Notes On Critical Areas in Labor Law Part Ii

CRITICAL AREAS IN LABOR LAW
(LABOR STANDARDS)
By: ATTY. VOLTAIRE T. DUANO 1
Labor legislation and social legislation, distinguished
1995 Bar Examination
Labor legislation consists of statutes, regulations and jurisprudence governing the relations
between capital and labor, by providing for employm ent standards and a legal framework for
negotiating, adjusting and administering those standards and other incidents of employment.
Social legislation include laws that provide particular kinds of protection or benefits to society or
segments thereof in furtherance of social justice
General classifications of labor statutes

2004, 2003, 1997 and 1995 Bar Examinations
1.
Labor standards law shall refer to the minimum requirements prescribed by existing
laws, rules and regulations and other issuances relating to wages, hours of work, cost of living allowances
and other monetary and welfare benefits, including those set by occupational safety and health standards.
(Section 7, Rule I, Rules on the Disposition of Labor Standards Cases in the Regional Office,
dated September 16, 1987, cited in Maternity Children's Hospital vs. Secretary of Labor, GR No.
78909, June 30, 1989)
2.
Social security law are those laws that provide for income security and/or medical care
for contingencies such as: a. sickness b. maternity c. invalidity d. old age e. death of a bread winner;
unemployment; f. emergency expenses; and g. employment injuries xxx. (ILO Recommendation No. 67
cited in page 159 Labor and Social Legislation An Updated Systematic Presentation, Froilan M.
Bacungan 2011)
3.
Labor relations law defines the status, rights and duties, and the institutional
mechanisms, that govern the individual and collective interactions of employers, employees or their
representatives. Labor - is understood as physical toil although it does not necessarily exclude the
application of skill, thus there is skilled and unskilled labor
Basis of labor laws

Constitutional provisions
2012, 2011 and 2009 Bar Examinations
The 1987 Constitution mandates the protection of labor and the promotion of their welfare. Thus, the
1987 Constitution provides the fundamental labor standards and labor relations rights of workers. Among
the relevant constitutional provisions on labor are as follows:
1.The State shall promote a just and dynamic social order that will ensure the prosperity and
independence of the nation and free the people from poverty through policies that provide adequate
social services, promote full employment, a rising standard of living, and an improved quality of life
for all. (1987 Constitution, Declaration of Principles and State Policies, Article II, Section 9)
2.The State shall promote social justice in all phases of national development. (1987
Constitution, Declaration of Principles and State Policies, Article II, Section 10)
3.The State values the dignity of every human person and guarantees full respect for human
rights. (1987 Constitution, Declaration of Principles and State Policies, Article II, Section 11)
1993 LLB San Sebastian College-Recoletos Institute of Law (Class Valedictorian) and 2014 Master of
Laws, San Sebastian College-Recoletos Graduate School of Law (Benemeritus). Book author: Principles
and Cases, Labor Standards & Social Legislation, 2015 Edition, and Principles and Cases, Labor
Relations, 2016 Edition, Provisional Remedies & Special Civil Actions, Principles and Cases, 2015
Edition, Rules on Modes of Discovery, Principles and Cases, 2014 Edition. MCLE Lecturer, Professor of
Law and Bar Reviewer in Labor Law
4.The State recognizes the vital role of the youth in nation-building and shall promote and
protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the
youth patriotism and nationalism, and encourage their involvement in public and civic affairs. (1987
Constitution, Declaration of Principles and State Policies, Article II, Section 13)
5.The State recognizes the role of women in nation-building, and shall ensure the
fundamental equality before the law of women and men. (1987 Constitution, Declaration of
Principles and State Policies, Article II, Section 14)
6.The State affirms labor as a primary social economic force. It shall protect the rights of
workers and promote their welfare. (1987 Constitution, Declaration of Principles and State
Policies, Article II, Section 18)
7.The State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments. (1987 Constitution, Declaration of
Principles and State Policies, Article II, Section 20)
8.No person shall be deprived of life, liberty, or property without due process of law, nor shall
any person be denied the equal protection of the laws. (1987 Constitution, Bill of Rights, Article
III, Section 1)
9.No law shall be passed abridging the freedom of speech, of expression, or of the press, or
the right of the people peaceably to assemble and petition the government for redress of grievances.
(1987 Constitution, Bill of Rights, Article III, Section 4)
10.The right of the people, including those employed in the public and private sectors, to
form unions, associations, or societies for purposes not contrary to law shall not be abridged. (1987
Constitution, Bill of Rights, Article III, Section 8)
11.The civil service embraces all branches, subdivisions, instrumentalities, and agencies of
the Government, including government-owned or controlled corporations with original charters.
(1987 Constitution, Civil Service, Article IX-B, Section 2 [3])
12.No officer or employee of the civil service shall be removed or suspended except for
cause provided by law. (1987 Constitution, Civil Service, Article IX-B, Section 2 [3])
13.The right to self-organization shall not be denied to government employees. (6)
Temporary employees of the Government shall be given such protection as may be provided by law.
(1987 Constitution, Civil Service, Article IX-B, Section 2 [5])
14.The Congress shall provide for the standardization of compensation of government
officials and employees, including those in government-owned or controlled corporations with
original charters, taking into account the nature of the responsibilities pertaining to, and the
qualifications required for, their positions. (1987 Constitution, Civil Service, Article IX-B, Section
5)
15.The use of property bears a social function, and all economic agents shall contribute to
the common good. Individuals and private groups, including corporations, cooperatives, and similar
collective organizations, shall have the right to own establish, and operate economic enterprises,
subject to the duty of the State to promote distributive justice and to intervene when the common
good so demands. (1987 Constitution, National Economy and Patrimony, Article XII, Section 6)
16.The State shall promote the preferential use of Filipino labor, domestic materials and
locally produced goods, and adopt measures that help make them competitive. (1987 Constitution,
National Economy and Patrimony, Article XII, Section 12)
17.The sustained development of a reservoir of national talents consisting of Filipino
scientists, entrepreneurs, professionals, managers, high-level technical manpower and skilled
workers and craftsmen in all fields shall be promoted by the State. The State shall encourage
appropriate technology and regulate its transfer for the national benefit.
The practice of all professions in the Philippines shall be limited to Filipino citizens, save in
cases prescribed by law. (1987 Constitution, National Economy and Patrimony, Article XII,
Section 14)
18.The Congress shall not, except by general law, provide for the formation, organization, or
regulation of private corporations. Government-owned or controlled corporations may be created or
established by special charters in the interest of the common good and subject to the test of
economic viability. (1987 Constitution, National Economy and Patrimony, Article XII, Section
16)
19. The Congress shall give highest priority to the enactment of measures that protect and
enhance the right of all the people to human dignity, reduce social, economic, and political
inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the
common good.
To this end, the State shall regulate the acquisition, ownership, use, and disposition of property
and its increments. (1987 Constitution, Social Justice and Human Rights, Article XIII, Section
1)
20.The promotion of social justice shall include the commitment to create economic
opportunities based on freedom of initiative and self-reliance. (1987 Constitution, Social Justice
and Human Rights, Article XIII, Section 2)
21.The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with law.
They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall
also participate in policy and decision-making processes affecting their rights and benefits as may
be provided by law.
The State shall promote the principle of shared responsibility between workers and employers
and the preferential use of voluntary modes in settling disputes, including conciliation, and shall
enforce their mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of
labor to its just share in the fruits of production and the right of enterprises to reasonable returns to
investments, and to expansion and growth. (1987 Constitution, Labor, Article XIII, Section 3)
22.The State shall protect working women by providing safe and healthful working
conditions, taking into account their maternal functions, and such facilities and opportunities that will
enhance their welfare and enable them to realize their full potential in the service of the nation.
(1987 Constitution, Women, Article XIII, Section 14)
Protection to labor clause under the 1987 Constitution

1998 and 1996 Bar Examinations
This clause on protection to labor can be found in Article XIII, Section 3 of the 1987 Constitution. It
guarantees the following:
1.Extent and coverage of protection Full protection to labor, local and overseas,
organized and unorganized
2.Policy on employment Promote full employment and equality of employment
opportunities for all.
3.Unionism and Methods of Determination Conditions of Employment, Concerted
Activities The rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law.
4.Working conditions To security of tenure, humane conditions of work, and a living
wage.
5.Codetermination Participation in policy and decision-making processes affecting their
rights and benefits as may be provided by law.
6.Shared responsibility Promote the principle of shared responsibility between workers
and employers.
7.Policy on dispute resolution Preferential use of voluntary modes in settling disputes,
including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace.
8.Right of labor and of enterprise Right of labor to its just share in the fruits of
production and the right of enterprises to reasonable returns to investments, and to expansion and
growth.
Management prerogatives and those which affect the rights of the employees
1994 Bar Examinations
In Philippine Airlines, Inc. v. National Labor Relations Commission, et al, G.R No. 85985,
August 13, 1993, the principal issue is whether management may be compelled to share with the union
or its employees its prerogative of formulating a code of discipline. The provisions in question are as
follows:
Articles IV and I of Chapter II
Section 2. Non-exclusivity. This Code does not contain the entirety of the rules and
regulations of the company. Every employee is bound to comply with all applicable rules,
regulations, policies, procedures and standards, including standards of quality,
productivity, and behaviour, as issued and promulgated by the company through its duly
authorized officials. Any violations thereof shall be punishable with a penalty to be
determined
by
the
gravity
and/or
frequency
of
the
offense.
Section 7. Cumulative Record. An employees record of offenses shall be cumulative.
The penalty for an offense shall be determined on the basis of his past record of offenses
of any nature or the absence thereof. The more habitual an offender has been, the
greater shall be the penalty for the latest offense. Thus, an employee may be dismissed if
the number of his past offenses warrants such penalty in the judgment of management
even if each offense considered separately may not warrant dismissal. Habitual offenders
or recidivists have no place in PAL. On the other hand, due regard shall be given to the
length of time between commission of individual offenses to determine whether the
employees conduct may indicate occasional lapses (which may nevertheless require
sterner disciplinary action) or a pattern of incorrigibility.
In resolving the issue, the Supreme Court said:
Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending
Article 211 of the Labor Code, that the law explicitly considered it a State policy" (t)o ensure the
participation of workers in decision and policy-making processes affecting their rights, duties and
welfare." However, even in the absence of said clear provision of law, the exercise of
management prerogatives was never considered boundless. Thus, in Cruz v. Medina (177
SCRA 565 [1989]), it was held that managements prerogatives must be without abuse of
discretion.
In San Miguel Brewery Sales Force Union (PTGWO) v. Ople (170 SCRA 25 [1989], we
upheld the companys right to implement a new system of distributing its products, but gave the
following caveat:
s virtual 1aw library
So long as a companys management prerogatives are exercised in good faith for the
advancement of the employers interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid agreements,
this Court will uphold them. (at p. 28.)
All this points to the conclusion that the exercise of managerial prerogatives is not
unlimited. It is circumscribed by limitations found in law, a collective bargaining
agreement, or the general principles of fair play and justice (University of Sto. Tomas v.
NLRC, 190 SCRA 758 [1990]). Moreover, as enunciated in Abbott Laboratories (Phil.),
Inc. v. NLRC (154 SCRA 713 [1987], it must be duly established that the prerogative
being invoked is clearly a managerial one.
A close scrutiny of the objectionable provisions of the Code reveals that they are not purely
business-oriented nor do they concern the management aspect of the business of the company
as in the San Miguel case. The provisions of the Code clearly have repercusions on the
employees right to security of tenure. The implementation of the provisions may result in the
deprivation of an employees means of livelihood which, as correctly pointed out by the NLRC, is
a property right (Callanta v. Carnation Philippines, Inc., 145 SCRA 268 [1986]). In view of these
aspects of the case which border on infringement of constitutional rights, we must uphold the
constitutional requirements for the protection of labor and the promotion of social justice, for these
factors, according to Justice Isagani Cruz, tilt "the scales of justice when there is doubt, in favor of
the worker." (Employees association of the Philippine American Life Insurance Company v.
NLRC, 199 SCRA 628 [1991] 635)
Verily, a line must be drawn between management prerogatives regarding business

operations per se and those which affect the rights of the employees.
Construction in favor of labor

In Songco v. National Labor Relations Commission, G.R. No. L-50999 March 23, 1990 the
Supreme Court ruled on the proper construction and interpretation of labor laws and its implementing
rules in case of doubt as follows:
The final consideration is, in carrying out and interpreting the Labor Code's provisions and its
implementing regulations, the workingman's welfare should be the primordial and paramount
consideration. This kind of interpretation gives meaning and substance to the liberal and
compassionate spirit of the law as provided for in Article 4 of the Labor Code which states that "all
doubts in the implementation and interpretation of the provisions of the Labor Code including its
implementing rules and regulations shall be resolved in favor of labor" (Abella v. NLRC, G.R. No.
71812, July 30,1987,152 SCRA 140; Manila Electric Company v. NLRC, et al., G.R. No.
78763, July 12,1989), and Article 1702 of the Civil Code which provides that "in case of doubt, all
labor legislation and all labor contracts shall be construed in favor of the safety and decent living
for the laborer.
Article 4 of the Labor Code extended to cover doubts in the evidence - In Peaflor v. Outdoor
Clothing Manufacturing, G.R. No. 177114, January 21,2010, the Supreme Court explained the
application of Article 4 of the Labor Code regarding doubts on respondents evidence on the voluntariness
of petitioners resignation. Thus, the High Court said:
Another basic principle is that expressed in Article 4 of the Labor Code that all doubts in the
interpretation and implementation of the Labor Code should be interpreted in favor of the
workingman. This principle has been extended by jurisprudence to cover doubts in the evidence
presented by the employer and the employee. (Fujitsu Computer Products Corporation of the
Philippines v. Court of Appeals, 494 Phil. 697 [2005]) As shown above, Peaflor has, at very
least, shown serious doubts about the merits of the companys case, particularly in the
appreciation of the clinching evidence on which the NLRC and CA decisions were based. In such
contest of evidence, the cited Article 4 compels us to rule in Peaflors favor. Thus, we find that
Peaflor was constructively dismissed given the hostile and discriminatory working environment
he found himself in, particularly evidenced by the escalating acts of unfairness against him that
culminated in the appointment of another HRD manager without any prior notice to him. Where
no less than the companys chief corporate officer was against him, Peaflor had no alternative
but to resign from his employment. (Unicorm Safety Glass, Inc. v. Basarte, 486 Phil. 493
[2004])
Concept of management prerogatives

The Supreme defined management prerogative in SHS Perforated Materials, Inc. v. Diaz, G.R.
No. 185814, October 13,2010: which refers to the right of an employer to regulate all aspects of
employment, such as the freedom to prescribe work assignments, working methods, processes to be
followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and
dismissal and recall of work. (Baybay Water District v. Commission on Audit, G.R. Nos. 14724849. January 23, 2002)
Criterion to guide in the exercise of management prerogatives

In Gemina, Jr. v. Bankwise, Inc. (Thrift Bank) G.R. No. 175365, October 23, 2013 it was held:
The employers right to conduct the affairs of its business, according to its own discretion and judgment, is
well-recognized. An employer has a free reign and enjoys wide latitude of discretion to regulate all
aspects of employment and the only criterion to guide the exercise of its management prerogative is that
the policies, rules and regulations on work-related activities of the employees must always be fair and
reasonable. (The Coca-Cola Export Corporation v. Gacayan, G.R. No. 149433, December 15, 2010,
638 SCRA 377, 398-399)
xxx
As respondents employer, petitioner has the right to regulate, according to its discretion and best
judgment, work assignments, work methods, work supervision, and work regulations, including the hiring,
firing and discipline of its employees. Indeed, petitioner has the management prerogative to discipline its
employees, like herein respondent, and to impose appropriate penalties on erring workers pursuant to
company rules and regulations. (Deles, Jr. v. National Labor Relations Commission, G.R. No. 121348.
March 9, 2000) This Court upholds these management prerogatives so long as they are exercised in
good faith for the advancement of the employers interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws and valid agreements. ( Challenge Socks
Corporation v. Court of Appeals, G.R. No. 165268, November 8, 2005, 474 SCRA 356, 362-363)
Outsourcing any activities as management prerogative

In BPI- Employees Union-Davao City FUBU (BPIEU-Davao City-FUBU) v. Bank of the
Philippine Islands, 174912, July 24,2013, on the issue of outsourcing as a management prerogative,
the Supreme Court held: In one case, the Court held that it is management prerogative to farm out any of
its activities, regardless of whether such activity is peripheral or core in nature. (Alviado v. Procter &
Gamble Phils., Inc, G.R. No. 160506, March 9, 2010,614 SCRA 563,577) What is of primordial
importance is that the service agreement does not violate the employee's right to security of tenure and
payment of benefits to which he is entitled under the law. Furthermore, the outsourcing must not squarely
fall under labor-only contracting where the contractor or sub-contractor merely recruits, supplies or places
workers to perform a job, work or service for a principal xxx.
Grant of bonus
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From a legal point of view, a bonus is a gratuity or act of liberality of the giver which the recipient
has no right to demand as a matter of right. (Philippine National Construction Corp. v. National Labor
Relations Commission, G.R. No. 117240. October 2, 1997) The grant of a bonus is basically a
management prerogative which cannot be forced upon the employer who may not be obliged to assume
the onerous burden of granting bonuses or other benefits aside from the employees basic salaries or
wages. (Traders Royal Bank v. National Labor Relations Commission, G.R. No. 88168, August 30,
1990, 189 SCRA 274, 277)
A bonus, however, becomes a demandable or enforceable obligation when it is made part of the
wage or salary or compensation of the employee. (Philippine National Construction Corp. v. National
Labor Relations Commission, 366 Phil. 678 [1999]; Philippine Duplicators, Inc. v. National Labor
Relations Commission, 311 Phil. 407, 419 [1995]) Particularly instructive is the ruling of the Court
in Metro Transit Organization, Inc. v. National Labor Relations Commission, 315 Phil. 860, 871
(1995) where it was written:
Whether or not a bonus forms part of wages depends upon the circumstances and
conditions for its payment. If it is additional compensation which the employer promised
and agreed to give without any conditions imposed for its payment, such as success of
business or greater production or output, then it is part of the wage. But if it is paid only if
profits are realized or if a certain level of productivity is achieved, it cannot be considered
part of the wage. Where it is not payable to all but only to some employees and only
when their labor becomes more efficient or more productive, it is only an inducement for
efficiency, a prize therefore, not a part of the wage.
While in Producers Bank of the Philippines v. NLRC, G.R. No. 100701. March 28, 2001 it was
held: A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed
to the success of the employers business and made possible the realization of profits. It is an act of
generosity granted by an enlightened employer to spur the employee to greater efforts for the success of
the business and realization of bigger profits. (Luzon Stevedoring Corp. v. Court of Industrial
Relations, 15 SCRA 660 [1965]) The granting of a bonus is a management prerogative, something given
in addition to what is ordinarily received by or strictly due the recipient. (Traders Royal Bank v. NLRC,
189 SCRA 274 [1990]) Thus, a bonus is not a demandable and enforceable obligation, (Luzon
Stevedoring Corp. v. Court of Industrial Relations, supra) except when it is made part of the wage,
salary or compensation of the employee. (Philippine National Construction Corporation v. NLRC, 307
SCRA 218 (1999); Atok-Big Wedge Mutual Benefit Association v. Atok-Big Wedge Mining Co., 92
Phil 754 [1953]) However, an employer cannot be forced to distribute bonuses which it can no longer
afford to pay. To hold otherwise would be to penalize the employer for his past generosity. Thus, in
Traders Royal Bank v. NLRC,(supra) we held that
It is clear x x x that the petitioner may not be obliged to pay bonuses to its
employees. The matter of giving them bonuses over and above their lawful salaries and
allowances is entirely dependent on the profits, if any, realized by the Bank from its
operations during the past year.
Applicability
The applicability of the Labor Code are subject to certain exceptions such as those employed in
the civil service, those employed in government-owned and controlled corporations with special charter,
involving intra-corporate controversy, employers with immunity from suit and those excluded under
working conditions and rest periods of Book III Title I under Article 82 of the Labor Code in relation to
Rules I, Section 2, II, Section 1, Rule IV, Section 1 and Rule , Section 1, Book III of the Omnibus Rules
Implementing the Labor Code.
Test to determine whether a GOCC is subject to Civil Service Law

The Supreme Court laid down the test to determine whether a GOCC is subject to Civil Service
Law based on the previous ruling of National Service Corporation v. NLRC. As held in Philippine
National Oil Company-Energy Development Corporation, v. Leogardo, G.R. No. L-58494 July 5,
1989: Thus, under the present state of the law, the test in determining whether a government-owned or
controlled corporation is subject to the Civil Service Law is the manner of its creation such that
government corporations created by special charter are subject to its provisions while those incorporated
under the general Corporation Law are not within its coverage. However, it should be noted that even if
an entity is under the civil service law it is not completely beyond the scope of labor laws. In Philippine
Fisheries Development Authority v. NLRC, G.R. No. 94825, September 4, 1992 it was held:
Notwithstanding that the petitioner is a government agency, its liabilities, which are joint and solidary with
that of the contractor, are provided in Articles 106, 107 and 109 of the Labor Code. This places the
petitioners liabilities under the scope of the NLRC. Moreover, Book Three, Title II on Wages specifically
provides that the term "employer" includes any person acting directly or indirectly in the interest of an
employer in relation to an employee and shall include the Government and all its branches, subdivisions
and instrumentalities, all government-owned or controlled corporation and institutions as well as non-profit
private institutions, or organizations (Art. 97 [b], Labor Code; Eagle Security Agency, Inc. v. NLRC,
173 SCRA 479 [1989]; Rabago v. NLRC, 200 SCRA 158 [1991]). Settled is the rule that in job
contracting, the petitioner as principal is jointly and severally liable with the contractor for the payment of
unpaid wages. The statutory basis for the joint and several liability is set forth in Articles 107, and 109 in
relation to Article 106 of the Labor Code.
Employers with immunity from suit

In a number of cases, the Supreme Court affirmed the immunity from suit of certain international
organizations as follows:
1. In Department of Foreign Affairs v. NLRC, G.R. No. 113191, September 18,1996, in
upholding ADBs immunity from suit, the Supreme Court held:
Being an international organization that has been extended a diplomatic status, the ADB is
independent of the municipal law. (SEAFDEC vs. NLRC, 206 SCRA 283; See International
Catholic Migration Commission vs. Calleja, supra) In Southeast Asian Fisheries
Development Center vs. Acosta, 226 SCRA 49 the Court has cited with approval the opinion
(No. 139, Series of 1984) of the then Minister of Justice; thus "One of the basic immunities of an international organization is immunity from local
jurisdiction, i.e., that it is immune from the legal writs and processes issued by the
tribunals of the country where it is found. (See Jenks, Id., pp. 37-44). The obvious
reason for this is that the subjection of such an organization to the authority of the local
courts would afford a convenient medium thru which the host government may interfere
in their operations or even influence or control its policies and decisions of the
organization; besides, such subjection to local jurisdiction would impair the capacity of
such body to discharge its responsibilities impartially on behalf of its member-states."
(At page 53)
xxx
Private respondent argues that, by entering into service contracts with different private
companies, ADB has descended to the level of an ordinary party to a commercial transaction
giving rise to a waiver of its immunity from suit. In the case of Holy See vs. Hon. Rosario, Jr.,
238 SCRA 524 the Court has held:
There are two conflicting concepts of sovereign immunity, each widely held and
firmly established. According to the classical or absolute theory, a sovereign cannot,
without its consent, be made a respondent in the Courts of another sovereign.
According to the newer or restrictive theory, the immunity of the sovereign is
recognized only with regard to public acts or acts jure imperii of a state, but not with
regard to private act or acts jure gestionis.
x x x
xxx
xxx
Certainly, the mere entering into a contract by a foreign state with a private party
cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical
question is whether the foreign state is engaged in the activity in the regular course of
business. If the foreign state is not engaged regularly in a business or trade, the
particular act or transaction must then be tested by its nature. If the act is in pursuit of
a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when
it is not undertaken for gain or profit. (At pp. 535-536)
The service contracts referred to by private respondent have not been intended by the ADB
for profit or gain but are official acts over which a waiver of immunity would not attach.
2. In Callado v. International Rice Research Institute, G.R. No. 106483, May 22, 1995 the
Supreme Court resolved the issue: Did the International Rice Research Institute (IRRI) waive its immunity
from suit in this dispute which arose from an employer-employee relationship?
IRRI's immunity from suit is undisputed.
Presidential Decree No. 1620, Article 3 provides:
Art. 3. Immunity from Legal Process. The Institute shall enjoy immunity from any
penal, civil and administrative proceedings, except insofar as that immunity has been
expressly waived by the Director-General of the Institute or his authorized
representatives.
In the case of International Catholic Migration Commission v. Hon. Calleja, et al. and
Kapisanan ng Manggagawa at TAC sa IRRI v. Secretary of Labor and Employment and
IRRI, G.R. No. 85750 and G.R. No. 89331, September 28, 1990, 190 SCRA 130 the Court
upheld the constitutionality of the aforequoted law. After the Court noted the letter of the Acting
Secretary of Foreign Affairs to the Secretary of Labor dated June 17, 1987, where the immunity of
IRRI from the jurisdiction of the Department of Labor and Employment was sustained, the Court
stated that this opinion constituted "a categorical recognition by the Executive Branch of the
Government that . . . IRRI enjoy(s) immunities accorded to international organizations, which
determination has been held to be a political question conclusive upon the Courts in order not to
embarass a political department of Government. (Supra at pp. 139-140)
xxx
The grant of immunity to IRRI is clear and unequivocal and an express waiver by its DirectorGeneral is the only way by which it may relinquish or abandon this immunity.
On the matter of waiving its immunity from suit, IRRI had, early on, made its position clear.
Through counsel, the Institute wrote the Labor Arbiter categorically informing him that the Institute
will not waive its diplomatic immunity. In the second place, petitioner's reliance on the
Memorandum with "Guidelines in handling cases of dismissal of employees in relation to P.D.
1620" dated July 26, 1983, is misplaced.
xxx
We agree with private respondent IRRI that this memorandum cannot, by any stretch of the
imagination, be considered the express waiver by the Director-General.
xxx
The memorandum, issued by the former Director-General to a now-defunct division of the
IRRI, was meant for internal circulation and not as a pledge of waiver in all cases arising from
dismissal of employees. Moreover, the IRRI's letter to the Labor Arbiter in the case at bench
made in 1991 declaring that it has no intention of waiving its immunity, at the very least, supplants
any pronouncement of alleged waiver issued in previous cases.
3. In Lasco v. United Nation Revolving Fund for Natural Resources Exploration
[UNRFNRE], G.R. Nos. 109095, February 23,1995 the immunity from suit of a specialized agencies of
the UN was affirmed. Thus, it was held:
Corollary to the cited article is the Convention on the Privileges and Immunities of the
Specialized Agencies of the United Nations, to which the Philippines was a signatory (Vol. 1,
Philippine Treaty Series, p. 621). We quote Sections 4 and 5 of Article III thereof:
Sec. 4. The specialized agencies, their property and assets, wherever located and by
whomsoever held shall enjoy immunity from every form of legal process except insofar as
in any particular case they have expressly waived their immunity. It is, however,
understood that no waiver of immunity shall extend to any measure of execution
(Emphasis supplied).
Sec. 5. The premises of the specialized agencies shall be inviolable. The property
and assets of the specialized agencies, wherever located and by whomsoever held, shall
be immune from search, requisition, confiscation, expropriation and any other form of
interference, whether by executive, administrative, judicial or legislative action (Emphasis
supplied).
xxx
In the International Catholic Migration Commission case, we held that there is no conflict
between the constitutional duty of the State to protect the rights of workers and to promote their
welfare, and the grant of immunity to international organizations. Clauses on jurisdictional
immunity are now standard in the charters of the international organizations to guarantee the
smooth discharge of their functions.
The diplomatic immunity of private respondent was sufficiently established by the letter of the
Department of Foreign Affairs, recognizing and confirming the immunity of UNRFNRE in
accordance with the 1946 Convention on Privileges and Immunities of the United Nations where
the Philippine Government was a party. The issue whether an international organization is entitled
to diplomatic immunity is a "political question" and such determination by the executive branch is
conclusive on the courts and quasi-judicial agencies (The Holy See v. Hon. Eriberto U.
Rosario, Jr., G.R. No. 101949, Dec. 1, 1994; International Catholic Migration Commission v.
Calleja, supra).
Our courts can only assume jurisdiction over private respondent if it expressly waived its
immunity, which is not so in the case at bench (Convention on the Privileges and Immunities
of the Specialized Agencies of the United Nations, Art. III, Sec. 4).
Private respondent is not engaged in a commercial venture in the Philippines. Its presence
here is by virtue of a joint project entered into by the Philippine Government and the United
Nations for mineral exploration in Dinagat Island. Its mission is not to exploit our natural
resources and gain pecuniarily thereby but to help improve the quality of life of the people,
including that of petitioners.
4. In upholding the lack of jurisdiction over the labor cases filed against petitioner, the Supreme
Court in Southeast Asian Fisheries Development Center v. Acosta, G.R. Nos. 97468-70 September
2, 1993 held: It is beyond question that petitioner SEAFDEC is an international agency enjoying
diplomatic immunity. This, we have already held in Southeast Asian Fisheries Development CenterAquaculture Department vs. National Labor Relations Commission, G.R. No. 86773, 206 SCRA
283/1992; see also Lacanilao v. de Leon, G.R. No. 76532, 147 SCRA, 286/1987/, where we said
Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department
(SEAFDEC-AQD) is an international agency beyond the jurisdiction of public respondent
NLRC.
xxx
The then Minister of Justice likewise opined that Philippine Courts have no
jurisdiction over SEAFDEC-AQD in Opinion No. 139, Series of 1984
4. One of the basic immunities of an international organization is immunity
from local jurisdiction, i.e., that it is immune from the legal writs and processes
issued by the tribunals of the country where it is found. (See Jenks, Id., pp. 3744). The obvious reason for this is that the subjection of such an organization to
the authority of the local courts would afford a convenient medium thru which the
host government may interfere in their operations or even influence or control its
policies and decisions of the organization; besides, such objection to local
jurisdiction would impair the capacity of such body to discharge its
responsibilities impartially on behalf of its member-states. In the case at bar, for
instance, the entertainment by the National Labor Relations Commission of Mr.
Madamba's reinstatement cases would amount to interference by the Philippine
Government in the management decisions of the SEARCA governing board;
even worse, it could compromise the desired impartiality of the organization since
it will have to suit its actuations to the requirements of Philippine law, which may
not necessarily coincide with the interests of the other member-states. It is
precisely to forestall these possibilities that in cases where the extent of the
immunity is specified in the enabling instruments of international organizations
(jurisdictional immunity, is specified in the enabling instruments of international
organizations), jurisdictional immunity from the host country is invariably among
the first accorded. (See Jenks, Id.; See Bowett. The Law of International
Institutions. pp. 284-285).
When immunity from suit is not applicable

In the consolidated cases of United States of America v. Guinto, G.R. No. 76607 February
26, 1990, United States of America v. Rodrigo, G.R. No. 79470 February 26, 1990, United States
of America v. Ceballos, G.R. No. 80018 February 26, 1990, United States of America v. Alarcon
Vergara, G.R. No. 80258 February 26, 1990 the doctrine of state immunity was not applied in G.R.
No. 79470 and G.R. No. 76607. In the said cases, the United States of America although not
impleaded in the lower courts moved to dismiss on the ground that they are in effect suits against it to
which it has not consented. It is now contesting the denial of its motions by the respondent judges. In
resolving the issue, the Supreme Court said:
There is no question that the United States of America, like any other state, will be deemed to
have impliedly waived its non-suability if it has entered into a contract in its proprietary or private
capacity. It is only when the contract involves its sovereign or governmental capacity that no such
waiver may be implied. This was our ruling in United States of America v. Ruiz, 136 SCRA 487
where the transaction in question dealt with the improvement of the wharves in the naval
installation at Subic Bay. As this was a clearly governmental function, we held that the contract
did not operate to divest the United States of its sovereign immunity from suit. In the words of
Justice Vicente Abad Santos:
xxx.
In G.R. No. 79470, private respondent Genove was employed as a cook in the Main Club
located at the U.S. Air Force Recreation Center, also known as the Open Mess Complex, at John
Hay Air Station. As manager of this complex, petitioner Lamachia is responsible for eleven
diversified activities generating an annual income of $2 million. Under his executive management
are three service restaurants, a cafeteria, a bakery, a Class VI store, a coffee and pantry shop, a
main cashier cage, an administrative office, and a decentralized warehouse which maintains a
stock level of $200,000.00 per month in resale items. He supervises 167 employees, one of
whom was Genove, with whom the United States government has concluded a collective
bargaining agreement.
From these circumstances, the Court can assume that the restaurant services offered at the
John Hay Air Station partake of the nature of a business enterprise undertaken by the United
States government in its proprietary capacity. Such services are not extended to the American
servicemen for free as a perquisite of membership in the Armed Forces of the United States.
Neither does it appear that they are exclusively offered to these servicemen; on the contrary, it is
well known that they are available to the general public as well, including the tourists in Baguio
City, many of whom make it a point to visit John Hay for this reason. All persons availing
themselves of this facility pay for the privilege like all other customers as in ordinary restaurants.
Although the prices are concededly reasonable and relatively low, such services are undoubtedly
operated for profit, as a commercial and not a governmental activity.
The consequence of this finding is that the petitioners cannot invoke the doctrine of state
immunity to justify the dismissal of the damage suit against them by Genove. Such defense will
not prosper even if it be established that they were acting as agents of the United States when
they investigated and later dismissed Genove. For that matter, not even the United States
government itself can claim such immunity. The reason is that by entering into the employment
contract with Genove in the discharge of its proprietary functions, it impliedly divested itself of its
sovereign immunity from suit.
But these considerations notwithstanding, we hold that the complaint against the petitioners
in the court below must still be dismissed. While suable, the petitioners are nevertheless not
liable.
xxx
Concerning G.R. No. 76607, we also find that the barbershops subject of the concessions
granted by the United States government are commercial enterprises operated by private
10
person's. They are not agencies of the United States Armed Forces nor are their facilities
demandable as a matter of right by the American servicemen. These establishments provide for
the grooming needs of their customers and offer not only the basic haircut and shave (as required
in most military organizations) but such other amenities as shampoo, massage, manicure and
other similar indulgences. And all for a fee. Interestingly, one of the concessionaires, private
respondent Valencia, was even sent abroad to improve his tonsorial business, presumably for the
benefit of his customers. No less significantly, if not more so, all the barbershop concessionaires
are under the terms of their contracts, required to remit to the United States government fixed
commissions in consideration of the exclusive concessions granted to them in their respective
areas.
This being the case, the petitioners cannot plead any immunity from the complaint filed by the
private respondents in the court below. The contracts in question being decidedly commercial, the
conclusion reached in the United States of America v. Ruiz case cannot be applied here.
Interpretation of the proviso in Article 13b of the Labor Code

In People v. Panis, G.R. Nos. L-58674-77, July 11, 1990, the basic issue is the correct
interpretation of Article 13(b) of P.D. 442, otherwise known as the Labor Code. The view of the private
respondents is that to constitute recruitment and placement, all the acts mentioned in this article should
involve dealings with two or more persons as an indispensable requirement. On the other hand, the
petitioner argues that the requirement of two or more persons is imposed only where the recruitment and
placement consists of an offer or promise of employment to such persons and always in consideration of
a fee. The other acts mentioned in the body of the article may involve even only one person and are not
necessarily for profit. In resolving the contentions, the Supreme Court said:
Neither interpretation is acceptable. We fail to see why the proviso should speak only of an
offer or promise of employment if the purpose was to apply the requirement of two or more
persons to all the acts mentioned in the basic rule. For its part, the petitioner does not explain
why dealings with two or more persons are needed where the recruitment and placement
consists of an offer or promise of employment but not when it is done through "canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers.
As we see it, the proviso was intended neither to impose a condition on the basic rule nor to
provide an exception thereto but merely to create a presumption. The presumption is that the
individual or entity is engaged in recruitment and placement whenever he or it is dealing with two
or more persons to whom, in consideration of a fee, an offer or promise of employment is made in
the course of the "canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of)
workers."
The number of persons dealt with is not an essential ingredient of the act of recruitment and
placement of workers. Any of the acts mentioned in the basic rule in Article 13(b) will constitute
recruitment and placement even if only one prospective worker is involved. The proviso merely
lays down a rule of evidence that where a fee is collected in consideration of a promise or offer of
employment to two or more prospective workers, the individual or entity dealing with them shall
be deemed to be engaged in the act of recruitment and placement. The words "shall be deemed"
create that presumption.[Underscore ours supplied]
Constitutionality of Article 13 (b) of the Labor Code

In The People of the Philippines v. Dela Piedra, G.R. No. 121777, January 24, 2001 accusedappellant Dela Piedra questions her conviction for illegal recruitment in large scale and assails, as well,
the constitutionality of the law defining and penalizing said crime. In deciding the case, the Supreme
Court explained:
Appellant submits that Article 13 (b) of the Labor Code defining recruitment and placement
is void for vagueness and, thus, violates the due process clause. (Constitution, Article III,
Section 1)
xxx
We reiterated these principles in People vs. Nazario 165 SCRA 186 (1988):
As a rule, a statute or act may be said to be vague when it lacks comprehensible
standards that men of common intelligence must necessarily guess at its meaning and
differ as to its application. It is repugnant to the Constitution in two respects: (1) it
violates due process for failure to accord persons, especially the parties targeted by it,
11
fair notice of the conduct to avoid; and (2) it leaves law enforcers unbridled discretion in
carrying out its provisions and become an arbitrary flexing of the Government muscle.
We added, however, that:
x x x the act must be utterly vague on its face, that is to say, it cannot be clarified by
either a saving clause or by construction. Thus, in Coates v. City of Cincinnati, the U.S.
Supreme Court struck down an ordinance that had made it illegal for three or more
persons to assemble on any sidewalk and there conduct themselves in a manner
annoying to persons passing by. Clearly, the ordinance imposed no standard at all
because one may never know in advance what annoys some people but does not
annoy others.
Coates highlights what has been referred to as a perfectly vague act whose obscurity is
evident on its face. It is to be distinguished, however, from legislation couched in imprecise
languagebut which nonetheless specifies a standard though defectively phrasedin which
case, it may be saved by proper construction.
xxx
In support of her submission that Article 13 (b) is void for vagueness, appellant invokes
People vs. Panis, 142 SCRA 664 (1986) where this Court, to use appellants term, criticized
the definition of recruitment and placement as follows:
It is unfortunate that we can only speculate on the meaning of the questioned
provision for lack of records of debates and deliberations that would otherwise have been
available if the Labor Code had been enacted as a statute rather than a presidential
decree is that they could be, and sometimes were, issued without previous public
discussion or consultation, the promulgator heeding only his own counsel or those of his
close advisers in their lofty pinnacle of power. The not infrequent results are rejection,
intentional or not, of the interest of the greater number and, as in the instant case, certain
esoteric provisions that one cannot read against the background facts usually reported in
the legislative journals.
If the Court in Panis had to speculate on the meaning of the questioned provision,
appellant asks, what more the ordinary citizen who does not possess the necessary
[legal] knowledge?
Appellant further argues that the acts that constitute recruitment and placement suffer from
overbreadth since by merely referring a person for employment, a person may be convicted of
illegal recruitment.
These contentions cannot be sustained.
Appellants reliance on People vs. Panis is misplaced. The issue in Panis was whether,
under the proviso of Article 13 (b), the crime of illegal recruitment could be committed only
whenever two or more persons are in any manner promised or offered any employment for a
fee. The Court held in the negative, xxx.
xxx
Evidently, therefore, appellant has taken the penultimate paragraph in the excerpt quoted
above out of context. The Court, in Panis, merely bemoaned the lack of records that would help
shed light on the meaning of the proviso. The absence of such records notwithstanding, the
Court was able to arrive at a reasonable interpretation of the proviso by applying principles in
criminal law and drawing from the language and intent of the law itself. Section 13 (b), therefore,
is not a perfectly vague act whose obscurity is evident on its face. If at all, the proviso therein is
merely couched in imprecise language that was salvaged by proper construction. It is not void for
vagueness.
An act will be declared void and inoperative on the ground of vagueness and uncertainty, only
upon a showing that the defect is such that the courts are unable to determine, with any
reasonable degree of certainty, what the legislature intended. x x x.
That Section 13 (b) encompasses what appellant apparently considers as customary and
harmless acts such as labor or employment referral (referring an applicant, according to
appellant, for employment to a prospective employer) does not render the law overbroad.
Evidently, appellant misapprehends concept of overbreadth.
12
A statute may be said to be overbroad where it operates to inhibit the exercise of individual
freedoms affirmatively guaranteed by the Constitution, such as the freedom of speech or religion.
A generally worded statute, when construed to punish conduct which cannot be constitutionally
punished is unconstitutionally vague to the extent that it fails to give adequate warning of the
boundary between the constitutionally permissible and the constitutionally impermissible
applications of the statute. (Wright vs. Georgia, 373 US 284, 10 L Ed 2d 349, 83 S Ct 1240
[1963])
Ban on direct-hiring
Direct-hiring is prohibited. Thus, it is provided that no employer may hire a Filipino worker for
overseas employment except through the POEA and entities authorized by the Secretary of Labor
(Article 18, Labor Code). The reason for the ban is that a Filipino worker hired directly by a foreign
employer without government intervention, may not be assured of the best possible terms and conditions
of employment. He is not in a position to know the real financial condition of the foreign employer and the
prevailing terms and conditions of employment in the host country. On the other hand, the Philippine
government, through its various listening posts abroad (embassies, consular offices, etc.) has up-to-date
and more or less accurate information on the conditions prevailing in foreign countries. As the Filipino
worker may be over-eager to find employment abroad, government intervention is necessary to protect
him from exploitation by foreign employers. (Annotation Illegal Recruitment of Overseas Filipino
Workers as Economic Sabotage, 279 SCRA 199 [1997], by Jorge R. Coquia) However, exempted
from this provision is the direct-hiring made by members of the diplomatic corps, international
organizations and such other employers as may be allowed by the Secretary of Labor.
Direct hires under the Omnibus Rules of RA 8042, as amended by RA 10022

Direct Hires - workers directly hired by employers for overseas employment as authorized by the
Secretary of Labor and Employment and processed by the POEA, including:
1. Those hired by international organizations
2. Those hired members of the diplomatic corps.
3. Name hires or workers who are able to secure overseas employment opportunity with an
employer without the assistance or participation of any agency. [Labor Code, POEA Rules] (Section 1(i),
Rule II, Omnibus Rules and Regulations Implementing The Migrant Workers and Overseas
Filipinos Act of 1995 as amended by Republic Act No. 10022)
The direct hires are exemptions from the ban on direct-hiring under Article 18 of the Labor Code.
Who may participate in the private sector

Only the following persons or entities in the private sector may engage in the recruitment and
placement of workers either for local or overseas employment:
(a) Private employment agencies;
(b) Private recruitment entities;
(c) Shipping or manning agents or representatives; and
(d) Such other persons or entities as may be authorized by the Secretary. (Rule IV, Section 1,
Book I, Omnibus Rules Implementing the Labor Code)
The participation of the private sector in recruitment and placement activities is authorized under
Article 25 of the Labor Code. This is very clear according to Article 16 of the Labor Code which provides,
Except as provided in Chapter II of this Title xxx. The provisions under Chapter II of Title I Book I of the
Labor Code covers the specific regulations on the participation of the private sector in recruitment and
placement activities.
Disqualification to engage in recruitment and placement for overseas employment

The following are not qualified to engage in the business of recruitment and placement of Filipino
workers overseas:
a. Travel agencies and sales agencies of airline companies;
b. Officers or members of the Board of any corporation or members in a partnership engaged in
the business of a travel agency;
13
c. Corporations and partnerships, when any of its officers, members of the board or partners, is
also an officer, member of the board or partner of a corporation or partnership engaged in the business of
a travel agency;
d. Persons, partnerships or corporations which have derogatory records;
e. Any official or employee of the DOLE, POEA, OWWA, DFA and other government agencies
directly involved in the implementation of R.A. 8042, otherwise known as Migrant Workers and Overseas
Filipino Act of 1995 and/or any of his/her relatives within the fourth civil degree of consanguinity or affinity;
and
f. Persons or partners, officers and Directors of corporations whose licenses have been
previously cancelled or revoked for violation of recruitment laws. (Part II, Section 2, Rule I, 2002 POEA
Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas
Workers and Part II, Section 2, Rule I, 2003 POEA Rules and Regulations Governing Recruitment
and Employment of Seafarers)
Those considered with derogatory records

The derogatory records refers to the existence of negative information such as but not limited to
the following:
1) Those certified to have derogatory record or information by the National Bureau of
investigation or by the Anti-Illegal Recruitment Branch of the POEA;
2) Those against whom probable cause or prima facie finding of guilt for illegal recruitment or
other related cases exists;
3) Those convicted for illegal recruitment or other related cases and/or crimes involving moral
turpitude; and
4) Those agencies whose licenses have been previously revoked or cancelled by the
Administration for violation of RA 8042, PD 442 as amended and their implementing rules and
regulations as well as these rules and regulations. (Part II, Section 2, Rule I, 2002 POEA Rules and
Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers
and Part II, Section 2, Rule I, 2003 POEA Rules and Regulations Governing Recruitment and
Employment of Seafarers)
Qualifications for overseas recruitment and placement

Only those who possess the following qualifications may be permitted to engage in the business
of recruitment and placement of Filipino workers:
a. Filipino citizens, partnerships or corporations at least seventy five percent (75%) of the
authorized capital stock of which is owned and controlled by Filipino citizens;
b. A minimum capitalization of Two Million Pesos (P2,000,000.00) in case of a single
proprietorship or partnership and a minimum paid-up capital of Two Million Pesos (P2,000,000.00) in case
of a corporation; Provided that those with existing licenses shall, within four years from effectivity hereof,
increase their capitalization or paid up capital, as the case may be, to Two Million Pesos (P2,000,000.00)
at the rate of Two Hundred Fifty Thousand Pesos (P250,000.00) every year.
c. Those not otherwise disqualified by law or other government regulations to engage in the
recruitment and placement of workers for overseas employment. (Part II, Section 1, Rule I, 2002 POEA
Rules and Regulations Governing Recruitment and Placement of Land-Based Overseas Workers
and Part II, Section 1, Rule I, 2003 POEA Rules and Regulations Governing Recruitment and
Placement of Seafarers)
Qualifications for local recruitment and placement

The applicant for a license to operate a private employment agency must possess the following:
a. Filipino citizens for single proprietorship and seventy ve percent (75%) of the authorized
capital stock is owned and controlled by Filipino citizens for partnership and corporation.
b. Minimum net worth of P1,000,000.00 in case of single proprietorship and a minimum paid up
capital of P1,000,000.00 in case of partnership and corporation; and
c. Not otherwise disqualied by law or other government rules and regulations to engage in the
business of recruitment and placement of workers for local employment. (Section 4, Revised
Rules and Regulations Governing Recruitment and Placement for Local Employment
[Department Order No. 141-14 Series of 2014] issued on November 20,2014)
Jurisdiction of DOLE to suspend or cancel license or authority

14
In Trans Action Overseas Corporation v. The Honorable Secretary of Labor, G.R. No.
109583, September 5, 1997, the issue presented is whether or not the Secretary of Labor and
Employment has jurisdiction to cancel or revoke the license of a private fee-charging employment agency.
In resolving the issue, the High Court ruled:
The power to suspend or cancel any license or authority to recruit employees for overseas
employment is vested upon the Secretary of Labor and Employment. Article 35 of the Labor
Code, as amended, which provides:
xxx
In the case of Eastern Assurance and Surety Corp. v. Secretary of Labor, 181 SCRA 110
(1990) we held that:
The penalties of suspension and cancellation of license or authority are prescribed
for violations of the above quoted provisions, among others. And the Secretary of Labor
has the power under Section 35 of the law to apply these sanctions, as well as the
authority, conferred by Section 36, not only to restrict and regulate the recruitment and
placement activities of all agencies, but also to promulgate rules and regulations to carry
out the objectives and implement the provisions governing said activities. Pursuant to
this rule-making power thus granted, the Secretary of Labor gave the POEA, (Sec. 1,
Rule II, Book VI of the New Rules on Overseas Employment) on its own initiative or
upon filing of a complaint or report or upon request for investigation by any aggrieved
person, x x (authority to) conduct the necessary proceedings for the suspension or
cancellation of the license or authority of any agency or entity for certain enumerated
offenses including xxx
This power conferred upon the Secretary of Labor and Employment was echoed in People v.
Diaz, 259 SCRA 441 (1996) viz.:
A non-licensee or non-holder of authority means any person, corporation or entity
which has not been issued a valid license or authority to engage in recruitment and
placement by the Secretary of Labor, or whose license or authority has been suspended,
revoked or cancelled by the POEA or the Secretary. (Underscoring supplied)
xxx
The concurrent jurisdiction of the Department of Labor and Employment (DOLE) and the Philippine
Overseas Employment Administration (POEA) was also affirmed by the Supreme Court in the case of
Romero v. People, G.R. No. 171644, November 23, 2011citing Eastern Assurance and Surety Corp.
v. Secretary of Labor and People v. Diaz.
Illegal recruitment constituting economic sabotage

2011, 2010, 2007, 2005 and 2002 Bar Examinations
Illegal recruitment by a syndicate and illegal recruitment in a large scale. (second paragraph
Section 6 of RA 8042, Migrant Workers and Overseas Filipinos Act of 1995, as amended by
Section 5 of RA 10022, and Section 2, Rule IV, Omnibus Rules and Regulations Implementing the
Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022)
Illegal recruitment by a syndicate or in a large scale does not define illegal recruitment. They are
qualifying circumstances to constitute an offense involving economic sabotage.
Illegal recruitment by a syndicate, how committed

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or
more persons conspiring or confederating with one another. (second paragraph of Section 6 of RA
8042, Migrant Workers and Overseas Filipinos Act of 1995, as amended by Section 6 of RA 10022)
Elements of illegal recruitment by a syndicate

The following elements must occur:
1. The accused have no valid license or authority required by law to enable them to lawfully
engage in the recruitment and placement of workers.
2. The accused engaged in this activity of recruitment and placement by actually recruiting,
deploying and transporting.
15
3. Illegal recruitment was committed by three persons conspiring and confederating with one
another. (People vs. Hashim, G.R. Nos. 194255, June 13, 2012)
Illegal recruitment in a large scale, how committed

It is deemed committed in large scale if committed against three (3) or more persons individually
or as a group. (second paragraph Section 6 of RA 8042, Migrant Workers and Overseas Filipinos
Act of 1995, as amended by Section 5 of RA 10022)
Elements of illegal recruitment in a large scale

The three elements of the crime of illegal recruitment in large scale, to wit:
a) the offender has no valid license or authority required by law to enable him to lawfully engage
in recruitment and placement of workers;
b) the offender undertakes any of the activities within the meaning of "recruitment and placement"
under Article 13(b) of the Labor Code, or any of the prohibited practices enumerated under Article 34 of
the said Code (now Section 6 of Republic Act No. 8042); and
c) the offender committed the same against three or more persons, individually or as a group.
(People of the Philippines vs. Taguinay, G.R. No. 186132, February 27, 2012)
Distinctions of illegal recruitment under RA 8042, as amended by RA 10022, and the

Labor Code
Illegal recruitment under Section RA 8042, Migrant Workers and Overseas Filipinos Act of 1995,
as amended by RA 10022, broadened the concept of illegal recruitment (People vs. Gamboa, G.R. No.
135382, September 29,2000), as it includes the commission of acts (letters a to n in the second sentence
of the first paragraph of Section 6 of RA 8042, as amended) whether committed by any person, whether
a non-licensee, non-holder of authority, licensee or holder of authority, and provided for stiffer
penalties (Ibid), while illegal recruitment as defined by Article 38 (a) in relation to Article 13 (b) and 34 of
the Labor Code is committed only by a non-licensees or non-holders of authority.
By its terms, persons who engage in canvassing, enlisting, contracting, transporting, utilizing,
hiring, or procuring workers without the appropriate government license or authority are guilty of
illegal recruitment whether or not they commit the wrongful acts enumerated in that section. On the
other hand, recruiters who engage in the canvassing, enlisting, etc. of OFWs, although with the
appropriate government license or authority, are guilty of illegal recruitment only if they commit
any of the wrongful acts enumerated in Section 6 of RA 8042 as amended. (Republic of the
Philippines vs. Philippine Association of Service Exporters Inc. (PASEI), G.R. No. 167590,
November 12,2013 consolidated with other cases)
Coverage of alien employment permit

Any alien seeking admission to the Philippines for employment purposes and any domestic or
foreign employer who desires to engage an alien for employment in the Philippines shall obtain an
employment permit from the Department of Labor and Employment. (Article 40, Labor Code) Under Rule
I, 1, Department Order No. 75-06 Series of 2006, issued on May 31,2006 [Revised Rules for the Issuance
of Employment Permits to Foreign Nationals] all foreign nationals who intend to engage in gainful
employment in the Philippines shall apply for Alien Employment Permit (AEP).
Apprenticeship and learnership, distinguished

Distinctions
As
to
the
agreement
As to the period of
agreement
Apprenticeship
In
Apprenticeship,
the
agreement entered by the
parties
is
known
as
Apprenticeship
Agreement.
(Articles 58 [d], Labor Code);
In
Apprenticeship,
the
agreement shall not be less than
four (4) months and not more
than six (6) months; (Articles 58
[c] in relation to Article 61and
3.10, TESDA Circular No. 16,
Series of 2004);
Learnship
In learnership, the agreement entered by the
parties is known as Learnership Agreement
(75, Labor Code);
In learnership, the agreement period shall not
be more than three months; (Article 75 (c),
Labor Code, 3.10, TESDA Circular No. 16,
Series of 2004);
16
As to obligations to
hire
As
to
pretermination of the
agreement
As to the person
hired
As
to
supplement
theoretical
instructions
the
on
As to the reasons
for hiring
As to qualifications
As
to
what
occupations hired
In apprenticeship, the enterprise

is not obliged to hire the
apprentice
after
the
apprenticeship period; (Articles
61, Labor Code, 3.10, TESDA
Circular No. 16, Series of
2004);
In apprenticeship, upon pretermination of the agreement
there is no regular employment
by operation of law; (Articles
57-72, Labor Code);
In apprenticeship, the persons
hired as trainees is known as
apprentice; (Articles 58 [a],
Labor
Code,
2,
TESDA
Circular No. 16, Series of
2004);
In apprenticeship, the training on
the job is with compulsory
related theoretical instructions;
(Article 58 [a], Labor Code,
Section 4 [j], R. A. 7796, and 2,
TESDA Circular No. 16, Series
of 2004);
In apprenticeship, the law did
not provide any reasons where
an apprentice may be hired
(Articles 59-72, Labor Code);
In
apprenticeship,
the
qualifications are (a) At least
fifteen (15) 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 and no
justifications or reasons given by
law for hiring; (Articles 59,
Labor Code);
In
apprenticeship,
the
occupations involves "highly
technical
industries"
which
means
trade,
business,
enterprise, industry, or other
activity, which is engaged in the
application
of
advanced
technology and apprenticeable
occupations must be approved
by TESDA; (Articles 60, Labor
Code and 3.3, TESDA Circular
No. 16, Series of 2004).
In learnership, the enterprise is obliged to hire

the learner after the learnership period
(Article 75 (d), Labor Code, 3.10, TESDA
Circular No. 16, Series of 2004);
In learnership, a learner allowed or suffered to

work during the first two (2) months shall be
deemed regular employees if training is
terminated by the employer before the end of
the stipulated period through no fault of the
learners (Article 75 (d), Labor Code);
In learnership, the persons hired as trainees is
known as learner (Articles 73, Labor Code,
2, TESDA Circular No. 16, Series of 2004);
In learnership, the practical training on the job

may or may not be supplemented by related
theoretical instructions; (2, TESDA Circular
No. 16, Series of 2004);
In learnership, the law provides the following

reasons for hiring (1) when no experienced
workers are available; (2) the employment of
learners is necessary to prevent curtailment of
employment opportunities; and (3) the
employment
does
not
create
unfair
competition in terms of labor costs or impair or
lower working standards (Article 74, Labor
Code);
In learnership, the law did not provide such
qualifications.
However,
reasons
or
justifications for hiring are provided by law
(Articles 74, Labor Code);
In learnership, the occupations involves are

semi-skilled and other industrial occupations
which are non-apprenticeable and learnable
occupations must be approved by TESDA
(Articles 73, Labor Code and 3.3, TESDA
Circular No. 16, Series of 2004).
Apprenticeship and learnership, similarities

Similarities
As to the approval of the
agreement/program
As
to
number
apprentices/learners to
of
be
Apprenticeship/Learnership
In both, Apprenticeship and Learnerhsip, the contract or agreement
entered by the parties is on approved (apprenticeable/learnable)
occupations by TESDA (Section 4 [j] and [n], R. A. 7796);
In both, the participating enterprise shall be allowed to take an
apprentices or learners only up to a maximum 20% of its total regular
17
hired
As to practical training on the
job
As to ground for revocation of
Registration Certificates
As to the wage to be paid
As to the implementation of
apprenticeship/learnership
programs
workforce (3.7, TESDA Circular No. 16, Series of 2004);

In both, the apprentice or learner is on practical training on the job
(Articles 58 [a] and 73, Labor Code);
In both, the Registration Certificates of companies that are not taking
in apprentices or learners for two consecutive years shall be revoked.
(3.5, TESDA Circular No. 16, Series of 2004)
In both, the apprentices or learners are entitled to receive a wage
equivalent to 75 percent of the prevailing minimum wage and other
benefits including overtime pay. (see 3.8. TESDA Circular No. 16,
Series of 2004; Articles 61 and 75 [c], Labor Code)
In both, in the implementation of the apprenticeship and learnership
programs are in accordance with the TESDA-approved competencybased format. (see 1.2, TESDA Circular No. 16, Series of 2004;
Articles 61 and 75 [c], Labor Code)
In both, graduates of the Apprenticeship/Learnership programs shall
be subjected to competency assessment. Competency Certificate
shall be issued on the basis of demonstrated competencies for each
trade by the enterprise. (see 3.6. TESDA Circular No. 16, Series of
2004)
Definitions of terms under Republic Act No. 7277

Republic Act No. 7277 known as Magna Carta for Disabled Persons later the title was amended,
by Republic Act No. 9442, as the "Magna Carta for Persons with Disability". The following selected
terms are defined by Republic Act No. 7277, as amended, as follows:
(a) Disabled Persons are those suffering from restriction of 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;
(b) Impairment is any loss, diminution or aberration of psychological, physiological, or anatomical
structure of function;
(c) Disability shall mean (1) a physical or mental impairment that substantially limits one or more
psychological, physiological or anatomical function of an individual or activities of such individual; (2) a
record of such an impairment; or (3) being regarded as having such an impairment;
(d) Handicap refers to a disadvantage for a given individual resulting from an impairment or a
disability, that limits or prevents the functions or activity, that is considered normal given the age and sex
of the individual;
j) Auxiliary Social Services are the supportive activities in the delivery of social services to the
marginalized sectors of society;
(k) Marginalized Disabled Persons refer to disabled persons who lack access to rehabilitative
services and opportunities to be able to participate fully in socioeconomic activities and who have no
means of livelihood or whose incomes fall below poverty threshold;
(l) Qualified Individual with a Disability shall mean 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 employers judgement 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.(Section 4, Republic Act 7277)
Persons with disability as apprentices or learners

Subject to the provision of the Labor Code as amended, disabled persons shall be eligible as
apprentices or learners; Provided, That their handicap is not much as to effectively impede the
performance of job operations in the particular occupation for which they are hired; Provided, further, That
after the lapse of the period of apprenticeship if found satisfactory in the job performance, they shall be
eligible for employment. (Section 7, Republic Act No. 7277)
Wage rate of persons with disability
18

A qualified disabled employee shall be subject to the same terms and conditions of employment
and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a
qualified able-bodied person. (second sentence, Section 5, Republic Act No. 7277) This means that
persons with disability are entitled to 100% of the applicable minimum wage. However, if they are
employed as apprentices or learners their wage rate shall be not less that 75% of the applicable minimum
wage. (Articles 61 and75 of the Labor Code) But if they are employed as learners in piece or incentiverate jobs they are entitled to be paid in full or 100% of the minimum wage. ( Article 76 of the Labor
Code)
Incentives for Employer

The following are the incentives to the employer:
(a) To encourage the active participation of the private sector in promoting the welfare of disabled
persons and to ensure gainful employment for qualified disabled persons, adequate incentives shall be
provided to private entities which employ disabled persons.
(b) Private entities that employ disabled persons who meet the required skills or qualifications,
either as 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
disabled persons: Provided, however, That such entities present proof as certified by the Department of
Labor and Employment that disabled person are under their employ. Provided, further, That the disabled
employee is accredited with the Department of Labor and Employment and the Department of Health as
to his disability, skills and qualifications.
(c) Private entities that improved or modify their physical facilities in order to provide reasonable
accommodation for disabled persons shall also be entitled to an additional deduction from their net
taxable income, equivalent to fifty percent (50%) of the direct costs of the improvements or modifications.
This section, however, does not apply to improvements or modifications of facilities required under Batas
Pambansa Bilang 344. (Section 8, Republic Act No. 7277)
The traditional four-fold test of employer employee relationship

2014, 2011, 2010, 2008, 2002, 1996, 1991 Bar Examinations
The four elements of an employment relationship are: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control
the employees conduct. (Lakas sa Industriya ng Kapatirang Haligi ng Alyansa-Pinagbuklod ng
Manggagawang Promo ng Burlingame v. Burlingame Corporation, G.R. No. 162833, June 15, 2007
524 SCRA 690, 695, citing Sy v. Court of Appeals, 398 SCRA 301, 307-308 (2003); Pacific
Consultants International Asia, Inc. v. Schonfeld, G.R. No. 166920, February 19, 2007, 516 SCRA
209, 228)
The most crucial and determinative factor of employment relationship

The significant factor in determining the relationship of the parties is the presence or absence of
supervisory authority to control the method and the details of performance of the service being rendered,
and the degree to which the principal may intervene to exercise such control. (AFP Mutual Benefit
Association, Inc. v. National Labor Relations Commission, 334 Phil. 712, 721-722 [1997]) In other
words, the test is whether the employer controls or has reserved the right to control the employee, not
only as to the work done, but also as to the means and methods by which the same is accomplished.
(Lazaro v. Social Security Commission, 479 Phil. 385, 389-390 (2004), citing Investment Planning
Corporation v. Social Security System, 21 SCRA 924, 928-929 [1967])
Existence of employer-employee relationship cannot be expressly repudiated

It is axiomatic that the existence of an employer-employee relationship cannot be negated by
expressly repudiating it in the management contract and providing therein that the employee is an
independent contractor when the terms of agreement clearly show otherwise. For, the employment status
19
of a person is defined and prescribed by law and not by what the parties say it should be. ( Industrial
Timber Corporation v. NLRC, G.R. No. 83616, 20 January 1989, 169 SCRA 341)
In Tabas v. California Manufacturing Co., Inc., G.R. No. L-80680 January 26, 1989, in finding
the existence of employer-employee relationship not on the basis of an agreement the Honorable
Supreme Court ruled in this wise: The existence of an employer-employees relation is a question of law
and being such, it cannot be made the subject of agreement. Hence, the fact that the manpower supply
agreement between Livi and California had specifically designated the former as the petitioners' employer
and had absolved the latter from any liability as an employer, will not erase either party's obligations as an
employer, if an employer-employee relation otherwise exists between the workers and either firm. At any
rate, since the agreement was between Livi and California, they alone are bound by it, and the petitioners
cannot be made to suffer from its adverse consequences.[Underscore ours supplied]
Kind of relationship under a "boundary system" arrangement

In a number of cases decided by the Supreme Court, (National Labor Union vs. Dinglasan, 98
Phil. 649, 652 (1996); Magboo vs. Bernardo, 7 SCRA 952, 954 (1963); Lantaco, Sr. vs. Llamas, 108
SCRA 502, 514 [1981]) it was ruled that the relationship between jeepney owners/operators on one hand
and jeepney drivers on the other under the boundary system is that of employer-employee and not of
lessor-lessee. It was explained that in the lease of chattels, the lessor loses complete control over the
chattel leased although the lessee cannot be reckless in the use thereof, otherwise he would be
responsible for the damages to the lessor. In the case of jeepney owners/operators and jeepney drivers,
the former exercise supervision and control over the latter. The management of the business is in the
owner's hands. The owner as holder of the certificate of public convenience must see to it that the driver
follows the route prescribed by the franchising authority and the rules promulgated as regards its
operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess of the socalled "boundary" they pay to the owner/operator is not sufficient to withdraw the relationship between
them from that of employer and employee. The above doctrine was applied by analogy to the
relationships between bus owner/operator and bus conductor, (Doce vs. Workmen's Compensation
Commission, 104 Phil. 946, 948 [1958]) auto-calesa owner/operator and driver, (Citizens' League of
Freeworkers vs. Abbas, 18 SCRA 71, 73 [1966]) and recently between taxi owners/operators and taxi
drivers. (Martinez vs. NLRC, 272 SCRA 793, 800 [1997])
Working scholars
There is no employer-employee relationship between students on one hand, and schools,
colleges or universities on the other, where there is written agreement between them under which the
former agree to work for the latter in exchange for the privilege to study free of charge, provided the
students are given real opportunities, including such facilities as may be reasonable and necessary to
finish their chosen courses under such agreement. (Section 14 Rule X Book III, Omnibus Rules
Implementing the Labor Code)
Two-tiered test: Economic dependence test and control test

In Sevilla v. Court of Appeals, G.R. Nos. L-41182-3, April 15, 1988, 160 SCRA 171, 179-180,
citing Visayan Stevedore Transportation Company v. Court of Industrial Relations, 125 Phil. 817,
820 (1967) the Supreme Court observed the need to consider the existing economic conditions prevailing
between the parties, in addition to the standard of right-of-control like the inclusion of the employee in the
payrolls, to give a clearer picture in determining the existence of an employer-employee relationship
based on an analysis of the totality of economic circumstances of the worker. Thus, the determination of
the relationship between employer and employee depends upon the circumstances of the whole
economic activity, such as: (1) the extent to which the services performed are an integral part of the
employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature
and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the
amount of initiative, skill, judgment or foresight required for the success of the claimed independent
enterprise; (6) the permanency and duration of the relationship between the worker and the employer;
and (7) the degree of dependency of the worker upon the employer for his continued employment in that
line of business.
The proper standard of economic dependence is whether the worker is dependent on the alleged
employer for his continued employment in that line of business. (Francisco v. NLRC G.R. No. 170087,
August 31,2006 citing the foreign authority of Halferty v. Pulse Drug Company, 821 F.2d 261 [5th
Cir. 1987])
According to the Supreme Court in Francisco v. NLRC (Ibid) there are certain cases the control
test is not sufficient to give a complete picture of the relationship between the parties, owing to the
20
complexity of such a relationship where several positions have been held by the worker. There are
instances when, aside from the employers power to control the employee with respect to the means and
methods by which the work is to be accomplished, economic realities of the employment relations help
provide a comprehensive analysis of the true classification of the individual, whether as employee,
independent contractor, corporate officer or some other capacity. Thus, the better approach would
therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the
employee with respect to the means and methods by which the work is to be accomplished; and (2) the
underlying economic realities of the activity or relationship. This two-tiered test would provide us with a
framework of analysis, which would take into consideration the totality of circumstances surrounding the
true nature of the relationship between the parties. This is especially appropriate in this case where there
is no written agreement or terms of reference to base the relationship on; and due to the complexity of the
relationship based on the various positions and responsibilities given to the worker over the period of the
latters employment.
Applying the two-tiered test of the economic dependence test and control test in the said case of
Francisco v. NLRC, the Supreme Court held that by applying the control test, there is no doubt that
petitioner is an employee of Kasei Corporation because she was under the direct control and supervision
of Seiji Kamura, the corporations Technical Consultant. She reported for work regularly and served in
various capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate
Secretary, with substantially the same job functions, that is, rendering accounting and tax services to the
company and performing functions necessary and desirable for the proper operation of the corporation
such as securing business permits and other licenses over an indefinite period of engagement. Under the
broader economic reality test, the petitioner can likewise be said to be an employee of respondent
corporation because she had served the company for six years before her dismissal, receiving check
vouchers indicating her salaries/wages, benefits, 13 th month pay, bonuses and allowances, as well as
deductions and Social Security contributions from August 1, 1999 to December 18, 2000. When
petitioner was designated General Manager, respondent corporation made a report to the SSS signed by
Irene Ballesteros. Petitioners membership in the SSS as manifested by a copy of the SSS specimen
signature card which was signed by the President of Kasei Corporation and the inclusion of her name in
the on-line inquiry system of the SSS evinces the existence of an employer-employee relationship
between petitioner and respondent corporation. It is therefore apparent that petitioner is economically
dependent on respondent corporation for her continued employment in the latters line of business.
In Orozco v. Court of Appeals, G.R. No. 155207, August 13, 2008, the Supreme Court held the
absence of employer-employee relationship between petitioner Orozco and Philippine Dialy Inquirer (PDI)
on the basis of economic dependence test. This is by noting that petitioners main occupation is not as a
columnist for respondent but as a womens rights advocate working in various womens
organizations. Likewise, she herself admits that she also contributes articles to other publications. Thus,
it cannot be said that petitioner was dependent on respondent PDI for her continued employment in
respondents line of business.
Employer-employee relationship in job contracting and labor-only contracting

In Vigilla v. Philippine College of Criminology, Inc., G.R. No. 200094, June 10, 2013 citing
Philippine Bank of Communications v. NLRC, 230 Phil. 430 (1986) the Supreme Court explained the
legal effects of a job-only contracting and labor-only contracting, to wit:
Under the general rule set out in the first and second paragraphs of Article 106, an employer
who enters into a contract with a contractor for the performance of work for the employer, does
not thereby create an employer-employees relationship between himself and the employees of
the contractor. Thus, the employees of the contractor remain the contractor's employees and his
alone. Nonetheless when a contractor fails to pay the wages of his employees in accordance with
the Labor Code, the employer who contracted out the job to the contractor becomes jointly and
severally liable with his contractor to the employees of the latter "to the extent of the work
performed under the contract" as such employer were the employer of the contractor's
employees. The law itself, in other words, establishes an employer-employee relationship
between the employer and the job contractor's employees for a limited purpose, i.e., in order to
ensure that the latter get paid the wages due to them.
A similar situation obtains where there is "labor only" contracting. The "labor-only" contractori.e "the person or intermediary" - is considered "merely as an agent of the employer." The
employer is made by the statute responsible to the employees of the "labor only" contractor as if
such employees had been directly employed by the employer. Thus, where "labor-only"
contracting exists in a given case, the statute itself implies or establishes an employer-employee
relationship between the employer (the owner of the project) and the employees of the "labor
only" contractor, this time for a comprehensive purpose: "employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code." The law in effect holds both
the employer and the "labor-only" contractor responsible to the latter's employees for the more
21
effective safeguarding of the employees' rights under the Labor Code. (Id. at 439-440) [Emphasis
supplied].
Coverage of Title I of Book III (Working Conditions and Rest Periods)

It shall apply to employees in all establishments and undertakings whether for profit or not.
(Article 82, Labor Code)
Exemption from coverage of Title I, Book III of the Labor Code

The government employees, managerial employees, field personnel, members of the family of
the employer who are dependent on him for support, domestic helpers, persons in the personal service of
another, and workers who are paid by results. (Article 82, Labor Code)
Workers who are paid by results

The workers paid by results, referred by Article 82, which are excluded in Book III of the Labor
Code are those who are paid on piece-work, "takay," "pakiao" or task basis, and other non-time work.
(Section 2 [e], Rule I, Book III, Omnibus Rules Implementing the Labor Code) They are excluded
from the benefits of Book III if their output rates are in accordance with the standards prescribed under
Section 8, Rule VII, Book Three of these regulations, or where such rates have been fixed by the
Secretary of Labor and Employment in accordance with the aforesaid Section. [Underscore supplied]
(Section 2 [e], Rule I, Book III, Omnibus Rules Implementing the Labor Code) In interpreting the
exclusion of workers who are paid by results including those who are paid on piece-work, takay, pakiao,
or task basis from the benefits of Book III, specifically the overtime pay, the Supreme Court in Labor
Congress of the Philippines v. NLRC, G. R. No. 123938. May 21, 1998, explained the application of
Section 2 [e], Rule I, Book III, Omnibus Rules Implementing the Labor Code as follows:
As to overtime pay, the rules, however, are different. According to Sec. 2(e), Rule I, Book III
of the Implementing Rules, workers who are paid by results including those who are paid on
piece-work, takay, pakiao, or task basis, if their output rates are in accordance with the standards
prescribed under Sec. 8, Rule VII, Book III, of these regulations, or where such rates have been
fixed by the Secretary of Labor in accordance with the aforesaid section, are not entitled to
receive overtime pay.
Concept of field personnel

"Field personnel" shall refer to non-agricultural employees who regularly perform their duties
away from the principal place of business or branch office of the employer and whose actual hours of
work in the field cannot be determined with reasonable certainty. (third paragraph, Art. 82, Labor Code)
Interpretation of the clause "whose time and performance is unsupervised by the

employer"
In Union of Filipro Employees (UFE) v. Vivar Jr., G.R. No. 79255 January 20, 1992 the
controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot be
determined with reasonable certainty." It is undisputed that these sales personnel start their field work at
8:00 a.m. after having reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they
are Makati-based. The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m.
comprises the sales personnel's working hours which can be determined with reasonable certainty. In
resolving the issue, the Supreme Court said:
The law requires that the actual hours of work in the field be reasonably ascertained. The
company has no way of determining whether or not these sales personnel, even if they report to
the office before 8:00 a.m. prior to field work and come back at 4:30 p.m, really spend the hours
in between in actual field work.
xxx
Moreover, the requirement that "actual hours of work in the field cannot be determined with
reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing
Rules which provides:
22
xxx
Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did
not add another element to the Labor Code definition of field personnel. The clause "whose time
and performance is unsupervised by the employer" did not amplify but merely interpreted and
expounded the clause "whose actual hours of work in the field cannot be determined with
reasonable certainty." The former clause is still within the scope and purview of Article 82 which
defines field personnel. Hence, in deciding whether or not an employee's actual working hours in
the field can be determined with reasonable certainty, query must be made as to whether or not
such employee's time and performance is constantly supervised by the employer.
The SOD schedule adverted to by the petitioner does not in the least signify that these sales
personnel's time and performance are supervised. The purpose of this schedule is merely to
ensure that the sales personnel are out of the office not later than 8:00 a.m. and are back in the
office not earlier than 4:00 p.m.
Likewise, the Court fails to see how the company can monitor the number of actual hours
spent in field work by an employee through the imposition of sanctions on absenteeism contained
in the company circular of March 15, 1984.
The petitioner claims that the fact that these sales personnel are given incentive bonus every
quarter based on their performance is proof that their actual hours of work in the field can be
determined with reasonable certainty.
The Court thinks otherwise.
The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based
on sales target; (2) good collection performance; (3) proper compliance with good market
hygiene; (4) good merchandising work; (5) minimal market returns; and (6) proper truck
maintenance. (Rollo, p. 190).
The above criteria indicate that these sales personnel are given incentive bonuses precisely
because of the difficulty in measuring their actual hours of field work. These employees are
evaluated by the result of their work and not by the actual hours of field work which are hardly
susceptible to determination.
In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the
Court had occasion to discuss the nature of the job of a salesman. Citing the case of Jewel Tea
Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated:
The reasons for excluding an outside salesman are fairly apparent. Such a salesman,
to a greater extent, works individually. There are no restrictions respecting the time he
shall work and he can earn as much or as little, within the range of his ability, as his
ambition dictates. In lieu of overtime he ordinarily receives commissions as extra
compensation. He works away from his employer's place of business, is not subject to
the personal supervision of his employer, and his employer has no way of knowing the
number of hours he works per day.
While in that case the issue was whether or not salesmen were entitled to overtime pay, the
same rationale for their exclusion as field personnel from holiday pay benefits also applies.
Employees whose time/performance are constantly supervised by employer

By established jurisprudence, the following employees, although performing their duties away
from the principal place of business of the employer, were not considered as field personnel because
their time and performance were constantly supervised by the employer:
1. BUS DRIVER - It is of judicial notice that along the routes that are plied by these bus
companies, there are its inspectors assigned at strategic places who board the bus and inspect the
passengers, the punched tickets, and the conductors reports. There is also the mandatory once-aweek car barn or shop day, where the bus is regularly checked as to its mechanical, electrical, and
hydraulic aspects, whether or not there are problems thereon as reported by the driver and/or
conductor. They too, must be at specific place at a specified time, as they generally observe prompt
departure and arrival from their point of origin to their point of destination. In each and every depot,
there is always the Dispatcher whose function is precisely to see to it that the bus and its crew leave
the premises at specific times and arrive at the estimated proper time. The driver was therefore under
23
constant supervision while in the performance of this work. He cannot be considered a field personnel.
(Auto Bus Transport Systems, Inc. v. Bautista, G.R. No. 156367. May 16, 2005)
2. FISHERMEN - The employer company argued that since the work of a fisherman is performed
away from its principal place of business, it has no way of verifying his actual hours of work on the
vessel. However, the SC ruled that during the entire course of their fishing voyage, fishermen
employed by petitioner have no choice but to remain on board its vessel. Although they perform nonagricultural work away from petitioners business offices, the fact remains that throughout the duration
of their work they are under the effective control and supervision of petitioner through the vessels
patron or master. (Mercidar Fishing Corporation vs. NLRC, G.R. No. 112574, 8 October 1998)
3. TRUCK/TRAILER DRIVER - The employee in one case was not a field personnel, as he was
based at the principal office, with actual work hours (from 6:00 a.m. to 6:00 p.m.) that were
ascertainable with reasonable certainty. He averaged 21 trips per month. And if not driving for the
company, he was paid P125.00 per day for cleaning and maintaining the company's equipment.
(Duterte vs. Kingswood Trading Co., Inc., G.R. No. 160325, 4 October 2007)
Validity of compressed Work Week (CWW) scheme

In Bisig Manggagawa sa Tryco v. National Labor Relations Commission, G. R. No. 151309,
October 15, 2008 the Supreme Court affirmed the validity of compressed workweek scheme in relation to
the waiver of overtime pay and the conditions required as follows:
Finally, we do not agree with the petitioners assertion that the MOA is not enforceable as it is
contrary to law. The MOA is enforceable and binding against the petitioners. Where it is shown
that the person making the waiver did so voluntarily, with full understanding of what he was doing,
and the consideration for the quitclaim is credible and reasonable, the transaction must be
recognized as a valid and binding undertaking. (Land and Housing Development Corporation
v. Esquillo, G.R. No. 152012, September 30, 2005, 471 SCRA 488, 498)
D.O. 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 offdays 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
abovecited that will accrue to the employees.
Moreover, the adoption of a compressed workweek scheme in the company will help temper
any inconvenience that will be caused the petitioners by their transfer to a farther workplace.
Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21,
to protect the interest of the employees in the implementation of a compressed workweek
scheme:
1. The employees voluntarily agree to work more than eight (8) hours a day the total in a
week of which shall not exceed their normal weekly hours of work prior to adoption of
the compressed workweek arrangement;
2. There will not be any diminution whatsoever in the weekly or monthly take-home pay
and fringe benefits of the employees;
3.
If an employee is permitted or required to work in excess of his normal weekly hours

of work prior to the adoption of the compressed workweek scheme, all such excess
hours shall be considered overtime work and shall be compensated in accordance
24
with the provisions of the Labor Code or applicable Collective Bargaining Agreement
(CBA);
4. Appropriate waivers with respect to overtime premium pay for work performed in
excess of eight (8) hours a day may be devised by the parties to the agreement.
5. The effectivity and implementation of the new working time arrangement shall be by
agreement of the parties.
Rule involving on call

An employee who is required to remain on call in the employer's premises or so close thereto that
he cannot use the time effectively and gainfully for his own purpose shall be considered as working while
on call. (Section 5 [b], Rule I, Book III, Omnibus Rules Implementing the Labor Code)
Rule on travel time

The rule on travel time are as follows:
Travel from home to work and work to home is not compensable
Travel office to jobsite or from jobsite to jobsite is compensable
Travel away from home is compensable
Change in the work schedule as valid exercise of management prerogative

In Sime Darby Pilipinas, Inc. v. NLRC, G. R. No. 11905, April 15, 1998, the Supreme Court
sustained the change in the work schedule and the elimination of the 30-minute paid lunch break of the
factory workers as valid exercise of management prerogative as follows: The right to fix the work
schedules of the employees rests principally on their employer. In the instant case petitioner, as the
employer, cites as reason for the adjustment the efficient conduct of its business operations and its
improved production. It 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 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 onehour 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.
Night Shift Differential (NSD)

Night Shift Differential (NSD) refers to the additional compensation of ten percent (10%) of an
employees regular wage for each hour of work performed between ten oclock in the evening to six
oclock in the morning. (Article 86, Labor Code /GMA Network Inc. v. Pabriga, G. R. No. 176419,
November 27, 2013)
Excluded from Night Shift Differential (NSD)

The following are excluded from entitlement to night shift differential:
(a) Those of the government and any of its political subdivisions, including government-owned
and/or controlled corporations;
(b) Those of retail and service establishments regularly employing not more than five (5) workers;
(c) Domestic helpers and persons in the personal service of another;
(d) Managerial employees as defined in Book Three of this Code;
25
(e) Field personnel and other employees whose time and performance is unsupervised by the
employer including those who are engaged on task or contract basis, purely commission basis, or those
who are paid a fixed amount for performing work irrespective of the time consumed in the performance
thereof. (Section 1, Rule II, Book III, Omnibus Rules Implementing the Labor Code)
Overtime pay, defined

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Overtime pay refers to the additional compensation for work performed beyond eight (8) hours a
day. (Handbook on Workers Statutory Monetary Benefits, 2014 Edition, page 18)
Excluded from overtime pay

The following are excluded from overtime pay:
(a) Government employees whether employed by the National Government orany of its political
subdivision, including those employed in government-owned and/or controlled corporations;
(b) Managerial employees, if they meet all of the following conditions:
(c) Officers or members of a managerial staff
(d) Domestic servants and persons in the personal service of another
(e) Workers who are paid by results, including those who are paid on piece-work, "takay,"
"pakiao" or task basis, and other non-time work if their output rates are in accordance with the standards
prescribed under Section 8, Rule VII, Book Three of these regulations, or where such rates have been
fixed by the Secretary of Labor and Employment in accordance with the aforesaid Section.cralaw
(f) Non-agricultural field personnel if they regularly perform their duties away from the principal or
branch office or place of business of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty. (Section 2, Rule I, Omnibus Rules Implementing the Labor
Code)
Computation of overtime pay

The Handbook on Workers Statutory Monetary Benefits, 2014 Edition, (see pages 18-19)
provided the following guide on the computation of overtime pay and illustrated as follows:
The COLA shall not be included in the computation of overtime pay. The minimum overtime pay
rates vary according to the day the overtime work is performed, as follows:
1. For work in excess of eight (8) hours performed on ordinary working days: Plus 25% of the
hourly rate.
2. For work in excess of eight (8) hours performed on a scheduled rest day or a special day: Plus
30% of the hourly rate on said days.
3. For work in excess of eight (8) hours performed on a special day which falls on a scheduled
rest day: Plus 50% of the hourly rate on said days.
4. For work in excess of eight (8) hours performed on a regular holiday: Plus 30% of the hourly
rate on said days.
5. For work in excess of eight (8) hours performed on a regular holiday which falls on a scheduled
rest day: Plus 30% of the hourly rate on said days.
Stipulated Overtime Rates

Generally, the premium pay for work performed on rest days, special days, or regular holidays is
included as part of the regular rate of the employee in the computation of overtime pay for 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 agreement the payment for
overtime work at rates higher than those provided by law. (Handbook on Workers Statutory Monetary
Benefits, 2014 Edition, page 19)
Undertime during his regular daily work cannot be deducted in overtime work
26
Undertime work on any particular day shall not be offset by overtime work on any other day.
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 in this Chapter. (Art. 88, Labor Code)
The rule on offsetting of undertime with overtime has been resolved by the Supreme Court in the
case of National Waterworks and Sewerage Authority v. NWSA Consolidated Unions, et al., G.R.
No. L-18939, August 31, 1964 where it was held that:
There is merit in the decision of respondent court that the method used by petitioner in
offsetting the overtime with the undertime and at the same time charging said undertime to the
accrued leave of the employee is unfair, for under such method the employee is made to pay
twice for his undertime because his leave is reduced to that extent while he was made to pay for
it with work beyond the regular working hours. The proper method should be to deduct the
undertime from the accrued leave but pay the employee the overtime to which he is entitled. This
method also obviates the irregular schedule that would result if the overtime should be set off
against the undertime for that would place the schedule for working hours dependent on the
employee.
Compulsory overtime work

In any of the following cases, an employer may require any of his employees to work beyond
eight (8) hours a day, provided that the employee required to render overtime work is paid the additional
compensation required by these regulations:
(a) When the country is at war or when any other national or local emergency has been declared
by Congress or the Chief Executive;
(b) When overtime work is necessary to prevent loss of life or property, or in case of imminent
danger to public safety due to actual or impending emergency in the locality caused by serious accident,
fire, floods, typhoons, earthquake, epidemic or other disaster or calamities;
(c) When there is urgent work to be performed on machines, installations, or equipment, in order
to avoid serious loss or damage to the employer or some other causes of similar nature;
(d) When the work is necessary to prevent loss or damage to perishable goods;
(e) When the completion or continuation of work started before the 8th hour is necessary to
prevent serious obstruction or prejudice to the business or operations of the employer; or
(f) When overtime work is necessary to avail of favorable weather or environmental conditions
where performance or quality of work is dependent thereon.
In cases not falling within any of these enumerated in this Section, no employee may be made to
work beyond eight hours a day against his will. (Section 4, Rule I, Book III, Omnibus Rules
Exception where an employee can be required to work on rest day

The employer may require his employees to work on any day:
(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 imminent danger
to public safety;
(b) In cases of urgent work to be performed on the machinery, equipment, or installation, 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 loss or damage to perishable goods;
(e) Where the nature of the work requires continuous operations and the stoppage of work may
result in irreparable injury or loss to the employer; and
(f) Under other circumstances analogous or similar to the foregoing as determined by the
Secretary of Labor and Employment. (Article 92, Labor Code)
(g) When the work is necessary to avail of favorable weather or environmental conditions where
performance or quality of work is dependent thereon. (Section 6 [f], Rule III, Book III, Omnibus Rules
27
Compensation on rest day/Sunday/holiday

The Handbook on Workers Statutory Monetary Benefits, 2014 Edition, (see page 17)
provided the following guide on the computation of premium pay and illustrated as follows:
The COLA shall not be included in the computation of premium pay. The minimum statutory
premium pay rates are as follows:
1. For work performed on rest days or on special days: Plus 30% of the daily basic rate of 100%
or a total of 130%.
2. For work performed on a rest day which is also a special day: Plus 50% of the daily basic rate
of 100% or a total of 150%.
3. For work performed on a regular holiday which is also the employees rest day (not applicable
to employees who are not covered by the holiday-pay rule).
Plus 30% of the regular holiday rate of 200% based on his/her daily basic wage rate or a total
of 260%.
12 Regular Holidays and 3 Nationwide Special Days

According to Section 26 (a) and (b), Chapter 7, Book I of Executive Order No. 292, otherwise
known as "The Administrative Code of 1987", as amended by Republic Act 9849:
Unless otherwise modified by law, order, or proclamation, the following regular holidays and
special days shall be observed in the country:
"(a) Regular Holidays
New Years Day
Maundy Thursday
Good Friday
Eidl Fitr
Eidl Adha
Araw ng Kagitingan
Labor Day Monday
Independence Day
National Heroes Day
Bonifacio Day
Christmas Day
Rizal Day
January 1
Movable Date
Movable Date
Movable Date
Movable Date
Monday nearest April 9
nearest May 1
Monday nearest June 12
Last Monday of August
Monday nearest November 30
December 25
Monday nearest December 30
"(b) Nationwide Special Holidays

Ninoy Aquino Day
All Saints Day
Last Day of the Year
Monday nearest August 21

November 1
December 31
Coverage of holidays with pay

Under Article 94 of the Labor Code, the general rule is that holiday pay provisions cover all
employees. To be excluded from their coverage, an employee must be one of those that these provisions
expressly exempt, strictly in accordance with the exemption. (David v. Macasio, G.R. No. 195466, July
02, 2014)
Excluded from coverage of holidays with pay

The following are excluded from the coverage of holidays with pay:
(a) Those of the government and any of the political subdivision, including government-owned
and controlled corporation;
(b) Those of retail and service establishments regularly employing less than ten (10) workers;
(c) Domestic helpers and persons in the personal service of another;
(d) Managerial employees as defined in Book Three of the Code;
28
(e) Field personnel and other employees whose time and performance is unsupervised by the
employer including those who are engaged on task or contract basis, purely commission basis, or those
who are paid a fixed amount for performing work irrespective of the time consumed in the performance
thereof. (Section 1, Rule IV, Book III, Omnibus Rules Implementing the Labor Code)
Rule on absences
The rule on absences during holidays are as follows:
(a) All covered employees shall be entitled to the benefit provided herein when they are on leave
of absence with pay. Employees who are on leave of absence without pay on the day immediately
preceding a regular holiday may not be paid the required holiday pay if he has not worked on such regular
holiday.
(b) Employees shall grant the same percentage of the holiday pay as the benefit granted by
competent authority in the form of employee's compensation or social security payment, whichever is
higher, if they are not reporting for work while on such benefits.
(c) Where the day immediately preceding the holiday is a non-working day in the establishment or
the scheduled rest day of the employee, he shall not be deemed to be on leave of absence on that day, in
which case he shall be entitled to the holiday pay if he worked on the day immediately preceding the nonworking day or rest day. (Section 6, Rule IV, Book III, Omnibus Rules Implementing the Labor Code)
Rule on two regular holidays on the same day

The rule on two regular holidays which falls on the same has been explained in the Explanatory
Bulletin, dated March 11, 1993, issued by the Department of Labor and Employment [DOLE],
through Undersecretary Cresenciano B. Trajano, cited by the Supreme Court in the landmark case of
Asian Transmission Corporation v. Court of Appeals G.R. No. 144664, March 15, 2004. The bulletin
reads:
"On the correct payment of holiday compensation on April 9, 1993 which apart from
being Good Friday is also Araw ng Kagitingan, i.e., two regular holidays falling on the
same day, this Department is of the view that the covered employees are entitled to at
least two hundred percent (200%) of their basic wage even if said holiday is unworked.
The first 100% represents the payment of holiday pay on April 9, 1993 as Good Friday
and the second 100% is the payment of holiday pay for the same date as Araw ng
Kagitingan.
Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy
Thursday and Araw ng Kagitingan x x x x
The foregoing rule are simply stated:
1.
If unworked - the employee is entitled to 200% (the first 100% represents the payment of
holiday pay on April 9, 1993 as Good Friday and the second 100% is the payment of holiday pay for the
same date as Araw ng Kagitingan) of their basic wage; and
2.
If worked the employee is entitled to 300% of the basic wage. (the 100% in addition to
200% represents the basic pay for working not more than eight hours)
Right to service incentive leave

Every employee who has rendered at least one year of service shall be entitled to a yearly
service incentive leave of five days with pay. (Article 95, Labor Code and Section 2, Rule V, Book III,
Omnibus Rules Implementing the Labor Code)
Definition of "at least one-year service"

The term "at least one-year service" shall mean service for not less than 12 months, whether
continuous or broken reckoned from the date the employee started working, including authorized
absences and paid regular holidays unless the working days in the establishment as a matter of practice
or policy, or that provided in the employment contract is less than 12 months, in which case said period
29
shall be considered as one year. (Section 3, Rule V, Book III, Omnibus Rules Implementing the Labor
Code)
Exclusions from entitlement of Service Incentive Leave under Book III, Rule V
The following are excluded from entitlement to service incentive leave:
(a) Those of the government and any of its political subdivisions, including government-owned
and controlled corporations;
(b) Domestic helpers and persons in the personal service of another; (see Sec. 29, RA 10361)
(c) Managerial employees as defined in Book Three of this Code;
(d) Field personnel and other employees whose performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those who are
paid a fixed amount for performing work irrespective of the time consumed in the performance thereof;
(e) Those who are already enjoying the benefit herein provided;
(f) Those enjoying vacation leave with pay of at least five days; and
(g) Those employed in establishments regularly employing less than ten employees. (Section 1,
Rule V, Book III, Omnibus Rules Implementing the Labor Code)
Domestic workers/ Kasambahays entitlement to service incentive leave

A domestic worker who has rendered at least one (1) year of service shall be entitled to an annual
service incentive leave of five (5) days with pay: Provided, That any unused portion of said annual leave
shall not be cumulative or carried over to the succeeding years. Unused leaves shall not be convertible to
cash. (Section 29, Republic Act No. 10361)
Interpretation of Rule V, Section 1 (e), Book III, IRR in relation to Art. 95

In interpreting Article 95 in relation to Rule V, Section 1 (e), Book III, of the IRR the Supreme
Court in David v. Macasio, G.R. No. 195466, July 02, 2014 explained the entitlement of those engaged
on pakyaw or task basis to service incentive leave by re-visiting the provisions on service incentive leave.
Thus, the High Court elucidated the following:
Provisions governing SIL xxxx
Article 82 of the Labor Code provides the exclusions from the coverage of Title I, Book III of
the Labor Code - provisions governing working conditions and rest periods.
Art. 82. Coverage. The provisions of [Title I] shall apply to
employees in all establishments and undertakings whether for profit or
not, but not to government employees, managerial employees, field
personnel, members of the family of the employer who are dependent
on him for support, domestic helpers, persons in the personal service of
another, and workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.
xxxx
Field personnel shall refer to non-agricultural employees who regularly
perform their duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the field cannot
be determined with reasonable certainty. [emphases and underscores
ours]
Among the Title I provisions are the provisions on xxxx and SIL pay (under Article 95 of the
Labor Code). Under Article 82, field personnel on one hand and workers who are paid by
results on the other hand, are not covered by the Title I provisions. The wordings of Article 82 of
the Labor Code additionally categorize workers paid by results and field personnel as separate
and distinct types of employees who are exempted from the Title I provisions of the Labor Code.
xxxx
On the other hand, Article 95 of the Labor Code and its corresponding provision in the IRR
(Section 1, Rule V of Book 3) pertinently provides:
Art. 95. Right to service incentive. (a) Every employee who has rendered at least one
year of service shall be entitled to a yearly service incentive leave of five days with pay.
30
(b) This provision shall not apply to those who are already enjoying the benefit herein
provided, those enjoying vacation leave with pay of at least five days and those employed
in establishments regularly employing less than ten employees or in establishments
exempted from granting this benefit by the Secretary of Labor and Employment after
considering the viability or financial condition of such establishment. [emphases ours]
xxxx
Section 1. Coverage. This rule shall apply to all employees except:
xxxx
(e) Field personnel and other employees whose performance is unsupervised by
the employer including those who are engaged on task or contract basis, purely
commission basis, or those who are paid a fixed amount for performing work
irrespective of the time consumed in the performance thereof. [emphasis ours]
Under these provisions, the general rule is that xxxx and SIL pay provisions cover all
employees. To be excluded from their coverage, an employee must be one of those that these
provisions
expressly
exempt,
strictly
in
accordance
with
the
exemption.
Under the IRR, exemption from the coverage of xxxx and SIL pay refer to field personnel and
other employees whose time and performance is unsupervised by the employer including those
who are engaged on task or contract basis[.] Note that unlike Article 82 of the Labor Code, the
IRR on xxxx and SIL pay do not exclude employees engaged on task basis as a separate and
distinct category from employees classified as field personnel. Rather, these employees are
altogether merged into one classification of exempted employees.
Because of this difference, it may be argued that the Labor Code may be interpreted to mean
that those who are engaged on task basis, per se, are excluded from the SIL and xxxx payment
since this is what the Labor Code provisions, in contrast with the IRR, strongly suggest. The
arguable interpretation of this rule may be conceded to be within the discretion granted to the LA
and NLRC as the quasi-judicial bodies with expertise on labor matters.
However, as early as 1987 in the case of Cebu Institute of Technology v. OpleG.R. No. L58870, 18 December 1987 the phrase those who are engaged on task or contract basis in the
rule has already been interpreted to mean as follows:
[the phrase] should however, be related with "field personnel" applying the rule on
ejusdem generis that general and unlimited terms are restrained and limited by the
particular terms that they follow xxx Clearly, petitioner's teaching personnel cannot be
deemed field personnel which refers "to non-agricultural employees who regularly
perform their duties away from the principal place of business or branch office of the
employer and whose actual hours of work in the field cannot be determined with
reasonable certainty. [Par. 3, Article 82, Labor Code of the Philippines]. Petitioner's claim
that private respondents are not entitled to the service incentive leave benefit cannot
therefore be sustained.
In short, the payment of an employee on task or pakyaw basis alone is insufficient to exclude
one from the coverage of SIL and xxxx. They are exempted from the coverage of Title I (including
the xxxx and SIL pay) only if they qualify as field personnel. The IRR therefore validly qualifies
and limits the general exclusion of workers paid by results found in Article 82 from the coverage
of xxxx and SIL pay. This is the only reasonable interpretation since the determination of
excluded workers who are paid by results from the coverage of Title I is determined by the
Secretary of Labor in appropriate regulations.
The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus Transport Systems,
Inc., v. Bautista:
A careful perusal of said provisions of law will result in the conclusion that the grant of
service incentive leave has been delimited by the Implementing Rules and Regulations of
the Labor Code to apply only to those employees not explicitly excluded by Section 1 of
Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to
employees classified as field personnel. The phrase other employees whose
performance is unsupervised by the employer must not be understood as a separate
classification of employees to which service incentive leave shall not be granted. Rather,
it serves as an amplification of the interpretation of the definition of field personnel under
the Labor Code as those whose actual hours of work in the field cannot be determined
with reasonable certainty.
31
The same is true with respect to the phrase those who are engaged on task or
contract basis, purely commission basis. Said phrase should be related with field
personnel, applying the rule on ejusdem generis that general and unlimited terms are
restrained and limited by the particular terms that they follow.
The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the CA cited in
support of granting Macasios petition.
In Serrano, the Court, applying the rule on ejusdem generis (The general and unlimited
terms are restrained and limited by the particular terms that they follow ) declared that
employees engaged on task or contract basis xxx are not automatically exempted from
the grant of service incentive leave, unless, they fall under the classification of field
personnel. (Serrano v. Severino Santos Transit, supra note 22, at 492-493; emphasis
supplied, underscore ours) The Court explained that the phrase including those who are
engaged on task or contract basis, purely commission basis found in Section 1(d), Rule V of
Book III of the IRR should not be understood as a separate classification of employees to which
SIL shall not be granted. Rather, as with its preceding phrase - other employees whose
performance is unsupervised by the employer - the phrase including those who are engaged on
task or contract basis serves to amplify the interpretation of the Labor Code definition of field
personnel as those whose actual hours of work in the field cannot be determined with
reasonable
certainty.
xxx
In short, in determining whether workers engaged on pakyaw or task basis is entitled to xxx
and SIL pay, the presence (or absence) of employer supervision as regards the workers time and
performance is the key: if the worker is simply engaged on pakyaw or task basis, then the
general rule is that he is entitled to xxx and SIL pay unless exempted from the exceptions
specifically provided under Article 94 (holiday pay) and xxxx of the Labor Code. However, if the
worker engaged on pakyaw or task basis also falls within the meaning of field personnel under
the law, then he is not entitled to these monetary benefits.
Treatment of benefit
The service incentive leave shall be commutable to its money equivalent if not used or exhausted
at the end of the year. (Section 5, Rule V, Book III, Omnibus Rules Implementing the Labor Code)
Other leaves provided by law

Republic Act No. 8187 known as "Paternity Leave Act of 1996"
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Coverage
Every married male employee in the private sector shall be entitled to paternity leave
benefits of seven (7) days with full pay for the first four deliveries by his lawful spouse under such
terms and conditions as hereinafter provided. The rules on paternity leave of employees in the
public sector shall be promulgated by the Civil Service Commission. (Section 2, Revised
Implementing Rules and Regulations of Republic Act No. 8187 for the Private Sector)
Conditions to entitlement of paternity leave benefits
A married male employee shall be entitled to paternity benefits provided that:
a. he is an employee at the time of delivery of his child;
b. he is cohabiting with his spouse at the time she gives birth or suffers a miscarriage.
c. he has applied for paternity leave in accordance with Section 4 hereof; and
d. his wife has given birth or suffered a miscarriage. (Section 3, Revised Implementing Rules
and Regulations of Republic Act No. 8187 for the Private Sector)
32
Maternity Leave under Republic Act No. 8282

Conditions for entitlement under Section 14-A of R. A. No. 8282
A female member who has paid at least three (3) monthly contributions in the twelvemonth 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;
(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. (Section 14-A, Republic Act No. 8282)
Parental Leave for Solo Parents under Republic Act No. 8972
Solo Parent is 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 mother keeps and raises the child.
2. Parent left solo or alone with the responsibility of parenthood due to the following
circumstances:
a. to death of spouse;
b. while the spouse is detained or is serving sentence for a criminal conviction for
at least one (1) year;
c. due to physical and/or mental incapacity of spouse as certified by a public
medical practitioner;
d. 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;
e. 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;
f. due to abandonment of spouse for at least one (1) year;
3. 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.
4. Any other person who solely provides parental care and support to a child or children.
5. 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.
Conditions for Entitlement of Parental Leave
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
33
(c) He/She has presented a Solo Parent Identification Card to his/her employer. (Section
19, Rules and Regulations Implementing Republic Act 8972)
Leave for Victims of VAWC under Republic Act 9262

1.
Entitled to Leave
Victims under this Act shall be entitled to take a paid leave of absence up to ten (10) days in
addition to other paid leaves under the Labor Code and Civil Service Rules and Regulations, extendible
when the necessity arises as specified in the protection order.
Any employer who shall prejudice the right of the person under this section 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. (Section 43, Republic Act No. 9262)
2.
Ten-day paid leave in addition to other leave benefits
At any time during the application of any protection order, investigation, prosecution and/or trial of
the criminal case, a victim of 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.
The availment of the ten 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
noncumulative 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 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. (Section 42, Rule VI, The Rules and
Regulations Implementing the Anti-Violence Against Women and Their Children Act of 2004)
Service Charge
Coverage
The rule on service charge shall apply only to establishments collecting service charges such as
hotels, restaurants, lodging houses, night clubs, cocktail lounge, massage clinics, bars, casinos and
gambling houses, and similar enterprises, including those entities operating primarily as private
subsidiaries of the Government. (Section 1, Rule VI, Book III, Omnibus Rules Implementing the
Labor Code)
Employees covered
The rule on service charge shall 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 to managerial employees. As used herein, a "managerial employee" shall mean one who is
vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign, or discipline employees or to effectively recommend such
managerial actions. All employees not falling within this definition shall be considered rank-and-file
employees. (Section 2, Rule VI, Book III, Omnibus Rules Implementing the Labor Code)
34
Distribution of service charges

All service charges collected by covered employers shall be distributed at the rate of 85% for the
employees and 15% for the management. The 85% shall be distributed equally among the covered
employees. The 15% shall be for the disposition by management to answer for losses and breakages and
distribution to managerial employees at the discretion of the management in the latter case. (Section 3,
Rule VI, Book III, Omnibus Rules Implementing the Labor Code)
Frequency of distribution
The shares referred to herein shall be distributed and paid to the employees not less than once
every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days. (Section 4, Rule VI,
Book III, Omnibus Rules Implementing the Labor Code)
Integration of service charges

In case the service charges is abolished the share of covered employees shall be considered
integrated in their wages. (Article 96, Labor Code)
Basis of the integrated amount

The basis of the amount to be integrated shall be the average monthly share of each employee
for the past twelve (12) months immediately preceding the abolition of withdrawal of such charges.
(Section 5, Rule VI, Book III, Omnibus Rules Implementing the Labor Code)
When Article 96 of the Labor Code is not applicable

In explaining the instance when Article 96 on service charges is not applicable, the Supreme
Court in the case of National Union of Workers in Hotel Restaurant and Allied Industries
(NUWHRAIN-APL-IUF), Philippine Plaza Chapter v. Philippine Plaza Holdings, Inc., G.R. No.
177524, July 23, 2014 held:
Article 96 of the Labor Code provides for the minimum percentage distribution between the
employer and the employees of the collected service charges, and its integration in the covered
employees wages in the event the employer terminates its policy of providing for its collection. It
pertinently reads:
Art. 96. Service Charges.
x x x In case the service charge is abolished, the share of the covered employees shall
be considered integrated in their wages.
This last paragraph of Article 96 of the Labor Code presumes the practice of collecting service
charges and the employers termination of this practice. When this happens, Article 96 requires
the employer to incorporate the amount that the employees had been receiving as share of the
collected service charges into their wages. In cases where no service charges had previously
been collected (as where the employer never had any policy providing for collection of service
charges or had never imposed the collection of service charges on certain specified transactions),
Article 96 will not operate.
13TH Month Pay

Those required to pay the 13th month pay
All employers are required to pay their rank-and-file employees the 13 th month pay not later than
December 24 of every year. (Revised Guidelines on the Implementation of the 13 th Month Pay Law,
dated November 16, 1987; Section 1, Presidential Decree 851, as modified by Memorandum Order
No. 28, dated August 13, 1986)
Those entitled to receive the 13th month pay
All rank-and-file employees regardless of the nature of their employment, and irrespective of the
methods by which they are paid, provided they worked for at least one month during a calendar year.
35
(No. 1 in relation to No. 2, Revised Guidelines on the Implementation of the 13 th Month Pay Law,
dated November 16, 1987)
13th Month Pay for Certain Types of Employees

The following types of employees are entitled to 13 th month pay
(a) Employees Paid by Results. Employees who are paid on piece work basis are by law
entitled to the 13th month pay.
Employees who are paid a fixed or guaranteed wage plus commission are also entitled to the
mandated 13th month pay, based on their total earnings during the calendar year, i.e., on both their fixed
or guaranteed wage and commission.
(b) Those with Multiple Employers. Government employees working part time in a private
enterprise, including private educational institutions, as well as employees working in two or more private
firms, whether on full or part time basis, are entitled to the required 13th month pay from all their private
employers regardless of their total earnings from each or all their employers.
(c) Private School Teachers. Private school teachers, including faculty members of
universities and colleges, are entitled to the required 13th month pay, regardless of the number of months
they teach or are paid within a year, if they have rendered service for at least one (1) month within a year.
(No. 5, Revised Guidelines on the Implementation of the 13 th Month Pay Law, dated November 16,
1987)
(d) 13th Month Pay of Resigned or Separated Employee - An employee who has resigned or
whose services were terminated at any time before the time for payment of the 13th month pay is entitled
to this monetary benefit in proportion to the length of time he worked during the year, reckoned from the
time he started working during the calendar year up to the time of his resignation or termination from the
service. Thus, if he worked only from January up to September his proportionate 13th month pay should
be equivalent of 1/12 his total basic salary he earned during that period.
The payment of the 13th month pay may be demanded by the employee upon the cessation of
employer-employee relationship. This is consistent with the principle of equity that as the employer can
require the employee to clear himself of all liabilities and property accountability, so can the employee
demand the payment of all benefits due him upon the termination of the relationship. (No. 6, Revised
Guidelines on the Implementation of the 13th Month Pay Law, dated November 16, 1987)
The employers who are exempted from paying the 13th month
The following employers are exempted to pay 13 th month under PD 851:
(a) Government and any of its political subdivision, including government-owned and controlled
corporations, except those corporations operating essentially as private subsidiaries of the Government;
(b) Employers already paying their employees 13 th month pay or more in a calendar year or its
equivalent at the time of this issuance;
(c) Persons in the personal service of another in relation to such workers; and
(d) Employers 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 grant the
required 13th month pay to such workers.
As used herein, 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.
The term "its equivalent" as used on paragraph (b) hereof shall include Christmas bonus, midyear bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary but
shall not include cash and stock dividends, cost of living allowances and all other allowances regularly
enjoyed by the employee, as well as non-monetary benefits. Where an employer pays less than required
1/12th of the employees basic salary, the employer shall pay the difference. (No. 2, Revised Guidelines
on the Implementation of the 13th Month Pay Law, dated November 16, 1987)
Wage and salary are synonymous

36

That wage and salary are synonymous has been settled in Songco v. National Labor Relations
Commission, G.R. Nos. 50999-51000, 23 March 1990, 183 SCRA 610, where the Supreme Court said:
The ambiguity between Article 97(f), which defines the term 'wage' and Article XIV of the
Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the
Implementing Rules, which mention the terms "pay" and "salary", is more apparent than real.
Broadly, the word "salary" means a recompense or consideration made to a person for his pains
or industry in another man's business. Whether it be derived from "salarium," or more fancifully
from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation
for services rendered. Indeed, there is eminent authority for holding that the words "wages" and
"salary" are in essence synonymous (Words and Phrases, Vol. 38 Permanent Edition, p. 44 citing
Hopkins vs. Cromwell, 85 N.Y.S. 839,841,89 App. Div. 481; 38 Am. Jur. 496). "Salary," the
etymology of which is the Latin word "salarium," is often used interchangeably with "wage", the
etymology of which is the Middle English word "wagen". Both words generally refer to one and
the same meaning, that is, a reward or recompense for services performed. Likewise, "pay" is the
synonym of "wages" and "salary" (Black's Law Dictionary, 5th Ed.). Inasmuch as the words
"wages", "pay" and "salary" have the same meaning, and commission is included in the definition
of "wage", the logical conclusion, therefore, is, in the computation of the separation pay of
petitioners, their salary base should include also their earned sales commissions.
In Equitable Banking Corporation (now known as Equitable-PCI Bank) v. Sadac, G.R. No.
164772, June 8,2006, respondent take exception to the rule that general increases in basic salary are not
deemed component in the computation of full backwages by arguing that jurisprudence speaks only of
wage and not salary, and therefore, the rule is inapplicable to him. It is respondent Sadacs stance that
he was not paid at the wage rate nor was he engaged in some form of manual or physical labor as he
was hired as Vice President of petitioner Bank. He cites Gaa v. Court of Appeals, G.R. No. L-44169, 3
December 1985, 140 SCRA 304, 309, where the Court distinguished between wage and salary.
The reliance is misplaced. The distinction between salary and wage in Gaa was for the purpose of
Article 1708 of the Civil Code which mandates that, [t]he laborers wage shall not be subject to execution
or attachment, except for debts incurred for food, shelter, clothing and medical attendance. In labor law,
however, the distinction appears to be merely semantics. Paramount and Evangelista may have involved
wage earners, but the petitioner in Espejo was a General Manager with a monthly salary of P9,000.00
plus privileges. That wage and salary are synonymous has been settled in Songco v. National Labor
Relations Commission, G.R. Nos. 50999-51000, 23 March 1990, 183 SCRA 610.
Wage and salary in Article 1708 of the Civil Code distinguished

In Gaa v. Court of Appeals, G.R. No. L-44169 December 3, 1985 the Supreme Court
interpreted that the distinction between salary and wage was for the purpose of Article 1708 of the Civil
Code. Thus, the High Court ruled on the distinctions of wages and salary as follows:
Article 1708 used the word "wages" and not "salary" in relation to "laborer" when it declared
what are to be exempted from attachment and execution. The term "wages" as distinguished from
"salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated times,
and measured by the day, week, month, or season, while "salary" denotes a higher degree of
employment, or a superior grade of services, and implies a position of office: by contrast, the term
wages " indicates considerable pay for a lower and less responsible character of employment,
while "salary" is suggestive of a larger and more important service (35 Am. Jur. 496).
The distinction between wages and salary was adverted to in Bell vs. Indian Livestock Co.
(Tex. Sup.), 11 S.W. 344, wherein it was said: "'Wages' are the compensation given to a hired
person for service, and the same is true of 'salary'. The words seem to be synonymous,
convertible terms, though we believe that use and general acceptation have given to the word
'salary' a significance somewhat different from the word 'wages' in this: that the former is
understood to relate to position of office, to be the compensation given for official or other service,
as distinguished from 'wages', the compensation for labor." Annotation 102 Am. St. Rep. 81, 95.
Rules on facilities
The following are the relevant rules on facilities:
1. Subsidized meals and snacks An employer may provide subsidized meals and snacks to his
employees provided that the subsidy shall not be less than 30% of the fair and reasonable value of such
facilities. In such case, the employer may deduct from the wages of the employees not more than 70% of
37
the value of the meals and snacks enjoyed by the employees, provided that such deduction is with the
written authorization of the employees concerned. (Section 4, Rule VII-A, Book III, Omnibus Rules
2. Facilities - The term facilities as used in this Rule shall include articles or services for the
benefit of the employee or his family but shall not include tools of the trade or articles or service primarily
for the benefits of the employer or necessary to the conduct of the employers business. (Section 5,
Rule VII-A, Book III, Omnibus Rules Implementing the Labor Code)
3. Value of Facilities - The fair and reasonable value of facilities is hereby determined to be the
cost of operation and maintenance, including adequate depreciation plus reasonable allowance (but not
more than 5 % interest on the depreciated amount of capital invested by the employer); provided that if
the total so computed is more than the fair rental value (or fair price of the commodities or facilities offered
for sale) the fair rental value (or the fair price of the commodities or facilities offered for sale) shall be the
reasonable cost of the operation and maintenance. The rate of depreciation and depreciated amount
computed by the employer shall be those arrived at under good accounting practices. (second paragraph,
Section 6, Rule VII-A, Book III, Omnibus Rules Implementing the Labor Code)
Distinction between "facilities" and "supplements"

In SLL International Cables Specialist v. National Labor Relations Commission, G.R. No.
172161, March 2, 2011, 644 SCRA 411, 422-423, cited in Our Haus Realty Development Corporation
v. Parian, G.R. No. 204651, August 6, 2014, the Supreme Court was confronted with the issue on the
proper characterization of the free board and lodging provided by the employer. Thus, the High Court
explained:
The Court, at this point, makes a distinction between "facilities" and "supplements". It is of the
view that the food and lodging, or the electricity and water allegedly consumed by private
respondents in this case were not facilities but supplements. In the case of Atok-Big Wedge
Assn. v. Atok-Big Wedge Co., the two terms were distinguished from one another in this wise:
"Supplements", therefore, constitute extra remuneration or special privileges or
benefits given to or received by the laborers over and above their ordinary earnings or
wages. "Facilities", on the other hand, are items of expense necessary for the laborer's
and his family's existence and subsistence so that by express provision of law (Sec. 2[g]),
they 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.
In short, the benefit or privilege given to the employee which constitutes an extra
remuneration above and over his basic or ordinary earning or wage is supplement; and when said
benefit or privilege is part of the laborers' basic wages, it is a facility. The distinction lies not so
much in the kind of benefit or item (food, lodging, bonus or sick leave) given, but in the
purpose for which it is given. In the case at bench, the items provided were given freely by SLL
for the purpose of maintaining the efficiency and health of its workers while they were
working at their respective projects. (Id. at 422-423; citations omitted; italics supplied;
emphasis and underscoring ours)
Legal requirements to deduct facilities

As held in Mabeza v. National Labor Relations Commission, G.R. No. 118506, April 18, 1997:
Granting that meals and lodging were provided and indeed constituted facilities, such facilities could not
be deducted without the employer complying first with certain legal requirements. Without satisfying
these requirements, the employer simply cannot deduct the value from the employee's wages. First,
proof must be shown that such facilities are customarily furnished by the trade. Second, the provision of
deductible facilities must be voluntarily accepted in writing by the employee. Finally, facilities must be
charged at fair and reasonable value. (Labor Code, art. 97 [f])
The purpose test set by jurisprudence

In explaining the purpose test, the Supreme Court in Our Haus Realty Development
Corporation v. Parian, G.R. No. 204651, August 6, 2014 said:
Under this test, if a benefit or privilege granted to the employee is clearly for the employers
convenience, it will not be considered as a facility but a supplement. (Mabeza v. National Labor
Relations Commission, G.R. No. 118506. April 18, 1997) Here, careful consideration is given
to the nature of the employers business in relation to the work performed by the employee. This
test is used to address inequitable situations wherein employers consider a benefit deductible
38
from the wages even if the factual circumstances show that it clearly redounds to the employers
greater advantage.
While the rules serve as the initial test in characterizing a benefit as a facility, the purpose test
additionally recognizes that the employer and the employee do not stand at the same bargaining
positions on benefits that must or must not form part of an employees wage. In the ultimate
analysis, the purpose test seeks to prevent a circumvention of the minimum wage law.
xxx
Ultimately, the real difference lies not on the kind of the benefit but on the purpose why it was
given by the employer. If it is primarily for the employees gain, then the benefit is a facility; if its
provision is mainly for the employers advantage, then it is a supplement. Again, this is to ensure
that employees are protected in circumstances where the employer designates a benefit as
deductible from the wages even though it clearly works to the employers greater convenience or
advantage.
Under the purpose test, substantial consideration must be given to the nature of the
employers business in relation to the character or type of work performed by the employees
involved.
When bonuses be considered part of the wage, salary or compensation

In Eastern Telecommunications Philippines, Inc. v. Eastern Telecommunications,
Employees Union, G. R. No. 185665, February 8, 2012, the consequential question that needs to be
settled, therefore, is whether the subject bonuses are demandable or not. Stated differently, can these
bonuses be considered part of the wage, salary or compensation making them enforceable obligations?
In resolving the issue, the Supreme Court explained:
From a legal point of view, a bonus is a gratuity or act of liberality of the giver which the
recipient has no right to demand as a matter of right. (Philippine National Construction Corp.
v. National Labor Relations Commission, 345 Phil. 324, 331 [1997]) The grant of a bonus is
basically a management prerogative which cannot be forced upon the employer who may not be
obliged to assume the onerous burden of granting bonuses or other benefits aside from the
employees basic salaries or wages. (Traders Royal Bank v. National Labor Relations
Commission, G.R. No. 88168, August 30, 1990, 189 SCRA 274, 277)
A bonus, however, becomes a demandable or enforceable obligation when it is made part of
the wage or salary or compensation of the employee. (Philippine National Construction Corp.
v. National Labor Relations Commission, 366 Phil. 678 (1999); Philippine Duplicators, Inc.
v. National Labor Relations Commission, 311 Phil. 407, 419 [1995]) Particularly instructive is
the ruling of the Court in Metro Transit Organization, Inc. v. National Labor Relations
Commission, 315 Phil. 860, 871 (1995) where it was written:
Whether or not a bonus forms part of wages depends upon the circumstances and
conditions for its payment. If it is additional compensation which the employer promised
and agreed to give without any conditions imposed for its payment, such as success of
business or greater production or output, then it is part of the wage. But if it is paid only if
profits are realized or if a certain level of productivity is achieved, it cannot be considered
part of the wage. Where it is not payable to all but only to some employees and only
when their labor becomes more efficient or more productive, it is only an inducement for
efficiency, a prize therefore, not a part of the wage.
Commissions as part of actual wages

In Iran v. NLRC, G.R. No. 121927. April 22, 1998 in explaining that a commission should be
included in the computation of actual wages, the High Court ruled:
Article 97(f) of the Labor Code defines wage as follows:
Art. 97(f) Wage paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis, or other method of calculating
the same, which is payable by an employer to an employee under a written or unwritten
contract of employment for work done or to be done, or for services rendered or to be
rendered and includes the fair and reasonable value, as determined by the Secretary of
39
Labor, of board, lodging, or other facilities customarily furnished by the employer to the
employee.
xxx
xxx
x x x. (Emphasis supplied)
This definition explicitly includes commissions as part of wages. While commissions are,
indeed, incentives or forms of encouragement to inspire employees to put a little more industry on
the jobs particularly assigned to them, still these commissions are direct remunerations for
services rendered. In fact, commissions have been defined as the recompense, compensation or
reward of an agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same
is calculated as a percentage on the amount of his transactions or on the profit to the principal.
The nature of the work of a salesman and the reason for such type of remuneration for services
rendered demonstrate clearly that commissions are part of a salesmans wage or salary.
(Philippine Duplicators, Inc. vs. NLRC, 227 SCRA 747 [1993])
Thus, the commissions earned by private respondents in selling softdrinks constitute part of
the compensation or remuneration paid to drivers/salesmen and truck helpers for serving as
such, and hence, must be considered part of the wages paid them.
The NLRC asserts that the inclusion of commissions in the computation of wages would
negate the practice of granting commissions only after an employee has earned the minimum
wage or over. While such a practice does exist, the universality and prevalence of such a practice
is questionable at best. In truth, this Court has taken judicial notice of the fact that some
salesmen do not receive any basic salary but depend entirely on commissions and allowances or
commissions alone, although an employer-employee relationship exists. (Songco vs. NLRC, 183
SCRA 610 [1990]) Undoubtedly, this salary structure is intended for the benefit of the corporation
establishing such, on the apparent assumption that thereby its salesmen would be moved to
greater enterprise and diligence and close more sales in the expectation of increasing their sales
commissions. This, however, does not detract from the character of such commissions as part of
the salary or wage paid to each of its salesmen for rendering services to the corporation. (supra,
Philippine Duplicators)
Likewise, there is no law mandating that commissions be paid only after the minimum wage
has been paid to the employee. Verily, the establishment of a minimum wage only sets a floor
below which an employees remuneration cannot fall, not that commissions are excluded from
wages in determining compliance with the minimum wage law. This conclusion is bolstered by
Philippine Agricultural Commercial and Industrial Workers Union vs. NLRC, 247 SCRA 256
(1995) where this Court acknowledged that drivers and conductors who are compensated purely
on a commission basis are automatically entitled to the basic minimum pay mandated by law
should said commissions be less than their basic minimum for eight hours work. It can, thus, be
inferred that were said commissions equal to or even exceed the minimum wage, the employer
need not pay, in addition, the basic minimum pay prescribed by law. It follows then that
commissions are included in determining compliance with minimum wage requirements.
Non-elimination or diminution rule

Requisites of diminution of benefits
In Vergara, Jr. v. Coca-Cola Bottlers Philippines, Inc., G.R. No. 176985, April 1, 2013, it was
held: There is diminution of benefits when the following requisites are present: (1) the grant or benefit is
founded on a policy or has ripened into a practice over a long period of time; (2) the practice is consistent
and deliberate; (3) the practice is not due to error in the construction or application of a doubtful or difficult
question of law; and (4) the diminution or discontinuance is done unilaterally by the employer. (Supreme
Steel Corporation v. Nagkakaisang Manggagawa ng Supreme Independent Union (NMS-IND-APL),
G.R. No. 185556, March 28, 2011, 646 SCRA 501, 527 cited in Vergara, Jr. v. Coca-Cola Bottlers
Philippines, Inc., G.R. No. 176985, April 1, 2013)
When is a benefit to be considered as a regular company practice

As held in Vergara, Jr. v. Coca-Cola Bottlers Philippines, Inc., G.R. No. 176985, April 1,
2013, To be considered as a regular company practice, the employee must prove by substantial
evidence that the giving of the benefit is done over a long period of time, and that it has been made
consistently and deliberately. (See Eastern Telecommunications Philippines, Inc., v. Eastern
Telecoms Employees Union, supra note 15, at 532; Supreme Steel Corporation v. Nagkakaisang
Manggagawa ng Supreme Independent Union (NMS-IND-APL), supra, at 528; and Metropolitan
40
Bank and Trust Company v. National Labor Relations Commission, G.R. No. 152928, June 18,
2009, 589 SCRA 376, 384)
Meaning of the term benefits mentioned in the non-diminution rule

In Royal Plant Workers Union v. Coca-Cola Bottlers Philippines, Inc.-Cebu Plant, G. R. No.
198783, April 15, 2013, it was ruled:
The operators chairs cannot be considered as one of the employee benefits covered in
Article 100 of the Labor Code. In the Courts view, the term benefits mentioned in the nondiminution rule refers to monetary benefits or privileges given to the employee with monetary
equivalents. Such benefits or privileges form part of the employees wage, salary or
compensation making them enforceable obligations.
This Court has already decided several cases regarding the non-diminution rule where the
benefits or privileges involved in those cases mainly concern monetary considerations or
privileges with monetary equivalents. Some of these cases are: Eastern Telecommunication
Phils. Inc. v. Eastern Telecoms Employees Union, (G.R. No. 185665, February 8, 2012, 665
SCRA 516) where the case involves the payment of 14th, 15th and 16th month bonuses; Central
Azucarera De Tarlac v. Central Azucarera De Tarlac Labor Union-NLU, (G.R. No. 188949, July
26, 2010, 625 SCRA 622) regarding the 13th month pay, legal/special holiday pay, night premium
pay and vacation and sick leaves; TSPIC Corp. v. TSPIC Employees Union, (G.R. 163419,
February 13, 2008, 545 SCRA 215) regarding salary wage increases; and American Wire and
Cable Daily Employees Union vs. American Wire and Cable Company, Inc., (497 Phil. 213
[2005]) involving service awards with cash incentives, premium pay, Christmas party with
incidental benefits and promotional increase.
Direct payment of wages

Wages shall be paid directly to the workers to whom they are due. (Article 104, Labor Code)
Exceptions to direct payment of wages

(a) In cases of force majeure rendering such payment impossible or under other special
circumstances to be determined by the Secretary of Labor and Employment in appropriate regulations, in
which case, the worker may be paid through another person under written authority given by the worker
for the purpose; or
(b) Where the worker has died, in which case, the employer may pay the wages of the deceased
worker to the heirs of the latter without the necessity of intestate proceedings. The claimants, if they are
all of age, shall execute an affidavit attesting to their relationship to the deceased and the fact that they
are his heirs, to the exclusion of all other persons. If any of the heirs is a minor, the affidavit shall be
executed on his behalf by his natural guardian or next-of-kin. The affidavit shall be presented to the
employer who shall make payment through the Secretary of Labor and Employment or his representative.
The representative of the Secretary of Labor and Employment shall act as referee in dividing the amount
paid among the heirs. The payment of wages under this Article shall absolve the employer of any further
liability with respect to the amount paid. (Article 105, Labor Code)
Regulations on exceptions to direct payment of wages

Payment of wages shall be made direct to the employees entitled thereto except in the following
cases:
(a) Where the employer is authorized in writing by the employee to pay his wages to a member of
his family;
(b) Where payment to another person of any part of the employees wages is authorized by
existing law, including payments for the insurance premiums of the employee and union dues where the
right to check-off has been recognized by the employer in accordance with a collective agreement or
authorized in writing by the individual employees concerned; or
(c) In case of death of the employee. (Section 5, Rule VIII, Book III, Omnibus Rules
Criteria for legitimate contracting or subcontracting

41
Contracting or subcontracting shall be legitimate if all the following circumstances concur:

(a) The contractor must be registered in accordance with these Rules and carries a distinct and
independent business and undertakes to perform the job, work or service on its own responsibility,
according to its own manner and method, and free from control and direction of the principal in all matters
connected with the performance of the work except as to the results thereof;
(b) The contractor has substantial capital and/or investment; and
(c) The Service Agreement ensures compliance with all the rights and benefits under Labor Laws.
(Section 4, D.O. No. 18-A Series of 2011)
The required substantial capital

Substantial capital refers to paid-up capital stocks/shares:
At least Three Million Pesos (P3,000,000.00) in the case of corporations, partnerships
and cooperatives;
A net worth of at least Three Million Pesos (P3,000,000.00) in the case of single
proprietorship. (Section 3 (l), D.O. No. 18-A Series of 2011)
Articles 106-109 of the Labor Code

2014, 2013, 2012, 2011, 2009, 2004, 2002, 2001, 200, 1997 and 1994 Bar Examinations
The conditions for legitimate job contracting or subcontracting

In Norkis Trading Corporation v. Buenavista, G. R. No. 182018, October 10, 2012, the
conditions for legitimate job contracting or subcontracting laid down by the Supreme Court are as
follows:
These differentiate it from permissible or legitimate job contracting or subcontracting,
which refers to an arrangement whereby a principal agrees to put out or farm out with the
contractor or subcontractor the performance or completion of a specific job, work, or service
within a definite or predetermined period, regardless of whether such job, work, or service is to be
performed or completed within or outside the premises of the principal. A person is considered
engaged in legitimate job contracting or subcontracting if the following conditions concur: (a) the
contractor carries on a distinct and independent business and partakes the contract work on his
account under his own responsibility according to his own manner and method, free from the
control and direction of his employer or principal in all matters connected with the performance of
his work except as to the results thereof; (b) the contractor has substantial capital or investment;
and (c) the agreement between the principal and the contractor or subcontractor assures the
contractual employees entitlement to all labor and occupational safety and health standards, free
exercise of the right to self-organization, security of tenure, and social welfare benefits. (Babas v.
Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010, 638 SCRA 735, 745746, citing Vinoya v. NLRC, 381 Phil. 460, 472-473; 324 SCRA 469, 478-479 [2000]).
Prohibitions on Labor-only Contracting

Labor-only contracting is hereby declared prohibited. For this purpose, labor only contracting shall
refer to an arrangement where:
(a) The contractor does not have substantial capital or investments in the form of tools,
equipment, machineries, work premises, among others, and the employees recruited and placed are
performing activities which are usually necessary or desirable to the operation of the company, or directly
related to the main business of the principal within a definite or predetermined period, regardless of
whether such job, work or service is to be performed or completed within or outside the premises of the
principal; or
(b) The contractor does not exercise the right to control over the performance of the work of the
employee. (Section 6, D.O. No. 18-A Series of 2011)
Elements of labor only-contracting

Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor
merely recruits, supplies, or places workers to perform a job, work, or service for a principal. In labor-only
contracting, the following elements are present: (a) the contractor or subcontractor does not have
42
substantial capital or investment to actually perform the job, work, or service under its own account and
responsibility; and (b) the employees recruited, supplied or placed by such contractor or subcontractor
perform activities which are directly related to the main business of the principal. (Norkis Trading
Corporation v. Buenavista, G. R. No. 182018, October 10, 2012)
Other prohibitions which are contrary to law or public policy

The following are hereby declared prohibited for being contrary to law or public policy:
A. Contracting out of jobs, works or services when not done in good faith and not justified by the
exigencies of the business such as the following:
(1) Contracting out of jobs, works or services when the same results in the termination or
reduction of regular employees and reduction of work hours or reduction or splitting of the
bargaining unit.
(2) Contracting out of work with a Cabo. Make this a footnote (b) Cabo refers to a person
or group of persons or to a labor group which, in the guise of a labor organization,
cooperative or any entity, supplies workers to an employer, with or without any monetary or
other consideration, whether in the capacity of an agent of the employer or as an ostensible
independent contractor.
(3) Taking undue advantage of the economic situation or lack of bargaining strength of the
contractors employees, or undermining their security of tenure or basic rights, or
circumventing the provisions of regular employment, in any of the following instances:
(i) Requiring them to perform functions which are currently being performed by the
regular employees of the principal; and
(ii) Requiring them to sign, as a precondition to employment or continued
employment, an antedated resignation letter; a blank payroll; a waiver of labor standards
including minimum wages and social or welfare benefits; or a quitclaim releasing the
principal, contractor or from any liability as to payment of future claims.
(4)
Contracting
out
of
job,
work
or
service
through
an
in-house
agency.
(5) Contracting out of a job, work or service that is necessary or desirable or directly related
to the business or operation of the principal by reason of a strike or lockout whether actual or
imminent.
(6) Contracting out of a job, work or service being performed by union members when such
will interfere with, restrain or coerce employees in the exercise of their rights to selforganization as provided in Art. 248 (c) of the Labor Code, as amended.
(7) Repeated hiring of employees under an employment contract of short duration or under a
Service Agreement of short duration with the same or different contractors, which circumvents
the Labor Code provisions on Security of Tenure.
(8) Requiring employees under a subcontracting arrangement to sign a contract fixing the
period of employment to a term shorter than the term of the Service Agreement, unless the
contract is divisible into phases for which substantially different skills are required and this is
made known to the employee at the time of engagement.
(9) Refusal to provide a copy of the Service Agreement and the employment contracts
between the contractor and the employees deployed to work in the bargaining unit of the
principals certified bargaining agent to the sole and exclusive bargaining agent (SEBA).
(10) Engaging or maintaining by the principal of subcontracted employees in excess of those
provided for in the applicable Collective Bargaining Agreement (CBA) or as set by the
Industry Tripartite Council (ITC).
B. Contracting out of jobs, works or services analogous to the above when not done in good faith
and not justified by the exigencies of the business. (Section 7, D.O. No. 18-A Series of 2011)
Contractors employees rights and privileges under the Labor Code

All contractors employees, whether deployed or assigned as reliever, seasonal, weekender, temporary, or promo jobbers, shall be entitled to all the rights and privileges as provided
for in the Labor Code, as amended, to include the following:
43
(a) safe and healthful working conditions;

(b) labor standards such as service incentive leave, rest days, overtime pay, holiday pay,
13th month pay
(c) separation pay as may be provided in the Service Agreement or under the Labor
Code;
(d) retirement benefits under the SSS, or retirement plans of the contractor, if there are
any;
(e) social security and welfare benefits;
(f) self-organization, collective bargaining and peaceful concerted activities; and
(g) security of tenure. (Section 8, D.O. No. 18-A Series of 2011)
Required contracts under D. O. No. 18-A

(a) Employment contract between the contractor and its employee. Notwithstanding any
oral or written stipulations to the contrary, the contract between the contractor and its employee
shall be governed by the provisions of Articles 279 (renumbered to Art. 285) and 280
(renumbered to Art. 286) of the Labor Code, as amended. It shall include the following terms and
conditions:
i
ii
iii
The specic description of the job, work or service to be performed by the

employee;
The place of work and terms and conditions of employment, including a
statement of the wage rate applicable to the individual employee; and
The term or duration of employment that must be co-extensive with the Service
Agreement or with the specific phase of work for which the employee is engaged.
The contractor shall inform the employee of the foregoing terms and conditions of
employment in writing on or before the first day of his/her employment.
(b)
Service Agreement between the principal and the contractor. The Service
Agreement shall include the following:
i.
ii.
iii.
iv.
v.
vi.
vii.
The specic description of the job, work or service being subcontracted.

The place of work and terms and conditions governing the contracting
arrangement, to include the agreed amount of the services to be rendered, the
standard administrative fee of not less than ten percent (10%) of the total
contract cost.
Provisions ensuring compliance with all the rights and benefits of the employees
under the Labor Code and these Rules on: provision for safe and healthful
working conditions; labor standards such as, service incentive leave, rest days,
overtime pay, 13th month pay and separation pay; retirement benets;
contributions and remittance of SSS, Philhealth, Pagibig Fund, and other welfare
benets; the right to self-organization, collective bargaining and peaceful
concerted action; and the right to security of tenure.
A provision on the Net Financial Contracting Capacity of the contractor, which
must be equal to the total contract cost.
A provision on the issuance of the bond/s as defined in Section 3(m) renewable
every year.
The contractor or subcontractor shall directly remit monthly the employers' share
and employees contribution to the SSS, ECC, Philhealth and Pag-ibig.
The term or duration of engagement.
The Service Agreement must conform to the DOLE Standard Computation and
Standard Service Agreement, which form part of these Rules as Annexes A and B.
(Section 9, D.O. No. 18-A Series of 2011)
Effects of finding of labor-only contracting and/or violation of Sections 7, 8, 9

A finding by competent authority of labor-only contracting shall render the principal jointly
and severally liable with the contractor to the latter's employees, in the same manner and extent
that the principal is liable to employees directly hired by him/her, as provided in Article 106 of the
Labor Code, as amended.
A finding of commission of any of the prohibited activities in Section 7, or violation of
either Sections 8 or 9 hereof, shall render the principal the direct employer of the employees of
the contractor or subcontractor, pursuant to Article 109 of the Labor Code, as amended. (Section
27, D.O. No. 18-A Series of 2011)
44
Job contracting/subcontracting from labor-only contracting, distinguished

The following cases distinguished job-contracting and labor-only contracting:
1. The Supreme Court in Polyfoam-RGC International Corporation vs. Concepcion, G. R. No.
172349, June 13,2012 citing Sasan, Sr. v. National Labor Relations Commission 4th Division, G.R.
No. 176240, October 17, 2008, 569 SCRA 670 distinguished permissible job contracting or
subcontracting from labor-only contracting, to wit:
Permissible job contracting or subcontracting refers to an arrangement whereby a principal
agrees to put out or farm out to a contractor or subcontractor the performance or completion of a
specific job, work or service within a definite or predetermined period, regardless of whether such
job, work or service is to be performed or completed within or outside the premises of the
principal. A person is considered engaged in legitimate job contracting or subcontracting if the
following conditions concur:
(a)The contractor or subcontractor carries on a distinct and independent business and
undertakes to perform the job, work or service on its own account and under its own
responsibility according to its own manner and method, and free from the control and
direction of the principal in all matters connected with the performance of the work except as
to the results thereof;
(b)The contractor or subcontractor has substantial capital or investment; and
(c)The agreement between the principal and contractor or subcontractor assures the
contractual employees entitlement to all labor and occupational safety and health standards,
free exercise of the right to self-organization, security of tenure, and social and welfare
benefits.
In contrast, labor-only contracting, a prohibited act, is an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job, work or service for a
principal. In labor-only contracting, the following elements are present:
(a)The contractor or subcontractor does not have substantial capital or investment to
actually perform the job, work or service under its own account and responsibility; and
(b)The employees recruited, supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main business of the principal. (Sasan,
Sr. v. National Labor Relations Commission 4th Division, supra, at pp. 689-690.
[Citations omitted])
The following distinctions was also observed in PCI Automation Center, Inc. v. NLRC, G.R. No.
115920, January 29, 1996 as follows:
In legitimate job contracting, no employer-employee relationship exists between the employees of
the job contractor and the principal employer. Even then, the principal employer becomes jointly and
severally liable with the job contractor for the payment of the employees wages whenever the contractor
fails to pay the same. In such case, the law creates an employer-employee relationship between the
principal employer and the job contractors employees for a limited purpose, that is, to ensure that the
employees are paid their wages. Other than the payment of wages, the principal employer is not
responsible for any claim made by the employees. (Philippine Bank of Communications vs. NLRC,
146 SCRA 347 [1986])
On the other hand, in labor-only contracting, an employer-employee relationship is created by law
between the principal employer and the employees of the labor-only contractor. In this case, the laboronly contractor is considered merely an agent of the principal employer. The principal employer is
responsible to the employees of the labor-only contractor as if such employees had been directly
employed by the principal employer. The principal employer therefore becomes solidarily liable with the
labor-only contractor for all the rightful claims of the employees. (Philippine Bank of Communications
vs. NLRC, 146 SCRA 347 [1986])
Thus, in legitimate job contracting, the principal employer is considered only an indirect employer,
(Article 107, Labor Code, as amended) while in labor-only contracting, the principal employer is
considered the direct employer of the employees. (last paragraph of Article 106, Labor Code, as
amended)
45
In short, the legitimate job contractor provides services while the labor-only contractor provides
only manpower. The legitimate job contractor undertakes to perform a specific job for the principal
employer while the labor-only contractor merely provides the personnel to work for the principal employer.
Solidary liability in labor-only contracting and job-contracting, distinguished

The case of Vigilla v. Philippine College of Criminology, Inc. G. R. No. 200094, June 10,
2013, also gave the distinctions between solidary liability in legitimate job contracting and in labor-only
contracting. Thus, the Supreme Court said:
Jurisprudence is also replete with pronouncements that a job-only contractor is solidarily
liable with the employer. One of these is the case of Philippine Bank of Communications v.
NLRC, 230 Phil. 430 (1986), where this Court explained the legal effects of a job-only
contracting, to wit:
Under the general rule set out in the first and second paragraphs of Article 106, an
employer who enters into a contract with a contractor for the performance of work for the
employer, does not thereby create an employer-employees relationship between himself
and the employees of the contractor. Thus, the employees of the contractor remain the
contractor's employees and his alone. Nonetheless when a contractor fails to pay the
wages of his employees in accordance with the Labor Code, the employer who
contracted out the job to the contractor becomes jointly and severally liable with his
contractor to the employees of the latter "to the extent of the work performed under the
contract" as such employer were the employer of the contractor's employees. The law
itself, in other words, establishes an employer-employee relationship between the
employer and the job contractor's employees for a limited purpose, i.e., in order to ensure
that the latter get paid the wages due to them.
A similar situation obtains where there is "labor only" contracting. The "labor-only"
contractor-i.e "the person or intermediary" - is considered "merely as an agent of the
employer." The employer is made by the statute responsible to the employees of the
"labor only" contractor as if such employees had been directly employed by the employer.
Thus, where "labor-only" contracting exists in a given case, the statute itself implies or
establishes an employer-employee relationship between the employer (the owner of the
project) and the employees of the "labor only" contractor, this time for a comprehensive
purpose: "employer for purposes of this Code, to prevent any violation or circumvention
of any provision of this Code." The law in effect holds both the employer and the "laboronly" contractor responsible to the latter's employees for the more effective safeguarding
of the employees' rights under the Labor Code. (Id. at 439-440) [Emphasis supplied].
The case of San Miguel Corporation v. MAERC Integrated Services, Inc., 453 Phil.
543 (2003) also recognized this solidary liability between a labor-only contractor and the
employer. In the said case, this Court gave the distinctions between solidary liability in
legitimate job contracting and in labor-only contracting, to wit:
In legitimate job contracting, the law creates an employer-employee relationship
for a limited purpose, i.e., to ensure that the employees are paid their wages. The
principal employer becomes jointly and severally liable with the job contractor only for
the payment of the employees' wages whenever the contractor fails to pay the same.
Other than that, the principal employer is not responsible for any claim made by the
employees.
On the other hand, in labor-only contracting, the statute creates an employeremployee relationship for a comprehensive purpose: to prevent a circumvention of
labor laws. The contractor is considered merely an agent of the principal employer
and the latter is responsible to the employees of the labor-only contractor as if such
employees had been directly employed by the principal employer. The principal
employer therefore becomes solidarily liable with the labor-only contractor for all the
rightful claims of the employees. (Id. at 566-567) [Emphases supplied; Citations
omitted]
Purpose of joint and several liability of employer or principal

The case of San Miguel Corporation v. MAERC Integrated Services, Inc., G.R. No. 144672,
July 10, 2003, explained the purpose of the enactment of the joint and several liability of the employer or
principal:
46
This statutory scheme is designed to give the workers ample protection, consonant with labor
and social justice provisions of the 1987 Constitution. (Manila Electric Company v. Benamira,
501 Phil. 621, 644 (2005); Mariveles Shipyard Corp. v. Court of Appeals, 461 Phil. 249, 267
[2003])
This Courts pronouncement in Rosewood Processing, Inc. v. NLRC, 352 Phil. 1013 (1998)
is noteworthy:
The joint and several liability of the employer or principal was enacted to ensure
compliance with the provisions of the Code, principally those on statutory minimum wage.
The contractor or subcontractor is made liable by virtue of his or her status as a direct
employer, and the principal as the indirect employer of the contractors employees. This
liability facilitates, if not guarantees, payment of the workers compensation, thus, giving
the workers ample protection as mandated by the 1987 Constitution. This is not unduly
burdensome to the employer. Should the indirect employer be constrained to pay the
workers, it can recover whatever amount it had paid in accordance with the terms of the
service contract between itself and the contractor. (Id. at 1033-1034. [Citations
omitted])
Article 107 distinguished from Article 106 and interpretation of "not an employer"
In Baguio v. NLRC, G.R. No. 79004-08 October 4, 1991 the Supreme Court laid down the
distinction between Article 106 and 107 of the Labor Code as follows:
The distinction between Articles 106 and 107 was in the fact that Article 106 deals with "laboronly" contracting. Here, by operation of law, the contractor is merely considered as an agent of
the employer, who is deemed "responsible to the workers to the same extent as if the latter were
directly employed by him." On the other hand, Article 107 deals with "job contracting." In the latter
situation, while the contractor himself is the direct employer of the employees, the employer is
deemed, by operation of law, as an indirect employer.
In other words, the phrase "not an employer" found in Article 107 must be read in conjunction
with Article 106. A contrary interpretation would render the provisions of Article 107 meaningless
considering that everytime an employer engages a contractor, the latter is always acting in the
interest of the former, whether directly or indirectly, in relation to his employees.
It should be recalled that a finding that a contractor is a "labor-only" contractor is equivalent to
declaring that there is an employer-employee relationship between the owner of the project and
the employees of the "labor-only" contractor (Associated Anglo-American Tobacco Corp. v.
Clave, G.R. No. 50915, 30 August 1990, 189 SCRA 127; Industrial Timber Corp. v. NLRC,
G.R. No. 83616, 20 January 1989, 169 SCRA 341). This is evidently because, as heretofore
stated, the "labor-only" contractor is considered as a mere agent of an employer. In contrast, in
"job contracting," no employer-employee relationship exists between the owner and the
employees of his contractor. The owner of the project is not the direct employer but merely an
indirect employer, by operation of law, of his contractor's employees.
Remedies of principal on its being made liable to indirect employees

In Government Service Insurance System v. National Labor Relations Commission, G.R.
No. 180045, November 17, 2010 it was held:
The principal is made liable to its indirect employees because, after all, it can protect itself
from irresponsible contractors by withholding payment of such sums that are due the employees
and by paying the employees directly, or by requiring a bond from the contractor or subcontractor
for this purpose. (Rosewood Processing, Inc. v. NLRC, 352 Phil. 1013 [1998])
xxx
It should be understood, though, that the solidary liability of petitioner does not preclude the
application of Article 1217 of the Civil Code on the right of reimbursement from its co-debtor, viz.:
( Manila Electric Company v. Benamira, 501 Phil. 621, 644 [2005])
Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation.
If two or more solidary debtors offer to pay, the creditor may choose which offer to accept.
47
He who made the payment may claim from his co-debtors only the share which
corresponds to each, with the interest for the payment already made. If the payment is
made before the debt is due, no interest for the intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency, reimburse his
share to the debtor paying the obligation, such share shall be borne by all his co-debtors,
in proportion to the debt of each.
Workers preference can be enforced only in bankruptcy or liquidation proceedings

In China Banking Corporation v. Young, G. R. No. 76061, July 28, 1993 and China Banking
Corporation v. NLRC, G. R. No. 82566, July 28, 1993, petitioner CBC argues that the preferential right
under Art. 110 of the Labor Code is not available to NKEIs workers in the absence of a bankruptcy or
insolvency or liquidation proceedings. Thus, the decision in both labor cases should be enforced against
the foreclosed properties of NKEI. The public and private respondents, upon the other hand, insist that
the preferential right of the workers over the properties foreclosed, subsists without the necessity of a
declaration of insolvency, bankruptcy or judicial liquidation and wherever the property goes. The Court
said:
In a number of cases decided by this Court, it has been repeatedly held that there must first
be a declaration of bankruptcy or judicial liquidation of the employers business before the worker
preference can be enforced just as all other creditors of the employer company can assert their
preferences, if any, only in the course of a bankruptcy or judicial liquidation proceeding. ( See
Development Bank of the Philippines v. The Minister of Labor, 195 SCRA 463 (1991);
Development Bank of the Philippines v. NLRC, et al., 183 SCRA 328 (1990); Philippine
National Bank v. Cruz, et al., 180 SCRA 630 (1989); Development Bank of the Philippines v.
The Hon. Secretary of Labor, et al., 179 SCRA 630 (1989); Development Bank of the
Philippines v. Hon. Labor Arbiter Ariel C. Santos, et al., 171 SCRA 138 [1989])
This rule was ushered in by the Courts pronouncement in the case of Republic v. Peralta,
150 SCRA 37 (1987) where the Court said:
Art. 110 of the Labor Code, in determining the reach of its terms, cannot be viewed
in isolation. Rather, Article 110 must be read in relation to the provisions of the Civil Code
concerning the classification, concurrence and preference of credits, which provisions
find particular application in insolvency proceedings where the claims of all creditors,
preferred or non-preferred, may be adjudicated in a binding manner. It is thus important
to begin by outlining the scheme constituted by the provisions of the Civil Code on this
subject.
Concepts of attorneys fees under Article 111 of the Labor Code

In Kaisahan at Kapatiran ng mga Manggagawa at kawani sa MWC-East Zone Union v. Manila
Water Company, Inc., G.R. No. 174179, November 16, 2011 the Supreme Court explained the
concepts of attorneys fees as follows:
We explained in PCL Shipping Philippines, Inc. v. National Labor Relations
Commission, G.R. No. 153031, December 14, 2006, 511 SCRA 44 that there are two commonly
accepted concepts of attorneys fees the ordinary and extraordinary. In its ordinary concept,
an attorneys fee is the reasonable compensation paid to a lawyer by his client for the legal
services the former renders; compensation is paid for the cost and/or results of legal services per
agreement or as may be assessed. In its extraordinary concept, attorneys fees are deemed
indemnity for damages ordered by the court to be paid by the losing party to the winning
party. The instances when these may be awarded are enumerated in Article 2208 of the Civil
Code, specifically in its paragraph 7 on actions for recovery of wages, and is payable not to the
lawyer but to the client, unless the client and his lawyer have agreed that the award shall
accrue to the lawyer as additional or part of compensation. (Id. at 64-65, citing Dr. Reyes v.
Court of Appeals, 456 Phil. 520, 539-540 [2003])
We also held in PCL Shipping that Article 111 of the Labor Code, as amended, contemplates
the extraordinary concept of attorneys fees and that Article 111 is an exception to the
declared policy of strict construction in the award of attorneys fees. Although an express
finding of facts and law is still necessary to prove the merit of the award, there need not be
any showing that the employer acted maliciously or in bad faith when it withheld the
48
wages. In carrying out and interpreting the Labor Code's provisions and implementing
regulations, the employee's welfare should be the primary and paramount consideration. This
kind of interpretation gives meaning and substance to the liberal and compassionate spirit of the
law as embodied in Article 4 of the Labor Code (which provides that "[a]ll doubts in the
implementation and interpretation of the provisions of [the Labor Code], including its
implementing rules and regulations, shall be resolved in favor of labor") and Article 1702 of the
Civil Code (which provides that "[i]n case of doubt, all labor legislation and all labor contracts shall
be construed in favor of the safety and decent living for the laborer). (Ibid)
We similarly so ruled in RTG Construction, Inc. v. Facto, G. R. No. 163872, December 21,
2009, 608 SCRA 615 and in Ortiz v. San Miguel Corporation.
G.R. Nos. 151983-84, July
31, 2008, 560 SCRA 654. In RTG Construction, we specifically stated:
Settled is the rule that in actions for recovery of wages, or where an employee was
forced to litigate and, thus, incur expenses to protect his rights and interests, a monetary
award by way of attorneys fees is justifiable under Article 111 of the Labor Code; Section
8, Rule VIII, Book III of its Implementing Rules; and paragraph 7, Article 2208 of the Civil
Code. The award of attorneys fees is proper, and there need not be any showing
that the employer acted maliciously or in bad faith when it withheld the wages.
There need only be a showing that the lawful wages were not paid accordingly.
(Supra note 37, at 625-626) (emphasis ours)
Object and import of Article 228 [b] (formerly Art. 222 [b])
In the case of ABS-CBN Supervisors Employees Union Members vs. ABS-CBN
Broadcasting Corporation, G.R. No. 106518. March 11, 1999, March 11, 1999 the Supreme Court
elucidated the object and import of the said provision of law citing Bank of Philippine Islands
Employees Union - Association Labor Union (BPIEU-ALU) vs. National Labor Relations
Commission, 171 SCRA 556, 569 as follows:
"The Court reads the afore-cited provision (Article 222 [b] of the Labor Code) as
prohibiting the payment of attorney's fees only when it is effected through forced contributions
from the workers from their own funds as distinguished from the union funds. xxx"
Attorneys fees in Art. 111 and Art. 228 [b] (formerly Art. 222 [b]), distinguished
Article 111, provides for ten percent (10%) as the amount to be charged as attorneys fees while
Article 228 [b] (formerly Art. 222 [b]) prohibits the payment of attorney's fees to be imposed on individual
member of the contracting union;
Article 111, the attorneys fees are in cases of unlawful withholding of wages while Article 228 [b]
(formerly Art. 222 [b]) the prohibition on attorneys fees being imposed on individual member of the
contracting union arising from any collective bargaining agreement;
Article 111 of the Labor Code, contemplates the extraordinary concept of attorneys fees. In its
extraordinary concept, attorneys fees are deemed indemnity for damages ordered by the court to
be paid by the losing party to the winning party. The instances when these may be awarded are
enumerated in Article 2208 of the Civil Code, specifically in its paragraph 7 on actions for recovery of
wages, and is payable not to the lawyer but to the client, unless the client and his lawyer have
agreed that the award shall accrue to the lawyer as additional or part of compensation while Article
228 [b] (formerly Art. 222 [b]) as prohibiting the payment of attorney's fees only when it is effected through
forced contributions from the workers from their own funds as distinguished from the union funds.
Wage deduction
The general rule on wage deduction is that no employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees. (Article 113, Labor Code)
Exceptions where wage deductions can be allowed

The following are the exceptions on the prohibition on wage deduction:
(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;
49
(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.(Article 113, Labor Code)
As provided under the Omnibus Rules Implementing the Labor Code

Deductions from the wages of the employees may be made by the employer in any of the
following cases:
(a) When the deductions are authorized by law, including deductions for the insurance premiums
advanced by the employer in behalf of the employee as well as union dues where the right to check-off
has been recognized by the employer or authorized in writing by the individual employee himself.
(b) When the deductions are with the written authorization of the employees for payment to the
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. (Section 10, Rule VIII, Book III, Omnibus Rules
Deductions allowed by law

The following are the deductions allowed by law:
1. Premiums for SSS (RA 8282), Philhealth (RA 7875), employees compensation and Pag-ibig
(RA 9679) and withholding tax under the National Internal Revenue Code (NIRC);
2. 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 under Article 113 [a]
of the Labor Code;
3. 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 under Article 113
[b] of the Labor Code;
4. When the deductions are with the written authorization of the employees for payment to the
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 under Section 10 [b], Rule VIII, Book III, Omnibus Rules
Implementing the Labor Code;
5. Deposit for loss or damage under Article 114 of the Labor Code;
6. Agency fees under Article 248 [e] (renumbered to Article 254 [e]) of the Labor Code;
7. Withholding of the wages for a debt due of an employee under Article 1706 of the Civil Code;
8. By court order or by way of execution or attachment of laborers wages for debts incurred for
food, shelter, clothing and medical attendance under Article 1708 of the Civil Code;
Wage Distortion
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Procedures to be followed where wage distortion arises

Where wage distortion arises from the implementation of wage increase it involves jurisdiction
and remedy for its correction. The procedures to be followed are:
1.
Jurisdiction and remedy to correct wage distortion in case there is a CBA
Where the application of any prescribed wage increase by virtue of a law or wage order issued by
any Regional Board results in distortions of the wage structure within an establishment, the employer and
the union shall negotiate to correct the distortions. Any dispute arising from wage distortions shall be
resolved through the grievance procedure under their collective bargaining agreement and, if it remains
unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute
shall be decided by the voluntary arbitrators within ten (10) calendar days from the time said dispute was
referred to voluntary arbitration. (fourth paragraph, Article 124, as amended by Republic Act No.
6727, June 9, 1989)
50
2.
labor unions
Jurisdiction and remedy to correct wage distortion in case there is no CBA/recognized
In cases where there are no collective agreements or recognized labor unions, the employers and
workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be settled through
the National Conciliation and Mediation Board and, if it remains unresolved after ten (10) calendar days of
conciliation, shall be referred to the appropriate branch of the National Labor Relations Commission
(NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the dispute within
twenty (20) calendar days from the time said dispute is submitted for compulsory arbitration. (fifth
paragraph, Article 124, as amended by Republic Act No. 6727, June 9, 1989)
Meaning of wage distortion

As used herein, a wage distortion shall mean a situation where an increase in prescribed wage
rates results in the elimination or severe contraction of intentional quantitative differences in wage or
salary rates between and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service, or other logical bases of
differentiation. (seventh paragraph, Article 124, as amended by Republic Act No. 6727, June 9, 1989)
Otherwise stated, wage distortion means the disappearance or virtual disappearance of pay differentials
between lower and higher positions in an enterprise because of compliance with a wage order. (P.I.
Manufacturing, Incorporated, vs. P.I. Manufacturing Supervisors and Foremen Association, G. R.
No. 167217, February 4, 2008 citing Azucena, The Labor Code with Comments and Cases, Vol. 1,
p. 301)
Visitorial and Enforcement Power

Visitorial power
The visitorial power of the Secretary of Labor and Employment or his duly authorized
representatives, including Labor Regulations Officers or Industrial Safety Engineers, includes the
following:
1. access to employer's records and premises at any time of the day or night whenever work is
being undertaken therein, and right to copy therefrom;
2. to question any employee, and
3. to investigate any fact, condition or matter relevant to the enforcement of any provision of the
Code and of any labor law, wage order or rules and regulations issued pursuant thereto. (Article 128 (a),
Labor Code and Section 1, Rule X, Book III, Omnibus Rules Implementing the Labor Code)
Enforcement power
The enforcement power includes the following:
1. To issue compliance order - Notwithstanding the provisions of Articles 129 and 217 of this
Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary
of Labor and Employment or his duly authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards provisions of this Code and other labor legislation
based on the findings of labor employment and enforcement officers or industrial safety engineers made
in the course of inspection. (Article 128 (b), Labor Code, as amended by Republic Act No. 7730, June
2, 1994, and Section 2 [a], Rule X, Book III, Omnibus Rules Implementing the Labor Code)
2. To issue writs of execution - The Secretary or his duly authorized representatives shall issue
writs of execution to the appropriate authority for the enforcement of their orders, except in cases where
the employer contests the findings of the labor employment and enforcement officer and raises issues
supported by documentary proofs which were not considered in the course of inspection. (Article 128 (b),
Labor Code, as amended by Republic Act No. 7730, June 2, 1994, and Section 2 [b], Rule X, Book
III, Omnibus Rules Implementing the Labor Code)
According to the implementing rules, in line with the provisions of Article 128 in relation to Articles
289 and 290 of the Labor Code as amended in cases, however, where the employer contests the findings
of the Labor Standards and Welfare Officers and raises issues which cannot be resolved without
considering evidentiary matters that are not verifiable in the normal course of inspection, the Regional
Director concerned shall indorse the case to the appropriate arbitration branch of the National Labor
51
Relations Commission for adjudication. (Section 2 [a], Rule X, Book III, Omnibus Rules Implementing
the Labor Code)
3. Enforcement power on health and safety of workers which includes the following:
1. To issue order of stoppage of work or suspension of operations - The Secretary of
Labor and Employment may likewise order stoppage of work or suspension of operations of any
unit or department of an establishment when non-compliance with the law or implementing rules
and regulations poses grave and imminent danger to the health and safety of workers in the
workplace. (Article 128 [c], Labor Code and Section 3 [a], Rule X, Book III, Omnibus Rules
2. Lifting of order of stoppage of work or suspension of operations - Within twenty-four
hours, a hearing shall be conducted to determine whether an order for the stoppage of work or
suspension of operations shall be lifted or not. In case the violation is attributable to the fault of
the employer, he shall pay the employees concerned their salaries or wages during the period of
such stoppage of work or suspension of operation. (Article 128 [c], Labor Code and Section 3
[b], Rule X, Book III, Omnibus Rules Implementing the Labor Code)
4. To keep and maintain employment records - The Secretary of Labor and Employment may, by
appropriate regulations, require employers to keep and maintain such employment records as may be
necessary in aid of his visitorial and enforcement powers under this Code.
Power of review
The power of review are as follows:
1. The Secretary of Labor and Employment, at his own initiative or upon request of the employer
and/or employee, may review the order of the Regional Director. The order of the Regional Director shall
be immediately final and executory unless stayed by the Secretary of Labor and Employment upon
posting by the employer of a reasonable cash or surety bond as fixed by the Regional Director. (last
paragraph of Article 128 (b), Labor Code, as amended by Republic Act No. 7730, June 2,
1994,Section 4 [a], Rule X, Book III, Omnibus Rules Implementing the Labor Code)
2. In aid of his power of review, the Secretary of Labor and Employment may direct the Bureau of
Working Conditions to evaluate the findings or orders of the Regional Director. The decision of the
Secretary of Labor and Employment shall be final and executory. (Section 4 [b], Rule X, Book III,
Omnibus Rules Implementing the Labor Code)
Exception clause, in the last sentence of Article 128 (b) of the Labor Code
In the case of Meteoro v. Creative Creatures, Inc., G. R. No. 171275, July 13, 2009 it was ruled
that the power of the Regional Director to hear and decide the monetary claims of employees is not
absolute. The last sentence of Article 128 (b) of the Labor Code, otherwise known as the exception
clause, provides an instance when the Regional Director or his representatives may be divested of
jurisdiction over a labor standards case. Thus, the High Court explained:
Under prevailing jurisprudence, the so-called exception clause has the following elements,
all of which must concur:
(a)that the employer contests the findings of the labor regulations officer and raises
issues thereon;
(b)that in order to resolve such issues, there is a need to examine evidentiary matters;
and
(c)that such matters are not verifiable in the normal course of inspection. ( Bay Haven,
Inc., et al. v. Abuan, et al., supra; Ex-Bataan Veterans Security Agency, Inc. v.
Laguesma, supra, at p. 663; Batong Buhay Gold Mines, Inc. v. Sec. Dela Serna, 370
Phil. 872, 887; 312 SCRA 22, 33 (1999); SSK Parts Corporation v. Camas, G.R. No.
85934, January 30, 1990, 181 SCRA 675, 678 [1990])
xxx.
Adjudicatory powers under Article 129 of the Labor Code

52

Article 129 of the Labor Code provides for the adjudicatory powers of the Regional Director or
any duly authorized Hearing Officer of the Department of Labor and Employment through summary
proceedings and after due notice to hear and decide involving recovery of wages and other monetary
claims arising from employer-employee relationship presented by an employee or person employed in
domestic/household service, or househelper and the aggregate money claim, including legal interest, of
each employee or househelper does not exceed Five Thousand Pesos (P5,000.00).
Requisites for the exercise of adjudicatory powers under Article 129

In Rajah Humabon Hotel, Inc. v. Trajano, G. R. Nos. 100222-23, September 14, 1993 the
Supreme Court laid down the requisites for the exercise of jurisdiction of the Regional Director or hearing
officers under Article 129 of the Labor Code as follows:
Following the consistent doctrine announced by this Court in South Motorists Enterprises
vs. Tosoc (181 SCRA 386 [1990]), Brokenshire Memorial Hospital Inc. vs. Minister of Labor
and Employment (182 SCRA 5 [1990]), Servando's Inc. vs. Secretary of Labor and
Employment (184 SCRA 664 [1990]); 198 SCRA 156 [1991], Baritua vs. Secretary of the
Department of Labor and Employment (204 SCRA 332 [1991]), and lately in Midland
Insurance Corporation vs. Secretary of Labor and Employment (214 SCRA 578 [1992]),
there is no doubt that the regional directors under Republic Act No. 6715, can try money claims
only if the following requisites concur:
1. The claim is presented by an employee or person employed in domestic or household
service, or househelper under the code;
2. The claimant, no longer being employed, does not seek reinstatement; and
3. The aggregate money claim of the employee or housekeeper does not exceed five
thousand pesos (P5,000.00).
Corrective labor and social laws on gender inequality

The provisions of the Labor Code governing the rights of women workers are found in Articles
130 to 136 thereof. The former Articles 130 and 131 providing for nightwork prohibition and exceptions
therefo has been amended by Republic Act No. 10151, approved on June 21, 2011. The subsequent
articles are renumbered according to express provision of Republic Act No. 10151. Thus, Article 130
(formerly Article 132) is now the provision that ensures the right of women to be provided with facilities
and standards which the Secretary of Labor may establish to ensure their health and safety while Article
132 (formerly Article 134) provides for family planning services; incentives for family planning. For
purposes of labor and social legislation, a woman working in a nightclub, cocktail lounge, massage clinic,
bar or other similar establishments shall be considered as an employee under Article 136 (formerly Article
138). Article 133 (formerly Article 135), on the other hand, recognizes a woman's right against
discrimination with respect to terms and conditions of employment on account simply of sex. Lastly, Article
134 (formerly Article 136) explicitly prohibits discrimination merely by reason of the marriage of a female
employee.
Discrimination Prohibited
The discriminations prohibited are as follows:
1.
It shall be unlawful for any employer to discriminate against any woman employee with
respect to terms and conditions of employment solely on account of her sex;
2.
The following are acts of discrimination:
(a) Payment of a lesser compensation, including wage, salary or other form of remuneration and
fringe benefits, to a female 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. (Article 133, Labor Code, as
amended by Republic Act No. 6725, May 12, 1989)
Effect of willful commission of any unlawful act under Article 133
53
Criminal liability for the willful commission of any unlawful act as provided in this Article or any violation
of the rules and regulations issued pursuant to Section 2 hereof shall be penalized as provided in Articles 294
(forermly Art. 288) and 295 (formerly Art. 289) of this Code.
Actions independent of any criminal action under Article 133

The institution of any criminal action under this provision shall not bar the aggrieved employee from
filing an entirely separate and distinct action for money claims, which may include claims for damages and
other affirmative reliefs. The actions hereby authorized shall proceed independently of each other. (Article
133, Labor Code, as amended by Republic Act No. 6725, May 12, 1989).
Republic Act No. 7877 known as the Anti-Sexual Harassment Act of 1995
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Republic Act No. 7877 known as the Anti-Sexual Harassment Act of 1995 was approved on
February 14, 1995. It is a landmark legislation that punishes unwelcome sexual advances committed in a
work-related, education or training related environment.
Work, Education or Training -Related, Sexual Harassment Defined

Work, education or training-related sexual harassment is committed by an 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 the other,
regardless of whether the demand, request or requirement for submission is accepted by the object of
said Act. (Section 3, Republic Act No.7877)
Sexual harassment are committed in:

1. Work-related or employment environment;
2. Education-related environment; or
3. Training-related environment (Section 3, Republic Act No. 7877)
Sexual harassment in work-related environment, education or training

The sexual acts in work-related environment, education or training are defined as follows:
(a) In a work-related or employment environment, sexual harassment is committed when:
(1) The sexual favor is made as a condition in the hiring or in the employment, reemployment or continued employment of said individual, or in granting said individual favorable
compensation, terms of 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.
(b) 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 consideration; or
(4) When the sexual advances result in an intimidating, hostile or offensive environment
for the student, trainee or apprentice.
Any person who directs or induces another to commit any act of sexual harassment as
herein defined, or who cooperates in the commission thereof by another without which it would
not have been committed, shall also be held liable under this Act. (Section 3, Republic Act
No.7877)
54
In Domingo v. Rayal, G.R. No. 155831, February 18, 2008, Rayala v. Office of the President,
G.R. No. 155840, February 18, 2008, Republic of the Philippines v. Rayala G.R. No. 158700,
February 18, 2008, Rayala insisted that the acts 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. The Supreme Court
held:
The law penalizing sexual harassment in our jurisdiction is RA 7877. Section 3 thereof
defines work-related sexual harassment in this wise:
Sec. 3. Work, Education or Training-related Sexual Harassment Defined. Work,
education or training-related sexual harassment is committed by an employer, 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 the other, regardless of whether the demand, request or requirement
for submission is accepted by the object of said Act.
(a) In a work-related or employment environment, sexual harassment is committed when:
(1) The sexual favor is made as a condition in the hiring or in the employment, reemployment 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
a way would discriminate, deprive or diminish employment opportunities or otherwise
adversely affect said employee;
(2) The above acts would impair the employees rights or privileges under existing labor
laws; or
(3) The above acts would result in an intimidating, hostile, or offensive environment for
the employee.
This section, in relation to Section 7 on penalties, defines the criminal aspect of the unlawful
act of sexual harassment. The same section, in relation to Section 6, authorizes the institution of
an independent civil action for damages and other affirmative relief.
xxx
Yet, even if we were to test Rayalas 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 Domingos 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 Rayalas 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 respondents acts result in creating an intimidating, hostile or
offensive environment for the employee. (REPUBLIC ACT 7877, Sec. 3 (a) (3); AO 250, Rule III,
Sec. 3 [d]) 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.
Stipulations against marriage

Article 134 of the Labor Code declared the following as unlawful:
1. To require as a condition of employment or continuation of employment that a woman employee
shall not get married; or
2. To stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed
resigned or separated; or
3. To actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by
reason of her marriage. (Article 134, Labor Code)
55
While Section 13, Rule XII, Book III, Omnibus Rules Implementing the Labor Code provides:
Section 13. Prohibited Acts. It shall be unlawful for any employer:
xxx
(e) To require as a condition for a continuation of employment that a woman
employee shall not get married or to stipulate expressly or tacitly that upon getting
married, a woman employee shall be deemed resigned or separated, or to actually
dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by
reason of her marriage.
Cases involving policy or stipulations against marriage

In the following case the Supreme Court ruled on validity of company policy or stipulations
against marriage:
1. In Star Paper Corporation v. Simbol, G. R. No. 164774, April 12, 2006, the Supreme Court
resolved the validity of the following company policy:
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
With more women entering the workforce, employers are also enacting employment policies
specifically prohibiting spouses from working for the same company. We note that two types of
employment policies involve spouses: policies banning only spouses from working in the same
company (no-spouse employment policies), and those banning all immediate family members,
including spouses, from working in the same company (anti-nepotism employment policies).
(Ibid)
xxx
In challenging the anti-nepotism employment policies in the United States, complainants
utilize two theories of employment discrimination: the disparate treatment and the disparate
impact. Under the disparate treatment analysis, the plaintiff must prove that an employment
policy is discriminatory on its face. No-spouse employment policies requiring an employee of
a particular sex to either quit, transfer, or be fired are facially discriminatory. For example, an
employment policy prohibiting the employer from hiring wives of male employees, but not
husbands of female employees, is discriminatory on its face. (Supra, A. Giattina, Challenging
No-Spouse Employment Policies As Marital Status Discrimination)
On the other hand, to establish disparate impact, the complainants must prove that a facially
neutral policy has a disproportionate effect on a particular class. For example, although most
employment policies do not expressly indicate which spouse will be required to transfer or leave
the company, the policy often disproportionately affects one sex. (Ibid)
The state courts rulings on the issue depend on their interpretation of the scope of marital
status discrimination within the meaning of their respective civil rights acts. Though they agree
that the term marital status encompasses discrimination based on a person's status as either
married, single, divorced, or widowed, they are divided on whether the term has
a broader meaning. Thus, their decisions vary.(Ibid)
The courts narrowly (Whirlpool Corp. v. Michigan Civil Rights Comm'n, 425 Mich. 527,
390 N.W.2d 625 (1986); Maryland Comm'n on Human Relations v. Greenbelt Homes, Inc.,
300 Md. 75, 475 A.2d 1192 (1984); Manhattan Pizza Hut, Inc. v. New York State Human
Rights Appeal Bd., 51 N.Y.2d 506, 434 N.Y.S.2d 961, 415 N.E.2d 950 (1980); Thompson v.
Sanborn's Motor Express Inc., 154 N.J. Super. 555, 382 A.2d 53 [1977]) interpreting marital
status to refer only to a person's status as married, single, divorced, or widowed reason that if the
legislature intended a broader definition it would have either chosen different language or
specified its intent. They hold that the relevant inquiry is if one is married rather than to whom one
is married. They construe marital status discrimination to include only whether a person is single,
married, divorced, or widowed and not the identity, occupation, and place of employment of one's
spouse. These courts have upheld the questioned policies and ruled that they did not violate the
marital status discrimination provision of their respective state statutes.
56
The courts that have broadly (Ross v. Stouffer Hotel Co., 72 Haw. 350, 816 P.2d 302
(1991); Thompson v. Board of Trustees, 192 Mont. 266, 627 P.2d 1229 (1981); Kraft, Inc. v.
State, 284 N.W.2d 386 (Minn.1979); Washington Water Power Co. v. Washington State
Human Rights Comm'n, 91 Wash.2d 62, 586 P.2d 1149 [1978)]) construed the term marital
status rule that it encompassed the identity, occupation and employment of one's spouse. They
strike down the no-spouse employment policies based on the broad legislative intent of the state
statute. They reason that the no-spouse employment policy violate the marital status provision
because it arbitrarily discriminates against all spouses of present employees without regard to the
actual effect on the individual's qualifications or work performance. (See note 55, A. Giattina,
supra) These courts also find the no-spouse employment policy invalid for failure of the employer
to present any evidence of business necessity other than the general perception that spouses in
the same workplace might adversely affect the business. (See note 56, ibid) They hold that the
absence of such a bona fide occupational qualification (Also referred to as BFOQ)
invalidates a rule denying employment to one spouse due to the current employment of the other
spouse in the same office. (See note 67, A. Giattina, supra ) Thus, they rule that unless the
employer can prove that the reasonable demands of the business require a distinction based on
marital status and there is no better available or acceptable policy which would better accomplish
the business purpose, an employer may not discriminate against an employee based on the
identity of the employees spouse. (See Muller v. BP Exploration (Alaska) Inc., 923 P.2d 783,
73 Fair Empl.Prac.Cas. (BNA) 579, 69) This is known as the bona fide occupational
qualification exception.
We note that since the finding of a bona fide occupational qualification justifies an employers
no-spouse rule, the exception is interpreted strictly and narrowly by these state courts. There
must be a compelling business necessity for which no alternative exists other than the
discriminatory practice. To justify a bona fide occupational qualification, the employer must prove
two factors: (1) that the employment qualification is reasonably related to the essential operation
of the job involved; and, (2) that there is a factual basis for believing that all or substantially all
persons meeting the qualification would be unable to properly perform the duties of the job.
(Richard G. Flood and Kelly A. Cahill, The River Bend Decision and How It Affects
Municipalities Personnel Rule and Regulations, Illinois Municipal Review, June 1993, p. 7.)
The concept of a bona fide occupational qualification is not foreign in our jurisdiction. We
employ the standard of reasonableness of the company policy which is parallel to the bona fide
occupational qualification requirement. In the recent case of Duncan Association of DetailmanPTGWO and Pedro Tecson v. Galxo Wllcome Philippines, Inc. G. R. No. 162994, September
17, 2004 we passed on the validity of the policy of a pharmaceutical company prohibiting its
employees from marrying employees of any competitor company. We held that Glaxo has a right
to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential
programs and information from competitors. We considered the prohibition against personal or
marital relationships with employees of competitor companies upon Glaxos employees
reasonable under the circumstances because relationships of that nature might compromise the
interests of Glaxo. In laying down the assailed company policy, we recognized that Glaxo only
aims to protect its interests against the possibility that a competitor company will gain access to
its secrets and procedures.(Ibid)
The requirement that a company policy must be reasonable under the circumstances to
qualify as a valid exercise of management prerogative was also at issue in the 1997 case
of Philippine Telegraph and Telephone Company v. NLRC, G.R. No. 118978, May 23,
1997. In said case, the employee was dismissed in violation of petitioners policy of disqualifying
from work any woman worker who contracts marriage. We held that the company policy violates
the right against discrimination afforded all women workers under Article 136 of the Labor Code,
but established a permissible exception, viz.:
[A] requirement that a woman employee must remain unmarried could be justified as
a bona fide occupational qualification, or BFOQ, where the particular requirements of
the job would justify the same, but not on the ground of a general principle, such as the
desirability of spreading work in the workplace. A requirement of that nature would be
valid provided it reflects an inherent quality reasonably necessary for satisfactory job
performance.(Ibid) (Emphases supplied.)
The cases of Duncan and PT&T instruct us that the requirement of reasonableness must
be clearly established to uphold the questioned employment policy. The employer has the burden
to prove the existence of a reasonable business necessity. The burden was successfully
discharged in Duncan but not in PT&T.
We do not find a reasonable business necessity in the case at bar.
57
xxx
It is significant to note that in the case at bar, respondents were hired after they were found fit
for the job, but were asked to resign when they married a co-employee. Petitioners failed to show
how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an
employee of the Repacking Section, could be detrimental to its business operations. Neither did
petitioners explain how this detriment will happen in the case of Wilfreda Comia, then a
Production Helper in the Selecting Department, who married Howard Comia, then a helper in the
cutter-machine. The policy is premised on the mere fear that employees married to each other
will be less efficient. If we uphold the questioned rule without valid justification, the employer can
create policies based on an unproven presumption of a perceived danger at the expense of an
employees right to security of tenure.
Petitioners contend that their policy will apply only when one employee marries a coemployee, but they are free to marry persons other than co-employees. The questioned policy
may not facially violate Article 136 of the Labor Code but it creates a disproportionate effect
and under the disparate impact theory, the only way it could pass judicial scrutiny is a showing
that it is reasonable despite the discriminatory, albeit disproportionate, effect. The failure of
petitioners to prove a legitimate business concern in imposing the questioned policy cannot
prejudice the employees right to be free from arbitrary discrimination based upon stereotypes of
married persons working together in one company. (See A. Giattina, supra)
2. The Supreme Court in Duncan Association of Detailman-PTGWO v. Glaxo Wellcome
Philippines, Inc., G.R. No. 162994, September 17, 2004 was confronted a novel question, with
constitutional overtones, involving the validity of the policy of a pharmaceutical company prohibiting its
employees from marrying employees of any competitor company. Thus, the High Court ruled in this wise:
No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxos policy
prohibiting an employee from having a relationship with an employee of a competitor company is
a valid exercise of management prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and
other confidential programs and information from competitors, especially so that it and Astra are
rival companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor
companies upon Glaxos employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. In laying down the
assailed company policy, Glaxo only aims to protect its interests against the possibility that a
competitor company will gain access to its secrets and procedures.
xxx
In any event, from the wordings of the contractual provision and the policy in its employee
handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships
between its employees and those of competitor companies. Its employees are free to cultivate
relationships with and marry persons of their own choosing. What the company merely seeks to
avoid is a conflict of interest between the employee and the company that may arise out of such
relationships. As succinctly explained by the appellate court, thus:
The policy being questioned is not a policy against marriage. An employee of the
company remains free to marry anyone of his or her choosing. The policy is not aimed at
restricting a personal prerogative that belongs only to the individual. However, an
employees personal decision does not detract the employer from exercising
management prerogatives to ensure maximum profit and business success. . . (Decision
of the Court of Appeals, Rollo, p. 28)
The Court of Appeals also correctly noted that the assailed company policy which forms part
of respondents Employee Code of Conduct and of its contracts with its employees, such as that
signed by Tescon, was made known to him prior to his employment. Tecson, therefore, was
aware of that restriction when he signed his employment contract and when he entered into a
relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a contract of
employment with Glaxo, the stipulations therein have the force of law between them and, thus,
should be complied with in good faith." (Article 1159, Civil Code. See National Sugar Trading
and/or the Sugar Regulatory Administration v. Philippine National Bank, G.R. No. 151218,
January 18, 2003, 396 SCRA 528; Pilipinas Hino, Inc. v. Court of Appeals, G.R. No. 126570,
August 18, 2000, 338 SCRA 355) He is therefore estopped from questioning said policy.
58
xxx
As noted earlier, the challenged policy has been implemented by Glaxo impartially and
disinterestedly for a long period of time. In the case at bar, the record shows that Glaxo gave
Tecson several chances to eliminate the conflict of interest brought about by his relationship with
Bettsy. When their relationship was still in its initial stage, Tecsons supervisors at Glaxo
constantly reminded him about its effects on his employment with the company and on the
companys interests. After Tecson married Bettsy, Glaxo gave him time to resolve the conflict by
either resigning from the company or asking his wife to resign from Astra. Glaxo even expressed
its desire to retain Tecson in its employ because of his satisfactory performance and suggested
that he ask Bettsy to resign from her company instead. Glaxo likewise acceded to his repeated
requests for more time to resolve the conflict of interest. When the problem could not be resolved
after several years of waiting, Glaxo was constrained to reassign Tecson to a sales area different
from that handled by his wife for Astra. Notably, the Court did not terminate Tecson from
employment but only reassigned him to another area where his home province, Agusan del Sur,
was included. In effecting Tecsons transfer, Glaxo even considered the welfare of Tecsons
family. Clearly, the foregoing dispels any suspicion of unfairness and bad faith on the part of
Glaxo. (Decision of the Court of Appeals, Rollo, pp. 24-27)
3. In Philippine Telegraph and Telephone Company
v. National Labor Relations
Commission G.R. No. 118978, May 23, 1997, the High Court resolved the issue on petitioner's policy of
not accepting or considering as disqualified from work any woman worker who contracts marriage as
follows:
In the case at bar, petitioner's 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.
Contrary to petitioner's assertion that it dismissed private respondent from employment on
account of her dishonesty, the record discloses clearly that her ties with the company were
dissolved principally because of the company's policy that married women are not qualified for
employment in PT & T, and not merely because of her supposed acts of dishonesty.
xxx
Verily, private respondent's act of concealing the true nature of her status from PT & T could
not be properly characterized as willful or in bad faith as she was moved to act the way she did
mainly because she wanted to retain a permanent job in a stable company. In other words, she
was practically forced by that very same illegal company policy into misrepresenting her civil
status for fear of being disqualified from work. While loss of confidence is a just cause for
termination of employment, it should not be simulated. (Mapalo vs. National Labor Relations
Commission, et al., G.R. No. 107940, June 17, 1994, 233 SCRA 266; PNOC-Energy
Development Corporation vs. National Labor Relations Commission, et al., G.R. No. 79182,
September 11, 1991, 201 SCRA 487) It must rest on an actual breach of duty committed by the
employee and not on the employer's caprices. (San Antonio vs. National Labor Relations
Commission, et al., G.R. No. 100829, November 21, 1995, 250 SCRA 359; Labor vs. National
Labor Relations Commission, G.R. No. 110388, September 14, 1995, 248 SCRA 183)
Furthermore, it should never be used as a subterfuge for causes which are improper, illegal, or
unjustified. (Hospicio de San Jose de Basili vs. National Labor Relations Commission, et
al., G.R. No. 75997, August 18, 1988, 164 SCRA 516)
4. The government, to repeat, abhors any stipulation or policy in the nature of that adopted by
petitioner PT & T. The Labor Code state, in no uncertain terms, as follows:
Art. 136. Stipulation against marriage. It shall be unlawful for an employer to
require as a condition of employment or continuation of employment that a woman 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.
xxx
It would be worthwhile to reflect upon and adopt here the rationalization in Zialcita, et al. vs.
Philippine Air Lines, Case No. RO4-3-3398-76; February 20, 1977 a decision that emanated
from the Office of the President. There, a policy of Philippine Air Lines requiring that prospective
flight attendants must be single and that they will be automatically separated from the service
once they marry was declared void, it being violative of the clear mandate in Article 136 of the
Labor Code with regard to discrimination against married women. xxx
59
xxx
The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining &
Industrial Corporation, CA-G.R. No. 52753-R, June 28, 1978 considered as void a policy of the
same nature. In said case, respondent, in dismissing from the service the complainant, invoked a
policy of the firm to consider female employees in the project it was undertaking as separated the
moment they get married due to lack of facilities for married women. Respondent further claimed
that complainant was employed in the project with an oral understanding that her services would
be terminated when she gets married. Branding the policy of the employer as an example of
"discriminatory chauvinism" tantamount to denying equal employment opportunities to women
simply on account of their sex, the appellate court struck down said employer policy as unlawful
in view of its repugnance to the Civil Code, Presidential Decree No. 148 and the Constitution.
Under American jurisprudence, job requirements which establish employer preference or
conditions relating to the marital status of an employee are categorized as a "sex-plus"
discrimination where it is imposed on one sex and not on the other. Further, the same should be
evenly applied and must not inflict adverse effects on a racial or sexual group which is protected
by federal job discrimination laws. Employment rules that forbid or restrict the employment of
married women, but do not apply to married men, have been held to violate Title VII of the United
States Civil Rights Act of 1964, the main federal statute prohibiting job discrimination against
employees and applicants on the basis of, among other things, sex. (45A Am. Jur. 2d, Job
Discrimination, Sec. 506, p. 486)
Further, it is not relevant that the rule is not directed against all women but just against
married women. And, where the employer discriminates against married women, but not against
married men, the variable is sex and the discrimination is unlawful. (Ibid., id., id..) Upon the other
hand, a requirement that a woman employee must remain unmarried could be justified as a "bona
fide occupational qualification," or BFOQ, where the particular requirements of the job would
justify the same, but not on the ground of a general principle, such as the desirability of spreading
work in the workplace. A requirement of that nature would be valid provided it reflects an inherent
quality reasonably necessary for satisfactory job performance. Thus, in one case, a no-marriage
rule applicable to both male and female flight attendants, was regarded as unlawful since the
restriction was not related to the job performance of the flight attendants. (Ibid., id., Sec. 507)
Prohibited acts under Article 135 of the Labor Code

It shall be unlawful for any employer:
(1) To deny any woman employee the benefits provided for in this Chapter; or
(2) To discharge any woman employed by him for the purpose of preventing her from enjoying any of
the benefits provided under this Code;
(3) To discharge such woman on account of her pregnancy, or while on leave or in confinement due to
her pregnancy;
(4) To discharge or refuse the admission of such woman upon returning to her work for fear that she
may again be pregnant. (Article 135, Labor Code)
Benefits referred by Article 135 (1)

The benefits referred are as follows:
1. The facilities for women under Article 130;
2. Maternity leave benefits under Article 131 as amended;
3. Family planning services; Incentives for Family Planning under Article 132
Prohibited acts as provided under the Omnibus Rules Implementing the Labor Code
It shall be unlawful for any employer:
(a) To discharge any woman employed by him for the purpose of preventing such woman from
enjoying the maternity leave, facilities and other benefits provided under the Code;
(b) To discharge such woman employee on account of her pregnancy, or while on leave or in
confinement due to her pregnancy;
(c) To discharge or refuse the admission of such woman upon returning to her work for fear that
she may be pregnant;
(d) To discharge any woman or child or any other employee for having filed a complaint or having
testified or being about to testify under the Code; and
60
(e) To require as a condition for a continuation of employment that a woman employee shall not
get married or to stipulate expressly or tacitly that upon getting married, a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage.cralaw (Section 13, Rule XII, Book III, Omnibus
Rules Implementing the Labor Code)
Dismissal on account of pregnancy is unlawful

In the following cases, the Supreme Court affirmed the dismissal as illegal being on account of
pregnancy:
1. In Lakpue Drug, Inc., Croesus Pharma, Inc., Tropical Biological Phils., Inc. (all known as
Lakpue Group of Companies) v. Belga, G. R. No. 166379, October 20, 2005 Tropicals ground for
terminating Belga is her alleged concealment of pregnancy. Thus, it was ruled:
In the instant case, 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. Tropical 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. We agree with respondents 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 Tropical that Belgas case is such.
Belgas failure to formally inform Tropical of her pregnancy can not be considered as grave
misconduct directly connected to her work as to constitute just cause for her separation.
The charge of disobedience for Belgas failure to comply with the memoranda must likewise
fail. Disobedience, as a just cause for termination, must be willful or intentional. Willfulness is
characterized by a wrongful and perverse mental attitude rendering the employees act
inconsistent with proper subordination. (St. Michaels Institute v. Santos, 422 Phil. 723, 734
[2001]) In the instant case, the memoranda were given to Belga two days after she had given
birth. It was thus physically impossible for Belga to report for work and explain her absence, as
ordered.
2. In Del Monte Philippines, Inc. v. Velasco, G. R. No. 153477, March 6, 2007, the essential
question is whether the employment of respondent had been validly terminated on the ground of
excessive absences without permission. Corollary to this is the question of whether the petitioner
discharged the respondent on account of pregnancy, a prohibited act. In resolving the essential question
and the issue corollary to it, the High Court ruled in this manner:
As the CA and the NLRC correctly noted, it is not disputed that respondent was pregnant and
that she was suffering from urinary tract infection, and that her absences were due to such facts.
The petitioner admits these facts in its Petition for Review. And, as the CA aptly held, it was no
less than the company doctor who advised the respondent to have rest-in-quarters for four days
on account of a pregnancy-related sickness.
xxx
The Court agrees with the CA in concluding that respondents sickness was pregnancyrelated and, therefore, the petitioner cannot terminate respondents services because in doing so,
petitioner will, in effect, be violating the Labor Code which prohibits an employer to discharge an
employee on account of the latters pregnancy.
Article 137 of the Labor Code provides:
Art. 137.
Prohibited acts. It shall be unlawful for any employer:
xxx
(2)
To discharge such woman on account of her pregnancy, while on
leave or in confinement due to her pregnancy; or
xxx
xxx
61
The Court is 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.
Classification of certain women workers

Status of women workers in certain work places:
1. Any woman who is permitted or suffered to work with or without compensation, in any night
club, cocktail lounge, beer house, massage clinic, bar or similar establishments;
2. Under the effective control or supervision of the employer for a substantial period of time as
determined by the Secretary of Labor and Employment, shall be considered as an employee of such
establishments for purposes of labor and social legislation. (Article 136, Labor Code)
Amendment to Article 137 (a) of the Labor Code

2012, 2007, 2006, 2004, and 2002 Bar Examinations
Article 137 (a) of the Labor Code was already repealed by Republic Act No. 7610, as amended
by Republic Act Numbers 7658 and 9231. Republic Act No. 7610, known as "Special Protection of
Children Against Abuse, Exploitation and Discrimination Act", was approved on June 17, 1992. Its
Article VIII, Section 12 proscribes the employment of children below fifteen (15) years of age subject to
certain exceptions. However, on November 9, 1993 Republic Act No. 7658 was approved amending
Section 12, Article VIII of R.A. No. 7610. Further amendments to its Article VIII, Section 12 was
introduced by Republic Act No. 9231, which was approved on December 19, 2003. The pertinent
amendatory provisions of Republic Act No. 9231 are as follows:
Section 2. Section 12 of the same Act, as amended, is hereby further amended to read as
follows:
Sec. 12. Employment of Children Children below fifteen (15) years of age shall not be
employed except:
1) When a child works directly under the sole responsibility of his/her parents or legal
guardian and where only members of his/her family are employed: Provided, however,
That his/her employment neither endangers his/her life, safety, health, and morals, nor
impairs his/her normal development: Provided, further, That the parent or legal guardian
shall provide the said child with the prescribed primary and/or secondary education; or
2) Where a childs employment or participation in public entertainment or information
through cinema, theater, radio, television or other forms of media is essential: Provided,
That the employment contract is concluded by the childs parents or legal guardian, with
the express agreement of the child concerned, if possible, and the approval of the
Department of Labor and Employment: Provided, further, That the following requirements
in all instances are strictly complied with:
(a) The employer shall ensure the protection, health, safety, morals and normal
development of the child;
(b) The employer shall institute measures to prevent the childs exploitation or
discrimination taking into account the system and level of remuneration, and the duration
and arrangement of working time; and
(c) The employer shall formulate and implement, subject to the approval and supervision
of competent authorities, a continuing program for training and skills acquisition of the
child.
In the above-exceptional cases where any such child may be employed, the employer
shall first secure, before engaging such child, a work permit from the Department of
Labor and Employment which shall ensure observance of the above requirements.
For purposes of this Article, the term child shall apply to all persons under eighteen
(18) years of age.
62
Also among the amendments to Republic Act 7610 by Republic Act 9231 includes the following:
Section 3. The same Act, as amended, is hereby further amended by adding new sections to be
denominated as Sections 12-A, 12-B, 12-C, and 12-D to read as follows:
Sec. 12-A. Hours of Work of a Working Child. Under the exceptions provided in
Section 12 of this Act, as amended:
(1) A child below fifteen (15) years of age may be allowed to work for not more than
twenty (20) hours a week: Provided, That the work shall not be more than four (4) hours
at any given day;
(2) A child fifteen (15) years of age but below eighteen (18) shall not be allowed to work
for more than eight (8) hours a day, and in no case beyond forty (40) hours a week;
(3) No child below fifteen (15) years of age shall be allowed to work between eight
oclock in the evening and six oclock 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
oclock in the evening and six oclock in the morning of the following day.
Sec. 12-D. Prohibition Against Worst Forms of Child Labor. No child shall be engaged
in the worst forms of child labor. The phrase worst forms of child labor shall refer to any
of the following:
(1) All forms of slavery, as defined under the Anti-trafficking in Persons Act of 2003, or
practices similar to slavery such as sale and trafficking of children, debt bondage and
serfdom and forced or compulsory labor, including recruitment of children for use in
armed conflict; or
(2) The use, procuring, offering or exposing of a child for prostitution, for the production
of pornography or for pornographic performances; or
(3) The use, procuring or offering of a child for illegal or illicit activities, including the
production and trafficking of dangerous drugs and volatile substances prohibited under
existing laws; or
(4) Work which, by its nature or the circumstances in which it is carried out, is hazardous
or likely to be harmful to the health, safety or morals of children, such that it:
a) Debases, degrades or demeans the intrinsic worth and dignity of a child as a human
being; or
b) Exposes the child to physical, emotional or sexual abuse, or is found to be highly
stressful psychologically or may prejudice morals; or
c) Is performed underground, underwater or at dangerous heights; or
d) Involves the use of dangerous machinery, equipment and tools such as power-driven
or explosive power-actuated tools; or
e) Exposes the child to physical danger such as, but not limited to the dangerous feats of
balancing, physical strength or contortion, or which requires the manual transport of
heavy loads; or
f) Is performed in an unhealthy environment exposing the child to hazardous working
conditions, elements, substances, co-agents or processes involving ionizing, radiation,
fire, flammable substances, noxious components and the like, or to extreme
temperatures, noise levels, or vibrations; or
g) Is performed under particularly difficult conditions; or
h) Exposes the child to biological agents such as bacteria, fungi, viruses, protozoans,
nematodes and other parasites; or
i) Involves the manufacture or handling of explosives and other pyrotechnic products.
Section 5. Section 14 of the same Act is hereby amended to read as follows:
Sec. 14. Prohibition on the Employment of Children in Certain Advertisements. No
child shall be employed as a model in any advertisement directly or indirectly promoting
alcoholic beverages, intoxicating drinks, tobacco and its byproducts, gambling or any
form of violence or pornography.
Department Order No. 65-04 implementing Republic Act No. 9231
63
Pursuant to Section 10 of Republic Act No. 9231 (An Act Providing for the Elimination of the
Worst Forms of Child Labor and Affording Stronger Protection for the Working Child, Amending for this
Purpose Republic Act No. 7610, as amended, Otherwise Known as the Special Protection of Children
Against Child Abuse, Exploitation and Discrimination Act), the Department of Labor and Employment
issued on July 26,2004 Department Order No. 65-04, the Rules and Regulations Implementing Republic
Act No. 9231 amending R.A. 7610. The essential provisions of the said rules are as follows:
Coverage
These Rules shall cover all persons and entities engaging the services of or employing children.
(Section 1, Department Order No. 65-04, Rules and Regulations Implementing Republic Act No.
9231, Amending R.A. 7610, as Amended)
Definition of Terms
As used in the Rules, the term:
(a) Child refers to any person under 18 years of age.
(b) Child labor refers to any work or economic activity performed by a child that subjects him/her
to any form of exploitation or is harmful to his/her health and safety or physical, mental or psychosocial
development.
(c) 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 as defined in the immediately preceding sub-paragraph, and
ii. when the child below fifteen (15) years of age, (i) in work where he/she is directly under
the responsibility of his/her parents or legal guardian and where only members of the childs
family are employed; or (ii) in public entertainment or information.
Chapter III, Articles 139 to 150 has been amended by Republic Act No. 10361
According to Section 44, Article X of Republic Act No. 10361, all articles or provisions of Chapter
III (Employment of Househelpers) of Presidential Decree No. 442, as amended and renumbered by
Republic Act No. 10151, and all laws, decrees, executive orders, issuances, rules and regulations or parts
thereof inconsistent with the provisions of the said Act were repealed or modified accordingly.
Republic Act No. 10361 is an Act Instituting Policies for the Protection and Welfare of Domestic
Workers, otherwise known as Domestic Workers Act or Batas Kasambahay. It was signed on January
18, 2013 by President Benigno S. Aquino III and became effective on June 4, 2013 or fifteen (15) days
after May 19, 2013, the publication in the news papers of general circulation (The Philippine Star and the
Manila Times) of its Implementing Rules and Regulations (IRR).
Republic Act No. 10361 ("Domestic Workers Act" or "Batas Kasambahay")

2012, 2001, 2009, 2000 and 1998
Coverage
This Act applies to all domestic workers employed and working within the country. (Section 3,
Article I, Republic Act No. 10361)
Coverage
Apply to all parties to an employment contract for the services of the following
Kasambahay, whether on a live-in or live-out arrangement, such as but not limited to:
(a) General househelp;
(b) Yaya;
(c) Cook
(d) Gardener;
(e) Laundry person; or
(f) Any person who regularly performs domestic work in one household on an
occupational basis. (Section 2, Rule I, Implementing Rules and Regulations of Republic Act
10361)
64
Those not covered

The following are not covered:
(a) Service providers;
(b) Family drivers;
(c) Children under foster family arrangement; and
(d) Any other person who performs work occasionally or sporadically and not on an
occupational basis. (Section 2, Rule I, Implementing Rules and Regulations of Republic Act
10361)
Definition of Terms as provided under RA 10361

As used in this Act, the term:
(c) Domestic work refers to work performed in or for a household or households.
(d) Domestic worker or "Kasambahay" refers to any person engaged in domestic work within an
employment relationship such as, but not limited to, the following: general househelp, nursemaid or
"yaya", cook, gardener, or laundry person, but shall exclude any person who performs domestic work only
occasionally or sporadically and not on an occupational basis.
The term shall not include children who are under foster family arrangement, and are provided
access to education and given an allowance incidental to education, i.e. "baon", transportation, school
projects and school activities.
(f) Household refers to the immediate members of the family or the occupants of the house that
are directly provided services by the domestic worker. (Section 4, Article I, Republic Act No. 10361)
Rights and Privileges of Kasambahay

The rights and privileges of the Kasambahay are as follows:
(a) Minimum wage;
(b) Other mandatory benets, such as the daily and weekly rest periods, service incentive leave,
and 13th month pay;
(c) Freedom from employers' interference in the disposal of wages;
(d) Coverage under the SSS, Philhealth and Pag-ibig laws;
(e) Standard of treatment;
(f) Board, lodging and medical attendance;
(g) Right to privacy;
(h) Access to outside communication;
(i) Access to education and training;
(j) Right to form, join, or assist labor organization;
(k) Right to be provided a copy of the employment contract as required under Section 7, Rule II
of this IRR;
(l) Right to certicate of employment as required under Section 6, Rule VII of this IRR;
(m)Right to terminate the employment as provided under Section 2, Rule VII of this IRR; and
(n) Right to exercise their own religious beliefs and cultural practices. (Section 1, Rule IV,
Implementing Rules and Regulations of Republic Act No. 10361)
Termination Initiated by the Domestic Worker

The domestic worker may terminate the employment relationship at any time before the
expiration of the contract for any of the following causes:
(a) Verbal or emotional abuse of the domestic worker by the employer or any member of the
household;
(b) Inhuman treatment including physical abuse of the domestic worker by the employer or any
member of the household;
(c) Commission of a crime or offense against the domestic worker by the employer or any
member of the household;
(d) Violation by the employer of the terms and conditions of the employment contract and other
standards set forth under this law;
(e) Any disease prejudicial to the health of the domestic worker, the employer, or member/s of the
household; and
(f) Other causes analogous to the foregoing. (Section 33, Article V, Republic Act No. 10361)
65
Effect if Kasambahay leaves without cause

If the Kasambahay leaves without cause, any unpaid salary due, not exceeding the equivalent of
fteen (15) days work, shall be forfeited. In addition, the employer may recover from the Kasambahay
deployment expenses, if any, if the services have been terminated within six (6) months from
employment. (last paragraph, Section 2, Rule VII, Implementing Rules and Regulations of Republic
Act No. 10361)
Termination Initiated by the Employer

An employer may terminate the services of the domestic worker at any time before the expiration
of the contract, for any of the following causes:
(a) Misconduct or willful disobedience by the domestic worker of the lawful order of the employer
in connection with the formers work;
(b) Gross or habitual neglect or inefficiency by the domestic worker in the performance of duties;
(c) Fraud or willful breach of the trust reposed by the employer on the domestic worker;
(d) Commission of a crime or offense by the domestic worker against the person of the employer
or any immediate member of the employers family;
(e) Violation by the domestic worker of the terms and conditions of the employment contract and
other standards set forth under this law;
(f) Any disease prejudicial to the health of the domestic worker, the employer, or member/s of the
household; and
(g) Other causes analogous to the foregoing. (Section 34, Article V, Republic Act No. 10361)
Effect if employer dismissed Kasambahay without cause

2011 Bar Questions
If the employer dismissed the Kasambahay for reasons other than the above, he/she shall pay
the Kasambahay the earned compensation plus indemnity in the amount equivalent to fteen (15) days
work. (last paragraph, Section 3, Rule VII, Implementing Rules and Regulations of Republic Act No.
10361)
Homeworker
Definitions
The following terms shall have the meanings indicated hereunder:
(a) Industrial Homework is a system of production under which work for an employer or
contractor is carried out by a homework 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.
(b) Industrial Homeworker means a worker who is engaged in industrial homework. (Section 2,
Rule XIV, Book II, Omnibus Rules Implementing the Labor Code)
66

Notes On Critical Areas in Labor Law Part Ii

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CRITICAL AREAS IN LABOR LAW

General classifications of labor statutes

Basis of labor laws

Protection to labor clause under the 1987 Constitution

Verily, a line must be drawn between management prerogatives regarding business

Construction in favor of labor

Concept of management prerogatives

Criterion to guide in the exercise of management prerogatives

Outsourcing any activities as management prerogative

Test to determine whether a GOCC is subject to Civil Service Law

Employers with immunity from suit

When immunity from suit is not applicable

Interpretation of the proviso in Article 13b of the Labor Code

Constitutionality of Article 13 (b) of the Labor Code

Direct hires under the Omnibus Rules of RA 8042, as amended by RA 10022

Who may participate in the private sector

Disqualification to engage in recruitment and placement for overseas employment

Those considered with derogatory records

Qualifications for overseas recruitment and placement

Qualifications for local recruitment and placement

Jurisdiction of DOLE to suspend or cancel license or authority

Illegal recruitment constituting economic sabotage

Illegal recruitment by a syndicate, how committed

Elements of illegal recruitment by a syndicate

Illegal recruitment in a large scale, how committed

Elements of illegal recruitment in a large scale

Distinctions of illegal recruitment under RA 8042, as amended by RA 10022, and the

Coverage of alien employment permit

Apprenticeship and learnership, distinguished

In apprenticeship, the enterprise

In learnership, the enterprise is obliged to hire

In learnership, a learner allowed or suffered to

In learnership, the practical training on the job

In learnership, the law provides the following

In learnership, the occupations involves are

Apprenticeship and learnership, similarities

workforce (3.7, TESDA Circular No. 16, Series of 2004);

Definitions of terms under Republic Act No. 7277

Persons with disability as apprentices or learners

2013 and 1998 Bar Examinations

Incentives for Employer

The traditional four-fold test of employer employee relationship

The most crucial and determinative factor of employment relationship

Existence of employer-employee relationship cannot be expressly repudiated

Kind of relationship under a "boundary system" arrangement

Two-tiered test: Economic dependence test and control test

Employer-employee relationship in job contracting and labor-only contracting

Coverage of Title I of Book III (Working Conditions and Rest Periods)

Exemption from coverage of Title I, Book III of the Labor Code

Workers who are paid by results

Concept of field personnel

Interpretation of the clause "whose time and performance is unsupervised by the

Employees whose time/performance are constantly supervised by employer

Validity of compressed Work Week (CWW) scheme

If an employee is permitted or required to work in excess of his normal weekly hours

Rule involving on call

Rule on travel time

Change in the work schedule as valid exercise of management prerogative

Night Shift Differential (NSD)

Excluded from Night Shift Differential (NSD)

Overtime pay, defined

Excluded from overtime pay