inform employee of reinstatement (either in the payroll or in the position previously held or in a substantially equivalent position of no longer available, at the position of the employer)). The remedy if employer refuses if reinstate is contempt. The posting of bond does not stay reinstatement.

Appeal involving monetary awards.


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a. No monetary award, no appeal bond required.

b. Cash or surety bond is required for perfection appeal from monetary award.

c. Real property bond may be posted in the lieu of cash of surety bond.

d. Bond should be posted within the 10-calendar day reglementary period.

e. Award of moral and exemplary damages and attorney’s fees, excluded from computation of bond.

f. If bond is not genuine, appeal is not perfected.

g. Non-posting of bond will not perfect the appeal.

h. Remedy of employee in case employer failed to post bond is to file a motion to dismiss the appeal.

i. Motion to reduce bond may be granted only in meritorious cases such as when the monetary claims had already prescribed.

j. The filing of a motion to reduce bond does not stop the running of the period to perfect appeal. Appeal from NLRC decision.-

None. The only way to elevate the case to the Court of Appeals (no longer to the Supreme Court) is through the original civil action for certiorari under rule 65 of the 1997 Rules of civil procedure. A motion for reconsideration of the NLRC’s decision is a requisite prior to filing of certiorari petition.

Period which to file certiorari petition-60 days reckoned from the receipt by party of the denial of the Motion for Reconsideration.

DECISIONS OF DOLE SECRETARY. Remedy is also a petition for certiorari to the Court of Appeals (same rule as in the case of NLRC).

DECISIONS VOLUNTARY ARBITRATORS. Remedy is appeal (not a petition for certiorari) to the Court of Appeals.

NOTE: Book V Rules no longer allows a Motion for Reconsideration on decisions rendered by the Voluntary Arbitrators.

DECISION OF BUREAU OF LABOR RELATIONS. It depends. If rendered in its original jurisdiction—appeal is to the DOLE Secretary. If rendered in its appellate jurisdiction-a petition for certiorari to the Court of Appeals is the correct recourse.

UNFAIR LABOR PRACTICES

Concept of unfair labor practice (ULP).- It violates the right of workers to self-organization, is inimical to the legitimate interest of both labor and management, including their right to bargain collective and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupts industrial peace and hinders the promotion of healthy and stable labor-management relations.

Aspect of ULP:(1) Civil; and (2) Criminal.

Labor Arbiters shall have jurisdiction over the civil aspects of all cases involving unfair labor practices, which may include claims for actual, moral, exemplary and other forms of damages, attorney’s fees and other affirmative relief.

Recovery of civil liability in the administrative proceedings shall bar recovery under the Civil Code No. criminal prosecution may be instituted without a final judgement finding that an unfair labor practice was committed having been first obtained in the labor case.

Parties who may commit ULP. (1) Employer (See Article 248, Labor Code); and (2) Labor Organizations (See Article 249,Labor code for specific acts constituting ULP).


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On the part of the employer, only the officers and agents corporations, associations or partnership who have participated in, authorized or ratified unfair labor practices shall be held criminally liable.

On the part of the union, only the officers, members of labor associations or organizations who have actually participated in, authorized or ratified the unfair labor, practices shall be held criminally liable.

If the offense is committed by a corporation, trust, firm, partnership, association or any other entity, the penalty shall be impose upon the guilty officers or such corporation, trust, firm, partnership, association or entity. (Article 289,Labor Code).

Elements of ULP. - Before an employer or labor organization, as they can be, may be said to have committed unfair practices acts, the following ingredients must both concur:

1. there should exist an employer-employee relationship between the offended party and the offender; and

2. the act complained must be expressly mentioned and defined in the labor code as constitutive and unfair labor practice. If not mentioned, there is no ULP.

Absent one of the elements aforementioned will not make the act an unfair labor practice act.

ULP of employers.(a) To interfere with, restrain or

coerce employees in the exercise of their right to self organization;

(b) To require as a condition of employment that a person or an employee shall not join labor organization or shall withdraw from one to which he belongs;

(c) To contract out services or functions being performed by union when such will interfere

with, restrain coerce employees in the exercise of their rights to self—organizations;

(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters;

(e) To discriminate in regard to wages, hours of work and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the parties in requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. Employees of an appropriate bargaining unit who are not already members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent,, if such non-union members accept the benefits under the collective bargaining agreement: Provided, that the individual authorization required under Article 242, paragraph (0) of this shall not apply to the non-members of the recognized collective bargaining agent.

(f) To dismiss, discharge or other wise prejudice or discriminate against an employee for having given or being about to give testimony under this Code;


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(g) To violate the duty to bargain collectively as prescribed by this Code;

(h) To pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute; or

(i) To violate a collective bargaining agreement.

The provisions preceding paragraph notwithstanding, only the officers and agents of corporations, associations or partnership who have actually participated in, authorized or ratified unfair labor practices shall be held criminally liable.

Totality of Conduct of Doctrine.- Expressions of opinion by an employer, may be held to be constitutive of unfair labor practice because of the circumstances under which they were uttered, the history of the particular employer’s labor relations or anti-union bias or because of their connection with an established collateral plan of coercion or interference. An expression which might be permissibly uttered by one employer, might, in the mouth of more hostile employer, be deemed improper and consequently actionable as an unfair labor practice.

ULP of Labor Organization a. To restrain or coerce employees

in the exercise of their right to self-organization. However, a labor organization shall have the right to prescribe its own rules with respect to the acquisition or retention of membership.

b. To cause or attempt an employer to discriminate against an employee with respect to whom membership in such organizations has been denied or terminate an employee on any other than the usual terms and conditions under which membership or continuation of

membership is made available to other members.

c. To violate the duty, or refuse to bargain collectively with the employer, provided it is the representative of the employees.

d. To cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or other things of value, in the nature of an exaction, for services which are not performed or not to be performed, including the demand for fee for union negotiations;

e. To ask for or accept negotiations or attorney’s fees from part of the settlement of any issue in collective bargaining or any other dispute; or

f. To violate collective bargaining agreement.

The provisions of the preceding paragraph notwithstanding, only the officers, members of governing boards, representatives or agents or members of labor associations or organizations who have actually participated in, authorized or ratified unfair labor practices shall be held criminally liable.

Yellow dog Contract- A yellow dog contract is an agreement which exacts from workers as a condition of employment, that they shall not join or belong to a labor organization, or attempt to organized one, during their period of employment or that they shall withdraw therefrom, in case they are already members of a labor organizations.

Union Security Clause, the phrase “union for security clause” is a stipulation in the CBA whereby the management recognizes, that the membership of employees in the union which negotiated said should be maintained and continued as a condition for employment or retention of employment. The obvious purpose is to safeguard and ensure the continued existence of the union.


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Classification.- (1) Closed shop agreement; (2) Maintenance of membership agreement; (3) Union shop agreement; (4) Modified union shop agreement; (5) Exclusive bargaining agreement; (6) Bargaining for members only agreement; (7) Agency shop agreement; (8) Preferential hiring agreement.

Due process should be observed in dismissal based on union security clause.

An employee may not compelled to join union based on religious ground.

Agency fee may be deducted from non-union members who availed of the benefits from CBA even without written authorization..

Runaway shop.- is an industrial plant moved by its owners from one location to another to escape union labor regulations or state laws. It may also be a relocation motivated by anti—union animus rather than for business reasons.

Featherbedding.- It shall be unfair labor practice for a labor organization, its officers, agents representatives to cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or other things of value, in the nature of an exaction, for services which are not performed or not to be performed, including the demand for fee union negotiations.

Violations of the CBA.—It is ULP only if gross in character which means flagrant and/or malicious refusal to comply with the provisions thereof.

LABOR ORGANIZATIONS

Coverage of right self-organization.- All persons employed in commercial, industrial and agricultural enterprises in an religious, charitable, medical or education institutions, whether operating for profit not, shall have the right to self-organizations of their own

choosing for purposes of collective bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection.

Right to organize of employees in the public service.-Employees of government corporations established under the Corporation Code shall have the right to organized and to bargain collectively with their respective employers. All other employees in the civil case shall have the right to form associations for purposes not contrary to law.

Prohibition against aliens; general rule.-All aliens, natural or judicial, as well as foreign organizations are strictly prohibited from engaging directly or indirectly in all forms of trade union activities without prejudice to normal contacts between Philippine labor unions and recognized internat6ional labor centers. Exceptions: Alien Employees with valid working permit issued by the DOLE may exercise the right to self-organizations for purposes of collective bargaining, if they are nationals of country which grants the same or similar rights to Filipino workers, as certified by the Department of Foreign Affairs.

Three (3) categories of employees:1. Managerial employees (recently

classified into: top management and middle management);

2. Supervisory management (classified as first-time management); and

3. Rank and file employees.

Managerial employees are not allowed to join any labor organization. Supervisory employees are allowed to join a supervisory union but the union of rank-and-file employees.

The principle distinction between managerial


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employees and supervisory employees is: the former have the power to decide and do managerial acts: while the latter have the power only to recommend managerial acts such as laying down policy, or dismissal of employees and the like.

Separation of union doctrine.- The affiliation of both t6he rank-and-file union and supervisory union in the same company with one and the same federation is not allowed if the rank-and-file employees are under the direct supervision of the supervisors composing the supervisory union. If not, said affiliation with one and the same federation allowed.

NOTE: This is now allowed under the amendments to the Code.

Confidential employee rule.- Confidential employees are not allowed to join any union (as they are treated like managers) when they:(1) assist or act in confidential capacity, (2) to persons who formulate, determine, and effectuate management policies specifically in the field of labor relations. Otherwise, if this two conditions do not concur, they can join a union.

Security guards.—Present rule is security guards may join rank-and-file or supervisory union, depending on their rank or position.

Labor organization—any union or association of employees which exists in whole or in part for the purpose of collective bargaining or for dealing with employers concerning terms and conditions of employment. It is considered “legitimate” if duly registered with DOLE.

Workers’ association-any association of workers organized for the mutual aid and protection- any association of workers organized for the mutual aid and protection of its members or for any legitimate purpose

other than collective bargaining. Registration with DOLE makes it legitimate.

Purpose of labor organization.- (1) Collective bargaining; and (2) Dealing with employers.

Registration of labor organization.- The application for registration must be supported by at least 20% of the members of the bargaining unit.

A “bargaining unit” is the group or cluster of jobs or positions that supports the labor organization which applying for registration, within the employer’s establishment.

Denial of registration; grounds for appeal. The decision may be appealed to the Bureau of Labor Relations if the denial by the Regional Director, or to the Secretary, if the denial is by the Bureau of Labor Relations, within ten (10) days from receipt of notice thereof, on the ground of grave abuse of discretion or violations of the Rules.

Chartering and affiliation of labor organizations with federation.- An affiliate of a labor federation or national union may be classified into: (1) a local or a chapter; or (2) an independently-registered union.Proof of affiliation.

1. Local or chapter.-Charter certificate issued by the federation or national union.

2. Independently-registered union.- contract of affiliation between federation and the union.

Effect of affiliation.

A labor union which affiliates with a federation or national union becomes subject to the rules and regulations of the latter. The federation is the principal and the local union, the agent. An independently-registered union does not lose its independent legal personality when


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it affiliates with a federation or a national union. Appending the name of the federation to the local union’s name does not mean that the federation absorbed the latter.

CERTIFICATION ELECTION & REPRESENTATION ISSUES

Sole and exclusive bargaining agent.-refers to any legitimate labor organizations duly recognized pr certified as the sole and exclusive bargaining agent of all the exclusive bargaining agent of all the employers n a bargaining unit.

Exclusive bargaining representative; how determined.

1. voluntary recognition in cases where there is only one legitimate labor organization operating within the bargaining unit; or

2. certification election; or3. run-off election; or4. consent election.

Definition of Terms.

Voluntary recognit9ion of union.- Voluntary recognition of bargaining agent is the free and voluntary act of the employer of extending and conferring full recognition to a union as the sole and exclusive bargaining representative of the employees in the appropriate bargaining unit, for purposes of collective bargaining. This is allowed when there is only one union operating in the bargaining unit.

Certification election.- refers to the process of determining through secret ballot sole the sole and exclusive bargaining representative of the employees in an appropriate bargaining unit, for purposes of collective bargaining.

Run-off election.-refers to an election between the receiving the two (2) highest number of votes when a certification

election which provides for three (3) more choices res4lts in no choice receiving a majority of the valid votes cast; provided, that the total number of votes for all contending unions is at least fifty percent 50% union of the number of votes cast.

Consent election.- refers to the election voluntarily agreed upon by the parties, with or without the intervention of the of th4e Department of Labor and Employment, to determine the issue of majority representation of all the workers in the appropriate collective bargaining unit.

Bargaining unit.- refers to a group of employees sharing mutual interests within a given employer unit, comprised of all or less than all of the entire body of employees in the employer unit or any specific occupational and geographical grouping within such employer unit.

Bargaining unit, how determined. – No specific criteria but the following may be used:

1. Substantial mutual interests principle or Community or mutuality of interests rule

2. Globe doctrine [will of the employees]

3. Collective bargaining history 4. Employment status.

Consent election and certification election distinguished.-Consent election is a separate and distinct process and has nothing to do with the important and effort of a certification election in the sense that the purpose of the latter is to determine the sole and exclusive bargaining agent of all the employees in the bargaining unit.

Direct certification, not allowed.

Requisites for certification election in organized establishments.

1. that a petition questioning the majority status of the incumbent


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bargaining agent is filed before the DOLE within 60-day freedom period;

2. that such petition is verified; and 3. that the petition is supported by

the written consent of at least twenty-five (25%) of all employees in the bargaining unit.

Note: In unorganized establishments, certification election shall be “automatically” conducted upon the filing of a petition for certification election by a legitimate labor organization.

Who may file a petition for certification election?A certification for certification election may filed by:

1. a legitimate labor organization; or

2. a dederation or national union in behalf of a local or chapter

3. as employer, only when requested by a labor organization to bargain collectively and the status of the union is in doubt.

When to file petition for certification election.- The general rule is, in the absence of a collective bargaining agreement duly registered in accordance with Article 231 of the Labor Code, a petition for certification election may be filed at any time.

Exceptions.However, no certification election may held under the following rules:

1. certification year—bar rule;

2. bargaining deadclock-bar rule; or

3. contract-bar rule.4. Consent election bar

1. Certification year-bar rule – Under this rule, a certification election petition may not

be filed within one (1) year: (1) from date of a valid certification, consent or run-off election; or (2) from the date of voluntary recognition.

2. Bargaining deadclock-bar rule.. – Neither a representation questioned be entertained if:

1. Before the filing of the petition for certification election, the duly recognized or certified union has commenced negotiations with the employer within one-year period from the date of a valid certification, consent or run-off election or from the date voluntary recognition; or

2. A. bargaining deadclock to which an incumbent or certified bargaining agent is a party had been submitted to a conciliation or arbitration or had become the subject of a valid notice of strike or lockout.

3. Contract-bar rule.- The Bureau of Labor Relations shall not entertain any petition for certification election or any other action which may disturb the administration of duly registered existing collective bargaining agreements affecting the parties.

Exceptions to the contract-bar rule.1. during the 60—day period;2. when the CBA, is not registered

with the BIR or DOLE Regional Offices;

3. when the CBA, although registered, contains provisions lower than the standards fixed by law;

4. when the documents supporting its registration are falsified, fraudulent or tainted with misrepresentation;

5. when the collective bargaining agreement is not complete as it does not contain any of the requisite provisions which the law requires;

6. when the collective bargaining agreement was entered into


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prior to the 60-day freedom period;

7. when there is a mass defection or schism in the union resulting in an industrial dispute wherein the collective bargaining agreement can no longer foster industrial peace.

Appeal in certification election cases.-To the DOLE Secretary within 10 days from receipt of the decision.

NOTE: In an unorganized estab;ishment, if the petition is granted, there is no appeal thereto.

STRIKES & LOCKOUTS

Strike.- Any temporary stoppage of work by the concerted action of the employees as a result of an industrial or labor dispute. It consists not only of concerted work stoppages but also showdown, mass, leaves, sitdowns, attempts to damage, destroy or sabotage plant equipment and facilities and similar activities.

Lockout.- Any temporary refusal of an employer to furnish work as a result of an industrial or labor dispute.

Industrial or labor dispute.- It includes any controversy or matter concerning terms and condition of employment or the association or representation of persons in negotiating, fixing maintaining, changing or arranging the terms and conditions of employment,, regardless of whether the disputants stand in the proximate relation of employer and employee.

Forms of strikes:

a. Legal strike-one called for a valid purpose and conducted through means allowed by law.

b. Illegal strike-one staged for a purpose not recognized by law, or, if for a valid

purpose, conducted through means not sanctioned by law.

c. Economic strike-one declared to demand higher wages, overtime pay, holiday pay, vacation pay, etc. It is one declared the purpose of forcing wage or other concessions from the employer which he is not required by law to grant.

d. ULP strike-one called to protest against the employer’s acts of unfair labor practice enumerated in Article 248 of the Labor Code as amended, including gross violation of the collective bargaining agreement (CBA) and union-busting.

e. Slow down strike-one stage without the workers quitting t heir work but by merely slackening or by reducing their normal work output.

f. Wildcat strike-one declared and staged without the majority approval of the recognized bargaining agent.

g. Sit down strike- one where the workers stop working but do not leave their place of work.

Requisites of a lawful strike or lockout:First requisite: Valid and final factual ground

a. Valid grounds: (1) CBA Deadlock; and (2) ULP

b. No other grounds are allowed except the two mentioned above.

Second requisite: Notice of strike or notice of lockout

a. When to file notice:ULP: 15 days from intended date of strike/lockoutCBA Deadlock: 30 days from the intended date thereof

a. Parties who may file notice: Any certification union, in case of strike; and employer in case of lockout.

b. Where to file notice-NCMB

Third requisite: Strike vote or lockout votea. Majority approval of strike or

lockout is required b. Strike vote still necessary even in

case of union-busting.


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Fourth requisite: Strike vote report or lockout vote report

a. When to submit strike or lockout vote report-at lest seven (7) days prior to strike lockout, as the case may be.

b. Effect of none-submission of strike vote NCMB, DOLE-strike or lockout is illegal

c. Effect on seven-day waiting period if filed within cooling-off period.

d. Strike vote report in case of union-busting-still necessary, it being mandatory unlike the cooling-off period which may be dispensed with.

Fifth requisite: Cooling off-period a. General rule: CBA Deadlock-30

days; ULP: 15 daysb. Exceptions in the case of union-

busting: Cooling-off period need not be complied with.

c. When Cooling-off periods starts-from the time the notice of strike/lockout is filed with NCMB, DOLE.

Sixth requisite: 7-day waiting period or strike ban

a. Cooling-off period and waiting and waiting period distinguished. Waiting period is counted from the time of submission of strike vote report to NCMB; Cooling-off period is counted from the filing of Notice of Strike/Lockout with NCMB.

b. Purpose of the seven-day waiting period- To ensure that the strike votes vote was indeed taken and that the majority approved of it.

c. Deficiency of even one-day of the seven-day strike ban (or cooling-off period) is fatal. Hence, the strike is illegal.

Summary of principles governing strikes:1. A strike or lockout is illegal if any

of the legal requirements

(enumerated above) is not complied with. Procedural requirements are mandatory.

2. A strike or lockout is illegal if it is based on non-strikeable issues (e.g., inter-union or intra-union disputes or wage distortion).

3. A strike or lockout is illegal if the issues involved are already subject of compulsory or voluntary arbitration or conciliation or the steps of grievance machinery are not exhausted.

4. A strike or lockout is illegal if unlawful means were employed or prohibited acts practices were committed (e.g., Use of force, violence, threats, coercion, etc.; Barricades, blockades, and obstruction of ingress [entrance] or egress from [exit] the company premises).

5. A strike or lockout is illegal if the notice of strike or notice of lockout in already converted into a preventive mediation case.

6. A strike or lockout is illegal if staged in violation of the ”Not Strike, No Lockout” cause in the collective bargaining agreement.

7. A strike or lockout is illegal if staged in violation of temporary restraining order or an injunction or assumption or certification order.

8. A strike is illegal if staged by a minority union.

9. A strike or lockout is illegal if conducted for unlawful purpose/s (e.g., Strike to compel dismissal of employee; Union-recognition-strike)

Improved offer balloting.- In case of a strike, the Regional Branch of the NCMB shall, at its own initiative or upon the request of any affected party, conduct a referendum by secret balloting on the improved offer, the striking workers shall immediately return to work and the employer shall thereupon


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readmit them upon the signing of the agreement.

Reduced offer balloting.- In case of lockout, the Regional Branch of the NCMB shall conduct a referendum by secret balloting on the reduced offer of the union on or before the 30th day of the lockout. When at least a majority of the board of directors or trustees or the partners holding the controlling the interest in the case of partnership, vote to accept the reduced offer, the workers shall immediately return to work and the employer shall thereupon readmit them signing of the agreement.

Power to assume or certify labor disputes The DOLE Secretary may (himself) assume the jurisdiction over, or certify to the NLRC for compulsory arbitration, a labor dispute which, in his opinion, may cause or likely to cause a strike or lockout in an industry indispensable to the national interest.

Effect of assumption or certification of labor dispute:

a. On intended or impending strike or lockout-automatically enjoined even if a Motion for Reconsideration is filed.

b. On actual strike or lockout- strikers or locked out employees should immediately return to work and employer should readmit them back.

c. On case filed or may be filed- All shall be subsumed/absorbed by the assumed or certified case when the order specified otherwise. The parties to the case should inform the DOLE Secretary of pendency thereof.

Injunction in strike or lockout cases.-

General rule: No injunction may be issued against strikes or lockouts validly and legally held.

Exception: when illegal acts are committed or threatened to be committed in the course thereof.

Return –to-work order; automatic in nature.- A return-to-work order is automatic in nature. It may be enforced even if the assumption or certification order does not contain a return to work order because it is considered the logical and legal effect of the issuance of the said order. Violation thereof, even for one day, would make the strike illegal. This holds true even if a Motion for Reconsideration thereof is filed.

Strikes in hospitals, clinics and medical institutions. – The DOLE Secretary may immediately assume jurisdiction over the labor dispute within 24 hours from his knowledge thereof.

Concerted activities and strikes in the government service..- Not allowed because the terms and conditions of government employment are governed by law. Government employees may, however, organize government employees” organizations and may negotiate certain terms and condition of employment except: (1) those requiring appropriations; or (2) exercise of prerogatives.

Effect if illegality of strike on employment.- Union officers are deemed to have lost their employment status. This adverse consequence does not apply to ordinary union members except when they participate in the commission of illegal acts in the course thereof (even in the case of legal strike), in which case, shall be deemed to have also lost their employment status.

Strike Breakers..—Any person who obstruct, impedes or interferes with by force, violence, coercion, threats, or intimidation any peaceful picketing by employees during any labor controversy affecting wages, conditions of work or in the exercise of right to self—organization or collective bargaining. Use or employment of strike breakers is prohibited by law.

COLLECTIVE BARGAINING AGREEMENT


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Collective Bargaining Agreement (CBA) refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. The CBA is deemed the law between the parties during its lifetime. Itys provisions are construed liberally.

A proposal not embodied in CBA is not part thereof.

Minutes of CBA negotiation-no effect if its contents are not incorporated in the CBA.

Making a promise during the CBA negotiation is not considered bad faith.

Adamant stance resulting in impasse, not bad faith.

The DOLE Secretary cannot order inclusion of terms and conditions in CBA which the law and the parties did not intend reflect therein.

Signing bonus, not demandable under the law.

Allegations of bad faith, wiped out with signing of CBA.

Duty to bargain collectively when exists a CBA.- When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate or modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties.

Freedom period.- The last sixty (60) days of the lifetime of a collective bargaining agreement immediately prior to its expiration is called the “freedom period”. It is so called because it is only the time when the law allows the parties to serve notice to

terminate, alter or modify the existing agreement. It is also the time when the majority status of the bargaining union or agent may be challenged by another union appropriate petition for certification election.

Automatic renewal clause.- At the time of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent where not petition for certification election is filed.

Terms of a CBA:

Representation aspect (sole exclusive status of certified union): -The term and condition is 5 years which means that no petition questioning the majority status of the incumbent bargaining agent shall be entertained by DOLE and no certification election shall be conducted outside of the 60-day freedom period.

All other provisions (which refer to both economic and non-economic provisions except representation): Shall be renegotiated not later that three (3) years after its execution..

Retroactive of CBA.

a. Rule involving CBAs concluded by the parties (not concluded through arbitral award)..

1. The collective bargaining agreement or other provisions of such agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in the collective bargaining agreement shall retract to the day immediately following such date.

2. If any such agreement is entered into beyond six (6) months, the parties shall agree on the date of effectivity thereof.


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b. CBAs concluded through arbitral award by DOLE Secretary, NLRC or Voluntary Arbitrator (Jurisprudence varies).

In case of arbitral awards, the retroactivity of the CBA provided under Article 253-A of the Labor Code (enumerated above) has no application.. Thus, Supreme Court Ruled:

In Pier 8 Arrastre and Stevedoring Services, Inc. vs. Roldan-Confesor,[241 SCRA 294, 307,1995], the effective date of the new CBA should be the date the Secretary of Labor and Employment has resolved the Labor dispute.

In St. Luke’s Medical Center, Inc. vs. Torres,[223 SCRA 779 (1993)], the effectivity date of was retroactive to the date of the expiration of the previous CBA.

In Manila Electric Company vs. Quisumbing, [G. R. No. 127598, January 27,1999, 302 SCRA 173, 209], the effectivity date was made prospective.

CBA Deadlock.In case of a deadlock in the negotiation or renegotiation of the collective bargaining agreement, the parties may exercise the following rights under the Labor Code.

1. Conciliation and mediation by the NCMB, DOLE.

2. Declaration of a strike or lockout, as the case may be.

3. Referral of case compulsory or voluntary arbitration.

GRIEVANCE AND VOLUNTARY ARBITRATION

“Grievance” is any question by either the employer or the union regarding the interpretation or application of the collective bargaining agreement or company personnel policies or any claim by either party that the other party that is violating any provisions of the CBA or company personnel policies. It is a complaint or dissatisfaction arising from the interpretation or implementation of the

CBA and those arising from interpretation or enforcement of personnel policies

“Grievance machinery” refers to the mechanism for the adjustment and resolution of grievances arising from the interpretation or implementation of a CBA and those and those arising from interpretation or enforcement of company personnel policies. It is a part of the continuing process of collective bargaining.

“Grievance procedure” refers to the internal rules of procedure established by the parties in their CBA with voluntary arbitration as the 6terminal step, which are intended to resolve all issue arising from the implementation and interpretation of their CBA. It is refers to the system of grievance settlement at the plant level as provided in the collective bargaining agreement. It is usually consists of successive steps starting at the level of the complainant and his immediate supervisor and ending, when necessary, at the level of the top union and company officials.

All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days from the date of their submission shall automatically be referred to voluntary arbitration prescribed in the CBA.

For this purpose, parties to a CBA shall name and designate in advance a Voluntary Arbitrators, or include n the agreement a procedure for the selection of such Voluntary Arbitrators or panel of Voluntary Arbitrators, preferably from the listing of qualified Voluntary Arbitrators duly accredited by the NCMB. In case the parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the NCMB shall designate the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be necessary, pursuant to the selection procedure agreed upon in the CBA, which shall act with the same force and effect as if the Arbitrator or panel of Arbitrators has been selected by the parties as described above.


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Role of Sole Bargaining Agent.- It is the representative of all employees of purposes of collective bargaining. However, an individual employee group of employees shall have the right at any time to present grievances to their employer.

Participation of workers in policy and decision-making processes.- Workers shall have the right participate in policy and decision-making processes of the establishment where they are employed insofar as said processes will directly affect their rights, benefits, and welfare. For this purpose, workers and employers may form labor-management councils: Provided, That the representatives of the workers in such labor-management councils shall be elected by at least the majority of all employees in said establishment.

POST EMPLOYMENT

SECURITY OF TENURE

SECURITY OF TENURESecurity of tenure does not

exclusively apply to regular employment only. It id also applies to probationary, seasonal, project and other forms of employment during the effectivity thereof. Managerial employees also enjoy security of tenure.

DUE PROCESS CONSTITUTIONAL BASIS.The right to due process of law is

constitutionally-guaranteed right. It is basic constitutional tenet that “no person shall be deprived of life, liberty or property without due process, nor shall any person be denied the equal protection of the laws.” (Section 1,Article III [Bill of Rights], 1987 Constitution).

SUBSTANTIVE DUE PROCESS.Just causes and authorized causes.-

As mentioned in Article 279, there are two (2) kinds of causes or grounds to terminate employment by employer, to wit:

1. “Just causes” which refer to those instances enumerated under Article 282 [Termination by employer] of the Labor Code.

2. “Authorized causes” which refer to those instances enumerated under Article 283 [Closure of establishment and reduction of personnel] and 284 [Disease as ground for termination] of the Labor Code.

PROCEDURAL DUE PROCESS.Two-fold process requirement.- The

requirement of due process is two-fold, thus:(1) Substantive aspect; and (2)

Procedural aspect.Twin requirement of notice of hearing. The twin requirements of notice and hearing constitute the essential elements of procedural due process and neither of these elements can be eliminated without running a foul of the procedural mandate.

Summary of basic due process principles:

Termination with just cause but without procedural due process-the dismissal IS UPHELD OR TERMINATION is without procedural due process, there shall be nominal damages to be awaeded based on Agabon and Jaka cases. (Serrano vs. NLRC et. al., [G. R. No. January 27, 2000 was abandoned by these two cases]).

Termination without just cause and due process-Illegal.

Termination for false or non-existent cause- Employees should be reinstated.

In cases where employee was not dismissed but he filed an illegal dismissal case and failed


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to prove it—employee should be reinstated and employer should readmit him. No damages, attorney’s fees or backwages shall be awarded.

Quantum of evidence in all termination cases—mere “substantive evidence..” ther standards of evidence (such as “proof beyond reasonable doubt” or “preponderance of evidence” are not applicable in labor cases).

SUSPENSION OF EFFECTS OF TERMINATION (Art. 277 [b]).

Grounds.—The secretary may suspend the effects of termination pending resolution of the case in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom the dispute is pending that:

1. the termination may cause a serious labor dispute; or

2. the termination is in implementation of a mass lay-off.

PREVENTIVE SUSPENSION.a. Legal basis.- The Labor Code does

not contain any provision on preventive suspension. The legal basis for the valid imposition thereof is found in the Rules to implement the Labor Code.

b. Justification for the imposition of preventive suspension (not a penalty; period.

The employer may place the worker concerned under preventive suspension for a period of 30-days if his continued employment poses a serious imminent threat to the life or property of the employer of his co-workers. During the said period, the employee is not entitled to his wages. But if the 30-day period is extended because the employer has not finished

THE SOLO PARENTS' WELFARE ACT OF 2000




It bears noting that this leave privilege is an additional leave benefit which is separate and distinct from any other leave benefits provided under existing laws or agreements. Thus, under Section 8 thereof, it is provided:



“Sec. 6. Flexible Work Schedule. – The employer shall provide for a flexible working schedule for solo parents: Provided, That the same shall not affect individual and company productivity: Provided, further, That any employer may request exemption from the above requirements from the DOLE on


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certain meritorious grounds.” (Section 6, Republic Act No. 8972).


(e) “Flexible work schedule” - is the right granted to a solo parent employee to vary his/her arrival and departure time without affecting the core work hours as defined by the employer. (Section 3[e], Republic Act No. 8972).EntitlementQ: How many days are entitled to a solo parent? A: A Male or Female Solo Parent is entitled to 1 – 7 days of leave each year.

Q: Who is considered a solo parent under Republic Act 8972\A: The following are considered a solo parent:1. A woman who gives birth as a result of rape; 2. A widow or widower;3. A spouse of convict in jail;4. A spouse of insane;5. A spouse after legal separation with custody of children;6. A spouse after declaration of nullity of marriage with custody of children;7. A spouse abandoned for at least one year;8. An unmarried mother or father with custody of children;9. Any person who solely provides pastoral care and support to a child; and10. Any family member who assumes responsibility of a parent who abandons. (R.A. NO. 8972, 11/7/2000)

BATTERED WOMAN LEAVE Q: How many days leave is entitled to a battered woman under R.A. 9262?A: A battered woman is entitled to ten (10) days leave with pay in addition to other paid leaves under the labor code, other laws and company policies.BATTERED WOMAN DEFINED. Q: Who is considered a Battered Woman?A: A Battered Woman is one who is a victim of any act or series of acts of violence

committed by any person which resulted to her physical, sexual or psychological suffering. Q: How does a battered woman apply for such leave?A: The woman employee has to submit a certification from the barangay captain or kagawad or prosecutor or the clerk of court that an action under R.A. No. 9262 has been filed and is pending.– Usage of the 10-day leave is at the option of the woman employee. It shall cover the day or days when she will have to attend to medical and legal concerns. Leaves not availed of are non-cumulative and not convertible to cash (r.a. no. 9262, the anti-violence against women and their children act of 2004; 3/8/04).

SOCIAL SECURITY SYSTEMRA1161 as amended by RA 8282

COVERAGE:

Compulsory: Compulsory upon all

employees not over 60 years of age and their employers

In case of domestic helpers, their monthly income should not be less than one thousand pesos

Limitation: Sec. 9 (a) Any benefit already earned by

the employees under private benefit plans existing at the time of the approval of the Act shall not be discontinued, reduced or otherwise impaired

Private plans which are existing and in force at the time of compulsory coverage shall be integrated with the plan of the SSS in such a way where the employer’s contribution to his private plan is more than that required of him in this Act, he shall pay to the SSS only the contribution required of him


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and he shall continue his contribution to such private plan less his contribution to the SSS so that the employer’s total contribution to his benefit plan and and to the SSS shall be the same as his contribution to his private benefit plan before any compulsory coverage.

Any changes, adjustments, modifications, eliminations or improvements in the benefits to be available under the remaining private plan, which may be necessary to adopt by reason of the reduced contribution thereto as a result of the integration shall be subject to agreements between the employers and the employees concerned

The private benefit plan which the employer shall continue for his employees shall remain under the employer’s managementand control unless there is an existing agreement to the contrary.

Nothing in this Act shall be construed as a limitation on the right of employers and employees to agree on and adopt benefits which are over and above those provided under this act

3. Compulsory upon such self- employed persons as may be determined by the Commission including but not limited to the following (Sec 9-A): (APAPI)

1. All self employed professionals2. Partners and single proprietors 3. Actors and actresses directors,

scriptwriters and news correspondents who do not fall within the definition of the term employee in Section 8 (d) of this Act

4. Professional athletes, coaches, trainers, and jockeys

5. Individual farmers and fishermen

Voluntary:

Spouses who devote full time to managing the household and family affairs, unless they are also engaged in other vocation or employment which is subject to mandatory coverage, may be covered by the SSS on a voluntary basis.

Filipinos recruited by foreign based employers for employment abroad may be covered by the SSS on a voluntary basis

Employees separated from employment may continue to pay contributions to maintain his right to full benefits (Sec. 11)

Self-employed with no income (11-A)

BY AGREEMENT:

Any foreign government, international organization, or their wholly-owned instrumentality employing workers in the Philippines, may enter into an agreement with the Philippine government for the inclusion of such employees in the SSS except those already covered by their respective civil service retirement systems (Sec.8 (j (4)).

Excluded Employment (Sec. 8 (j)): Employment purely casual and

not for the purpose of occupation or business of the employer

Service performed on or in connection with an alien vessel by an employee if he is employed when such vessel is outside the Philippines.

Service performed in the employ of the Philippine government or instrumentality or agency thereof.


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Service performed in the employ of a foreign government, international organization, or their wholly owned instrumentality;

Services performed by temporary employees, which may be excluded by regulation of the commission.

EFFECTIVE DATE OF COVERAGE:

Employer: It shall take effect on the first day of his operation

Employee: On the day of his employment

Self-employed: It shall take effect upon his registration with SSS

Definition of Terms

EMPLOYER Any person natural or juridical, domestic or foreign, who carries on in the Philippines, any trade business, industry undertaking or activity of any kind and uses the services of another person who is under his orders as regards the employment except the Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or controlled by the GovernmentSelf- employed person shall be both the employer and employee at the same time

EMPLOYEE

Any person who performs services for an employer in which either or both mental and physical efforts are used and who receives compensation for such services, where there is an employer- employee relationship.Self- employed person shall be both the employer and employee at the same time

DEPENDENTS:

The legal spouse entitled by law to receive support from the member

the legitimate, legitimated or legally adopted and illegitimate child who is unmarried, not gainfully employed and has not reached 21 years of age or if 21 years of age, he is congenitally incapacitated or while still a minor has been permanently incapacitated and incapable of self- support, physically and mentally and

the parent who is receiving regular support from the member

BENEFICIARIES

a. The dependent spouse until he or she remarries, the dependent legitimate, legitimated or legally adopted and illegitimate children who shall be the primary beneficiaries of the member

b. PROVIDED that the dependent illegitimate children shall be entitled to 50% of the share of the legitimate, legitimated or legally adopted children.

c. PROVIDED FURTHER in the absence of the legitimated, legally adopted or legitimate children, illegitimate children shall be entitled to 100% of the benefits.

d. In their absence, the dependent parents who shall be the secondary beneficiaries.

e. In the absence of all of the foregoing, any person designated by the covered employee as secondary beneficiary.

Benefits

1. Monthly pension

1. Dependents pension


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It shall be paid for each dependent child conceived on or before the date of the contingency but not exceeding five, beginning with the youngest without substitution PROVIDED that where there are legitimate and illegitimate children, the former shall be preferred.

1. Retirement benefits

A member who has paid at least 120 monthly contributions prior to the semester of retirement and who:

has reached the age of 60 years and is already separated from employment or has ceased to be self-employed

has reached the age of 65 years, shall be entitled for as a covered member who is 60 years old not qualified under No. 1 shall still be entitled to retirement benefits PROVIDED, he is separated from employment and is not continuing payment of contributions to the SSS on his own.

SUSPENSION OF MONTHLY PENSION: Upon the re-employment or resumption of self-employment of a retired employee who is less than 65 years old.

1. Death Benefits

1. Permanent disability benefits

1. Funeral Benefit A funeral grant equivalent to Twelve thousand pesos (P12, 000.00) shall be paid, in cash or in kind, to help defray the cost of funeral expenses upon the death of a member, including permanently totally disabled member or retiree.

1. Sickness Benefit

Requirements:a. A member must have paid at least

3 monthly contributions in the

twelve month period immediately preceding the semester of sickness or injury

b. and is confined therefor for more than three days in a hospital or elsewhere with the approval of the SSS

1. Maternity Leave Benefit It shall be paid to a female employee who has paid at least 3 monthly contributions in the twelve month period immediately preceding the semester of her childbirth or miscarriage PROVIDED:

a. That the employee shall have notified her employer of her pregnancy and the probable date of her childbirth which notice shall be transmitted to the SSS.

b. The full payment shall be advanced by the employer within 30 days from the filing of the maternity leave application

c. Payment of daily maternity benefits shall be a bar to the recovery of sickness benefits

d. The maternity benefits provided under this section shall be paid only for the first 4 deliveries or miscarriages

e. The SSS shall immediately reimburse the employer 100% of the benefits advanced by the latter

f. If no contributions were remitted by the employer or no notice was given to SS, the employer shall be liable for damages equivalent to the benefits which said employee member would otherwise have been entitled to.

Non-transferability of Benefits (Sec. 15)

Such benefits are not transferable and no power of attorney or other document executed by those entitled thereto, in favor of any agent, attorney or any other person for the collection thereof on their behalf shall be recognized, except when they are


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physically unable to collect personally such benefits.

Sources of Fund

1. Collection: Beginning on the last day of the month when an employee’s compulsory coverage takes effect and every month thereafter during his employment, his employer shall pay the employer’s contribution and shall deduct and withhold from such employee’s monthly salary the employees contribution.The same time of collection for self-employed

1. Remittance: It shall be remitted within the first 10 days of each calendar month following the month for which they are applicable or within such time as the Commission may prescribe.For self-employed they shall remit their contributions quarterly on such dates and schedules as the Commission may require.

(NOTE: SEE TABLE ON SOCIAL WELFARE LEGISLATION FOR COMPARISON WITH GSIS)

TRANSFER OF HEALTH INSURANCE FUNDS OF SSS AND GSIS

It shall be transferred to the Corporation within 60 days from the promulgation of the Implementing Rules and Regulation

The SSS and GSIS shall continue to perform Medicare functions under contract with the Corporation until such time that such functions are assumed by the Corporation.

TRANSFER OF MEDICARE FUNCTIONS OF THE SSS AND GSIS

Within 5 years from the promulgation of the implementing rules and regulations. But the SSS and GSIS shall continue performing its Medicare functions beyond the stipulated 5-year period if such extension will benefit Program members.

PRIMER ON SOCIAL SECURITY LAW OF 1997Republic Act No. 8282

1. In addition to the Employees Compensation Law found in the Labor Code, what are the other social securities law in the Philippines?

The following social security laws:(1) RA No. 8282-Social Security Act of

1997(2) RA No. 8291-Government Service

Insurance System Act of 1997(3) RA No. 7875-National Health

Insurance Act of 1995(4) RA No. 7699-Limited Portability

Scheme in Social Security System(5) PD 1753 as amended by RA No.

7743 - The Home Development Mutual Fund Law of 1980 or the

PAG-IBIG Fund.

2. What law governs the social security system of the private employees?

The Social Security Law of 1997 which is RA No. 1161 as amended by RA No. 8282 which took effect last 24 May 1997.

3. What is the declared policy of the state relative to social security system?

As provided by Sec.2, RA No. 8282:Sec. 2. Declaration of Policy- It is the

policy of the State to establish, develop, promote and perfect a sound and viable tax-exempt social security system suitable to the needs of the people throughout the Philippines which shall promote social justice and provide meaningful protection to


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members and their beneficiaries against the hazards, disability, sickness, maternity, old age, and death and other contingencies resulting in loss of income or financial burden. Towards this end, the State shall endeavor to extend social security protection to workers and their beneficiaries.

4. Give the organizational set-up of the Social Security System.

The Social Security System is a corporate body, with principal place of business in Metro Manila. It is directed and controlled by the Social Security System.

The Social Security System is composed by the Secretary of Labor and Employment or his duly designated undersecretary, the SSS president and sever (7) appointive members, three of whom shall represent the workers' group, one of whom shall be a woman, three from the employers' group, at least one of whom shall be a woman and one, the general public whose representative shall have adequate knowledge and experience regarding social security, to be appointed by the President of the Philippines. (Sec. 3, RA No. 8282)

5. Who shall generally conduct the operations and management functions of the SSS?

Vested in the SSS President who shall serve as chief executive officer in carrying the SSS program.

6. What are the duties and powers of the Commission?

These powers and duties:

(1) To adopt, amend, rescind, subject to the approval of the President such rules and regulations as may be necessary to carry out the provision and purposes of this Act.

(2) To establish a provident fund for the members which will consist of voluntary contributions of employers and/or employees, self-employed and voluntary

members and their earnings, for payment of benefits, subject to such rules and regulations as it may promulgate and approved by the President of the Philippines.

(3) To maintain a Provident Fund which consist of contributions made by both the SSS and its officials and employees and their earnings, for th payment of benefits to such officials and employees or their heirs under such terms and conditions as it may prescribe;

(4) To approve restructuring proposals for the payment of due but unremitted contributions and unpaid loan amortization under such terms and conditions as it may prescribe.

(5) To authorize cooperatives registered with cooperative development authority to act as collecting agent of SSS with respect to their members;

(6) To compromise or release in whole or in part any interest, penalty or civil liability to SSS in connection with the investment under Sec. 26 of this Act.

(7) To approve, confirm, pass upon any and all actions of the SSS. [ Sec. 4(a), RA No. 8282].

7. What are the powers and duties of the Social Security System?

The following:(1) To submit annually public report

to the President, not later than 30 April;(2) To require the actuary to submit a

valuation report on the SSS benefit program every four years; and to undertake actual studies and cancellations for any possible increase of benefits.

(3) To establish SSS offices covering many provinces and cities and congressional districts;

(4) To enter into contracts or agreements for such services and aids;

(5) To adopt from time to time a budget of expenditures;

(6) To set up its accounting systems;(7) To require reports, compilations

and analyses of statistical and economic data;


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(8) To acquire and dispose of property, real or personal;

(9) To acquire, receive or hold by way of purchase, expropriation or otherwise, public and private property

(10) To sue and be sued in court;(11) To perform such other corporate

acts as it may deem appropriate for the proper enforcement of this Act [Sec. 4(b), RA No. 8282].

8. Are decisions of the Commission appealable by judicial review to regular courts?

Yes. The appeal by judicial review under Sec. 5( c ), RA No. 8282 may be made within 15 days from receipt of decision/order/denial of motion for reconsideration to:

(1) Court of Appeals if it involves question of law and fact.

(2) Supreme Court if it involves solely question of law

9. Under the existing SSS system what are the two classes of coverages?

Coverage of the system may either be:

(1) Compulsory coverage of the system; and

(2) Voluntary coverage of the system.

10. When shall the coverage in the SSS be considered as compulsory or mandatory?

Coverage shall be compulsory upon:(1) All employees not over sixty (60)

years of age and their employers;(2) Domestic helpers whose monthly

income shall not be less than P1,000.00 a month

(3) Self-employed persons, including but not limited to:

(a) All self-employed professionals;

(b) Partners and single proprietors of business;

(c ) Actors and actresses, directors, scriptwriters and news correspondents who do not fall within the term "employee under Sec. 8(d) of this act

(d) Individual farmers and fishermen. [Sec.9(a), RA No. 8282].

11. Who may be covered by the SSS on a voluntary basis?

The following:(1) Spouses who devote full time to

managing the household and family affairs unless they are also engaged in other vocation or employment which is subject to mandatory coverage may be covered by the SSS on a voluntary basis. [Sec.9(b), RA No. 8282]

(2) Filipinos recruited by foreign-based employers for employment abroad may be covered by the SSS on a voluntary basis. [Sec.9(c ), RA No. 8282].

12. What is meant by "employer" under the SSS?

Employer means any person, natural or juridical, domestic or foreign, who carries on in the Philippines any trade, business, industry, undertaking or activity of any kind and uses the services of another person who is under his orders as regards the employment, except government and any of its political subdivisions, branches or instrumentalities including corporations owned and controlled by the Government; Provided, That a self-employed person shall be both employee and employer at the same time. [Sec.8(c), RA No. 8282].

13. What is an "employee" within the coverage of the SSS?

Any person who performs services for an employer in which either or both mental and physical efforts are used and who receives compensation for such services, where there is an employer-employee relationship. Provided, that a self-employed person shall be both employee


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and employer at the same time. [Sec.8(d), RA No. 8282].

14. Under the SSS, what do you mean by "self-employed"?

Self-employed shall mean any person whose income is not derived from employment, as defined in this Act, as well as those workers enumerated in Section 9-A hereof.

15. Under the SSS, what is meant by employment?

Any service performed by an employee for an employer except:

(1) Employment purely casual and not for the purpose of business or occupation of the employer;

(2) Service performed on or in connection with an alien vessel by an employee if he is employed when such vessel is outside of the Philippines;

(3) Service performed in the employ of the Philippine Government or instrumentality or agency thereof.

(4) Service performed in the employ of a foreign government or international organization or their wholly-owned instrumentality.

(5) Such other services performed by temporary employees which may be excluded by the regulation of the Commission. [Sec.8(j)]

16. When does the compulsory coverage of an employer, employee or a self-employed person take effect? or when is the effective date of SSS coverage?

Compulsory coverage of the employer shall take effect on the first day of his operation and that the compulsory coverage of the self-employed shall take effect upon his registration with the SSS. (Sec.10, RA No. 8282)

17. State the effect of the employee's separation of employment upon his membership in the SSS.

When an employee under compulsory coverage is separated from employment, his employer's contribution on his account and his obligation to pay contribution arising from that employment shall cease at the end of the month of separation, but said employee shall be credited with all contributions paid on his behalf and entitled to the benefits according to the provisions of this Act. He may, however, continue to pay the total contribution to maintain his right to full benefits. (Sec.11, RA No. 8282).

18. Cite the effects of interruption of business or professional income.

If the self-employed realizes no income in an government, he shall not be required to pay contributions for that month. He may, however, be allowed to continue paying contributions under the same rules and regulations applicable to separated employee member. (Sec. 11-A).

19. What are the benefits accorded/available to the SSS members?

The benefits are:(1) Monthly pensions (Sec.12)(2) Dependent's pension (Sec.12-A);(3) Retirement benefits (Sec.12-B);(4) Death benefits (Sec.13)(5) Permanent disability benefits

(Sec.13-A);(6) Funeral benefits (Sec.13-B);(7) Sickness benefit (Sec.14);(8) Maternity leave benefit (Sec.14-

A)

20. What is the minimum monthly pension?

The following:(1) P1,200.00 for members with at

least 10 credited years of service;(2) P2,400.00 for those with 20

credited years of service [Sec.12(b), RA No. 8282].


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21. What shall be the highest monthly pension?

The monthly pension shall be the highest of the sum of P300.00 plus:

(1) 20% of the average monthly salary credit; plus

(2) 2% of the average monthly salary credit for each credited year of service in excess of ten years; or

Forty percent (40%) of the average monthly salary credit; or

One thousand pesos (P1,000.00) Provided that the monthly pension shall in no case be paid for an aggregate amount of less than 60 months. * Monthly salary credit means- the compensation base for contributions and benefits as indicated in the schedule 18 of this Act. [Sec.8(g), RA No. 8282].

22. Who are the dependents under SSS?

The dependents shall be the following:

(1) The legal spouse entitled by law to receive support from the member.

(2) The legitimate, legitimated or legally adopted, and illegitimate child who is unmarried, not gainfully employed and has not reached 21 years of age or over if congenitally incapacitated or incapable of self-support, physically or mentally. [Sec.8(e), RA No. 8282].

(3) The parent who is receiving regular support from the member.

23. Explain briefly dependent's pension.

The dependent pension shall be 10% of the monthly pension or P250.00 whichever is higher to be received by each dependent but not exceeding five. (Sec. 12-A)

24. Who are the members to enjoy retirement benefits?

The following:

(1) Those who contributed prior to his semester of retirement has paid 120 monthly contributions;

(2) Those who reach the age of 60 or 65 years of age. (Sec.12-B)

25. Classify beneficiaries under SSS.

They are:(1) Primary beneficiaries - dependent

spouse, dependent legitimate/legitimated/adopted/illegitimate children;

(2) Secondary beneficiaries - in the absence of the primary beneficiaries, the dependent parents and other person designated by the member.

26. How much is the death benefit to be enjoyed by the primary beneficiaries?

If the member has paid at least 36 monthly contributions, the benefit shall be a lump sum equivalent to 36 times the monthly pension.

However, if he had not paid the 36 monthly contributions, the beneficiary shall be entitled to a lump sum benefit equivalent to the monthly pension times the number of monthly contributions paid to SSS or 12 times the monthly pension whichever is higher.

27. What are the two types of permanent disability?

(1) Permanent total disability - is loss or reduction of earning capacity due to impairment of the normal functions of the physical and/or mental faculties, recovery therefrom being medically remote. The loss or reduction of earning capacity must amount to at least 75% or the aggregate loss or reduction of earning capacity from more than one injury or disease amounts to at least 100%. [Sec.13-1 (g), RA No. 8282].

(2) Permanent partial disability - accrues or arises when the loss or reduction or earning capacity amounts to less than 75% or when the aggregate loss or reduction of earning capacity resulting from more than


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one injury or disease amounts to less than 100% as a result of unrecoverable anatomical loss.

28. What is the condition to entitle a member to permanent disability benefits?

He has paid 36 monthly contributions prior to the semester of the disability. [Sec.13-A(a), RA No. 8282].

29. How are permanent disability benefits classified?

They are classified as permanent total disability benefits and the permanent partial disability benefits.

30. What disabilities are considered permanent and total?

The following:(1) Complete loss of sight of both

eyes;(2) Loss of two limbs at or above the

ankle or wrists;(3) Permanent complete paralysis of

two limbs;(4) Brain injury resulting to incurable

imbecility or insanity; and(5) Such cases as determined and

approved by the SSS [Sec.13-A(c ), RA No. 8282]

31. What are the disability benefits provided by SSS?

(1) Upon the permnanent total disability of a member who has paid at least 36 monthly contributions prior to the semester of disability, he shall be entitled to the monthly pension. [Sec.13-A(a)]

(2) If the disability is permanent partial, and such disability occurs before the 36 monthly contributions have been paid prior to the semester of disability, the benefit shall be such percentage of the lump sum benefit prescribed in the preceding paragraph with due regard to the degree of disability as the Commission may determine.

(3) If the disability is permanent partial and such disability occurs after 36 monthly contributions have been paid prior to the semester of disability, the benefit shall be the monthly pension for permanent total disability payable than the period designated in the schedules set forth in par. (f), Sec.13-A, RA No. 8282.

32. When is the monthly pension as well as the dependent's pension be suspended?

The monthly pension and the dependent's pension shall be suspended upon the re-employment or resumption of self-employment or the recovery of the disabled member from his permanent total disability or his failure to present himself for examination of at least once a year upon notice by the SSS. [Sec.13-A(b), RA No. 8282].

33. Who are entitled to monthly pensions?

(1) Those who are receiving retirement benefits (Sec.12-B);

(2) Those who are receiving permanent disability benefits (Sec.13-A);

(3) Primary beneficiaries upon the death of the retired members [Sec.12-B (d), RA No. 8282];

(4) Primary beneficiaries upon the death of the permanent total disability pensioner. [Sec. 13-A(c )].

34. In case a permanent total disability pensioner dies, are his beneficiaries entitled to any death benefits?

His primary beneficiaries shall be entitled to the monthly pensions upon the death of the permanent total disability pensioner. (Sec.13-A)

35. If a retired employee pensioner dies, what death benefits if any will his beneficiaries and dependents get?

Upon the death of the retired employee pensioner, his primary beneficiaries shall be entitled to the monthly


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pension and if he has no primary beneficiaries, his secondary beneficiaries shall be entitled to a lump sum benefit. [Sec. 12-B (c ), RA No. 8282].

36. In case no beneficiary qualifies for entitlement of death benefit under the SSS law, how will such benefits be disposed of?

The death benefits shall be paid to the legal heirs of the deceased in accordance with the law of succession (Sec. 15, RA No. 8282)

37. How much is the funeral benefit?

P12,000.00 (Sec.13-B).

38. What is the sickness benefit?

It is a daily allowance paid to a covered employee who becomes sick and is confined in a hospital for more than three days or elewhere with the Commission's approval. Such daily sickness benefit equivalent to 90% of his average daily salary credit. (Sec.14).

* Average daily salary credit - the result obtained by dividing the sum of the six highest monthly salary credits in the twelve month period immediately preceding the semester of contingency by 180 [Sec.8(n), RA No. 8282].

*Contingency - the retirement, death, permanent disability, injury or sickness and maternity of the member [Sec.8 (l)].

39. What are the conditions governing sickness benefits?

(1) The payment of the daily allowance not to exceed 120 days in one calendar year;

(2) The daily sickness benefits shall not be paid for more than 240 days on account of the same confinement; and

(3) The employee shall notify his employer of the fact of his sickness or injury within five days from the start of the

confinement. [Sec.14(1)(20)(3), RA No. 8282].

40. Who may advance the daily allowance for the sickness benefit?

The employer subject to 100% reimbursement by SSS provided said employer complied the notification requirement.

41. Give the effect if the employer has failed to make the proper notification.

The employer is not entitled to reimbursement.

42. When is the employer or the unemployed member not entitled to reimbursement of sickness benefits?

(1) Where the employer failed to notify the SSS of the confinement;

(2) In case of the unemployed, where he failed to send the notice directly to the SSS except when the confinement is in a hospital; and

(3) Where the claim for reimbursement is made after one (1) year from date of confinement.

43. Who are entitled to maternity benefit under SSS?

A female employee who has paid at least three (3) monthly contributions in the twelve month period immediately preceding the semester of her childbirth or miscarriage shall be paid daily maternity benefit equivalent to 100% of her average salary credit for 60 days or 78 days in case of Caesarian delivery subject to certain conditions. (Sec.14-A).

44. What are the conditions set by SSS relative to maternity benefits?

The conditions are:

(1) That the employee shall have notified her employer of her pregnancy and


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the probable date of her childbirth which notice shall be transmitted to the SSS in accordance with the rules and regulations it may provide;

(2) The full payment shall be advanced by the employer within 30 days from the filing of the maternity leave application.

(3) That the payment of daily maternity benefits shall be a bar to the recovery of sickness benefits provided by this Act for the same period for which daily maternity benefits have been received.

(4) That the maternity benefits provided under this section shall be paid only for the first four (4) deliveries or miscarriages. [Sec.14-A(a-d), RA No. 8282].

45. What are the effects if no contributions being made due to the fault of the employer?

As a rule, the SSS shall immediately reimburse the employer of the 100% of the amount of maternity benefits advanced by the employer upon the receipt of satisfactory proof of such payment and legality thereof [Sec.14-A(e), RA No. 8282]. However, if an employee should give birth or suffer a miscarriage without the required contribution having been remitted for her by her employer to the SSS or without the latter having been previously notified by the employer of the time of the pregnancy, the employer shall pay to the SSS damages equivalent to the benefits which said employee member would otherwise have been entitled to [Sec.14-A(f), RA No. 8282].

46. Who are those beneficiaries disqualified to receive any benefits under the SSS law?

Those beneficiaries who are nationals of foreign countries which do not extend benefits to the Filipino beneficiaries residing in the Philippines or which are not recognized by the Philippines, shall not be entitled to receive any benefit under this Act; Provided, that notwithstanding the foregoing, where the best interest of the SSS will be served, the Commission may direct

payments without regard to nationality or country of residence. (Sec.15, RA No. 8282).

47. What are the characteristics of the SSS benefits?

(1) Enjoyable only by covered members;

(2) Non-transferrable (Sec.15)(3) Exempted from tax or

attachments (Sec.16)(4) Not chargeable by any agent or

attorneys (Sec.17)

48. What is contribution?

It is the amount paid to the SSS by and on behalf of the member in accordance with Sec. 18 of this Act.

49. Define compensation.

All actual remunerations for employment, the mandated cost of living allowance, as well as the cash value of any remuneration paid in any medium other than cash except that part of the remuneration received during the month in excess of the maximum salary credit as provided under Sec.18 of this Act [Sec.8(f)].

50. What are the sources of funds of the SSS?

From the contributions of the following:

(1) Employees contributions (Sec.18);(2) Employers contributions(3) Contributions of the self-

employed. (Sec.19-A)(4) Government contribution and

guarantee (Sec.20 & 21)

51. What is the method of remittance, collection and payment?

The SSS shall require a complet and proper collection and payment of contributions and proper collection and payment of contributions and proper identification of the employer and the


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employee. Payment may be made in cash, checks, stamps, coupons, tickets or other reasonable devices that the Commission may adopt (Sec. 23, RA No. 8282).

52. What is a "Reserved Fund"?

All revenues of the SSS that are not needed to meet the current administrative and operational expenses incidental to the carrying of this Act shall be known as the the Reserve Fund (Sec.26, RA No. 8282).

53. What is an "Investment Reserve Fund"?

Such portion of the Reserve Fund as are not needed to meet the current benefit obligations thereof shall be known as the "Investment Reserve Fund" which the Commission shall manage and invest with the skill, care, prudence and diligence necessary under the circumstances then prevailing that a prudent man setting in like capacity and familiar with such matters would exercise in the conduct of an enterprise of a like character and with similar aims. (Sec.26, RA No. 8282).

54. For what purpose are the contributions to the Social Security System utilized?

The revenue of the SSS are to be used to meet current administrative and operational expenses and for the payment of the benefits under the SSS law.

55. What are the various loans that may be extended by SSS to its members?

The various loans are:(1) salary loan(2) educational loan(3) housing loan(4) community hospital loan

56. Before local government may issue any business permit or license, what is required?

Notwithstanding any law to the contrary, local government units shall prior to issuing any annual business license or

permit, require submission of certificate of SSS coverage and compliance with the provisions of this Act. Provided, that the certification or clearance shall be issued by the SSS within five (5) working days from receipt of the request [Sec.239(g), RA No. 8282].

57. Relative to the SSS Investment Reserve Fund, in what fields of investments are they allowed to be invested?

The SSS Reserve Fund may be invested in any or all of the following:

(1) Interest-bearing bonds or securities of the Government of the Philippines;

(2) Interest-bearing deposits or securities in any domestic bank doing business in the Philippines;

(3) In loans or interest-bearing advances to the National Government for construction of bridges, roads and public buildings;

(4) In direct housing loans;(5) In small short-term loans to

covered employees;(6) In other income earning projects

and investments secured by first mortgages on real estate collaterals which, in the determination of the Social Security Commission, shall redound to the benefit of the SSS, its members as well as the public welfare. (Sec.26, RA No. 8282).

58. Is the SSS law a law of succession?

No. The benefits under the SSS law do not form part of the estate of the SSS member. Further, persons other than the heirs of deceased employee may be entitled to the said benefits.

59. What are the proprietary functions of the SSS?

The SSS is exercising proprietary reasons for the following reasons:

(1) It can enter into agreements or contracts for the proper, stable and efficient administration of the System;


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(2) It can sue and be sued;(3) It covers an insurance scheme of

general application; and(4) It is operated for profit, it being

authorized to invest its funds in profitable securities.

60. How is the Social Security law to be construed?

The SSS law should be construed in favor of giving benefits to its members and their beneficiaries. Any doubt shall be resolved in favor of the claimant. Even if a person was mistakenly or wrongfully covered, when he paid the premium regularly and where the mistaken covered was discovered only after his death, his beneficiaries or heirs upon his death, shall be entitled to the death benefits. Thus it was ruled that the provisions of the SSS should be liberally construed in favor of those seeking its benefits. Any interpretation which would defeat rather than promote the ends for which the SSS was enacted should be schewed.

61. Distinguish ECC and SSS.

Employers' Compensation Social Security System

1) requires injury or death to1) injury or death need not be work be work connected connected2) only employers contribute2) both are required to contribute3) no loan benefits3) affords loan benefits4) administered by Employees 4)

GSIS or SSS Compensation Commission

62. What rules or guidelines govern the Househelpers?

Circular No. 21-V dated September 1, 1993 entitled " Guidelines on SSS Coverage of Househelpers".

63. Who are the househelpers that are mandatorily covered by SSS?

Under Sec. 1, Rule II, the following appears: "Coverage in the SSS shall be compulsory upon all househelpers who are sixty (60) years of age and below (i.e., have not yet reached their 61st birth) and who are receiving a monthly cash compensation of at least one thousand pesos. (Sec.1, II, Coverage).

64. Define the following: househelper, domestic or household services, and household employer.

(1) Househelper - any person who renders domestic or household services exclusively to a household employer. (i.e., driver, babysitter, gardener, cook, nursemaid, etc.)

(2) Domestic or household services - service in the employer's home which is usually necessary or desirable for the maintenance thereof and includes ministering to the personal comfort and convenience of the members of the employer's household including services of family drivers.

(3) Household employer - any person who engages the services of a househelper. For the purposes of this rule, the head of the family (i.e., the husband or in his absence, the wife) shall be deemed the household helper's employer (Secs.1-3. I, (Circular No. 21-V).

65. Define Compensation, Contribution, Monthly Salary Credit and Quarter as used in Circular No. 21-V.

(1) Compensation - monthly cash wage paid to the househelper.

(2) Contribution - amount paid or to be paid to the SSS by the househelper and by his/her employer in accordance with the attached scheduled of Monthly contributions.

(3) Monthly Salary Credit - the compensation base for


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contributions/benefits as indicated in the attached Schedule Monthly Contribution.

(4) Quarter - period of three consecutive calendar months ending on the last day of March, June, September and December.

66. When is the effective date of the coverage?

To take effect on the day of his employment but not earlier than 1 September 1, 1993.

67. What are required in the registration of househelpers?

Prior to reporting by the household employer, a househelper subject to compulsory coverage shall first secure his SSS number by submitting duly accomplished SSS Form No. E-1 together with: birth certificate (in its absence, baptismal certificate) and if none, joint affidavit of two persons personally known attesting to the correct names and date of birth.

68. State the effect of separation.

He may continue to pay voluntarily the contributions of both the employer and employee shares. If re-employed he can use the same SSS number.

69. What are the rights of the covered household employer? Covered househelper?

A household employer shall be subject to the same rights and obligations applicable to a regular covered employer under SSS, Medicare and EC laws and pertinent rules and regulations (Sec.2, III. Implementing Guidelines).

A covered househelper shall be entitled to the same benefits, loans and other privileges that are made available to a regular covered employee under the SSS, Medicare and EC laws (V, Implementing Guidelines).

70. What are the prohibited and penal acts under the SSS?

(1) Whoever, for the purpose of any payment to be made under this Act, or under agreement thereunder, where none is authorized to be paid, shall make or cause to be made, false statement or representation as to any compensation paid or received or whoever makes or causes to be made any false statement of a material fact of any claim for any benefit payable under this act, or application for loan with SSS, or whoever or causes to be made false statement or representation, affidavit or document in connection with such claim or loan, shall suffer the penalty provided for in Art. 172 of the Revised Penal Code.

(2) Whoever shall obtain or receive any money or check under this Act or any agreement thereunder, without being entitled thereto with intent to defraud any covered employee, employer or the SSS shall be fined not less than P5,000.00 nor more than P20,000.00 and imprisoned for not less than six years and one day nor more than 12 years.

(3) Whoever buys, sells, offers for sale, uses, transfers, takes or gives in exchange, or pledges to give a pledge, except as authorized in this Act or in regulation made pursuant thereto any stamp, coupon, ticket, book or other device, prescribed pursuant to Sec.27 hereof by the Commission for the collection or payment of contributions required herein, shall be fined not less than P5,000.00 nor more than P20,000.00 or imprisoned for not less than six years and one day nor more than 12 years, or both at the discretion of the court.

(4) Whoever, with intent to defraud, alters, forges or makes counterfeits any stamp, coupon, ticket, book or other device prescribed by the Commission for the collection or payment of any contribution required herein, or uses, sells, lends, or has in his possession any such altered, forged or counterfeited materials, or makes, uses, sells or has in his possession any material imitation of the materials, used in the manufacture of such stamps, coupons,


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ticket, book or other device shall be fined not less than P5,000.00 nor more than P20,000.00 or imprisoned for not less than six years and one day nor more than 12 years, or both at the discretion of the court.

(5) Whoever fails or refuses to comply with the provisions promulgated by the Commission, shall be punished by a fine not less than P5,000.00 nor more than P20,000.00 or imprisoned for not less than six years and one day nor more than 12 years, or both at the discretion of the court. Provided, that when the violation consists in failure or refusal to register employees or himself, in case of the covered self-employed or to deduct contributions from employee's compensation and remit the same to the SSS, the penalty shall be a fine not less than P5,000.00 nor more than P20,000.00 and imprisoned for not less than six years and one day nor more than 12 years.

(6) Any employee of the SSS who receives or keeps funds or property belonging, payable or deliverable to the SSS and who shall appropriate the same, or shall take or misappropriate or shall consent or through abandonment or negligence shall permit any other person to take such property or funds, wholly or partially, or shall otherwise be guilty of misappropriation of such funds or property, shall suffer the penalties provided in Art. 217 of the RPC.

(7) Any employer who, after deducting the monthly contribution or loan amortizations from his employee's compensation fails to remit said contribution to the SSS within 30 days from the date they become due shall be presumed to have misappropriated such contributions or loan amortizations and shall suffer penalties provided in Art.315 of the RPC. (Sec. 28, RA No. 8282).

71. In case juridical person commits any of the prohibited acts under the SSS law, who shall be liable?

If the act or omission penalized by this Act be committed by an association, partnership, corporation or any other institution, its managing head, directors or

partners shall be liable to the penalties provided in this Act for the offense. [Sec.28 (f), RA No.8282].

72. Who will initiate the filing of the criminal cases under the penal cause of this Act?

Criminal action arising from a violation of the provisions of this Act may be commenced by the SSS or the employee concerned either under this Act or in appropriate case under the RPC; Provided, that such criminal action may be filed by the SSS in the city or municipality where the SSS provincial or regional office is located if the violation was committed within its territorial jurisdiction or in Metro Manila, at the option of the SSS. [Sec.28 (j), RA No. 8282].

BAR QUESTIONS ON SSS LAW

1. Phil. Daily News prints and publishes the Daily News, copies of which are circulated through dealers in Metro Mla. These dealers, who are single proprietors exclusively distributing the Daily News but handling competing dailies for a fixed amount per copy sold, engage the services of newsboys. These newsboys are given a specified number of copies to sell everyday within a six hour period in the morning. After this period, the newsboys are free to sell other newspapers or go to school or engage in other activities. Each newsboy is paid 50c for every copy sold.

As counsel for the Phil. Daily News would you advise your client to report the dealers and newsboys as its employees pursuant to the SSS Act? (BAR 1987).

I will advise my client not to cover the dealers and newsboys because Phil. Daily News will not qualify as their employer under the SSS law. They are not under its supervision or control. But dealers and newsboys may be covered by SSS as its self-employed persons.


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2. Union Drug Company has sick leave policy, contained in a collective bargaining agreement requiring the accumulation of five days of the 15 days sick leave earned annually. Thus, an employee could use only 10 days of earned sick leave every year. The accumulated leave is convertible to cash when employment is terminated for any cause but may be used upon prior application with and approved by the company.

Pedro San Juan, an employee of the company, applied for sickness benefits under the Social Security Act, when he fell ill of pneumonia and his 10 day company sick leave had been exhausted. The System denied the application.

Decide. (BAR 1987).

The System has no reason to deny the applied sick benefits because of these reasons: First, the sickness benefit has not yet reached its limitations. Thus, (1) In no case shall daily sickness benefit be paid longer than 120 days in one calendar year; nor shall any unused portion of the 120 days of sickness benefit granted under this section be carried forward and added to the total number of compensable days allowable in the subsequent year [Sec.14(a)(1), RA No. 8282]. (2) The daily sickness benefit shall not be paid for more than 240 days on account of the same confinement.

Second, The compensable confinement shall begin on the first day of sickness, and the payment of such allowances shall be promptly made by the employer every regular payday or on the 15th

and last day of each month and similarly, in the case of direct payment by the SSS, for as long as such allowance are due and payable; Provided, That such allowances shall being only after all sick leaves of absence with full pay to the credit of the employee shall have been exhausted [Sec.14(b), RA No. 8282].

3. Leonardo Marasigan started working for Madrid Development Corporation in August 1984 when it was being organized and had no fixed offices. The company did

not ask for his Social Security Registration number, nor did it report him to the SSS. He died a year later and his widow filed a claim for death benefits with the SSS. While following up the claim, the widow discovered that it was only in November 1985 whn he was reported by his employer to the SSS and the premiums covering the entire period from August 1984 were remitted.

Leonardo's widow came to you for assistance. What would be your legal advice? (BAR 1987).

I will advise the widow that as primary beneficiary she is entitled to receive the SSS death benefits.

The nonreporting is not fatal because the premium were adequately remitted.

Since Leonardo failed to pay 36 monthly contributions, his widow is not entitled to a monthly pension but the widow as primary beneficiary is entitled to a lump sum benefit equivalent to 35 times the monthly pension.

4. Sapatilya Company, a manufacturer of wooden shoes, started its operations on Jan. 1, 1989. As of June 15, 1989, the company had in its payroll a general manager, an assistant general manager, three supervisors and forty rank and file employees,all of whom started with the company on Jan.1, 1989. On July 1, 1989, the company also had 10 casual employees who had been in the company since Feb. 16, 1989 and 12 contractual employees whose contract of employment with the company is for the period from Aug.1, 1989 to Sept. 30, 1989. Who among the aforementioned employees are under the coverage of the Social Security Law? When did their coverage under the said law take effect? (BAR 1987).

All of them are covered (Sec. 9, RA No. 8282). Formerly, employment purely casual and not for the purpose of occupation or business of employer are not covered. The mandatory coverage of all employees takes effect on the day of their employment.


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5. Don Jose, a widower owns a big house with a large garden. One day, his househelper and gardener left after they were scolded. For days, Don Jose, who lives alone in the compound to look for someone who could water the plants in the garden and clean the house. He chanced upon Mang Kiko on the street and asked him to water the plants and clean the house. Without asking any question, Mang Kiko attended to the plants in the garden and cleaned the house. He finished the work in two days.

(a). Is there an employer-employee relationship between Don Jose and Mang Kiko?

(b) Are they compulsorily covered by the SSS? (BAR 1991).

(a) No employer-employee relationship exists between them. The test and elements of the relationship are not present.

(b) No, he was performing a domestic service. He cannot be covered by the SSS because there is no mention in the problem that his monthly salary is P1,000.00 or more which makes a person doing household or domestic services within the coverage of SSS.

6. Ma. Sara Mira is an unwed mother with three children from 3 different fathers. In 1999, she became a member of the Social Security System. In August 2000, she suffered a miscarriage, also out of wedlock and again by a different father. Can Ma. Mira claim maternity benefits under the Social Security Act of 1997? Reason. (BAR 2000).

Yes. She is entitled to maternity benefits because such benefit (not dependent upon her being married or not under Sec.14-A, RA No. 8282). However, the delivery or miscarriage under such benefits cannot extend beyond four deliveries/miscarriages.

7. Marvin Patrimonio is a caddy rendering caddying services for the members and guests of the Barili Gold and Country Club. As such caddy, he is subject to Barili's

golf's rules and regulations governing Caddies regarding conduct, dress, language, etc. However, he does not have to observe any working hours, he is free to leave anytime he pleases and he can stay away for as long as he likes. Nonetheless, if he is found remise in the observance of club rules, he can be disciplined by being barred from the premises of the Barili Golf.

Is Marvin within the compulsory coverage of the Social Security System? When? (BAR 1999).

No employer-employee relationship exists between them (Manila Golf & Country Club, Inc. vs. IAC; 237 SCRA 207). However, Marvin Patrimonio may qualify as self-employed person under Sec.9-A of the Social Security Act of 1997.

FREQUENTLY ASKED QUESTIONS ON SSS

1. How can one register with the SSS? General Requirements

A person registering with the SSS for the first time as an employee, self employed, non-working spouse or OFW should submit, together with the SSS registration form, a photocopy of his/her birth or baptismal certificate or passport. In the absence of these documents, any two of the following documents:

record of employment GSIS member's record certificate from the National

Archive birth/baptismal certificate of

children marriage contract driver’s license school records or voter’s ID

card Alien Certificate of

Registration, or joint affidavit of two

disinterested parties attesting to the correct name and/or fact of birth of the person concerned


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A married person should also submit his or her marriage contract upon registration. If reporting children, he or she should submit the birth or baptismal certificate of the child, if legitimate; proof of filiation showing acknowledgment of the child, if illegitimate; or decree of adoption, if legally adopted. The original or certified true copies of these documents should be presented to the SSS for authentication.

For EmployeesAn employee should accomplish SSS Form E-1 (Personal Data Record) and submit it together with the general requirements.

For Employers Single Proprietorships

An owner of a single proprietorship business should accomplish and submit SSS Forms R-1 (Employer's Data Record) and R-1A (Initial or Subsequent List of Employees).

Partnerships Any of the partners of a partnership firm should accomplish SSS Forms R-1 (Employer's Data Record) and R-1A (Initial or Subsequent List of Employees) and submit these forms together with a photocopy of the Articles of Partnership. The original copy of the Articles of Partnership must be presented for authentication.

Corporations A corporation must accomplish SSS Forms R-1 (Employer's Data Record) and R-1A (Initial or Subsequent List of Employees) signed by its President or any of the corporate officers or incorporators and submit these forms together with the photocopy of the Articles of Incorporation. The original copy of the Articles of Incorporation must be presented to the SSS for authentication.

Household-Helper Employers A household-helper employer

who has an existing SS number should use his personal SS number as his employer number in all transactions with regard to his household-helper. If the employer has no existing SS number, he should get his SS number by accomplishing SSS Form E-1 (Member's Data Record).

For Self-Employed Members A self-employed person should accomplish SSS Form RS-1 (Self-Employed Data Record) and submit it together with the general requirements. If the self-employed member has employees, he should also register as an employer and secure an employer ID number that his company must use in all transactions with the SSS.

For Voluntary Members Separated Members

A member who is separated from employment or ceased to be self-employed/ overseas Filipino worker/ non-working spouse and would like to continue paying his contributions should get in touch with the nearest SSS office. Being a previous member, he will not be issued a new number. It is only his membership status that will be changed from covered employee, self-employed, OFW or non-working spouse to a voluntary paying member.

Non-Working Spouses A non-working spouse should accomplish SSS Form NW-1 (Non-Working Spouse Data Record) and submit it, duly signed by the working spouse, with a copy of his marriage certificate. In the absence of the marriage certificate, the applicant may submit a copy of SSS Form E-1 or E-4 of the working spouse where his name is reported.

Overseas Filipino Workers (OFWs)

An OFW should accomplish SSS Form OW-1 (Overseas Worker Record Form) and submit it together with the general requirements.

2. How can a member change the data in his membership records?


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Changes in a member's record should be reported immediately to the nearest SSS office by accomplishing SSS Form E-4 (Member's Data Amendment Form). He should submit a photocopy of the following:

marriage certificate for change of status

birth or baptismal certificates of children for change or addition of dependents

birth or baptismal certificate for correction of birth date and name

In case of non-availability of birth record or baptismal certificate, submit a certificate of loss or non-availability from the local civil registrar of the place where the member was born and from the parish priest of the locality where the member was baptized, together with any two of the following documents:

record of employment GSIS member's record certificate from the National

Archive Alien Certificate of

Registration birth/baptismal certificates of

children marriage contract school records passport joint affidavit of two

disinterested parties attesting to the correct name and/or fact of birth of the person concerned

The original or certified true copies of the documents should be presented to the SSS for authentication. 3. Who are considered the legal dependents of a member?The legal beneficiaries of a married member are his legally married spouse, legitimate, legitimated, legally adopted or illegitimate children. These are his primary beneficiaries. If he is single, his benefits will go to his dependent parents, who are considered his secondary beneficiaries. In the absence of both primary and secondary beneficiaries, whoever is

designated by the member in his membership record becomes the legal beneficiary.

4. When the member loses his SS ID card or cannot remember his SS number, should he secure another SS number? No. The SS number assigned to a member is his lifetime number and must always be used in all transactions with the SSS. He should not secure another number at any other time. If he wishes to secure another SS ID and cannot remember his SS number, he may inquire from the nearest SSS office. 5. What are the duties and responsibilities of an SSS employee-member? An SSS member should:

secure an SS number; ensure that he is reported by his

employer to the SSS; pay his monthly share of

contributions and ensure that these contributions are remitted to the SSS by his employer;

ensure that SSS Form R3s (Quarterly Collection Lists), where his name is included, are submitted to the SSS by his employer every quarter;

pay his monthly loan amortization, if any, through salary deduction and ensure that these payments are remitted to the SSS by his employer;

update or correct his personal records with the SSS by submitting a duly filled-up SSS Form E-4 (Member's Data Amendment Form) and supporting documents, such as marriage certificate for change of status, or birth or baptismal certificate for change or correction of name or date of birth, to avoid delays in the processing of benefit claims; and


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be conscious of changes and improvements in SSS policies and benefit structure.

6. What are the duties and responsibilities of an SSS employer-member? An employer is obliged to:

require the presentation of the SS number of prospective employees;

report all his employees for SS coverage within one month from date of employment by submitting an

accomplished SSS Form R-1A at the membership counter of the nearest SSS office;

deduct from his employees the monthly SS contribution based on the schedule of contributions; pay his share of contributions including Employees' Compensation (EC) and remit these contributions to any SSS-accredited bank within five days after the covered month;

submit a summary of all his employees' contributions (Contribution Collection List) together with a copy of the Special Bank Receipt (SBR) and SSS Form R-5 (Payment Return Form) to the nearest SSS branch or Postal Services Office within 10 days after the applicable quarter;

An employer may also participate in the SSSNet, a computer service using the electronic data interchange technology, designed to hasten the posting of employees contributions for faster processing and availment of benefits and loan privileges. Employers who are using this facility shall pay their employees' contributions and transmit both the employee and employer

contributions data on or before the 10th day following the month when said contributions are due and applicable.

Or, the employer may opt to participate in the R3 Tape/ Diskette Project, which allows the submission of the quarterly summary of employees' contributions thru a computer tape or diskette. This system is a better alternative to manual reporting as it minimizes encoding errors and processing time. Under this scheme, the employer shall submit the R3 tape or diskette on or before the last working day of the applicable month.

issue official receipts and maintain official records of employment and remittances for all contributions deducted from his employees every month or indicate such deductions from his employees' pay envelopes; A household helper employer should submit an accomplished SSS Form H-3 (Quarterly Collection List for Househelpers) together with the SSS Form R-5s. Household helpers employers in the National Capital Region may enroll in the Auto-Debit Arrangement System, which allows the one-time enrollment of the employer's bank account for the automatic payment of monthly SS contributions and loan repayments. This arrangement is open at the United Coconut Planters Bank, Far East Bank and Trust Co., Equitable Bank, Bank of the Philippine Islands,


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Metropolitan Bank and Trust Co. and the Philippine National Bank.

remit to the SSS all salary, educational, stocks investment or privatization loan amortization of his employees and submit an accomplished SSS Form ML-1 (Quarterly Salary/ Educational/ Calamity/ Stock Investment Loan Payment Return Form) to any of the SSS-accredited banks on or before the 20th day of the month after the applicable quarter; submit a summary of all employees' loan amortization thru an accomplished SSS Form ML-2 (Collection List) with copies of the SBRs and SSS Form ML-1 to the nearest branch or Postal Services Office within 10 days after the applicable quarter;

An employer may also participate in the Salary Loan Repayment Tape/Diskette project, which allows the submission of the quarterly summary of employees' loan repayment thru a computer tape or diskette. This system provides the employer with convenience and hastens the posting of member's loan repayments. Under this scheme, the employer shall submit the ML-2 tape or diskette on or before the last working day of the applicable month.

advance SS and EC sickness benefits due his employees once these are approved by the SSS;

advance SS maternity benefits due to qualified female employees;

file for reimbursement for all legally advanced sickness and maternity benefits;

keep his employees updated on the changes in SSS policies and increases in their benefits;

ensure that all forms submitted are properly and accurately accomplished;

inform SSS of any change in company address, business name, or temporary/permanent cessation of business operations thru the submission of a duly notarized SSS Form R-8 (Employer's Data Amendment Form);

submit annually an updated SSS Form L-501 (Specimen Signature Card); and,

certify Medicare forms and other SSS-related documents for the employees when required for purposes of their claims.

7. What are the duties and responsibilities of a voluntary/self-employed member? A voluntary/self-employed member should:

pay his contributions using SSS Form RS-5 (Contributions Payment Return Form) monthly or in accordance with the prescribed schedule; In case of change in monthly earnings or contribution, he should notify the nearest SSS office in writing.

update or correct his personal records with the SSS by submitting a duly filled-up SSS Form E-4 (Member's Data Amendment Form) and supporting documents such as marriage certificate;

be conscious of changes and improvements in SSS policies and benefit structure.

Self-employed and voluntary members in the National Capital Region may enroll in the Auto-Debit Arrangement System, which


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allows the one-time enrollment of the member's bank account for the automatic payment of monthly SSS contributions and loan repayments. This arrangement is open at the United Coconut Planters Bank, Far East Bank and Trust Co., Equitable Bank, Bank of the Philippine Islands, Metropolitan Bank and Trust Co., and the Philippine National Bank.

8. Monthly contributions based on the gross compensation of SSS members are payable under two programs, as follows:

SSS - 9.4% average monthly compensation not exceeding P15,000 and payable by both employer (6.07%) and employee (3.33%).

EC - 1% of average monthly compensation not exceeding P1,000 and payable only by the employer.

9. What is the basis for determining the monthly salary credit and monthly contributions of an SSS member?

For an employee - The monthly salary credit should be based on the total actual remuneration from employment, including cost of living allowance, as well as the cash value of any remuneration paid in kind as stated in the Social Security Law of 1997, Sec. 8 (f). The monthly contributions of a member can be determined based on his monthly salary credit which will be according to the Table of Contributions.

For self-employed or voluntary members - the monthly earnings declared at the time of registration shall be the basis of his monthly salary credit. However, the declared earnings should not be lower than P1,000 per month except for the OFWs whose lowest

monthly salary credit is pegged at P3,000.

10. What is the minimum/maximum monthly salary credit of a member?

The minimum monthly salary credit is P1,000 and the maximum is P15,000 beginning January 2002.

11. What are the different modes of paying the SSS contributions?SSS contributions may be paid through:

accredited banks; over-the-counter transactions at

the Cashiering Department in the SSS head office;

electronic data interchange (EDI) for enrolled employer members;

automatic debit arrangement (ADA) with banks.

12. How should the member pay his monthly contributions?

For an employee, including household helpers - monthly through salary deduction, starting on the first month of employment.

The employer should use SSS Form R-5 (Contributions Payment Return) for payments over-the-counter and through accredited banks. Household employers may also pay through ADA.

For a self-employed member, including farmers and fisherfolks - monthly, upon approval of membership.

The self-employed should use SSS Form RS-5 (Contributions Payment Return for Self-employed/ Voluntary Members) for payment through accredited banks or over-the-counter. He may also pay through ADA.

For a voluntary member, including non-working spouses and OFWs - monthly. The voluntary member should use SSS Form RS-5 (Contributions Payment Return for Self-


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employed/ Voluntary Members) for payment through accredited banks or over-the-counter. He may also pay through ADA.

Self-employed and voluntary members are allowed to change their monthly salary credit (MSC) once in a given year without a need for a written request. Increase or decrease in MSC shall be up to 20 percent of the current MSC but in no case shall it be lower than P1,000 (P3,000 for OFWs). Increase made in excess of 20 percent shall require the presentation and submission of a copy of the income tax return (ITR) for the prior year, duly received by the Bureau of Internal Revenue (BIR).

Retroactive payment of contributions will not be allowed for self employed and voluntary members.

13. When is the remittance of contributions due?

For employers Employers who remit through

the electronic data interchange (EDI) system - on or before the 10th day of the month following the applicable month

Household employers who remit through automatic debit arrangement (ADA) - deducted from bank account every 10th day of the month following the applicable month

Employers, including household helper employers, who remit over-the-counter or through banks - on or before the 5th calendar day of the month following the applicable month

For self-employed and voluntary members

Self-employed and voluntary members who remit through automatic debit arrangement (ADA) - deducted from bank account on or before the 10th day of the month following the applicable month

Self-employed and voluntary members who remit over-the-counter or through banks - on or before the 5th day of the month following the applicable month

14. When and how should employers report their contribution payments to the SSS?

Employers who remit through the electronic data interchange (EDI) system - monthly, through the Monthly Collection List (MCL), on or before the 10th day of the month following the applicable month.

Household employers who remit through automatic debit arrangement (ADA) - reporting is done between the SSS and the bank upon enrollment of the employer.

Employers, including household employers, who remit over-the-counter or through banks - within the first 10 days after every quarter ending in March, June, September and December using the Contribution Collection List (SSS Form R-3) with the copies of the validated SSS Form R-5 and SBR; or within the first 5 days following the applicable month using R-3 diskette with copies of the validated Form R-5 and SBR and transmittal letter.


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PRIMER ON GOVERNMENT SERVICE INSURANCE SYSTEM-Republic Act No. 8921

What is the title of Rep. Act No. 8921?

Rep. Act No. 8921 provides: “Sec. 1 Presidential Decree as amended, otherwise known as the “Revised Government Service Insurance Act of 1997 is further amended to read as the follows: “Sec. 1 Title- The short title of this Act shall be the Government service Act of 1997”.

What is the significance of PD No. 1146 of the GSIS law as amended by Republic Act No. 8921?

PD 1146 is the law expanding and improving the Social Service Insurance System. It increases the pension benefits, expands disability benefits, expands disability benefits, expands disability benefits and will eventually extend the compulsory coverage of the social security and insurance programs to all government officers regardless of employment status. 3. Who is the employer for purposes of the GSIS law? The national government, its political subdivisions, branches, agencies or instrumentalities, including government-owned or controlled corporations, and financial institutions with original charters, the constitutional commissions and the judiciary; 4. Who is an employee or member of the GSIS?

Any person receiving compensation while in the service of an employer as defined herein, whether by election or appointment, irrespective of status of appointment, including barangay and Sanggunian officials; 5. Who may be considered as dependents of a member? Dependents shall be the following: (a) the legitimate spouse dependent for support upon the member or pensioner; (b) the legitimate, legitimated, legally adopted child, including the illegitimate child, who is unmarried, not gainfully employed, not over the age of majority, or is over the age of majority but incapacitated and incapable of self-support due to a mental or physical defect acquired prior to age of majority; and (c) the parents dependent upon the member for support; 6. Classify the different beneficiaries of a member. a. Primary beneficiaries- The legal dependent spouse until he/she remarries and the dependent children; b. Secondary beneficiaries- The dependent parents and, subject to the restrictions on dependent children, the legitimate descendants; 7. What is meant by a. contribution? b. compensation c. What are the sources of funds of GSIS? a. Contribution- the amount payable to the GSIS by the member and the employer in accordance with Section 5 of this Act:1. Member- 9.0% and 12 %2. Employee of the Judiciary 3% and employer- 3% b. Compensation- basic pay or salary received by an employee, pursuant to his election/ appointment, excluding per diem, bonuses, overtime pay, honoraria, allowances and any other emoluments received in addition to the basic pay which are not integrated into the basic pay under existing laws ( Sec 2(j), GSIS)c. The funds of the GSIS come from the monthly contributions required by the covered employees and their employers (Sec 5, GSIS).


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5. What do you understand of the term lump sum?The basic monthly pension multiplied by sixty (60); 6. Is membership in the GSIS Compulsory?Membership in the GSIS shall be compulsory for all employees receiving compensation who have not reached the compulsory retirement age, irrespective of employment status, except members of the Armed Forces of the Philippines and the Philippine National Police, subject to the condition that they must settle first their financial obligation with the GSIS, and contractuals who have no employer and employee relationship with the agencies they serve. "Except for the members of the judiciary and constitutional commissions who shall have life insurance only, all members of the GSIS shall have life insurance, retirement, and all other social security protections such as disability, survivorship, separation, and unemployment benefits. (Section 3)7. What is the effect of separation from government service?“A member separated from the service shall continue to be a member, and shall be entitled to whatever benefits he has qualified to in the event of any contingency compensable under this Act.” (SEC. 4.)8. What are the obligations of the employer under the GSIS law?The employer has the following obligations under the GSIS law:

To report to the GSIS the names of all employees, their corresponding employment status, positions, salaries and other information;

To remit directly to GSIS the employer and employees contribution within the first ten days of the calendar month following the month to which the contributions apply. (Section 6, GSIS).

10. What is the penalty for non- remittance or delayed remittance?Penalized by interest penalty not less than 2% per month.

11. Enumerate the benefits that may be enjoyed by covered member of GSIS.The benefits are:

Basic monthly pension benefit Separation benefits Retirement benefits Permanent disability benefits Temporary disability benefits Survivorship benefits Funeral benefits Life insurance benefits

12.How is the basic monthly basic Pension Computed?SEC. 9. Computation of the Basic Monthly Pension. - (a) The basic monthly pension is equal to: "1) thirty-seven and one-half percent (37.5%) of the revalued average monthly compensation; plus "2) two and one-half percent (2.5%) of said revalued average monthly compensation for each year of service in excess of (15) years: Provided, That the basic monthly pension shall not exceed ninety percent (90%) of the average monthly compensation. "(b) The basic monthly pension may be adjusted upon the recommendation of the President and General Manager of the GSIS and approved by the President of the Philippines in accordance with the rules and regulations prescribed by the GSIS: Provided, however, that the basic monthly pension shall not be less than One thousand and three hundred pesos (P1,300.00): Provided, further, that the basic monthly pension for those who have rendered at least twenty (20) years of service after the effectivity of this Act shall not be less than Two thousand four hundred pesos (P2,400.00) a month. 13. How is the length of service computed?"SEC. 10. Computation of Service. - (a) The computation of service for the purpose of determining the amount of benefits payable under this Act shall be from the date of original appointment/election, including periods of service at different times under one or more employers, those performed overseas under the authority of the Republic of the Philippines, and those that may be prescribed by the GSIS in coordination with the Civil Service Commission.


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"(b) All service credited for retirement, resignation or separation for which corresponding benefits have been awarded under this Act or other laws shall be excluded in the computation of service in case of reinstatement in the service of an employer and subsequent retirement or separation which is compensable under this Act. "For the purpose of this section, the term service shall include full-time service with compensation: Provided, that part-time and other services with compensation may be included under such rules and regulations as may be prescribed by the GSIS. 14. When is retirement compulsory?Unless the service is extended by appropriate authorities, retirement shall be compulsory for an employee 65 years of age, with at least 15 years of service. Provided That if he has less than 15 years of service he may be allowed to continue in the service in accordance with existing civil service rules and regulations ( Sec 13 b, GSIS) 15. What shall consist the separation benefits?The separation benefits shall consist of: (a) a cash payment equivalent to one hundred percent (100%) of his average monthly compensation for each year of service he paid contributions, but not less than Twelve thousand pesos (P12,000) payable upon reaching sixty (60) years of age upon separation, whichever comes later: Provided, that the member resigns or separates from the service after he has rendered at least three (3) years of service but less than fifteen (15) years; or "(b) a cash payment equivalent to eighteen (18) times his basic monthly pension at the time of resignation or separation, plus an old-age pension benefit equal to the basic monthly pension payable monthly for life upon reaching the age of sixty (60): Provided, that the member resigns or separates from the service after he has rendered at least fifteen (15) years of service and is below sixty (60) years of age at the time of resignation or separation.

16. Supposing a government employee retires, what are the benefits that he may receive from the GSIS? Retirement benefits shall be: "(1) the lump sum payment as defined in this Act payable at the time of retirement plus an old-age pension benefit equal to the basic monthly pension payable monthly for life, starting upon expiration of the five-year (5) guaranteed period covered by the lump sum; or "(2) cash payment equivalent to eighteen (18) months of his basic monthly pension plus monthly pension for life payable immediately with no five-year (5) guarantee. "(b) Unless the service is extended by appropriate authorities, retirement shall be compulsory for an employee of sixty-five (65) years of age with at least fifteen (15) years of service: Provided, That if he has less than fifteen (15) years of service, he may be allowed to continue in the service in accordance with existing civil service rules and regulations. 17. To be entitled to the retirement benefits mentioned under No. 12, what requirements must a government employee satisfy?(1) he has rendered at least fifteen years of service; (2) he is at least sixty (60) years of age at the time of retirement; and (3) he is not receiving a monthly pension benefit from permanent total disability. 18. Under the GSIS, what are the two classes of disability benefits?

1. Permanent Disability Benefits 2. Temporary Disability Benefits

19. What do you mean by the following terms: 1. disability 2. total disability 3. permanent total disability 3. temporary total disability 4. permanent partial disability?

1. Disability- any loss or impairment of the normal functions of the physical and/ or mental faculty of a member which reduces or eliminates his/ her capacity to continue with his/her current gainful occupation or engage in any other gainful occupation.


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2. Total disabilty- complete incapacity to continue with his present employment or engage in any gainful occupation due to the loss or impairment of the normal functions of the physical and/ or mental faculties of the members.3. Permanent total disability- accrues or arises when recovering from impairment mentioned in Sec 2 Q is medically remitted.4. Temporary Total Disability- accrues or arises when the impaired physical or mental faculties can be rehabilitated and/ or restored to their normal functions.5. Permanent Partial Disability- accrues or arises upon the irrevocable loss or impairment of certain portion/s of the physical faculties, despite which the member is able to pursue a gainful occupation.

20. What are the two classes of permanent disability benefits?1. Permanent total disability benefits2. Permanent partial disability benefits21. What are the general conditions that must concur before a member may be entitled to permanent disability benefits?A member, who suffers permanent disability for reasons not due to his grave misconduct, notorious negligence, habitual intoxication, or willful intention to kill himself or another, shall be entitled to the benefits provided for under Sections 16 and 17 immediately following, subject to the corresponding conditions thereof. 22. In case the disability is total, what amount will a member receive because of such disability?If the permanent disability is total, he shall receive a monthly income benefit for life equal to the basic monthly pension effective from the date of disability: 23. What additional conditions must concur before a member may be entitled to permanent disability benefits? (1) he is in the service at the time of disability; or (2) if separated from the service, he has paid at least thirty-six (36) monthly contributions within the five (5) year period immediately preceding disability, or has paid a total of at least one hundred eighty (180) monthly

contributions, prior to his disability: Provided, further, That if at the time of disability, he was in the service and has paid a total of at least one hundred eighty (180) monthly contributions, in addition to the monthly income benefit, he shall receive a cash payment equivalent to eighteen (18) times his basic monthly pension: Provided, finally, That a member cannot enjoy the monthly income benefit for permanent disability and the old-age retirement simultaneously. "(b) If a member who suffers permanent total disability does not satisfy conditions (1) and (2) in paragraph (a) of this section but has rendered at least three (3) years of service at the time of his disability, he shall be advanced the cash payment equivalent to one hundred percent (100%) of his average monthly compensation for each year of service he paid contributions, but not less than Twelve thousand pesos (P12,000.00) which should have been his separation benefit. 24. When is the disability benefit suspended?Unless the member has reached the minimum retirement age, disability benefit shall be suspended when: "(1) he is reemployed; or "(2) he recovers from his disability as determined by the GSIS, whose decisionshall be final and binding; or "(3) he fails to present himself for medical examination when required by the GSIS.

25. What disabilities are considered total and permanent?

The following disabilities shall be deemed total and permanent: "(1) complete loss of sight of both eyes; "(2) loss of two (2) limbs at or above the ankle or wrist; "(3) permanent complete paralysis of two (2) limbs; "(4) brain injury resulting in incurable imbecility or insanity; and "(5) such other cases as may be determined by the GSIS.


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26. What are the conditions that must concur before a member may be entitled to temporary disability benefits?"A member who suffers temporary total disability for reasons not due to any of the conditions enumerated in Section 15 hereof shall be entitled to seventy-five percent (75%) of his current daily compensation for each day or fraction thereof of temporary disability benefit not exceeding one hundred twenty (120) days in one calendar year after exhausting all his sick leave credits and collective bargaining agreement sick leave benefits, if any, but not earlier than the fourth day of his temporary total disability: Provided, That: "(1) he is in the service at the time of his disability; or "(2) if separated, he has rendered at least three (3) years of service and has paid at least six (6) monthly contributions in the twelve-month period immediately preceding his disability."Provided, however, That a member cannot enjoy the temporary total disability benefit and sick leave pay simultaneously: Provided, further, That if the disability requires more extensive treatment that lasts beyond one hundred twenty (120) days, the payment of the temporary total disability benefit may be extended by the GSIS but not to exceed a total of two hundred forty (240) days. 27. In case a GSIS pensioner dies, will his survivors receive any benefit under this Act? Yes, his survivors will receive survivorship benefits. When a member or pensioner dies, the beneficiaries shall be entitled to survivorship benefits provided in Sections 21 and 22 hereunder subject to the conditions therein provided for. The survivorship pension shall consist of: (1) the basic survivorship pension which is fifty percent (50%) of the basic monthly pension; and (2) the dependent children’s pension not exceeding fifty percent (50%) of the basic monthly pension.

28. State the policies on survivorship benefits when the deceased member was in the active service?

The policies or rules are:First, if at the time of death, a member is in the active service and has rendered at least 15 years of creditable service:

The primary beneficiaries shall receive the survivorship pension and cash payment equivalent to 18 x the basic monthly pension; or

In the absence of primary beneficiaries, his secondary, the legal heirs of members shall receive the cash payment.

Second, if at the time of death, the member was in the service with less than 15 years of creditable service, his primary beneficiaries shall receive the cash payment equivalent to 100% of the average monthly compensation for every year of creditable service, but not less than P12, 000 .

29. What should be the governing rules and policies on the survivorship benefits of inactive members?

Survivors of members who retired under retirement laws not administered by the GSIS shall not receive any survivorship benefits from the system.

Primary beneficiaries of inactive members who have at least 15 years of creditable service shall receive the survivorship pension.

Primary beneficiaries of inactive members who have at least three years but les than 15 years of creditable service and were less than sixty years of age at the time of death shall receive a cash benefit equivalent of 100% of the deceased inactive member’s average monthly compensation for every year of creditable service but not less than P12,000.


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Primary beneficiaries of inactive members who have less than 15 years of creditable service and were at least 60 years of age at time of separation from service, shall not be entitled to receive survivorship benefits. However, if the member has not yet received the separation benefits within four years after his separation, the primary beneficiaries shall receive the cash benefit equivalent to 100% of the inactive member’s average monthly compensation for every year of creditable service.

30. State the new rule or policy on the GSIS Pensioner or Recipient of Monthly Income Benefits for Permanent Total Disability?

The survivorship benefits of a retiree- pensioner or a member receiving a monthly income benefit for permanent total disability shall be entitled to:

The primary beneficiaries shall receive the survivorship pension.

In the case of a pensioner who dies within the covered period by the lump sum, the survivorship pension shall be paid after the expiration of the said period.

31. Under Res. No. 188, what is meant by average monthly compensation(AMC)?

Consistent with the Premium based Policy, the AMC shall be the average salary for the last three years of service of the member prior to his/ hr death or separation, where the corresponding premium contributions have been paid and remitted to the GSIS.( Res. No. 188 No. 6, August 13, 2003). 32. Under the GSIS law, is there such a thing as compulsory life insurance?Yes, all employees except for Members of the Armed Forces of the Philippines (AFP)

and the Philippine National Police (PNP) shall, under such terms and conditions as may be promulgated by the GSIS, be compulsorily covered with life insurance.33. What are the benefits under the compulsory insurance?The member of his designated beneficiaries/ legal heirs are entitled to any of the following benefits available under the compulsory life insurance:

Maturity benefit Death Benefit Accident Cash benefit Cash Surrender Value Insurance Loans

34. What are the two classes of life insurance under the GSIS?

1. Compulsory life insurance2. Optional Insurance

35. When may a member apply for optional insurance? What are the benefits under an optional life insurance policy.

Subject to the rules and regulations prescribed by GSIS, a member may apply for insurance and / or pre need coverage embracing life, health, hospitalization, education, memorial plans, and such other plans as may be designed by the GSIS for himself and/ or his dependents. Any employer may likewise apply for group insurance coverage for its employees.

36. Who will effect payment of premium in optional insurance?

The payment of the premium/ installments for optional insurance and pre- need products may be made by the insured or his employer and/ or any person acceptable to the GSIS.37. Until what time should claims for benefits under the GSIS law be filed? Claims for benefits under this Act except for life and retirement shall prescribe after four (4) years from the date of contingency. 38. Does this 4 year prescriptive period cover life and retirement?


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No.39. Give the effects in case of wrong payment of benefits to ineligible/disqualified party?Payments made by the GSIS, prior to receipt of an adverse claim,to a beneficiary or claimant subsequently found not entitled thereto shall not bar the legal and eligible recipient to his right to demand the payment of benefits, proceeds and claims from the GSIS, who shall however, have a right to institute the appropriate action in a court of law against the ineligible recipient.(Sec 29 GSIS)40. What government agency has exclusive original jurisdiction to hear disputes arising from the GSIS law?The GSIS shall have original and exclusive jurisdiction to settle any disputes arising under this Act and any other laws administered by the GSIS. The Board may designate any member of the Board, or official of the GSIS who is a lawyer, to act as hearing officer to receive evidence, make findings of fact and submit recommendations, together with all documentary and testimonial evidence to the Board within thirty (30) working days from the time the parties have closed their respective evidence and filed their last pleading. The Board shall decide the case within thirty (30) days from the receipt of the hearing officer’s findings and recommendations. The cases heard directly by the Board shall be decided within thirty (30) working days from the time they are submitted by the parties for decision. 41. What powers have been enjoyed by officials and employees authorized by the Board to hear and receive evidence for the Board on any GSIS dispute within its jurisdiction?They have the power:

To administer oaths and affirmation

Take depositions Certify to official acts Issue subpoena to persons to

testify and for the production of books, papers,

correspondence and other records.

42. What rules shall govern appeals from any decision of the Board? Appeals from any decision or award of the Board shall be governed by Rules 43 and 45 of the 1997 Rules of Civil Procedure adopted by the Supreme Court on April 8, 1997 which will take effect on July 1, 1997: Provided, That pending cases and those filed prior to July 1, 1997 shall be governed by the applicable rules of procedure: Provided, further, That the appeal shall take precedence over all other cases except criminal cases when the penalty of life imprisonment or death or reclusion perpetua is imposable. The appeal shall not stay the execution of the order or award unless ordered by the Board, by the Court of Appeals or by the Supreme Court and the appeal shall be without prejudice to the special civil action of certiorari when proper. 43. What constitute GSIS Social Insurance Fund?All contributions payable under Sec. 5 of this Act together with the earnings and accrual thereon shall constitute the GSIS social Insurance Fund (Section 34, GSIS)44. What are the other funds being administered by GSIS?

Optional Insurance Fund Employees’ Compensation

Insurance Fund General Insurance Fund Other Special Funds

45. When should the retirement benefits be paid to a member?" The GSIS shall pay the retirement benefits to the employee on his last day of service in the government: Provided, That all requirements are submitted to the GSIS within a reasonable period prior to the effective date of the retirement; 46. In case an employee is also covered by another law, which grants similar benefits to what is granted by the GSIS law, may such employee claim under both laws?No, the employee may not claim under both. Under Section 55. of the GSIS law:


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“Exclusiveness of Benefits. - Whenever other laws provide similar benefits for the same contingencies covered by this Act, the member who qualifies to the benefits shall have the option to choose which benefits will be paid to him. However, if the benefits provided by the law chosen are less than the benefits provided under this Act, the GSIS shall pay only the difference. 47. What are the powers and functions of the GSIS?

To formulate, adopt and amend rules and regulations;

To adopt and approve the annual supplemental budget of receipts and expenditures;

To invest funds of GSIS; To acquire, utilize and dispose of

its real and personal properties;

To conduct actuarial and statistical studies and evaluation to determine the financial condition of the GSIS

To have the power of succession. To sue and be sued To enter into contracts; To carry on any lawful business; To establish offices for the

conduct of its business; To borrow money from other

sources; To invest, own or participate in

equity in any establishment firm or entity;

To approve appointments; To design and adopt early

Retirement Incentive plan; To fix and periodically review

and adjust rates of interest and other terms and conditions;

To enter into any agreement with SSS or with any other entity;

To be able to float proper instrument to liquefy long term maturity by pooling funds for short term secondary market;

To submit annually report to the President and Congress of the Philippines;

To maintain provident fund; To approve guidelines affecting

investments; To authorize payment of

remunerations to officials and employees;

To determine an impose interest upon unpaid premiums due from employers and employees;

To ensure all collection of all indebtedness, liabilities, and accountabilities;

To design and implement programs;

To exercise such other powers and functions as may be necessary and useful in promoting the purposes and objectives of GSIS.

BAR QUESTIONS ON GSIS LAW1. Gregorio Reposo, a 59 year old government employee and member of the GSIS could not wait for his retirement benefits and thought of enjoying them in advance of his retirement at age 60 by borrowing 80% of the retirement benefits from a friendly money lender, assigning to him the entire amount of his expected benefits. He obtained the approval of the assignment from the GSIS.Reposo spent the proceeds on a business venture that failed. A supplier sued Reposo for unpaid materials and attempted to proceed against his retirement benefits.Reposo seeks your assistance in an effort to shield his retirement benefits. What legal advice would you give? (Bar 1987)


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I would advise him that the party in interest is now the money lender due to the approved assignment. Incidentally however, I would advise him that his retirement benefits cannot be subject to attachment, garnishment, levy and other processes.Sec 39 GSIS Act of 1997).2. Juan de la Cruz was employed in a private company and was covered employee under the SSS. Her thereafter resigned but opted to maintain his membership with the system by shouldering the total contributions required. He later accepted an appointment in the government service and by reason thereof, became a member of the GSIS.Question Can Cruz continue his membership under both systems? Since both systems provide for permanent disability benefits and should Cruz thus become disabled, which system should answer for such benefit? ( Bar 1979).Yes, Cruz can be both a self-employed individual under the SSS and a GSIS member by virtue of his governmental appointment. As to recovery of benefits, he has the option to choose which benefit is favorable to him. However, if the benefits chosen are less, the other system will provide for the difference applying the portability and totalization scheme of Rep. Act. No. 7699, infra.3. An old-age pensioner of the GSIS had not received the lump sum payment of his pension and died within the guaranteed period of five years. He was survived by his wife and minor children.Are his heirs entitled to any benefit or benefits under the GSIS Act of 1997?(BAR Q. 1980).Yes, his primary beneficiaries are entitled to the balance of the monthly pension which is guaranteed for five years. They may instead opt for a lump-sum payment. Survivorship pension shall be given to the heirs after 5-year guaranteed period.Additionally, a funeral benefit of P18,000 (formerly P12,000.00 see Sec.23, GSIS) shall be paid upon the death of the pensioner.

PRIMER IN EMPLOYEES COMPENSATION PROGRAM AND STATE INSURANCE FUND

1. What is the Employees’ Compensation Program (ECP)?

It is the program provided for in Article 166 to 208 of the Labor Code whereby a fund known as the State Insurance Fund is established through premium payments exacted from employers and from which employees and their dependents in the event of work-connected disability or death, may promptly secure adequate income benefit, and medical or related benefits.

2. What are the basic features of the new ECP?

The basic features of the new program are:

It is tax exempt. It is funded by monthly

contributions of all covered employers.

Compulsory and Wider coverage. All employers and their employees not over 60 years of age are covered. With the inclusion into the system of employers with at least one employee and regardless of the capitalization and the type or nature of their business, more employees are now covered.

Exclusivity of benefits. The benefits are exclusive and in place of all other liabilities of the employer to the employee, his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents.

Integration of benefits. Compensation benefits for work-connected injury, sickness, disability and death


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have been integrated with those of the SSS/GSIS and Medicare, simplifying and facilitating the processing of claims.

Increase in benefits. An allowed income benefit has been considerably increased; death and permanent disability benefits now consist of a lifetime pension. Burial expenses have also been increased.

Prompt payment of income benefits. The new program does away with in the adversary type of proceedings. The claimant is not required to go to court to establish his claim. In fact, his own employer will file the claim in his behalf. The new simplified system results in the early settlement of claims and the prompt payment of income benefits.

Legal service dispensed with. Legal services are dispensed with in the processing of claims under the system, eliminating the payment of attorney’s fees.

Exclusive jurisdiction. The System has its own adjudication machinery with exclusive original jurisdiction to settle any dispute with respect to coverage, entitlement to benefits, collection and payment of contributions and penalties thereon, or any other matter related thereto, independent of other tribunals except the Supreme Court

A more balanced rehabilitation program. It enables permanently disabled employees to avail themselves of rehabilitation services under the employee’s

Compensation Program which can help them regain, as soon as possible, their physical capacity to the maximum level. Disabled workers could therefore remain as useful assets of society and regain their self confidence and self respect. (San Miguel Corporation vs. NLRC, G.R. No. 57473, August 15, 1988).

3. Who are covered under the ECP?

The following are covered under the law: Employers – All employers

belonging to the public or private sector are covered;

Employers – All employees not over sixty (60) years old are covered. Employees who are over sixty (60) years old shall be covered if he has been paying contribution prior to the age of sixty (60) and has not been compulsorily retired. Employees covered by both the GSIS and the SSS shall be compulsorily covered by both systems. (Sec. 2, Rule I, Amended Rules on Employees Compensation).

4. Who are Employers?

The term shall mean any person, natural or juridical, domestic or foreign, who carries on the Philippines any trade, business, industry, undertaking or activity of any kind and uses the services of another person who is under his orders as regards the employment.

An employer shall belong to either: The public sector covered by the

GSIS, comprising the National Government, including government-owned or -controlled corporations with original charters, the Philippine Tuberculosis Society, the Philippine


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National Red Cross and the Philippine Veterans Bank; or

The private sector covered by the SSS, comprising all employers other than those defined in the immediately preceding paragraph (Sec. 3a, Rule I, Amended Rules on Employees Compensation)

5. Who are Employees?

The term shall mean any person who performs services for an employer.

An employee shall belong to either: The public sector comprising the

employed workers who covered by the GSIS, including the members of the Armed Forces of the Philippines, elective officials who are receiving regular salary, and any person employed as casual, emergency temporary, substitute or contractual.

The private sector comprising the employed workers who are covered by the SSS (Sec. 4, Rule I, Ibid).

6. Are Filipinos under foreign employment covered?

Filipinos working abroad in the service of an employer, domestic or foreign, who carries on in the Philippines any trade, business, industry, undertaking or activity of any kind are also covered. They are entitled to the same benefits given to employees working in the Philippines (Sec. 5(a), Rule I, Amended Rules on Employees Compensation).

7. When does such compulsory coverage take effect?

The effectivity dates of coverage are the following:

For employers – First day of operation but not earlier than January 1, 1975;

For employees – First day of employment (Sec. 6, Rule I, Amended Rules on Employees Compensation).

8. What is the registration as requirement?The employer and the employees shall register with the system by accomplishing the prescribed forms. The private sector shall register with the SSS, while the public sector shall register with the GSIS. (Sec. 1, Rule II, Amended Rules on Employees Compensation).9. When is the employee deemed reported?An employee is deemed to have been duly reported for coverage, if the System (SSS or GSIS) has received a report or written communication about him from his employer or an EC (Employer Compensation) contribution paid in his name by his employer before a compensable contingency occurs (Sec. 3 (b)(3), Rule II, Amended Rules on Employees Compensation).10. What is the penalty for non-registration?

Failure or refusal to register its employees shall make the employer or responsible official who committed the violation liable for a fine of not less than P1, 000.00 nor more than P10, 000.00 and/or imprisonment for the duration of the violation or non compliance or until such time that the rectification of the violation has been made, at the discretion of the Court.In case a compensable contingency occurs after 30 days from employment and before the system receives any report for coverage about the employee or EC contribution on his behalf, his employer shall be liable to the System for the lump sum equivalent to the benefits to which the employee or his dependents may be entitled (Sec. 4, Rule II, Amended Rules on Employees Compensation).

11. What are the grounds for a claim for benefits under the ECP?

They are the following:


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sickness and the resulting disability or death by reason of an employment accident; and

sickness and the resulting disability or death by reason of an occupational disease.

12. What is the meaning of compensable sickness?

Sickness means any illness definitely accepted as an occupational disease listed by the Employees’ Compensation Commission, or any illness caused by employment subject to proof by the employee that the risk of contracting the same is increased by working conditions.

For this purpose, the Commission is empowered to determine and approve occupational diseases and work-related illness that may be considered compensable based on peculiar hazards of employment.However, there are cases where the disease although not listed as occupational, is still compensable such as when the worker was exposed to adverse working conditions, or the risk of contracting the disease was increased by the working conditions (De Guia vs. ECC, 198 SCRA 834; Ibid).

13. Discuss briefly the theory of “increase risk.”

The term sickness as defined includes “any illness caused by employment subject to proof by the employee that the risk of contracting the same is increased by working conditions.” This is a recognition of the theory of increased risk. To establish compensability under the same, the claimant must show substantial proof of a reasonable work-connection and not a direct causal relation. The test of evidence of the relation of the disease with the employment is probability and not certainty. To require otherwise, would not be consistent with the liberal interpretation of the Labor Code and the social justice guarantee.

14. What is an occupational disease?

An occupational disease is one which results from the nature of the employment and by the nature is meant which all employees of a class are subject and which produce the disease as a natural incident of a particular occupation, and attach to that occupant a hazard which distinguishes it from the usual run of the occupation a hazard attending employment in general.This type of disease is characterized by the fact that (a) it occurs in association with particular types of occupation, and (b) the disability due to the injurious exposure grows gradually over a period of time.Familiar examples of this disease are the following: (a) lead poisoning among miners; (b) silicosis among miners; (c) bends among drivers; and (d) communicable disease among nurses directly in contact with patients with such disease, is also held to be an occupational disease.

15. Is cancer an occupational disease?

Although the cause of cancer is not yet known, it has already been included as a qualified occupational disease in certain cases. Thus, cancer of the epithelial lining of the bladder is considered occupational when contracted by employees engaged in work involving exposure to alphanaphtylamine, betanaphtylamine, or benzidine or part of the salts, and suramine or magenta.Likewise, cancer of the skin or of the corneal surface of the eye is considered occupational in work involving the use or handling or exposure to tar, pitch, bitumen, mineral oil including paraffin, soot, or any compound or residue of any of its substances.Cancer of the stomach and other lymphatic and forming vessels, or of the nasal cavity and sinuses is recognized as an occupational disease among woodworkers, carpenters, loggers, and employees in pulp, paper and plywood mills; while cancer in the lungs, liver and brain is listed as an occupational disease of vinyl chloride or plastic workers.

16. What is the Doctrine of presumptive compensability and theory of aggravation?


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The presumption of compensability and the theory of aggravation established under the Workmen’s Compensation Act (Act No. 3428) as amended have been abandoned under the new Labor Code. However, the Supreme Court held that: “while these doctrines may have been abandoned, the liberalities of the law still subsists.” This decision gave substance to the liberal and compassionate spirit of the law found in Article 4 of the Labor Code which provides that all doubts shall be resolved in favor of labor.Note that for claims that have accrued prior to the new Labor Code, the above rules should be applied.

17. Is the claimant under the ECP required to present proof of causal relation or aggravation where the cause or origin of the disease is still unknown?

Yes. If the disease not intended by law to be compensated are inadvertently or recklessly included, the integrity of the State Insurance Fund is endangered. Compassion for the victims of diseases not covered by the law ignores the need to show greater concern for the trust fund to which tens of millions of workers and their families look for compensation whenever accidents, disease, and deaths occur.18. What is the old doctrine?

Under the old doctrine, the necessity of proof is present only when the cause of the disease is known. If unknown, there is no duty to present proof, for the requirement that the disease was caused or aggravated by the employment or work applies only to an illness where the cause can be determined or proved (Mora vs. ECC, G.R. No. 62157, 1December 1987.)However, actual proof of causation is not necessary to justify compensability. The degree of proof required to establish work connection between the illness and the employment is only substantial evidence of reasonable work-connection (Cristobal vs. ECC, 181 SCRA 874). The claimant must show that the development of the disease is brought largely by the conditions present in

the nature of the job (Zozobrado vs.ECC, 141SCRA 136). In other words, the employee has the burden of proving that his illness is work-related.19. What is the new doctrine?

The new doctrine provides two (2) approaches to a solution in cases where it cannot be proved that the risk of contracting an illness, not listed as an occupational disease, was increased by the claimant’s working conditions. One approach is that if a claimant cannot prove the necessary work connection because the cause of the disease are still unknown, it must be presumed that working conditions increased the risk of contracting the ailment. On of the order hand, the other approach provides that if there is no proof of the required work connection, the disease is not compensable because the law says so.

20. What are the conditions for compensability of occupational diseases?For an occupational disease and the resulting disability or death to be compensable, all of the following conditions must be satisfied:

The employee’s work must involve the risk described herein;

The disease was contracted as a result of the employee’s exposure to the describe risks;

The disease was contracted within the period of exposure and under such other factors necessary to contract it;

There was no notorious negligence on the part of the employee.

The employer who has failed to provide the adequate protection and safety devices shall be subject to the penalty imposed by Article 200 of the Code. Where he has provided adequate protection and safety mdevices, there shall be a determination as to whether or not the employee has been notoriously negligent. (Annex “A,” Amended Rules on Employees Compensation).


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21. What is the crucial test of compensability?The crucial test compensability is the existence of employer-employee relationship which is the jurisdictional foundation for recovery of compensation under the law. Where the relationship has already been severed, the provisions of the law will not apply. For purposes of determining the existence of employer-employee relationship, the most important test is the power to control the employee’s conduct (Iloilo Chinese Commercial School vs. Fabrigas, L – 16600, 27 December 1961).22. Is employment the sole factor?NO. Under the law, it is not required that employment should be the sole factor in the growth development or acceleration of the illness to entitle him to benefits provided therein. It is enough that his employment had contributed, even in a small degree to the development of the disease (Red Line Transportation Co., Inc. vs. Barriso, 11 SCRA 801; Lao vs. ECC, 97 SCRA 780).

23. Is Hansen’s Disease (leprosy) compensable?

Yes, provided the illness is traceable to employment. Leprosy, like tuberculosis, is a system disease; its specific cause is bacteria and the same can be acquired through body contact with a person harboring the germs; and some of the participating factors leading to the development of the disease are exposure to sudden changes in the environment and temperature and the lessening of the body resistance of the person affected. (Better Buildings, Inc. vs. Pucan, G.R. No. L-42731, February 28, 1985)

24. F.C. worked in the printing department of a government agency. He handled various chemicals for printing, ate without washing his hands, and was exposed to intense heat. He often neglected personal necessity due to inadequate facilities in his place of work. F.C. later died of rectal cancer. Is his death compensable? Why?

Yes. Although rectal cancer is not listed as an occupational disease, there is ample proof that the risk of contracting the same was increased, if not caused, by the working conditions prevailing in the employer’s premises. (Cristobal vs. Employees’ Compensation Commission, G.R. No. L-49280, April 30, 1980)

25. S., employed as a mechanic in a naval shipyard, died of pyelonephritis (acute pyelogenic infection of the kidney) and bronchopneumonia (infection of the bronchi and lung tissue). Is his death compensable? Why?

No. The diseases are not occupational with respect to the work of the deceased. Besides, the risk of contracting them was not increased by his working conditions. (Sulit vs. Employees’ Compensation Commission, G.R. No. L-48602, June 30, 1980)

26. Is ureterolithiosis (presence of renal stones in the ureter and urinary stones) of a chemical laboratory technician of the NBI compensable under the employees’ compensation program? Explain.

Yes. Though not expressly recognized as an occupational disease, ureterolithiosis may be compensable by reason of the theory of increased risk. It is medically established that environment, water or other liquid intake and the nature of the occupation are important factors in the development or inhibition of the disease.

The work of the NBI laboratory technician exposed her to drugs, insecticides, volotile poisons, fuels and inorganic compounds, and chemical laboratory equipment. Moreover, she attended to filed cases and rendered holiday and night duties once a week and helped the chemist in the examination of incoming cases. She often missed some important health habits such as regularly drinking water and urination in order not to interrupt the flow of concentration.


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Despite the abandonment of the presumption of compensability, the present law has not ceased to be a social legislation; the liberality of the law in favor of the working man or woman still prevails. (Employees’ Compensation Commission vs. Court of Appeals, G.R. No. 121545, November 14, 1996)27. Give instances of compensable illnesses.

The following ailments are compensable:

Tuberculosis considered occupational disease or work connected in such occupation as that of a teacher, laborer, driver, land inspector and other similar occupations (Visual vs. ECC, 187 SCRA 623).

Diabetes mellitus contracted by a public school teacher whose work was physically and emotionally stressful (Millora vs. ECC, 143 SCRA 151).

Hepatoma and post-necrotic cirrhosis contracted by a cashier of a bank, who was constantly exposed to various chemicals in the form of carbon paper, erasing fluids, and others and whose assignments involved irregular working hours and expose to different working conditions, body fatigue and psychological stress (Neri vs. ECC, 127 SCRA 672). The DBP cashier was exposed to handling money bills (Ibid).

Cirrhosis contracted by a nursery farm aide who was constantly exposed to plant chemicals and insecticides (San Valentin vs. ECC, 118 SCRA 160).

Cardiovascular disease which includes myocardial infraction in work-related disease (Telefast Communications vs. Castro, G.R. No. 78367, 29 February 1988).

Cancer of the lungs contracted by a librarian who has work for

15 years during which she was exposed to dusty books and other deleterious substances in the library (Dator vs. ECC, 111 SCRA 632).

Cancer of the liver contracted by a school teacher who has served for twenty-four (24) years (Abadiano vs. GSIS, 111 SCRA 509).

Rheumatoid arthritis contracted by school teacher usually associated with the nature and character of their occupation (Gersalino vs, WCC, 187 SCRA 1).

Senile cataract contracted by a construction worker who was constantly exposed to the sun’s glared and heat as well as excessive dirt and dust (Jarillo vs. ECC, 112 SCRA 264).

28. Give instances of non-compensable illnesses.

The following ailments are not compensable:

Ailments of a telephone operator diagnosed as chronic pylonephritis, diabetes mellitus, anemia metastases (cancer) are not occupational diseases (De Jesus vs. ECC, G.R. No. 56191, 27 May 1986).

Cancer of the pancreas contracted by a bookkeeper (Milano vs. ECC, 142 SCRA 52).

Senile cataract of a district engineer is not listed as occupational disease (Zozodrado vs. ECC, G.R. No. 65856, 17 January 1986).

Pylonephritis and bronchopneumonia contracted by a mechanic (Sulit vs.ECC, 98 SCRA 478).

Peptic ulcer is not included in the list of occupational diseases (Dabatian vs. GSIS G.R. No. 47294, 8 April 1987).


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Bells Palsy, anxiety neurosis, peripheral neuritis not listed as occupational diseases (Galanida vs. ECC, G.R. No. 70660, 24 September 1987)

Parotid Carcinoma or cancer of the salivary glands contracted by an accounting clerk is not an occupational disease (Sarmiento vs. ECC, G.R. No. 65680, 11 May 1988).

Glaucoma is no longer compensable (Hatta Hataie vs. ECC, 195 SCRA 580).

29. What an injury?Injury is defined as any harmful changes in human organism from any accident sustained at work while executing an order for the employer.30. What are the conditions for compensability of injuries?

For injury and the resulting disability or death to be compensable, the injury must be the result of an accident that satisfies all of the following conditions:

The employee must have been injured at the place where his work requires him to be;

The employee must have been performing his official functions;

If the injury was sustained elsewhere, the employee must have been executing an order for the employer (Sec. 1(a), Rule III, Amended Rules on Employees Compensation).

Thus an injury or accident is said to arise “in the course of employment” when it takes place within the period of employment, at a place where the employee may be, and while he is fulfilling his duties or is engaged in doing something incidental thereto. Note that “in the course” factor applies to time, place and circumstances (PHHC vs. WCC, L – 18246, 30 October 1964).

31. Distinguish “arising out of” and “in the course of” factors?

An injury or illness “arise out of” when it results from a risk or hazard which is necessarily or ordinarily or reasonably inherent in or incident to the conduct of such work or business. It refers to the origin or cause of the accident and are descriptive of its character (PASUDECO vs. 16 SCRA 784).“In the course of” takes place when an employee is doing the duty which he is required to perform. It refers to time, place, and circumstances under which accident takes place (Afable vs. Singer Machine Co.,58 Phil. 42).






Acts of ministration. The injury of the employee who heeded the “call of nature” and sustained injuries in the performance of such act, is deemed compensable. Likewise, acts necessary to the health and comfort of an employee while at work such as satisfaction of thirst, hunger, etc. are incidental to employment and injuries sustained there from are held to be compensable. (Chua vs.


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Roman, L-14827, 31 October 1960).








In his desire to retrieve the logs being carried away by strong current, the employee, although a good swimmer, met his death by

drowning as a consequence. This is deemed compensable (Cuevo vs. Barrredo, No. L-45699, 24 February 1938).







The employee is on his way to further work at time, even though on a fixed salary. Example: The employer required employee to bring some papers at home for overtime purposes; on his way he met an accident (Torbela


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vs. ECC, G.R. No. L-42627, 21 February 1980).




The general rule in workmen’s compensation law known as the going and coming rule, is that in the absence of special circumstances, an employee injured while going to or coming from his place of work is excluded from the benefits of the workmen’s compensation law. Thus, an injury or accident sustained by an employee while using the public streets and highways in going to or returning from the place of employment is not compensable. Such as injury is suffered as a consequence of risk and hazard of employment. Furthermore, the employer is not an insurer against all accidental injuries which might happen to an employee while in the course of employment. (Iloilo Dock and Engineering Co. vs. WCC, 26 SCRA 102, 105)









36. What defenses may be interposed by the State Insurance Fund against a claim for compensation made by a covered employee or his dependents?



The disability or death was occasioned by the employee’s intoxication, willful intention to injure or kill himself or


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another, or his notorious negligence.
















Whenever other laws provide similar benefits for the same contingency, the employee who qualifies for the benefits shall have the option to choose the law under which the benefit will be paid to him. If the law chosen provides for benefits lesser than those provided by the Labor Code, he shall be entitled only to the difference.The employee cannot avail himself at the same time of similar benefits provided by different laws, except the difference thereof. However, the employer may continue to grant benefits already earned by the employees under any collective bargaining agreement or any other arrangement (Sec. 2, Rule ІV, Amended Rules on Employees Compensation).




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YES. While it is true the SSS Law (R.A. No. 1161, as amended) is “distinct and different” from the labor Code, the provisions of Sections 15 of the SSS law and Article 173 of the Labor Code are in pari materia insofar as they both relate to payment of compensation to covered employees, and insofar also as both provisions barred the simultaneous recovery of benefits under both the SSS Law and the Labor Code, until Article 173 was amended by P.D No. 1921 in 1984. The amendment introduced by P.D No. 1921 to Article 173 lifted the ban against the

simultaneous recovery of benefits under the Labor Code and the SSS law, and is deemed to have repealed by necessary implication the provision of Section 15 of the SSS Law. Since P.D. No. 1921 is the latest expression of the legislative will, it will prevail over Section 15 of the SSS Law. (Opinions of the Secretary of justice dated May 23, 1989 and January 12, 1990 addressed to the SSS).Furthermore, benefits under the State Insurance Fund accrue due to the employees concerned due to hazards involved and are made a burden on the employment itself. On the other hand, social security benefits are paid to SSS members by reason of their membership therein for which they contribute their money to a general fund.It must be noted that under the new Social Security Act (R.A. 8282), the provision of Section 15 of the old SSS law which bars simultaneous recovery of benefits, has already been deleted.


No. Unless otherwise provided, the liability of the State Insurance Fund under this Title shall be exclusive and in place of all other liabilities of the employer to the employee, his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents. 45. G., who worked in the weaving department of a textile firm, was stabbed to death by L., his fellow employee. L. was convicted of homicide and sentenced to pay indemnity to the heirs of G. If the heirs have already recovered from the State Insurance Fund, can they still hold the employer subsidiarily liable for the indemnity to be paid by L., in the event the latter is unable to pay the same? Why?

No, the heirs can no longer recover indemnity from the employer. The liability of the State Insurance Fund is exclusive and in place of all other liabilities of the


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employer to the employee and his dependents or beneficiaries. This includes the subsidiary liability of the employer under the Revised Penal Code. (Generoso vs. Universal Textile Mills, Inc. G.R. No. L-28586, January 22, 1980) 46. What are the liabilities of third parties?

In case the injury or death is caused by circumstances creating a legal liability against a third party other than the employer, the injured employee or his dependents may either claim compensation from the System under the Labor Code or sue for damages in accordance with law. In case the benefit is paid by the system, the latter is subrogated to the rights of the injured employee or his dependent in accordance with the general law. Where the System recovers from such third party damages in excess of those paid or allowed under Title II, Book IV, of the Labor Code, such excess shall be delivered to the injured employee or another person entitled thereto, after deduction of the expenses of the System and the cost of the proceedings.It must be noted that injuries or death caused by a third person are compensable provided the requisites of compensability are present. However, the injured employee cannot claim payment twice for the same injuries, that is, from the third party and from the SSS or GSIS (Alba vs. Bulaong, 101 Phil. 434).

47. S., a driver-mechanic, was killed when he tried to fight unidentified men who carnapped the vehicle of his employers. As a consequence of his death, his heirs filed an action for death compensation and damages before the RTC against his employers. The latter, however, contended that the complaint should be dismissed as the appropriate remedy is a claim under the Employees’ Compensation Program. Is the contention of the employers correct? Explain.

No. The employee or his heirs have the choice of cause of action and the

corresponding relief, i.e. either an ordinary action for damages based on Article 1171 of the New Civil Code before the regular courts or a special claim for limited compensation under the Employees’ Compensation Program. But the right of choice is qualified in that the employee should be held to the particular remedy in which he stakes his fortune. (Vda. de Severo vs. Go, G.R. No. L-44330, January 29, 1988)

48. Who are entitled to benefits under the employees’ compensation program?

The covered employee, his dependents, and in case of his death, his beneficiaries.

49. Who are the dependents of the employee?

Dependents include the following: the legitimate, legitimated or

legally adopted child who is: unmarried, not gainfully employed, and not over eighteen years of age, or over eighteen but not over

twenty-one years of age provided that he is enrolled in school,

or over twenty-one years of age provided that he is congenitally incapacitated and incapable of self-support due to physical or mental defect which is congenital or acquired during minority;

the legitimate spouse living with the employee; and

the legitimate parents of said employee wholly dependent upon him for regular support.

50. What is the meaning of dependency?

Dependency is a relationship between two persons where the claimant-beneficiary looks up to or relies for support upon another for the purpose of maintaining himself consistent with the dependent’s station in life. Thus, a lawful dependent is


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one who relies upon the deceased for the support with reasonable expectation that the same shall continue. The support may take the form of sustenance, dwelling, clothing and medical attendance. (Art. 290, New Civil Code)

51. Who are included under the term beneficiaries?

Beneficiaries mean the dependent spouse until he remarries and dependent children who are the primary beneficiaries. In their absence, the dependent parents subject to the restrictions imposed on dependent children, the illegitimate children and legitimate descendants, who are the secondary beneficiaries.

52. Who are the primary beneficiaries?

The following beneficiaries are considered primary:

The legitimate spouse living with the employee at the time of the employee’s death until he remarries; and

Legitimate, legitimated or legally adopted or acknowledged natural children who are unmarried, not gainfully employed, not over 21 years of age, or over 21 years of age provided that he is incapacitated and incapable of the self support, due to physical or mental defect which is congenital or acquired during minority: Provided further that the dependent acknowledged natural chill shall be considered a primary beneficiary only when there are no other dependent children who are qualified and eligible for monthly income benefit: Provided, Finally, that if there are two or more acknowledged natural

children, they shall be counted from the youngest and without substitution, but not exceeding five. (Sec. 1(b), Rule XV, Amended Rules on Employees Compensation)

53. Who are the secondary beneficiaries?

The following beneficiaries are considered secondary:

The legitimate beneficiaries parents wholly dependent upon the employee for support.

The legitimate descendants and illegitimate children who are unmarried, not gainfully employed and not over 21 years of age, or over 21years of age provided that he is incapacitated and incapable of self-support due to physical or mental defect which is congenital or acquired during minority. (Sec.1(c), Rule XV, Amended Rules on Employees Compensation)

54. Who shall have priority?

Primary beneficiaries shall have priority claim to death benefit over secondary beneficiaries. Whenever there are primary beneficiaries, no death benefit shall be paid to secondary beneficiaries.If the deceased employee has no primary beneficiaries at the time of his death benefit shall be paid to his secondary beneficiaries.If the deceased employee has no beneficiaries at the time of his death, the death benefits shall accrue to the Employees Compensation Fund. (Sec.2, Rule XV, Amended Rules on Employees Compensation)

55. Classify the benefits which may be enjoyed under the State Insurance Fund.

a. Medical Benefitsb. Disability Benefitsc. Death Benefits and


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d. Funeral Benefits

56. What are medical benefits?

Medical benefit means all payments made under this Title to the providers of medical care, rehabilitation services and hospital care. It consists of medical services and rehabilitation services.

57. What is the scope of medical services?

Medical services cover the following: During confinement in an

accredited physician; Subsequent domiciliary care by

an accredited hospital, in case of injury. (Annex C, Amended Rules on Employees Compensation)

58. What are the conditions of entitlement to medical services?

Any employee shall be entitled to such medical services, appliances and supplies as the nature of his disability and the progress of his recovery may require, provided, the following conditions are satisfied:

he has been duly reported to the System (SSS or GSIS);

he sustains an injury or contracts sickness; and

the System has been duly notified of the injury or sickness.

59. What is the period for entitlement?

The medical services, appliances and supplies shall be provided to the afflicted employee beginning with the first day of injury or sickness, during the subsequent period of his disability, and as the progress of his recovery may require, subject to the periodic submission of a medical report on his disability certified by his physicians (Sec. 2, Rule VIII, Amended Rules on Employees Compensation).

60. What is the meaning of rehabilitation?

Rehabilitation is the process by which there is provided a balanced program of remedial treatment, vocational assessment and preparation designed to meet the individual needs of each handicapped employee to restore him to suitable employment, including assistance as may be within its resources to help rehabilitee to develop his mental, vocational or social potentials. (Sec.1 (a), Rule IX, Amended Rules on Employees Compensation)

61. What is the nature of the coverage?

Coverage of handicapped employees in the rehabilitation services program is voluntary in nature. (Sec.2, Rule IX, Amended Rules on Employees Compensation)

62. What are the conditions for entitlement?

Any employee shall be employees in the rehabilitation services, if all of the following conditions are satisfied:

He has been reported to the System;

He sustains a permanent disability as a result of compensable injury or sickness;

the System has been duly notified of the injury or sickness which caused the disability;

He has not been placed in suitable employment (Sec. 3, Rule IX, Amended Rules on Employees Compensation).

63. What is the period of entitlement? Rehabilitation services shall be provided during the period of disability unless suspended or terminated under any of the following grounds:

upon suitable employment; by self-termination;


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upon suspension or termination of such services by the rehabilitation center. (Sec.4, Rules IX, Amended Rules on Employees Compensation)

64. What is the extent of the services? Rehabilitation services shall consist of medical-surgical management, hospitalization, necessary appliances and supplies, vocational training and assistance for placement. Transportation allowance between place of residence and the rehabilitation facility, launch, and dormitory allowance in appropriate cases may be included in the extent of service. (Sec.5, Rule IX, Amended Rules on Employees Compensation)

65. What are the disability benefits?They are income benefits in case of

temporary total disability, permanent total disability and permanent partial disability.

66. What is the meaning of temporary total disability?

A total disability is temporary if as a result of the injury or sickness, the employee is unable to perform any gainful occupation for a continuous period not exceeding 120 days, or where the injury or sickness still requires medical attendance beyond 120 days but not to exceed 240 days from the onset of disability. (Sec. 2, Rule VII Amended Rules on Employees Compensation)


An employee is entitled to an income benefit for temporary total disability if all the following conditions are satisfied:

The employee has been duly reported to the System;

The employee sustains the temporary total disability as a results of the injury or sickness;

The system has been duly notified of the injury or

sickness which caused disability;

If the illness or injury occurs before the employee is duly reported for coverage, the employer shall be liable for the benefit. (Sec. 1, Rule Amended Rules on Employees Compensation)

68. What is the period of entitlement?

The income benefit shall be paid beginning on the first day of the disability. If caused by an injury or sickness, it shall not be paid longer than 120 consecutive days except where such injury or sickness still requires medical attendance beyond 120 days but not to exceed 240 days from onset of disability. However, the System may declare the total and permanent status at any time after120 days of continuous temporary total disability as may be warranted by the degree of actual loss or impairment of physical or mental functions as determined by the System. (Sec. 2, Rule X, Amended Rules on Employees Compensation)After an employee has fully recovered from an illness as duly certified to by the attending physician, the period covered by an relapse or recurrence of illness resulting in disability, shall be considered independent of and separate from the period covered by the original disability. (Sec.2(a), Rule X, Amended Rules on Employee Compensation)

69. How much is the employee entitled?

Any employee entitled to benefit for temporary total disability shall be paid income benefit equivalent to 90% of his average daily salary credit, provided that the daily income benefit shall not be less than P10.00 nor more than P90.00 nor paid longer than 120 days for the same disability unless the injury or sickness requires more extensive treatment that lasts beyond 120 days as may be determined by the Commission. (Sec.3, Rules X, Amended Rules on Employee Compensation)

70. May the said benefit be suspended?


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The monthly income benefits shall be suspended if the employee fails to submit a monthly medical report certified by his attending physician. (Sec.3, Rule X, Amended Rules on Employees Compensation)

71. What is the meaning of permanent total disability?

A disability is total and permanent if as a result of the injury or sickness, the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days except when the disability that lasts beyond 120 days is considered as temporary total. (Sec.2(b), Rule XI, Amended Rules on Employees Compensation)

72. What are the disabilities that are considered total and permanent?

The following disabilities shall be deemed total and permanent:

Temporary total disability lasting continuously for more than one hundred twenty days;

Complete loss of sight of both eyes;

Lost of two limbs at or above the ankle or wrist;

Permanent complete paralysis of two limbs;

Brain injury resulting in incurable imbecility or insanity; and

Such cases as determined by the Medical Director of the System and approved by the Commission.

73. May a permanent total disability arise although the employee does not lose the use of any part of his body?

Yes. Where the employee is unable, by reason of the injury or sickness, to perform his customary job for more than 120 days, permanent total disability arises.


An employee shall be entitled to an income benefit for permanent total disability if all of the following conditions are satisfied:

The employee has been duly reported to the system;

He sustains permanent The system has been duly

notified of the injury or sickness which caused hi disability.

The employer shall be liable for the benefit if such injury or sickness occurred before the employee is duly reported for coverage to the System (Rule XI, Amended Rules on Employee Compensation)

75. What is the period of entitlement?

The full monthly income benefit shall be paid for all compensable months of disability. (Sec.2, Rule XI, Amended Rules on Employees Compensation) The monthly income benefit is guaranteed for five (5) years.

76. May the said benefits be suspended?

The monthly income benefits can be suspended under any following conditions:

Failure of the employee to present himself for examination at least once a year upon notice by the system.

Failure to submit a quarterly medical report certified by the attending physician;

Complete or full recovery from his permanent disability; or

Upon being gainfully employed. (Sec.2, Rule XI Amended Rules on Employees Compensation)

77. How much is the amount of benefit?

Each dependent child, but not exceeding five (5), counted from the youngest and without substitution, shall be entitled to 10% of the monthly income benefit of the employee. (Sec.4, Rule XI,


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Amended Rules on Employees Compensation)

In this case of the SSS, the monthly income benefit of an employee is equivalent to 15% of the sum of the average monthly salary credit multiplied by the replacement ratio and 1½ of the average monthly credit for each credited years of service in excess of ten years. In the case of the GSIS, the monthly income benefit of an employee shall be the basic monthly pension as defined in P.D. 1146 plus 20% thereof but not less than P250.00 or more than the actual salary at the time of contingency. (Sec.9, Rule VI, Amended Rules on Employees Compensation)

78. What is the meaning of permanent partial disability?

A disability is partial and permanent if as a result of injury or sickness, the employee suffers a permanent partial loss of the use of any part of his body. (Sec.2(c), Rule XII, Rules on Employees Compensation)

79. For how long may the permanent partial disability income benefit be enjoyed?

The benefit shall be paid for not more than the period designated in the following schedule:

Complete and permanent loss of the use of: Number of monthsOne thumb 10One index finger 8One middle finger 6One ring finger 5One little finger 3One big toe 6Any toe 3One hand 39One arm 50One foot 31One leg 46One ear 10Both ears 20Hearing of one ear 10Hearing of both ears 50Sight of one eye 25

80. May a permanent partial disability be converted to permanent total disability after the employee's retirement? Why?

Yes. This is in line with the social justice provision in the Constitution. A persons disability may not manifest itself fully at on precise moment in time but rather a period of time. And disability should not be understood more on its medical significance but on loss of earning capacity.


An employee is entitled to the income benefit for permanent partial disability if all the following conditions are satisfied:

The employee has been duly reported to the System;

The employee sustains a permanent partial disability as a results of injury or sickness; or

The system has been duly notified of the injury or sickness which caused his disability. If the injury or sickness occurred before the employee is duly reported for coverage to the system, the employer shall be liable for the benefit. (Sec.1, Rule XII, Amended Rules on Employees Compensation)

A covered employee shall continue to receive the income benefits even if he is gainfully employed and receiving is wages or salary.

82. How should the monthly income benefit be paid?

If the number of months for payment of income benefit for permanent partial disability exceeds twelve (12) months, income benefit shall be paid in monthly pension, otherwise, the system may pay the


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income benefit in lump sum. (Sec.3(a), Rule XII, Amended Rules on Employees Compensation)

83. How much is the amount of income benefit?

In the case of primary beneficiaries, the monthly income benefit for permanent total disability, which shall be guaranteed for five years, increased by ten percent (10%) for each dependent child not exceeding five(5) beginning with the youngest and without substitution: Provided that, the aggregate monthly benefit payable in the GSIS shall in no case exceed the monthly wage or salary actually received by the employee at the time of his death; and provided further that the minimum income benefit shall not be less than fifteen thousands pesos (15,000.00), The death benefits shall be paid during the entire period for which they are entitled thereto.If the employee has been receiving income benefit for permanent total disability at the time of his death, the primary beneficiaries shall be paid the monthly income benefit equivalent to 80% plus dependent’s pension equivalent to 10% for every dependent child but not exceeding five counted from the youngest and without substitution.In the case of secondary beneficiaries, the income benefit is payable in monthly pension which shall not exceed the period of sixty (60) months and the aggregate income benefit shall not be less than P15,000.00.If the employee has been monthly income benefit for permanent total disability at the time of his death, the secondary beneficiaries shall be paid the monthly pension, excluding the dependent’s pension of the remaining balance of the five year guaranteed period. (Sec.3, Rule XIII, Amended Rules on Employees Compensation)

84. What are the death benefits?

Death benefits are the monthly income benefit which accrue to the primary beneficiaries upon the death of a covered

employee in an amount equivalent to the monthly income benefit plus ten per cent for each dependent child, but not exceeding five, beginning with the youngest and without substitution. The said monthly income benefit shall be guaranteed for five years. However, if he has no primary beneficiary the System shall pay to his secondary beneficiaries monthly income benefit but not to exceed six months.

85. What are the conditions for entitlement to death benefits?The beneficiaries of a deceased employee shall be entitled to an income benefit if all the following conditions are satisfied:

a. he has been duly reported to the System (SSS or GSIS);

b. he dies as a result of an injury or sickness; and

c. the System has been duly notified of his death, as well as the injury or sickness which caused his death.

If the employee has been receiving monthly income benefit for permanent total disability at the time of his death, the surviving spouse must show that the marriage has been validly subsisting at the time of his disability. (Sec.1(b), Rule XIII, Amended Rules on Employees Compensation)

86. Give the rules governing payment of death benefits to the beneficiaries.

Primary beneficiaries shall have priority claim to death benefits over secondary beneficiaries. Whenever there are primary beneficiaries, no death benefit shall be paid to his secondary beneficiaries.

If the deceased employee has no primary beneficiaries at the time of his death, the death benefit shall be paid to his secondary beneficiaries.

If the deceased employee has no beneficiaries at the time of his death, the death benefit shall


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accrue to the Employees’ Compensation Fund.

87. For how long are the primary beneficiaries entitled to the death benefits?The dependent spouse, until he or she remarries; the dependent children until they get married, or find gainful employment, or reach 21 years of age; and in the case of the child suffering from physical or mental defect, when such defect disappears.

88. If the employee suffers disability or dies before he is duly reported for coverage to the System (SSS or GSIS), who will be liable for the benefits?The employer.

89. What is the funeral benefit?A funeral benefit of P10,000.00 shall be paid upon the death of a covered employee or a permanently totally disabled pensioner.

90. Who are entitled to funeral benefits?

The funeral benefit shall be paid upon the death of a covered employee or permanently totally disabled pensioner to one of the following:

the surviving spouse; or the legitimate child who spent

for the funeral services; or any other person who can show

incontrovertible proof of having borne the funeral expenses. (Rule XIV, Amended Rules on Employees Compensation)

91. What is the nature of the relationship required by law?

What has been contemplated by the law for purposes of claiming income benefits for death is legitimate relationship. Thus, if the beneficiary is the surviving spouse, then she or he must be the legal wife or husband of the deceased at the time of death. The same rule also applies to children. Under the

Civil Code, they must be legitimate, legitimated or legally adopted children in order to qualify them as legitimate beneficiaries.

92. How may relationship be proved?

Dependency may be established by submission of proof of filiations. The filiations of a legitimate child can be proven by the record of birth appearing in the civil register, or by any authentic document, or a final judgment of the court. In their absence, it can be proven by the continuous possession of the status of a legitimate child (Art. 265 and 266, New Civil Code). On the part of a legitimate spouse, it can be proven by authentic documents such as the marriage contract or the marriage certificate.

93. What is the composition of Employees Compensation Commission (ECC)?

The Employees Compensation Commission is composed of the following:

Secretary of Labor and Employment – ex-officio Chairman

Executive Director of ECC – ex-officio Member

GSIS general manager – ex-officio Member

SSS Administrator – ex-officio Member

Chairman of Medicare Commission – ex-officio member

Employee’s Representative – appointive Member

Employee’s Representative – appointive Member

94. What are their qualification?

The appointive members, that is, the employee’s representative and employer’s representative shall have at least five (5) years experience in workmen’s compensation or social security program.

95. What is the status of ECC?


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The Employees Compensation Commission is a Government corporation. For purposes of policy coordination and guidance, it is attached to the Department of labor and Employment.

96. What are the powers and duties of ECC?

The ECC has the power to determine and approve additional occupational diseases and work-related illnesses with specific criteria based on peculiar hazards employment. (Sec. 3, Rule III, Amended Rules on Employment Compensation)Also, as a corporate entity, it can sue and be sued in court, it can acquire real, or personal property and it can enter into agreements or contracts.

97. How should the ECC invest its funds? The State Insurance Fund should be used exclusively for payment of employee’s compensation benefits and no amount thereof can be used for any other purpose. The same can be invested with due and prudent regard for the liquidity needs of the system.

98. Who should file the claims?

Claims for medical benefits shall be filed by the accredited physician accredited hospital directly with the SSS or GSIS, as the case may be, using the prescribed form. (Sec. 1, Rule XVIII, Amended Rules on Employees Compensation)On the other hand, claims for income benefit may be filed by the employee, his dependent, his dependents or his employer on his behalf,

99. What is the effect of erroneous payment?

Payment in good faith made by the Systems to a dependent with inferior right discharges the System from liability, unless and until a dependent with superior right notifies the System of his claim prior to the payment.

100. When does the right to compensation or benefit for loss or impairment of an employee's earning capacity due to work-related illness or injury arise?

It arises or accrues upon, and not before, the happening of the contingency. Hence, an employee acquires no vested right to a program of compensation benefits because it was operative at the time he became employed. Although said program provides for better benefits than what may be enjoyed under Employees' Compensation Program, the employee can only claim for the benefits under the latter if the illness or injury was sustained while the ECP was already in effect.

101. What is the prescriptive period for filling claims?

Claims for compensation shall be filed with the System within three (3) years from the time the cause of action accrued; otherwise, it shall forever be barred by prescription.

102. Who has jurisdiction over disputes under the ECP with respect to coverage, entitlement to benefits, collection and payment of contribution and penalties or any other matter related thereto?

The System (SSS or GSIS) has original and exclusive jurisdiction, subject to appeal within ten (10) days from receipt of the decision to the Employees' Compensation Commission, which shall decide appealed cases within twenty (20) working days from the submission of the evidence.Decisions, awards, judgments, final orders or resolution of the Commission may be appealed to the Court of Appeals within fifteen (15) days from notice of the award, judgment final orders or resolution, whether


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the appeal involves questions of fact, law, or mixed questions of fact and law.

103. How can the decision be enforced?

Enforcement of decision order or resolution of the Commission (ECC) becomes final and executory if no appeal is taken within ten (10) days from notice thereof.The Commission has the power to issue a writ of execution necessary for the enforcement of such decision, order or resolution. Any person who fails or refuses to comply with the writ of execution, shall upon application by the Commission, be punished for contempt by the proper court.

104. Who are required to make contributions to the State Insurance Fund?

Contributions to the State Insurance Fund shall be paid in their entirety by the employer and any contract or device for the deduction of any portion thereof from the wages or salaries of the employees shall be null and void.

105. Discuss the process of contribution by the employer.

For covered employees in the public sector, his employer shall remit to the GSIS a monthly contribution equivalent to one percent of the actual wages or salary received by him as of the last day of the month but not to exceed P30.00 per employee.For a covered employee in the private sector, his employer shall remit to the SSS a monthly contribution equivalent to one percent of his monthly salary credit as of last day of the month in accordance with the following schedule.

106. What is the liability of the delinquent employer?

The employer who is delinquent in his contributions is liable for the following;

the benefits which may have been paid to his employee or

their dependents, and any benefit and expenses to which the employer is liable shall constitute a preferred lien on all his property, real or personal, over any credit except taxes;

fine of not less than P1’000.00 nor more than P1,000.00 and/or imprisonment for the duration of the violation or non-compliance or until such time that a rectification of the violation has been made, at the discretion of the court;

3% penalty per month from the date the contribution falls due until paid (Sec. 3, Rule V, Amended Rules on Employees Compensation)

107. Does payment erase the criminal liability?

NO. The payment by the employer of the lump sum equivalent to such liability shall absolve him from payment of the delinquent contributions due and payable during the calendar year of the contingency and the penalty thereon with respect to the employee concerned; but said employer shall still be subject to criminal liability.

108. When is the employer liable to pay a penalty to the State Insurance Fund?

In case the employee's injury or death was due to the failure of the employer to comply with any law, or to install and maintain safety devices, or take other precautions for the prevention of injury, said employer shall pay to the State Insurance Fund a penalty of twenty-five percent of lump sum equivalent of the income benefit payable by the System to the employee. All employers, especially those who should have been paying a rate of contribution higher than that required of them under this Title, are enjoined to undertake and strengthen measures for the occupational health and safety of their employees.


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109. Are contributions refundable?

The refund of required contributions is not allowed (Sec.1(5), Rule V, Amended Rules on Employees Compensation).

110. What if the funds got depleted?

The claimant – employee has nothing to fear that he cannot collect his benefit if and when the State Insurance Fund in depleted.In order to insure payment of benefits due an employee, the government guarantee such benefits provided under the law and accept general responsibility for the solvency of the State Insurance Fund. Thus, in case of any deficiency, the same can be covered by supplemental appropriations from the national government.

111. What is the Principle of non-assignment of benefits?

Under the principle of non-thjassignment of benefits, compensation benefits are unassignable (non-transferable); not subject to tax, and not subject to execution, attachment, garnishment, levy or seizure, that is exempted from creditor claims, expect in payment of a debt to the System.

112. What is the purpose of the law?

The law is police regulation aimed at promoting the lot of the working man by completely securing to them the payment of compensation benefits free from attachment, garnishment, execution, levy, tax, or charges so that the claimant may enjoy and use it to the fullest. Otherwise, it would defeat the very purpose for which this law has been enacted. (Cristobal vs. ECC, L – 49280, 21 February 1981)

113. What is the prohibition on award of attorney’s fees?

A close scrutiny of the provisions of the Labor Code on employee’s compensation expressly reveals that claim proceedings in

both the SSS and GSIS are non-adversarial. This is the primordial reason why an agent, attorney or other person pursuing or in charge of the preparation or filling of any compensation claim or benefit is prohibited to demand or charge for his compensation for payment of such fees is null and void. The prohibition is in keeping with the intent and spirit of the law to promote the lot of the working man.Since the claimant is exempted from liability for attorney’s fess, who, therefore is liable? Well-settled is the rule that the defaulting employer or government agency remains liable for attorney’s fees, because it compelled claimant to employ the services of the counsel by unjustly refusing to recognize the validity of the claim. (Cristobal vs. ECC, 103 SCRA 339; Godizano vs. ECC, 136 SCRA 344)

114. When can attorney’s fees be awarded?

Attorney’s fees can be awarded as a separate and distinct item from compensation benefits. Fairness and equity dictate that the lawyer must receive reasonable compensation for services rendered. This is so, for it would be very difficult for claimant, majority of whom are not learned in the intricacies of the law, to get and enjoy good legal services. Thus, there is no prohibition against imposing 10% attorney’s fee on the employer for the benefit of claimant’s counsel. (Panotes vs. ECC, 138 SCRA 595)

115. What is the purpose of notice to the employer?

Notice to the employer of the occurrence of the contingency is important to enable the employer may make the proper entries in his logbook, as required by law, within five days from notice or knowledge thereof. Within five days after such entry, the employer shall report to the System only those contingencies it deems to be work-connected. 116. When is notice not required?


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Giving of notice can be dispensed with in the following instances:

In case medical, surgical and hospital services and supplies have been voluntary furnished by the employer;

In case the employer or his duly authorized representatives had actual knowledge of the contingency:

In case the employer did not suffer by the delay or failure to give notice.

117. When is the law applicable?

Book IV, Title II, of the Labor Code, dealing on Employees Compensation and State Insurance Fund applies only to injury, sickness, disability or death occurring on or January 1, 1975. (Corales vs. ECC, 88 SCRA 547; Chavez vs. ECC, 149 SCRA 82) QUESTIONS AND ANSWERS ON OVERSEAS EMPLOYMENT

Q. What is a license?A license shall refer to the document issued by the Secretary or his duly authorized representative authorizing a person, partnership or corporation to operate a private employment agency.

Q. Who may be issued a license??Only those who possess the following qualifications may be permitted to engage in the business of recruitment and placement of Filipino workers.1. Filipino citizens, partnerships or corporations at least seventy five percent (75%) of the authorized capital stock of which is owned and controlled by Filipino citizens.2. Single proprietorships or partnerships with minimum capitalization of Two Million Pesos (P2,000,000.00) or corporations with minimum paid-up capital of Two Million Pesos (P2,000,000.00) (amended provision)3. Those not disqualified by law or other government regulations to engage in

the recruitment and placement of workers for overseas employment.

Q. Why is there a need to increase the minimum capitalization requirement?The capitalization was increased to ensure that the agencies are financially capable of responding to the needs of its deployed workers.

Q. Are all agencies required to comply with the increase in capital?Yes, however, existing agencies are given four years from the effectivity of the amended rules within which to comply with the increase in capital.

Q. Who are disqualified from being issued a license?1. Travel agencies and sales agencies of airline companies2. Officers or members of the Board of any corporation or members in a partnership engaged in the business of a travel agency.3. Corporations and partnerships, when any of its officers, members of the board or partners, is also an officer, member of the board or partner of a corporation or partnership engaged in the business of a travel agency.4. Persons, partnerships or corporations which have derogatory records.5. Any official or employee of the DOLE, POEA, OWWA, DFA and other government agencies directly involved in the implementation of RA 8042, otherwise known as Migrant Workers and Overseas

Filipino Act of 1995 and/or any of his/her relatives within the fourth civil degree of consanguinity or affinity.6. Persons or partners, officers and Directors of corporations whose licenses have been previously cancelled or revoked for violation of recruitment law.

Q. What is the validity period of the license?


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It shall be valid for four (4) years from the date of issuance, unless sooner cancelled, revoked or suspended for violation of applicable Philippine law, these rules and other pertinent issuances.

Q. What is a provisional license?Applicants for new license shall be issued a provisional license which shall be valid for a limited period of one (1) year within which the applicant should be able to comply with its undertaking to deploy 100 workers to its new principal.

3Can a provisional license be upgraded to a full license?Yes, the license of an agency which has complied with its undertaking shall be upgraded to a full license entitling them to another three years of operation.

What are the requirements for renewal of license?1. Duly accomplished POEA-LRO renewal application form.2. Renewed or revalidated surety bond in the amount of P100,000.00 valid for four years together with official receipt.2. Renewed escrow agreement in the amount of P1,000,000.00 with a commercial bank with confirmation of excrow deposit3. Audited financial statements for the past two years with verified corporate or individual tax returns or individual income tax returns of the single proprietor or partner. In case the equity of the agency is below the minimum capitalization requirement, it shall be given thirty (30) days from release of the renewed license to submit proof(s) of capital infusion, otherwise the license shall be suspended until it has complied with the said requirement.4. NBI clearance issued not earlier than six (6) months from date of filing of application and clearance from the POEA Anti-Illegal Recruitment Branch for all the

Directors, officers, and employees involved in recruitment and placement. In case of directors or partners with foreign nationality, the clearance from their country of origin may be submitted in place of the NBI clearance.5. Other requirements as may be imposed by the Administration.

Q. How soon can a license be renewed?A license can be renewed within forty- eight (48) hours from receipt of the application for renewal with the complete requirements.

Q. What are the fees/costs chargeable to the workers?1. Placement fee2. Documentations costs

What is placement fee?It refers to the amount charged by a private employment agency from a worker for its recruitment and placement services, which is equivalent to one month salary, exclusive of documentation costs.

Q. What are documentation costs?Documentation costs to be paid by the worker shall include, but not limited to, expenses for the following:1. Passport2. NBI/Policy/Barangay Clearance3. Authentication4. Birth Certificate5. Medicare6. Trade Test, if necessary7. Inoculation, when required by the host country8. Medical Examination fees


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Q. When is a worker not required to pay placement fee?When a worker is to be deployed to a country where the prevailing system, either by law, policy or practice, does not allow the charging or collection of placement and recruitment fee.

Q. Can a licensed agency conduct recruitment activities outside its registered address?As a general rule a licensed agency can not conduct hrecruitment activities outside of its registered address. However it may conduct recruitment activities under the following instances:1. If recruitment is conducted under the Public Employment Service Office Act of 1999 (RA 8759). Public Employment Service Office Act of 1999 is an act institutionalizing a national facilitation service network through the establishment of a Public Employment Service Office in every province, key city and other strategic areas throughout the country.2. If recruitment is conducted under a Special Recruitment Authority issued by the Administration. Special Recruitment Authority refers to the authority granted to an agency to conduct recruitment outside its registered business address approved by the Administration.

Q. When can the agency advertise without prior approval of the Administration?Licensed agencies may advertise for actual job vacancies without prior approval from the Administration if covered by manpower requests of registered/accredited foreign principals and projects. The Advertisements shall indicate the following information:1. Name, address and POEA licensed number of the agency;2. Work site of prospective principal/project;3. Skill categories and qualification standards; and4. Number of available positions

Q. Can the agency advertise for manpower pooling without prior approval?Yes, licensed agencies may advertise for manpower pooling without prior approval from the Administration subject to the following conditions:a. The advertisement should indicate in bold letters that it is for manpower pooling only and that no fees will be collected from the applicants; andb. The advertisement indicates the name, address and POEA license number of the agency, name and worksite of the prospective registered/accredited principal and the skill categories and qualification standard.

Q. Can foreign principals/employers directly advertise for overseas job vacancies?Foreign principals/employers who wish to advertise overseas job vacancies may do so only through a POEA-licensed agency or through the Administration.

Q. What is a Special Exit Clearance?Special exit clearance refers to clearance issued to individuals whose nature of travel falls under special cases.

What is meant by registration of foreign principals, employers and projects?Registration shall refer to the act of recognizing and entering in the official records of the POEA the existence of a foreign principal/employer or project whose documents have been verified in the jobsite


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by the appropriate officials of the Philippine government.

Q. What are the minimum provisions which should be incorporated in the employment contract of landbased workers?1. Guaranteed wages for regular work hours and OT pay which shall not be lower than the prescribed minimum wage in the host country or not lower than the appropriate minimum wage standard set forth in a bilateral agreement or international convention, if applicable, or not lower than the minimum wage in the country whichever is highest.2. Free transportation to and from the worksite or offsetting benefit;3. Free food and accommodation or offsetting benefit;4. Just/authorized causes for termination of the contract or of the services of the workers, taking into consideration the customs, traditions, mores, practices, company policies and the labor laws and social legislations of the host country.

Q. What are the grounds for revocation or cancellation of accreditation by the POEA?The following are grounds for revocation or cancellation of accreditation by the POEA:1. Expiration of the principal’s business license2. Upon written mutual agreement by the parties to pre-terminate the Agreement3. False documentation or misrepresentation in

connection with the application for accreditation;4. Final judgment in a disciplinary action against the foreign principal.

NAME HIRE

Q. Who is a name hire?A name hire refers to a worker who is able to secure an overseas employment opportunity with an employer without the assistance or participation of any agency.

Q. Does a name-hire need to register with POEA?Yes. A name hire has to register with the POEA to document his status as an Overseas Filipino Worker.

Q. What documents are required for registration?A name hire worker shall be registered by the POEA upon submission of the following documents:1. OFW Information Sheet2 Valid passport3. Employment contract or offer of employment or equivalent document, indicating the terms and conditions of employment4. Work visa/permit, no objection certificate (NOC), visa assurance or equivalent entry document5. Certificate of medical fitness issued by a DOH-accredited medical clinic authorized to conduct medical examination for overseas employment6. Certificate of attendance to POEA in-house pre-departure orientation seminar

Q. Are there fees to be paid upon registration?A worker shall pay the following fees upon registration :Processing fee - US$100 or its peso equivalentOWWA contribution - US$ 25 or its peso equivalentMedicare fee - P900.00


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Upon payment of the required fees, the POEA shall issue the corresponding Overseas Employment Certificate (OEC).

Q. What is the overseas employment certificate (OEC)?The Overseas Employment Certificate (OEC) is a document issued by the POEA which serves as a travel clearance when a worker leaves to assume his overseas employment. The OEC also exempts the worker from payment of travel tax of P1,620 and airport tax of P550.

Q. Where does one register as a name hire?A worker may register as a name hire at the One Stop Landbased Accreditation and Processing Center, located at the 2nd floor, POEA Bldg, Ortigas corner EDSA, Mandaluyong City or at any of the following POEA regional centers and regional extension units.

Q. What is the Employment Guarantee Trust Fund about?The Employment Guarantee Trust Fund is established for all workers hired on a government-to-government arrangement for the purpose of covering monetary claims of workers that may arise from breach of contractual obligations of employers.

Q. How would applicants from the provinces avail of the in-house recruitment program of POEA-GPB?All regional applicants should apply thru the Regional Labor Center/Office where

applications are pooled and forwarded to the POEA Head Office.

Q. What is illegal recruitment?Illegal recruitment is any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers and includes referrals, contract, services, promising or advertising for employment abroad whether for profit or not when undertaken by a non-licensee or nonholder 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.

Q. Is illegal recruitment committed only by those without license or authority from the POEA?No. A licensee or a holder of authority, when it conductsany of the prohibited acts enumerated in Section 6 of RA 8042 may be charged with illegal recruitment.

Q. What are the acts that constitute illegal recruitment?1. To charge or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary or to make a worker pay the recruiter or its agents any amount greater than that actually loaned or advanced to him;2. To furnish or publish any false notice or information or document in relation to recruitment or employment;3. To give any false notice, testimony, information or document or commit any act or misrepresentation for the purpose of securing a license or authority under the Labor Code.4. To induce or attempt to induce a worker already employed to quit his employment in order to offer him another unless the transfer is designed to liberate a worker from oppressive terms and conditions of employment;5. To influence or attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency;


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6. To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines as may be prohibited by law or duly constituted authority;7. To obstruct or attempt to obstruct inspection by the Secretary or by his/her duly authorized representative;8. To fail to submit reports on the status of employment, placement, vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary under penalty of law;9. To substitute or alter to the prejudice of the worker, employment contract approved and verified by the DOLE from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the DOLE;10. For an officer or agent of a recruitment or placement agency to become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of a travel agency;11. To withhold or deny travel documents from applicant workers before departure for monetary or financial consideration other than those authorized under the Labor Code and its implementing rules and regulations;12. To fail to actually deploy without valid reason as determined by the DOLE;13. To fail to reimburse expenses incurred by the worker in connection with his/her documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker’s fault.

Q. Is illegal recruitment a crime?Yes. Illegal recruitment is a crime and is punishable under Article 39 of the Labor Code as amended and Sec. 7 of the RA 8042.

Q. What are the kinds of cases filed at the Adjudication Office?

The kinds of cases filed in the Adjudication Office:1. Recruitment violation cases against recruitment agencies;2. Disciplinary action cases against foreign employers;3. Disciplinary action cases against the overseas workers.

Q. Who may file the complaint?Any aggrieved person or one who is prejudiced by the commission of a violation of the Labor Code, the POEA Rules and Regulations, and other issuances relating to recruitment may file a complaint.

Q. What are the usual complaints against recruitment agencies?The usual complaints against recruitment agencies are:1. Non-issuance of receipts2. Illegal exaction or charging or accepting an amount greater than that allowed by the Secretary3. Charging or accepting an amount even before employment is obtained for an applicant4. Substituting or altering, to the prejudice of the worker, the employment contract5. Withholding the workers’ travel documents6. Misrepresentation

Q. What are the preventive actions that the Administration may take against the recruitment agencies pending investigation of the complaints against them?Pending investigation, the Administration may impose the following against the recruitment agencies:1. Suspension of Documentary Processing. The Administration may suspend of the processing of documents of a respondent agency for violation of any provision of these Rules, Orders, and regulations. Such is without prejudice to the outcome of the investigation wherein the proper penalty may be imposed.


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2. Preventive Suspension. Pending investigation of the recruitment violation/s, the license of the respondent agency may be suspended for a period not exceeding the imposable penalties under the revised schedule of penalties, on the following grounds:a. There exist reasonable grounds to believe that the continued operation of the agency will lead to further violation or exploitation of the workers being recruited or adversely affect friendly relations with any country or otherwise prejudice national interest; andb. There is prima facie evidence of a case for violation of the pertinent provisions of the Labor Code, its implementing rules and Regulations, POEA Rules and Regulations or any issuance of the Administration where the evidence of guilt is strong.

Q. In recruitment violations, may money claims be awarded to the complainants?Yes, money claims arising from recruitment violations may be awarded in addition to the administrative penalties imposed.

Q. How are the fines imposed on suspended agencies computed?In addition or in lieu of the penalty of suspension of license, the Administration may impose the penalty of fine which shall be computed at P10,000.00 for every month of suspension.

Q. What happens to the respondent agency if it is found guilty in one case filed by five (5) or more complainants?The respondent agency shall suffer the penalty of cancellation of its license.

Q. What are some of the usual complaints against the worker?The usual complaints against the worker are:A. Pre-Employment Offenses1. Using, providing, or submitting false information or documents for purposes of job application or employment2. Unjustified refusal to depart for the worksite after all employment and travel

documents have been duly approved by the appropriate Government agency/iesB. Offenses during Employment1. Commission of a felony or crime punishable by Philippine Laws or by the laws of the host country2. Unjustified breach of employment contract3. Embezzlement of company funds or monies and/or properties of a fellow worker entrusted for delivery to kin or relatives in the Philippines4. Violation/s of the sacred practices of the host country.

Q. What are the grounds for disciplinary action cases against the foreign employers?The usual complaints against the foreign employers are:1. Default on its contractual obligations to the migrant worker and/ or to its Philippine agent2. Gross violation of laws, rules and regulations on overseas employment3. Gross negligence leading to serious injury or illness or death of the worker4. Grave misconduct5. Conviction of an offense involving moral turpitude6. Any other cases analogous to the foregoing

Q. What sanction can the Administration impose against the foreign employer pending the investigation of a complaint?Preventive suspension. A principal/employer may be suspended from participating in the overseas employment program pending investigation of the disciplinary action gcase when the evidence of guilt is strong and there is reasonable ground to believe that the continued deployment to the principal/employer will result to further violation or exploitation of migrant workers

Q. What are the possible sanctions or penalties meted against the foreign employers?1. Temporary disqualification. A foreign employer/principal against whom a


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complaint for disciplinary action has been filed shall be temporarily disqualified from participating in the overseas employment program until the respondent submits to the jurisdiction of the Administration.2. Disqualification. Foreign employers/principals against whom the penalty of suspension or disqualification had been imposed through an order, decision or resolution shall be disqualified from participating in overseas employment program unless cleared by the Administration or the penalty imposed is lifted.

Q. What are the circumstances to be considered in determining the penalties to be imposed to erring recruitment agency, foreign employer and worker?In the determination of the penalties to be imposed, the following mitigating, aggravating and alternative circumstances attendant to the commission of the offense shall be considered:1. First Offender2. Admission of guilt and voluntary restitution, where applicable3. Good faith4. Exemplary performance5. Recidivism6. Prejudice to the worker7. Gross negligence8. Other analogous circumstances

Q. What is the effect of complainant’s desistance or withdrawal of complaint?The complainant’s desistance or withdrawal of complaint shall not bar the Administration from proceeding with the investigation of the recruitment violations. The Administration shall resolve the case on the merits and impose the appropriate penalties.

Q. What are the requirements of an appeal?The requirements of Appeal are:1. The appealing party shall file a Notice of Appeal and an Appeal Memorandum with the Adjudication Office2. In case a fine or and/or a monetary award is imposed against the appealing party, he shall also file a supersedeas bond in the amount of such fine and/or monetary award, in cash or in surety bond by a surety company acceptable to the Administration3. The Appeal Memorandum shall clearly point out the errors of law and/or fact in the decision appealed from and shall be verified.Any Appeal that does not comply with these requirements shall not be acted upon and the Administration shall issue an Order for the execution of the decision for which the appeal is sought.

Q. Who has the appellate jurisdiction over the appeal or petition for review filed by the party?The Secretary shall have the exclusive jurisdiction to act on appeals/ petitions for review of decisions by the Administration.

Q. What is the period within which a party should file his/her appeal?Appeals/Petitions for Review shall be filed with the Administration within fifteen (15) days from receipt of the decision by the appealing or petitioning party.

Q. Is there still a need for the issuance of a temporary restraining order (TRO) pending an appeal?The authority of the Secretary to issue a TRO is removed. The submission of all the requirements of an appeal and the 60-day period to resolve the appeal have the effect of staying the execution of the Order.

Q. In what instances will the order not be stayed?The decision of the Administration shall be stayed during the pendency of the Appeal except in the following instances:


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1. If the penalty imposed carries the maximum penalty of twelve months suspension or cancellation of the license; and2. If the penalty imposed is suspension for one month or less, the decision shall be immediately executory and may only be appealed on ground of abuse of discretion.

Q. When is the writ of execution issued?After the Order has become final and executory, the Administration, upon motion, or on its own initiative, shall issue a writ of execution requiring the Enforcement Officer to enforce a monetary award and/or fine imposed in the decision.

Q. In what order will the assets of the losing party be garnished?Garnishment of the assets of the losing 1. Escrow deposit2. Surety bond3. Personal property4. Real propertySUPPLENTAL TOPICS ON OVWEAWAS EMPLOYMENTQ. Is Illegal Recruitment Considered as an Act of Economic Sabotage? Answer. Yes. Illegal recruitment may either be by a syndicate or in large scale, both of which are considered as offenses involving economic sabotage.

(a) Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring or confederating with one another.

(b) It is deemed committed in large scale if committed against three (3) or more persons individually or as a group.

(c) The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of juridical persons, the officers having control, management or direction of their business shall be liable.

Sec. 7. Penalties (This section amended the provision of Art. 39 of the labor Code). Under this provision, the penalties are follows:

(a) "Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not less than six (6) years and one (1) day but not more than twelve (12) years and a fine of not less than Two hundred thousand pesos (P200,000.00) nor more than Five hundred thousand pesos (P500,000.00);

(b) The penalty of life imprisonment and a fine of not less than Five hundred thousand pesos (P500,000.00) no more than One million pesos (P1,000,000.00) shall be imposed if illegal recruitment constitute economic sabotage as defined herein.

Provided, however, That the maximum penalty shall be imposed if the person illegally recruited is less than eighteen (18) years of age or committed by a non-licensee or non-holder of authority."

PRIMER on PRIMER

on \\ MONTH PAY

TOPICS IN SOME VILLARAMA DECISIONS AND CONCURRED DECISIONS:

TOPICS: Collective Bargaining Agreement, Grivance Machinery, Unfair Labor Practices

EMPLOYEES UNION OF BAYER PHILS., FFW and JUANITO S. FACUNDO, in his capacity as President, Petitioners, versus BAYER PHILIPPINES, INC., DIETER J. LONISHEN (President), ASUNCION AMISTOSO (HRD Manager), AVELINA REMIGIO AND ANASTACIA VILLAREAL, Respondents. G.R. No. 162943 2010 Dec 6TOPICS:: Illegal Dismissal, Termination of Employment


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1st Division

[2010V178] WILFREDO M. BARON, BARRY ANTHONY BARON, RAMIL CAYAGO, DOMINADOR GEMINO, ARISTEO PUZON, BERNARD MANGSAT, MARIFE BALLESCA, CYNTHIA JUNATAS, LOURDES RABAGO, JEFFERSON DELA ROSA and JOMAR M. DELA ROSA, Petitioners, versus NATIONAL LABOR RELATIONS COMMISSION and MAGIC SALES, INC. represented by JOSE Y. SY, Respondents

G.R. No. 182299

2010 Feb 22 ^ [4] In Phimco Industries, Inc. v. Actg. Sec. of Labor Brillantes (364 Phil. 402, 410 [1999]), we held that the labor secretary acted with grave abuse of discretion in assuming jurisdiction over a labor dispute without any showing that the disputants were engaged in an industry indispensable to national interest; PHIMCO, a match factory, though of value, can hardly be considered as an industry “indispensable to the national interest” as it cannot be in the same category as “generation or distribution of energy, or those undertaken by banks, hospitals, and export-oriented industries.”

TOPICS: Illegal Dismissal, Termination of Employment


G.R. No. 182299

1st Division

2010 Feb 22 Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant. Such misconduct, however serious, must nevertheless be in connection with the employee’s work to constitute just cause for his separation.[

DECISION As this Court held in Diamond Motors Corporation v. Court of Appeals:[28]

A disharmony between the factual findings of the Labor Arbiter and the National Labor Relations Commission opens the door to a review thereof by this Court. Factual findings of administrative agencies are not infallible and will be set aside when they fail the test of arbitrariness. Moreover, when the findings of the National Labor Relations Commission contradict those of the labor arbiter, this Court, in the exercise of its equity jurisdiction, may look into the records of the case and reexamine the questioned findings.

The Constitution, statutes and jurisprudence uniformly mandate that no worker shall be dismissed except for a just or valid cause provided by law, and only after due process is properly observed. In a recent decision,[29] this Court said that dismissals have two facets: first, the legality of the act of dismissal, which constitutes substantive due process; and, second, the legality of the manner of dismissal, which constitutes procedural due process.

TOPICS: Collective Bargaining Agreement, Illegal Dismissal, Minimum Wage, Termination of Employment, Unfair Labor Practices


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G.R. No. 167407

3rd Division

2010 Jul 5

see [2010V635] BAGONG PAGKAKAISA NG MANGGAGAWA NG TRIUMPH INTERNATIONAL, represented by SABINO F. GRAGANZA, Union President, and REYVILOSA TRINIDAD, Petitioners, versus SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT and TRIUMPH INTERNATIONAL (PHILS.), INC., Respondents.

\-- TOPICS: Illegal Dismissal, Termination of Employment


G.R. No. 182299

1st Division

2010 Feb 22

DECISION

VILLARAMA, JR., J.:

^ [65] LABOR CODE, Article 263(g) – When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national

interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure the compliance with this provision as well as with such orders as he may issue to enforce the same. Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.

(f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout must


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be approved by a majority of the board of directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The [Department] may at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the [Department] the results of the voting at least seven days before the intended strike or lockout, subject to the cooling-off period herein provided.

Art. 263. Strikes, picketing, and lockouts. x x x

(c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a notice of strike or the employer may file a notice of lockout with the [Department] at least 30 days before the intended date thereof. In cases of unfair labor practice, the period of notice shall be 15 days and in the absence of a duly certified or recognized bargaining agent, the notice of strike may be filed by any legitimate labor organization in behalf of its members. However, in case of dismissal from employment of union officers duly elected in accordance with the union constitution and by-laws, which may constitute union busting where the existence of the union is threatened, the 15-day cooling-off period shall not apply and the union may take action immediately.

(d) The notice must be in accordance with such implementing rules and regulations as the [Secretary] of Labor and Employment may promulgate.

(e) During the cooling-off period, it shall be the duty of the [Department] to exert all efforts at mediation and conciliation to effect a voluntary settlement. Should the dispute remain unsettled until the lapse of the requisite number of days from the mandatory

filing of the notice, the labor union may strike or the employer may declare a lockout.

(f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout must be approved by a majority of the board of directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The [Department] may at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the [Department] the results of the voting at least seven days before the intended strike or lockout, subject to the cooling-off period herein provided.

^ [17] Piñero v. National Labor Relations Commission, 480 Phil. 534, 542 (2004); Grand Boulevard Hotel v. GLOWHRAIN, 454 Phil. 463, 488 (2003).

Keywords: Collective Bargaining Agreement, Illegal Dismissal, Minimum Wage, Termination of Employment, Unfair Labor Practices

VILLARAMA, JR., J.:


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Under the law,[65] the Labor Secretary's assumption of jurisdiction over the dispute or its certification to the National Labor Relations Commission for compulsory arbitration shall have the effect of automatically enjoining the intended or impending strike or lockout and all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions before the strike or lockout. The union and its officers, as well as the workers, defied the Labor Secretary's assumption of jurisdiction, especially the accompanying return-to-work order within twenty-four (24) hours; their defiance made the strike illegal under the law[66] and applicable jurisprudence.[67] Consequently, it constitutes a valid ground for dismissal.[68] Article 264(a), paragraph 3 of the Labor Code provides that “Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status.”

The union officers were answerable not only for resisting the Labor Secretary's assumption of jurisdiction and return-to-work

orders; they were also liable for leading and instigating and, in the case of Figura, for participating in a work slowdown (during the CBA negotiations), a form of strike[69] undertaken by the union without complying with the mandatory legal requirements of a strike notice and strike vote. These acts are similarly prohibited activities.[70]

There is sufficient indication in the case record that the union officers, collectively, save for shop steward Olangar, were responsible for the work slowdown, the illegal strike, and the violation of the Labor Secretary's assumption order, that started with the slowdown in July 1999 and lasted up to March 2000 (or for about ten (10) months).[71] These illegal concerted actions could not have happened at the spur of the moment and could not have been sustained for several months without the sanction and encouragement of the union and its officers; undoubtedly, they resulted from a collective decision of the entire union leadership and constituted a major component of the union’s strategy to obtain concessions from the company management during the CBA negotiations.

That the work slowdown happened is confirmed by the affidavits[72] and the documentary evidence submitted by the company. Thus, Ernesto P. Dayag, a security officer of the agency servicing the company (Tamaraw Security Service, Inc.) stated under oath that in October 1999, the union members were engaging in a noise-barrage everyday and when it was time to go back to work at noontime, they would mill around the production area or were at the toilet discussing the ongoing CBA negotiations (among others), and were slow in their movements; in late October (October 27, 1999), they did the same thing at about seven o’clock in the morning which was already time for work; even those who were already working were deliberately slow in their movements. On November 12, 1999, when union officer Lisa Velasquez talked to the union members at lunchtime regarding the CBA negotiations, only about 50% of the


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union members returned to their work stations.


EMPLOYEES UNION OF BAYER PHILS., FFW and JUANITO S. FACUNDO, in his capacity as President, Petitioners, versus BAYER PHILIPPINES, INC., DIETER J. LONISHEN (President), ASUNCION AMISTOSO (HRD Manager), AVELINA REMIGIO AND ANASTACIA VILLAREAL, Respondents. G.R. No. 162943 2010 Dec 6JUSTICE MARTIN VILLARAMA, JR. CASES


EMPLOYEES UNION OF BAYER PHILS., FFW and JUANITO S. FACUNDO, in his capacity as President, Petitioners, versus BAYER PHILIPPINES, INC., DIETER J. LONISHEN (President), ASUNCION AMISTOSO (HRD Manager), AVELINA REMIGIO AND ANASTACIA VILLAREAL, Respondents. G.R. No. 162943 2010 Dec 6

DECISION VILLARAMA, JR., J.: This petition for review on certiorari assails the Decision[1] dated December 15, 2003 and Resolution[2] dated March 23, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 73813.

Petitioner Employees Union of Bayer Philippines[3] (EUBP) is the exclusive bargaining agent of all rank-and-file employees of Bayer Philippines (Bayer), and is an affiliate of the Federation of Free Workers (FFW). In 1997, EUBP, headed by its president Juanito S. Facundo (Facundo), negotiated with Bayer for the signing of a collective bargaining agreement (CBA). During the negotiations, EUBP rejected Bayer’s 9.9% wage-increase proposal resulting in a bargaining deadlock. Subsequently, EUBP staged a strike,

prompting the Secretary of the Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute.

In November 1997, pending the resolution of the dispute, respondent Avelina Remigio (Remigio) and 27 other union members, without any authority from their union leaders, accepted Bayer’s wage-increase proposal. EUBP’s grievance committee questioned Remigio’s action and reprimanded Remigio and her allies. On January 7, 1998, the DOLE Secretary issued an arbitral award ordering EUBP and Bayer to execute a CBA retroactive to January 1, 1997 and to be made effective until December 31, 2001. The said CBA[4] was registered on July 8, 1998 with the Industrial Relations Division of the DOLE-National Capital Region (NCR).[5]

Meanwhile, the rift between Facundo’s leadership and Remigio’s group broadened. On August 3, 1998, barely six months from the signing of the new CBA, during a company-sponsored seminar,[6] Remigio solicited signatures from union members in support of a resolution containing the decision of the signatories to: (1) disaffiliate from FFW, (2) rename the union as Reformed Employees Union of Bayer Philippines (REUBP), (3) adopt a new constitution and by-laws for the union, (4) abolish all existing officer positions in the union and elect a new set of interim officers, and (5) authorize REUBP to administer the CBA between EUBP and Bayer.[7] The said resolution was signed by 147 of the 257 local union members. A subsequent resolution was also issued affirming the first resolution.[8]

A tug-of-war then ensued between the two rival groups, with both seeking recognition from Bayer and demanding remittance of the union dues collected from its rank-and-file members. On September 8, 1998, Remigio’s splinter group wrote Facundo, FFW and Bayer informing them of the decision of the majority of the union members to disaffiliate from FFW.[9] This was followed by another letter informing Facundo, FFW and Bayer that an interim set


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of REUBP executive officers and board of directors had been appointed, and demanding the remittance of all union dues to REUBP. Remigio also asked Bayer to desist from further transacting with EUBP. Facundo, meanwhile, sent similar requests to Bayer[10] requesting for the remittance of union dues in favor of EUBP and accusing the company of interfering with purely union matters.[11] Bayer responded by deciding not to deal with either of the two groups, and by placing the union dues collected in a trust account until the conflict between the two groups is resolved.[12]

On September 15, 1998, EUBP filed a complaint for unfair labor practice (first ULP complaint) against Bayer for non-remittance of union dues. The case was docketed as NLRC-NCR-Case No. 00-09-07564-98.[13]

EUBP later sent a letter dated November 5, 1998 to Bayer asking for a grievance conference.[14] The meeting was conducted by the management on November 11, 1998, with all REUBP officers including their lawyers present. Facundo did not attend the meeting, but sent two EUBP officers to inform REUBP and the management that a preventive mediation conference between the two groups has been scheduled on November 12, 1998 before the National Conciliation and Mediation Board (NCMB).[15]

Apparently, the two groups failed to settle their issues as Facundo again sent respondent Dieter J. Lonishen two more letters, dated January 14, 1999[16] and September 2, 1999,[17] asking for a grievance meeting with the management to discuss the failure of the latter to comply with the terms of their CBA. Both requests remained unheeded.

On February 9, 1999, while the first ULP case was still pending and despite EUBP’s repeated request for a grievance conference, Bayer decided to turn over the collected union dues amounting to P254,857.15 to respondent Anastacia Villareal, Treasurer of REUBP.

Aggrieved by the said development, EUBP lodged a complaint[18] on March 4, 1999 against Remigio’s group before the Industrial Relations Division of the DOLE praying for their expulsion from EUBP for commission of “acts that threaten the life of the union.”

On June 18, 1999, Labor Arbiter Jovencio Ll. Mayor, Jr. dismissed the first ULP complaint for lack of jurisdiction.[19] The Arbiter explained that the root cause for Bayer’s failure to remit the collected union dues can be traced to the intra-union conflict between EUBP and Remigio’s group[20] and that the charges imputed against Bayer should have been submitted instead to voluntary arbitration.[21] EUBP did not appeal the said decision.[22]

On December 14, 1999, petitioners filed a second ULP complaint against herein respondents docketed as NLRC-RAB-IV Case No. 12-11813-99-L. Three days later, petitioners amended the complaint charging the respondents with unfair labor practice committed by organizing a company union, gross violation of the CBA and violation of their duty to bargain.[23] Petitioners complained that Bayer refused to remit the collected union dues to EUBP despite several demands sent to the management.[24] They also alleged that notwithstanding the requests sent to Bayer for a renegotiation of the last two years of the 1997-2001 CBA between EUBP and Bayer, the latter opted to negotiate instead with Remigio’s group.[25]

On even date, REUBP and Bayer agreed to sign a new CBA. Remigio immediately informed her allies of the management’s decision.[26]

In response, petitioners immediately filed an urgent motion for the issuance of a restraining order/injunction[27] before the National Labor Relations Commission (NLRC) and the Labor Arbiter against respondents. Petitioners asserted their authority as the exclusive bargaining representative of all


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rank-and-file employees of Bayer and asked that a temporary restraining order be issued against Remigio’s group and Bayer to prevent the employees from ratifying the new CBA. Later, petitioners filed a second amended complaint[28] to include in its complaint the issue of gross violation of the CBA for violation of the contract bar rule following Bayer’s decision to negotiate and sign a new CBA with Remigio’s group.

Meanwhile, on January 26, 2000, the Regional Director of the Industrial Relations Division of DOLE issued a decision dismissing the issue on expulsion filed by EUBP against Remigio and her allies for failure to exhaust reliefs within the union and ordering the conduct of a referendum to determine which of the two groups should be recognized as union officers.[29] EUBP seasonably appealed the said decision to the Bureau of Labor Relations (BLR).[30] On June 16, 2000, the BLR reversed the Regional Director’s ruling and ordered the management of Bayer to respect the authority of the duly-elected officers of EUBP in the administration of the prevailing CBA.[31]

Unfortunately, the said BLR ruling came late since Bayer had already signed a new CBA[32] with REUBP on February 21, 2000. The said CBA was eventually ratified by majority of the bargaining unit.[33]

On June 2, 2000, Labor Arbiter Waldo Emerson R. Gan dismissed EUBP’s second ULP complaint for lack of jurisdiction.[34] The Labor Arbiter explained the dismissal as follows:

All told, were it not for the fact that there were two (2) [groups] of employees, the Union led by its President Juanito Facundo and the members who decided to disaffiliate led by Ms. Avelina Remigio, claiming to be the rightful representative of the rank and file employees, the Company would not have acted the way it did and the Union would not have filed the instant case.

Clearly then, as the case involves intra-union disputes, this Office is bereft of any jurisdiction pursuant to Article 226 of the Labor Code, as amended, which provides pertinently in part, thus:

“Bureau of Labor Relations – The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the Department of Labor and Employment shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all workplaces whether agricultural or non-agricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration.”

Specifically, with respect to the union dues, the authority is the case of Cebu Seamen’s Association[,] Inc. vs. Ferrer-Calleja, (212 SCRA 51), where the Supreme Court held that when the issue calls for the determination of which between the two groups within a union is entitled to the union dues, the same cannot be taken cognizance of by the NLRC.

x x x x

WHEREFORE, premises considered, the instant complaint is hereby DISMISSED on the ground of lack of jurisdiction.

SO ORDERED.[35]

On June 28, 2000, the NLRC resolved to dismiss[36] petitioners’ motion for a restraining order and/or injunction stating that the subject matter involved an intra-union dispute, over which the said Commission has no jurisdiction.[37]

Aggrieved by the Labor Arbiter’s decision to dismiss the second ULP complaint, petitioners appealed the said decision, but


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the NLRC denied the appeal.[38] EUBP’s motion for reconsideration was likewise denied.[39]

Thus, petitioners filed a Rule 65 petition to the CA. On December 15, 2003, the CA sustained both the Labor Arbiter and the NLRC’s rulings. The appellate court explained,

A cursory reading of the three pleadings, to wit: the Complaint (Vol. I, Rollo, p[p]. 166-167); the Amended Complaint (Vol. I, Rollo[,] pp. 168-172) and the Second Amended Complaint dated March 8, 2000 (Vol. II, Rollo, pp. 219-225) will readily show that the instant case was brought about by the action of the Group of REM[I]GIO to disaffiliate from FFW and to organized (sic) REUBP under the tutelage of REM[I]GIO and VILLAREAL. At first glance of the case at bar, it involves purely an (sic) inter-union and intra-union conflicts or disputes between EUBP-FFW and REUBP which issue should have been resolved by the Bureau of Labor Relations under Article 226 of the Labor Code. However, since no less than petitioners who admitted that respondents committed gross violations of the CBA, then the BLR is divested of jurisdiction over the case and the issue should have been referred to the Grievance Machinery and Voluntary Arbitrator and not to the Labor Arbiter as what petitioners did in the case at bar. x x x

x x x x

Furthermore, the CBA entered between BAYER and EUBP-FFW [has] a life span of only five years and after the said period, the employees have all the right to change their bargaining unit who will represent them. If there exist[s] two opposing unions in the same company, the remedy is not to declare that such act is considered unfair labor practice but rather they should conduct a certification election provided [that] it should be conducted within 60 days of the so[-]called freedom period before the expiration of the CBA.

WHEREFORE, premises considered, this Petition is DENIED and the assailed Decision

dated September 27, 2001 as well as the Order dated June 21, 2002, denying the motion for reconsideration, by the National Labor Relations Commission, First Division, in NLRC Case No. RAB-IV-12-11813-99-L, are hereby AFFIRMED in toto. Costs against petitioners.

SO ORDERED.[40]

Undaunted, petitioners filed this Rule 45 petition before this Court. Initially, the said petition was denied for having been filed out of time and for failure to comply with the requirements provided in the 1997 Rules of Civil Procedure, as amended.[41] Upon petitioners’ motion, however, we decided to reinstate their appeal.

The following are the issues raised by petitioners, to wit:

I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN ARRIVING AT THE DECISION PROMULGATED ON 15 DECEMBER 2003 AND RESOLUTION PROMULGATED ON 23 MARCH 2004, DECIDED THE CASE IN ACCORDANCE WITH LAW AND JURISPRUDENCE; AND

II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN ARRIVING AT THE DECISION PROMULGATED ON 15 DECEMBER 2003 AND RESOLUTION PROMULGATED ON 23 MARCH 2004, GRAVELY ABUSE[D] ITS DISCRETION IN ITS FINDINGS AND CONCLUSION THAT:

THE ACTS OF ABETTING OR ASSISTING IN THE CREATION OF ANOTHER UNION, NEGOTIATING OR BARGAINING WITH SUCH UNION, WHICH IS NOT THE SOLE AND EXCLUSIVE BARGAINING AGENT, VIOLATING THE DUTY TO BARGAIN COLLECTIVELY, REFUSAL TO PROCESS GRIEVABLE ISSUES IN THE GRIEVANCE MACHINERY AND/OR REFUSAL TO DEAL WITH THE SOLE AND EXCLUSIVE BARGAINING AGENT ARE ACTS CONSTITUTING OR TANTAMOUNT TO UNFAIR LABOR PRACTICE.[42]


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Respondents Bayer, Lonishen and Amistoso, meanwhile, identify the issues as follows:

I. WHETHER OR NOT THE UNIFORM FINDINGS OF THE COURT OF APPEALS, THE NLRC AND THE LABOR ARBITER ARE BINDING ON THIS HONORABLE COURT;

II. WHETHER OR NOT THE LABOR ARBITER AND THE NLRC HAVE JURISDICTION OVER THE INSTANT CASE;

III. WHETHER OR NOT THE INSTANT CASE INVOLVES AN INTRA-UNION DISPUTE;

IV. WHETHER OR NOT RESPONDENTS COMPANY, LONISHEN AND AMISTOSO COMMITTED AN ACT OF UNFAIR LABOR PRACTICE; AND

V. WHETHER OR NOT THE INSTANT CASE HAS BECOME MOOT AND ACADEMIC.[43]

Essentially, the issue in this petition is whether the act of the management of Bayer in dealing and negotiating with Remigio’s splinter group despite its validly existing CBA with EUBP can be considered unfair labor practice and, if so, whether EUBP is entitled to any relief.

Petitioners argue that the subject matter of their complaint, as well as the subsequent amendments thereto, pertain to the unfair labor practice act of respondents Bayer, Lonishen and Amistoso in dealing with Remigio’s splinter union. They contend that (1) the acts of abetting or assisting in the creation of another union is among those considered by the Labor Code, as amended, specifically under Article 248 (d)[44] thereof, as unfair labor practice; (2) the act of negotiating with such union constitutes a violation of Bayer’s duty to bargain collectively; and (3) Bayer’s unjustified refusal to process EUBP’s grievances and to recognize the said union as the sole and exclusive bargaining agent are tantamount to unfair labor practice.[45]

Respondents Bayer, Lonishen and Amistoso, on the other hand, contend that there can be no unfair labor practice on their part since the requisites for unfair labor practice – i.e., that the violation of the CBA should be gross, and that it should involve violation in the economic provisions of the CBA – were not satisfied. Moreover, they cite the ruling of the Labor Arbiter that the issues raised in the complaint should have been ventilated and threshed out before the voluntary arbitrators as provided in Article 261 of the Labor Code, as amended.[46] Respondents Remigio and Villareal, meanwhile, point out that the case should be dismissed as against them since they are not real parties in interest in the ULP complaint against Bayer,[47] and since there are no specific or material acts imputed against them in the complaint.[48]

The petition is partly meritorious. An intra-union dispute refers to any conflict between and among union members, including grievances arising from any violation of the rights and conditions of membership, violation of or disagreement over any provision of the union’s constitution and by-laws, or disputes arising from chartering or disaffiliation of the union.[49] Sections 1 and 2, Rule XI of Department Order No. 40-03, Series of 2003 of the DOLE enumerate the following circumstances as inter/intra-union disputes, viz:

RULE XI

INTER/INTRA-UNION DISPUTES AND

OTHER RELATED LABOR RELATIONS DISPUTES Section 1. Coverage. - Inter/intra-union disputes shall include:

(a) cancellation of registration of a labor organization filed by its members or by another labor organization;

(b) conduct of election of union and workers’ association officers/nullification of


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election of union and workers’ association officers;

(c) audit/accounts examination of union or workers’ association funds;

(d) deregistration of collective bargaining agreements;

(e) validity/invalidity of union affiliation or disaffiliation;

(f) validity/invalidity of acceptance/non-acceptance for union membership;

(g) validity/invalidity of impeachment/expulsion of union and workers’ association officers and members;

(h) validity/invalidity of voluntary recognition;

(i) opposition to application for union and CBA registration;

(j) violations of or disagreements over any provision in a union or workers’ association constitution and by-laws;

(k) disagreements over chartering or registration of labor organizations and collective bargaining agreements;

(l) violations of the rights and conditions of union or workers’ association membership;

(m) violations of the rights of legitimate labor organizations, except interpretation of collective bargaining agreements;

(n) such other disputes or conflicts involving the rights to self-organization, union membership and collective bargaining –

(1) between and among legitimate labor organizations;

(2) between and among members of a union or workers’ association.

Section 2. Coverage. – Other related labor relations disputes shall include any conflict between a labor union and the employer or any individual, entity or group that is not a labor organization or workers’ association. This includes: (1) cancellation of registration of unions and workers’ associations; and (2) a petition for interpleader.

It is clear from the foregoing that the issues raised by petitioners do not fall under any of the aforementioned circumstances constituting an intra-union dispute. More importantly, the petitioners do not seek a determination of whether it is the Facundo group (EUBP) or the Remigio group (REUBP) which is the true set of union officers. Instead, the issue raised pertained only to the validity of the acts of management in light of the fact that it still has an existing CBA with EUBP. Thus as to Bayer, Lonishen and Amistoso the question was whether they were liable for unfair labor practice, which issue was within the jurisdiction of the NLRC. The dismissal of the second ULP complaint was therefore erroneous.

However, as to respondents Remigio and Villareal, we find that petitioners’ complaint was validly dismissed.

Petitioners’ ULP complaint cannot prosper as against respondents Remigio and Villareal because the issue, as against them, essentially involves an intra-union dispute based on Section 1 (n) of DOLE Department Order No. 40-03. To rule on the validity or illegality of their acts, the Labor Arbiter and the NLRC will necessarily touch on the issues respecting the propriety of their disaffiliation and the legality of the establishment of REUBP – issues that are outside the scope of their jurisdiction. Accordingly, the dismissal of the complaint was validly made, but only with respect to these two respondents.

But are Bayer, Lonishen and Amistoso liable for unfair labor practice? On this score, we find that the evidence supports an answer in the affirmative.


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It must be remembered that a CBA is entered into in order to foster stability and mutual cooperation between labor and capital. An employer should not be allowed to rescind unilaterally its CBA with the duly certified bargaining agent it had previously contracted with, and decide to bargain anew with a different group if there is no legitimate reason for doing so and without first following the proper procedure. If such behavior would be tolerated, bargaining and negotiations between the employer and the union will never be truthful and meaningful, and no CBA forged after arduous negotiations will ever be honored or be relied upon. Article 253 of the Labor Code, as amended, plainly provides:

ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. – Where there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate or modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. (Emphasis supplied.)

This is the reason why it is axiomatic in labor relations that a CBA entered into by a legitimate labor organization that has been duly certified as the exclusive bargaining representative and the employer becomes the law between them. Additionally, in the Certificate of Registration[50] issued by the DOLE, it is specified that the registered CBA serves as the covenant between the parties and has the force and effect of law between them during the period of its duration. Compliance with the terms and conditions of the CBA is mandated by express policy of the law primarily to afford protection to labor[51] and to promote industrial peace. Thus, when a valid and binding CBA had been entered

into by the workers and the employer, the latter is behooved to observe the terms and conditions thereof bearing on union dues and representation.[52] If the employer grossly violates its CBA with the duly recognized union, the former may be held administratively and criminally liable for unfair labor practice.[53]

Respondents Bayer, Lonishen and Amistoso, contend that their acts cannot constitute unfair labor practice as the same did not involve gross violations in the economic provisions of the CBA, citing the provisions of Articles 248 (1) and 261[54] of the Labor Code, as amended.[55] Their argument is, however, misplaced.

Indeed, in Silva v. National Labor Relations Commission,[56] we explained the correlations of Article 248 (1) and Article 261 of the Labor Code to mean that for a ULP case to be cognizable by the Labor Arbiter, and for the NLRC to exercise appellate jurisdiction thereon, the allegations in the complaint must show prima facie the concurrence of two things, namely: (1) gross violation of the CBA; and (2) the violation pertains to the economic provisions of the CBA.[57]

This pronouncement in Silva, however, should not be construed to apply to violations of the CBA which can be considered as gross violations per se, such as utter disregard of the very existence of the CBA itself, similar to what happened in this case. When an employer proceeds to negotiate with a splinter union despite the existence of its valid CBA with the duly certified and exclusive bargaining agent, the former indubitably abandons its recognition of the latter and terminates the entire CBA.

Respondents cannot claim good faith to justify their acts. They knew that Facundo’s group represented the duly-elected officers of EUBP. Moreover, they were cognizant of the fact that even the DOLE Secretary himself had recognized the legitimacy of EUBP’s mandate by rendering an arbitral award ordering the signing of the 1997-2001 CBA between Bayer


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and EUBP. Respondents were likewise well-aware of the pendency of the intra-union dispute case, yet they still proceeded to turn over the collected union dues to REUBP and to effusively deal with Remigio. The totality of respondents’ conduct, therefore, reeks with anti-EUBP animus.

Bayer, Lonishen and Amistoso argue that the case is already moot and academic following the lapse of the 1997-2001 CBA and their renegotiation with EUBP for the 2006-2007 CBA. They also reason that the act of the company in negotiating with EUBP for the 2006-2007 CBA is an obvious recognition on their part that EUBP is now the certified collective bargaining agent of its rank-and-file employees.[58]

We do not agree. First, a legitimate labor organization cannot be construed to have abandoned its pending claim against the management/employer by returning to the negotiating table to fulfill its duty to represent the interest of its members, except when the pending claim has been expressly waived or compromised in its subsequent negotiations with the management. To hold otherwise would be tantamount to subjecting industrial peace to the precondition that previous claims that labor may have against capital must first be waived or abandoned before negotiations between them may resume. Undoubtedly, this would be against public policy of affording protection to labor and will encourage scheming employers to commit unlawful acts without fear of being sanctioned in the future.

Second, that the management of Bayer decided to recognize EUBP as the certified collective bargaining agent of its rank-and-file employees for purposes of its 2006-2007 CBA negotiations is of no moment. It did not obliterate the fact that the management of Bayer had withdrawn its recognition of EUBP and supported REUBP during the tumultuous implementation of the 1997-2001 CBA. Such act of interference which is violative of the existing CBA with EUBP led to the filing of the subject complaint.

On the matter of damages prayed for by the petitioners, we have held that as a general rule, a corporation cannot suffer nor be entitled to moral damages. A corporation, and by analogy a labor organization, being an artificial person and having existence only in legal contemplation, has no feelings, no emotions, no senses; therefore, it cannot experience physical suffering and mental anguish. Mental suffering can be experienced only by one having a nervous system and it flows from real ills, sorrows, and griefs of life – all of which cannot be suffered by an artificial, juridical person.[59] A fortiori, the prayer for exemplary damages must also be denied.[60] Nevertheless, we find it in order to award (1) nominal damages in the amount of P250,000.00 on the basis of our ruling in De La Salle University v. De La Salle University Employees Association (DLSUEA-NAFTEU)[61] and Article 2221,[62] and (2) attorney’s fees equivalent to 10% of the monetary award. The remittance to petitioners of the collected union dues previously turned over to Remigio and Villareal is likewise in order.

WHEREFORE, the petition for review on certiorari is PARTLY GRANTED. The Decision dated December 15, 2003 and the Resolution dated March 23, 2004 of the Court of Appeals in CA-G.R. SP No. 73813 are MODIFIED as follows:

1) Respondents Bayer Phils., Dieter J. Lonishen and Asuncion Amistoso are found LIABLE for Unfair Labor Practice, and are hereby ORDERED to remit to petitioners the amount of P254,857.15 representing the collected union dues previously turned over to Avelina Remigio and Anastacia Villareal. They are likewise ORDERED to pay petitioners nominal damages in the amount of P250,000.00 and attorney’s fees equivalent to 10% of the monetary award; and

2) The complaint, as against respondents Remigio and Villareal. is DISMISSED due to the lack of jurisdiction of the Labor Arbiter and the NLRC, the complaint being in the nature of an intra-union dispute.


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No pronouncement as to costs.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES

Associate Justice

Chairperson

ARTURO D. BRION

Associate Justice

LUCAS P. BERSAMIN

Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

CONCHITA CARPIO MORALES

Associate Justice

Chairperson, Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the 1987 Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA

Chief Justice

^ [1] Rollo, pp. 221-237. Penned by Associate Justice Mercedes Gozo-Dadole, with Associate Justices Eugenio S. Labitoria and Rosmari D. Carandang, concurring.

^ [2] Id. at 239.

^ [3] With Registration No. NCR-10-165-88. See CA rollo, Vol. I, p. 183.

^ [4] Rollo, pp. 31-47.

^ [5] Id. at 48.

^ [6] Id. at 71, 136.

^ [7] Id. at 52.

^ [8] Id.

^ [9] Id. at 517-529.

^ [10] Id. at 551-553 and 556.

^ [11] Id. at 556.

^ [12] Letter dated October 30, 1998. Id. at 557-558.

^ [13] Id. at 531-534.

^ [14] Id. at 492.

^ [15] Id. at 492 and 560.

^ [16] Id. at 68.

^ [17] Id. at 69-73.

^ [18] Docketed as Case No. OD-9903-004-IRD. See rollo, pp. 563-568.

^ [19] Rollo, pp. 535-549.

^ [20] Id. at 543-544.


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^ [21] Id. at 546-548.

^ [22] Id. at 490.

^ [23] Id. at 571.

^ [24] Id.

^ [25] Id.

^ [26] Id. at 574.

^ [27] Dated January 21, 2000. Id. at 575-584.

^ [28] Dated March 8, 2000. Id. at 81-87.

^ [29] Id. at 178.

^ [30] The appeal was docketed as BLR-A-TR-13-17-2-00. See rollo, p. 176.

^ [31] Rollo, p. 181.

^ [32] Id. at 585-614.

^ [33] Id. at 495.

^ [34] Id. at 615-624.

^ [35] Id. at 623-624.

^ [36] Id. at 626-634.

^ [37] Id. at 633.

^ [38] NLRC Decision dated September 27, 2001. Id. at 185-215.

^ [39] NLRC Order dated June 21, 2002. Id. at 217-219.

^ [40] Id. at 234-236.

^ [41] Id. at 469-470.

^ [42] Id. at 782.

^ [43] Id. at 731.

^ [44] Article 248 (d) of the Labor Code provides:

ART. 248. Unfair labor practices of employers. – It shall be unlawful for an employer to commit any of the following unfair labor practices:

x x x x

(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters;

x x x x

^ [45] Rollo, pp. 783-790.

^ [46] Id. at 734-740.

^ [47] Id. at 661-663.

^ [48] Id. at 675-676.

^ [49] C.A. Azucena, Jr., Vol. II, The Labor Code with Comments and Cases, 2004 ed., p. 111.

^ [50] Rollo, p. 48.

^ [51] Del Monte Philippines, Inc. v. Saldivar, G.R. No. 158620, October 11, 2006, 504 SCRA 192, 201.

^ [52] De La Salle University v. De La Salle University Employees Association (DLSUEA-NAFTEU), G.R. No. 177283, 584 SCRA 592, 603.

^ [53] Article 248 of the Labor Code provides in part:

ART. 248. Unfair labor practices of employers. – It shall be unlawful for an employer to commit any of the following unfair labor practices:

x x x x


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(i) To violate a collective bargaining agreement.

^ [54] Art. 261 of the Labor Code provides in part:

ART. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. – The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of a Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. (Emphasis supplied.)

^ [55] Rollo, pp. 499-500.

^ [56] G.R. No. 110226, June 19, 1997, 274 SCRA 159.

^ [57] Id. at 173.

^ [58] Rollo, pp. 752-753.

^ [59] Flight Attendants and Stewards Association of the Philippines v. Philippine Airlines, Inc., G.R. No. 178083, July 22, 2008, 559 SCRA 252, 294.

^ [60] Article 2234 of the Civil Code provides in part:

ART. 2234. While the amount of the exemplary damages need not be proved, the plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of

whether or not exemplary damages should be awarded. x x x

^ [61] Supra note 52 at 604.

^ [62] Article 2221 of the Civil Code provides:

ART. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.\

3rd Division

TOPICS: Collective Bargaining AgreementCIRTEK EMPLOYEES LABOR UNION-FEDERATION OF FREE WORKERS, Petitioner, versus CIRTEK ELECTRONICS, INC., Respondent

GOOD LUCK- JOBL


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