Labor Standards

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LAST-MINUTE NOTES ON THE 2012 BAR EXAMINATION IN LABOR LAW BASED ON THE SUPREME COURT-PRESCRIBED SYLLABUS Prof. Joselito Guianan Chan

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C. LABOR STANDARDS

[These 8-part Notes discuss all topics/sub-topics in the Supreme Court-prescribed Syllabus for Labor Law]

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TOPICS UNDER THE SYLLABUS

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1. Hours of Work

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C. LABOR STANDARDS

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a. Service Incentive Leave Pay (1) Right to service incentive leave (2) Exclusions from coverage (3) Commutable nature of benefit b. Maternity Leave (1) Coverage (2) Conditions to entitlement (3) Availment c. Paternity Leave (1) Coverage (2) Conditions to entitlement

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a. Right to holiday pay (1) In case of absences (2) In case of temporary cessation of work (3) Of teachers, piece workers, seafarers, seasonal workers, etc. b. Exclusions from coverage 5. Leaves

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a. Right to weekly rest day b. Preference of the employee c. When work on rest day authorized 4. Holidays

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3. Rest Day

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a. “No work no pay” principle b. Coverage/Exclusions c. Facilities vs supplements d. Wages vs. salaries e. Wage distortion f. CBA vis-à-vis Wage Orders – CBA creditability g. Non-diminution of benefits h. Worker’s preference in case of bankruptcy i. Labor Code provisions for wage protection j. Allowable deductions without employee’s consent k. Attorney’s fees and union service fee in labor cases l. Criteria/Factors for Wage Setting

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2. Wages

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a. Coverage/Exclusions b. Normal Hours of Work (a) Exceptions (a) Health Personnel c. Compressed Work Week d. Work interruption due to brownouts e. Meal Break f. Idle time, waiting time, commuting time, travel time, whether part of hours of work or not g. Overtime work (a) Undertime not offset by overtime (b) Waiver of overtime pay h. Night Work i. CBA provision vis-à-vis overtime work

LABOR LAW: C. LABOR STANDARDS Prof. Joselito Guianan Chan

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a. Definition b. Benefits accorded househelpers c. Termination d. Reliefs for unjust termination

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11. Employment of Homeworkers

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12. Apprentices and Learners

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a. Definition b. Rights and benefits accorded homeworkers c. Conditions for deduction from homeworker’s earnings

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13. Handicapped Workers (RA 7277)

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a. Distinctions between Learnership and Apprenticeship

a. Definition of “handicapped workers” b. Rights of disabled workers c. Prohibitions on discrimination against disabled persons d. Incentives for employers

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========================================== TOPIC UNDER THE SYLLABUS C. LABOR STANDARDS 1. Hours of Work a. Coverage/Exclusions b. Normal Hours of Work (a) Exceptions (a) Health Personnel c. Compressed Work Week d. Work interruption due to brownouts e. Meal Break f. Idle time, waiting time, commuting time,

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10. Employment of Househelpers

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a. Regulation of working hours of a child b. Employment of the child in public entertainment c. Prohibition of employing minors in certain undertakings and in certain advertisements

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9. Minor Workers (RA 7678, RA 9231)

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a. Discrimination (Art. 135, LC) b. Stipulation against marriage (Art. 136, LC) c. Prohibited Acts (Art. 137, LC) d. Classification of certain women workers (Art. 138, LC) e. Anti-Sexual Harassment Act (RA 7877)

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8. Women Workers

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a. Coverage b. Exclusion/Exemptions from coverage c. Nature of 13th month pay d. Commissions vis-à-vis 13th month pay e. CBA vis-à-vis 13th month pay

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7. Thirteenth (13th) Month Pay and other bonuses

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a. Coverage b. Exclusion c. Distribution d. Integration

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6. Service Charges

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(3) Availment d. Parental Leave (1) Coverage (2) Conditions to entitlement (3) Availment e. Leaves for victims of violence against women (1) Coverage (2) Conditions to entitlement (3) Availment

2 LABOR LAW: C. LABOR STANDARDS Prof. Joselito Guianan Chan




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travel time, whether part of hours of work or not g. Overtime work (a) Undertime not offset by overtime (b) Waiver of overtime pay h. Night Work i. CBA provision vis-à-vis overtime work ==========================================

1. PROVISIONS OF THE LABOR CODE ON WORKING CONDITIONS.

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2. COVERAGE.

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The provisions on working conditions in the Labor Code are as follows. Article 83 ‐ Normal hours of work; Article 84 ‐ Hours worked; Article 85 ‐ Meal periods; Article 86 ‐ Night shift differential; Article 87 ‐ Overtime work; Article 88 ‐ Undertime not offset by overtime; Article 89 ‐ Emergency overtime work; Article 90 ‐ Computation of additional compensation; Right to weekly rest period; Article 91 ‐ Article 92 ‐ When employer may require work on a rest day; Article 93 ‐ Compensation for rest day, Sunday or holiday work; Article 94 ‐ Right to holiday pay; Article 95 ‐ Right to service incentive leave; and Service charges. Article 96 ‐

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3. EXCLUSIONS.

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4. NORMAL HOURS OF WORK.

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The total number of working hours of a worker or employee shall not exceed eight (8) hours daily. This eight (8) hour period is called the normal hours of work. Any work in excess of eight (8) hours is considered overtime work.

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4.1. EXCEPTIONS:

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a. Reduction of 8‐hour working day by employer. The employer, in the lawful exercise of its prerogative, is not prohibited from reducing the eight‐hour normal working time per day provided that no corresponding reduction is made on the employee’s wage or salary equivalent to an eight‐hour work day. In instances where the number of hours required by the nature of work is less than eight hours, such number of hours should be regarded as the employee’s full working day.

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b. Broken hours. The normal eight (8) working hours mandated by law do not always mean continuous and uninterrupted eight (8) hours of work. As may be required by peculiar circumstances of employment, it may mean broken hours of say, four hours in the morning and four hours in the evening or a variation thereof, provided the total of eight (8) hours is accomplished within one “work day” as this term is understood in law [infra]. Hence, the 4‐hour work done in the evening as in the example above, should not be considered overtime work since the eight‐hour period has not yet been exceeded.

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The following are excluded from the coverage of the law on labor standards: a. Government employees; b. Managerial employees; c. Other officers or members of a managerial staff; d. Domestic servants and persons in the personal service of another; e. Workers paid by results; f. Non‐agricultural field personnel; and g. Members of the family of the employer.

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c. Staggered working time. Staggered working time is a valid scheme which may be resorted to by employers. As a matter of precedence, Memorandum Circular No. 81 was issued by the Office of the President on December 14, 2004 which implemented the Staggered Working Time in the Executive Department in relation to the other branches of government and the private sector in Metro Manila during the Christmas Season from December 15, 2004 to January 6, 2005. According to this issuance, the “Staggered Working Time” is meant to improve the delivery of goods and services.

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All employees in all establishments, whether operated for profit or not, are covered by the law on labor standards.





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d. Work in different shifts. In establishments where work is in different shifts, work done by the employee beyond his eight‐hour shift is considered overtime work which should be compensated accordingly. For example, if there are three (3) eight‐hour shifts in a “work day,” say, the first shift is from 6:00 a.m. to 2:00 p.m.; second shift from 2:00 p.m. to 10:00 p.m.; and the third shift from 10:00 p.m. to 6:00 a.m. of the following day, the employee whose regular eight‐hour work is in the first shift (6:00 a.m. to 2:00 p.m.), once required to work in the second or third shift, should be given additional compensation for such work done beyond his regular working hours which legally is considered overtime work.

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e. Reduction of workdays on account of losses. Workdays may be reduced in situations where the reduction in the number of regular working days is resorted to by the employer to prevent serious losses due to causes beyond his control, such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw materials.1

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h. Part‐time work. The rules implementing the different Wage Orders issued by the Regional Tripartite Wages and Productivity Boards (RTWPBs) in the various regions in the country carry a uniform provision to the effect that wages and allowances of part‐time workers shall not be less than the compensable time that they actually rendered work. Hence, in the case of cost‐of‐living allowance (COLA), if the worker rendered work for less than the prescribed eight (8) hours, say for four (4) hours only, the employer may validly make proportionate payment of COLA, if it has granted a proportionate payment in the worker’s basic wage. Following the principle of “no work, no pay, no allowance,” the workers are not entitled to said benefits for the four‐hour period that they did not render work. It is important to stress, however, that the employees should have entered into an agreement with the employer that they will be employed as part‐time workers. In view of the foregoing, on the issue of whether the company should give the part‐time employees concerned only fifty percent (50%) of the wages and other benefits that the employer may pay the workers who will work for four (4) hours a day, 6:00 to 10:00 in the evening, it was opined in the Advisory Opinion on Conditions of Employment of Part‐ time Workers issued by the Bureau of Working Conditions of the Department of Labor and Employment, that compensation in proportion to the time they actually rendered work or equivalent to only four (4) hours a day must be given to part‐time workers. This is, however, without prejudice to any individual or collective agreement or company practice or policy that provides higher basis of computation of wages.

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g. Flexible work arrangements during economic difficulties and national emergencies. DOLE Secretary Marianito D. Roque issued Department Advisory No. 2, Series of 2009, on January 29, 2009 enunciating the Guidelines on the Adoption of Flexible Work Arrangements. The following are the flexible work arrangements which may be considered, among others: 1. “Compressed Workweek” refers to one where the normal workweek is reduced to less than six (6) days but the total number of work‐hours of 48 hours per week shall remain. The normal workday is increased to more than eight hours but not to exceed twelve hours, without corresponding overtime premium. The concept can be adjusted accordingly depending on the normal workweek of the company pursuant to the provisions of Department Advisory No. 02, Series of 2004, dated December 2, 2004. 2. “Reduction of Workdays” refers to one where the normal workdays per week are reduced but should not last for more than six (6) months. 3. “Rotation of Workers” refers to one where the employees are rotated or alternately provided work within the workweek. 4. “Forced Leave” refers to one where the employees are requires to go on leave for several days or weeks utilizing their leave credits, if there are any. 5. “Broken‐time schedule” refers to one where the work schedule is not continuous but the work‐hours within the day or week remain. 6. “Flexi‐holidays schedule” refers to one where the employees agree to avail of the holidays at some other days provided there is no diminution of existing benefits as a result of such arrangement. Under these flexible work arrangements, the employers and the employees are encouraged to explore alternative schemes under any agreement and company policy or practice in order to cushion and mitigate the effect of the loss of income of the employees.

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f. Flexible work schedule under R.A. No. 8972. Under Republic Act No. 8972, otherwise known as “The Solo Parents’ Welfare Act of 2000,” solo parents are allowed to work on a flexible schedule, thus: “Sec. 6. Flexible Work Schedule. – The employer shall provide for a flexible working schedule for solo parents: Provided, That the same shall not affect individual and company productivity: Provided, further, That any employer may request exemption from the above requirements from the DOLE on certain meritorious grounds.” (Section 6, Republic Act No. 8972). The phrase “flexible work schedule” is defined in the same law as the right granted to a solo parent employee to vary his/her arrival and departure time without affecting the core work hours as defined by the employer.2

Explanatory Bulletin on the Effect of Reduction of Workdays on Wages/Living Allowances issued by the DOLE on July 23, 1985. See Section 3[e] thereof





4.2. HOURS OF WORK OF HOSPITAL AND CLINIC PERSONNEL.

a. Coverage. The second paragraph of Article 83 of the Labor Code enunciates the rule on hours of work of hospital and clinic personnel. Its provision as well as the corresponding provisions in the Rules to Implement the Labor Code, apply to: a. All hospitals and clinics, including those with a bed capacity of less than one hundred (100) which are situated in cities or municipalities with a population of one (1) million or more; and b. All hospitals and clinics with a bed capacity of at least one hundred (100), irrespective of the size of the population of the city or municipality where they may be situated.3

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b. Definition of terms. The terms “hospital” and “clinic” shall mean a place devoted primarily to the maintenance and operation of facilities for the diagnosis, treatment and care of individuals suffering from illness, disease, injury or deformity, or in need of obstetrical or other medical and nursing care. Either term shall also be construed as any institution, building, or place where there are installed beds or cribs or bassinets for twenty‐four (24) hour use or longer by patients in the treatment of diseases, injuries, deformities or abnormal physical and mental states, maternity cases or sanitarial care or infirmaries, nurseries, dispensaries and such other similar names by which they may be designated. (Section 2, Rule I‐A, Book III, Rules to Implement the Labor Code). The term “health personnel” shall include resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel.4

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f. Hours worked of hospital or clinic personnel. In determining the compensable hours of work of hospital and clinic personnel, the pertinent provisions of Rule 1 of Book III of the Rules to Implement the Labor Code shall apply.8

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POLICY INSTRUCTIONS NO. 54. a. Working hours and compensation of hospital/clinic personnel. Policy Instructions No. 54 [April 12, 1988] provides that personnel in subject hospitals and clinics are entitled to a full weekly wage for seven (7) days if they have completed the 40‐hour/5‐day workweek in any given workweek.

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b. Policy Instructions No. 54, declared void. The Supreme Court, however, has voided Policy Instructions No. 54 in the case of San Juan de Dios Hospital Employees Association v. NLRC, [G.R. No. 126383, November 28, 1997]. Consequently, the rule that hospital employees who worked for only 40 hours/5 days in any given workweek should be compensated for full weekly wage for seven (7) days is no longer applicable. The Supreme Court ratiocinated that “the Secretary of Labor exceeded his authority by including a two days off with pay in contravention of the clear mandate of the statute. Such act the Court shall not countenance. Administrative interpretation of the law, we reiterate, is at best merely advisory, and the Court will not hesitate to strike down an administrative interpretation that deviates from the provision of the statute.”

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e. Overtime work of hospital or clinic personnel. Where the exigencies of the service so require as determined by the employee, any employee may be scheduled to work for more than five (5) days or forty (40) hours a week provided that the employee is paid for the overtime work an additional compensation equivalent to his regular wage plus at least thirty percent (30%) thereof, subject to the provisions of Book III of the Labor Code on the payment of additional compensation for work performed on special and regular holidays and on rest days.7

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d. Regular working days of hospital or clinic personnel. The regular working days of covered employees shall not be more than five (5) days in a workweek. The workweek may begin at any hour and on any day, including Saturday or Sunday, designated by the employer. Employers are not precluded from changing the time at which the workday or workweek begins provided that the change is not intended to evade the requirements of Rule I‐A of the Rules to Implement the Labor Code.6

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c. Regular working hours of hospital or clinic personnel. The regular working hours of hospital and clinic personnel shall not be more than eight (8) hours in any one day nor more than forty (40) hours in any one week. A “day” shall mean a workday of twenty‐four (24) consecutive hours beginning at the same time each calendar day. A “week” shall mean the workweek of 168 consecutive hours, or seven consecutive 24‐hour workdays, beginning at the same hour and on the same calendar day each calendar week.5

Article 83, Labor Code; Section 1, Rule I-A, Book III, Rules to Implement the Labor Code. Article 83, Labor Code; Section 4, Rule I-A, Book III, Ibid.. Section 5, Rule I-A, Book III, Ibid.. 6 Section 6, Rule I-A, Book III thereof. 7 Article 83, Labor Code; Section 7, Rule I-A, Book III, Ibid.. 8 Section 8, Rule I-A, Book III, Ibid.. 3 4 5





5. COMPRESSED WORKWEEK (CWW).

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Linton Commercial Co., Inc. v. Hellera, [G.R. No. 163147, October 10, 2007]. In declaring the compressed workweek arrangement in this case as unjustified and illegal and in holding that petitioners are guilty of illegal reduction of work hours, the Supreme Court found specious the petitioners attempt to justify their action by alleging that the company was suffering from financial losses owing to the Asian currency crisis. Petitioners’ claim of financial losses was not supported by evidence. A close examination of petitioners’ financial reports for 1997‐1998 shows that while the company suffered a loss of P3,645,422.00 in 1997, it retained a considerable amount of earnings and operating income. Clearly then, while Linton suffered from losses for that year, there remained enough earnings to sufficiently sustain its operations. In business, sustained operations in the black is the ideal but being in the red is a cruel reality. However, a year of financial losses would not warrant the immolation of the welfare of the employees which in this case was done through a reduced workweek that resulted in an unsettling diminution of the periodic pay for a protracted period. Permitting reduction of work and pay at the slightest indication of losses would be contrary to the State’s policy to afford protection to labor and provide full employment.

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b. Department Order No. 02, Series of 2004. Department Order No. 02, Series of 2004, was issued by the Secretary of Labor and Employment on December 2, 2004 implementing compressed workweek schemes to guide employers and workers who may opt to adopt a mutually acceptable compressed workweek (CWW) scheme suitable to the requirements of the establishment As a matter of policy, and taking into account the emergence of new technology and the continuing restructuring and modernization of the work process, the Department of Labor and Employment (DOLE) encourages employers and workers to enter into voluntary agreements adopting CWW schemes based on the following objectives: 1. To promote business competitiveness and productivity, improve efficiency by lower operating costs, and reduce work‐related expenses of employees; 2. To give employers and workers flexibility in fixing hours of work compatible with business requirements and the employees’ need for a balanced work life; and 3. To ensure the safety and health of employees at the workplace at all times. A CWW scheme is an alternative arrangement whereby the normal workweek is reduced to less than six (6) days but the total number of normal work hours per week shall remain at forty‐eight (48) hours. The normal workday is thus increased to more than eight (8) hours without corresponding overtime premium. This concept can be adjusted accordingly in cases where the normal workweek of the firm is five (5) days.

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Philippine Graphic Arts, Inc. v. NLRC, [G.R. No. L‐80737, September 29, 1988, 166 SCRA 118]. The High Court upheld the validity of the reduction of working hours, taking into consideration the following: the arrangement was temporary; it was a more humane solution instead of the retrenchment of personnel; there were notices and consultations with the workers and supervisors; a consensus was reached on how to deal with the deteriorating economic conditions; and it was sufficiently proven that the company was suffering from losses. Although the said Explanatory Bulletin of Director Sanchez stands more as a set of directory guidelines than a binding set of implementing rules, it has one main consideration, consistent with the ruling in Philippine Graphic Arts, in determining the validity of reduction of working hours, i.e., that the company was suffering from losses.

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a. Compressed workweek allowed. The employer may compress the work days from six (6) days (from Monday to Saturday) to five (5) days (from Monday to Friday) under certain conditions imposed by the Department of Labor and Employment. In situations, for instance, where the employees’ work‐week was forty‐five (45) hours consisting of eight (8) hours daily from Monday to Friday and five (5) hours on Saturday, the employer may propose to compress or shorten the work‐week from Monday to Friday with work for nine (9) hours per day without overtime pay for the excess one (1) hour. The Department of Labor and Employment (DOLE) normally does not interpose any objection to this kind of scheme provided the following conditions are met: 1. The employees voluntarily agree to work nine (9) hours a day from Monday to Friday; 2. There should be no diminution in the take‐home pay and fringe benefits of the employees; 3. The value of the benefits that will accrue to the employees under the proposed work schedule is more than or, at least, commensurate with, or equal to, the one‐hour overtime pay that is due them during weekdays based on the employees’ quantification; 4. The one‐hour overtime pay of the employees will become due and demandable if ever they are permitted or made to work on any Saturday during the effectivity of the new working time arrangement, since the agreement between the employees and management is that there will be no Saturday work in exchange for a longer work day during week‐days; 5. The work of the employees does not involve strenuous physical exertion and they are provided with adequate rest periods or coffee breaks in the morning and afternoon; and 6. The effectivity of the proposed working time arrangement should be of temporary duration as determined by the Secretary of Labor and Employment.

Conditions. DOLE shall recognize CWW schemes adopted in accordance with the following: 1. The CWW scheme is undertaken as a result of an express and voluntary agreement of majority of the covered employees or their duly authorized representatives. This agreement may be expressed through collective





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bargaining or other legitimate workplace mechanisms of participation such as labor‐management councils, employee assemblies or referenda. 2. In firms using substances, chemicals and processes or operating under conditions where there are airborne contaminants, human carcinogens or noise prolonged exposure to which may pose hazards to the employees’ health and safety, there must be a certification from an accredited health and safety organization or practitioner or from the firm’s safety committee that work beyond eight (8) hours is within threshold limits or tolerable levels of exposure, as set in the OSHS. 3. The employer shall notify the DOLE, through its Regional Office having jurisdiction over the workplace, of the adoption of the CWW scheme. The notice should be made in DOLE CWW Report Form.

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The following are the effects of work interruption due to brownouts.9 1. Brown‐outs of short duration but not exceeding twenty (20) minutes shall be treated as worked or compensable hours whether used productively by the employees or not. 2. Brown‐outs running for more than twenty (20) minutes may not be treated as hours worked provided any of the following conditions are present: a. The employees can leave their workplace or go elsewhere whether within or without the work premises; or

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6. WORK INTERRUPTION DUE TO BROWNOUTS.

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Bisig Manggagawa sa Tryco v. NLRC, [G.R. No. 151309, October 15, 2008]. Private respondent Tryco and the petitioners signed separate Memorand[a] of Agreement (MOA), providing for a compressed workweek schedule to be implemented in the company effective May 20, 1996. The MOA was entered into pursuant to DOLE Department Order (D.O.) No. 21, Series of 1990 enunciating the Guidelines on the Implementation of Compressed Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as the regular working hours, and no overtime pay shall be due and payable to the employee for work rendered during those hours. The MOA specifically stated that the employee waives the right to claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the compressed workweek schedule is adopted in lieu of the regular workweek schedule which also consists of forty‐six (46) hours. However, should an employee be permitted or required to work beyond 6:12 p.m., such employee shall be entitled to overtime pay. Tryco informed the Bureau of Working Conditions (BWC) of the Department of Labor and Employment of the implementation of the said compressed workweek in the company. In upholding the validity of the compressed workweek, it was noted that Department Order No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the employees will derive from the adoption of a compressed workweek scheme, thus: “The compressed workweek scheme was originally conceived for establishments wishing to save on energy costs, promote greater work efficiency and lower the rate of employee absenteeism, among others. Workers favor the scheme considering that it would mean savings on the increasing cost of transportation fares for at least one (1) day a week; savings on meal and snack expenses; longer weekends, or an additional 52 off‐days a year, that can be devoted to rest, leisure, family responsibilities, studies and other personal matters, and that it will spare them for at least another day in a week from certain inconveniences that are the normal incidents of employment, such as commuting to and from the workplace, travel time spent, exposure to dust and motor vehicle fumes, dressing up for work, etc. Thus, under this scheme, the generally observed workweek of six (6) days is shortened to five (5) days but prolonging the working hours from Monday to Friday without the employer being obliged for pay overtime premium compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the benefits above‐cited that will accrue to the employees.” Moreover, the adoption of the compressed workweek scheme in the company will help temper any inconvenience that will be caused the petitioners by their transfer to a farther workplace.

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Effects. A CWW scheme which complies with the foregoing conditions shall have the following effects: 1. Unless there is a more favorable practice existing in the firm, work beyond eight (8) hours will not be compensable by overtime premium provided the total number of hours worked per day shall not exceed twelve (12) hours. In any case, any work performed beyond twelve (12) hours a day or forty‐eight (48) hours a week shall be subject to overtime premium. 2. Consistent with Articles 85 of the Labor Code, employees under a CWW scheme are entitled to meal periods of not less than sixty (60) minutes. Nothing, however, shall impair the right of employees to rest days as well as to holiday pay, rest day pays or leaves in accordance with law or applicable collective bargaining agreement (CBA) or company practice. 3. Adoption of the CWW scheme shall in no case result in diminution of existing benefits. Reversion to the normal eight‐hour workday shall not constitute a diminution of benefits. The reversion shall be considered a legitimate exercise of management prerogative provided that the employer shall give the employees prior notice of such reversion within a reasonable period of time.

Policy Instructions No. 36 dated May 22, 1978 was issued by the Undersecretary of Labor and Employment to clarify the effects of power interruptions or brown-outs on productive man-hours.





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b. The employees can use the time effectively for their own interest. 3. In each case, the employer may extend the working hours of his employees outside the regular schedules to compensate for the loss of productive man‐hours without being liable for overtime pay. 4. Industrial enterprises with one or two workshifts may adopt any of the workshifts prescribed for enterprises with three (3) workshifts to prevent serious loss or damage to materials, machineries or equipment that may result in case of power interruptions.10 5. The days when work was not required and no work could be done because of shutdown due to electrical power interruptions, lack of raw materials and repair of machines, are not deemed hours worked.11

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7. MEAL BREAKS (ARTICLE 85, LABOR CODE).

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a. General rule on meal period. As a general rule, every employer is required to give his employees, regardless of sex, not less than one (1) hour (or 60 minutes) time‐off for regular meals.12 Being time‐off, it is not compensable hours worked. In this case, the employee is free to do anything he wants, except to work. If he is required, however, to work while eating, he should be compensated therefor.

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e. Changing from 30‐minute paid “on call” lunch break to 1 hour meal time without pay, effect. The case of Sime Darby Pilipinas, Inc. v. NLRC, [G.R. No. 119205, April 15, 1998, 289 SCRA 86], is illustrative of this point. Prior to the present controversy, all company factory workers in Marikina including members of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30‐minute paid “on call” lunch break. Petitioner, by way of a memorandum, changed the meal time schedule from 30 minutes to one (1) hour without pay. Since private respondent felt affected adversely by the change in the work schedule and discontinuance of the 30‐minute paid “on call” lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for unfair labor practice, discrimination and evasion of liability. In declaring the change in the work schedule as valid, the Supreme Court held: “(The petitioner) rationalizes that while the old work schedule included a 30‐minute paid lunch break, the employees could be called upon to do jobs during that period as they were ‘on call.’ Even if denominated as lunch break, this period could very well be considered as working time because the factory employees were required to work if necessary and were paid accordingly for

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d. Shortening of meal time to less than 20 minutes, effect. The law does not allow that meal time be shortened to less than twenty (20) minutes. If so reduced, the same shall no longer be considered as meal time but merely as rest period or coffee break and, therefore, becomes compensable working time.15

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c. Shortening of meal time to not less than 20 minutes, when not compensable. The law allows a situation where the employees themselves request for the shortening of meal period to not less than twenty (20) minutes (say, thirty minutes, or from 12:00 to 12:30 p.m. instead of 12:00 to 1:00 p.m.) for the purpose of allowing them to leave work earlier than the lapse of the eight (8) hours required by law (say, 4:30 p.m. instead of 5:00 p.m.). This shortened period, however, shall not be considered compensable working time provided the following conditions are complied with: a. The employees voluntarily agree in writing to a shortened meal period of thirty (30) minutes and are willing to waive the overtime pay for such shortened meal period; b. There should be no diminution in the benefits of the employees which they receive prior to the effectivity of the shortened meal period; c. The work of the employees does not involve strenuous physical exertion and they are provided with adequate coffee breaks in the morning and afternoon; d. The value of the benefits derived by the employees from the proposed work arrangement is equal to or commensurate with the compensation due them for the shortened meal period as well as the overtime pay for 30 minutes as determined by the employees concerned; e. The overtime pay of the employees will become due and demandable if ever they are permitted or made to work beyond 4:30 p.m.; and f. The effectivity of the proposed working time arrangement shall be for a temporary duration as determined by the Secretary of Labor and Employment.14

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b. Shortening of meal time to not less than 20 minutes, when compensable. In the following cases, a meal period of not less than twenty (20) minutes may be given by the employer provided that such shorter meal period is credited as compensable hours worked of the employee: a. Where the work is non‐manual work in nature or does not involve strenuous physical exertion; b. Where the establishment regularly operates for not less than sixteen (16) hours a day; c. In cases of actual or impending emergencies or when there is urgent work to be performed on machineries, equipment or installations to avoid serious loss which the employer would otherwise suffer; and d. Where the work is necessary to prevent serious loss of perishable goods.13

Policy Instructions No. 36, May 22, 1978. Durabilt Recapping Plant Company v. NLRC, G.R. No. L-76746, July 27, 1987, 152 SCRA 328. Article 85, Labor Code; Section 7, Rule I, Book III, Rules to Implement the Labor Code. 13 Section 7, Rule I, Book III, Ibid.. 14 Letter-Opinion dated Nov. 27, 1989 of Secretary Franklin Drilon to Kodak Philippines. 15 Last paragraph, Section 7, Rule I, Book III, Rules to Implement the Labor Code. 10 11 12





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working. With the new work schedule, the employees are now given a one‐hour lunch break without any interruption from their employer. For a full one‐hour undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but also for their rest and comfort which are conducive to more efficiency and better performance in their work. Since the employees are no longer required to work during this one‐hour lunch break, there is no more need for them to be compensated for this period. We agree with the Labor Arbiter that the new work schedule fully complies with the daily work period of eight (8) hours without violating the Labor Code. Besides, the new schedule applies to all employees in the factory similarly situated whether they are union members or not.”

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f. Meal time involving several shifts. In a company where work is continuous for several shifts, the mealtime breaks should be counted as working time for purposes of overtime compensation. Consequently, the workers who are required to work in two (2) full successive shifts should be paid for sixteen (16) hours and not fourteen (14), the two hours for rest or mealtime breaks being included as compensable working time. The idle time that an employee may spend for resting wherein he may leave the work area should not be counted as working time only when the work is not continuous.16

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8.1. IDLE TIME.

The idle time during which an otherwise off‐duty employee remains available to be called to work may or may not be compensable, depending upon the situation. As a general rule, the issue of compensability depends on whether the time is spent primarily for the employer’s benefit as opposed to the employee’s. The answer usually turns upon the extent to which employee is able to and does use the time effectively for personal purposes. An evaluation of all the relevant facts become necessary to determine compensability. The following, among others, should be considered: a. The employer requires the employee to remain on the employer’s premises; b. The employer requires the employee to wait at home for calls or messages or confines the employee to a highly‐restricted geographical area; c. The employee receives numerous or frequent work assignments during the on‐call period; d. The employee must respond within a short timeframe under the circumstances (especially if the employee must travel somewhere to do the work);

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b. Some principles in determining hours worked. The following general principles shall govern in determining whether the time spent by an employee is considered hours worked: a. All hours are hours worked which the employee is required to give to his employer, regardless of whether or not such hours are spent in productive labor or involve physical or mental exertion; b. An employee need not leave the premises of the workplace in order that his rest period shall not be counted, it being enough that he stops working, may rest completely and may leave his workplace to go elsewhere, whether within or outside the premises of his workplace; c. If the work performed was necessary or it benefited the employer or the employee could not abandon his work at the end of his normal working hours because he had no replacement, all time spent for such work shall be considered as hours worked if the work was with the knowledge of his employer or immediate supervisor; d. The time during which an employee is inactive by reason of interruptions in his work beyond his control shall be considered working time either if the imminence of the resumption of work requires the employee’s presence at the place of work or if the interval is too brief to be utilized effectively and gainfully in the employee’s own interest. (Section 4, Rule I, Book III, Rules to Implement the Labor Code). It bears emphasizing that the employer retains the management prerogative, whenever exigencies of the service so require, to change the working hours of its employees.18 Moreover, the age‐old rule which governs the relationship between labor and capital or management and employee of a “fair day’s wage for a fair day’s labor,” remains the basic factor in determining the employees’ wages and backwages.19

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a. Compensable hours worked. The following shall be considered as compensable hours worked: a. All time during which an employee is required to be on duty or to be at the employer’s premises or to be at a prescribed workplace; and b. All time during which an employee is suffered or permitted to work.17

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8. IDLE TIME, WAITING TIME, COMMUTING TIME, TRAVEL TIME, WHETHER PART OF HOURS OF WORK OR NOT. (ARTICLE 84, LABOR CODE).

National Development Company v. Court of Industrial Relations, G.R. No. L-15422, Nov. 30, 1962. Article 84, Labor Code; Section 3, Rule I, Book III, Rules to Implement the Labor Code; Rada v. NLRC, G.R. No. 96078, Jan. 9, 1992, 205 SCRA 69. Union Carbide Labor Union v. Union Carbide Philippines, Inc., 215 SCRA 554 [1992]. 19 Durabilt Recapping Plant Company v. NLRC, G.R. No. L-76746, July 27, 1987, 152 SCRA 328. 16 17 18





e. Requires the employee to be on‐call frequently, never relieves the employee from on‐call status, does not permit the employee to exchange calls or call periods with another worker, or does not allow the employee to turn down at least some calls; and f. There is an agreement or understanding covering the arrangement. Some combination of the foregoing factors is present when idle on‐call time is found to be compensable

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8.2. WAITING TIME.

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c. Off Duty Based on U.S. jurisprudence, periods during which an employee is completely relieved from duty and which are long enough to enable him to use the time effectively for his own purposes are not hours worked. Whether time off work is truly sufficient to enable employees to effectively use the time for their own purposes is a factual issue dependent upon the circumstances. Circumstances considered by the courts include the duration of the time off and any other facts which may place restrictions on the employees. Examples of cases where courts have found that employers are justified in denying compensation for idle time include: • A telephone dispatcher who only had to answer a small number of telephone calls for non‐emergency ambulance care each night and who was allowed to pursue her own personal, social and business activities during the evening hours; • Employees who were required to live on the employer's premises during their off‐shift hours, but who were free during their off duty time to sleep, eat, watch television, exercise, play ping pong or cards, read and engage in other personal amusements; and • Truck drivers responsible for picking up and delivering the mail who were free to attend to personal matters and occupy their time as they desired during the waiting time between scheduled runs.

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b. On Duty. Waiting time while on duty is included in compensable time, especially when it is unpredictable, or is of such short duration that the employees cannot use the time effectively for their own purposes. In those instances, the employees are to be compensated whether their work is on or off the employer's premises, even if the employees spend the time engaging in such amusements as playing cards, watching television or reading. Examples in American jurisprudence where employees were found to be engaged in compensable waiting time include: • Assembly line workers who experienced idle time of 45 minutes or less due to delays in delivery and mechanical failures; • A well pumper who resided on the employer's premises and who was required to be on duty at least eight hours per day, seven days per week to pump wells and repair machinery when needed; • Restaurant employees who were required by their employer to report to work at a certain time even though they could not punch in until enough customers were present to make work available; • Truck washers who were idle while waiting for the arrival of the next truck; • Truck drivers carrying the mail who had periodic layovers lasting two hours or less due to loading or unloading problems;43 • Oil well casing crews who had to wait for casings after they set up their equipment; • Truck drivers and helpers who were required by their employer to wait on premises for assignments; and • Employees who experienced occasional idle time caused by machinery breakdowns.

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a. When waiting time is compensable. Waiting time spent by an employee shall be considered as working time if waiting is an integral part of his work or the employee is required or engaged by the employer to wait.20 In Arica v. NLRC, [G.R. No. 78210, February 28, 1989, 170 SCRA 776], it was ruled that the 30‐minute assembly time practiced by the employees of the company cannot be considered “waiting time” and should not, therefore, be compensable. Although it is clear that employers must compensate employees for time actually spent working, questions arise as to whether the minimum wage and overtime provisions of the FLSA also apply to time spent waiting to perform productive work. Under the regulations, whether waiting time is time worked depends on the particular circumstances. Time spent waiting for work is compensable if it is spent "primarily for the benefit of the employer and [its] business." Conversely, if the time is spent primarily for the benefit of the employee, the time is not compensable. In determining whether waiting time constitutes hours worked, the amount of control the employer has over the employee during the waiting time, and whether the employee can effectively use that time for his own purposes is material.

Section 5 [a], Rule I, Book III, Ibid..





8.3. COMMUTING TIME AND TRAVEL TIME.

The rules applicable to travel time in accordance with the Manual issued by the Department of Labor and Employment are discussed below.

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a. Travel from home to work. An employee who travels from home before his regular workday and returns to his home at the end of the workday is engaged in ordinary home‐to‐work travel which is a normal incident of employment and, therefore, not considered as hours worked. This is true whether he works at a fixed location or at different jobsites. But while normal travel from home to work is not working time, if an employee receives an emergency call outside of his regular working hours and is required to travel to his regular place of business or some other work site, all of the time spent in such travel is considered working time.

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b. Distinction between premium pay and overtime pay. “Premium pay” refers to the additional compensation required by law for work performed within eight (8) hours on non‐working days, such as rest days and special days.21

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a. Some principles on overtime work. 1. Work rendered after normal eight (8) hours of work is called overtime work. 2. In computing overtime work, "regular wage" or "basic salary" means "cash" wage only without deduction for facilities provided by the employer. 3. "Premium pay" means the additional compensation required by law for work performed within 8 hours on non‐working days, such as regular holidays, special holidays and rest days. 4. "Overtime pay" means the additional compensation for work performed beyond 8 hours. Every employee entitled to premium pay is also entitled to the benefit of overtime pay. 5. Illustrations on how overtime is computed: a. For overtime work performed on an ordinary day, the overtime pay is plus 25% of the basic hourly rate. b. For overtime work performed on a rest day or on a special day, the overtime pay is plus 30% of the basic hourly rate which includes 30% additional compensation as provided in Article 93 [a] of the Labor Code. c. For overtime work performed on a rest day which falls on a special day, the overtime pay is plus 30% of the basic hourly rate which includes 50% additional compensation as provided in Article 93 [c] of the Labor Code. d. For overtime work performed on a regular holiday, the overtime pay is plus 30% of the basic hourly rate which includes 100% additional compensation as provided in Article 94 [b] of the Labor Code. e. For overtime work performed on a rest day which falls on a regular holiday, the overtime pay is plus 30% of the basic hourly rate which includes 160% additional compensation.

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9. OVERTIME WORK (ARTICLE 87, LABOR CODE).

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b. Travel that is all in the day’s work. Time spent by an employee in travel as part of his principal activity, such as travel from jobsite to jobsite during the workday, must be counted as hours worked. Where an employee is required to report at a meeting place to receive instructions or to perform other work there, or to pick and to carry tools, the travel from the designated place to the workplace is part of the day’s work and must be counted as hours worked regardless of contract, custom or practice. If an employee normally finishes his work on the premises at 5:00 p.m. and is sent to another job which he finished at 8:00 p.m. and is required to return to his employer’s premises arriving at 9:00 p.m., all of the time is working time. However, if the employee goes home instead of returning to his employer’s premises, the travel after 8:00 p.m. is home‐to‐work travel and is not hours worked. c. Travel away from home. Travel that keeps the employee away from home overnight is travel away from home. Travel away from home is clearly working time when it cuts across the employee’s workday. The employee is simply substituting travel for other duties. The time is not only hours worked on regular working days during normal working hours but also during the corresponding hours on non‐working days. Thus, if an employee regularly works from 9:00 a.m. to 5:00 p.m. from Monday through Friday, the travel time during these hours is working time. Regular meal period is not counted. As an enforcement policy, the Department of Labor and Employment does not consider as working time that time spent in travel away from home outside of regular working hours as a passenger on an airplane, train, boat, bus or automobile. Any work which an employee is required to perform while travelling must be counted as hours worked. An employee who drives a truck, bus, automobile, boat or airplane or an employee who is required to ride therein as an assistant or helper, is working while riding, except during bona‐fide meal periods or when he is permitted to sleep in adequate facilities furnished by the employer.

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No. III, DOLE Handbook on Workers Statutory Monetary Benefits.





“Overtime pay” refers to the additional compensation for work performed beyond eight (8) hours a day. Every employee who is entitled to premium pay is likewise entitled to the benefit of overtime pay.22

9.1. EMERGENCY OVERTIME WORK (ARTICLE 89, LABOR CODE).

a. General rule. The general rule remains that no employee may be compelled to render overtime work against his will

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b. Exceptions when employee may be compelled to render overtime work: 1. 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; 2. 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; 3. 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; 4. When the work is necessary to prevent loss or damage to perishable goods; 5. 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 6. When overtime work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon.

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10. NIGHT WORK (ARTICLE 86, LABOR CODE).

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The right to claim overtime pay is not subject to a waiver. Such right is governed by law and not merely by the agreement of the parties.23 While rights may be waived, the same must not be contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law.24 But if the waiver is done in exchange for and in consideration of certain valuable privileges, among them that of being given tips when doing overtime work, there being no proof that the value of said privileges did not compensate for such work, such waiver may be considered valid.25

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a. Night‐shift differential. Night shift differential is equivalent to 10% of employee's regular wage for each hour of work performed between 10:00 p.m. and 6:00 a.m. of the following day.

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b. Night shift differential and overtime pay, distinguished When the work of an employee falls at nighttime, the receipt of overtime pay shall not preclude the right to receive night differential pay. The reason is, the payment of the night differential pay is for the work done during the night; while the payment of the overtime pay is for work in excess of the regular eight (8) working hours.

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c. Computation of Night Shift Differential Pay: 1. Where night shift (10 p.m. to 6 a.m.) work is regular work. a. On an ordinary day: Plus 10% of the basic hourly rate or a total of 110% of the basic hourly rate. b. On a rest day, special day or regular holiday: Plus 10% of the regular hourly rate on a rest day, special day or regular holiday or a total of 110% of the regular hourly rate. 2. Where night shift (10 p.m. to 6 a.m.) work is overtime work. a. On an ordinary day: Plus 10% of the overtime hourly rate on an ordinary day or a total of 110% of the overtime hourly rate on an ordinary day.

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9.3. WAIVER OF OVERTIME PAY.

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The following rules shall apply: 1. Undertime work on any particular day shall not be offset by overtime on any other day. 2. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required by law such as overtime pay or night shift differential pay.

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9.2. UNDERTIME NOT OFFSET BY OVERTIME (ARTICLE 88, LABOR CODE).

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c. May an employee validly refuse to render overtime work under any of the afore‐said circumstances? An employee cannot validly refuse to render overtime work if any of the afore‐mentioned circumstances is present. 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.

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No. IV, Ibid.. Mercader v. Manila Polo Club, G.R. No. L-8373, Sept. 28, 1956; Cruz v. Yee Sing, G.R. No. L-12046, Oct. 1959; Manila Terminal Co., Inc. v. CIR, G.R. No. L-9265, April 29, 1957, 48 O. G. 7, p. 2725, 91 Phil. 625. Article 6, Civil Code; Pampanga Sugar Development Co., Inc. v. Court of Industrial Relations, G.R. No. L-39387, June 29, 1982. 25 Meralco Workers Union v. Manila Electric Co., G.R. No. L-11876, May 29, 1959. 22 23 24





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b. On a rest day or special day or regular holiday: Plus 10% of the overtime hourly rate on a rest day or special day or regular holiday. 3. For overtime work in the night shift. Since overtime work is not usually eight (8) hours, the compensation for overtime night shift work is also computed on the basis of the hourly rate. a. On an ordinary day. Plus 10% of 125% of basic hourly rate or a total of 110% of 125% of basic hourly rate. b. On a rest day or special day or regular holiday. Plus 10% of 130% of regular hourly rate on said days or a total of 110% of 130% of the applicable regular hourly rate.

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11. CBA PROVISION VIS‐À‐VIS OVERTIME WORK.

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a. Validity of stipulated overtime rates. Generally, the premium pay for work performed on the employee’s rest days or on special days or regular holidays is included as part of the regular rate of the employee in the computation of overtime pay for any overtime work rendered on said days, especially if the employer pays only the minimum overtime rates prescribed by law. The employees and employer, however, may stipulate in their collective bargaining agreement (CBA) the payment of overtime rates higher than those provided by law and exclude the premium payments in the computation of overtime pay. Such agreement may be considered valid only if the stipulated overtime pay rates will yield to the employees not less than the minimum prescribed by law.26

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2. COVERAGE/EXCLUSIONS (ARTICLE 97, LABOR CODE).

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a. Actual work, the basis of claim for wages. It must be emphasized that the age‐old rule governing the relation between labor and capital, or management and employee of “no work, no pay” or “fair day’s wage for fair day’s labor” remains to be adhered in our jurisdiction as the basic factor in determining the wages of employees. If the worker does not work, he is generally not entitled to any wage or pay. The exception is when it was the employer who unduly prevented him from working despite his ableness, willingness and readiness to work; or in cases where he is illegally locked out or illegally suspended or illegally dismissed, or otherwise illegally prevented from working, in which event, he should be entitled to his wage.28

a. Coverage. The minimum wage rates prescribed by law shall be the basic cash wages without deduction therefrom of whatever benefits, supplements or allowances which the employees enjoy free of charge aside from the basic pay.29

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1. “NO WORK, NO PAY” PRINCIPLE.

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=============================================== TOPIC UNDER THE SYLLABUS C. LABOR STANDARDS 2. Wages a. “No work no pay” principle b. Coverage/Exclusions c. Facilities vs supplements d. Wages vs. salaries e. Wage distortion f. CBA vis-à-vis Wage Orders – CBA creditability g. Non-diminution of benefits h. Worker’s preference in case of bankruptcy i. Labor Code provisions for wage protection j. Allowable deductions without employee’s consent k. Attorney’s fees and union service fee in labor cases l. Criteria/Factors for Wage Setting ================================================

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b. Built‐in overtime pay. In case the employment contract stipulates that the compensation includes built‐in overtime pay and the same is duly approved by the Director of the Bureau of Employment Services (now Bureau of Local Employment), the non‐ payment by the employer of any overtime pay for overtime work is justified and valid.27 In PAL Employees Savings and Loan Association, Inc. [PESALA] v. NLRC, [G.R. No. 105963, August 22, 1996], where the period of normal working hours per day was increased to twelve (12) hours, it was held that the employer remains liable for whatever deficiency in the amount for overtime work in excess of the first eight (8) hours, after recomputation shows such deficiency.

No. IV [D], DOLE Handbook on Workers Statutory Monetary Benefits. Engineering Equipment, Inc. v. Minister of Labor, G.R. No. L-64967, Sept. 23, 1985 Aklan Electric Cooperative v. NLRC, G.R. No. 121439, Jan. 25, 2000; Philippine Airlines v. NLRC, G.R. No. 55159, June 22, 1989; Caltex Refinery Employees Association v. Brillantes, G.R. No. 123782, Sept. 16, 1997, 279 SCRA 218; Durabilt Recapping Plant Company v. NLRC, G.R. No. L-76746, July 27, 1987, 152 SCRA 328; SSS v. SSS Supervisors Union, G.R. No. L-31832, Oct. 23, 1982; J. P. Heilbronn Co. v. National Labor Union, G.R. No. L-5121, Jan. 20, 1953. 29 Section 1, Rule VII-A, Book III, Rules to Implement the Labor Code, as amended by Memorandum Circular No. 3, Nov. 4, 1992. 26 27 28





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b. Exclusions. The term “basic wage” means all the remuneration or earnings paid by an employer to a worker for services rendered on normal working days and hours but does not include cost‐of‐living allowances, profit‐sharing payments, premium payments, 13th‐month pay or other monetary benefits which are not considered as part of or integrated into the regular salary of the workers on the date this law became effective.30 Further, as held in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda, [G.R. No. 145561, June 15, 2005, 460 SCRA 187], the following should be excluded from the computation of “basic salary,” to wit: payments for sick, vacation and maternity leaves, night differentials, regular holiday pay and premiums for work done on rest days and special holidays.31

3. FACILITIES VS. SUPPLEMENTS.

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a. Facilities, defined. The term “facilities” includes articles or services for the benefit of the employee or his family 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.32 They are items of expense necessary for the laborer’s and his family’s existence and subsistence which form part of the wage and when furnished by the employer, are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same.33

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a. “Wage and ” “salary,” distinguished.40 1. The term “wage” is used to characterize the compensation paid for manual skilled or unskilled labor. “Salary,” on the other hand, is used to describe the compensation for higher or superior level of employment. 2. In cases of execution, attachment or garnishment of the compensation of an employee received from work issued by the court to satisfy a judicially‐determined obligation, a distinction should be made whether such compensation is considered “wage” or “salary.” Under Article 1708 of the Civil Code, if considered a “wage,” the employee’s compensation shall not be subject to execution or attachment or garnishment, except for debts incurred for food, shelter, clothing and medical attendance. If deemed a “salary,” such compensation is not exempt from execution or attachment or garnishment. Thus, the salary, commission and other remuneration received by a managerial employee (as distinguished from an ordinary worker or

Item [n], Definition of Terms, Rules Implementing Republic Act No. 6727. See also San Miguel Corporation Cagayan Coca-Cola Plant v. Inciong, G.R. No. L-49774, Feb. 24, 1981, 103 SCRA 139. Section 2, Rule VII-A, Book III, Rules to Implement the Labor Code, as amended by Memorandum Circular No. 3, Nov. 4, 1992. 33 State Marine Cooperation and Royal Line, Inc. v. Cebu Seamen’s Association, Inc., G.R. No. L-12444, Feb. 28, 1963; Atok Big Wedge Mining Co., Inc. v. Atok Big Wedge Mutual Benefit Association, G.R. No. L-5276, March 3, 1953, 97 Phil. 294. 34 States Marine Cooperation and Royal Line, Inc. v. Cebu Seamen’s Association, Inc., G.R. No. L-12444, Feb. 28, 1963, 7 SCRA 294; Atok Big Wedge Mining Co., Inc. v. Atok Big Wedge Mutual Benefit Association, G.R. No. L-5276, March 3, 1953, 97 Phil. 294 35 States Marine Corporation and Royal Line, Inc. v. Cebu Seamen’s Association, Inc., infra; Mayon Hotel & Restaurant v. Adana, supra; Mabeza v. NLRC, supra. 36 States Marine Corporation and Royal Line, Inc. v. Cebu Seamen’s Association, Inc., [G.R. No. L-12444, February 28, 1963, 7 SCRA 294]. 37 Mabeza v. NLRC, [G.R. No. 118506, April 18, 1997, 271 SCRA 670]. 38 Section 1, Rule VII-A, Book III, Rules to Implement the Labor Code, as amended by Memorandum Circular No. 3, Nov. 4, 1992. 39 S.I.P. Food House v. Batolina, [G.R. No. 192473, October 11, 2010], 40 The terms “wage” (etymologically from the Middle English word “wagen”), “salary” (from the Roman word “sal” and Latin word “salarium”) are synonymous in meaning and usage. They all refer to the same thing, i.e., a compensation paid on account of work or services rendered. 30 31

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4. WAGES VS. SALARIES.

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d. Some principles on facilities and supplements. 1. Facilities are deductible but not supplements.36 2. Legal requirements must be complied with before deducting facilities from wages. The employer simply cannot deduct the value from the employee’s wages without satisfying the following: (a) proof that such facilities are customarily furnished by the trade; (b) the provision of deductible facilities is voluntarily accepted in writing by the employee; and (c) the facilities are charged at fair and reasonable value.37 3. An employer may provide subsidized meals and snacks to his employees provided that the subsidy shall not be less than thirty percent (30%) of the fair and reasonable value of such facilities. In such a case, the employer may deduct from the wages of the employees not more than seventy percent (70%) of the value of the meals and snacks enjoyed by the employees, provided that such deduction is with the written authorization of the employees concerned.38 4. The free board and lodging petitioner SIP furnished its employees cannot operate as a set‐off for the underpayment of their wages.39

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c. Facilities and supplements, distinguished. The benefit or privilege given to the employee which constitutes an extra remuneration over and above his basic or ordinary earning or wage, is supplement; and when said benefit or privilege is part of the laborer’s basic wage, it is a facility. As earlier pointed out, the criterion is not so much with the kind of the benefit or item (food, lodging, bonus or sick leave) given but its purpose. Thus, free meals supplied by the ship operator to crew members, out of necessity, cannot be considered as facilities but supplements which could not be reduced having been given not as part of wages but as a necessary matter in the maintenance of the health and efficiency of the crew personnel during the voyage.35

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b. Supplements, defined. The term “supplements” means extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages.34

32





laborer) cannot be considered wages. Salary is understood to relate to a position or office, or the compensation given for official or other service; while wage is the compensation for labor.41

5. WAGE DISTORTION (ARTICLE 124, LABOR CODE).

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Minimum Wage = % x Prescribed Increase = Distortion Adjustment Actual Salary

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The above formula was held to be just and equitable.

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d. Some principles on wage distortion. 1. No wage distortion in case wage increases were granted by a wage order to employees in one region and the same are not granted to their counterparts in other regions who are not covered by the same wage order.46 2. In correcting wage distortion, the law does not require that the difference which had previously existed between and among the employees of different classes be restored in exactly the same amount. What is required is substantial difference in such wage rates.47

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6. CBA VIS‐À‐VIS WAGE ORDERS – CBA CREDITABILITY (ARTICLE 125, LABOR CODE).

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a. Wage increases and benefits from CBA different from those granted by law. Wage increases and benefits derived from law and wage order and those from the CBA or company policy or practice are separate and distinct from each other, unless otherwise provided by the agreement itself or by law.48

Gaa v. CA, infra; See also Equitable Banking Corp. v. Sadac, G.R. No. 164772, June 8, 2006. Article 124, Labor Code; Item [p], Definition of Terms, Rules Implementing Republic Act No. 6727; Section 4 [m], Rule I, NWPC Guidelines No. 01, Series of 2007, June 19, 2007 [Amended Rules of Procedure on Minimum Wage Fixing; See also Section 1[l], Rule II, NCMB Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings [Oct. 15, 2004]. 43 National Federation of Labor v. NLRC, G.R. No. 103586, July 21, 1994, 234 SCRA 311; See also Metropolitan Bank and Trust Company Employees Union-ALU-TUCP v. NLRC, [G.R. No. 102636, Sept. 10, 1993, 226 SCRA 268; Cardona v. NLRC, G.R. No. 89007, March 11, 1991, 195 SCRA 92; Associated Labor Unions-TUCP v. NLRC, G.R. No. 109328, Aug. 16, 1994, 235 SCRA 395. 44 Prubankers Association v. Prudential Bank and Trust Company, [G.R. No. 131247, January 25, 1999, 302 SCRA 74]. 45 National Federation of Labor v. NLRC, G.R. No. 103586, July 21, 1994, 234 SCRA 311. 46 Prubankers Association v. Prudential Bank and Trust Company, [supra]. 47 National Federation of Labor v. NLRC, G.R. No. 103586, July 21, 1994, 234 SCRA 311; Metro Transit Organization, Inc. v. NLRC, G.R. No. 116008, July 11, 1995, 245 SCRA 767. 48 Meycauayan Colleges v. Drilon, G.R. No. 81144, May 7, 1990; Universal Corn Products v. NLRC, 153 SCRA 191; Citibank Philippines Employees Union-NATU v. Minister of Labor, 97 SCRA 52; Roche [Philippines], v. NLRC, G.R. No. 83335, Oct. 5, 1989; Philippine Apparel Workers Union v. NLRC, G.R. No. L-50320, July 31, 1981, 106 SCRA 444. 41 42

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c. Formula for resolving wage distortion. In the case of Metropolitan Bank and Trust Company Employees Union‐ALU‐TUCP v. NLRC, [G.R. No. 102636, September 10, 1993], the Supreme Court has given its imprimatur to the following formula for the correction of wage distortion in the pay scale structures:

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b. Four elements of wage distortion. The four (4) elements of wage distortion are as follows: (1) An existing hierarchy of positions with corresponding salary rates; (2) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one; (3) The elimination of the distinction between the two levels; and (4) The existence of the distortion in the same region of the country.44 Normally, a company has a wage structure or method of determining the wages of its employees. In a problem dealing with “wage distortion,” the basic assumption is that there exists a grouping or classification of employees that establishes distinctions among them on some relevant or legitimate bases.45 Involved in the classification of employees are various factors such as the degrees of responsibility, the skills and knowledge required, the complexity of the job, or other logical basis of differentiation. The differing wage rate for each of the existing classes of employees reflects this classification.

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a. Wage distortion, as defined in the law and implementing rules. As defined by law and implementing rules, “wage distortion” contemplates a situation where an increase in prescribed wage rates results in either of the following: 1. Elimination of the quantitative differences in the rates of wages or salaries; or 2. Severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on the following criteria: a. skills; b. length of service; or c. other logical bases of differentiation.42 Elaborating on this statutory definition, the Supreme Court ruled: “Wage distortion presupposes a classification of positions and ranking of these positions at various levels. One visualizes a hierarchy of positions with corresponding ranks basically in terms of wages and other emoluments. Where a significant change occurs at the lowest level of positions in terms of basic wage without a corresponding change in the other level in the hierarchy of positions, negating as a result thereof the distinction between one level of position from the next higher level, and resulting in a parity between the lowest level and the next higher level or rank, between new entrants and old hires, there exists a wage distortion. xxx. The concept of wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such employees on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of employees.”43





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The CBA‐mandated wage increases are granted after serious bargaining negotiations between the employer and the employees through their duly recognized or certified bargaining agent. The legally‐mandated wage increases and benefits are imposed by the government, through the Regional Tripartite Wages and Productivity Boards (RTWPBs) without the benefit of any bargaining negotiations although public hearings are conducted prior to the promulgation of any wage order they issue. Once granted, both CBA‐mandated and legislated wage increases and benefits should be fully complied with by the employers under pain of being penalized under the law.

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“Section 10. CREDITABLE WAGE INCREASE. Any increase granted by an employer in an organized establishment within three (3) months prior to the effectivity of this Order shall be credited as compliance with the prescribed increase set forth herein, provided that an agreement to this effect has been forged between the parties or a collective bargaining agreement provision allowing creditability exists. In the absence of such an agreement or provision in the CBA, any increase granted by the employer shall not be credited as compliance with the wage increase prescribed in this Order. In unorganized establishments, any increase granted by the employer within five (5) months prior to the effectivity of this Order shall be credited as compliance therewith. In case the increases given are less than the prescribed Minimum Wage, the employer shall pay the difference. Such increases shall not include anniversary increases, merit wage increases and those resulting from the regularization or promotion of employees.”

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Rule IV of the Implementing Rules of said Wage Order expounds this further in more details, thus:

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“RULE IV CREDITABLE INCREASE

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“Section 1. ORGANIZED ESTABLISHMENTS. Wage increases granted by an employer in an organized establishment within three (3) months prior to the effectivity of the Order may be credited as compliance with the prescribed increase set forth therein; Provided that an agreement to this effect has been forged between the parties or a provision in the collective bargaining agreement allowing creditability exists. In the absence of such an agreement or provision in the CBA, any increase granted by the employer shall not be credited as compliance with the increase prescribed in this Order.

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“Section 2. UNORGANIZED ESTABLISHMENTS. In unorganized establishments, wage increases granted by the employer within five (5) months prior to the effectivity of the Order may be credited as compliance.

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“Section 3. CREDITABLE INCREASES GIVEN IN THE FORM OF ALLOWANCES. Where the increase given by the employer is in the form of allowances, the employer shall integrate the same into the basic wage of the workers to comply with the P404.00 or P 367.00 per day minimum basic pay whichever is applicable, prescribed under the Order. However, if the amount of the increase is greater than the increase granted under the Wage Order, the employer has the option to integrate partially or in full the allowances earlier given. In the event of partial integration, any excess maybe retained as allowances. “Section 4. CREDITABLE INCREASES GIVEN LESS THAN THE PRESCRIBED ADJUSTMENTS. In case the increases given are less than the prescribed adjustments, the employer shall pay the difference. Such increases shall not

49 50 51

Marcopper Mining Corporation v. NLRC, G.R. No. 103525, March 29, 1996; Kimberly Clark Phils. v. Lorredo, G.R. No. 103090, Sept. 21, 1993, 226 SCRA 639; Plastic Town Center Corporation v. NLRC, G.R. No. 81176, April 19, 1989, 172 SCRA 580. Filipinas Golf & Country Club, Inc. v. NLRC, G.R. No. 62918, Aug. 23, 1989. Philippine Telegraph and Telephone Corporation v. NLRC, G.R. No. 99858, June 19, 1995, 245 SCRA 193; Liberty Flour Mills Employees v. Liberty Flour Mills, Inc., G.R. Nos. 58768-70, Dec. 29, 1989, 180 SCRA 668.



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d. Wage Orders issued by RTWPBs. Wage Orders issued by the various Regional Tripartite Wages and Productivity Boards (RTWPBs) throughout the Philippines usually, although not in every case, contain a provision on chargeability. For instance, in Wage Order No. NCR‐15 [effective July 01, 2010], the following provision on creditability or chargeability is found in its Section 10, to wit:

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c. Creditability of CBA increases to Wage Order increases. Chargeability or creditability clause is a provision in the CBA or in the law or wage order allowing CBA‐ mandated increases to be charged or credited as compliance with the statutory wage increases mandated or ordered by law or wage order. This is a valid provision in the CBA or in the law or wage order mandating wage increases, provided that after charging or crediting thereof, the amount of wages of the employees shall remain equivalent to or over and above the prevailing minimum wage set by law or wage order. Where the increases are less than the applicable amount provided in the law or wage order, the employer is required to pay the difference.51

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b. Materiality of the intention of the parties to the CBA. A CBA, just like any contract, is subject to interpretation or construction if there is ambiguity in its provisions or stipulations. If no such ambiguity exists, its provisions which must be read together with its other stipulations and not in isolation from one another, should be given their literal meaning, following the basic rules of legal hermeneutics. The purpose of applying the rules of legal hermeneutics is to ascertain the intention of the parties to the agreement. Once determined, such intention should be given full effect and force as between them, it being understood that such CBA is their law. The principle that the CBA is the law between the contracting parties stands strong and true.49 Hence, it is well‐settled that if the purpose of the parties in entering into a stipulation on wage increases is to grant the same separate and distinct from whatever wage increases as may be granted by law or wage order, then the workers are entitled, no doubt, to both the CBA‐mandated and legally‐mandated wage increases during the period when both increases are concurrently effective. The manifest will and intent of the parties to treat the legislated increases as equivalent pro tanto to those stipulated in their bargaining agreement must be respected and given effect.50



include anniversary increases, merit wage increases, and those resulting from the regularization or promotion of employees.”

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e. Validity of chargeability/creditability clause. The validity of chargeability or creditability clause had long been upheld by the Supreme Court. In earlier Wage Orders containing chargeability clauses, such as Wage Orders Nos. 5 [June 11, 1984] and 6 [October 26, 1984], it was ruled that such clause is grounded on public policy to encourage employers to grant wage and allowance increases prescribed by the statute or administrative regulation.52 Moreover, according to Filipinas Golf & Country Club, Inc. v. NLRC, [G.R. No. 61918, August 23, 1989, 176 SCRA 625], stipulations which subordinate contractual wage increases to those imposed or prescribed by law are not contrary to law, customs, public order or public policy. In Philippine Telegraph and Telephone Corporation v. NLRC, [G.R. No. 99858, June 1995], the CBA provisions in question reveal quite sufficiently the parties' intention to consider salary increases provided in the CBA to be creditable to wage increases that are or may be mandated within the applicable period by law. In holding that there is nothing sinister in this kind of stipulation, the High Court cited the said case of Filipinas Golf and Country Club, Inc., vs. NLRC, where it was stated that such agreements merely create an equivalence between legal and contractual imperatives, rendering both obligations susceptible of performance by compliance with either, subject only to the condition that where the increases given under the agreement fall short in amount of those fixed by law, the difference must be made up by the employer.

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a. Principle under Article 100. Article 100 of the Labor Code ordains two (2) principles, namely, [1] the non‐elimination and (2) the non‐ diminution of the supplements or other benefits of employees being enjoyed by them at the time of the promulgation of the Labor Code on May 1, 1974. Therefore, the reduction or diminution or withdrawal by employers of any such 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.54

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b. The non‐elimination or non‐diminution principle applied even to benefits granted after the promulgation/effectivity of the Labor Code. Albeit Article 100 is clear that the twin principles of non‐elimination and non‐diminution of benefits apply only to the benefits being enjoyed “at the time of the promulgation” of the Labor Code, the Supreme Court, however, has consistently cited Article 100 as being applicable even to benefits granted after said promulgation. It has, in fact, been treated as the legal anchor for the declaration of the invalidity of so many acts of employers deemed to have eliminated or diminished the benefits of employees.

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c. When elimination or diminution of benefits constitutes demotion. The illegal and unjustified elimination or diminution of certain benefits may result in illegal demotion. Under established jurisprudence, there is demotion where the act of the employer results in the lowering in position or rank or reduction in salary of the employee.55 It involves a situation where an employee is relegated to a subordinate or less important position constituting a reduction to a lower grade or rank with a corresponding decrease in duties and responsibilities and usually accompanied by a decrease in salary.56

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b. When elimination or diminution of benefits constitutes constructive dismissal. Elimination or diminution of certain benefits may result in the constructive dismissal of an employee. Constructive dismissal is an involuntary resignation resorted to when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee that it could foreclose any choice by him except to forego his continued employment.57

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Apex Mining Co., Inc. v. NLRC, G.R. No. 86200, Feb. 25, 1992, 206 SCRA 497. Lakas ng Manggagawang Makabayan [LMM] v. Abiera, G.R. No. L-29474, Dec. 19, 1970; Liberation Steamship Co., Inc. v. CIR, G.R. No. L-25389, June 27, 1968. Republic Planters Bank, now known as PNB-Republic Bank, v. NLRC, G.R. No. 117460, Jan. 6, 1997; Davao Fruits Corporation v. Associated Labor Union, G.R. No. 85073, Aug. 24, 1993, 225 SCRA 567 55 Philippine Wireless, Inc. [Pocketbell] v. NLRC, G.R. No. 112963, July 20, 1999; Brillantes v. Guevarra, G.R. No. L-22586, Feb. 27, 1969, 27 SCRA 138; Fernando v. Sto. Tomas, G.R. No. 112309, July 28, 1994, 234 SCRA 546. 56 Tinio v. CA, G.R. No. 171764, June 8, 2007. 57 Unicorn Safety Glass, Inc. v. Basarte, G.R. No. 154689, Nov. 25, 2004; See also Uniwide Sales Warehouse Club v. NLRC, G.R. No. 154503, Feb. 29, 2008; Chiang Kai Shek College v. Hon. CA, G.R. No. 152988, Aug. 24, 2004. 52 53 54

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7. NON‐DIMINUTION OF BENEFITS (ARTICLE 100, LABOR CODE).

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g. Prohibition on CBA stipulations below minimum legal standards. The parties to a CBA are not allowed to stipulate below the minimum standards provided under the law. Entering into a CBA which contains terms and conditions of employment below minimum standards established by law will not constitute a bar to the conduct of a certification election despite the registration of the CBA with the Department of Labor and Employment. Previously, entering into a CBA providing benefits below the minimum standards set by law is one of the grounds for cancellation of union registration under Article 239 [f] of the Labor Code. This ground, however, has been deleted by the amendatory provision of Republic Act No. 9481, which took effect on June 14, 2007.

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f. Law is presumed part of the CBA. The provisions of existing laws form part of a valid contract. This is a well‐settled rule. There is no need for the parties to make any express reference thereto. The law is presumed to be part of the contract.53





8. WORKER’S PREFERENCE IN CASE OF BANKRUPTCY (ARTICLE 110, LABOR CODE).

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a. Rule under Article 110. Article 110,58enunciates the concept of “worker preference” to cover not only unpaid “wages” but also “other monetary claims” to which even claims of the government must be deemed subordinate. Thus, it is explicitly provided that “(s)uch unpaid wages and monetary claims shall be paid in full before claims of the government and other creditors may be paid.” Its implementing rule59 states:

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“Section 10. Payment of Wages and Other Monetary Claims in Case of Bankruptcy. ‐ In case of bankruptcy or liquidation of the employer’s business, the unpaid wages and other monetary claims of the employees shall be given first preference and shall be paid in full before the claims of government and other creditors may be paid.” [Underlining supplied]

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c. Preference of mortgage credit. A mortgage credit is a special preferred credit under Article 2241 of the Civil Code while workers’ preference is an ordinary preferred credit.67 The statement in Development Bank of the Philippines v. NLRC, [G.R. Nos. 100264‐81, January 29, 1993, 218 SCRA 183], that under the new Article 110 of the Labor Code, mortgage credits are subordinate to workers’ claim is merely an obiter.68 Thus, it is grave abuse of discretion on the part of the Labor Arbiter in ruling that the employees may enforce their first preference in the satisfaction of their claims over those of the mortgagor in the absence of a declaration of bankruptcy or judicial liquidation of the employer. There is nothing that prevents the employees from instituting involuntary insolvency or any other appropriate proceeding against their employer where their claims can be asserted with respect to their employer’s assets.69 The 2005 case of Barayoga v. Asset Privatization Trust, [GR No. 160073, October 24, 2005], continues to affirm the same principles enunciated in the cases mentioned earlier. In this case, Philippine National Bank (PNB) was a mortgage creditor of Bicolandia Sugar Development Corp. (BISUDECO). The claim of PNB was later transferred to the Asset Privatization Trust (APT) which was created to conserve, provisionally manage and dispose of non‐performing assets of the Philippine government identified for privatization or disposition. APT subsequently acquired ownership of BISUDECO’s assets following foreclosure proceedings. A complaint for underpayment of wages and other labor standards benefits was filed by the workers of BISUDECO. APT later sold BISUDECO’s assets to the Bicol‐Agro Industrial Cooperative (BAPCI). The workers sought to enforce their claim against APT and BAPCI. Both the Labor Arbiter and the NLRC ruled in favor of the workers for their unpaid benefits. APT, having been held liable therefor, raised the issue of whether, as mortgagee of their employer’s assets, it can be held liable for the workers’ claims. The Supreme Court ruled

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As amended by Section 1 of R.A. No. 6715 [March 21, 1989]. Particularly Section 10, Rule VIII, Book III of the Rules to Implement the Labor Code, as amended on May 24, 1989. Some of the notable cases where this pronouncement was asserted are Bolinao, Jr. v. Padolina, [G.R. No. 81415, June 6, 1990, 186 SCRA 368]; DBP v. NLRC, [G.R. No. 86932, June 27, 1990, 186 SCRA 841]; DBP v. Minister of Labor, [G. R. No. 75801, March 20, 1991]; DBP v. NLRC, [G.R. Nos. 100264-81, January 29, 1993]; DBP v. NLRC, [G.R. No. 86227, January 19, 1994, 229 SCRA 350]; Hautea v. NLRC, [G.R. No. 96149, February 16, 1994]; DBP v. NLRC, [G.R. No. 106655, September 1, 1994]; DBP v. NLRC, [G.R. No. 108031, March 01, 1995] and Barayoga v. Asset Privatization Trust, [GR No. 160073, October 24, 2005]. 61 The Manila Banking Corporation, v. NLRC, G.R. No. 107487, Sept. 29, 1997, 279 SCRA 602. 62 Commissioner of Internal Revenue v. NLRC, G.R. No. 74965, Nov. 9, 1994, 238 SCRA 42; DBP v. Secretary of Labor, G.R. No. 79351, Nov. 28, 1989. 63 DBP v. NLRC, G.R. No. 86227, Jan. 19, 1994, 229 SCRA 350. 64 DBP v. Secretary of Labor, G.R. No. 79351, Nov. 28, 1989 citing Philippine Savings Bank v. Lantin, G.R. No. L-33929, Sept. 2, 1983, 124 SCRA 476; DBP v. Hon. Labor Arbiter Ariel C. Santos G.R. Nos. 78261-62, March 8, 1989. 65 DBP v. NLRC, G.R. No. 108031, March 1, 1995, 242 SCRA 59. 66 See also Republic v. Enriquez, G.R. No. L-78391, Oct. 21, 1988, 166 SCRA 608. 67 Hautea v. NLRC, G.R. No. 96149, Feb. 16, 1994, 230 SCRA 119; DBP v. NLRC, G.R. Nos. 82763-64, June 27, 1990, 183 SCRA 328. 68 Hautea v. NLRC, G.R. No. 96149, Feb. 16, 1994, 230 SCRA 119. 69 DBP v. Secretary of Labor, G.R. No. 79351, Nov. 28, 1989 58 59 60

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b. Preference of taxes and claims of government. By way of underscoring this point on preference of taxes, worth reiterating is the ruling in Commissioner of Internal Revenue v. NLRC, [G.R. No. 74965, November 9, 1994, 238 SCRA 42], that there is no merit in the contention that taxes are absolutely preferred claims only with respect to movable and immovable properties on which they are due. The claim of the government predicated on a tax lien is superior to the claim of a private litigant predicated on a judgment. The tax lien attaches not only from the service of the warrant of distraint of personal property but from the time the tax became due and payable.66

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Despite the clear letter of the law and its implementing rule, the Supreme Court consistently held in a plethora of cases that the right to preference given to workers under Article 110 cannot exist in any effective way prior to the time of its presentation in distribution proceedings. In other words, there should first be a declaration of bankruptcy or judicial liquidation.60 It is beyond dispute that employees indeed enjoy first preference in the event of bankruptcy or liquidation of an employer’s business.61 But Article 110 applies only in case of bankruptcy or judicial liquidation of the employer.62 Judicial proceedings in rem is required for creditors’ claims against debtors to become operative.63 In this jurisdiction, bankruptcy, insolvency and general judicial liquidation proceedings provide the only proper venue for the enforcement of a creditor's preferential right such as that established in Article 110 of the Labor Code, for these are in rem proceedings binding against the whole world where all persons having any interest in the assets of the debtor are given the opportunity to establish their respective credits.64 To contend that Article 110 of the Labor Code is applicable also to extrajudicial proceedings would be putting the worker in a better position than the State which could only assert its own prior preference in case of a judicial proceeding.65





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that the mortgagee‐transferee of its debtor’s assets does not automatically acquire the liabilities of the debtor‐ mortgagor, such as the workers’ claims for benefits. Hence, APT as mortgagee of BISUDECO, cannot be held liable for the monetary claims of the latter’s workers. Citing DBP v. NLRC, [G.R. Nos. 82763‐64, March 19, 1990, 183 SCRA 328], it further held that the worker’s preference of credit is not a lien that attaches to specific properties of their insolvent employer. A mortgagee’s lien, on the other hand, creates a charge on the debtor company’s particular property and, hence, should prevail over the workers’ preference of credit. The Supreme Court reiterated the rule that the benefit of Article 110 cannot be invoked outside bankruptcy or judicial proceedings where the claims of all creditors may be inventoried and determined.

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d. Meaning of “wages” in Article 110. The term “wages” under Article 110 of the Labor Code may be regarded as embracing within its scope, severance pay or termination or separation pay.70

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9. LABOR CODE PROVISION FOR WAGE PROTECTION (ARTICLES 112 TO 119, LABOR CODE). The following provisions of the Labor Code are meant to protect wage:

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ART. 112. Non-interference in disposal of wages. - No employer shall limit or otherwise interfere with the freedom of any employee to dispose of his wages. He shall not in any manner force, compel, or oblige his employees to purchase merchandise, commodities or other property from any other person, or otherwise make use of any store or services of such employer or any other person.

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ART. 116. Withholding of wages and kickbacks prohibited. - It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the worker’s consent.

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ART. 115. Limitations. - No deduction from the deposits of an employee for the actual amount of the loss or damage shall be made unless the employee has been heard thereon, and his responsibility has been clearly shown.

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ART. 114. Deposits for loss or damage. - No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deductions or requiring deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor and Employment in appropriate rules and regulations.

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ART. 113. Wage deduction. - No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except: (a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; (b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and (c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment.

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ART. 117. Deduction to ensure employment. - It shall be unlawful to make any deduction from the wages of any employee for the benefit of the employer or his representative or intermediary as consideration of a promise of employment or retention in employment.

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ART. 118. Retaliatory measures. - It shall be unlawful for an employer to refuse to pay or reduce the wages and benefits, discharge or in any manner discriminate against any employee who has filed any complaint or instituted any proceeding under this Title or has testified or is about to testify in such proceedings.

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ART. 119. False reporting. - It shall be unlawful for any person to make any statement, report, or record filed or kept pursuant to the provisions of this Code knowing such statement, report or record to be false in any material respect.

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All the foregoing provisions are considered prohibitions regarding wages. 10. ALLOWABLE DEDUCTIONS WITHOUT EMPLOYEE’S CONSENT (ARTICLE 113, LABOR CODE).

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b. Deductions allowed under Article 113. Article 113 allows only three (3) kinds of deductions, namely: (a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; (b) For union dues, in cases where the right of the worker or his union to check‐off has been recognized by the employer or authorized in writing by the individual worker concerned; and (c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment.

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Republic v. Peralta, G.R. No. 56568, May 20, 1987, 150 SCRA 37, 51. Galvadores v. Trajano, G.R. No. L-70067, Sept. 15, 1986, 144 SCRA 138.





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a Non‐lawyers are not entitled to attorney’s fees. Albeit the law allows, under certain circumstances, non‐lawyers to appear before the Labor Arbiter, National Labor Relations Commission or other labor tribunals, this does not mean, however, that they are entitled to attorney’s fees. Their act of representing, appearing or defending a party litigant in a labor case does not, by itself, confer upon them any legal right to claim for attorney’s fees. Entitlement to attorney’s fees presupposes the existence of attorney‐ client relationship. This relationship cannot exist unless the client’s representative is a lawyer.82

b. Attorney’s fees cannot be shared with non‐lawyers. As held in the case of Amalgamated Laborers Association v. CIR, [G.R. No. L‐23467, March 27, 1968, 22 SCRA 1266], it is an immoral act for a lawyer to enter into an agreement whereby the union president will share in his attorney’s fees. Canon 34 of Legal Ethics proscribes and condemns this arrangement. It provides that no division of fees for legal services is proper except with another lawyer based upon a division of service or responsibility. Since the union president is not the lawyer for the workers, he cannot be allowed to share in the attorney’s fees.

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II. ON UNION SERVICE FEES.

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a. Entitlement to union service fees. There are certain cases where it is not a lawyer who represents the interest of the employees. Labor federations and local unions are allowed in our jurisdiction to appear as counsels in labor proceedings. Their appearance has been given sanction under Article 222 of the Labor Code which allows non‐lawyers to represent their organization or any member thereof.83 The best illustrative case on this point is Radio Communications of the Phils., Inc. v. Secretary of Labor and Employment, [G.R. No. 77959, January 9, 1989, 169 SCRA 38]. In this case, petitioner continuously withheld payment of the ECOLA mandated under Wage Order No. 1. For this reason, the employees were forced to avail of the services of

Article 248 [e], Labor Code. Radio Communications of the Phils., Inc. v. Secretary of Labor and Employment, G.R. No. 77959, Jan. 9, 1989, 169 SCRA 38. Section 13, Rule VIII, Book III, Rules to Implement the Labor Code. 75 Section 7, Rule VI, Book III, Rules to Implement the Labor Code. 76 Article 1706, Civil Code 77 Article 1708, Civil Code. 78 Article 59, R.A. No. 6938. 79 Special Steel Products, Inc. v. Villareal, [G.R. No. 143304, July 8, 2004]. 80 Pondoc v. NLRC, G.R. No. 116347, Oct. 03, 1996. 81 Agabon v. NLRC, [G.R. No. 158693, November 17, 2004]. 82 Five J. Taxi, v. NLRC, G.R. No. 111474, Aug. 22, 1994, 235 SCRA 556; Philippine Association of Free Labor Unions [PAFLU] v. Binalbagan Isabela Sugar Co., G.R. No. L-23959, Nov. 29, 1971, 42 SCRA 302. 83 RCPI v. Secretary of Labor and Employment, infra. 72 73 74

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I. ON ATTORNEY’S FEES.

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11. ATTORNEY’S FEES AND UNION SERVICE FEE IN LABOR CASES (ARTICLE 111, LABOR CODE).

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d. Some principles on deductions from employee’s salary or wage. 1. Debt due to the employer may be set‐off against the employee’s wages and benefits.79. 2. To validly set‐off debt, the employee’s debt should arise from, or be connected with, the employment relationship. Evidence should be presented by the employer to prove that the indebtedness arose out of or was incurred in connection with their employment relationship. Moreover, the set‐off should be asserted during the proceedings before the Labor Arbiter and not after the case had been resolved with finality.80 3. Deductions due to tardiness or absences are valid. 4. 13th‐month pay is considered part of “wages” within the meaning and contemplation of Article 97 [f] of the Labor Code. No deduction, therefore, can be made therefrom without the knowledge and consent of the employee concerned. Thus, the deduction of SSS loan and the value of shoes from the 13th‐month pay of the employee is not allowed.81

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c. Deductions allowed under other provisions of the Labor Code and other laws. Deductions from the wages of employees may be made by the employer in any of the following cases: 1. Deductions for loss or damage under Article 114 of the Labor Code; 2. Deductions made for agency fee from non‐union members who accept the benefits under the CBA negotiated by the recognized or certified bargaining union. This form of deduction does not require the written authorization of the non‐union member concerned;72 3. Union service fee;73 4. When the deductions are with the written authorization of the employee for payment to a third person and the employer agrees to do so, provided that the latter does not receive any pecuniary benefit, directly or indirectly, from the transaction;74 5. Deductions for value of meal and other facilities;75 6. Deductions for premiums for SSS, PhilHealth, employees’ compensation and Pag‐IBIG; 7. Withholding tax mandated under the National Internal Revenue Code (NIRC); 8. Withholding of wages because of the employee’s debt to the employer which is already due;76. 9. Deductions made pursuant to a court judgment against the worker under circumstances where the wages may be the subject of attachment or execution but only for debts incurred for food, clothing, shelter and medical attendance;77 10. When deductions from wages are ordered by the court; 11. Salary deductions of a member of a legally established cooperative.78





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their union – the United RCPI Communications Labor Association (URCPICLA) – Federation of Unions of Rizal (FUR) in order to secure the benefit. URCPICLA–FUR litigated the case up to the Supreme Court. In the meantime, petitioner RCPI, without the knowledge and consent of private respondent URCPICLA–FUR, entered into a compromise agreement with Buklod ng Manggagawa sa RCPI‐NFL (BMRCPI‐NFL), the new bargaining agent of the RCPI employees. Petitioner then implemented the terms of the compromise agreement without paying the 10% “union service fee” due private respondent URCPICLA–FUR. On the sole issue of whether the public respondents acted with grave abuse of discretion amounting to lack of jurisdiction in holding petitioner RCPI solely liable for "union service fee" to respondent URCPICLA‐FUR, the Supreme Court ruled in the negative. The union is entitled to union service fees considering that it was categorically found by the Labor Secretary to have been responsible for the successful prosecution of the case to its ultimate conclusion in behalf of its members, employees of petitioner. The union’s right to fees for services rendered, or what it termed as "union service fee," is, therefore, indubitable. In the 2009 case of Dealco Farms, Inc. v. NLRC, [G.R. No. 153192, January 30, 2009], the Supreme Court affirmed the union service fees of 10% of the total monetary award earlier granted by the Labor Arbiter and the NLRC as it was based on the finding that respondents were dismissed without just or authorized cause.

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c. Standards/Criteria for minimum wage fixing. The minimum wage rates to be established by the Board shall be as nearly adequate as is economically feasible to maintain the minimum standards of living necessary for the health, efficiency and general well‐being of the workers within the framework of national economic and social development goals. In the determination of regional minimum wages, the Board shall, among other relevant factors, consider the following: (a) Needs of workers and their families 1) Demand for living wages 2) Wage adjustment vis‐à‐vis the consumer price index 3) Cost of living and changes therein 4) Needs of workers and their families 5) Improvements in standards of living (b) Capacity to pay 1) Fair return on capital invested and capacity to pay of employers 2) Productivity (c) Comparable wages and incomes 1) Prevailing wage levels (d) Requirements of economic and social development 1) Need to induce industries to invest in the countryside 2) Effects on employment generation and family income 3) Equitable distribution of income and wealth along the imperatives of economic and social development. (Section 2, Rule II, Ibid.). ================================= TOPIC UNDER THE SYLLABUS C. LABOR STANDARDS 3. Rest Day a. Right to weekly rest day b. Preference of the employee c. When work on rest day authorized =================================

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a. Latest NWPC Guidelines No. 01, Series of 2007. NWPC Guidelines No. 01, Series of 2007 was issued by the NWPC on June 19, 2007, promulgating the “Amended Rules of Procedure on Minimum Wage Fixing” governing the proceedings in the Commission and the RTWPBs in the fixing of minimum wage rates by region, province or industry. By virtue of this latest issuance, the previous NWPC Guidelines No. 001‐95 and the June 4, 1990 Rules are now deemed repealed pursuant to Section 1, Rule XII thereof which declares that “(a)ll existing rules, regulations or orders or any part thereof inconsistent with this Amended Rules are hereby, repealed, amended or modified accordingly.” b. Conduct of wage and productivity studies. The Board (RTWPB) shall, subject to the guidelines issued by the Commission (NWPC), conduct continuing studies of wage rates, productivity and other conditions in the region, provinces or industries therein. The Board shall investigate and study all pertinent facts, and based on standards and criteria (see below) shall determine whether a wage order should be issued.84

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1. RIGHT TO WEEKLY REST DAY (ARTICLE 91, LABOR CODE).

a. Coverage.

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12. CRITERIA/FACTORS FOR WAGE SETTING (ARTICLE 124, LABOR CODE).

Section 1, Rule II, NWPC Guidelines No. 01, Series of 2007, June 19, 2007 [Amended Rules of Procedure on Minimum Wage Fixing].





The rule on weekly rest period is applicable to all employers, whether operating for profit or not, including public utilities operated by private persons.85

b. Weekly rest period. Every employer is required to give his employees a rest period of not less than twenty‐four (24) consecutive hours after every six (6) consecutive normal work days.86

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2. PREFERENCE OF THE EMPLOYEE (ARTICLE 91, LABOR CODE).

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======================================= TOPIC UNDER THE SYLLABUS C. LABOR STANDARDS 4. Holidays a. Right to holiday pay (1) In case of absences (2) In case of temporary cessation of work (3) Of teachers, piece workers, seafarers,

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b. Compulsory work on scheduled rest day. An employer may require any of his employees to work on his scheduled rest day for the duration of the following emergency and exceptional conditions: a. In case of 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 in case of force majeure or imminent danger to public safety; b. In case of urgent work to be performed on machineries, equipment, or installations, to avoid serious loss which the employer would otherwise suffer; c. In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be expected to resort to other measures; d. To prevent serious loss of perishable goods; e. Where the nature of the work is such that the employees have to work continuously for seven (7) days in a week or more, as in the case of the crew members of a vessel to complete a voyage and in other similar cases; and f. When the work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon.92

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a. General rule. No employee shall be required against his will to work on his scheduled rest day except under the circumstances provided under Article 92 of the Labor Code where work on such day may be compelled. However, in case work on rest day is required and not one of the said circumstances is present, the employee may work during such rest day but only on voluntary basis. And once an employee volunteers to work on his rest day, he should express such willingness and desire to work in writing. Accordingly, he should be paid the additional compensation for working on his rest day under the law.91

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3. WHEN WORK ON REST DAY AUTHORIZED (ARTICLE 92, LABOR CODE).

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a. Employee’s preference of rest day based on religious grounds. By express provision of Article 91 of the Labor Code, the exercise by the employer of such right and prerogative is subject to the preference in the choice by the employee of his rest day based on religious grounds. Article 91, in fact, makes the employer duty‐bound to respect such preference of the employee if based on religious grounds. The employee should make known his preference to the employer in writing at least seven (7) days before the desired effectivity of the initial rest day so preferred.89 Where, however, the choice of the employees as to their rest day based on religious grounds will inevitably result in serious prejudice or obstruction to the operations of the undertaking and the employer cannot normally be expected to resort to other remedial measures, the employer may so schedule the weekly rest day of their choice for at least two (2) days in a month.90

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c. Schedule of rest day. Where the weekly rest is given to all employees simultaneously, the employer should make known such rest period by means of a written notice posted conspicuously in the workplace at least one (1) week before it becomes effective.87 Where the rest period is not granted to all employees simultaneously and collectively, the employer shall make known to the employees their respective schedules of weekly rest day through written notices posted conspicuously in the workplace at least one (1) week before they become effective.88

Section 1, Rule III, Book III, Rules to Implement the Labor Code. Section 3, Rule III, Book III, Ibid.. Section 5 [a], Rule III, Book III, Ibid.. Section 5 [b], Rule III, Book III, Ibid.. 89 Section 4, Rule III, Book III, Ibid.. 90 Section 4, Rule III, Book III, Ibid.. 91 Under Section 6, Rule III, Book III of the Rules to Implement the Labor Code. 92 See Section 6, Rule III, Book III, Rules to Implement the Labor Code. 85 86 87 88





seasonal workers, etc. b. Exclusions from coverage =======================================

1. RIGHT TO HOLIDAY PAY IN CASE OF ABSENCES (ARTICLE 94, LABOR CODE).

a. Effect of absences on entitlement to holiday pay. 1. Employees on leave of absence with pay ‐ entitled to holiday pay when they are on leave of absence with pay.93 2. Employees on leave of absence without pay on the day immediately preceding the regular holiday ‐ may not be paid the required holiday pay if he has not worked on such regular holiday.94 3. Employees on leave while on SSS or employee’s compensation benefits ‐ Employers should grant the same percentage of the holiday pay as the benefit granted by competent authority in the form of employee’s compensation or social security payment, whichever is higher, if he is not reporting for work while on such benefits.95 4. When day preceding regular holiday is a non‐working day or scheduled rest day ‐ should not be deemed to be on leave of absence on that day, in which case, he is entitled to the regular holiday pay if he worked on the day immediately preceding the non‐working day or rest day.96

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2. RIGHT TO HOLIDAY PAY IN CASE OF TEMPORARY CESSATION OF WORK.

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ON RIGHT TO HOLIDAY PAY OF TEACHERS.

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ON RIGHT TO HOLIDAY PAY OF PIECE WORKERS.

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b. Workers paid by results classified into supervised and unsupervised. The principal test to determine entitlement to holiday pay is whether the employees’ time and performance of the work are “supervised” or “unsupervised” by their employer. If supervised, the employee is entitled to holiday pay. If unsupervised, he is not.102 The distinctions between supervised and unsupervised workers paid by results are as follows: (1) Those whose time and performance are supervised by the employer. Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece‐rate worker belongs to this category especially if he performs his work in the company premises; and (2) Those whose time and performance are unsupervised. Here, the employer’s control is over the result of the work. Workers on pakyao and takay basis belong to this group. Both classes of workers are paid per unit accomplished. Piece‐rate payment is generally practiced in garment factories where work is done in

Section 6 [a], Rule IV, Book III, Rules to Implement the Labor Code; No. II [E], DOLE Handbook on Workers Statutory Monetary Benefits. Section 6 [a], Rule IV, Book III, Ibid.; No. II [E], Ibid. Section 6 [b], Rule IV, Book III, Ibid.; No. II [E], Ibid.. 96 Section 6 [c], Rule IV, Book III, Ibid.; No. II [E], Ibid.. 97 Section 7 [a], Rule IV, Book III, Ibid.; No. II [F], Ibid.. 98 Section 7 [b], Rule IV, Book III, Ibid.. 99 Section 8 [a], Rule IV, Book III, Ibid.; No. II [G], Ibid.. 100 Jose Rizal College v. NLRC, [G.R. No. 65482, December 1, 1987]. 101 Section 8 [b], Rule IV, Book III, Rules to Implement the Labor Code; No. II [G], DOLE Handbook on Workers Statutory Monetary Benefits. 102 Labor Congress of the Philippines v. NLRC, [G.R. No. 123938, May 21, 1998, 290 SCRA 509]; Tan v. Lagrama, [G.R. No. 151228, August 15, 2002]. 93

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a. Holiday pay of piece workers or employees paid by results. Where a covered employee is paid by results or output such as payment on piece‐work, his holiday pay should not be less than his average daily earnings for the last seven (7) actual working days preceding the regular holiday. In no case, however, should the holiday pay be less than the applicable statutory minimum wage rate.101

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1. Private school teachers, in general. Private school teachers, including faculty members of colleges and universities, may not be paid for the regular holidays during semestral vacations. They shall, however, be paid for the regular holidays during Christmas vacation.99 2. Holiday pay of hourly‐paid teachers. A school is exempted from paying hourly‐paid faculty members their pay for regular holidays, whether the same be during the regular semesters of the school year or during semestral, Christmas, or Holy Week vacations. However, it is liable to pay the faculty members their regular hourly rate on days declared as special holidays or if, for some reason, classes are called off or shortened for the hours they are supposed to have taught, whether extensions of class days be ordered or not; and in case of extensions, said faculty members shall likewise be paid their hourly rates should they teach during said extensions,100

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b. Temporary cessation of operation due to business losses or reverses. The regular holiday during the temporary cessation of operation of an enterprise due to business losses or financial reverses as authorized by the Secretary of Labor and Employment may not be paid by the employer.98 3. RIGHT TO HOLIDAY PAY OF TEACHERS, PIECE WORKERS, SEAFARERS, SEASONAL WORKERS, ETC.

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a. Temporary or periodic shutdown or cessation of work not due to business reverses. In cases of temporary or periodic shutdown and temporary cessation of work of an establishment, as when a yearly inventory or when the repair or cleaning of machineries and equipment is undertaken, the regular holidays falling within the period should be compensated in accordance with Rule IV [Holidays With Pay], Book III of the Rules to Implement the Labor Code.97

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the company premises, while payment on pakyao and takay basis is commonly observed in the agricultural industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify. Petitioners belong to the first category, i.e., supervised employees.103

ON RIGHT TO HOLIDAY PAY OF SEAFARERS.

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Under the Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean‐ Going Vessels, it is provided that “(a)ny hours of work or duty including hours of watch keeping performed by the seafarer on designated rest days and holidays shall be paid rest day or holiday pay.

ON RIGHT TO HOLIDAY PAY OF SEASONAL WORKERS.

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a. Right to service incentive leave.

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1. SERVICE INCENTIVE LEAVE PAY (ARTICLE 95, LABOR CODE).

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=================================== TOPIC UNDER THE SYLLABUS C. LABOR STANDARDS 5. Leaves a. Service Incentive Leave Pay (1) Right to service incentive leave (2) Exclusions from coverage (3) Commutable nature of benefit b. Maternity Leave (1) Coverage (2) Conditions to entitlement (3) Availment c. Paternity Leave (1) Coverage (2) Conditions to entitlement (3) Availment d. Parental Leave (1) Coverage (2) Conditions to entitlement (3) Availment e. Leaves for victims of violence against women (1) Coverage (2) Conditions to entitlement (3) Availment ===================================

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a. Coverage; exceptions. Generally, all employees are entitled to covered by Article 94 of the Labor Code, as amended, and its implementing rules, except: a. Those of the government and any of the political subdivisions, including government‐owned and controlled corporations; b. Those of retail and service establishments regularly employing less than ten (10) workers; c. Domestic helpers; d. Persons in the personal service of another; e. Managerial employees as defined in Book III of the Labor Code; f. Field personnel and other employees whose time and performance is unsupervised by the employer; g. Those who are engaged on task or contract basis or purely commission basis; h. Those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof; i. Other officers and members of the managerial staff; j. Members of the family of the employer who are dependent on him for support.105

103 104 105

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4. EXCLUSIONS FROM COVERAGE OF HOLIDAY PAY.

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Seasonal workers are entitled to holiday pay while working during the season. They may not be paid the required regular holiday pay during off‐season where they are not at work.104

Lambo v. NLRC, [G.R. No. 111042, October 26, 1999, 317 SCRA 420]. Section 8 [c], Rule IV, Book III, Rules to Implement the Labor Code; No. II [G], DOLE Handbook on Workers Statutory Monetary Benefits. Article 82, Labor Code; See also Section 1, Rule IV, Book III, Rules to Implement the Labor Code; No. II [A], DOLE Handbook on Workers Statutory Monetary Benefits.





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Every covered employee who has rendered at least one (1) year of service is entitled to a yearly service incentive leave of five (5) days with pay.106 The term “at least one year of service” should mean service within twelve (12) months, whether continuous or broken, reckoned from the date the employee started working, including authorized absences and paid regular holidays, unless the number of working days in the establishment as a matter of practice or policy, or that provided in the employment contract, is less than twelve (12) months, in which case, said period should be considered as one (1) year for the purpose of determining entitlement to the service incentive leave benefit.107

b. Exclusions from coverage. All employees are covered by the rule on service incentive leave except: a. Those of the government and any of its political subdivisions, including government‐owned and controlled corporations; b. Domestic helpers; c. Persons in the personal service of another; d. Managerial employees as defined in Book III of the Labor Code; e. Field personnel and other employees whose performance is unsupervised by the employer; f. Those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof; g. Those who are already enjoying the benefit provided in the law; h. Those enjoying vacation leave with pay of at least five (5) days; i. Those employed in establishments regularly employing less than ten (10) employees; j. Other officers and members of the managerial staff; and k. Members of the family of the employer who are dependent on him for support.108

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SIL earned as of December 31, 2010 ‐ Five (5) days Proportionate SIL for Jan. and Feb. 2011 (2/12 x 5 days) ‐ 0.833 day Total accrued SIL as of March 1, 2011 ‐ 5.833 days112 2. MATERNITY LEAVE. (ARTICLE 133, LABOR CODE; SECTION 14‐A, SOCIAL SECURITY LAW [R.A. NO. 8282). a. Coverage. “Maternity leave” is the period of time which may be availed of by a woman employee, married or unmarried, to undergo and recuperate from childbirth, miscarriage or complete abortion during which she is permitted to retain her rights and benefits flowing from her employment. Section 14‐A113 of the Social Security Law now provides as follows: “Sec. 14‐A. Maternity Leave Benefit. ‐ A female member who has paid at least three (3) monthly contributions in the twelve‐month period immediately preceding the semester of her childbirth or miscarriage shall be paid a daily maternity benefit equivalent to one hundred percent (100%) of her average daily salary credit for sixty (60) days or seventy‐eight (78) days in case of caesarian delivery, subject to the following conditions: “(a) That the employee shall have notified her employer of her pregnancy and the probable date of her childbirth, which notice shall be transmitted to the SSS in accordance with the rules and regulations it may provide; “(b) The full payment shall be advanced by the employer within thirty (30) days from the filing of the maternity leave application;

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c. Commutable nature of benefit. The service incentive leave is commutable to its money equivalent if not used or exhausted at the end of the year.109 The phrase “leave with pay” means that the employee is entitled to his full compensation during his leave of absence from work.110 In computing the service incentive leave benefit, the basis is the salary rate at the date of commutation. The availment and commutation of the service incentive leave benefit may be on a pro‐rata basis.111 Illustration. To illustrate the computation of the service incentive leave (SIL) cash commutation, an employee who is hired on January 1, 2010 and resigned on March 1, 2011, assuming he has not used or commuted any of his accrued SIL, is entitled upon his resignation to the commutation of his accrued SIL as follows:

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Article 95 [a], Labor Code; Section 2, Rule V, Book III, Rules to Implement the Labor Code. Section 3, Rule V, Book III, Rules to Implement the Labor Code; No. VI [B], DOLE Handbook on Workers Statutory Monetary Benefits; Integrated Contractor and Plumbing Works, Inc. v. NLRC, G.R. No. 152427, August 9, 2005. Article 82, Labor Code; Section 1, Rule V, Book III, Rules to Implement the Labor Code; No. VI [A], DOLE Handbook on Workers Statutory Monetary Benefits. Section 5, Rule V, Book III, Ibid.; No. VI [C], Ibid.. 110 Escosura v. San Miguel Brewery, Inc., G.R. No. L-16696; Jan. 31, 1962. 111 No. VI [C], DOLE Handbook on Workers Statutory Monetary Benefits. 112 See No. VI [A], DOLE Handbook on Workers Statutory Monetary Benefits based on the opinion of DOLE Legal Service. 113 As amended by R.A. No. 7322 as well as the Social Security Act of 1997 [R.A. No. 8282]. 106 107 108 109





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b. Conditions to entitlement. The following are the qualifications for entitlement to maternity benefits: 1. The female member should be employed at the time of delivery, miscarriage or abortion. 2. She must have given the required notification to the SSS thru her employer. 3. Her employer must have paid at least three (3) months of maternity contributions within the 12‐month period immediately before the semester of contingency.114 c. Availment. 1. Pregnant women, whether married or unmarried, are entitled to maternity leave benefits. Entitlement to maternity leave benefits is not dependent on the civil status of the pregnant woman. Every pregnant woman in the private sector, whether married or unmarried, is entitled to the maternity leave benefits.115 2. Maternity benefits, not part of 13th‐month pay computation. 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.116 3. Voluntary or self‐employed members not entitled to maternity benefits. Voluntary or self‐employed members are not entitled to maternity benefits 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. 4. Computation of maternity benefits. The maternity benefits shall be computed as follows: a. Exclude the semester of contingency (delivery, miscarriage or abortion). A semester refers to two consecutive quarters ending in the quarter of contingency. A quarter refers to three (3) consecutive months ending in March, June, September or December. b. Count twelve (12) months backwards starting from the month immediately before the semester of contingency. c. Identify the six (6) highest monthly salary credits within the 12‐month period. “Monthly salary credit” means the compensation base for contributions and benefits related to the total earnings for the month. 117 d. Add the six (6) highest monthly salary credits to get the total monthly salary credit. e. Divide the total monthly salary credit by 180 days to get the average daily salary credit. This is equal to the daily maternity allowance. f. Multiply the daily maternity allowance by sixty (60) days (or 78 days) to get the total maternity allowance. 5. Entitlement to maternity benefit forecloses entitlement to sickness benefit. A female member of the SSS who has availed of maternity benefit cannot claim for sickness benefit for a period of sixty (60) days (or 78 days) within which she was already paid the maternity benefit. As a rule, no member can be entitled to two (2) benefits for the same period. 6. Notification to SSS in case of pregnancy. It is a requirement to notify the SSS. As soon as a female member becomes pregnant, she must immediately inform her employer of such pregnancy by accomplishing the Maternity Notification Form. The employer must, in turn, notify the SSS thru the submission of said form. 7. Payment of maternity benefit; how made. The benefit is advanced by the employer to the qualified employee in full or in two (2) equal installments. The first installment will be paid upon receipt of the maternity leave application. The second will be paid not later than thirty (30) days after payment of the first installment. Upon receipt of satisfactory proof of such payment, the SSS will pay back the employer the amount of maternity benefit it legally advanced to the employee.

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“(c) That payment of daily maternity benefits shall be a bar to the recovery of sickness benefits provided by this Act for the same period for which daily maternity benefits have been received; “(d) That the maternity benefits provided under this section shall be paid only for the first four (4) deliveries or miscarriages; “(e) That the SSS shall immediately reimburse the employer of one hundred percent (100%) of the amount of maternity benefits advanced to the employee by the employer upon receipt of satisfactory proof of such payment and legality thereof; and “(f) That if an employee member should give birth or suffer miscarriage without the required contributions having been remitted for her by her employer to the SSS, or without the latter having been previously notified by the employer of the time of the pregnancy, the employer shall pay to the SSS damages equivalent to the benefits which said employee member would otherwise have been entitled to.”

No. XI, DOLE Handbook on Workers Statutory Monetary Benefits. No. XI, DOLE Handbook on Workers Statutory Monetary Benefits. No. XI, DOLE Handbook on Workers Statutory Monetary Benefits. 117 The table of such monthly salary credit is omitted. 114 115 116





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3. PATERNITY LEAVE. (R.A. NO. 8187, “THE PATERNITY LEAVE ACT OF 1996” [JUNE 11, 1996]. a. Coverage. “Paternity leave” covers a married male employee allowing him not to report for work for seven (7) calendar days but continues to earn the compensation therefor, on the condition that his spouse has delivered a child or suffered miscarriage for purposes of enabling him to effectively lend support to his wife in her period of recovery and/or in the nursing of the newly‐born child.118 “Delivery” includes childbirth or any miscarriage.119 “Spouse” refers to the lawful wife. For this purpose, “lawful wife” refers to a woman who is legally married to the male employee concerned.120 “Cohabiting” refers to the obligation of the husband and wife to live together.121

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c. Availment. The employee is entitled to his full pay, consisting of basic salary, for the seven (7) calendar days during which he is allowed not to report for work provided that his pay shall not be less than the mandated minimum wage.124

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b. Conditions to entitlement. Every married employee in the private and public sectors is entitled to a paternity leave of seven (7) calendar days with full pay for the first four (4) deliveries of the legitimate spouse with whom he is cohabiting. The male employee applying for paternity leave should notify his employer of the pregnancy of his legitimate spouse and the expected date of such delivery.122 Paternity leave benefits are granted to the qualified employee after the delivery by his wife, without prejudice to an employer allowing an employee to avail of the benefit before or during the delivery, provided that the total number of days should not exceed seven (7) calendar days for each delivery. In the event that the paternity leave benefit is not availed of, said leave shall not be convertible to cash.123

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a. Coverage. “Parental leave” is the leave benefits granted to a male or female solo parent to enable him/her to perform parental duties and responsibilities where physical presence is required. The parental leave shall not be more than seven (7) working days every year to a solo parent who has rendered service of at least one (1) year, to enable him/her to perform parental duties and responsibilities where his/her physical presence is required. The seven‐day parental leave shall be non‐cumulative.125 It bears noting that this leave privilege is an additional leave benefit which is separate and distinct from any other leave benefits provided under existing laws or agreements.126 The term "solo parent" refers to any individual who falls under any of the following 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 death of spouse; (3) Parent left solo or alone with the responsibility of parenthood while the spouse is detained or is serving sentence for a criminal conviction for at least one (1) year; (4) Parent left solo or alone with the responsibility of parenthood due to physical and/or mental incapacity of spouse as certified by a public medical practitioner; (5) Parent left solo or alone with the responsibility of parenthood due to legal separation or de facto separation from spouse for at least one (1) year, as long as he/she is entrusted with the custody of the children; (6) Parent left solo or alone with the responsibility of parenthood due to declaration of nullity or annulment of marriage as decreed by a court or by a church as long as he/she is entrusted with the custody of the children; (7) Parent left solo or alone with the responsibility of parenthood due to abandonment of spouse for at least one (1) year; (8) Unmarried mother/father who has preferred to keep and rear her/his child/children instead of having others care for them or give them up to a welfare institution; (9) Any other person who solely provides parental care and support to a child or children; (10) Any family member who assumes the responsibility of head of family as a result of the death, abandonment, disappearance or prolonged absence of the parents or solo parent.

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4. PARENTAL LEAVE. (R.A. NO. 8972, “THE SOLO PARENTS’ WELFARE ACT OF 2000” (NOVEMBER 7, 2000).

Section 3, R.A. No. 8187; Section 1 [a], Revised Implementing Rules and Regulations of R.A. No. 8187 [March 13, 1997]. Section 2, Ibid.; Section 1 [c], Ibid.. Section 1 [d], Ibid.. 121 Section 1 [e], Ibid.. 122 Section 2, R.A. No. 8187. 123 Sections 5 and 8, Revised Implementing Rules and Regulations of R.A. No. 8187 [March 13, 1997]. 124 Section 6, Revised Implementing Rules and Regulations of R.A. No. 8187 [March 13, 1997]. 125 Section 18, Article V, Implementing Rules of R.A. No. 8972. 126 Section 8, R.A. No. 8972. 118 119 120





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Section 6. Flexible Work Schedule. ‐ The employer shall provide for a flexible working schedule for solo parents: Provided, That the same shall not affect individual and company productivity: Provided, further, That any employer may request exemption from the above requirements from the DOLE on certain meritorious grounds.

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Section 7. Work Discrimination. ‐ No employer shall discriminate against any solo parent employee with respect to terms and conditions of employment on account of his/her status.

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Section 8. Parental Leave. ‐ In addition to leave privileges under existing laws, parental leave of not more than seven (7) working days every year shall be granted to any solo parent employee who has rendered service of at least one (1) year.

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4. Other benefits under the R.A. No. 8972. Other benefits consist of the following:

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c. Availment. 1. Non‐conversion of parental leave. In the event that the parental leave is not availed of, said leave shall not be convertible to cash unless specifically agreed upon previously. However, if said leave were denied an employee as a result of non‐compliance with the provisions of these Rules by an employer, the aforementioned leave may be used a basis for the computation of damages.131 2. Crediting of existing leave. If there is an existing or similar benefit under a company policy, or a collective bargaining agreement or collective negotiation agreement the same shall be credited as such. If the same is greater than the seven (7) days provided for in the Act, the greater benefit shall prevail. Emergency or contingency leave provided under a company policy or a collective bargaining agreement shall not be credited as compliance with the parental leave provided for under the Act and these Rules.132 3. Benefits. Any solo parent whose income in the place of domicile falls below the poverty threshold as set by the National Economic and Development Authority (NEDA) and subject to the assessment of the DSWD worker in the area shall be eligible for assistance: Provided, however, That any solo parent whose income is above the poverty threshold shall enjoy the benefits mentioned in Sections 6, 7 and 8 of R.A. No. 8972, to wit:

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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.127 "Children" refer to those living with and dependent upon the solo parent for support who are unmarried, unemployed and not more than eighteen (18) years of age, or even over eighteen (18) years but are incapable of self‐support because of mental and/or physical defect/disability.128 "Parental responsibility" with respect to their minor children shall refer to the rights and duties of the parents as defined in Article 220 of Executive Order No. 209, as amended, otherwise known as the "Family Code of the Philippines" and hereunder enumerated as follows: (1) To keep them in their company, to support, educate and instruct them by right precept and good example and to provide for their upbringing in keeping with their means; (2) To give them love and affection, advice and counsel, companionship and understanding; (3) To provide them with moral and spiritual guidance, inculcate in them honesty, integrity, self‐ discipline, self‐reliance, industry and thrift, stimulate their interest in civic affairs, and inspire in them compliance with the duties of citizenship; (4) To furnish them with good and wholesome educational materials, supervise their activities, recreation and association with others, protect them from bad company, and prevent them from acquiring habits detrimental to their health, studies and morals; (5) To represent them in all matters affecting their interest; (6) To demand from them respect and obedience; (7) To Impose discipline on them as may be required under the circumstances; and (8) To perform such other duties as are imposed by law and upon parents and guardians.129 b. Conditions to entitlement. A solo parent shall be entitled to parental leave provided that: (a) He/She has rendered at least one (1) year of service whether continuous or broken at the time of the affectivity of the Act; (b) He/She has notified his/her employer of the availment thereof within a reasonable time period; and (c) He/She has presented a Solo Parent Identification Card to his/her employer.130

Section 9. Educational Benefits. ‐ The DECS, CHED and TESDA shall provide the following benefits and privileges:

Section 3[a], R.A. No. 8972; Section 6[b], Article III, Implementing Rules of R.A. No. 8972. Section 3[b], R.A. No. 8972; Section 6[e], Article III, Implementing Rules of R.A. No. 8972. Section 3[c], R.A. No. 8972; Section 6[f], Article III, Implementing Rules of R.A. No. 8972. 130 Section 19, Article v, Implementing Rules of R.A. No. 8972. 131 Section 20, Article v, Implementing Rules of R.A. No. 8972. 132 Section 21, Article v, Implementing Rules of R.A. No. 8972. 127 128 129





(1) Scholarship programs for qualified solo parents and their children in institutions of basic, tertiary and technical/skills education; and (2) Non‐formal education programs appropriate for solo parents and their children. The DECS, CHED and TESDA shall promulgate rules and regulations for the proper implementation of this program.

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Section 10. Housing Benefits. ‐ Solo parents shall be given allocation in housing projects and shall be provided with liberal terms of payment on said government low‐cost housing projects in accordance with housing law provisions prioritizing applicants below the poverty line as declared by the NEDA.

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Section 11. Medical Assistance. ‐ The DOH shall develop a comprehensive health care program for solo parents and their children. The program shall be implemented by the DOH through their retained hospitals and medical centers and the local government units (LGUs) through their provincial/district/city/municipal hospitals and rural health units (RHUs).

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5. LEAVES FOR VICTIMS OF VIOLENCE AGAINST WOMEN. (R.A. NO. 9262, “ANTI‐VIOLENCE AGAINST WOMEN AND THEIR CHILDREN ACT OF 2994” [MARCH 8, 2004).

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c. Availment. The availment of the ten (10) day‐leave shall be at the option of the woman employee, which shall cover the days that she has to attend to medical and legal concerns. Leaves not availed of are non‐cumulative and not convertible to cash. The employer/agency head who denies the application for leave, and who shall prejudice the victim‐ survivor or any person for assisting a co‐employee who is a victim‐survivor under the Act shall be held liable for discrimination and violation of R.A. No. 9262. The provision of the Labor Code and the Civil Service Rules and Regulations shall govern the penalty to be imposed on the said employer/agency head.136

6. SERVICE CHARGES (ARTICLE 96, LABOR CODE).

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a. Coverage. 1. Establishments covered. The rules on service charges apply only to establishments collecting service charges, such as hotels, restaurants, lodging houses, night clubs, cocktail lounges, massage clinics, bars, casinos and gambling houses, and similar enterprises, including those entities operating primarily as private subsidiaries of the government.137 2. Employees covered. The same rules on service charges apply to all employees of covered employers, regardless of their positions, designations or employment status, and irrespective of the method by which their wages are paid. except those receiving more than P2,000.00 a month.138

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b. Conditions of entitlement. At any time during the application of any protection order, investigation, prosecution and/or trial of the criminal case, a victim of Violence Against Women and their Children (VAWC) who is employed shall be entitled to a paid leave of up to ten (10) days in addition to other paid leaves under the Labor Code and Civil Service Rules and Regulations and other existing laws and company policies, extendible when the necessity arises as specified in the protection order. The Punong Barangay/kagawad or prosecutor or the Clerk of Court, as the case may be, shall issue a certification at no cost to the woman that such an action is pending, and this is all that is required for the employer to comply with the 10‐day paid leave. For government employees, in addition to the aforementioned certification, the employee concerned must file an application for leave citing as basis R.A. 9262. The administrative enforcement of this leave entitlement shall be considered within the jurisdiction of the Regional Director of the DOLE under Article 129 of the Labor Code of the Philippines, as amended, for employees in the private sector, and the Civil Service Commission, for government employees.135

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a. Coverage. R.A. No. 9262, grants to victims a total of ten (10) days of paid leave of absence, in addition to other paid leaves under the Labor Code and Civil Service Rules and Regulations. It is extendible when the necessity arises as specified in the protection order. This is afforded to the woman employee to enable her to attend to the medical and legal concerns relative to said law. This leave is not convertible to cash.133 Any employer who shall prejudice the right of the person under this law shall be penalized in accordance with the provisions of the Labor Code and Civil Service Rules and Regulations. Likewise, an employer who shall prejudice any person for assisting a co‐employee who is a victim under this Act shall likewise be liable for discrimination.134

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Section 43, R.A. No. 9262. Id. Section 42, Implementing Rules and Regulations of R.A. No. 9262. 136 Id. 137 Article 96, Labor Code; Section 1, Rule VI [Service Charges], Book III of the Rules to Implement the Labor Code. 138 Section 2, Rule VI, Book III, Rules to Implement the Labor Code. 133 134 135





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b. Exclusion. Specifically excluded from coverage are employees who are receiving wages of more than P2,000.00 a month.139 However, it must be pointed out that the P2,000.00 ceiling is no longer realistic considering the applicable minimum wages prevailing in the country. Hence, it must be disregarded. Instead, the rule now is that the 85% should be distributed to the covered employees except managerial employees; while the remaining 15% should be retained by management to answer for losses and breakages and for distribution to managerial employees, at the discretion of management in the latter case.140

c. Distribution. 1. Percentage of sharing. All service charges collected by covered employers are required to be distributed at the following rates: a. 85% to be distributed equally among the covered employees; and b. 15% to management to answer for losses and breakages and distribution to employees receiving more than P2,000.00 a month, at the discretion of the management.141. 2. Frequency of distribution. The share of the employees referred to above should be distributed and paid to the them not less often than once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days.142

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b. Exclusions/Exemptions from coverage. The following employers are not covered by P.D. No. 851, as amended: 1. The government and any of its political subdivisions, including government‐owned and controlled corporations, except those corporations operating essentially as private subsidiaries of the government.146 2. Employers already paying their employees 13th‐month pay or more in a calendar year or its equivalent at the time of the issuance of the Revised Guidelines.147 3. Employers of household helpers and persons in the personal service of another in relation to such workers.148 4. Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece‐rate basis, in which case, the employer shall be covered by the Revised Guidelines insofar as such workers are concerned. Workers paid on piece‐rate basis shall refer to those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated without regard to the time spent in producing the same.149

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7. THIRTEENTH (13TH) MONTH PAY AND OTHER BONUSES. (P.D. NO. 851 [DECEMBER 16, 1975; MEMORANDUM ORDER NO. 28 [AUGUST 13, 1986]; REVISED GUIDELINES ON THE IMPLEMENTATION OF THE 13TH MONTH PAY LAW [NOVEMBER 16, 1987]. a. Coverage. All employers are required to pay all their rank‐and‐file employees, a 13th‐month pay not later than December 24 of every year.

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Id. No. VII [A], DOLE Handbook on Workers Statutory Monetary Benefits. Section 3, Rule VI, Book III, Ibid.; No. VII [A], Ibid.. 142 Section 4, Rule VI, Book III, Ibid.; No. VII [B], Ibid.. 143 Section 5, Rule VI, Book III, Ibid.; No. VII [B], Ibid.. 144 No. VII [C], DOLE Handbook on Workers Statutory Monetary Benefits. 145 Mayon Hotel & Restaurant v. Adana, [G.R. No. 157634, May 16, 2005]. 146 No. 2 [a], Revised Guidelines on the Implementation of the 13th-Month Pay Law, formerly Section 3 [b], Rules and Regulations Implementing P.D. No. 851; Alliance of Government Workers v. Minister of Labor and Employment, G.R. No. L-60403, Aug. 3, 1983. 147 Section 2, P.D. No. 851; No. 2 [b], Revised Guidelines on the Implementation of the 13th-Month Pay Law, formerly Section 3 [c], Rules and Regulations Implementing P.D. No. 851. 148 No. 2 [c], Revised Guidelines on the Implementation of the 13th-Month Pay Law, formerly Section 3 [d], Rules and Regulations Implementing P.D. No. 851. 149 No. 2 [d], Ibid., formerly Section 3 [e], Rules and Regulations Implementing P.D. No. 851. 139 140

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e. Some principles on service charges. 1. Tips and services charges are two different things. Tips are given by customers voluntarily to waiters and other people who serve them out of recognition of satisfactory or excellent service. There is no compulsion to give tips under the law. The same may not be said of service charges which are considered integral part of the cost of the food, goods or services ordered by the customers. As a general rule, tips do not form part of the service charges which should be distributed in accordance with the sharing ratio prescribed under Article 96 of the Labor Code. However, where a restaurant or similar establishment does not collect service charges but has a practice or policy of monitoring and pooling tips given voluntarily by its customers to its employees, the pooled tips should be monitored, accounted for and distributed in the same manner as the service charges.144 Hence, the 85% : 15% sharing ratio should be observed. 2. Service charges are not in the nature of profit share and, therefore, cannot be deducted from wage.145

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d. Integration. In case the service charge is abolished, the share of covered employees should be considered integrated in their wages, in accordance with Article 96 of the Labor Code. The basis of the amount to be integrated is the average monthly share of each employee for the past twelve (12) months immediately preceding the abolition or withdrawal of such charges.143

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c. Nature of 13th month pay. 13th month pay is in the nature of additional income granted to employees who are not receiving the same.150 P.D. No. 851 is undoubtedly a labor standards law whose purpose is to increase the real wages of the workers.151 It is based on wage but not part of the wage.152 The minimum 13th‐month pay required by law should not be less than one‐twelfth (1/12) of the total basic salary earned by an employee within a calendar year.153

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d. Commissions vis‐a‐vis 13th month pay. In order to be considered part of 13th month pay, the commission should be part of the basic salary of the employee. However, whether or not a commission forms part of the basic salary depends upon the circumstances or conditions for its payment which indubitably are factual in nature for they will require a re‐examination and calibration of the evidence on record.154 If the commission paid in addition to the basic salary is in the nature of a productivity bonus or profit‐sharing benefit which is dependent on and generally tied to the productivity or capacity for revenue production of a company, it should not be considered as part of basic salary.155 But if the commission paid in addition to the basic salary has a clear direct or necessary relation to the amount of work actually done by the employee, it should be considered as part of basic salary.156 If the employee is paid on commission basis only, he is excluded from receiving the 13th‐month pay benefit.157

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1. DISCRIMINATION (ARTICLE 135, LABOR CODE).

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a. Acts of discrimination. Article 135 considers as unlawful the act of an employer to discriminate against any woman employee with respect to terms and conditions of employment solely on account of her sex.

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Agabon v. NLRC, [G.R. No. 158693, November 17, 2004]. Alliance of Government Workers v. Minister of Labor, G.R. No. L-60403, Aug. 3, 1983; National Federation of Sugar Workers v. Ovejera, G.R. No. 59743, May 31, 1982; Marcopper Mining Corporation v. Ople, G.R. No. 51254, June 11, 1981, 105 SCRA 75. Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor Union-NLU, G.R. No. 188949, July 26, 2010. 153 Section 2 [a], Rules and Regulations Implementing P.D. No. 851. 154 Reyes v. NLRC, [G.R. No. 160233, August 8, 2007]. 155 Philippine Duplicators, Inc. v. NLRC, [G.R. No. 110068, February 15, 1995]; Boie-Takeda Chemicals, Inc. v. Dela Serna, [G.R. No. 92174] and Philippine Fuji Xerox Corporation v. Trajano, [G.R. No. 102552, March 24, 1994]. 156 Id. 157 King of Kings Transport, Inc. v. Mamac, [G.R. No. 166208, June 29, 2007]. 158 No. 4 [a], Revised Guidelines on the Implementation of the 13th-Month Pay Law, formerly Section 2 [b] of the Rules and Regulations Implementing P.D. No. 851; No. X [C], DOLE Handbook on Workers Statutory Monetary Benefits. 159 See No. 1, DOLE Explanatory Bulletin on the Inclusion of Teachers’ Overload Pay in the 13th-Month Pay Determination [December 03, 1993]. 160 Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda, [G.R. No. 145561, June 15, 2005]; San Miguel Corporation (Cagayan Coca-Cola Plant) v. Inciong, [G.R. No. L-49774, February 24, 1981, 103 SCRA 139]. 161 No. 1, Revised Guidelines on the Implementation of the 13th-Month Pay Law; No. X [A], DOLE Handbook on Workers Statutory Monetary Benefits. 162 Ibid.; Section 1, Memorandum Order No. 28. 163 House of Sara Lee v. Rey, [G.R. No. 149013, August 31, 2006]. 164 BWC Opinion dated Dec. 19, 1987, Bagong Pilipino World’s Fashion Workers Union, World’s Fashion, Inc.. 150 151 152

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e. Some principles on 13th month pay. 1. “Basic salary” or “basic wage” contemplates work within the normal eight (8) working hours in a day. This means that the basic salary of an employee for purposes of computing the 13th‐month pay should include all remunerations or earnings paid by the employer for services rendered during normal working hours.159 2. For purposes of computing the 13th‐month pay, “basic salary” should be interpreted to mean not the amount actually received by an employee, but 1/12 of their standard monthly wage multiplied by their length of service within a given calendar year.160 3. To be entitled to the 13th‐month pay benefit, it is imposed as a minimum service requirement that the employee should have worked for at least one (1) month during a calendar year.161 4. Only rank‐and‐file employees, regardless of their designation or employment status and irrespective of the method by which their wages are paid, are entitled to the 13th‐month pay benefit. 162 5. Managerial employees, not entitled to 13th‐month pay.163 6. Extras, casuals and seasonal employees, entitled to 13th–month pay. 164 ================================================== TOPIC UNDER THE SYLLABUS C. LABOR STANDARDS 8. Women Workers a. Discrimination (Art. 135, LC) b. Stipulation against marriage (Art. 136, LC) c. Prohibited Acts (Art. 137, LC) d. Classification of certain women workers (Art. 138, LC) e. Anti-Sexual Harassment Act (RA 7877) ===================================================

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e. CBA vis‐a‐vis 13th month pay. For purposes of computing the 13th month pay, “basic salary” includes all remunerations or earnings paid by the employer for services rendered but does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, maternity leave, overtime, premium, night differential and holiday pay, premiums for work done on rest days and special holidays and cost‐of‐living allowances. However, these salary‐related benefits should be included as part of the basic salary in the computation of the 13th‐month pay if by individual or collective bargaining agreement, company practice or policy, the same are treated as part of the basic salary of the employees.158





More specifically, it enumerates the following acts of discrimination: (a) Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a female employee 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.

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b. Criminal liability under Article 135. The willful commission of any of the specific unlawful acts described in Article 135 has a criminal consequence. Consequently, the offender will be penalized under Articles 288 and 289 of the Labor Code.

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c. Money claims, a separate and distinct action. The institution of any criminal action under Article 135 will 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.

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c. Criminal action may proceed independently from the money claims case. The criminal and money claims actions authorized to be prosecuted under Article 135 shall proceed independently of each other.165

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166 167

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b. Relevant jurisprudence. The following cases are relevant: 1. Zialcita v. Philippine Airlines, Inc., [Case No. RO4‐3‐398‐76, February 20, 1977]. In this case decided by the Office of the President, the provision in a contract between an airline company and a flight attendant which states that “flight attendant‐applicants must be single and that they shall be automatically separated from employment in the event they subsequently get married” was declared as a null and void provision; hence, cannot be enforced for being contrary to Article 136 of the Labor Code and the protection‐to‐labor clause in the Constitution. 2. Philippine Telegraph and Telephone Company v. NLRC, [G.R. No. 118978, May 23, 1997, 272 SCRA 596, 605]. It was declared here that the company policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs afoul of the test of, and the right against, discrimination afforded all women workers by our labor laws and by no less than the Constitution.167 3. Star Paper Corp. v. Simbol, Comia and Estrella, [G.R. No. 164774, April 12, 2006]. The following policies were struck down as invalid for violating the standard of reasonableness which is being followed in our jurisdiction, otherwise called the “Reasonable Business Necessity Rule”: “1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd degree of relationship, already employed by the company. “2. In case of two of our employees (both singles [sic], one male and another female) developed a friendly relationship during the course of their employment and then decided to get married, one of them should resign to preserve the policy stated above.” 4. Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc., [G.R. No. 162994, September 17, 2004]. In this case, the prohibition against marriage embodied in the following stipulation in the employment contract was held as valid: “10. You agree to disclose to management any existing or future relationship you may have, either by consanguinity or affinity with co‐employees or employees of competing drug companies. Should it pose a possible conflict of interest in management discretion, you agree to resign voluntarily from the Company as a matter of Company policy.” The Supreme Court ruled that dismissal based on this stipulation in the employment contract is a valid exercise of management prerogative. The prohibition against personal or marital relationships with employees of competitor companies upon its employees was held reasonable under the circumstances because relationships of that nature might compromise the interests of the company. In laying down the assailed company policy, the employer only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures.

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a. Invalidity of stipulation against marriage. Article 136 considers as an unlawful act of the employer to require as a condition for or continuation of employment that a woman employee shall not get married or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, It is likewise an unlawful act of the employer, to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.166

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2. STIPULATION AGAINST MARRIAGE (ARTICLE 136, LABOR CODE).

Article 135, Labor Code. See also Section 13 [e], Rule XII, Book III, Rules to Implement the Labor Code; Gualberto v. Marinduque Mining Industrial Corporation, C.A.-G.R. No. 52753-R, June 28, 1978. See also Gualberto v. Marinduque Mining & Industrial Corporation, supra; Zialcita, v. Philippine Airlines, supra; 45A Am. Jur. 2d, Job Discrimination, Sec. 506, p. 486.





3. PROHIBITED ACTS. (ARTICLE 137, LABOR CODE).

a. Prohibited acts under Article 137 and its implementing rules. The corresponding provisions in the Rules to Implement the Labor Code provide for a broader enumeration of prohibited acts than those found in Article 137. It is provided thereunder that it shall be unlawful for any employer: 1. To discharge any woman employed by him for the purpose of preventing such woman from enjoying maternity leave, facilities and other benefits provided under the Labor Code; 2. To discharge such woman on account of her pregnancy, or while on leave or in confinement due to her pregnancy; 3. To discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant; 4. To discharge any woman or any other employee for having filed a complaint or having testified or being about to testify under the Labor Code; or 5. To require as a condition for or continuation of employment that a woman employee shall not get married or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of marriage.168

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c. Discharging a woman due to pregnancy. Paragraph [a] (2) and (3) of Article 137 contemplates the following prohibited acts in connection with the pregnancy of a woman employee: 1. To discharge her on account of her pregnancy; or 2. To discharge her while she is on leave due to her pregnancy; or 3. To discharge her while she is in confinement due to her pregnancy; or 4. To discharge her upon returning to her work for fear that she may again be pregnant; or 5. To refuse her admission upon returning to her work for fear that she may again be pregnant.170

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Del Monte Philippines, Inc. v. Velasco, [G.R. No. 153477, March 6, 2007]. The series of absences of the respondent due to pregnancy and its related ailments, such as urinary tract infection, was found not to be a valid ground to dismiss her from employment. The Supreme Court agreed with the Court of Appeals in concluding that respondent’s sickness was pregnancy‐related and, therefore, the petitioner cannot terminate respondent’s services because in doing so, petitioner will, in effect, be violating the Labor Code which, under Article 137 thereof, prohibits an employer to discharge an employee on account of the latter’s pregnancy. The Court was convinced that the petitioner terminated the services of respondent on account of her pregnancy which justified her absences and, thus, committed a prohibited act rendering the dismissal illegal. Lakpue Drug, Inc. v. Belga, [G.R. No. 166379, October 20, 2005]. Respondent was dismissed for allegedly deliberately concealing her pregnancy and for incurring absences without official leave for 16 days at which time she delivered her baby. Petitioner argues that such non‐disclosure is tantamount to dishonesty. In finding the penalty of dismissal too harsh and illegal, the Supreme Court ruled that the alleged misconduct of Belga barely falls within the situation contemplated by the law. Her absence for 16 days was justified considering that she had just delivered a child, which can hardly be considered a forbidden act, a dereliction of duty; much less does it imply wrongful intent on the part of Belga. Petitioner harps on the alleged concealment by Belga of her pregnancy. This argument, however, begs the question as to how one can conceal a full‐term pregnancy. The Court agreed with respondent’s position that it can hardly escape notice how she grows bigger each day. While there may be instances where the pregnancy may be inconspicuous, it has not been sufficiently proven by petitioner that Belga’s case is such.

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b. Denial of benefits or dismissal of a woman employee to deprive her of benefits. Paragraph [a] (1) of Article 137 speaks of two separate prohibited acts, namely: 1. To deny any woman employee the benefits provided in Chapter I (Employment of Women), Title III (Working Conditions for Special Groups of Employees) of Book III of the Labor Code, namely: a. Facilities for women under Article 132; b. Maternity leave benefits under Article 133; and c. Family planning services and incentives for family planning under Article 134. 2. To discharge any woman employee for the purpose of preventing her from enjoying any of the benefits provided under the Labor Code.169 Under No. 1 above, mere denial of the afore‐described benefits would already constitute a violation of Article 137. Under No. 2 above, it is required that there must not only be denial but actual discharge or dismissal of the woman employee meant to prevent her from enjoying any of the benefits under the Labor Code and not only of the benefits under Chapter I, Title III of Book III of the Labor Code.

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168 169 170

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Section 13, Rule XII, Book III thereof. See also Section 13, Rule XII, Book III, Rules to Implement the Labor Code. See also Section 13, Rule XII, Book III, Rules to Implement the Labor Code.





d. Discharging a woman employee for having filed a case or for testifying or being about to testify in a case. Cited as additional prohibited act in Section 13, Rule XII, Book III of the Rules to Implement the Labor Code is the act of discharging any woman or any other employee for having filed a complaint or having testified or being about to testify under the Labor Code. Of relevance to this prohibited act are the parallel provisions in Articles 118 and 248 [f] of the Labor Code. Under Article 118, it is considered unlawful for an employer to discharge or in any manner discriminate against any employee who has filed any complaint or instituted any proceeding under Title II (Wages) of Book III or has testified or is about to testify in such proceedings. Under Article 248 [f], it is considered an unfair labor practice (ULP) to dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under the Labor Code. This is the only ULP act of the employer which need not be related to the exercise by the employee of his right to self‐organization and collective bargaining.171

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e. Penalty for commission of the prohibited acts under Article 137. Having been declared unlawful, the commission of any of the prohibited acts under Article 137 would subject the offender to the penalties provided under Article 288 of the Labor Code.

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4. CLASSIFICATION OF CERTAIN WOMAN WORKERS (ARTICLE 138, LABOR CODE).

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5. ANTI‐SEXUAL HARASSMENT ACT (R.A. NO. 7877, FEBRUARY 14, 1995).

b. Specific acts penalized. The law punishes sexual harassment if the same is: 1. work‐related; or 2. education‐related; or 3. training‐related.173

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a. Three (3) situations only. R.A. No. 7877 declares sexual harassment unlawful only in three (3) situations, namely: (1) employment, (2) education, or (3) training environment. It must be underscored at the outset that sexual harassment is not the sole domain of women as men may also be subjected to the same despicable act. Said law does not limit the victim of sexual harassment to women.

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c. Hospitality girls are not regular employees.. In an opinion of the Department of Justice dated October 27, 1954, it was opined that hospitality girls are not considered employees when the night club operator does not control nor direct the details and manner of their work in the entertainment of nightclub patrons and, having no fixed hours of work, they may come and go as they please.

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d. Persons who may be liable for sexual harassment. Work, education or training‐related sexual harassment is committed by any employer, employee, manager, supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any other person who, having authority, influence or moral ascendancy over another in a work or training or education environment, demands, requests or otherwise requires any sexual favor from another, regardless of whether the demand, request or requirement for submission is accepted by the object of said act.174

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b. Regularity of employment. Any woman who is permitted or suffered to work, with or without compensation, in any night club, cocktail lounge, massage clinic, bar or similar establishments may be considered an employee of such establishment for purposes of labor and social legislation if the following requisites concur: 1. She works under the effective control or supervision of the employer; and 2. She has worked therein for a substantial period of time as determined by the Secretary of Labor and Employment.172 In accordance with Article 138, in relation to Article 280, of the Labor Code, such women working in night clubs and similar establishments are considered regular employees thereof considering that they are made to perform activities that are usually necessary or desirable in the usual business or trade of their employer. It bears noting that under Article 135 of the Labor Code, it is considered unlawful for any employer to discriminate against any woman employee with respect to terms and conditions of employment solely on account of her sex.

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a. Women working in night clubs and similar establishments. Article 138 enunciates the rule applicable to women employees who work regularly during nighttime in places of entertainment. The situation herein contemplated, because of its peculiar feature, constitutes an exception to the prohibition against nighttime work prescribed in Article 130, although the same was never included in the enumeration of the excepted instances under Article 131.

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Philcom Employees Union v. Philippine Global Communications, G.R. No. 144315, July 17, 2006; See also Bisig Manggagawa sa Tryco v. NLRC, G.R. No. 151309, Oct. 15, 2008. Article 138, Labor Code; Section 4, Rule XII, Book III, Rules to Implement the Labor Code. Section 3, R.A. No. 7877. 174 Id.. 171 172 173





Further, any person who directs or induces another to commit any act of sexual harassment as defined in the law, or who cooperates in the commission thereof by another without which it would not have been committed, shall also be held liable under the law.175

e. Sexual harassment in a work‐related or employment environment. In a work‐related or employment environment, sexual harassment is committed when: 1. The sexual favor is made a condition in the hiring or in the employment, re‐employment or continued employment of said individual or in granting said individual favorable compensation, terms, conditions, promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or classifying the employee which in any way would discriminate, deprive or diminish employment opportunities or otherwise adversely affect said employee; 2. The above acts would impair the employee’s rights or privileges under existing labor laws; or 3. The above acts would result in an intimidating, hostile, or offensive environment for the employee.176

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f. Sexual harassment in an education or training environment. In an education or training environment, sexual harassment is committed: 1. against one who is under the care, custody or supervision of the offender; 2. against one whose education, training, apprenticeship or tutorship is entrusted to the offender; 3. when the sexual favor is made a condition to the giving of a passing grade, or the granting of honors and scholarships, or the payment of a stipend, allowance or other benefits, privileges, or considerations; or 4. when the sexual advances result in an intimidating, hostile or offensive environment for the student, trainee or apprentice.178

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“xxx “Yet, even if we were to test Rayala’s acts strictly by the standards set in Section 3, RA 7877, he would still be administratively liable. It is true that this provision calls for a ‘demand, request or requirement of a sexual favor.’ But it is not necessary that the demand, request or requirement of a sexual favor be articulated in a categorical oral or written statement. It may be discerned, with equal certitude, from the acts of the offender. Holding and squeezing Domingo’s shoulders, running his fingers across her neck and tickling her ear, having inappropriate conversations with her, giving her money allegedly for school expenses with a promise of future privileges, and making statements with unmistakable sexual overtones ‐ all these acts of Rayala resound with deafening clarity the unspoken request for a sexual favor. “Likewise, contrary to Rayala’s claim, 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. That the acts of Rayala generated an intimidating and hostile environment for Domingo is clearly shown by the common factual finding of the Investigating Committee, the OP and the CA that Domingo reported the matter to an officemate and, after the last incident, filed for a leave of absence and requested transfer to another unit.”

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Libres v. NLRC, [G.R. No. 123737, May 28, 1999]. The act of the manager in touching a female subordinate’s hand and shoulder, caressing her nape and telling other people that the subordinate was the one who hugged and kissed him or that she responded to his sexual advances, was considered an act of sexual harassment for which he was penalized by the company with a 30‐day suspension whose validity the Supreme Court affirmed.177 Domingo v. Rayala, [G.R. No. 155831, February 18, 2008]. This involves a sexual harassment suit filed against Rogelio I. Rayala, the former Chairman of the National Labor Relations Commission (NLRC) by a subordinate, Ma. Lourdes T. Domingo, then Stenographic Reporter III. Rayala contends that the acts ascribed to him do not constitute sexual harassment, because Domingo did not allege in her complaint that there was a demand, request, or requirement of a sexual favor as a condition for her continued employment or for her promotion to a higher position. In disagreeing to this postulation and in holding Rayala liable for sexual harassment, the High Court ruled:

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g. Duty of the employer or head of office. It is the duty of the employer or the head of the work‐related, educational or training environment or institution, to prevent or deter the commission of acts of sexual harassment and to provide the procedures for the resolution or prosecution of acts of sexual harassment. Towards this end, the employer or head of office is required to: 1. promulgate appropriate rules and regulations in consultation with and jointly approved by the employees or students or trainees, through their duly designated representatives, prescribing the procedure for the investigation of sexual harassment cases and the administrative sanctions therefor. The said rules and

Id.. Section 3[a], Republic Act No. 7877. Villarama v. NLRC and Golden Donuts, Inc., [G.R. No. 106341, September 2, 1994]. 178 Section 3[b], Ibid.. 175 176 177





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b. Regulation of working hours of a child. The term “hours of work” includes (1) all time during which a child is required to be at a prescribed workplace, and (2) all time during which a child is suffered or permitted to work. Rest periods of short duration during working hours shall be counted as hours worked.184 The following hours of work shall be observed for any child allowed to work under R.A. No. 9231 and its Implementing Rules: (a) For a child below fifteen (15) years of age, the hours of work shall not be more than twenty (20) hours per week, provided that the work shall not be more than four (4) hours at any given day; (b) For a child fifteen (15) years of age but below eighteen (18), the hours of work shall not be more than eight (8) hours a day, and in no case beyond forty (40) hours a week; and (c) No child below fifteen (15) years of age shall be allowed to work between eight (8) o’clock in the evening and six (6) 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 (10) o’clock in the evening and six (6) o’clock in the morning of the following day.185

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a. “Child,” “working child.” meaning. For legal purposes, the term “child” refers to any person less than eighteen (18) years of age. A “working child” refers to any child engaged as follows: i. when the child is below eighteen (18) years of age, in work or economic activity that is not “child labor;” and ii. when the child below fifteen (15) years of age: (a) in work where he/she is directly under the responsibility of his/her parents or legal guardian and where only members of the child’s family are employed; or (b) in “public entertainment or information” which refers to artistic, literary, and cultural performances for television show, radio program, cinema or film, theater, commercial advertisement, public relations activities or campaigns, print materials, internet, and other media.

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6. MINOR WORKERS (R.A. NO. 7678, R.A. NO. 9231).

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Dr. Rico S. Jacutin v. People of the Philippines, [G.R. No. 140604, March 6, 2002]. This case illustrates the proper penalty imposable on the violator. Here, the Supreme Court affirmed the Sandiganbayan’s decision finding Dr. Rico Jacutin y Salcedo guilty of the crime of sexual harassment defined and punished under R.A. No. 7877, particularly Sections 3 and 7 thereof, and penalizing him with imprisonment of six (6) months and to pay a fine of Twenty Thousand (P20,000.00) Pesos, with subsidiary imprisonment in case of insolvency. Additionally, he was ordered to indemnify the offended party, Juliet Yee, in the amount of P30,000.00 and P20,000.00 by way of moral damages and exemplary damages, respectively.

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regulations issued shall include, among others, guidelines on proper decorum in the workplace and educational or training institutions. 2. create a committee on decorum and investigation of cases on sexual harassment. The committee shall conduct meetings, as the case may be, with officers and employees, teachers, instructors, professors, coaches, trainors and students or trainees to increase understanding and prevent incidents of sexual harassment. It shall also conduct the investigation of alleged cases constituting sexual harassment. In the case of work‐related environment, the committee is composed of at least one (1) representative each from the management, the union, if any, the employees from the supervisory rank and from the rank‐and‐file employees. In the case of educational or training institution, the committee is composed of at least one (1) representative from the administration, the trainors, teachers, instructors, professors, or coaches and students or trainees, as the case may be.179 h. Some principles on sexual harassment. 1. The employer or head of office or the educational or training institution are solidarily liable for damages arising from the acts of sexual harassment committed in an employment, education or training environment, if such employer or head of office or educational or training institution is informed of such acts by the offended party and no immediate action is taken thereon.180 2. The victim of sexual harassment is not precluded from instituting a separate and independent action for damages and other affirmative reliefs.181 3. Any action arising from sexual harassment prescribes in three (3) years.182 4. Any person who violates the provisions of R.A. No. 7877 shall, upon conviction, be penalized by imprisonment of not less than one (1) month nor more than six (6) months, or a fine of not less than ten thousand pesos (P10,000.00) nor more than twenty thousand pesos (P20,000.00) or both such fine and imprisonment at the discretion of the court.183

Section 4, Ibid.. Section 5, Ibid.. Section 6, Ibid.. 182 Section 7, Ibid.. 183 Section 7, Ibid.. 184 Section 3, Chapter 1, Department Order No. 65-04. 185 Section 15, Chapter 5, Ibid.; Section 12-A, R.A. No. 7610, as added by Section 3, R.A. No. 9231. 179 180 181





c. Employment of the child in public entertainment. Sleeping time as well as travel time of a child engaged in public entertainment or information from his/her residence to his/her workplace shall not be included as hours worked without prejudice to the application of existing rules on employees’ compensation.186

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d. Prohibition of employing minors in certain undertakings and in certain advertisements No child below eighteen (18) years of age is allowed to be employed as a model in any advertisement directly or indirectly promoting alcoholic beverages, intoxicating drinks, tobacco and its by‐products, gambling or any form of violence or pornography.187

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e. Prohibition on the employment of children below 15 years of age; exceptions and conditions.

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================================= TOPIC UNDER THE SYLLABUS C. LABOR STANDARDS 10. Employment of Househelpers a. Definition b. Benefits accorded househelpers c. Termination d. Reliefs for unjust termination =================================

a. Definition. The term “househelper” is synonymous to the term “domestic servant” and shall refer to any person, whether male or female, who renders services in and about the employer’s home and whose services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the employer’s family.192 It refers to any person who renders domestic or household services exclusively to a household employer. Examples are drivers, baby‐sitters, gardeners, cooks, nursemaids or yaya, and the like.193 b. Benefits accorded househelpers. Househelpers are entitled to the following benefits: 1. Minimum wage. The minimum wage rates prescribed under Article 143 of the Labor Code which refers to “basic cash wages” mentioned in Article 144. These minimum wage rates are on a monthly basis. [NOTE: The minimum wage rates prescribed by RTWPBs do not apply to househelpers]. 2. Salary rate in case of assignment in commercial, industrial or agricultural establishments. Househelpers should not be assigned to work in commercial, industrial or agricultural enterprises. However, if so required to work thereat, the wage or salary rate should not be lower than that provided for agricultural or non‐ agricultural workers as prescribed by law or wage order.194 3. Lodging, food and medical attendance. Suitable and sanitary living quarters (lodging) as well as adequate food and medical attendance, free of charge.195 Article 1689 of the Civil Code enunciates the rule that

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1. EMPLOYMENT OF HOUSEHELPERS (ARTICLES 141 TO 152, LABOR CODE).

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1. General rule. The general rule is that no child below fifteen (15) years of age shall be employed, permitted or suffered to work in any public or private establishment.188 2. Exceptions. The following shall be the only exceptions to the prohibition on the employment of a child below fifteen (15) year of age: (a) When the child works under the sole responsibility of his/her parents or guardian, provided that only members of the child’s family are employed. (b) When the child’s employment or participation in public entertainment or information is essential, regardless of the extent of the child’s role.189 3. Conditions to the prohibition. Such employment shall be strictly under the following conditions: i. The total number of hours worked shall be in accordance with Section 15 [Hours of Work of a Working Child] of the Rules [infra]; ii. The employment does not endanger the child’s life, safety, health and morals, nor impair the child’s normal development; iii. The child is provided with at least the mandatory elementary or secondary education; and iv. The employer secures a work permit for the child in accordance with Sections 8 to 12 of the Rules.190 “Normal development of the child” refers to the physical, emotional, mental, and spiritual growth of a child within a safe and nurturing environment where he/she is given adequate nourishment, care and protection and the opportunity to perform tasks appropriate at each stage of development.191

Id.. Section 6, Chapter 2, Department Order No. 65-04; Section 14, Article VIII, R.A. No. 7610, as amended by Section 5, R.A. No. 9231. Section 4, Chapter 2, Ibid.. 189 Section 7, Chapter 3, Ibid.. 190 Id.. 191 Section 3, Chapter 1, Ibid.. 192 Article 141, Labor Code; Section 1 [b], Rule XIII, Book III, Rules to Implement the Labor Code. 193 SSS Circular No. 21-V issued by the SSS Administrator on September 1, 1993. 194 Article 145, Labor Code; Section 10, Rule XIII, Book III, Rules to Implement the Labor Code. 195 Article 148 of the Labor Code. 186

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187 188





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d. Reliefs for unjust termination. The following principles apply in relation to reliefs available to househelpers in case of unjust termination” 1. The reliefs to which an unjustly dismissed househelper is entitled are provided for in Article 149. Such relief is in the nature of an “indemnity.” Thus, “if the househelper is unjustly terminated, he or she shall be paid the compensation already earned plus that for fifteen (15) days by way of indemnity.” 2. The reliefs for illegal dismissal under Article 280 of the Labor Code do not apply to unjust termination of househelpers. Clearly, no relief of “reinstatement” or “separation pay in lieu of reinstatement” to which an illegally dismissed regular employee is entitled is granted to an illegally dismissed househelper.

Article 144, Labor Code; Section 8, Rule XIII, Book III, Rules to Implement the Labor Code; SSS Circular No. 21-V issued by the SSS Administrator on September 1, 1993. Article 1695 of the Civil Code. Article 146 of the Labor Code. 199 See Section 11, Rule XIII, Book III, Rules to Implement the Labor Code. 200 Article 1695 of the Civil Code. 201 Last paragraph of Article 143 of the Labor Code. 202 See also Section 5, Rule XIII, Book III, Rules to Implement the Labor Code. 203 No. II [2], Ibid.. 204 No. V, Ibid.. 205 Househelpers were included in the coverage of the Retirement Pay Law by virtue of Department Order No. 20, issued by Secretary Ma. Nieves Roldan Confesor on May 31, 1994. On October 24, 1996, Secretary Leonardo A. Quisumbing issued his Labor Advisory on the Retirement Pay Law where they have been expressly and categorically included within the coverage of this law. 206 Section 16, Rule XIII, Book III thereof. 207 Philemploy Services and Resources, Inc. v. Rodriguez, [G.R. No. 152616, March 31, 2006]. 196 197 198

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c. Termination. The following principles apply to the termination of employment of a househelper: 1. The employment of househelpers, being on a fixed‐term basis, terminates upon its expiration. Article 142, in describing the contract of domestic service, explicitly provides that “(t)he original contract of domestic service shall not last for more than two (2) years but it may be renewed for such periods as may be agreed upon by the parties.” The use of the word “renewal” underscores too clearly that the contract of domestic service has an expiration date which, for its continued effectivity, needs to be “renewed” by the employer and the househelper. 2. The contract of employment of househelpers is terminable by mere notice, a clear indication of the fixed nature of its term. Article 150 simply requires that “(i)f the duration of the household service is not determined either in stipulation or by the nature of the service, the employer or the househelper may give notice to put an end to the relationship five (5) days before the intended termination of the service.” 3. Househelpers enjoy security of tenure only during the effectivity of their fixed‐term employment. After its expiration, no right to security of tenure may be invoked by them. Thus, it is provided in Article 149 that “(i)f the period of household service is fixed, neither the employer nor the househelper may terminate the contract before the expiration of the term, except for a just cause.” 4. Due process should be observed in terminating the employment of househelpers. The fact that Article 149 provides that “(i)f the period of household service is fixed, neither the employer nor the househelper may terminate the contract before the expiration of the term, except for a just cause,” is a recognition that due process has to be observed to determine whether just cause really exists to justify the dismissal.207 5. Househelpers cannot acquire regularity of employment. They are not included in the concept of regular employment under Article 280 [Regular and Casual Employment] of the Labor Code.

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household service shall always be reasonably compensated. Any stipulation that household service is without compensation shall be void. Lodging, food and medical attendance are not included in the term “basic cash wage.”196 4. Normal hours of work. Househelpers shall not be required to work for more than ten (10) hours a day.197 5. Overtime pay. If the househelper consents to render overtime work, he should be paid overtime pay. In the same vein, if the nature of his job requires him to work overtime, he has to render overtime work. 6. Opportunity for elementary education. If the househelper is under the age of eighteen (18) years, the employer should give him or her an opportunity for at least elementary education.198 The cost of education shall be part of the househelper’s compensation, unless there is a stipulation to the contrary.199 7. Monthly vacation. The househelper shall be allowed four (4) days vacation with pay each month.200 8. Compulsory SSS coverage. It is mandated under the Labor Code201 that in case the monthly wage of a househelper is at least One thousand pesos (P1,000.00), such househelper shall be covered by the Social Security System (SSS) and be entitled to all the benefits provided thereunder.202 Compulsory coverage of a househelper shall take effect on the day of his/her employment in a household but not earlier than September 1, 1993.203 A covered househelper is entitled to the same benefits, loans and other privileges that are made available to a regular covered employee under the Social Security (SS), PhilHealth and Employees’ Compensation (EC) laws.204 9. Retirement benefits. A househelper may retire upon reaching the age of 60 (optional) or 65 (compulsory) under Article 287 of the Labor Code.205 10. Funeral benefit. According to the Rules to Implement the Labor Code, in case of death of a househelper, the employer shall bear the funeral expenses commensurate to the standards of life of the deceased.206





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================================ TOPIC UNDER THE SYLLABUS C. LABOR STANDARDS 11. Employment of Homeworkers a. Definition b. Rights and benefits accorded homeworkers c. Conditions for deduction from homeworker’s earnings ================================

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Relevant Provisions: Articles 153 to 155, Labor Code; Department Order No. 5, [February 4, 1992] enunciating the regulations governing the employment of homeworkers. This Department Order is now known as Rule XIV, Book III of the Rules to Implement the Labor Code. 1. DEFINITIONS.

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a. Industrial homeworker, defined. An “industrial homeworker” is a worker who is engaged in industrial homework.208

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b. Industrial homework, defined. “Industrial homework” is a system of production under which work for an employer or contractor is carried out by a homeworker at his/her home. Materials may or may not be furnished by the employer or contractor. It differs from regular factory production principally in that, it is a decentralized form of production where there is ordinarily very little supervision or regulation of methods of work.209

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e. Employer, defined. “Employer” means any natural or artificial person who, for his own account or benefit, or on behalf of any person residing outside the Philippines, directly or indirectly, or through any employee, agent, contractor, subcontractor or any other person: 1. delivers or causes to be delivered any goods, articles or materials to be processed or fabricated in or about a home and thereafter to be returned or to be disposed of or distributed in accordance with his direction; or 2. sells any goods, articles or materials for the purpose of having such goods or articles processed in or about a home and then repurchases them himself or through another after such processing.

f. Contractor or subcontractor, defined. “Contractor” or “subcontractor” means any person who, for the account or benefit of an employer, delivers or causes to be delivered to a homeworker, goods or articles to be processed in or about his home and thereafter to be returned, disposed of or distributed in accordance with the direction of the employer.212

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g. Processing, defined. “Processing” means manufacturing, fabricating, finishing, repairing, altering, packing, wrapping or handling in any way connected with the production or preparation of an article or material.213

2. RIGHTS AND BENEFITS ACCORDED HOMEWORKERS.

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a. Duties of employer, contractor or subcontractor. Whenever an employer contracts with another for the performance of the employer’s work, it shall be the duty of such employer to provide in such contract that the employees or homeworkers of the contractor and the latter’s subcontractor shall be paid in accordance with the provisions of Rule XIV of the Rules to Implement the Labor Code. In the event that such contractor or subcontractor fails to pay the wages or earnings of his employees or homeworkers as specified in said Rules, such employer shall be jointly and severally liable with the contractor or subcontractor to the workers of the latter, to the extent that such work is performed under such contract, in the same manner as if the employees or homeworkers were directly engaged by the employer. The employer, contractor or subcontractor shall

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d. Field personnel, defined. A “field personnel” is a non‐agricultural employee who regularly performs his 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.211

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c. Home, defined. “Home” means any nook, house, apartment or other premises used regularly, in whole or in part, as a dwelling place, except those situated within the premises or compound of an employer, contractor/subcontractor and the work performed therein is under the active or personal supervision by or for the latter.210

Section 2, Department Order No. 5 [Rule XIV, Book III, Rules to Implement the Labor Code]. Id.. Id.. 211 Article 82, Labor Code 212 Section 2, Department Order No. 5 [Rule XIV, Book III, Rules to Implement the Labor Code]. 213 Section 2, Department Order No. 5 [Rule XIV, Book III, Rules to Implement the Labor Code]. 208 209 210





assist the homeworkers in the maintenance of basic safe and healthful working conditions at the homeworkers’ place of work.214

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b. Payment for homework. Immediately upon receipt of the finished goods or articles, the employer is required to pay the homeworker or the contractor or subcontractor, as the case may be, for the work performed less the corresponding homeworker’s share of SSS, PhilHealth and ECC premium contributions which should be remitted by the contractor or subcontractor or employer to the SSS with the employer’s share. However, where payment is made to a contractor or subcontractor, the homeworker should likewise be paid immediately after the goods or articles have been collected from the workers.215

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c. Prohibitions on certain kinds of homework. No homework shall be performed on the following: 1. Explosives, fireworks and articles of like character; 2. Drugs and poisons; and 3. other articles, the processing of which requires exposure to toxic substances.216

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3. CONDITIONS FOR DEDUCTION FROM HOMEWORKER’S EARNINGS.

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The following are the distinctions: 1. Practical training. Both learnership and apprenticeship involve practical training on‐the‐job. 2. Training agreement. Learnership is governed by a learnership agreement; while apprenticeship is governed by an apprenticeship agreement. 2. Occupation. Learnership involves learnable occupations consisting of semi‐skilled and other industrial occupations which are non‐apprenticeable; while apprenticeship concerns apprenticeable occupations or any trade, form of employment or occupation approved for apprenticeship by the DOLE Secretary. 3. Theoretical instructions. Learnership may or may not be supplemented by related theoretical instructions; while apprenticeship should always be supplemented by related theoretical instructions. 4. Ratio of theoretical instructions and on‐the‐job training. For both learnership and apprenticeship, the normal ratio is one hundred (100) hours of theoretical instructions for every two thousand (2,000) hours of practical or on‐the‐job training. Theoretical instruction time for occupations requiring less than two thousand (2,000) hours for proficiency should be computed on the basis of such ratio.218 5. Competency‐based system. Unlike in apprenticeship, it is required219 in learnership that it be implemented based on the TESDA‐approved competency‐based system.220 6. Duration of training. Learnership involves practical training on the job for a period not exceeding three (3) months; while apprenticeship requires for proficiency, more than three (3) months but not over six (6) months221 of practical training on the job. 7. Qualifications. The law does not expressly mention any qualifications for learners; while the following qualifications are required to be met by apprentices under Article 59 of the Labor Code:

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Relevant Provisions: 1. Apprentices – covered by Articles 57 to 72, Labor Code 2. Learners – covered by Articles 73 to 77, Labor Code 3. Republic Act No. 7796 (Technical Education and Skills Development Act of 1994) and its Implementing Rules and Regulations 1. DISTINCTIONS BETWEEN LEARNERSHIP AND APPRENTICESHIP.

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================================== TOPIC UNDER THE SYLLABUS C. LABOR STANDARDS 12. Apprentices and Learners a. Distinctions between Learnership and Apprenticeship ==================================

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a. Deductions for lost, destroyed, soiled or damaged materials. No employer, contractor or subcontractor shall make any deduction from the homeworker’s earnings for the value of materials which have been lost, destroyed, soiled or otherwise damaged unless the following conditions are met: a. The homeworker concerned is clearly shown to be responsible for the loss or damage; b. The homeworker is given reasonable opportunity to show cause why deduction should not be made; c. The amount of such deduction 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 twenty percent (20%) of the homeworker’s earnings in a week.217

Section 11, Department Order No. 5 [Rule XIV, Book III, Rules to Implement the Labor Code]. Section 6, Ibid.. Section 13, Department Order No. 5 [Rule XIV, Book III, Rules to Implement the Labor Code]. Section 8, Ibid.. 218 Section 28, Rule VI, Book II, Ibid.. 219 Under the 2004 TESDA Revised Guidelines in the Implementation of Apprenticeship and Learnership Programs. 220 No. 1.2., TESDA Circular No. 16, Series of 2004, dated August 12, 2004. 221 DOLE Circular No. 2, Series of 2006, [Amending Certain Provisions of Department Order No. 68-04] issued on August 11, 2006 by former DOLE Secretary (now Associate Justice of the Supreme Court) Arturo D. Brion 214 215 216 217





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==================================== TOPIC UNDER THE SYLLABUS C. LABOR STANDARDS 13. Handicapped Workers (RA 7277) a. Definition of “handicapped workers” b. Rights of disabled workers c. Prohibitions on discrimination against disabled persons d. Incentives for employers ====================================

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(a) Be at least fourteen (14) years of age; (b) Possess vocational aptitude and capacity for appropriate tests; and (c) Possess the ability to comprehend and follow oral and written instructions. 8. Circumstances justifying hiring of trainees. Unlike in apprenticeship, in learnership, the law, Article 74 of the Labor Code, expressly prescribes the pre‐requisites before learners may be validly employed, to wit: a. When no experienced workers are available; b. The employment of learners is necessary to prevent curtailment of employment opportunities; and c. The employment does not create unfair competition in terms of labor costs or impair or lower working standards.222 9. Limitation on the number of trainees. In learnership, a participating enterprise is allowed to take in learners only up to a maximum of twenty percent (20%) of its total regular workforce.223 No similar cap is imposed in the case of apprenticeship. 10. Option to employ. In learnership, the enterprise is obliged to hire the learner after the lapse of the learnership period; while in apprenticeship, the enterprise is given only an “option” to hire the apprentice as an employee. 224 11 Wage rate. The wage rate of a learner or an apprentice is set at seventy‐five percent (75%) of the statutory minimum wage.225

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1. DEFINITION OF “HANDICAPPED WORKERS” (UNDER R.A. NO. 7277).

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b. Definition of important terms. The following terms are specifically defined in the law: 1. “Persons with Disability” are those suffering from restriction or different abilities, as a result of a mental, physical or sensory impairment, to perform an activity in the manner or within the range considered normal for a human being. 2. “Impairment” refers to any loss, diminution or aberration of psychological, physiological, or anatomical structure or function. 3. “Disability” means (1) a physical or mental impairment that substantially limits one or more psychological, physiological or anatomical functions of an individual or activities of such individual; (2) a record of such an impairment; or (3) being regarded as having such an impairment. 4. “Handicap” refers to a disadvantage for a given individual, resulting from an impairment or a disability that limits or prevents the function or activity that is considered normal given the age and sex of the individual. 5. “Reasonable Accommodations” include: (1) improvement of existing facilities used by employees in order to render these readily accessible to and usable by persons with disability; and (2) modification of work schedules, reassignment to a vacant position, acquisition or modification of equipment or devices, appropriate adjustments or modifications of examinations, training materials or company policies, rules and regulations, the provision of auxiliary aids and services, and other similar accommodations for persons with disability. 6. “Marginalized Disabled Persons” or more appropriately, “Marginalized Persons with Disability” refer to persons with disability who lack access to rehabilitative services and opportunities to be able to participate fully in socio‐economic activities and who have no means of livelihood and whose incomes fall below the poverty threshold.

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a. Important clarification of terms. The term “handicapped workers” should no longer be used to describe persons with disability as this is no longer legally correct. Handicapped persons should not be called “disabled persons” but “persons with disability.” The term “disabled persons” has been changed to “persons with disability” not only in the title of R.A. No. 7277 but in all references in the said law to “disabled persons” by virtue of R.A. No. 9442.

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Relevant Provisions: ‐Handicapped workers – covered by Articles 78 to 81, Labor Code ‐R.A. No. 7277 [March 24, 1992] (“Magna Carta for Disabled Persons”) [now to be known as “Magna Carta for Persons with Disability” per Section 4 of R.A. No. 9442 (effective April 30, 2007)],

See also Section 2, Rule VII, Book II, Rules to Implement the Labor Code. No. 3.7., Ibid.. See No. 3.10 of TESDA Circular No. 16, Series of 2004 and DOLE Circular No. 2, Series of 2006. 225 Section 29, Rule VI, Book II, Ibid.; Section 5, Republic Act No. 6640; Section 10, Rules Implementing Republic Act No. 6640; Section 10, Rules Implementing Republic Act No. 6727; No. I [H], DOLE Handbook on Workers Statutory Monetary Benefits; No. 3.8., TESDA Circular No. 16, Series of 2004, dated August 12, 2004 [Revised Guidelines in the Implementation of Apprenticeship and Learnership Programs]. 222 223 224





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7. “Qualified Individual with a Disability” means an individual with a disability who, with or without reasonable accommodations, can perform the essential functions of the employment position that such individual holds or desires. However, consideration shall be given to the employer’s judgment as to what functions of a job are essential, and if an employer has prepared a written description before advertising or interviewing applicants for the job, this description shall be considered evidence of the essential functions of the job. 8. “Covered Entity” means an employer, employment agency, labor organization or joint‐labor management committee.

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2. RIGHTS OF PERSONS WITH DISABILITY (DISABLED WORKERS).

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a. Equal opportunity for persons with disability. Under the law,226 persons with disability are entitled to equal opportunity for employment. Consequently, no person with disability shall be denied access to opportunities for suitable employment. A qualified employee with disability 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 and other government agencies, offices or corporations engaged in social development shall be reserved for persons with disability.227

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d. Vocational guidance and counselling. The DSWD shall implement measures providing and evaluating vocational guidance and counselling to enable persons with disability to secure, retain and advance in employment. It shall ensure the availability and training of counsellors and other suitably qualified staff responsible for the vocational guidance and counselling of persons with disability.230

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e. Persons with disability are eligible for apprenticeship and learnership. Under R.A. No. 7277,231 it is provided that subject to the provisions of the Labor Code, as amended, persons with disability shall be eligible as apprentices or learners; provided that their handicap is not as much as to effectively impede the performance of job operations in the particular occupation for which they are hired and provided further that after the lapse of the period of apprenticeship, if found satisfactory in the job performance, they shall be eligible for employment.

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f. Wage rate. Under Article 80 of the Labor Code, handicapped workers are entitled to not less than seventy‐five percent (75%) of the applicable adjusted minimum wage.232 In view, however, of R.A. No. 7277,233 the wage rate of persons with disability is 100% of the applicable minimum wage.

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c. Vocational rehabilitation. Consistent with the principle of equal opportunity for workers with disability and workers in general, the State shall take appropriate vocational rehabilitation measures that shall serve to develop the skills and potentials of persons with disability and enable them to compete favorably for available productive and remunerative employment opportunities in the labor market. The State shall also take measures to ensure the provision of vocational rehabilitation and livelihood services for persons with disability in the rural areas. In addition, it shall promote cooperation and coordination between the government and non‐governmental organizations and other private entities engaged in vocational rehabilitation activities. The Department of Social Welfare and Development (DSWD) shall design and implement training programs that will provide persons with disability with vocational skills to enable them to engage in livelihood activities or obtain gainful employment. The Department of Labor and Employment (DOLE) shall likewise design and conduct training programs geared towards providing persons with disability with skills for livelihood.229

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b. Sheltered employment for persons with disability. “Sheltered Employment” refers to the provision of productive work for persons with disability through workshops providing special facilities, income‐producing projects or homework schemes with a view to giving them the opportunity to earn a living thus enabling them to acquire a working capacity required in open industry. If suitable employment for persons with disability cannot be found through open employment, the State shall endeavor to provide it by means of sheltered employment. In the placement of persons with disability in sheltered employment, it shall accord due regard to the individual qualities, vocational goals and inclinations to ensure a good working atmosphere and efficient production.228

Under R.A. No. 7277, otherwise known as the “Magna Carta for Disabled Persons” [now known as “Magna Carta for Persons with Disability”]. Section 5, Chapter 1, Title II, Republic Act No. 7277. Section 6, Chapter 1, Title II, Ibid.. Section 9, Chapter 1, Title II, Ibid.. 230 Section 10, Chapter 1, Title II, Ibid.. 231 Section 7, Chapter I, Title II thereof. 232 Article 80 [b], Labor Code; Section 5, Republic Act No. 6640; Section 10, Rules Implementing Republic Act No. 6640; Section 10, Rules Implementing Republic Act No. 6727; No. I [H], DOLE Handbook on Workers Statutory Monetary Benefits. 233 Section 5, Chapter 1, Title II of R.A. No. 7277. 226 227 228 229





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Wage orders issued by the Regional Tripartite Wages and Productivity Boards (RTWPBs) normally reflect this principle. To cite an example, Section 7 of Wage Order No. NCR‐15 [effective July 01, 2010] issued by RTWPB‐National Capital Region states: “All qualified handicapped workers shall receive the full amount of the minimum wage rate prescribed herein pursuant to Republic Act No. 7277, otherwise known as the Magna Carta for Disabled Persons.”234 Moreover, in case of legally‐mandated wage increases enunciated in wage orders issued by the RTWPBs, the employment agreements with persons with disability are deemed automatically modified insofar as their wage clauses are concerned to reflect the said increases.235

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g. Wage rate as apprentice or learner. A person with disability hired as an apprentice or learner shall be paid not less than seventy‐five percent (75%) of the applicable minimum wage. If the person with disability, however, is hired as a learner and employed in piece or incentive‐rate jobs during the training period, he shall be paid one hundred percent (100%) of the applicable minimum wage.

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a. Incentives for employers who employ persons with disability. To encourage the active participation of the private sector in promoting the welfare of persons with disability and to ensure gainful employment for qualified persons with disability, adequate incentives shall be provided to private entities which employ persons with disability.237 Private entities that employ persons with disability who meet the required skills or qualifications, either as a regular employee, apprentice or learner, shall be 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 persons with disability; provided, however, that such entities could present proof as certified by the Department of Labor and Employment that persons with disability are under their employ and provided further that the employee with disability is accredited with the Department of Labor and Employment and the Department of Health as to his disability, skills and qualifications.238 Private entities that improve or modify their physical facilities in order to provide reasonable accommodation for persons with disability shall also be entitled to an additional deduction from their net taxable income equivalent to

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4. INCENTIVES FOR EMPLOYERS.

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a. Discrimination on employment prohibited. No entity, whether public or private, shall discriminate against a qualified person with disability by reason of disability in regard to job application procedures, the hiring, promotion, or discharge of employees, employee compensation, job training, and other terms, conditions and privileges of employment. The following constitute acts of discrimination: (a) Limiting, segregating or classifying a job applicant with disability in such a manner that adversely affects his work opportunities; (b) Using qualification standards, employment tests or other selection criteria that screen out or tend to screen out a person with disability unless such standards, tests or other selection criteria are shown to be job‐related for the position in question and are consistent with business necessity; (c) Utilizing standards, criteria, or methods of administration that: (1) have the effect of discrimination on the basis of disability; or (2) perpetuate the discrimination of others who are subject to common administrative control. (d) Providing less compensation, such as salary, wage or other forms of remuneration and fringe benefits, to a qualified employee with disability, by reason of his disability, than the amount to which a non‐disabled person performing the same work is entitled; (e) Favoring a non‐disabled employee over a qualified employee with disability with respect to promotion, training opportunities, study and scholarship grants, solely on account of the latter’s disability; (f) Re‐assigning or transferring an employee with a disability to a job or position he cannot perform by reason of his disability; (g) Dismissing or terminating the services of an employee with disability by reason of his disability unless the employer can prove that he impairs the satisfactory performance of the work involved to the prejudice of the business entity; provided, however, that the employer first sought to provide reasonable accommodations for persons with disability; (h) Failing to select or administer in the most effective manner employment tests which accurately reflect the skills, aptitude or other factor of the applicant or employee with disability that such tests purports to measure, rather than the impaired sensory, manual or speaking skills of such applicant or employee, if any; and (i) Excluding persons with disability from membership in labor unions or similar organizations.236

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3. PROHIBITIONS ON DISCRIMINATION AGAINST PERSONS WITH DISABILITY (DISABLED PERSONS).

See also Section 8, Rule II, Implementing Rules of Wage Order No. NCR-14 issued on June 18, 2010. Article 124, Labor Code as amended by Section 3, Republic Act No. 6727; Section 10, Rules Implementing Republic Act No. 6727; Section 5, Republic Act No. 6640; Section 10, Rules Implementing Republic Act No. 6640 [applying by analogy similar provisions applicable to apprenticeship and learnership agreements mentioned therein]. 236 Section 32, Chapter I, Title III, Ibid.. 237 Section 8[a], Chapter 1, Title II, Ibid.. 238 Section 8[b], Chapter 1, Title II, Ibid. 234 235





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fifty percent (50%) of the direct costs of the improvements or modifications. This Section, however, does not apply to improvements or modifications of facilities required under Batas Pambansa Bilang 344 [February 25, 1983], entitled “An Act to Enhance the Mobility of Disabled Persons by Requiring Certain Buildings, Institutions, Establishments, and Public Utilities to Install Facilities and Other Devices.”239

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END OF DISCUSSION ON TOPIC C. LABOR STANDARDS

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Section 8[c], Chapter 1, Title II, Ibid..



Labor Standards

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