A. FUNDAMENTAL PRINCIPLES AND POLICIES

1. Constitutional Provisions

a. Article II - Declaration of Principles and State Policies

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.1

The State shall promote social justice in all phases of national development.2

The State values the dignity of every human person and guarantees full respect for human/rights.3

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.4

The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men.5

The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.6

The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments.7

b. Article III– Bill of Rights

1 Sec. 92 Sec.103 Sec.114 Sec. 135 Sec. 146 Sec. 187 Sec. 20

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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.8

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.9

The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law.10

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.11

No law impairing the obligation of contracts shall be passed.12

All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-judicial, or administrative bodies.13

No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall have been duly convicted.14

c. Article XIII –

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

8 Sec. 1.9 Sec. 4.10 Sec. 711 Sec. 8.12 Sec. 1013 Sec. 1614 Sec. 18 (2)

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and its increments.15

The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance.16

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 settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth.17

The State shall protect working women by providing safe and healthful working conditions, taking into account their maternal functions, and such facilities and opportunities that will enhance their welfare and enable them to realize their full potential in the service of the nation.18

2. New Civil Code

Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.19

The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts

15 Sec. 1.16 Sec. 2.17 Sec. 318 Sec. 1419 Art. 19

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are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.20

In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.21

3. Labor Code

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.22

All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor.23

The State shall promote and develop a tax-exempt employees’ compensation program whereby employees and their dependents, in the event of work-connected disability or death, may promptly secure adequate income benefit and medical related benefits.24

A.  It is the policy of the State:

(a)  To 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;

(b)  To promote free trade unionism as an instrument for the enhancement of democracy and the promotion of social justice and development;

20 Art. 170021 Art. 170222 Art. 323 Art. 424 Art. 166

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(c)  To foster the free and voluntary organization of a strong and united labor movement;

(d)  To promote the enlightenment of workers concerning their rights and obligations as union members and as employees;

(e)  To provide an adequate administrative machinery for the expeditious settlement of labor or industrial disputes;

(f)   To ensure a stable but dynamic and just industrial peace; and

(g)   To ensure the participation of workers indecision and policy-making processes affecting their rights, duties and welfare.

B.  To encourage a truly democratic method of regulating the relations between the employers and employees by means of agreements freely entered into through collective bargaining, no court or administrative agency or official shall have the power to set or fix wages, rates of pay, hours of work or other terms and conditions of employment, except as otherwise provided under this Code.25

Definitions.

Commission The National Labor Relations Commission or any of its divisions, as the case may be.

Bureau The Bureau of Labor Relations and/or the Labor Relations Divisions in the regional offices established under Presidential Decree No. 1, in the Department of Labor.

25 Art. 211

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Board The National Conciliation and Mediation Board established under Executive Order No. 126.

Council The Tripartite Voluntary Arbitration Advisory Council established under Executive Order No. 126, as amended.

Employer Includes any person acting in the interest of an employer, directly or indirectly.  The term shall not include any labor organization or any of its officers or agents except when acting as employer.

Employee Includes any person in the employ of an employer.  The term shall not be limited to the employees of a particular employer, unless the Code so explicitly states.  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 and regular employment.

Labor organization Any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment.

Legitimate labor organization

Any labor organization duly registered with the Department of Labor and Employment, and includes any branch or local thereof.

Company union Any labor organization whose formation, function or administration has been assisted by any act defined as unfair labor practice by this Code.

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Bargaining representative

A legitimate labor organization whether or not employed by the employer.

Unfair labor practice Any unfair labor practice as expressly defined by the Code.

Labor dispute Includes any controversy or matter concerning terms and conditions 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.

Managerial employee

Supervisory employees

Rank-and-file employees

One who is vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees

Those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment.

All employees not falling within any of the above definitions.

Voluntary Arbitrator Any person accredited by the Board as such or any person named or designated in the Collective Bargaining Agreement by the parties to act as their Voluntary Arbitrator, or one chosen with or without the assistance of the National Conciliation and Mediation Board, pursuant to a selection procedure agreed upon in the Collective Bargaining Agreement, or any official that may be authorized by the Secretary of Labor and Employment to act as Voluntary Arbitrator

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upon the written request and agreement of the parties to a labor dispute.

Strike Any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute.

Lockout Any temporary refusal of an employer to furnish work as a result of an industrial or labor dispute.

Internal union dispute Includes all disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by-laws of a union, including any violation of the rights and conditions of union membership provided for in this Code

Strike-breaker Any person who obstructs, impedes, or interferes with by force, violence, coercion, threats, or intimidation any peaceful picketing affecting wages, hours or conditions of work or in the exercise of the right of self-organization or collective bargaining.

Strike area The establishment, warehouses, depots, plants or offices, including the sites or premises used as runaway shops, of the employer struck against, as well as the immediate vicinity actually used by picketing strikers in moving to and fro before all points of entrance to and exit from said establishment.26

The labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit shall be the exclusive representative of the employees in such unit for the purpose of collective bargaining.

26 Art. 212

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However, an individual employee or group of law to the contrary notwithstanding, workers shall have the right, subject to such rules and regulations as the Secretary of Labor and Employment may promulgate, to 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.27

Miscellaneous provisions.a. All unions are authorized to collect reasonable membership

fees, union dues, assessments and fines and other contributions for labor education and research, mutual death and hospitalization benefits, welfare fund, strike fund and credit and cooperative undertakings.

b. 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. The Secretary of the Department of Labor and Employment may suspend the effects of the termination pending resolution of the dispute in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom such dispute is pending that the termination may cause a serious labor dispute or is in implementation of a mass lay-off. (As amended by Section 33, Republic Act No. 6715, March 21, 1989)

c. Any employee, whether employed for a definite period or not,

27 Art. 255

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shall, beginning on his first day of service, be considered as an employee for purposes of membership in any labor union.

d. No docket fee shall be assessed in labor standards disputes. In all other disputes, docket fees may be assessed against the filing party, provided that in bargaining deadlock, such fees shall be shared equally by the negotiating parties.

e. The Minister of Labor and Employment and the Minister of the Budget shall cause to be created or reclassified in accordance with law such positions as may be necessary to carry out the objectives of this Code and cause the upgrading of the salaries of the personnel involved in the Labor Relations System of the Ministry. Funds needed for this purpose shall be provided out of the Special Activities Fund appropriated by Batas Pambansa Blg. 80 and from annual appropriations thereafter.

f. A special Voluntary Arbitration Fund is hereby established in the Board to subsidize the cost of voluntary arbitration in cases involving the interpretation and implementation of the Collective Bargaining Agreement, including the Arbitrator’s fees, and for such other related purposes to promote and develop voluntary arbitration. The Board shall administer the Special Voluntary Arbitration Fund in accordance with the guidelines it may adopt upon the recommendation of the Council, which guidelines shall be subject to the approval of the Secretary of Labor and Employment. Continuing funds needed for this purpose in the initial yearly amount of fifteen million pesos (P15,000,000.00) shall be provided in the 1989 annual general appropriations acts.

The amount of subsidy in appropriate cases shall be determined by the Board in accordance with established guidelines issued by it upon the recommendation of the Council.

The Fund shall also be utilized for the operation of the Council, the training and education of Voluntary Arbitrators, and the Voluntary Arbitration Program.

g. The Ministry shall help promote and gradually develop, with the agreement of labor organizations and employers, labor-management cooperation programs at appropriate levels of the enterprise based on the shared responsibility and mutual respect in order to ensure industrial peace and improvement in productivity, working conditions and the quality of working life.

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h. In establishments where no legitimate labor organization exists, labor-management committees may be formed voluntarily by workers and employers for the purpose of promoting industrial peace. The Department of Labor and Employment shall endeavor to enlighten and educate the workers and employers on their rights and responsibilities through labor education with emphasis on the policy thrusts of this Code.

i. To ensure speedy labor justice, the periods provided in this Code within which decisions or resolutions of labor relations cases or matters should be rendered shall be mandatory. For this purpose, a case or matter shall be deemed submitted for decision or resolution upon the filing of the last pleading or memorandum required by the rules of the Commission or by the Commission itself, or the Labor Arbiter, or the Director of the Bureau of Labor Relations or Med-Arbiter, or the Regional Director.

Upon expiration of the corresponding period, a certification stating why a decision or resolution has not been rendered within the said period shall be issued forthwith by the Chairman of the Commission, the Executive Labor Arbiter, or the Director of the Bureau of Labor Relations or Med-Arbiter, or the Regional Director, as the case may be, and a copy thereof served upon the parties.

Despite the expiration of the applicable mandatory period, the aforesaid officials shall, without prejudice to any liability which may have been incurred as a consequence thereof, see to it that the case or matter shall be decided or resolved without any further delay.

B. Recruitment and Placement

1. Recruitment of local and migrant workers

a. Illegal recruitment28

28 Sec. 5, R.A. No. 10022

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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 non-licensee or non-holder of authority.29 Any such non-licensee or non-holder30 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 following acts, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority:

(a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay or acknowledge any amount greater than that actually received by him as a loan or advance;

(b) To furnish or publish any false notice or information or document in relation to recruitment or employment;

(c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under the Labor Code, or for the purpose of documenting hired workers with the POEA, which include the act of reprocessing workers through a job order that pertains to nonexistent work, work different from the actual overseas work, or work with a different employer whether registered or not with the POEA;

(d) To include 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;

(e) To influence or attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency or who has formed, joined or supported, or has contacted or is supported by any union or workers' organization;

29 under Art. 13 (f)30 Any person, corporation or entity:

1. Which has not been issued a valid license or authority to engage in recruitment and placementby the Secretary of Labor and Employment (SLE) or 2. Whose license or authority has been suspended, revoked or cancelled by the POEA or the SLE

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(f) 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;

(h) 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 of Labor and Employment;

(i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment 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 Department of Labor and Employment;

(j) 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 travel agency;

(k) To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations, or for any other reasons, other than those authorized under the Labor Code and its implementing rules and regulations;

(l) Failure to actually deploy a contracted worker without valid reason as determined by the Department of Labor and Employment;

(m) 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. Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage; and

(n) To allow a non-Filipino citizen to head or manage a licensed recruitment/manning agency.

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.

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1) License31 vs. authority

License Authority

A document issued by the Department of Labor authorizing a person or entity to operate a private employment agency.

A document issued by the Department of Labor authorizing a person or association to engage in recruitment and placement activities as a private recruitment entity.

2) Essential elements of illegal recruitment

1. Offender is a non‐licensee or non‐holder of authority to lawfully engage in  the recruitment/placement of workers 

2. Offender undertakes:  

a. Any  act  of  canvassing,  enlisting, contracting,  transporting,  utilizing, hiring or procuring workers, and includes referrals, contact services, promising or advertising  for employment,  locally  or  abroad, whether for profit or not;32 or  

31 No license or authority shall be used directly or indirectly by any person other than the one in whose favor it was issued or at any other place other than that stated in the license or authority, nor may such license or authority be transferred, conveyed or assigned to any other person or entity. Licensees or holders of authority or their duly authorized representatives may, as a rule, undertake recruitment and placement activities only at their authorized official addresses. Change of ownership or relationship of single proprietorship licensed to engage in overseas employment shall cause the automatic revocation of the license.32 Art. 13[b]

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b. To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay any amount greater than that actually received by him as a loan or advance;

c. To furnish or publish any false notice or information or document in relation to recruitment or employment;

d. To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under this Code.

e. To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another unless the transfer is designed to liberate the worker from oppressive terms and conditions of employment;

f. To influence or to attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency;

g. 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;

h. To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized representatives;

i. To fail to file 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 of Labor.

j. To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor;

k. 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; and

l. To withhold or deny travel documents from applicant workers before departure for monetary or financial

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considerations other than those authorized under this Code and its implementing rules and regulation.33

3) Simple illegal recruitment

When it involves less than three (3) victims or recruiters. 

4) Illegal recruitment in large scale34

5) Illegal recruitment as economic sabotage

When it is committed::

By a syndicate In large scale

If carried out by a group of 3 or more persons conspiring and confederating with one another;

If committed against 3 or more persons individually or as a group

6) Illegal recruitment vs. estafa35

Illegal recruitment Estafa

Malum prohibitum, thus:

1. Criminal  intent  is  not necessary

2. A crime which involves moral turpitude

Malum in se, thus:

1. Criminal  intent  is necessary

2. A crime  which involves  moral turpitude

It is not required that it be shown that the recruiter

Accused defrauded another by  abuse  of confidence,  or  by

33 Art. 3434 see Illegal Recruitment, infra35 under Art. 315, par. 2, RPC Estafa is committed by any person who defrauds another by using fictitious name, or falsely pretends to possess power, influence, qualifications, property, credit, agency, business or imaginary transactions, or by means of similar deceits executed prior to or simultaneously with the commission of fraud (People v. Comila, G.R. No. 171448, February 28, 2007, 517 SCRA 153, 167)

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wrongfully  represented himself  as  a  licensed recruiter.36

means of deceit.37

Illegal recruitment and estafa cases may be filed simultaneously or separately. The filing of charges for illegal recruitment does not bar the filing of estafa, and vice versa.

Double jeopardy will not set in

7) Liabilities

(i) Local recruitment agency(ii) Foreign employer

They  are  jointly  and  severally  liable  for  any violation  of  the  recruitment agreement  and  the contracts of employment.38

(a) Theory of imputed knowledge

Knowledge of the agent is knowledge of the principal.

Ascribes the knowledge of the agent to the principal employer, not the other way around.39

A  rule  in  insurance law that any information material to the transaction, either possessed by the agent  at  the  time of the transaction or acquired by him before its completion, is deemed to  be  the knowledge  of  the  principal,  at  least  so  far  as 

36 It is enough that the victims were deceived as they relied on the misrepresentation and scheme that caused them to entrust their money in exchange of what they later discovered was a vain hope of obtaining employment abroad.37 It is essential that the false statement or fraudulent representation constitutes the very cause or the only motive which induces the complainant to part with the thing of value.38 This joint and solidary liability imposed by law against recruitment agencies and foreign employers is meant to assure the aggrieved worker of immediate and sufficient payment of what is due him. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the claims and damages. (Becmen Service Exporter and Promotion v. Cuaresma, G.R. Nos. 182978 79, April 7, 2009)‐39 Rovels Enterprises, Inc. v. Ocampo, G.R. No. 136821, October 17, 2002, 391 SCRA 176; vide Air France v. Court of Appeals, et al., 211 Phil. 601 (1983).

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the transaction is concerned,  even  though  in  fact  the knowledge  is  not  communicated  to the  principal  at all.40

(iii) Solidary liability41

h) Pre-termination of contract of migrant worker

Rules on Repatriation of Overseas Workers:

Without fault of the worker His repatriation shall be borne by the local agency and/or principal over the

1. worker and his personal belongings;

2. remains of the deceased worker and his personal belongings.42

Fault of the migrant worker Shall be borne by the migrant worker43

In cases of war, epidemic, disasters, calamities, or other similar events

Shall be borne by OWWA, without prejudice to reimbursement by the principal or local agency.44

Underage migrant worker Shall be mandatory upon discovery, done by the responsible officers of the foreign service where the underage migrant worker is found.45

Seafarer POPEA Memo Circular No. 55-96 provides that a seaman can be repatriated without cause if the

40 Leonor v. Filipinas Compania, 48 OG 24341 see Liabilities, supra42 Sec. 15, par. 1, R.A. 804243 Ibid.44 id. Par. 245 Sec. 16, id.

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vessel arrives at a convenient port within three (3) months before the expiration of his contract, but only upon payment of

a. all his earned wages;b. leave pay for the entire

contract;c. termination pay of one (1)

month basic salary, if seaman has at least ten (10) months original contract.46

b. Direct hiring

General Rule:

An  employer  may  only  hire  Filipino  worker  for overseas employment  through  POEA  or entities authorized by DOLE.

Exceptions: Direct hiring by

1. International organizations2. Members of the diplomatic corps;3. Name hires; and4. Such other employers as may be allowed by the

Dept. of Labor.

2. Regulation and Enforcement

a. Suspension or cancellation of license or authority

The Secretary of Labor shall have the power to suspend or cancel any license or authority to recruit employees for overseas employment for violation of rules and regulations issued by the Department of Labor, the POEA, or for violations of this and other applicable laws, General Orders and Letters of Instructions.47

b. Regulatory and visitorial powers of the DOLE secretary46 PCL Shipping Pils. vs.NLRC, 511 SCRA 44 (2006)47 Art. 35, Labor Code

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Regulatory  powers Visitorial powers

1. Restrict  and  regulate the recruitment and placement activities of all agencies.

2. Issue  orders  and  promulgate  rules andRegulations.

1. Access  to  employer’s  records  andpremises  at  any  time  of  the  day or night,whenever work is being undertaken.

2. To copy from said records

3. Question  any  employee  and  investigateany  fact,  condition  or  matter  which  maybe  necessary  to  determine  violations  orwhich  may  aid  in  the  enforcement of theLabor  Code  and  of  any  labor  law, wageorder,  or  rules  and  regulation  issuedpursuant thereto.

c. Remittance of foreign exchange earnings

General Rule:

It  shall  be  mandatory  for  all OFWs  to  remit  a portion  of  their foreign exchange  earnings to  their  families,  dependents,  and/orbeneficiaries  ranging  from  50% ‐ 80% depending  on  the  worker’s  kindof  job.48

Exceptions: 1. The worker’s immediate family members, beneficiaries and dependents

48 Rule VIII, Book III, POEA Rules

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are residing with him abroad.

2. Immigrants and Filipino  professionals  and employees  working  with the  UN agencies or specialized bodies.

3. Filipino servicemen  working  in  U.S. military  installations.49

d. Prohibited activities50

1. Furnishing  or  publishing  any  false notice/information/document  related  to recruitment/employment 

2. Failure to file reports  required by SLE 

3. Inducing or attempting to induce a worker already  employed  to  quit  his employment in  order  to  offer  him  another  unless  the transfer  is  designed  to  liberate  aworker from oppressive terms and conditions 

4.Recruitment/placement of workers in/jobs harmful to  public health or morality or to the dignity of the country 

5. Engaging  directly  or  indirectly  in  the management of a travel agency 

6. Substituting  or  altering  employment contracts without approval of DOLE 

7.Charging or accepting any amount greater than  that  specified  by  DOLE  or make  a worker  pay  any  amount  greater  than actually received by him 

8. Committing  any  act  of  misrepresentation to secure a license or authority 

9.Influencing or attempting to influence any person/entity  not  to  employ  any worker who  has  not  applied  of  49 Resolution No. 1 83, Inter Agency Committee for Implementation of E.O. 857‐ ‐50 Art. 34

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employment through his agency 

10.Obstructing  or  attempting  to  obstruct inspection  by  SLE  or  by  his representatives 

11.Withholding  or  denying  travel  documents from  applicant  workers  before departure for  monetary  considerations  other  than authorized by law 

12. Granting  a  loan  to  an  OFW,  which  will  be used  for 

payment  of  legal  andallowable placement fees  

13.Refusing  to  condone  or 

renegotiate a loan incurred by an OFW after his employment contract  has  been  prematurely terminated  through  no  fault  of  his  or  her Own.

14. For  a  suspended  recruitment/manning  agency  to 

engage  in  any  kind  of recruitment activity  including  the processing  of  pending  workers' applications; and  

15. For a recruitment/manning agency or a foreign principal/employer to pass on the  OFW or  deduct  from  his  or  her  salary  the payment  of  the  cost  of  insurance fee, premium or other insurance related charges, as provided under the compulsory worker'sinsurance coverage. 

16. Imposing  a  compulsory  and  exclusive arrangement whereby an OFW is required to: 

a. Avail  a  loan  only  from  specifically designated  institutions,  entities  or persons; 

b. Undergo health examinations only from specifically designated medical, entities  or  persons, except seafarers whose  medical 

examination cost is shouldered  by the shipowner 

c. Undergo training  of  any  kind  only from  designated  institutions, entities or  persons,  except  for recommendatory  trainings mandated  by  principals/shipowners.51 

51 Sec. 6, R.A. 10022

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C. LABOR STANDARDS

1. Hours of Work52

a. Coverage/Exclusions

Coverage Exclusions

Employees in all establishments and undertakings, whether for profit or not.

1. Government employees,

2. Managerial employees,53

3. Field personnel,54

4. Members of the family of the employer who are dependent on him for support,domestic helpers,

5. Persons in the personal service of another, and

52 Work day" means 24 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 to 12:00 midnight unless the employee starts to work at this unusual hour. "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. Reduction of eight-hour working day - not prohibited by law provided there is no reduction in pay of workers. Hours of work of part-time workers - payment of wage should be in proportion only to the hours worked.53 Those whose primary duty consists of the management of the establishment in which they are employed or a department or subdivision thereof, and other officers or members of themanagerial staff. They must meet all of the ff. conditions, namely: 1.Primary duty: management of the establishment in which they are employed or of adepartment or sub division‐ thereof; 2. Customarily or regularly direct the work of 2 or more employees 3.Has the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any change of status of other employees are given particular weight. 4.Execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge 5. Execute under general supervision special assignment and tasks; and 6. Do not devote more than 20% of their hours worked to activities which are not directly and closely related to performance of the work described. (Art. 82[2])54 Non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty

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6. Workers who are paid by results

b. Normal Hours of Work

Eight (8) hours per day in a general working day.

a) Compressed work week55

The  normal  workweek  is  reduced  to  less than  6 days  but  the  total  number  of work hours  of  48 hours per week shall  remain. The normal workday is increased  to more than  8  hours  but  not  to  exceed 12  hours,  without  corresponding  overtime premium. The concept  can  be  adjusted  accordingly depending  on  the  normal work week of  the company.56

c. Meal Break

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 is required to work while eating, he should be compensated therefor.

If meal time is shortened to not less than twenty (20) minutes - compensable hours worked.

If shortened to less than 20 minutes - considered coffee break or rest period of short duration and, therefore, compensable.

d. Waiting time

Considered compensable if waiting is an integral part of the employee's work or he is required or engaged by the employer to wait.

e. Overtime work,57 Overtime Pay55 See shortening of work week (under 1. Hours of Work), supra56 Department Advisory Order No. 2, Series of 200957 General Rule: No employee may be compelled to render overtime work against his will.

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Overtime work Work beyond eight (8) hours of work within  the worker’s 24 hour workday.58

Overtime Pay The additional compensation for work performed beyond eight (8) hours a day within the worker’s 24-hour workday regardless whether the work covers 2 calendar days.

f. Night Work, Night shift differential

Exceptions: 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 work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon.When an 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.58 In computing overtime work, "regular wage" or "basic salary" means "cash" wage only without deduction for facilities provided by the employer. "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. "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.

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Night Work Work at night during a period of not less than seven (7) consecutive hours, including the interval from midnight to five o’clock in the morning.59

Night shift differential The additional compensation of ten percent (10%) of an employee’s regular wage for each hour of work performed between 10 p.m. and 6 a.m.

 g. Part-time work

When a worker is contracted for anything less than the basic full-time hours.

h. Contract for piece work

The contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill, or also furnish the material.60

2. Wages61

59 R.A. No. 1015160 Art. 1713, CC61 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 Exceptions : A. Payment through automated teller machine (ATM) of banks provided the following conditions are met: 1. the ATM system of payment is with the written consent of the employees concerned; 2. The employees are given reasonable time to withdraw their wages from the bank facility which time, if done during working hours, shall be considered compensable hours worked; 3. The system shall allow workers to receive their wages within the period or frequency and in the amount prescribed under the Labor Code, as amended; 4. There is a bank or ATM facility within a radius of one (1) kilometer to the place of work; 5. Upon request of the concerned employee/s, the employer shall issue a record of payment of wages,benefits and deductions for a particular period; 6. There shall be an additional expenses and no diminution of benefits and privileges as a result of the ATM system of payment;

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a. Wage vs. salary

Wages Salaries

Compensation for manual labor62 also known as “blue collared workers”, paid at stated times and measured by the day,week, month or season.

Paid to “white collared workers” and denotes a higher degree of employment, or a superior grade of services, and implies a position in office.

Indicates inconsiderable pay for a lower or less responsible character of employment.

Suggests a larger and more permanent or fixed compensation for more important services.

General Rule:

Not subject to execution

Exceptions:

Debts incurred for food, shelter,clothing and medical attendance.

Subject to execution

b. Minimum wage defined, Minimum wage setting

Minimum wage - lowest wage rate fixed by law that an employer can pay his employees.63

In the determination of the regional minimum wages, the Regional Board shall, among other relevant factors, consider the following:

7. The employer shall assume responsibility in case the wage protection provisions of law and regulations are not complied with under the arrangement62 skilled or unskilled63 The employer cannot exempt himself from liability to pay minimum wages because of poor financial condition of the company; the payment of minimum wages is not dependent on the employer’s ability to pay (De Racho v. Municipality of Iligan, G.R. NO. L-23542). The acceptance by an employee of the wages paid him without objection does not give rise to estoppel precluding him from suing for the difference between the amount received and the amount he should have received pursuant to a valid minimum wage law where it does not appear that the employer changed his position to his own prejudice.

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a) The demand for living wagesb) Wage adjustment vis‐a‐vis the consumer price indexc) The cost of living and changes or increases thereind) The needs of workers and their familiese) The need to induce industries to invest in the countrysidef) Improvements in standards of living g) The prevailing wage levelsh) Fair return of the capital invested and capacity to pay of

employersi) Effects on employment generation and family incomej) The equitable distribution of income and wealth along the

imperatives of economic and social development

c. Minimum wage of workers paid by results

1) Workers paid by results

All workers paid by results, including homeworkers and those who are paid on piece rate, takay, pakyaw or task basis, shall receive not less than the prescribed minimum wage rates under the Regional Wage Orders for normal working hours which shall not exceed eight (8) hours a day, or a proportion thereof.

2) Apprentices3) Learners

Wage of apprentices and learners shall in no case be less than seventy-five (75%) percent of the applicable minimum wage rates.

4) Persons with disability

A qualified disabled employee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits or allowances as a qualified able bodied person.64

d. Commissions

Direct remunerations received by an agent, salesman, executor, broker, or trustee calculated as a percentage on the amount of his transactions or on the profit to the principal.

64 Sec. 5 of RA 7277 or the Magna Carta for Disabled Person

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e. Deductions from wages

General Rule

Wage deduction is strictly prohibited.

Exceptions:65

1. With employees’ consent:

a. SSS payments b. Philhealth payments c. Contributions to Pag-IBIG Fund d. value of meals and other facilities e. payments to third persons with employees consent f. deduction of absences

2. Without employees’ consent:

a. worker’s insurance acquired by the employer b. union dues, where the right to check-off has been recognized by the employer c. cases where the employer is authorized by law or regulations issued by the Secretary of Labor d. debts of the employee to the employer which have become due and demandable

f. Non-diminution of benefits66

65 allowable deductions66 The rule is applicable if it is shown that the grant of the benefits is: Based on an express policy; or Has ripened into practice over a long period of time, The practice is consistent and deliberate; and It is not due to an error in the construction/ application of a doubtful or difficult question of law.

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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.67

The benefits being given to employees cannot be taken back or reduced unilaterally by the employer because the benefits have become part of the employment contract, written or unwritten.68

7. Facilities vs. supplements

Facilities Supplements

Items  of  expenses necessary  for  thelaborer’s and  his  family’s  existence andsubsistence but does 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.

Extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages.69

Forms part of the wage Independent of wage

Deductible from wage Not wage deductible

For  the  benefit  of  the worker and hisfamily.

Granted for the convenience of the employer.

67 See Art. 10068 Exception: To correct an error, otherwise, if the error is not corrected for a reasonable time, it ripens into acompany policy and employees can demand it as a matter of right.69Atok Big Wedge Mining Co. v. Atok Big Wedge Mutual Benefit Assoc., G.R. No. L 7349,‐ July 19, 1955

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8. Wage Distortion70/Rectification

A wage distortion happens when a wage order increasing the rates of wages removes or significantly reduces the pay advantage of one position of employees over another. This change has to be corrected. Correction of a wage distortion must first be done in the company's grievance machinery provided for in the CBA. If the distortion isn't resolved there, the next step is voluntary arbitration. In case the company has no CBA or recognized labor union, the employers and workers have to reach an agreement to correct the distortion. If they can't agree, they have to bring the problem to the NCMB. If after 10 days in the NCMB there isn't any correction the next place to go is the NLRC.

Wage distortions cannot be the cause of a strike or lockout.71 The correction of a wage distortion should be done by negotiation or arbitration.

9. Divisor to determine daily rate

The divisor is 250, which is arrived at by subtracting the 52 Sundays, 52 Saturdays, the 10 regular holidays and December 31, or a total of 115 off-days from the 365 days of the year or a difference of 250 days.72

C. Rest Periods

1. Weekly rest day

Not less than twenty-four (24) consecutive hours after every six (6) consecutive normal work days. 

The employer shall determine and schedule the weekly rest day of his employees subject to collective bargaining agreement and to 70 Elements: 1. An existing hierarchy of positions with corresponding salary rates. 2. A significant change or increase in the salary rate of a lower pay class without a corresponding increase in the salary rate of a higher one; 3. The elimination of the distinction between the 2 groups or classes; and 4. The WD exists in the same region of the country (Alliance Trade Unions v. NLRC, G.R. No. 140689,Feb. 17, 2004)71 Ilaw ng Manggagawa vs. NLRC, 198 SCRA 58672 See CBTC Employees Union vs. Jacobo C. Clave and Commercial Bank & Trust Co., G.R. No. L-49582, January 7, 1986

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such rules and regulations as the Secretary of Labor and Employment may provide.73

2. Emergency rest day work

In the following cases:

1. Actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic or other disaster or calamity to prevent loss of life and property, or imminent danger to public safety; 

2. Urgent work to be performed on the machinery, equipment, or installation, to avoid serious loss which the employer would otherwise suffer;

3. Abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be expected to resort to other measures; 

4. To prevent loss or damage to perishable goods;

5. The nature of the work requires continuous operations and the stoppage of work may result in irreparable injury or loss to the employer; and 

6. Other analogous or similar circumstances as determined by the Secretary of Labor and Employment.74

C. Holiday pay75/ Premium pay76

Coverage Exclusions

73 Art. 91 (a)74 Art. 9275 A day’s pay given by law to an employee even if he does not work on a regular holiday. It is limited to the eleven (11) regular holidays listed by law. The employee should not have been absent without pay on the working day preceding the regular holiday.76 Additional compensation for work performed on a scheduled rest day or holiday

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Holiday pay

Applies to all employees

1. Government employees, whether employed by the National Government or any of its political subdivisions, including those employed in government-owned and/or controlled corporations with original charters or created under special laws;

2. Those of retail and service establishments regularly employing less than ten (10) workers;

3. Househelpers and persons in the personal service of another;

4. Managerial employees, if they meet all of the following conditions:

4.1 Their primary duty is to manage the establishment in which they are employed or of a department or subdivision thereof;

4.2 They customarily and regularly direct the work of two or more employees therein;

4.3. They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to hiring, firing, and promotion, or any other change of status of other employees aregiven particular weight.

5. Officers or members of a managerial staff, if they perform the following duties and responsibilities:

5.1 Primarily perform work directly related to management policies of their employer;

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5.2 Customarily and regularly exercise discretion and independent judgment;

5.3 (a) Regularly and directly assist a proprietor or managerial employee in the management of the establishment or subdivision thereof in which he or she is employed; or (b) execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; or (c) execute, under general supervision, special assignments and tasks; and

5.4 Do not devote more than twenty percent (20%) of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs 5.1, 5.2, and 5.3 above.

6. Field personnel and other employees whose time and performance is unsupervised by the employer, includingthose who are engaged on task or contract basis, purely commission basis or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.

Premium pay

Applies to all employees

1. Government employees, whether employed by the National Government or any of its political subdivisions, includingthose employed in government-owned and/or controlled corporations with original charters or created under speciallaws;

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2. Managerial employees, if they meet all of the following conditions:

2.1 Their primary duty is to manage the establishment in which they are employed or of a department orsubdivision thereof;

2.2 They customarily and regularly direct the work of two or more employees therein;

2.3 They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to hiring, firing, and promotion, or any other change of status of other employees are given particular weight.

3. Officers or members of a managerial staff, if they perform the following duties and responsibilities:

3.1 Primarily perform work directly related to management policies of their employer;

3.2 Customarily and regularly exercise discretion and independent judgment;

3.3 (a) Regularly and directly assist a proprietor or managerial employee in the management of the establishment or subdivision thereof in which he or she is employed; or (b) execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; or (c)

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execute, under general supervision, specialassignments and tasks; and

3.4 Do not devote more than twenty percent (20%) of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs 3.1, 3.2, and 3.3 above.

4. Househelpers and persons in the personal service of another;

5. Workers who are paid by results, including those who are paid on piece rate, takay, pakyaw, or task basis, and other nontime work, if their output rates are in accordance with the standards prescribed in the regulations, or where such rates have been fixed by the Secretary of Labor and Employment;

6. Field personnel, if they regularly perform their duties away from the principal or branch office or place of business of the employer and whose actual hours of work in the field cannotbe determined with reasonable certainty.

Teachers, piece workers, takay, seasonal workers, seafarer

Employees Rule

Private  school teachers77

1. RH  during  semestral vacations

- Not  entitled to HP

77 Faculty members of colleges and universities

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2. RH  during  Christmas vacation

- Shall be paid HP

Paid by:

1. results or

2. output78

HP  shall  not  be  less  than  his average daily earnings  for  the last  7  actual  work  days precedingthe RH; Provided:  HP  shall  not  be  less than  thestatutory  minimum wage rate.

Seasonal Workers May not be paid the required HP during  offseason  wherethey  are not at work.

Workers  having  noregular work days

Shall be entitled to HP

Seafarers Shall be entitled to HP

5. Leaves

a. Service Incentive Leave79

Every employee who has rendered at least one (1) year of service80 shall be entitled to a yearly service incentive leave of five (5) days with pay.

78 Piece work payment79 It is 5 days leave with pay for every employee who has rendered at least 1 yr. of service. It iscommutable to its money equivalent if not used or exhausted at the end of year.80 Service for not less than 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless theworking days in the establishment as a matter of practice or policy, or that provided in theemployment contract is less than 12 months, in which case said period shall be considered as one year. (Sec. 3, Rule V, Book III, IRR)

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b. Maternity Leave81

A covered female employee who has paid at least three (3) monthly maternity contributions in the twelve (12)-month period preceding the semester of her childbirth, abortion or miscarriage and who is currently employed shall be paid a daily maternity benefit equivalent to one hundred percent (100%) of her present basic salary, allowances and other benefits or the cash equivalent of such benefits for 60 days or 78 days in case of caesarian delivery.

c. Paternity Leave82

Granted to a married male employee in the private and public sector allowing him not to report for work for seven (7) days but continues to earn the compensation therefor.

d. Parental Leave83

81

Maternity benefits, like other benefits granted by the SSS, are granted to employees in lieu of wages and, therefore, may not be included in computing the employee’s 13th-month pay for the calendar year. Voluntary or self-employed members are not entitled to the maternity benefit because to be entitled thereto, corresponding maternity contributions should be paid by employers. Voluntary or self-employed members have no employers so they do not have maternity contributions.82 Conditions to entitlement: The male employee is 1. Legally married to, and is cohabiting with the woman who delivers the baby 2. Employee of private or public sector; 3. Only for the first 4 deliveries (include childbirth or any miscarriage) of legitimate spouse with whom he is cohabiting;and 4.Notify his employer of the pregnancy of his legitimate spouse and the expected date of suchdelivery The paternity benefits may be enjoyed by the qualified employee before, during or after the delivery by his wife. However, the total number of days shall not exceed seven (7) working days for each delivery. This benefit shall be availed of not later than sixty (60) days after the date of said deliver It is not convertible to cash if not availed of.83 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. This leave privilege is an additional leave benefit which is separate and distinct from any other leave benefits provided under existing laws or agreements. Conditions to entitlement: 1. He or she must fall among those referred to as solo parent 2. Must have the actual and physical custody of the child or children 3. Must have at least rendered service of one (1) year to his or her employer 4. He or she must remain a solo parent

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Leave benefits of not more than seven (7) working days every year granted to a solo parent84 employee to enable him/her to perform parental duties and responsibilities where physical presence is required.

e. Leaves for victims of violence against women85

A  female  employee  who  is  a  victim  of  violence86 is  entitled  to  a paid  leave of 10  days  in  addition  to  other  paid leaves, extendible when the necessity arises as specified in the protection order.87

f. Special Leave Benefit for Women88

84 Any individual who falls under any of the ff. categories: 1. A woman who gives birth as a result of rape and other crimes against chastity even without a final conviction of the offender, provided, That the mother keeps and raises the child; 2. Parent left solo or alone with the responsibility of parenthood due to: a. Death of spouse; b. Detention or service of sentence of spouse for a criminal conviction for at least 1 yr; c. Physical and/or mental incapacity of spouse d. Legal separation or de facto separation from spouse for at least 1 yr as long as he/she isentrusted with the custody of the children; e. Nullity or annulment of marriage as decreed by a court or by a church as long ashe/she is entrusted with the custody of the children; f. Abandonment of spouse for at least 1 yr; 3. Unmarried mother/father who has preferred to keep and rear his or her child/childreninstead of: a. having others care for them or b. give them up to a welfare institution; 4. Any other person who solely provides: a. parental care and b. support to a child or children; 5. Any family member who assumes the responsibility of head of family as a result of the: a. death, b. abandonment, c. disappearance or d. prolonged absence of the parents or solo parent. A change in the status or circumstance of the parent claiming benefits under this Act, such that he/she is no longer left alone with the responsibility of parenthood, shall terminate his/her eligibility for these benefits. (Sec.3)85 under R.A. 926286 physical, sexual, or psychological87 Sec. 43, 1st par., ibid88 R.A. 9710 Conditions for Entitlement: 1. She has rendered at least six (6) months continuous aggregate employment service for the last twelve (12) months prior to surgery; 2. She has filed an application for special leave with her employer within a reasonable period of time from the expected date of surgery or within such period as may be provided by company rules and regulations or collective bargaining agreement; and 3. She has undergone surgery due to gynecological disorders as certified by a competent physician.

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Any female employee regardless of age and civil status shall be entitled to a special leave benefit under such terms and conditions provided herein.

The employee is entitled to special leave benefit of two (2) months with full pay based on her gross monthly compensation.

6. Service Charge

This is a charge  collected  by  hotels, restaurants  and  similar  establishments and  shall  be distributed at the rate of:    Covered Employees Management

85% 15%

Equally distributed among them

1. To  answer  for  losses  and breakages and

2. Distributed  to  employees  receiving more  thanP2000  a  month  at the  discretion  of  themanagement.

The  share  of  the employee  shall be distributed  and  paid to them not  less  than  once  every  2  weeks  or  twice  a month at intervals not exceeding 16 days. 

7. Thirteenth (13th) Month Pay

All rank-and-file employees are entitled to a 13th-month pay89

regardless of the amount of basic salary that they receive in a month,   if  their  employers  are  not  otherwise exempted from paying the 13th month pay.  Such  employees  are entitled  to  the  13th month  pay regardless of their designation or employment status, and irrespective of the method by which their

89 Forms: Christmas bonus; Midyear bonus; Profit sharing payments; and Other cash bonuses amounting to not less than1/12 of its basic salary

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wages are paid, provided that they have worked for at least one (1) month during a calendar year.90

6. Separation Pay

Separation pay is given to employees in instances covered by Articles 283 and 284 of the Labor Code of the Philippines. An employee’s entitlement to separation pay depends on the reason or ground for the termination of his or her services. An employee may be terminated for just cause,91 and other similar causes as enumerated under Article 282 of the Labor Code and, generally, may not be entitled to separation pay. On the other hand, where the termination is for authorized causes, separation pay is due.

7. Retirement Pay

1. Eligibility

Employees shall be retired upon reaching the age of sixty (60) years or more but not beyond sixty-five (65) years old [and have served the establishment for at least five (5) years].

2. Amount

The minimum retirement pay shall be equivalent to one-half (1/2) month salary92 for every year of service, a fraction of at least six (6) months being considered as one (1) whole year.

3. Retirement benefits of workers paid by results

90 Revised Guidelines on the Implementation of the 13 Month Pay Law It is in the nature of wages. This is a year-end pay established by P.D. 851 which is equivalent to 1/12 of the total basic salary earned by an employee within the calendar year, which is demandable as a legal obligation. It may be given anytime but not later than December 24. Exclusion/Exemptions from coverage: 1. Government employees 2. Household helpers 3. Employees paid purely on commission basis 4. Employees already receiving 13th month pay91 i.e., gross and habitual neglect of duty, fraud, or commission of a crime92 For the purpose of computing retirement pay, "one-half month salary" shall include all of the following: 1. Fifteen (15) days salary based on the latest salary rate; 2. Cash equivalent of five (5) days of service incentive leave; 3. One-twelfth (1/12) of the thirteenth-month pay. (1/12 x 365/12 = .083 x 30.41 = 2.5) Thus, “one-half month salary” is equivalent to 22.5 days (Capitol Wireless, Inc. vs. Honorable Secretary Ma. Nieves R. Confesor, G. R. No. 117174, November 13, 1996).

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The basis for the determination of the salary for fifteen (15) days shall be their average daily salary (ADS). The ADS is derived by dividing the total salary or earnings for the last twelve months reckoned from the date of retirement by the number of actual working days in that particular period, provided that the determination of rates of payment by results are in accordance with the established regulations.

4. Retirement benefits of part-time workers

“One month salary” for every year of service under RA 7641 after satisfying the following conditions precedent for optional retirement:

(a) there is no retirement plan between the employer and the employee and (b) the employee should have reached the age of sixty (60) years, and should have rendered at least five (5) years of service with the employer.

Applying the foregoing principle, the components of retirement benefit of part-time workers may likewise be computed at least in proportion to the salary and related benefits due them.

5. Taxability

RA No. 8424 extended the income tax exemption of retirement benefits under RA 4917 to those received by officials and employees in the private sector under the provisions of RA No. 7641. R.A. No. 7641 requires employers, in the absence of retirement plan or agreement, to pay employees upon reaching the age of sixty years or more, but not beyond sixty-five years and who have rendered at least five (5) years in the said establishment, a retirement benefit equivalent to at least one-half month for every year of service. Compared to RA No. 4917, RA No. 7641 specifies a shorter length of service but longer age requirement.

The BIR held in various rulings that the tax exemption privilege granted to retirement benefits under RA No. 7641 can only be invoked when there is no existing retirement plan, CBA, or other applicable employment contract in the establishment. In the presence of a retirement plan duly approved by the BIR, CBA, or applicable employment contract providing for retirement benefits, the same shall be followed provided that it shall not be less than those provided under RA No. 7641.

8. Women Workers

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a. Provisions against discrimination

It shall be unlawful for any employer to discriminate against any woman employee with respect to terms and conditions of employment solely on account of her sex.

The following are acts of discrimination:

a. Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a female employees as against a male employee, for work of equal value; and

b. Favoring a male employee over a female employee with respect to promotion, training opportunities, study and scholarship grants solely on account of their sexes. Criminal liability for the willful commission of any unlawful act as provided in this Article or any violation of the rules and regulations issued pursuant to Section 2 hereof shall be penalized as provided in Articles 288 and 289 of this Code: Provided, That the institution of any criminal action under this provision shall not bar the aggrieved employee from filing an entirely separate and distinct action for money claims, which may include claims for damages and other affirmative reliefs. The actions hereby authorized shall proceed independently of each other.93

b. Stipulation against marriage

Whether as a condition of employment or continuation of employment

1. A woman employee shall not get married, or

2. 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.94

c. Prohibited Acts

93 Art. 13594 Art. 136

A woman worker may not be dismissed on the ground of dishonesty for having written ‘’single” on the space for civil status on the application sheet, contrary to the fact that she was married. (PT&T Co. v. NLRC, G.R. No. 118978, May 23, 1997)

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1. Denying any woman employee the benefits provided for by law or to discharge any woman employed by him for the purpose of preventing her from enjoying any of the benefits provided for by law.

2. Discharging such woman on account of her pregnancy, or while on leave or in confinement due to her pregnancy; 

3. Discharging or refusing the admission of such woman upon returning to her work for fear that she may again be pregnant.95

d. Anti-Sexual Harassment Act96

The Act punishes sexual harassment if the same is:

1. work-related; or2. Education-related; or3. training-related.97

Sexual  harassment  may  be  committed by an:             

1. Employee  2. Manager 3. Supervisor 4. Agent of the employer 5. Teacher, instructor, professor  6. Coach, trainer, or  7.Any other person who, having authority, influence or mo

ral ascendancy over another in a work or training or education environment: 

a. Demands b. Requests or  

95 Art. 13796 R.A. 7877 - declares sexual harassment unlawful in the employment, education or training environment.97 Sec. 3, id.

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c. Requires any sexual favor from the other, regardless of whether the demand,request or requirement for submission is accepted by the object of R.A.8777.98

9. Employment of Minors99

General Rule Exceptions

1. No  person  under  18  years  of  age  willbe allowed to be employed in an undertakingwhich is hazardous  or  deleterious  in nature.

2. No  employer  shall  discriminate  against any person  in  respect  to  terms  and conditions of employment on account of his age.

A. Below 15 yrs. Old

1. The  child100  works  directly  under  thesole  responsibility  of  his  parents,  orguardians  who  employ  members  ofhis  family,  subject  to  the  followingconditions:

a. Employment  does  not  98 ibid. It is not necessary that the demand, request or requirement of a sexual favor be articulated in a categorical manner. It may be discerned, with equal certitude, from the acts of the offender. Likewise, it is not essential that the demand request or requirement be made as a condition for continued employment or for promotion to a higher position. It is enough that the respondent’s acts result in creating an intimidating, hostile or offensive environment for the employee. (Domingo v. Rayala, G.R. No. 155831, Feb. 18, 2008)99 R.A. 7678, R.A. 9231100 The term "child" shall apply to all persons under eighteen (18) years of age.

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endangerthe  child’s  safety,  health  and morals

b. Employment  does  not  impair the child’s normal dev’t.

c. Employer‐parent  or  legal  guardianprovides  the  child  with  the primary and/or  secondary education  prescribedby  the Dept. of Education

2. The  child’s  employment  or participation in  public  entertainmentor  information  through  cinema, theater,radio  or  television  is essential provided:

a. Employment  contract  is concludedby the child’s parents or legal guardian,

b. With  the  express  agreement  ofthe  child  concerned,  if  possible, and

c. The  approval  of  DOLE,  thefollowing  must  be  compliedwith:

i. The  employment  does  notinvolve  advertisement  or commercialspromoting alcoholic  beverages,intoxicating drinks,  tobacco and  its  by‐products  or exhibiting violence

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ii. there  is  a  written  contractapproved by DOLE

iii. the  conditions  provided  inthe first instance are met.

B. Above  15  but  below  18  –  may  beemployed in any non‐hazardous work

C. Above 18 – no prohibition

1. A child below fifteen (15) years of age101 may be allowed to work for not more than twenty (20) hours a week: Provided, That the work shall not be more than four (4) hours at any given day;

2. A child fifteen (15) years of age but below eighteen (18) shall not be allowed to work for more than eight (8) hours a day, and in no case beyond forty (40) hours a week;

101Children below fifteen (15) years of age shall not be employed except: (1) When a child works directly under the sole responsibility of his/her parents or legal guardian and where only members of his/her family are employed: Provided, however, That his/her employment neither endangers his/her life, safety, health, and morals, nor impairs his/her normal development: Provided, further, That the parent or legal guardian shall provide the said child with the prescribed primary and/or secondary education; or (2) Where a child's employment or participation in public entertainment or information through cinema, theater, radio, television or other forms of media is essential: Provided, That the employment contract is concluded by the child's parents or legal guardian, with the express agreement of the child concerned, if possible, and the approval of the Department of Labor and Employment: Provided, further, That the following requirements in all instances are strictly complied with: (a) The employer shall ensure the protection, health, safety, morals and normal development of the child; (b) The employer shall institute measures to prevent the child's exploitation or discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time; and (c) The employer shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skills acquisition of the child. In the above exceptional cases where any such child may be employed, the employer shall first secure, before engaging such child, a work permit from the Department of Labor and Employment which shall ensure observance of the above requirements. (Section 12, R.A. No. 7610, as amended by R. A. No. 9231, December 19, 2003).

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3. No child below fifteen (15) years of age shall be allowed to work between eight o'clock in the evening and six o'clock in the morning of the following day and no child fifteen (15) years of age but below eighteen (18) shall be allowed to work between ten o'clock in the evening and six o'clock in the morning of the following day.102

4. No child shall be employed as a model in any advertisement directly or indirectly promoting alcoholic beverages, intoxicating drinks, tobacco and its byproducts, gambling or any form of violence or pornography.103

10. Househelpers104

A  househelper  is  synonymous  to  domestic servant  

a.   Any person, male or female;  b.   Who  renders  services  in  and  about  the 

employers home and;  c. Services  are  usually  necessary  or  desirable for  the  maintenance  and 

enjoyment thereof, and   d. Ministers  exclusively  to  the  personal comfort  and enjoyment of  employers’ family.105 

Househelpers shall be paid the following minimum wage rates;

(1) Eight hundred pesos (P800.00) a month for househelpers in Manila, Quezon, Pasay and Caloocan cities and municipalities of Makati, San Juan, Mandaluyong, Muntinlupa, Navotas, Malabon, Parañaque, Las Piñas, Pasig, Marikina, Valenzuela, Taguig and Pateros in Metro Manila and in highly urbanized cities;

(2) Six hundred fifty pesos (P650.00) a month for those in other chartered cities and first class municipalities; and

102Sec. 12-A, R.A. No. 7610, as amended by R. A. No. 9231, December 19, 2003.103 Sec. 14, R.A. No. 7610, as amended by R. A. No. 9231, December 19, 2003.104 Labor Code as amended by R.A. No. 7655, an Act Increasing the Minimum Wage of Househelpers105 The children and relatives of a househelper who live under the employers’ roof and who sharethe accommodations provided for the househelper by the employer shall not be deemed as househelpers if/they are not otherwise engaged as such and are not required to perform any substantial household work. (Sec 3, Rule XII, Book III, IRR) The definition of a househelper cannot be interpreted to include househelp or laundry women working in staffhouses of a company. (APEX Mining CO., Inc., v. NLRC, G.R. No. 94951, April 22, 1991)

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(3) Five hundred fifty pesos (P550.00) a month for those in other municipalities;

Provided, that the employees shall review the employment contracts of their househelpers every three (3) years with the end in view of improving the terms and conditions thereof.

Provided, further, that those househelpers who are receiving at least One thousand pesos (P1,000.00) shall be covered by the Social Security System (SSS) and be entitled to all the benefits provided thereunder.106

Household Service under the Civil Code:

Household service shall always be reasonably compensated. Any stipulation that household service is without compensation shall be void. Such compensation shall be in addition to the house helper's lodging, food, and medical attendance.107

The head of the family shall furnish, free of charge, to the house helper, suitable and sanitary quarters as well as adequate food and medical attendance.108

If the house helper is under the age of eighteen years, the head of the family shall give an opportunity to the house helper for at least elementary education. The cost of such education shall be a part of the house helper's compensation, unless there is a stipulation to the contrary.109

No contract for household service shall last for more than two years. However, such contract may be renewed from year to year.110

The house helper's clothes shall be subject to stipulation. However, any contract for household service shall be void if thereby the house helper cannot afford to acquire suitable

106 R.A. 7655, Sec. 1, amending Art. 143 of the Labor Code107 Art. 1689108 Art. 1690109 Art. 1691110 Art. 1692

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clothing.111

The head of the family shall treat the house helper in a just and humane manner. In no case shall physical violence be used upon the house helper.112

House helpers shall not be required to work more than ten hours a day. Every house helper shall be allowed four days' vacation each month, with pay.113

In case of death of the house helper, the head of the family shall bear the funeral expenses if the house helper has no relatives in the place where the head of the family lives, with sufficient means therefor.114

If the period for household service is fixed neither the head of the family nor the house helper may terminate the contract before the expiration of the term, except for a just cause. If the house helper is unjustly dismissed, he shall be paid the compensation already earned plus that for fifteen days by way of indemnity. If the house helper leaves without justifiable reason, he shall forfeit any salary due him and unpaid, for not exceeding fifteen days.115

If the duration of the household service is not determined either by stipulation or by the nature of the service, the head of the family or the house helper may give notice to put an end to the service relation, according to the following rules:

(1) If the compensation is paid by the day, notice may be given on any day that the service shall end at the close of the following day;

(2) If the compensation is paid by the week, notice may be given, at the latest on the first business day of the week, that the service shall be terminated at the end of the seventh day from the beginning of the week;

(3) If the compensation is paid by the month, notice may be given, at the latest, on the fifth day of the month, that the service shall cease at the end of the month.116

111 Art. 1693112 Art. 1694113 Art. 1695114 Art. 1696115 Art. 1697

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  Upon the extinguishment of the service relation, the house helper may demand from the head of the family a written statement on the nature and duration of the service and the efficiency and conduct of the house helper.117

11. Employment of Homeworkers

Homeworkers refer to workers who perform in or about their homes any processing of goods or materials in whole or in part which have been furnished directly or indirectly by an employer or contractor, and thereafter to be returned to the latter. The term does not include those situated within the premises or compound of an employer or contractor, where work performed therein is under the active or personal supervision by or for the latter.

The employer is required to pay the homeworker or the contractor or sub-contractor for the work performed immediately upon receipt of the finished goods or articles. When payment is made to a contractor or sub-contractor, the homeworker shall be paid within one (1) week after the contractor or subcontractor has collected the goods or articles from the homeworker.118

Whenever an employer contracts with a contractor in this regard, the employer should provide in such contract that the employees or homeworkers of the contractor and the latter’s subcontractor shall be paid in accordance with these regulations. In the event that such contractor or subcontractor fails to pay the wages or earnings of his employees or homeworkers, such employee shall be jointly and severally liable with the contractor or subcontractor to the workers of the latter, to the extent that the work is performed under such contract, in the same manner as if the employees or homeworkers were directly engaged by the employer.119

No deductions shall me made from the homeworker’s earnings for the value of materials lost, destroyed, soiled or otherwise damaged unless the following conditions are met:

116 Art. 1698117 Art. 1699118 Domestic or household service” means service in the employer’s home which is usually necessary or desirable for the maintenance and enjoyment thereof and includes ministering to the personal comfort and convenience of the members of the employer’s household, including services of family drivers (Art. 141, 2nd par.) Rule XIII, Book III, Secs. 3 & 4, OR119 ibid, Sec. 8, OR.

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a) the homeworker concerned is clearly shown to be responsible for the loss or damage:

b) the employee is given reasonable opportunity to show cause why deductions should not be made:

c) the amount of such deductions is fair and reasonable, and shall not exceed the actual loss or damage; and

d) the deduction is made at such rate that the amount deducted does not exceed 20 percent of the homeworker’s earnings in a week.120

12. Apprentices and Learners

Apprentice - a worker who is covered by a written apprenticeship agreement with an employer.

Learner - 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.

Learnership Apprenticeship Nature

Training on the job in semi-skilled and otherindustrial occupation or trades which are non‐apprenticeable and which may belearned thru practical training on the job in a relatively short period of time.

Training in trades which are apprenticeable,that is,  practical  training  on  the  jobsupplemented by related theoretical instruction for more than 3 months.

Duration of training

With commitment to employ the learner as a regular employer if he desires uponcompletion of learnership.

No commitment to hire

In case of pretermination of contract

120 Rule XIII, Sec. 5, OR. This is to ensure the homeworker’s right to due process.

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Considered a regular employee if pre-termination occurs after 2 months of training and the dismissal is without fault of thelearner.

Worker not considered as regular employee.

Coverage

Semi‐skilled/Industrial occupations

Highly technical industries and only inindustrial occupation

There is a list of learnable trades by TESDA

No list

Written agreement

Require Learnership Agreement Requires Apprenticeship Agreement

M. Persons with disability121

1. Definition

One whose earning capacity is impaired by age, physical or mental deficiency; or injury.

2. Rights of persons with disability

1. Equal opportunity for employment 2. Sheltered  employment122  3. Apprenticeship 4. Vocational rehabilitation123

5. Vocational guidance and counseling. 

121 R.A. No. 7277, as amended by R.A. No. 9442122 The gov’t shall endeavor to provide them work if suitable employment for disabled persons cannot be found through open employment123 means to develop the skills and potentials of disabled workers and enable them to compete in the labor market

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3. Prohibition on discrimination against persons with disability

No  disable  person  shall  be  denied  access  to opportunities  for  suitable  employment.  A  qualified disabled  employee  shall  be  subject  to  the  same terms  and conditions  of  employment  and  the  same compensation,  privileges,  benefits,  fringe  benefits, incentives  or  allowances  as  a  qualified  able  bodied person. Five  percent  (5%)  of  all casual emergency and contractual positions in the Departments of  Social Welfare  and Development;  Health;  Education, Culture  and  Sports;  and  other  government agencies,  office or  corporations  engaged  in  social development  shall  be  reserved  for  disabled persons.124 

4. Incentives for employers

Entitled to an additional deduction, from their gross income, equivalent to twenty-five percent (25%) of the total amount paid as salaries and wages to disabled persons: Provided, however, That such entities present proof as certified by the Department of Labor and Employment that disabled persons are under their employ: Provided, further, That the disabled employee is accredited with the Department of Labor and Employment and the Department of Health as to his disability, skills and qualifications.

Private entities that improve or modify their physical facilities in order to provide reasonable accommodation for disabled persons shall also be entitled to an additional deduction from their net taxable income, equivalent to fifty percent (50%) of the direct costs of the improvements or modifications. This does not apply to improvements or modifications of facilities required under Batas Pambansa Bilang 344.125

124 The Magna Carta strictly prohibits discrimination against a qualified disabled person, even as the law gives incentives to employers of disabled persons.125 Sec. 8, R.A. 7277

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D. TERMINATION OF EMPLOYMENT

1. Employer-Employee Relationship

a. Four-fold Test

a. Selection and engagement of employee; b. Payment of wages; c. Power of dismissal; andd. Power of control126

b. Kinds of Employment

1. Probationary Employment

Employment where  the  employee,  upon  his engagement:  

1. Is made to undergo a trial period  

2. During which the employer determines his fitness to qualify for regular

employment,  

3. Based  on  reasonable  standards  made known  to  the  employee  at  the  time  of engagement.127

 

126 the most important test127 Sec 6, Rule I, Book VI, IRR The services of an employee who has been engaged on probationary basis may be terminated only for just cause, when he fails to qualify as a regular employee in accordance with reasonable standards prescribed by the employer.

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General Rule Probationary employment shall not exceed six months from the date the employee started working.

Exceptions 1. when it is covered by an apprenticeship agreement stipulating a longer period; or

2. when the parties to an employment contract agree otherwise, such as when the same is established by company policy or when the same is required by the nature of the work to be performed by the employee

2. Regular employment128

Where:

i. the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer.

ii. the employee has rendered at least one (1) year of service, whether such service is continuous or broken, with respect to the activity in which he is employed and his employment shall continue while such activity exists.

iii. the employee is allowed to work after a probationary period.

(4) Project employment

Where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee.

128 Regularization is not a management prerogative; it is the nature of employment that determines it.It is a mandate of the law. (PAL v. Pascua, G.R. No. 143258, Aug. 15, 2003) Regular employment does not mean permanent employment. A probationary employee becomes a regular employee after 6 months. A regular employee may only be terminated for just/authorized causes. The practice of entering into employment contracts which would prevent the workers from becoming regular should be struck down as contrary to public policy and morals. (Universal Robina Corp. v. Catapang, G.R. No. 164736, Oct. 14, 2005)

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(5) Seasonal employment

Where the work or service to be performed by the employee is seasonal in nature and the employment is for the duration of the season.

(4) Casual employment

Where an employee is engaged to perform a job, work or service which is merely incidental to the business of the employer, and such job, work or service is for a definite period made known to the employee at the time of engagement.

(5) Fixed term employment

Not limited to those by nature, seasonal or for specific projects with pre-determined dates of completion provided under the Labor Code. They also include contracts to which the parties by free choice, have assigned a specific date of termination

c. Job contracting

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.

a. Article 106 to Article 109 of the Labor Code

Whenever an employer enters into a contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or

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restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code.

There is "labor-only" contracting where 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 the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. 129

The provisions of the immediately preceding article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project.130

An employer or indirect employer may require the contractor or subcontractor to furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due the employees should the contractor or subcontractor, as the case may be, fail to pay the same. 131

The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers.132

b. Department Order No. 18-A133

c. Department Circular No. 01-12134

d. Effects of Labor-Only Contracting

129 Art. 106130 Art. 107131 Art. 108132 Art. 109133 See Reference134 Ibid.

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i. The subcontractor will be treated as the agent or intermediary of the principal. Since the act of an agent is the act of the principal, representations made by the subcontractor to the employees will bind the principal.

ii. The principal will become the employer as if it directly employed the workers engaged to undertake the subcontracted job or service. It will be responsible to them for all their entitlements and benefits under the labor laws.

iii. The principal and the subcontractor will be solidarily treated as the employer.

iv. The employees will become employees of the principal.135

If the labor-only contracting activity is undertaken by a legitimate labor organization, a petition for cancellation of union registration may be filed against it.136

e. Trilateral relationship in job contracting

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.137 

2. Dismissal from Employment

(1) Just Causes

135 No. 13, DOLE Primer on Contracting and Subcontracting, Effects of Department Order No. 3, Series of 2001.136 Ibid.137 Sec. 3 (m), Department Order No. 18-A

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(a) Serious misconduct138 or willful disobedience139

(b) Gross140 and habitual neglect141 of duties(c) Fraud142 or willful breach of trust143 (d) Abandonment of employment144

(e) Termination of employment pursuant to a Union Security Clause145

(f) Totality of infractions doctrine146

(2) Authorized Causes138 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. Grave and aggravated character and not merely trivial or unimportant; Must be in connection with the work of the employee.139 Elements: Assailed conduct must have been willful or intentional, willfulness characterized by a wrongful, perverse mental attitude It must be established that the said orders, regulations or instructions are Reasonable and lawful Sufficiently known to the employee In connection with his duties140Implies a want or absence of or failure to exercise slight care of diligence or the entire absence of care. It evinces thoughtless disregard of consequences without exerting any effort to avoid them. However, such neglect must not only be gross but habitual in character (Judy Phils. v. NLRC, G.R. No. 111934, April 29, 1998)141 Implies repeated failure to perform one’s duties over a period of time, depending upon the circumstance142 Commission of fraud by an employee against the employer will necessarily result in the latter's loss of trust and confidence in the former. Proof of loss is not required under this ground.143 loss of trust and confidence In order to constitute a just cause for dismissal, the act complained of should be “work-related” and must show that the employee concerned is unfit to continue to work for the employer. Requisites 1. The loss of confidence must not be simulated; 2. It should not be used as a subterfuge for causes which are illegal, improper or unjustified; 3. It may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; 4. It must be genuine, not a mere afterthought, to justify earlier action taken in bad faith; and 5. The employee involved holds a position of trust and confidence.144 The failure to report for work or absence without valid or justifiable reason and a clear intention to sever the employer-employee relationship145 In the case of Alabang Country Club, Inc. vs. NLRC, [G.R. No. 170287, Feb. 14, 2008], the Supreme Court declared that in terminating the employment of an employee by enforcing the union security clause, the employer needs only to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the union’s decision to expel the employee from the union. The foregoing requisites constitute just cause for terminating an employee based on the CBA’s union security provision. Employer should still afford due process to the expelled unionists. Although the Supreme Court has ruled that union security clauses embodied in the CBA may be validly enforced and that dismissals pursuant thereto may likewise be valid, this does not erode the fundamental requirement of due process.

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(a) Redundancy,147 Retrenchment and Closure

Redundancy Retrenchment Closure

Exists where the services of an employee are in excess of what would reasonably be demanded by the actual requirements of the enterprise.

A position is redundant when it is superfluous.

An employer has no legal obligation to keep on the payroll employees more than the number needed for the operation of the business.

Cutting of expenses and includes the reduction of personnel. It is a management prerogative, a means to protect and preserve the employer’s viability and ensure his survival. To be an authorized cause it must be affected in good faith and for the retrenchment, which is after all a drastic recourse with serious consequences for the livelihood of the employee’s or otherwise laid‐off.

The  reversal  of fortuneof  the  employer wherebythere  is  a complete cessationof business operationsto prevent further financialdrain upon  an  employerwho cannot  pay  anymorehis employees  sincebusiness  has already stopped.

(b) Disease or illness148

i. The employee suffers from a disease;

The reason behind the enforcement of union security clauses which is the sanctity and inviolability of contracts, cannot override one’s right to due process.146 Cognate offenses rule Dismissal due to repetition of related offenses, even if already punished with less punitive sanctions. It is the totality, not the compartmentalization of company infractions that the employee has committed, which justifies the penalty of dismissal (MERALCO v. NLRC, G.R. No. 114129, Oct. 24, 1996).147 A position is redundant when it is superfluous. An employer has no legal obligation to keep on the payroll employees more than the number needed for the operation of the business.148 Burden of proof rests on the employer. Company physician is not a “competent public health authority.” Medical certificate issued by company doctor is not sufficient

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ii. His  continued  employment  is  prohibited by  law  or  prejudicial  to  his  health or  to the  health  of  his  co‐employees.149

iii. With  a  certification  by  competent  public health  authority that the disease is incurable within  6  months  despite  due medication  and  treatment.150

 3. Due Process

a) Twin-notice requirement

A  written  notice  should  be  served  to  the  employee  specifying  the  ground/s for termination  and  giving  the  said  employee reasonable opportunity to explain.151    A  written  notice  of  termination  - If  termination  is  the  decision  of  the  employer, it should be served on the employerindicating that upon due considerations of all  the circumstance, grounds have been established  to  justify his  termination, at least one month prior to his termination.152 

b) Hearing; meaning of opportunity to be heard

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

"Ample opportunity to be heard" means any meaningful opportunity153 given to the employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way.

The "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or conference" requirement in the implementing rules and regulations.

149 Sec.8, Rule I, Book VI, IRR150 Solis v. NLRC, G.R. No. 116175, Oct. 28,1996151 This first written notice must apprise the employee that his termination is being considered due to the acts stated in the notice. (Phil. Pizza Inc. v. Bungabong, G.R. No. 154315, May 9, 2005)152 Single notice of termination does not comply with the requirements of the law. (Aldeguer & Co., Inc. vs. Honeyline Tomboc)G.R. No. 147633, July 28, 2008)153 verbal or written

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c. Reliefs for illegal dismissal

(1) Reinstatement 154

a. Pending appeal

The decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement.155

b. Separation pay156 in lieu of Reinstatement

May be viewed in 4 ways:

1. In lieu of reinstatement in illegal dismissal cases, where Ee is ordered reinstated but reinstatement is not feasible.

2. As Er’s statutory obligation in cases of legal termination due to authorized causes under Art. 283 and 284157 of the LC.

3. As financial assistance, as an act of social justice and even in case of legal dismissal under Art. 282158 of the LC.

4. As employment benefit granted in CBA or company policy.159

154 restoration to a state from which one has been removed155 Art. 223, 3rd par., LC156 Reinstatement can no longer be effected in view of the long passage of time or because of the realities of the situation. It is the amount that an employee receives at the time of his severance from the service and is designed to provide the employee with the wherewithal during the period that he is looking for another employment. Separation pay is payable to an employee whose services are validly terminated for authorized causes (Article 283 and 284). An employee dismissed for a just cause is not entitled to separation pay (Article 282). Exception: Where the employee is dismissed for causes other than serious misconduct or those reflecting on his moral character, separation pay may be allowed as a measure of social justice157 see Reference158 Ibid.159 Poquiz, 2005

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(2) Backwages160

a. Computation

Following several decisions of the Supreme Court, the following benefits, in addition to the basic salary, should be taken into account in the computation of backwages, if applicable:

1. Fringe benefits or their monetary equivalent.161 2. Increases in compensation and other benefits, including 13th

month pay162

3. Transportation and emergency allowances163 4. Holiday pay, vacation and sick leaves and service incentive

leaves164 5. Just share in the service charges165 6. Gasoline, car and representation allowances166

160 There is a resultant strained relations or irretrievable estrangements between the employer and the employee where the employee concerned occupies a position of trust and confidence and it is likely that if reinstated an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee. A form of relief that restores the income of the employee that was lost by reason of the unlawful dismissal. Full Backwages have to be paid by an employer as part of the price or penalty he has to pay for illegally dismissing his employee. Other benefits must be paid in addition to backwages. The computation should be based on the wage rate level at the time of the illegal dismissal and not in accordance with the latest, current wage level of the employee’s position.161 Acesite Corporation vs. NLRC, G. R. No. 152308, Jan. 26, 200162 Traders House, Inc. vs. NLRC, G. R. No. 120677, Dec. 21, 1998, 300 SCRA 360163 Santos vs. NLRC, G. R. No. 76721, Sept. 21, 1987; Soriano vs. NLRC, G. R. No. L-75510, Oct. 27, 1987..164 St. Louise College of Tuguegarao vs. NLRC, G. R. No. 74214, Aug. 31, 1989; On service incentive leave, see Fernandez vs. NLRC, G. R. No. 105892, Jan. 28, 1998, 285 SCRA 149..165 Maranaw Hotels & Resort Corporation vs. NLRC, G. R. No. 123880, Feb. 23, 1999).166 Consolidated Rural Bank [Cagayan Valley], Inc. vs. NLRC, G. R. No. 123810, Jan. 20, 1999, 301 SCRA

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7. Any other allowances and benefits or their monetary equivalent.167

The computation of said benefits should be up to the date of reinstatement as provided under Article 279168 of the Labor Code.169

b. Limited backwages

An illegally dismissed employee is entitled to reinstatement to his previous position without loss of seniority rights and backwages for a period of three (3) years without qualification and deduction.170 If reinstatement is no longer feasible, the employer may be ordered to pay in addition to backwages, separation pay as provided by law."

(d) Preventive Suspension171

During pendency of the investigation, if the worker’s continued employment poses a serious and imminent threat to life and property of employer, or of his co-employees.172

Can be extended provided the employer pays the suspended employee his wages and other benefits.

(e) Constructive dismissal

An involuntary resignation resorted to when continued employment becomes impossible, unreasonable, or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disclaim by an employer becomes unbearable to an employee.173

223.167 Blue DairyCorporation vs. NLRC, G. R. No. 129843, Sept. 14, 1999.168 See Reference169 Fernandez vs. NLRC, supra.170 Mercury Drug Rule171 Rule pending appeal: Preventive suspension is punitive already; hence, if exonerated, the employee must be reinstated and compensated for the period of his suspension Suspension beyond 30 days ripens to dismissal172 Max period: 30 days173 Leonardo v. NLRC, G.R. No.125303, June 16, 2000 An employee is deemed constructively dismissed where his status is changed from regular to casual.

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E. MANAGEMENT PREROGATIVE174

1. Discipline175

The employer’s right to conduct the affairs of his business, according to its own discretion and judgment, includes the prerogative to instill discipline in its employees and to impose penalties, including dismissal, upon erring employees. This is a management prerogative where the free will of management to conduct its own affairs to achieve its purpose takes form.  The only criterion to guide the exercise of its management prerogative is that the policies, rules and regulations on work-related activities of the employees must always be fair and reasonable and the corresponding

174 Limitations in its exercise i. Management's prerogatives must be without abuse of discretion (San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25 [1989]) ii. It must be duly established that the prerogative being invoked is clearly a managerial one. iii. It is circumscribed by limitations found in law, a collective bargaining agreement, or the general principles of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]). So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold them (San Miguel Brewery Sales Force Union (PTGWO) vs. Ople case)175 subject to reasonable regulation by the State in the exercise of its police power. (Associated Labor Unions-TUCP vs. NLRC, G. R. No. 120450, Feb. 10, 1999; PLDT vs. NLRC, 276 SCRA 1 [1997]).

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penalties, when prescribed, commensurate to the offense involved and to the degree of the infraction.176

Instilling discipline among its employees is a basic management right and prerogative. Management may lawfully impose reasonable penalties such as dismissal upon an employee who transgresses the company rules and regulations.177

2. Transfer of employees178

The Supreme Court has recognized and upheld the prerogative of management to transfer an employee from one office to another within the business establishment, provided there is no demotion in rank or diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. This is a privilege inherent in the employer’s right to control and manage its enterprise effectively.179

3. Productivity standard

The practice of a company in laying off workers because they failed to make the work quota has been recognized in this jurisdiction.180

Failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the allotted reasonable period, or by producing unsatisfactory results. This management prerogative of requiring

176 St. Michael’s Institute vs. Santos, G. R. No. 145280, Dec. 4, 2001; Consolidated Food Corporation vs. NRLC, 315 SCRA 129, 139 [1999]177 Deles, Jr. vs. NLRC, G. R. No. 121348, March 9, 2000.178 Jurisprudential guidelines:(a) a transfer is a movement from one position to another of equivalent rank, level or salary without break in the service or a lateral movement from one position to another of equivalent rank or salary;(b) the employer has the inherent right to transfer or reassign an employee for legitimate business purposes;(c) a transfer becomes unlawful where it is motivated by discrimination or bad faith or is effected as a form of punishment or is a demotion without sufficient cause;(d) the employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee179 Mendoza vs. Rural Bank of Lucban, G. R. No. 155421, July 7, 2004; Benguet Electric Cooperative vs. Fianza, G. R. No. 158606, March 9, 2004.180 Philippine American Embroideries vs. Embroidery and Garment Workers, 26 SCRA 634, 639.

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standards may be availed of so long as they are exercised in good faith for the advancement of the employer's interest.181

4. Grant of Bonus

By definition, a "bonus" is a gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right182. It is something given in addition to what is ordinarily received by or strictly due the recipient. The granting of a bonus is basically a management prerogative which cannot be forced upon the employer who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee's basic salaries or wages,183 especially so if it is incapable of doing so.

5. Change of working hours

Well-settled is the rule that management retains the prerogative, whenever exigencies of the service so require, to change the working hours of its employees.184

The employer has the prerogative to control all aspects of employment in his business organization such as 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 workers.185

6. Rules on Marriage between employees of competitor-employers

The rule is that unless the employer can prove that the reasonable demands of the business require a distinction based on marital status and there is no better available or acceptable policy which would better accomplish the business purpose, an employer may not discriminate against an employee based on the identity of the employee’s spouse.186 This is known as the bona fide occupational qualification exception.

181 Buiser v. Leogardo, Jr., 131 SCRA 151, 158 (1984).182 Traders Royal Bank v. NLRC, 189 SCRA 274 [1990] citing Aragon v. Cebu Portland Cement Co., 61 O.G. 4567.183 Kamaya Point Hotel v. NLRC, 177 SCRA 160 (1989).184 Sime Darby Pilipinas, Inc. vs. NLRC, G.R. No. 119205, 15 April 1998, 289 SCRA 86185 Consolidated Food Corporation, et al. vs. NLRC, et al., G. R. No. 118647, Sept. 23, 1999.186 see Muller v. BP Exploration (Alaska) Inc., 923 P.2d 783, 73 Fair Empl.Prac.Cas. (BNA) 579, 69

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Since the finding of a bona fide occupational qualification justifies an employer’s no-spouse rule, the exception is interpreted strictly and narrowly by these state courts. There must be a compelling business necessity for which no alternative exists other than the discriminatory practice.187 To justify a bona fide occupational qualification, the employer must prove two factors: (1) that the employment qualification is reasonably related to the essential operation of the job involved; and, (2) that there is a factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job.188

The concept of a bona fide occupational qualification is not foreign in our jurisdiction. The Supreme Court has employed the standard of reasonableness of the company policy which is parallel to the bona fide occupational qualification requirement. In the case of Duncan Association of Detailman-PTGWO and Pedro Tecson v. Glaxo Wellcome Philippines, Inc.,189 it passed on the validity of the policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor company. It held that Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors. It considered the prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s employees reasonable under the circumstances because relationships of that nature might compromise the interests of Glaxo. In laying down the assailed company policy, it recognized that Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures

7. Post-employment ban

Whether such an agreement would be held valid and binding will depend on its reasonableness in relation to the parties concerned, as well as to its public policy.

187 A. Giattina, Challenging No-Spouse Employment Policies As Marital Status Discrimination: A Balancing Approach, 33 Wayne L. Rev. 1111 (Spring, 1987).188 Richard G. Flood and Kelly A. Cahill, The River Bend Decision and How It Affects Municipalities’ Personnel Rule and Regulations, Illinois Municipal Review, June 1993, p. 7189 G.R. No. 162994, September 17, 2004

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F. SOCIAL AND WELFARE LEGISLATION

1. SSS Law190

a. Coverage

i. Compulsory upon all employees not over sixty (60) years of age and theiremployers. In the case of domestic helpers, their monthly income shall not be less than One thousand pesos (P1,000.00) a month.191

ii. 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.

iii. Filipinos recruited by foreign-based employers for employment abroad may be covered by the SSS on voluntary basis.

b. Exclusions from coverage192

i. Agricultural labor when performed by a share or leasehold tenant or worker who is not paid any regular daily wage or base pay and who does not work for an uninterrupted period of at least six months in a year;193

ii. Domestic service in a private home;

iii. Employment purely casual and not for the purposes of occupation or business of the employer;

iv. Service performed by an individual in the employ of his son, daughter, or spouse, and service performed by a child under the age of twenty-one years in the employ of his parents;

190 R.A. 8282191 Also compulsory upon such self-employed persons as may be determined by the Commission under such rules and regulations as it may prescribe, including but not limited to the following: 1.All/self-employed/professionals; 2. Partners and single proprietors of businesses; 3.Actors and actresses, directors, scriptwriters and news correspondents who do not fall within thedefinition of the term "employee" 4.Professional/athletes,/coaches,/trainers/and/jockeys;/and 5.Individual farmers and fishermen. Unless otherwise specified in the law, all provisions of the SSS LAW applicable to covered employees shall also be192 Sec. 8(j) of Social Security Act (As amended by Sec. 5, P.D. No. 735, S-1975).193 As amended by Sec. 4, R.A. 2658

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v. Service performed on or in connection with an alien vessel by an employee if he is employed when such vessel is outside the Philippines;

vi. Service performed in the employ of the Philippine Government or an instrumentality or agency thereof;

vii. Service performed in the employ of a foreign government or international organization, or their wholly-owned instrumentality: Provided, however, That his exemption notwithstanding, any foreign government, international organization, or their wholly-owned instrumentality employing workers in the Philippines or employing Filipinos outside of 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: Provided, further, That the terms of such agreement shall conform with the provisions of this Act on coverage and amount of payment of contributions and benefits: Provided, finally, That the provisions of this Act shall be supplementary to any such agreement194.

viii. Such other services performed by temporary employees who may be excluded by regulation of the Commission. Employees of bona fide independent contractors shall not be deemed employees of the employer engaging the services of said contractors195.

c. Benefits

i. Monthly pension; ii. Dependents’pension ;iii. Retirement benefits; iv. Death benefits; v. Permanent disability benefits; vi. Funeral benefit; vii. Sickness benefit; viii. Maternity leave benefit.

d. Beneficiaries

i. The dependent spouse until he or she remarries

ii. The dependent legitimate, legitimated or legallyadopted, and illegitimate children, who shall be the primary beneficiaries of the

194 As amended by Sec. 1, R.A. 3839; Sec. 3, R.A. 4857; and Sec. 5, P.D. No. 735, S-1975195 As amended by Sec. 5, P.D. No. 735, S-1975

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member.

iii. In their absence, the dependent parents who shall be the secondary beneficiaries of the member.

iv. In the absence of all the foregoing, any other person designated by the member as his/her secondary beneficiary.

2. GSIS Law196

a. Coverage

Compulsory for all employees receiving compensation who have not reached thecompulsory retirement age, irrespective of employment status.

b. Exclusions from coverage

i. 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

ii. Contractuals who have no employer and employee relationship with the agencies they serve.

c. Benefits

i. Monthly Pension; ii. Separation Benefits; iii. Unemployment or Involuntary Separation Benefits; iv.Retirement_Benefits;v. Permanent Disability Benefits; vi. Temporary Total Disability Benefits; vii. Survivorship Benefits; viii.Funeral_Benefits;ix. Compulsory Life Insurance Benefit; x. Optional 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 the member and/or his dependents.

d. Beneficiaries

196 R.A. 8291

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i. Primary beneficiaries- The legal dependent spouse until he/she remarries and the dependent children;

ii. Secondary beneficiaries- The dependent parents and, subject to the restrictions on dependent children, the legitimate descendants

3. Limited Portability Law197

Under this law, an employee who has worked in both the private and public sectors and has been covered by both the Government Service Insurance System (GSIS) and the Social Security System (SSS) shall have his creditable services or contributions in both Systems credited to his service or contribution record in each of the Systems, which shall be summed up for purposes of old age, disability, survivorship and other benefits in case the covered member does not qualify for such benefits in either or both Systems without the totalization.

4. Employee’s Compensation198 – Coverage and when compensable

Coverage in the State Insurance Fund shall be compulsory upon all employers and their employees not over sixty years of age: Provided, That an employee who is over sixty years of age and paying contributions to qualify for the retirement or life insurance benefit administered by the System shall be subject to compulsory coverage: Provided, further, That in case of an employee who is both covered by the SSS and GSIS, only his employment under the GSIS shall be considered for purposes of his coverage.

The State Insurance Fund shall be liable for compensation to the employee or his dependents, except when the disability or death was occasioned by the employee's intoxication, willful intention to injure or kill himself or another, notorious negligence, or otherwise provided under this Title.

197 R.A. 7699198 P.D. No. 626

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G. LABOR RELATIONS LAW

1. Right to Self-organization199

The right to join, assist or form labor organizations for collective bargaining and to engage in lawful concerted activities for the same purpose or for their mutual aid and protection.

Any employee200, whether employed for a definite period or not, shall beginning on the first day of his/her service, be eligible for membership in any labor organization.201

199 Employees of government corporations established under the Corporation Code (without original charters) shall have the right to organize and to bargain collectively with their respective employers. All other employees in the civil service shall have the right to form associations for purposes not contrary to law. General rule: All aliens, natural or juridical, 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 international labor centers. Exception: Alien employees with valid working permits issued by the DOLE may exercise the right to self-organization and join or assist labor organizations for purposes of collective bargaining, if they are nationals of a country which grants the same or similar rights to Filipino workers, as certified by the Department of Foreign Affairs.200 Three categories of employees:a. Managerial;b. Supervisory; andc. Rank-and-file.201 ibid.; See also Art. 277; No. 10, Basic Amendments under R. A. 6715, prepared by Members of the

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a. Who may unionize for purposes of collective bargaining

All persons employed in:

CommercialIndustrial ) enterprisesAgricultural ) whether operating for

profit or notCharitableReligious ) InstitutionsEducational

Likewise:

Ambulant workersIntermittent workersRural workersWorkers with no definite employersItinerant workersSelf-employed

Specific Coverage:

Supervisory employees202 Terminated employees who are contesting their

termination Aliens with valid work permit Government employees New employees Iglesia ni Kristo members Security guards

(1) Who cannot form, join or assist labor organizations

As a general rule, only top and middle managers are not allowed to join any labor organization.

Senate-House Conference Committee of Congress.202 Not eligible for membership in a labor union of the rank-and-file employees but may form, join or assist separate labor unions of their own. A union whose membership is a mixture of supervisors and rank-and-file is not and cannot become a legitimate labor organization A local supervisor’s union should not be allowed to affiliate with the national federation of union of rank-and-file employees where that federation actively participates in union activity in the company and the rank-and-file employees are directly under the authority of the supervisory employees

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First-line managers203 are allowed to join a supervisory union but not the union of rank-and-file employees or vice-versa.  In fact, the law does not allow mixed membership of both supervisory and rank-and-file employees in one union.  A union with such mixed membership is no union at all.  It cannot exercise the rights of a legitimate labor organization.

2. Bargaining unit

The group or cluster of jobs or positions that supports the labor organization which is applying for registration, within the employer’s establishment

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 or geographical grouping within such employer unit.

(a) Test to determine the constituency of an appropriate bargaining unit

Any of the following four (4) modes may be used:

a.  Substantial mutual interests principle or community or mutuality of interests rule.

The employees sought to be represented by the collective bargaining agent must have substantial mutual interests in terms of employment and working conditions as evinced by the type of work they perform. It is characterized by similarity of employment status, same duties and responsibilities and substantially similar compensation and working conditions204.

b. Globe doctrine205

The determining factor is the desire of the workers themselves.  Consequently, a certification election should be held separately to choose which representative union will be chosen by the workers206.

203 or supervisory employees204 San Miguel Corporation Employees Union-PTGWO vs. Confesor, G. R. No. 111262, Sept. 19, 1996, 262 SCRA 81, 98205 will of the employees206 See also Mechanical Department Labor Union sa Philippine National Railways vs. CIR, G. R. No. L-28223, Aug. 30, 1968.

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c. Collective bargaining history. 

Enunciates that the prior collective bargaining history and affinity of the employees should be considered in determining the appropriate bargaining unit. However, the Supreme Court has categorically ruled that the existence of a prior collective bargaining history is neither decisive nor conclusive in the determination of what constitutes an appropriate bargaining unit.207

d.   Employment status. 

The determination of appropriate bargaining unit based thereon is considered an acceptable mode.208

(b) Voluntary Recognition209

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 an appropriate bargaining unit, for purposes of collective bargaining.  This is allowed when there is only one union operating in the bargaining unit.

(1) Requirements

1. Submission to DOLE of a joint statement210 attesting to the voluntary recognition.

207 San Miguel Corporation vs. Laguesma, G. R. No. 100485, Sept. 21, 1994; National Association of Free Trade Unions vs. Mainit Lumber Development Company Workers Union, G. R. No. 79526, Dec. 21, 1990)208 Rothenberg on Labor Relations, pp. 482-510.209 Effect of voluntary recognition:From the time of recording, the union shall enjoy the rights, privileges and obligations of an exclusive bargaining representative Voluntary acknowledgement can ONLY take place when there is no dispute as to what union counts in its members a majority of the employees.Voluntary recognition is possible only in an unorganized establishment. In an organized setting, the employer cannot voluntarily recognize any new union because Art. 256, LCP requires the employer to continue recognizing and dealing with the incumbent union if it has not been properly replaced by another union.210 by the employer and union president

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2. The joint- statement211 must be published for 15 consecutive days in 2 conspicuous places in the establishment or CBU where the union seeks to operate

c. Certification election

It refers to the process of determining through secret ballot the sole and exclusive bargaining representative of the employees in an appropriate bargaining unit, for purposes of collective bargaining.

(a) In an unorganized establishment

Certification election shall be "automatically" conducted upon the filing of a petition for certification election by a legitimate labor organization. However, it must be emphasized that the petitioner-union should have a valid certificate of registration; otherwise, it has no legal personality to file the petition for certification election.

(b) In an organized establishment

The following are the requisites for certification election in organized establishments.

1. A petition questioning the majority status of the incumbent bargaining agent is filed before the DOLE within the 60-day freedom period;

2.  Such petition is verified; and

3.  The petition is supported by the written consent of at least twenty-five percent (25%) of all employees in the bargaining unit

d. Run-off election

It refers to an election between the labor unions receiving the two (2) highest number of votes when a certification election which provides for three (3) or more choices results in no choice receiving a majority of the valid votes cast; provided, that the total number of

211 The joint-statement should state the approximate number of employees in the CBU, accompanied by the names and signatures of at least a majority of the members of the CBU supporting the voluntary recognition; The joint-statement should state that there are no other LLO’s operating within the CBU The joint-statement must be submitted to the Regional Office within 30 days from date of recognition

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votes for all contending unions is at least fifty percent (50%) of the number of votes cast.

(a) Requirements

1. A valid election took place because majority of the CBU members voted

2. The election presented at least three choices3. Not one of the choices obtained the majority of the valid

votes4. The total votes of the unions is at least 50% of the votes cast5. There is no unresolved challenge of voter or election protest

e. Re-run election

Takes place:

1.  If one choice receives a plurality of the vote and the remaining choices results in a tie; or 

2. If all choices received the same number of votes.  

In both instances, the no union is also a choice. 

f. Consent election212

It refers to the election voluntarily agreed upon by the parties, with or without the intervention of the Department of Labor and Employment, to determine the issue of majority representation of all the workers in the appropriate collective bargaining unit.

In hearing a petition for a CE, the Med-Arbiter may persuade the contending unions to agree to a consent election. If the unions do agree, the Med-Arbiter shall enter in the minutes of the hearing the fact of the agreement and then cause the immediate scheduling of the pre-election conference.

212 The holding of a valid consent election, upon the intercession of the med-arbiter, bars the holding of a CE for one year. Where no petition for a CE had been filed but the parties themselves have agreed to hold consent election, the results of the election will NOT bar another CE, UNLESS the winning union had been extended voluntary recognition by the employer Consent election is a separate and distinct process and has nothing to do with the import and effect of a certification election. Neither does it shorten the terms of an existing CBA nor entitle the participants thereof to immediately renegotiate an existing CBA although it does not preclude the workers from exercising their right to choose their sole and exclusive bargaining representative after the expiration of the 60-day freedom period.

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g. Affiliation and disaffiliation of the local union from the mother union

(1) Substitutionary doctrine213

This principle states that even during the effectivity of a collective bargaining agreement executed between employer and employees thru their agent, the employees can change said agent but the contract continues to bind then up to its expiration date. They may bargain however for the shortening of said expiration date.

In formulating the "substitutionary" doctrine, the only consideration involved is the employees' interest in the existing bargaining agreement. The agent's interest never entered the picture.

In fact, the justification for said doctrine was:

... That the majority of the employees, as an entity under the statute, is the true party in interest to the contract, holding rights through the agency of the union representative. Thus, any exclusive interest claimed by the agent is defeasible at the will of the principal.214

h. Union dues and special assessments

Union dues Special assessments

Regular  monthly  contributions  paid  by the members  to  the  union  in  exchange for the benefits  given  to  them  by  the  CBA and  to  finance the activities of the union in  representing the union.

These  are  assessments  for  any  purpose  or  object other  than  those  expresslyprovided  by  the  labor organization’sconstitution and by‐laws.

213 Employees cannot revoke the validity of a validly executed CBA with their employer by the simple expedient of changing their collective bargaining agent The new agent must respect the subsisting CBA Employer cannot renege on the CBA, except to negotiate with the management for the shortening thereof Inapplicable to personal undertaking of deposed union; e.g. : no strike stipulation214 Benguet Consolidated Inc. vs. BCI Employees & W Union-PAFLU, 23 SCRA, 465, 471

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Requirements for validity

By obtaining the individual writtenauthorization duly signed by the employeewhich must specify:

1. Amount2. Purpose3. Beneficiary215

By written resolution approved by majority of all the members at the meeting called forthat purpose.216

i. Agency fees217

(a) Requisites for assessment

i. The employee is part of the bargaining unit ii. He is not a member of the union iii. He partook of the benefits of the CBA 

2. Right to Collective Bargaining218

a. Duty to bargain collectively

215 Ibid.,(o)216 Art.241217 It is an amount equivalent to union dues, which a non-union member pays to the union becausehe benefits from the CBA negotiated by the union.218 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. Legal principles applicable to Collective Bargaining Agreement: 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.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.

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The performance of the mutual obligation of the employer and the sole bargaining representative to meet promptly, expeditiously, & in good faith & agree on Wages, Hours of Work & Other terms & conditions of employment (WHO).

1) When there is absence of a CBA

It is the performance of a mutual obligation:

1. To meet and convene promptly and expeditiously in good faith (GF)

2. For the purpose of negotiating an agreement with respect to wages, hours of work and all other terms and conditions of employment

3. Including proposals for adjusting any grievances or questions arising under such agreement; and

4. To execute a contract incorporating such agreements if requested by either party.219

2) When there is a CBA

1. When there is a CBA the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime.

2. Either party can serve a written notice to terminate or modify the agreement at least 60 days prior to its expiration date.

3. It shall be the duty of both parties to keepthe status quo and to continue in full force and effect the terms and conditions

b. Collective Bargaining Agreement (CBA)

1) Mandatory provisions of CBA

a. Wages & Hours of Workb. Other terms & conditionsc. Other modes of compensationd. Work shiftse. Vacation & holidays

219 Art. 252

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f. Bonusesg. Pensions & retirement plansh. Seniorityi. Transfersj. Lay-offsk. Workloadl. Work rules & regulationsm. Rent of company housesn. Union security agreements

An employer does not commit ULP by insisting to the point of a bargaining impasse, on the inclusion in a contract of a management prerogative clause, or a union discipline clause, or a no strike clause.

(1) Grievance Procedure

The internal rules of procedure established by the parties in their CBA with voluntary arbitration as the terminal step, which are intended to resolve all issues arising from the implementation and interpretation of their CBA.  It refers to the system of grievance settlement at the plant level as provided in the collective bargaining agreement.  It 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 machinery220 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 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 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.

220 The mechanism for the adjustment and resolution of grievances arising from the interpretation or implementation of a CBA and those arising from the interpretation or enforcement of company personnel policies. It is part of the continuing process of collective bargaining.

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(2) Voluntary Arbitration

Refers to the mode of settling labor-management disputes by which the parties select a competent, trained and impartial third person who shall decide on the merits of the case and whose decision is final and executor.221

(3) No Strike-No Lockout Clause

The “no strike no  lockout”  clause  in  the  CBA applies only to  economic strikes.  It does  not  apply to ULP strikes.222 

Such no-strike provision in the CBA only bars strikes which are economic in nature, but not strikes grounded on unfair labor practices.223

The Supreme Court consistently ruled in a long line of cases that a strike is illegal if staged in violation of the “No Strike/No Lockout Clause” in the CBA stating that a strike, which is in violation of the terms of the CBA, is illegal, especially when such terms provide for conclusive arbitration clause.224

(4) Labor Management Council

The  Department  shall  promote  the  formation  of  labor‐management  councils  in  organized  and unorganized  establishments  to  enable  the workers to  participate  in  policy  and  decision‐making processes  in  the  establishment,  insofar  as  said processes  will  directly  affect their  rights,  benefits and  welfare,  except  those  which  are  covered  by collective bargaining  agreements  or  are  traditional areas of bargaining.  

The  Department  shall  promote  other  labor management cooperation schemes and, upon its own initiative or upon the request of both  parties, may  assist  in  the formulation  and  development  of programs  and  projects on  productivity, occupational

221 Section 1 [d], Rule II, NCMB Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings [Oct. 15, 2004].222 Hence, if the strike is founded on an unfair labor practice of the employer, a strike declared by the union cannot be considered a violation of the no strike clause. (Master Iron Labor Union v. NLRC, G.R. No. 92009, Feb. 17, 1993)223 MSMG-UWP vs. Ramos, 326 SCRA 428 (2000), citing Master Iron Labor Union vs. NLRC 219 SCRA 47 [1993]).224 Filcon Manufacturing Corporation vs. Lakas Manggagawa sa Filcon-Lakas Manggagawa Labor Center [LMF-LMLC], G. R. No. 150166, July 26, 2004.

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safety and health, improvement of quality of work life, product  quality improvement, and other similar schemes.225

b) Duration

(1) For economic provisions and(2) For non-economic provisions

Three (3) years after the execution of the CBA.

(3) Freedom period Sixty (60) days

3. Union Security

a) Union security clauses; closed shop, union shop, maintenance ofmembership shop, etc.

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.226

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

225 Sec. 1, Rule XXI, Book V, IRR226 does not have any retroactivity apply only to new hires Exceptions:a. 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).b. members of the rival union are not covered by such arrangement.

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continued employment.

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.

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.

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

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.227

227 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.

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b) Check-off; union dues, agency fees

Union Dues Agency Fees

Is deducted from members for the payment of union dues

Is deducted from non‐members of the bargaining agent (union) for the enjoyment of the benefits under the CBA

May not be deducted from the salaries of the union members without the written consent of the workers affected

May be deducted from the salary of the Ees without their written consent.

4. Unfair Labor Practice in Collective Bargaining

(a) Bargaining in bad faith

The good faith or bad faith is an inference to be drawn from the facts and is largely a  matter for the NLRC’s expertise. The charge of bad faith should  be  raised  while  the bargaining is in progress.228 

(b) Refusal to bargain

A union violates its duty to bargain collectively by entering  negotiations with  a fixedpurpose  of  not reaching an agreement or signing a contract. 

(c) Individual bargaining

It is an unfair labor practice for an employer operating under a collective bargaining agreement to negotiate or to attempt to 228 Instances: 1. Delay of negotiations 2. Imposing time limit on negotiations

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negotiate with his employees individually in connection with changes in the agreement.

The basis of the prohibition regarding individual bargaining with the strikers is that although the union is on strike, the employer is still under obligation to bargain with the union as the employees' bargaining representative.229

(d) Blue sky bargaining

It means making exaggerated or unreasonable proposals.230 (e) Surface bargaining

It means “going through the motions of negotiating” without any legal intent to reach an agreement.231

It  involves  the  question  of  whether  or not  the  employers  conduct demonstrates  an  unwillingness to  bargain  in  good  faith  or  is  merely  hard bargaining.232

Occurs  when  the  employer  constantly  changes  its position over the agreement. 

5. Unfair Labor Practice

(a)Nature of ULP

i. violate the constitutional right of workers and employees to self-organization;

ii. are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect

iii. disrupt industrial peace; and hinder the promotion of healthy and stable labor-management relations and mutual respect.233

229 Melo Photo Supply Corporation vs. National Labor Relations Board, 321 U.S. 332230 Arthur A. Sloane and Fred Witney, Labor Relations, 7th Edition 1991, p. 195 Whether or not the union is engaged in blue sky‐ bargaining is determined by the evidence presented bythe union as to its economic demands. Thus, if the union requires exaggerated or unreasonable economic demands, then it is guilty of ULP. (Standard Chartered Bank v. Confessor, G.R. No. 114974, June 16, 2004)231 Standard Chartered Bank Employees Union [NUBE] vs. Confesor, G. R. No. 114974, June 16, 2004).232 Ibid.233 labor-management relations unstable

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(b) ULP of Employers234

i. To interfere with, restrain or coerce employees in the exercise of their right to self-organization;

ii. To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs;235

iii. To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization;236

iv. 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;237

v. 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 from 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 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 (o) of this Code shall not apply to the non-members of the recognized collective bargaining agent;

vi. To dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code;234 Only the officers and agents of corporations, associations or partnerships who have actually participated in, authorized or ratified unfair labor practices shall be held criminally liable.235 a.k.a. yellow dog contract;236The act of an employer in having work or certain services or functions being performed by union members contracted out is not generally an unfair labor practice act. It is only when the contracting out of a job, work or service being performed by union members will interfere with, restrain or coerce employees in the exercise of their right to self-organization that it shall be unlawful and shall constitute unfair labor practice (Art. 248 [c], LC; Sec. 6 [f], Department Order No. 18-02, Series of 2002, [Feb. 21, 2002).237 a.k.a. company union

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vii. To violate the duty to bargain collectively as prescribed by this Code;

viii. 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

ix. To violate a collective bargaining agreement.238

(c) ULP of Labor Organizations

i. 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;

ii. To cause or attempt to cause an employer to discriminate against an employee, including discrimination against an employee with respect to whom membership in such organization has been denied or to terminate an employee on any ground other than the usual terms and conditions under which membership or continuation of membership is made available to other members;

iii. To violate the duty, or refuse to bargain collectively with the employer, provided it is the representative of the employees;

ix. 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;239

v. To ask for or accept negotiation or attorney’s fees from employers as part of the settlement of any issue in collective bargaining or any other dispute; or

vi. To violate a collective bargaining agreement.

3. Right to Peaceful Concerted Activities

a. Forms of Concerted Activities

Strike240 Lockout241 Picketing242

238 but only if gross in character239 a.k.a. feather-bedding240 Summary of principles governing strikes:

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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 slowdowns, mass leaves, sit downs, attempts to damage, destroy or sabotage plant equipment and facilities and similar activities.

Any temporary refusal of an employer to furnish work as a result of an industrial or labor dispute.

The right of workers to peacefully march to and fro before an establishment involved in a labor dispute generally accompanied by the carrying and display of signs, placards and banners intended to inform the public about the dispute.

  b. Who may declare a strike or lockout?

1.Any  certified  or  duly  recognized bargaining  representative  may  declare  a strikein  cases  of  bargaining  deadlock and  unfair  labor  practice.   Likewise, the employer may  declare  a  lockout  in  the same cases. 

1. A strike or lockout is illegal if any of the legal requisites (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 in grievance machinery are not exhausted. 4. A strike or lockout is illegal if unlawful means were employed or prohibited acts or practices were committed (e.g., Use of force, violence, threats, coercion, etc.; Barricades, blockades and obstructions of ingress to [entrance] or egress from [exit] the company premises). 5. A strike or lockout is illegal if the notice of strike or notice of lockout is already converted into a preventive mediation case. (See further discussion below). 6. A strike or lockout is illegal if staged in violation of the “No-Strike, No-Lockout” clause in the collective bargaining agreement. 7. A strike or lockout is illegal if staged in violation of a 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 or to compel the employer to recognize the union or the so-called “Union-Recognition Strike”) 10. The local union and not the federation is liable to pay damages in case of illegal strike.241 Grounds for Lockout

1. Collective bargaining deadlock2. ULP act of a union

242 or peaceful picketing

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2.  In the absence  of  a  certified  or  duly recognized  bargaining  representative, any legitimate  labor  organization  in  the establishment  may  declare  a  strike  but only  on  theground  of  unfair  labor practice.243

c. Requisites for a valid strike d. Requisites for a valid lockout

1. It  must  be  based  on  a  valid  and  factual ground;  

2. A  strike  or  lockout  NOTICE  shall  be  filed with  the  National  Conciliation and Mediation  Board  (NCMB)  at  least  15  days before  the  intended  date  of  the  strike or lockout  if  the  issues  raised  are  unfair labor  practices,  or  at  least  30  days before the intended  date  thereof  if  the issue involves bargaining deadlock.  

3.  In cases of dismissal from employment of union  officers  duly  elected  in accordance with the union constitution and bylaws, 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  after  the  strike  vote  is conducted  and  the  result  thereof submitted  to  the  Department  of  Labor and Employment. 

4. A  strike must be  approved  by a majority vote  of  the members of the Union and  a lockout  must  be  approved  by  a  majority vote  of  the  members  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. 

5. A  strike  or  lockout  vote  shall  be  reported  to  the  NCMB DOLE  Regional Branch  at least 7 days before the intended strike or lock-out subject to the cooling‐off period. 

6. In the event the result of thestrike/lockout ballot is filed within the cooling-off period, the 7day requirement shall be counted from the day following the expiration of the  cooling‐off period.244  

243 Sec. 2, Rule XIII Book V, Omnibus Rules Implementing The Labor Code, as amended244 NSFW vs. Ovejera, G.R. No. 59743, May 31, 1982

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In  case  of   dismissal  from  employment  of union officers which may constitute union busting,  the  time  requirement  for  the filing  of  the  Notice  of  Strike  shall  be dispensed  with  but  the  strike  vote requirement,  being  mandatory  in character,  shall  “inevery  case”  be complied with. 

7. The dispute must not be the subject of an assumption  of  jurisdiction  by  the President  or  the  Secretary  of  Labor  and Employment,  a  certification  for compulsory arbitration,  or  submission  to compulsory  or  voluntary  arbitration  nor  a subject  of  a pending  case   involving  the same grounds for the strike or lockout. 

e. Requisites for lawful picketing

No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer’s premises for lawful purposes, or obstruct public thoroughfares.245

f. Assumption of jurisdiction by the Secretary of Labor or Certification of the Labor dispute to the NLRC for compulsory arbitration

1. On intended or impending strike or lockout - automatically enjoined even if a Motion for Reconsideration is filed.

2. On actual strike or lockout - strikers or locked out employees should immediately return to work and employer should readmit them back.

3. On cases filed or may be filed - All shall be subsumed/absorbed by the assumed or certified case except when the order specified otherwise.  The parties to the case should inform the DOLE Secretary of pendency thereof.

g. Nature of Assumption Order or Certification Order

The DOLE Secretary may assume jurisdiction over a labor dispute, or certify it to the NLRC for compulsory arbitration, if, in his opinion, it may cause or likely to cause a strike or lockout in an industry indispensable to the national interest.246

h. Effect of defiance of Assumption or Certification Orders245 Art. 264 (e), as amended246 The President may also exercise the power to assume jurisdiction over a labor dispute

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A strike that is undertaken after the issuance by the Secretary of Labor and Employment of an assumption or certification order becomes a prohibited activity and thus illegal, pursuant to the second paragraph of Article 264247 of the Labor Code. The union officers and members, as a result, are deemed to have lost their employment status for having knowingly participated in an illegal strike. Stated differently, from the moment a worker defies a return-to-work order, he is deemed to have abandoned his job. The loss of employment results from the striking employees’ own act - an act which is illegal, an act in violation of the law and in defiance of authority.248 

i. Illegal Strike

(1) Liability of union officers

Only the union officers during the strike are liable.

The penalty of dismissal could be imposed only on union officers serving and acting as such during the period of illegal strike249.

As a necessary implication, if employees acted as union officers after said strike, they may not be held liable and, therefore, could not be terminated.250

(2) Liability of ordinary workers

The mere declaration of the illegality of strike would result in the termination of employment of union officers. They are deemed to have lost their employment status.  This adverse consequence does not apply to ordinary union members except when they participated in the commission of illegal acts in the course of the strike, in which case, they shall be deemed to have also lost their employment status. 

(1)Liability of employer

In case of non-compliance by the employer with the return-to-work order issued in connection with the assumption/certification of the labor dispute, he may be held liable to pay backwages, damages and other positive or affirmative reliefs, even criminal prosecution against him.251

247 See Reference248 Philippine Airlines, Inc. vs. Brillantes, G. R. No. 119360, Oct. 10, 1997249Lapanday Workers Union vs. NLRC, 248 SCRA 95, 106.250CCBPI Postmix Workers Union vs. NLRC, G. R. No. 114521, Nov. 27, 1998251 Art. 263[g; Sec. 4, Rule IX, Rules of Procedure of the NLRC, as amended by NLRC Resolution No. 01-02,

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Employers who refuse to re-admit returning workers may be

liable, upon filing of proper petition for the payment of wages and other benefits, from the date of actual refusal until the workers are re-admitted.252

(3) Waiver of illegality of strike

When  an  employer  accedes  to  the  peaceful settlement  brokered  by  the  NLRC  by  agreeing  to accept  all  employees  who  had  not  yet  returned  to work,  it  waives  the  issue  of  the  illegality  of  the strike.253   

j. Injunctions

(1) Requisites for Labor Injunctions

No temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity.

Exceptions:

1. When  prohibited  or  unlawful  acts  are being  or  about  to  be  committed

that will cause  grave  or  irreparable  damage  to  the complaining party.254

2. On the ground of national interest 

3. The  SLE  or  the  NLRC  may  seek  the assistance of law enforcement agencies

to ensure  compliance  with  this  provision  as well  as  with  such  orders  as  he  may  issue to enforce the same.255

(2) "Innocent Bystander Rule"

The innocent by stander must show:  

Series of 2002).252 No. 24, Guidelines Governing Labor Relations253 Reformist Union v. NLRC, G.R. No. 120482,Jan. 27, 1997254 Art. 218[e]255 Art. 263[g]

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1. Compliance  with  the  grounds  specified  in Rule 58 of the Rules of Court, and 

2. That  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.256

H. PROCEDURE AND JURISDICTION

1. Labor Arbiter

a. Jurisdiction257

  1) versus Regional Director

Labor Arbiter Regional Director

Exclusive and  original  jurisdiction to  hear  and decide the following cases258 

Has jurisdiction over claims for recovery of wages, simple money claims and other benefits,

256 MSF Tire & Rubber v. CA, G.R. 128632, Aug. 5, 1999257 The jurisdiction is original and exclusive in nature. Labor Arbiters have no appellate jurisdiction.258 Including the following cases: 1. Wage distortion cases only in unorganized establishments. In organized establishments, jurisdiction is vested with Voluntary Arbitrators. 2. All monetary claims of Overseas Filipino Workers arising from employer- employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment, including claims for

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involving all workers:

1. ULP cases

2. Termination disputes

3. If  accompanied  with  a  claimfor reinstatement,  those  that  workers  fileinvolving  wages,  rates  of  pay,  hours  of  work  and  other  terms  and  conditions  ofemployment

4. Claims for  actual,  moral,

exemplary  and other  forms  of  damages arising  from  employer‐employee relations

5. Cases arising from any violation  of  Art. 264,259  includingquestions involving the legality of strikesand lockouts;

6. Except claims  for  EmploymentCompensation,  Social  Security,  Philhealth and maternity benefits, all other claims arising from employer

provided that:

1. the claim must arise from employer-employee relationship;

2. the claimant does not seek reinstatement; and

3. the aggregate money claim of each employee does not exceed P5,000.00262

actual, moral, exemplary and other forms of damages. 3. Illegal dismissal cases of employees of cooperatives, but not members of cooperatives because they are not employees. 4. 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. Labor Arbiters have no jurisdiction over termination of corporate officers and stockholders which, under the law, is considered intra-corporate dispute. Labor Arbiters have no jurisdiction over labor cases involving entities immune from suit. Exception: when said entities perform proprietary activities (as distinguished from governmental functions).259 See Reference262 Art. 129

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employee  relations,Including those of persons in domestic orhousehold service, involving  an  amountexceeding P5000 regardless  of  whetheraccompanied with a claim for reinstatement.

7. Monetary  claims  of  overseas

contract workers arising from employer‐employee relations;260

8. Wage distortion disputes inunorganized establishments not voluntarily settled by the parties;261

9. Enforcement  of  compromise agreements when there is non-complianceby  any  of the  parties; and

10. Other cases as may be provided by law.

260 under the Migrant Worker’s Act of 1995, as amended by R.A. 10022261 pursuant to R.A. 6727

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b. Reinstatement pending appeal

The decision of the LA reinstating a dismissed or separated employee, shall be executory, even pending appeal:263

The employee shall either be:

i. Admitted back to work under the same terms and conditions prevailing prior to the dismissal or separation; or

ii. At the option of the employer, merely reinstated into the payroll.

c. Requirements to perfect appeal to NLRC264

The appeal is perfected if: 

i. Filed  within  the  reglementary  period provided in Sec. 1 of this Rules 

ii. Verified  by  the  appellant  himself  in accordance  with  Sec. 4, Rule 7 of the Rules of Court, as amended 

iii. In the form of a memorandum  of appeal  which  shall  state  the grounds relied upon and the arguments in support thereof, the  relief  prayed for, and with a statement of the date the appellant received the appealed decision, resolution or order 

263 The posting of a bond by the employer shall not stay the execution of reinstatement Even if the order of reinstatement of the LA is reversed on appeal, it is obligatory on the part ofthe employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. (Pfizer v. Velasco, G.R. No. 177467, March 9, 2011)Unless there is a restraining order, it is ministerial upon the LA to implement the order of reinstatement and it is mandatory on the employer to comply therewith. (Garcia v. PAL, G.R. No. 164856, Jan. 20, 2009)264 Appeal from the decision of the Labor Arbiter is brought by ordinary appeal to the NLRC within ten (10) calendar days from receipt by the party of the decision.

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iv. In  3  legibly  typewritten  or  printed copies 

v. Accompanied by 

(1)  proof of payment of  the  required  appeal  fee; (2)  posting  of  a  cash  or  surety  bond;  (3)  a certificate  of  non‐forum  shopping; and  (4)  proof  of  service  upon  the other parties. 

 Mere  notice  of  appeal  without 

complying with the other requisites aforestated shall not  stop  the  running  of  the  period  for perfecting an appeal. 

2. National Labor Relations Commission (NLRC)

a. Jurisdiction265

Exclusive Original Exclusive Appellate

1.   Injunction in ordinary labor disputes to enjoin or restrain any actual or threatened commission of any or all prohibited 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.

2. Injunction in strikes or lockouts under Article 264 of the Labor Code.

3. Certified  labor  disputes  causing  or  likely to cause a

1. All cases decided by the Labor Arbiters including contempt cases.

2. Cases decided by the DOLE Regional Directors or his duly authorized Hearing Officers266 involving recovery of wages, simple money claims and other benefits not exceeding P5,000 and not accompanied by claim for reinstatement.

265 Distinction between the jurisdiction of the Labor Arbiters and the NLRC. The NLRC has exclusive appellate jurisdiction on all cases decided by the Labor Arbiters. The NLRC does not have original jurisdiction on the cases over which Labor Arbiters have 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.266 under Art. 129

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strike or lockout in an industry indispensable to the national interest, certified to it by the Secretary of Labor and Employment for compulsory arbitration.

b. Effect of NLRC reversal of Labor Arbiter’s order of reinstatement

Even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court.

On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period.

In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive wages pending appeal upon reinstatement, which is immediately executory. Unless there is a restraining order, it is ministerial upon the Labor Arbiter to implement the order of reinstatement and it is mandatory on the employer to comply therewith.

c. Remedies

The employer is practically left with no effective contra-remedy that may forestall or stay the execution of a Labor Arbiter’s order for immediate reinstatement pending appeal. All that the employer has is to avail of any of the following options:

1. actual reinstatement of the employee to his work under the same terms and conditions prevailing prior to his dismissal or separation; or

2. reinstatement of the employee in the payroll of the company, without requiring him to report back to his work.267

267Art. 223; Zamboanga City Water District vs. Buat, 232 SCRA 587

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Failing to exercise any of the options, the employer can be compelled, under pain of contempt, to pay instead the salary of the employee. The employee should not be left without any remedy in case the employer unreasonably delays reinstatement. The unjustified refusal of the employer to reinstate an illegally dismissed employee entitles the employee to payment of his salaries.268 The entitlement of the dismissed employee to his salaries occasioned by the unjustified refusal of the employer to reinstate him becomes effective from the time the employer failed to reinstate him despite the issuance of a writ of execution.269

If despite several writs of execution, the employer still refuses to reinstate the employee, the remedy is not the grant of additional backwages to serve as damages but to file a motion to cite the employer for contempt.270

d. Certified cases

Signifies that the NLRC’s cases are certified by law and any cases which happened within the proceedings are considered final unless appeals are made.271

3. Bureau of Labor Relations (BLR) – Med Arbiters

a. Jurisdiction

The BLR has original and exclusive jurisdiction over the following:

1. “Inter-union disputes” or “representation 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.

268 Pioneer Texturizing Corporation vs. NLRC, 280 SCRA 806 [1997269 Roquero vs. Philippine Air Lines, Inc. case270 Christian Literature Crusade vs. NLRC, 171 SCRA 712, April 10, 1989; See also Industrial and Transport Equipment, Inc. vs. NLRC, G. R. No. 113592, Jan. 15, 1998271 en.wikipedia.org

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2. “Intra-union disputes” or “internal union disputes” which refer to disputes or grievances arising from any violation of 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 the interpretation or implementation of the CBA which are subject of grievance procedure and/or voluntary arbitration.

The BLR no longer handles “all labor management disputes;” rather its functions and jurisdiction are largely confined to:

1. Union matters 2. Collective bargaining registry and 3. Labor education

The BLR has appellate jurisdiction over decisions of the Regional Director in cases involving cancellations of certificates of registration of labor unions.

4. National Conciliation and Mediation Board (NCMB)

a. Nature of proceedings

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Non-litigious in nature. They are not governed by technical rules applicable to court or judicial proceedings, but they must, at all times, comply with the requirements of due process

b. Conciliation vs. Mediation

Conciliation Mediation

Conceived  of  as  a mild form of interventionby  a neutral third party

A  mild  intervention by  a  neutral  thirdparty

The conciliator‐Mediator,  relying  on hispersuasive expertise,  who  takes an  activerole  in assisting  parties  by trying  to  keepdisputants  talking, facilitating  other procedural  niceties, carrying  messages back  and  forth between  the  parties, and generallybeing  a good fellow who tries to  keep  thingscalm and forward‐looking in a tensesituation.

The conciliator-mediator,  whereby heStarts advising  the parties  or  offeringsolutions  or alternatives  to  the problems  with  the end  in  view  of assisting  themtowards  voluntarily reaching  their  ownmutually  acceptable settlement  of  thedispute.

It  is  the  process where a disinterested3rd  party  meets  with management  andlabor,  at  their request  or  otherwise,during  a  labor dispute  or  in collective bargaining conferences,  and  by cooling tempers,  aids in  reaching  an agreement.

It  is  when  a  3rd  party studies  each  side  of the  dispute  then makes  proposals  forthe  disputants  to consider.  The mediator  cannot make  an  award  nor render a decision.

b. Preventive Mediation

Refer  to  the  potential  labor  disputes  which are  the  subject  of  a  formal  or informal  request for  conciliation  and  mediation  assistance  sought by  either  or  both parties or

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upon the initiative of the NCMB to avoid the occurrence of actual labor disputes. 

 

5. DOLE Regional Directors

a. Jurisdiction272

6. DOLE Secretary

a. Visitorial and Enforcement Powers273

Visitorial Powers Enforcement Powers

1. Access  to  employer’s  records  andpremises at  any  time  of  the  day  or  night,whenever work is being undertaken therein

2. To copy from said records

3. Question  any  employee  and  investigateany  fact,  condition  or  matter 

1. Issue compliance orders

2. Issue  writs  of  execution  for  theenforcement  of  their  orders,  except  incases  where  the  employer  contests thefindings  of  the  labor  officer  and raiseissues  supported  by  documentary  proof

272 see 1. supra273 Visitorial and enforcement power by Secretary of Labor or duly authorized representative 1. Access to employer's records and premises 2. Right to copy records 3. Right to question any employee 4. Investigate any fact, condition or matter which may be necessary to 5. Order and administer, after due notice and hearing, compliance with the Labor Standards provisions 6. Issue writs of execution to the appropriate authority for enforcement of their orders 7. Order stoppage of work or suspension of operations when non-compliance with law and implementing regulations poses grave and imminent danger to the health and safety of workers in the workplace (only Secretary of Labor has this power) - Hearing within 24 hours - Employer liable for salaries during suspension of operations if found to have caused the violation - No TRO or Temporary/Permanent injunction may be issued by an inferior court over any case involving the enforcement orders issued

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which  maybe  necessary  to  determine  violations  orwhich  may  aid  in  the  enforcement  of  theLabor  Code  and  of  any  labor  law,  wageorder,  or  rules  and  regulation  issuedpursuant thereto.

which  were  not  considered  in  the  courseof inspection

3.Order  stoppage  of  work  or  suspension of operation  when  non‐compliance  with  the law or implementing rules and regulations poses  grave  and  imminent  danger  to health  and  safety  of workers  in  the workplace

b. Power to suspend effects of termination

The Secretary of the Department of Labor may suspend the effects of the termination pending resolution of the dispute in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom such dispute is pending that the termination may cause a serious labor dispute or is in implementation of a mass lay-off.274

c. Assumption of jurisdiction

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

274 Art. 277, last sentence

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law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same.275

d. Appellate jurisdiction

1. Orders issued by the duly authorized representative of the Secretary of Labor and Employment under Article 128276 may be appealed to the latter.

2. Denial of application for union registration or cancellation of union registration originally rendered by the Bureau of Labor Relations (BLR) may be appealed to the Secretary of Labor and Employment.277

3. Decisions of the Med-Arbiter in certification election cases are appealable to the DOLE Secretary.278

e. Voluntary arbitration powers

To prevent labor rows from escalating into full-blown strikes and work stoppages, the DOLE Secretary may refer pending labor disputes to voluntary arbitration as a mechanism to expeditiously and efficiently dispose the labor cases through its existing corps of accredited voluntary arbitrators (AVAs). Voluntary arbitration as a means of settling disputes avoids lengthy and expensive litigations that cause delays in the dispensation of labor justice and is effective as an alternative dispute settlement mechanism.

G. Grievance Machinery and Voluntary Arbitration

1. Subject matter of grievance

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.

2. Voluntary Arbitrator

275 Art. 263 (g), 1st par.276 Visitorial and Enforcement Power277 If originally rendered by the Regional Office, appeal should be made to the BLR.278 Art. 259 Decisions of Med-Arbiters in intra-union disputes are appealable to the BLR

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a) Jurisdiction

Original and exclusive jurisdiction over:

1. All unresolved grievances arising from the:

a. Implementation or interpretation of the CBAb. Interpretation or enforcement of company personnel policies

2. Wage distortion issues arising from the application of any wage orders in organized establishments

3. Those arising from interpretation and implementation of productivity incentive programs under R.A. 6971

4. Violations of CBA provisions which are not gross in character279 are no longer treated as ULP and shall be resolved as grievances under the CBA

5. Any other labor disputes upon agreement by the parties including ULP and bargaining deadlock.280

b) Procedure

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.281

279 Art. 262280 Art. 261281 Art. 262-A

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c) Remedies

Awards or decisions of voluntary arbitrator become final and executory after ten (10) calendar days from receipt of copies of the award or decision by the parties.

Both parties shall comply voluntarily and faithfully with the award. In instances of noncompliance by either or both parties, a motion to enforce/execute the award may be filed with the voluntary arbitrator who may issue a writ of execution requiring either the sheriff of the National Labor Relations Commission or the regular courts or any public official whom the parties may designate in the submission agreement, to execute the final decision or award. In the absence of the voluntary arbitrator or in case of his incapacity, the motion shall be filed with the Labor Arbiter in the region having jurisdiction over the workplace. The filing of a motion for the issuance of writ of execution is without prejudice to any other action the aggrieved party may take against the non-complying party such as a petition for contempt or imposition of fines and penalties.282

8. Court of Appeals

a. Rule 65, Rules of Court

A party may avail itself of the civil action for certiorari, where the tribunal, board or office exercising juridical functions:

Has acted without or in excess of jurisdiction; and, or

With grave abuse of discretion and praying that judgments be rendered annulling or modifying the proceedings, as the law requires, of such tribunal, board or officer

It may be filed not later than 60 days from notice of the judgment, order or resolution. Both SC and CA has jurisdiction over the action; however in line with the doctrine of minatory of warts, the petition should initially be presented to the lower of the two courts, that is, the CA.

9. Supreme Court

a. Rule 45, Rules of Court

A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the 282 Rule VII, Secs. 6 & 7, id.

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Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.283

10. Prescription of Actions

Offenses penalizedunder the LC 3 years

ULP One (1) year from accrual of such ULP; otherwise forever barred.284

Money Claims 3 years from the time the cause of action accrued; otherwise forever barred

All money claims accruing prior to the effectivity of the LC

Within one (1) year from the date of effectivity, in accordance with IRR; otherwise, they shall forever be barred

Workmen’s Compensation claims accruing prior to the effectivity of the LC and between Nov. 1, 1974‐Dec. 31, 1974

Dec. 31, 1974 shall be filed not later than Mar. 31, 1975 before the appropriate regional offices of the Department of Labor285

Illegal Dismissal Cases 4 years. It commences to run from the date of formal dismissal.286

283 Sec. 1284 Art. 290285 Art. 291286 Mendoza v. NLRC, G.R. No. 122481, Mar. 5, 1998

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Include: Pertinent Supreme Court decisions up to January 31, 2013.

ReferenceArticle 34. Prohibited practices. It shall be unlawful for any individual, entity, licensee, or holder of authority:

To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay any amount greater than that actually received by him as a loan or advance;

To furnish or publish any false notice or information or document in relation to recruitment or employment;

To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under this Code.

To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another unless the transfer is designed to liberate the worker from oppressive terms and conditions of employment;

To influence or to attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency;

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;

To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized representatives;

To fail to file 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 of Labor.

To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor;

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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; and

To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations other than those authorized under this Code and its implementing rules and regulations.

ARTICLE 110. Worker preference in case of bankruptcy. - In the event of bankruptcy or liquidation of an employer’s business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provisions of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before claims of the government and other creditors may be paid. (As amended by Section 1, Republic Act No. 6715, March 21, 1989).

ARTICLE 129. Recovery of wages, simple money claims and other benefits. - Upon complaint of any interested party, the Regional Director of the Department of Labor and Employment or any of the duly authorized hearing officers of the Department is empowered, through summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an employee or person employed in domestic or household service or househelper under this Code, arising from employer-employee relations: Provided, That such complaint does not include a claim for reinstatement: Provided further, That the aggregate money claims of each employee or househelper does not exceed Five thousand pesos (P5,000.00). The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the filing of the same. Any sum thus recovered on behalf of any employee or househelper pursuant to this Article shall be held in a special deposit account by, and shall be paid on order of, the Secretary of Labor and Employment or the Regional Director directly to the employee or househelper concerned. Any such sum not paid to the employee or househelper because he cannot be located after diligent and reasonable effort to locate him within a period of three (3) years, shall be held as a special fund of the Department of Labor and Employment to be used exclusively for the amelioration and benefit of workers. Any decision or resolution of the Regional Director or hearing officer pursuant to this provision may be appealed on the same grounds provided in Article 223 of this Code, within five (5) calendar days from receipt of a copy of said decision or resolution, to the National Labor Relations Commission which shall resolve the appeal within ten (10) calendar days from the submission of the last pleading required or allowed under its rules. The Secretary of Labor and Employment or his duly authorized representative may supervise the payment of unpaid wages and other monetary claims and benefits, including legal interest, found owing to any employee or househelper under this Code. (As amended by Section 2, Republic Act No. 6715, March 21, 1989).

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ARTICLE 217. Jurisdiction of the Labor Arbiters and the Commission. -(a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (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. Unfair labor practice 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 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.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

(c) Cases arising from the interpretation or implementation of collective bargaining agreement and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. (As amended by Section 9, Republic Act No. 6715, March 21, 1989).

ARTICLE 264. 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: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. (paragraph 2) ARTICLE 279. Security of tenure. - In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of

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seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of 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: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes:

a. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;

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

c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;

d. 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 representatives; and

e. Other causes analogous to the foregoing.

Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

Art. 284. Disease as ground for termination. An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month

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salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year.

Department Order No. 18-ASeries of 2011

RULES IMPLEMENTING ARTICLES 106 TO 109 OF THE LABOR CODE, AS AMENDED

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 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

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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

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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).

(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.

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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 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.

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(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;

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

(f) Security of tenure.

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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.

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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 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

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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 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

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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;

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

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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.

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

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(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;

(b) Name and address of the contractor;

(c) The ground/s for cancellation;

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(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.

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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 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.

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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 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.

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

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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.

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