SUN TZU NOTES
XIII. OTHER IMPORTANT LABOR PROVISIONS
A. CONTRACTING ARRANGEMENT
1. ARTS. 106-109 OF THE LABOR CODE
ART. 106. Contractor or subcontractor. -
Whenever an employer enters into a contract with
another person for the performance of the formers
work, the employees of the contractor and of the
latters subcontractor, if any, shall be paid in
accordance with the provisions of this Code.
In the event that the contractor or subcontractor
fails to pay the wages of his employees in
accordance with this Code, the employer shall be
jointly and severally liable with his contractor or
subcontractor to such employees to the extent of the
work performed under the contract, in the same
manner and extent that he is liable to employees
directly employed by him. (Liability of principal
exludes separation and retirement pay obligation
of the contractor)
The Secretary of Labor and Employment may, by
appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of
workers established under this Code. In so
prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job
contracting as well as differentiations within these
types of contracting and determine who among the
parties involved shall be considered the employer for
purposes of this Code, to prevent any violation or
circumvention of any provision of this Code.
There is "labor-only" contracting where the person
supplying workers to an employer does not have
substantial capital or investment in the form of tools,
equipment, machineries, work premises, among
others, and the workers recruited and placed by such
person are performing activities which are directly
related to the principal business of such employer.
(More so, if the right of control as to the means and
methods of the performance is exercised by the
principal). In such cases, the person or intermediary
shall be considered merely as an agent of the
employer who shall be responsible to the workers in
the same manner and extent as if the latter were
directly employed by him.
ART. 107. Indirect employer. - The provisions of
the immediately preceding article shall likewise apply
to any person, partnership, association or
corporation which, not being an employer, contracts
with an independent contractor for the performance
of any work, task, job or project.
ART. 108. Posting of bond. - An employer or
indirect employer may require the contractor or
subcontractor to furnish a bond equal to the cost of
labor under contract, on condition that the bond will
answer for the wages due the employees should the
contractor or subcontractor, as the case may be, fail
to pay the same.
ART. 109. Solidary liability. - The provisions of
existing laws to the contrary notwithstanding, every
employer or indirect employer shall be held responsible
with his contractor or subcontractor for any violation of
any provision of this Code. For purposes of determining the
extent of their civil liability under this Chapter, they shall
be considered as direct employers.
2. JOB CONTRACTING VS LABOR-ONLY
CONTRACTING
Job Contracting
There is contracting or subcontracting when an
employer, referred to as the principal, farms out the
performance of a part of its business to another,
referred to as the contractor or subcontractor. For the
purpose of undertaking the principals business that is
farmed out, the contractor or subcontractor then
employs its own employees.
Contracting and subcontracting are synonymous under
Philippines labor laws. The terms that is more
commonly used is subcontracting.
In subcontracting, there are three parties involved:
o The principal, which decides to farm out a
job or service to a subcontractor
o The subcontractor, which has the
capacity to independently undertake the
performance of the job or service; and
o The employees engaged by the
subcontractor to accomplish the job or
service
In subcontracting, the four-fold test of employer-
employee relationship should be satisfied by the
subcontractor in relation to the employees it engages
to accomplish the subcontracted job or service. In such
cases, the subcontractor is also referred to as
independent contractor.
If the four-fold test is satisfied not by the
subcontractor but by the principal, the principal then
becomes the employer of the employees engaged to
accomplish the job or service. What exists is not
subcontracting but a direct employer-employee
relationship between the principal and the employees.
The following are requisites of a LEGITIMATE
contracting or subcontracting:
o The contractor or subcontractor carries on
a distinct and independent business and
undertakes to perform the job, work or
service on its own account and under its
own responsibility; according to its own
manner and method, and free from the
control and directions of the principal in all
matters connected with the performance of
the work, except as to the results thereof;
(NO EE-ER relations exists)
o The contractor or subcontractor has
substantial capital or investment shown
by:
Adequacy of resources actually and
directly used
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May refer to subscribed
capital stocks for
corporations
Tools, equipments,
implements, machineries,
uniforms, protective gear or
safety devises
Operating costs such as
training and overhead costs
o The agreement between the principal
and contractor or subcontractor
assures the contractual employees to
entitlement to all labor and
occupational safety standards, free
exercise of the right to self-
organization, security of tenure, and
social welfare benefits
Labor-only Contracting
Refers to an arrangement where the
contractor or subcontractor merely recruits,
supplies or places workers to perform a job,
work or service for a principal, and any of
the following elements are present:
o The contractor or subcontractor
does not have substantial capital
or investment which relates to
the job, work or service to be
performed and 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; or
o The contractor does not exercise
the right to control over the
performance of the work of the
contractual employee
This is a prohibited practice
3. INDIVIDUAL INDEPENDENT
CONTRACTOR
Individuals with special skills, expertise or
talent enjoy the freedom to offer their
services as independent contractors.
The right to life and livelihood guarantees
this freedom to contract as independent
contractors.
The right of labor to security of tenure
cannot operate to deprive an individual to
contract as an independent contractor.
Are those who exercise independent
employment, contracting to do a piece of
work according to their own methods without
being subjected to the control of their
employer except as to the result of their
work
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4. SCOPE & NATURE OF LIABILITY OF PINCIPAL &
CONTRACTOR
In Job Contracting [first 2 paragraphs of Art. 106]
The contractor is the employer directly responsible to
the employees
The principal has limited liability. Should the contractor
fail to pay the wages, the principal is liable only to the
extent of the work performed and only with respect to
the payment of wages
The principal is jointly and severally liable with the
subcontractor for payment of all employees wages to
the extent of the work performed under the contract
The principal cannot be accused of illegal dismissal
insofar as the contractual employees are concerned
because there is no employer-employee relationship
In Labor-only Contracting [3rd and 4th paragraphs of Art.
106]
The contractor is merely and agent of the employer.
The principal and contractor will be solidarily treated as
the employer.
The principals liability is comprehensive. The liability
pertains not only to unpaid wages but extends to any
and all liability under the Labor laws
The employer is deemed to have directly hired the
contractual employees and is therefore liable for any
and all violations of the Labor Code
5. DUTIES AND OBLIGATIONS OF PRINCIPAL AND
CONTRACTOR
Under a Labor-only contracting arrangement
The following are the effects:
The subcontractor will be treated as the agent of the
principal. Since the act of an agent is the act of the
principal, representations made by the subcontractor
to the employees will bind the principal
The principal will become the employer as if it directly
employed the workers engaged to undertake the
subcontracted job or service. It will be responsible to
the for all their entitlements and benefits under the
labor laws
The principal and the subcontractor will be solidarily
treated as the employer
The employees will become employees of the principal,
subject to the classifications of employees under Art.
28 of the Labor Code
If the labor-only contracting activity is undertake by a
legitimate labor organization, a petition for cancellation of
union registration may be filed against it, pursuant to Art.
239 (e).
6. RIGHTS OF CONTRACTUAL EMPLOYEES
The contractual employee shall be entitled to all the rights
and privileges due a regular employee as provided for in
the Labor Code, as amended, to include the following:
 SUN TZU NOTES
(a) Safe and healthful working conditions;
(b) Labor standards such as service incentive leave,
rest days, overtime pay, holiday pay, 13th month
pay and separation pay;
(c) Social security and welfare benefits;
(d) Self-organization, collective bargaining and
peaceful concerted action; and
(e) Security of tenure.
The contractors employees tenure may end when
the contract between the principal and the contractor
ends.
7. OMNIBUS RULES, AS AMENDED BY DO No.
18-02, Series of 2002
RULES IMPLEMENTING ARTICLES 106 TO 109
OF THE LABOR CODE, AS AMENDED
By virtue of the power vested in the Secretary of
Labor and Employment under Articles 5 (Rule-
making) and 106 (Contractor or Subcontractor) of
the Labor Code of the Philippines, as amended, the
following regulations governing contracting and
subcontracting arrangements are hereby issued:
Section 1. Guiding principles. - Contracting and
subcontracting arrangements are expressly allowed
by law and are subject to regulation for the
promotion of employment and the observance of the
rights of workers to just and humane conditions of
work, security of tenure, self-organization, and
collective bargaining. Labor-only contracting as
defined herein shall be prohibited.
Section 2 . Coverage. - These Rules shall apply to
all parties of contracting and subcontracting
arrangements where employer-employee relationship
exists. Placement activities through private
recruitment and placement agencies as governed by
Articles 25 to 39 of the Labor Code are not covered
by these Rules.
Section 3. Trilateral Relationship in Contracting
Arrangements. - In legitimate contracting, there
exists a trilateral relationship under which there is a
contract for a specific job, work or service between
the principal and the contractor or subcontractor,
and a contract of employment between the
contractor or subcontractor and its workers.
Hence, there are three parties involved in these
arrangements, the principal which decides to farm
out a job or service to a contractor or subcontractor,
the contractor or subcontractor which has the
capacity to independently undertake the
performance of the job, work or service, and the
contractual workers engaged by the contractor or
subcontractor to accomplish the job work or service.
Section 4. Definition of Basic Terms. - The
following terms as used in these Rules, shall mean:
(a) "Contracting" or "subcontracting" refers to an
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arrangement whereby a principal agrees to put out or farm
out with a contractor or subcontractor the performance or
completion of a specific job, work or service within a
definite or predetermined period, regardless of whether
such job, work or service is to be performed or completed
within or outside the premises of the principal.
(b) "Contractor or subcontractor" refers to any person or
entity engaged in a legitimate contracting or
subcontracting arrangement.
(c) "Contractual employee" includes one employed by a
contractor or subcontractor to perform or complete a job,
work or service pursuant to an arrangement between the
latter and a principal.
(d) "Principal" refers to any employer who puts out or
farms out a job, service or work to a contractor or
subcontractor.
Section 5. Prohibition against labor-only contracting.
- Labor-only contracting is hereby declared prohibited. For
this purpose, labor-only contracting shall refer to an
arrangement where the contractor or subcontractor merely
recruits, supplies or places workers to perform a job, work
or service for a principal, and any of the following elements
are present:
(i) The contractor or subcontractor does not have
substantial capital or investment which relates to the job,
work or service to be performed and 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; or
(ii) the contractor does not exercise the right to control
over the performance of the work of the contractual
employee.
The foregoing provisions shall be without prejudice to the
application of Article 248 (C ) of the Labor Code, as
amended.
"Substantial capital or investment" refers to capital stocks
and subscribed capitalization in the case of corporations,
tools, equipment, implements, machineries and work
premises, actually and directly used by the contractor or
subcontractor in the performance or completion of the job,
work or service contracted out.
The "right to control" shall refer to the right reserved to
the person for whom the services of the contractual
workers are performed, to determine not only the end to
be achieved, but also the manner and means to be used in
reaching that end.
Section 6. Prohibitions. - Notwithstanding Section 5 of
these Rules, the following are hereby declared prohibited
for being contrary to law or public policy:
(a) Contracting out of a job, work or service when not
done in good faith and not justified by the exigencies of
the business and the same results in the termination of
regular employees and reduction of work hours or
reduction or splitting of the bargaining unit;
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(b) Contracting out of work with a "cabo" as defined
in Section 1 (ii), Rule I, Book V of these Rules.
"Cabo" refers to a person or group of persons or to a
labor group which, in the guise of a labor
organization, supplies workers to an employer, with
or without any monetary or other consideration
whether in the capacity of an agent of the employer
or as an ostensible independent contractor;
(c) Taking undue advantage of the economic
situation or lack of bargaining strength of the
contractual employee, or undermining his security of
tenure or basic rights, or circumventing the
provisions of regular employment, in any of the
following instances:
(i) In addition to his assigned functions, requiring the
contractual employee to perform functions which are
currently being performed by the regular employees
of the principal or of the contractor or subcontractor;
(ii) Requiring him to sign, as a precondition to
employment or continued employment, an antedated
resignation letter; a blank payroll; a waiver of labor
standards including minimum wages and social or
welfare benefits; or a quitclaim releasing the
principal, contractor or subcontractor from any
liability as to payment of future claims; and
(iii) Requiring him to sign a contract fixing the period
of employment to a term shorter than the term of
the contract between the principal and the contractor
or subcontractor, unless the latter contract is
divisible into phases for which substantially different
skills are required and this is made known to the
employee at the time of engagement;
(d) Contracting out of a job, work or service through
an in-house agency which refers to a contractor or
subcontractor engaged in the supply of labor which is
owned, managed or controlled by the principal and
which operates solely for the principal;
(e) Contracting out of a job, work or service directly
related to the business or operation of the principal
by reason of a strike or lockout whether actual or
imminent;
(f) Contracting out of a job, work or service being
performed by union members when such will
interfere with, restrain or coerce employees in the
exercise of their rights to self organization as
provided in Art. 248 (c) of the Labor Code, as
amended.
Section 7. Existence of an employer-employee
relationship. - The contractor or subcontractor shall
be considered the employer of the contractual
employee for purposes of enforcing the provisions of
the Labor Code and other social legislation. The
principal, however, shall be solidarily liable with
the contractor in the event of any violation of any
provision of the Labor Code, including the failure to
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pay wages.
The principal shall be deemed the employer of the
contractual employee in any of the following cases as
declared by a competent authority:
(a) where there is labor-only contracting; or
(b) where the contracting arrangement falls within the
prohibitions provided in Section 6 (Prohibitions) hereof.
Section 8. Rights of Contractual Employees. -
Consistent with Section 7 of these Rules, the contractual
employee shall be entitled to all the rights and privileges
due a regular employee as provided for in the Labor Code,
as amended, to include the following:
(a) Safe and healthful working conditions;
(b) Labor standards such as service incentive leave, rest
days, overtime pay, holiday pay, 13th month pay and
separation pay;
(c) Social security and welfare benefits;
(d) Self-organization, collective bargaining and peaceful
concerted action; and
(e) Security of tenure.
Section 9. Contract between contractor or
subcontractor and contractual employee.
- Notwithstanding oral or written stipulations to the
contrary, the contract between the contractor or
subcontractor and the contractual employee, which shall
be in writing, shall include the following terms and
conditions:
(a) The specific description of the job, work or service to
be performed by the contractual employee;
(b) The place of work and terms and conditions of
employment, including a statement of the wage rate
applicable to the individual contractual employee; and
(c) The term or duration of employment, which shall be
coextensive with the contract of the principal and
subcontractor, or with the specific phase for which the
contractual employee is engaged, as the case may be.
The contractor or subcontractor shall inform the
contractual employee of the foregoing terms and
conditions on or before the first day of his employment.
Section 10. Effect of Termination of Contractual
Employment. - In cases of termination of employment
prior to the expiration of the contract between the principal
and the contractor or subcontractor, the right of the
contractual employee to separation pay or other related
benefits shall be governed by the applicable laws and
jurisprudence on termination of employment.
Where the termination results from the expiration of the
contract between the principal and the contractor or
subcontractor, or from the completion of the phase of the
job, work or service for which the contractual employee is
engaged, the latter shall not be entitled to separation pay.
However, this shall be without prejudice to completion
bonuses or other emoluments, including retirement pay as
may be provided by law or in the contract between the
principal and the contractor or subcontractor.
 SUN TZU NOTES
Section 11. Registration of Contractors or
Subcontractors. - Consistent with the authority of
the Secretary of Labor and Employment to restrict or
prohibit the contracting out of labor through
appropriate regulations, a registration system to
govern contracting arrangements and to be
implemented by the Regional Offices is hereby
established.
The registration of contractors and subcontractors
shall be necessary for purposes of establishing an
effective labor market information and monitoring.
Failure to register shall give rise to the presumption
that the contractor is engaged in labor-only
contracting.
Section 12. Requirements for registration. - A
contractor or subcontractor shall be listed in the
registry of contractors and subcontractors upon
completion of an application form to be provided by
the DOLE. The applicant contractor or subcontractor
shall provide in the application form the following
information:
(a) The name and business address of the applicant
and the area or areas where it seeks to operate;
(b) The names and addresses of officers, if the
applicant is a corporation, partnership, cooperative
or union;
(c) The nature of the applicant's business and the
industry or industries where the applicant seeks to
operate;
(d) The number of regular workers; the list of
clients, if any; the number of personnel assigned to
each client, if any and the services provided to the
client;
(e) The description of the phases of the contract and
the number of employees covered in each phase,
where appropriate; and
(f) A copy of audited financial statements if the
applicant is a corporation, partnership, cooperative
or a union, or copy of the latest ITR if the applicant
is a sole proprietorship. The application shall be
supported by:
(a) A certified copy of a certificate of registration of
firm or business name from the Securities and
Exchange Commission (SEC), Department of Trade
and Industry (DTI), Cooperative Development
Authority (CDA), or from the DOLE if the applicant is
a union; and
(b) A certified copy of the license or business permit
issued by the local government unit or units where
the contractor or subcontractor operates.
The application shall be verified and shall include an
undertaking that the contractor or subcontractor
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shall abide by all applicable labor laws and regulations.
Section 13. Filing and processing of applications. -
The application and its supporting documents shall be filed
in triplicate in the Regional Offices where the applicant
principally operates. No application for registration shall be
accepted unless all the foregoing requirements are
complied with. The contractor or subcontractor shall be
deemed registered upon payment of a registration fee of
P100.00 to the Regional Office.
Where all the supporting documents have been submitted,
the Regional Office shall deny or approve the application
within seven (7) working days after its filing.
Upon registration, the Regional Office shall return one set
of the duly-stamped application documents to the
applicant, retain one set for its file, and transmit the
remaining set to the Bureau of Local Employment. The
Bureau shall devise the necessary forms for the
expeditious processing of all applications for registration.
Section 14. Duty to produce copy of contract
between the principal and the contractor or
subcontractor. - The principal or the contractor or
subcontractor shall be under an obligation to produce a
copy of the contract between the principal and the
contractor in the ordinary course of inspection. The
contractor shall likewise be under an obligation to produce
a copy of the contract of employment of the contractual
worker when directed to do so by the Regional Director or
his authorized representative.
A copy of the contract between the contractual employee
and the contractor or subcontractor shall be furnished the
certified bargaining agent, if there is any.
Section 15. Annual Reporting of Registered
Contractors. - The contractor or subcontractor shall
submit in triplicate its annual report using a prescribed
form to the appropriate Regional Office not later than the
15th of January of the following year. The report shall
include:
(a) A list of contracts entered with the principal during the
subject reporting period;
(b) The number of workers covered by each contract with
the principal;
(c) A sworn undertaking that the benefits from the Social
Security System (SSS), the Home Development Mutual
Fund (HDMF), PhilHealth, Employees Compensation
Commission (ECC), and remittances to the Bureau of
Internal Revenue (BIR) due its contractual employees have
been made during the subject reporting period.
The Regional Office shall return one set of the duly-
stamped report to the contractor or subcontractor, retain
one set for its file, and transmit the remaining set to the
Bureau of Local Employment within five (5) days from
receipt thereof.
Section 16. Delisting of contractors or
 SUN TZU NOTES
subcontractors. - Subject to due process, the
Regional Director shall cancel the registration of
contractors or subcontractors based on any of the
following grounds:
(a) Non-submission of contracts between the
principal and the contractor or subcontractor when
required to do so;
(b) Non-submission of annual report;
(c) Findings through arbitration that the contractor
or subcontractor has engaged in labor-only
contracting and the prohibited activities as provided
in Section 6 (Prohibitions) hereof; and
(d) Non-compliance with labor standards and
working conditions.
Section 17. Renewal of registration of
contractors or subcontractors. - All registered
contractors or subcontractors may apply for renewal
of registration every three years. For this purpose,
the Tripartite Industrial Peace Council (TIPC) as
created under Executive Order No. 49, shall serve as
the oversight committee to verify and monitor the
following:
(a) Engaging in allowable contracting activities; and
(b) Compliance with administrative reporting
requirements.
Section 18. Enforcement of Labor Standards
and Working Conditions. - Consistent with Article
128 (Visitorial and Enforcement Power) of the Labor
Code, as amended, the Regional Director through his
duly authorized representatives, including labor
regulation officers shall have the authority to
conduct routine inspection of establishments
engaged in contracting or subcontracting and shall
have access to employer's records and premises at
any time of the day or night whenever work is being
undertaken therein, and the right to copy therefrom,
to question any employee and investigate any fact,
condition or matter which may be necessary to
determine violations or which may aid in the
enforcement of the Labor Code and of any labor law,
wage order, or rules and regulations issued pursuant
thereto.
The findings of the duly authorized representative
shall be referred to the Regional Director for
appropriate action as provided for in Article 128, and
shall be furnished the collective bargaining agent, if
any.
Based on the visitorial and enforcement power of the
Secretary of Labor and Employment in Article 128
(a), (b), (c) and (d), the Regional Director shall issue
compliance orders to give effect to the labor
standards provisions of the Labor Code, other labor
legislation and these guidelines.
Section 19. Solidary liability. - The principal shall
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be deemed as the direct employer of the contractual
employees and therefore, solidarily liable with the
contractor or subcontractor for whatever monetary claims
the contractual employees may have against the former in
the case of violations as provided for in Sections 5 (Labor-
Only contracting), 6 (Prohibitions), 8 (Rights of Contractual
Employees) and 16 (Delisting) of these Rules. In addition,
the principal shall also be solidarily liable in case the
contract between the principal and contractor or
subcontractor is preterminated for reasons not attributable
to the fault of the contractor or subcontractor.
Section 20. Supersession. - All rules and regulations
issued by the Secretary of Labor and Employment
inconsistent with the provisions of this Rule are hereby
superseded.
Contracting or subcontracting arrangements in the
construction industry, under the licensing coverage of the
PCAB and shall not include shipbuilding and ship repairing
works, however, shall continue to be governed by
Department Order No. 19, series of
1993.
Section 21. Effectivity. - This Order shall be effective
fifteen (15) days after completion of its publication in two
(2) newspapers of general circulation.
8. DOLE Department Circular, No. 1, Series of 2007
--Hiring of cooperatives
An independent contractor may be:
a. an individual person or
b. an organization which must be registered
1. Corporation SEC
2. Partnership SEC
3. Union DOLE
4. Cooperative CDA and DOLE
If any of these organizations engages in labor contracting,
it must comply with DO No. 18-02 particularly its
requirement of registration. Non-registration creates the
presumption that the purported contractor is engaged in
labor-only contracting.
DO No 1 series of 2007 clarified the applicability of DO No.
18 to COOPERATIVES.
--Members of cooperatives as owners and not
employees
Cooperatives organized under RA 6938, otherwise known
as The Cooperative Code of the Philippines are
composed of members. Members of cooperatives are not
employees. As such, issues on termination of their
membership with the cooperative do not fall within the
jurisdiction of the Labor Arbiter.
9. WAGE INCREASES; LEGISLATED AND
CONTRACTUAL; EFFECT ON PRINCIPAL &
CONTRACTORS LIABILITY [RA 6727]
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AN ACT TO RATIONALIZE WAGE POLICY
DETERMINATION BY ESTABLISHING THE
MECHANISM AND PROPER STANDARDS
THEREFOR, AMENDING FOR THE PURPOSE
ARTICLE 99 OF, AND INCORPORATING
ARTICLES 120, 121, 122, 123, 124, 126 AND
127 INTO, PRESIDENTIAL DECREE NO. 442, AS
AMENDED, OTHERWISE KNOWN AS THE LABOR
CODE OF THE PHILIPPINES, FIXING NEW WAGE
RATES, PROVIDING WAGE INCENTIVES FOR
INDUSTRIAL DISPERSAL TO THE
COUNTRYSIDE, AND FOR OTHER PURPOSES
SECTION 1. This Act shall be known as the "Wage
Rationalization Act."
Section 2. It is hereby declared the policy of the
State to rationalize the fixing of minimum wages and
to promote productivity-improvement and gain-
sharing measures to ensure a decent standard of
living for the workers and their families; to
guarantee the rights of labor to its just share in the
fruits of production; to enhance employment
generation in the countryside through industry
dispersal; and to allow business and industry
reasonable returns on investment, expansion and
growth.
The State shall promote collective bargaining as the
primary mode of settling wages and other terms and
conditions of employment; and whenever necessary,
the minimum wage rates shall be adjusted in a fair
and equitable manner, considering existing regional
disparities in the cost of living and other socio-
economic factors and the national economic and
social development plans.
Section 3. In line with the declared policy under this
Act, Article 99 of Presidential Decree No. 442, as
amended, is hereby amended and Articles 120, 121,
122, 123, 124, 126 and 127 are hereby incorporated
into Presidential Decree No. 442, as amended, to
read as follows:
"Art. 99. Regional Minimum Wages. The minimum
wage rates for agricultural and non-agricultural
employees and workers in each and every region of
the country shall be those prescribed by the Regional
Tripartite Wages and Productivity Boards."
"Art. 120. Creation of the National Wages and
Productivity Commission. There is hereby created
a National Wages and Productivity Commission,
hereinafter referred to as the Commission, which
shall be attached to the Department of Labor and
Employment (DOLE) for policy and program
coordination."
"Art. 121. Powers and Functions of the Commission.
The Commission shall have the following powers
and functions:
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"(a) To act as the national consultative and advisory body
to the President of the Philippines and Congress on matters
relating to wages, incomes and productivity;
"(b) To formulate policies and guidelines on wages,
incomes and productivity improvement at the enterprise,
industry and national levels;
"(c) To prescribe rules and guidelines for the determination
of appropriate minimum wage and productivity measures
at the regional, provincial or industry levels;
"(d) To review regional wage levels set by the Regional
Tripartite Wages and Productivity Boards to determine if
these are in accordance with prescribed guidelines and
national development plans;
"(e) To undertake studies, researches and surveys
necessary for the attainment of its functions and
objectives, and to collect and compile data and periodically
disseminate information on wages and productivity and
other related information, including, but not limited to,
employment, cost-of-living, labor costs, investments and
returns;
"(f) To review plans and programs of the Regional
Tripartite Wages and Productivity Boards to determine
whether these are consistent with national development
plans;
"(g) To exercise technical and administrative supervision
over the Regional Tripartite Wages and Productivity
Boards;
"(h) To call, from time to time, a national tripartite
conference of representatives of government, workers and
employers for the consideration of measures to promote
wage rationalization and productivity; and
"(i) To exercise such powers and functions as may be
necessary to implement this Act.
"The Commission shall be composed of the Secretary of
Labor and Employment as ex-officio chairman, the
Director-General of the National Economic and
Development Authority (NEDA) as ex-officio vice-chairman,
and two (2) members each from workers and employers
sectors who shall be appointed by the President of the
Philippines upon recommendation of the Secretary of Labor
and Employment to be made on the basis of the list of
nominees submitted by the workers and employers
sectors, respectively, and who shall serve for a term of five
(5) years. The Executive Director of the Commission shall
also be a member of the Commission.
"The Commission shall be assisted by a Secretariat to be
headed by an Executive Director and two (2) Deputy
Directors, who shall be appointed by the President of the
Philippines, upon the recommendation of the Secretary of
Labor and Employment.
"The Executive Director shall have the same rank, salary,
benefits and other emoluments as that of a Department
Assistant Secretary, while the Deputy Directors shall have
 SUN TZU NOTES
the same rank, salary, benefits and other
emoluments as that of a Bureau Director. The
members of the Commission representing labor and
management shall have the same rank, emoluments,
allowances and other benefits as those prescribed by
law for labor and management representatives in the
Employees' Compensation Commission.
"Art. 122. Creation of Regional Tripartite Wages and
Productivity Boards. There is hereby created
Regional Tripartite Wages and Productivity Boards,
hereinafter referred to as Regional Boards, in all
regions, including autonomous regions as may be
established by law. The Commission shall determine
the offices/headquarters of the respective Regional
Boards.
"The Regional Boards shall have the following powers
and functions in their respective territorial
jurisdiction:
"(a) To develop plans, programs and projects
relative to wages, incomes and productivity
improvement for their respective regions;
"(b) To determine and fix minimum wage rates
applicable in their region, provinces or industries
therein and to issue the corresponding wage orders,
subject to guidelines issued by the Commission;
"(c) To undertake studies, researches and surveys
necessary for the attainment of their functions,
objectives and programs, and to collect and compile
data on wages, incomes, productivity and other
related information and periodically disseminate the
same;
"(d) To coordinate with the other Regional Boards as
may be necessary to attain the policy and intention
of this Code;
"(e) To receive, process and act on applications for
exemption from prescribed wage rates as may be
provided by law or any Wage Order; and
"(f) To exercise such other powers and functions as
may be necessary to carry out their mandate under
this Code.
Implementation of the plans, programs and projects
of the Regional Boards referred to in the second
paragraph, letter (a) of this Article, shall be through
the respective regional offices of the Department of
Labor and Employment within their territorial
jurisdiction; Provided, however, That the Regional
Boards shall have technical supervision over the
regional office of the Department of Labor and
Employment with respect to the implementation of
said plans, programs and projects.
"Each Regional Board shall be composed of the
Regional Director of the Department of Labor and
Employment as chairman, the Regional Directors of
the National Economic and Development Authority
and the Department of Trade and Industry as vice-
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chairmen and two (2) members each from workers and
employers sectors who shall be appointed by the President
of the Philippines, upon the recommendation of the
Secretary of Labor and Employment, to be made on the
basis of the list of nominees submitted by the workers and
employers sectors, respectively, and who shall serve for a
term of five (5) years.
"Each Regional Board to be headed by its chairman shall
be assisted by a Secretariat.
"Art. 123. Wage Order. Whenever conditions in the
region so warrant, the Regional Board shall investigate and
study all pertinent facts; and based on the standards and
criteria herein prescribed, shall proceed to determine
whether a Wage Order should be issued. Any such Wage
Order shall take effect after fifteen (15) days from its
complete publication in at least one (1) newspaper of
general circulation in the region.
"In the performance of its wage determining functions, the
Regional Board shall conduct public hearings/consultations,
giving notices to employees' and employers' groups,
provincial, city and municipal officials and other interested
parties.
"Any party aggrieved by the Wage Order issued by the
Regional Board may appeal such order to the Commission
within ten (10) calendar days from the publication of such
order. It shall be mandatory for the Commission to decide
such appeal within sixty (60) calendar days from the filing
thereof.
"The filing of the appeal does not stay the order unless the
person appealing such order shall file with the Commission
an undertaking with a surety or sureties satisfactory to the
Commission for the payment to the employees affected by
the order of the corresponding increase, in the event such
order is affirmed."
"Art. 124. Standards/Criteria for Minimum Wage Fixing.
The regional minimum wages to be established by the
Regional Board shall be as nearly adequate as is
economically feasible to maintain the minimum standards
of living necessary for the health, efficiency and general
well-being of the employees within the framework of the
national economic and social development program. In the
determination of such regional minimum wages, the
Regional Board shall, among other relevant factors,
consider the following:
"(a) The demand for living wages;
"(b) Wage adjustment vis-a-vis the consumer price index;
"(c) The cost of living and changes or increases therein;
"(d) The needs of workers and their families;
"(e) The need to induce industries to invest in the
countryside;
"(f) Improvements in standards of living;
 SUN TZU NOTES
"(g) The prevailing wage levels;
"(h) Fair return of the capital invested and capacity
to pay of employers;
"(i) Effects on employment generation and family
income; and
"(j) The equitable distribution of income and wealth
along the imperatives of economic and social
development.
"The wages prescribed in accordance with the
provisions of this Title shall be the standard
prevailing minimum wages in every region. These
wages shall include wages varying within industries,
provinces or localities if in the judgment of the
Regional Board conditions make such local
differentiation proper and necessary to effectuate the
purpose of this Title.
"Any person, company, corporation, partnership or
any other entity engaged in business shall file and
register annually with the appropriate Regional
Board, Commission and the National Statistics Office
an itemized listing of their labor component,
specifying the names of their workers and employees
below the managerial level, including learners,
apprentices and disabled/handicapped workers who
were hired under the terms prescribed in the
employment contracts, and their corresponding
salaries and wages.
"Where the application of any prescribed wage
increase by virtue of 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
arbitrator or panel of voluntary arbitrators within ten
(10) calendar days from the time said dispute was
referred to voluntary arbitration.
"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.
"The pendency of a dispute arising from a wage
distortion shall not in any way delay the applicability
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of any increase in prescribed wage rates pursuant to the
provisions of law or Wage Order.
"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.
"All workers paid by result, including those who are paid
on piecework, takay, pakyaw or task basis, shall receive
not less than the prescribed wage rates per eight (8) hours
work a day, or a proportion thereof for working less than
eight (8) hours.
"All recognized learnership and apprenticeship agreements
shall be considered automatically modified insofar as their
wage clauses are concerned to reflect the prescribed wage
rates."
"Art. 126. Prohibition Against Injunction. No preliminary
or permanent injunction or temporary restraining order
may be issued by any court, tribunal or other entity
against any proceedings before the Commission or the
Regional Boards."
"Art. 127. Non-diminution of Benefits. No Wage Order
issued by any Regional Board shall provide for wage rates
lower than the statutory minimum wage rates prescribed
by Congress."
Section 4. (a) Upon the effectivity of this Act, the
statutory minimum wage rates of all workers and
employees in the private sector, whether agricultural or
non-agricultural, shall be increased by twenty-five pesos
(P25.00) per day, except that workers and employees in
plantation agricultural enterprises outside of the National
Capital Region (NCR) with an annual gross sales of less
than five million pesos (P5,000,000.00) in the preceding
year shall be paid an increase of twenty pesos (P20.00),
and except further that workers and employees of
cottage/handicraft industries, non-plantation agricultural
enterprises, retail/service establishments regularly
employing not more than ten (10) workers, and business
enterprises with a capitalization of not more than five
hundred thousand pesos (P500,000.00) and employing not
more than twenty (20) employees, which are located or
operating outside the NCR, shall be paid only an increase
of fifteen pesos (P15.00): Provided, That those already
receiving above the minimum wage rates up to one
hundred pesos (P100.00) shall also receive an increase of
twenty-five pesos (P25.00) per day, except that the
workers and employees mentioned in the first exception
clause of this Section shall also be paid only an increase of
twenty pesos (P20.00), and except further that those
employees enumerated in the second exception clause of
this Section shall also be paid an increase of fifteen pesos
(P15.00): Provided, further, That the appropriate Regional
Board is hereby authorized to grant additional increases to
the workers and employees mentioned in the exception
clauses of this Section if, on the basis of its determination
 SUN TZU NOTES
pursuant to Article 124 of the Labor Code such
increases are necessary.
(b) The increase of twenty-five pesos (P25.00)
prescribed under this Section shall apply to all
workers and employees entitled to the same in
private educational institutions as soon as they have
increased or are granted authority to increase their
tuition fees during school year 1989-1990.
Otherwise, such increase shall be so applicable not
later than the opening of the next school year
beginning 1990.
(c) Exempted from the provisions of this Act are
household or domestic helpers and persons
employed in the personal service of another,
including family drivers.
Retail/service establishments regularly employing
not more than ten (10) workers may be exempted
from the applicability of this Act upon application
with and as determined by the appropriate Regional
Board in accordance with the applicable rules and
regulations issued by the Commission. Whenever an
application for exemption has been duly filed with
the appropriate Regional Board, action on any
complaint for alleged non-compliance with this Act
shall be deferred pending resolution of the
application for exemption by the appropriate
Regional Board.
In the event that applications for exemptions are not
granted, employees shall receive the appropriate
compensation due them as provided for by this Act
plus interest of one per cent (1%) per month
retroactive to the effectivity of this Act.
(d) If expressly provided for and agreed upon in the
collective bargaining agreements, all increases in the
daily basic wage rates granted by the employers
three (3) months before the effectivity of this Act
shall be credited as compliance with the increases in
the wage rates prescribed herein, provided that,
where such increases are less than the prescribed
increases in the wage rates under this Act, the
employer shall pay the difference. Such increases
shall not include anniversary wage increases, merit
wage increases and those resulting from the
regularization or promotion of employees.
Where the application of the increases in the wage
rates under this Section results in distortions as
defined under existing laws in the wage structure
within an establishment and gives rise to a dispute
therein, such dispute shall first be settled voluntarily
between the parties and in the event of a deadlock,
the same shall be finally resolved through
compulsory arbitration by the regional branches of
the National Labor Relations Commission (NLRC)
having jurisdiction over the workplace.
It shall be mandatory for the NLRC to conduct
continuous hearings and decide any dispute arising
under this Section within twenty (20) calendar days
10 of 132
from the time said dispute is formally submitted to it for
arbitration. The pendency of a dispute arising from a wage
distortion shall not in any way delay the applicability of the
increase in the wage rates prescribed under this Section.
Section 5. Within a period of four (4) years from the
effectivity of this Act and without prejudice to collective
bargaining negotiations or agreements or other
employment contracts between employers and workers,
new business enterprises that may be established outside
the NCR and export processing zones whose operation or
investments need initial assistance as may be determined
by the Department of Labor and Employment in
consultation with the Department of Trade and Industry or
the Department of Agriculture, as the case may be, shall
be exempt from the applicability of this Act for not more
than three (3) years from the start of their operations:
Provided, That such new business enterprises established
in Region III (Central Luzon) and Region IV (Southern
Tagalog) shall be exempt from such increases only for two
(2) years from the start of their operations, except those
established in the Provinces of Palawan, Oriental Mindoro,
Occidental Mindoro, Marinduque, Romblon, Quezon and
Aurora, which shall enjoy such exemption for not more
than three (3) years from the start of their operations.
Section 6. In the case of contracts for construction
projects and for security, janitorial and similar services,
the prescribed increases in the wage rates of the workers
shall be borne by the principals or clients of the
construction/service contractors and the contract shall be
deemed amended accordingly. In the event, however, that
the principal or client fails to pay the prescribed wage
rates, the construction/service contractor shall be jointly
and severally liable with his principal or client.
Section 7. Upon written permission of the majority of the
employees or workers concerned, all private
establishments, companies, businesses, and other entities
with twenty five (25) or more employees and located
within one (1) kilometer radius to a commercial, savings or
rural bank shall pay the wages and other benefits of their
employees through any of said banks and within the period
of payment of wages fixed by Presidential Decree No. 442,
as amended, otherwise known as the Labor Code of the
Philippines.
Section 8. Whenever applicable and upon request of a
concerned worker or union, the bank shall issue a
certification of the record of payment of wages of a
particular worker or workers for a particular payroll period.
Section 9. The Department of Labor and Employment
shall conduct inspections as often as possible within its
manpower constraint of the payroll and other financial
records kept by the company or business to determine
whether the workers are paid the prescribed minimum
wage rates and other benefits granted by law or any Wage
Order. In unionized companies, the Department of Labor
and Employment inspectors shall always be accompanied
by the president or any responsible officer of the
recognized bargaining unit or of any interested union in
the conduct of the inspection. In non-unionized companies,
establishments or businesses, the inspection should be
 SUN TZU NOTES
carried out in the presence of a worker representing
the workers in the said company. The workers'
representative shall have the right to submit his own
findings to the Department of Labor and Employment
and to testify on the same if he cannot concur with
the findings of the labor inspector.
Section 10. The funds necessary to carry out the
provisions of this Act shall be taken from the
Compensation and Organizational Adjustment Fund,
the Contingent Fund, and other savings under the
Republic Act No. 6688, otherwise known as the
General Appropriations Act of 1989, or from any
unappropriated funds of the National Treasury:
Provided, That the funding requirements necessary
to implement this Act shall be included in the annual
General Appropriations Act for the succeeding years.
Section 11. The National Wages Council created
under Executive Order No. 614 and the National
Productivity Commission created under Executive
Order No. 615 are hereby abolished. All properties,
records, equipment, buildings, facilities, and other
assets, liabilities and appropriations of and belonging
to the abovementioned offices, as well as other
matters pending therein, shall be transferred to the
Commission. All personnel of the above abolished
offices shall continue to function in a holdover
capacity and shall be preferentially considered for
appointments to or placement in the Commission.
Any official or employee separated from the service
as a result of the abolition of office pursuant to this
Act shall be entitled to appropriate separation pay
and retirement and other benefits accruing to them
under existing laws. In lieu, thereof, at the option of
the employee, he shall be preferentially considered
for employment in the government or in any of its
subdivisions, instrumentalities, or agencies, including
government-owned or controlled corporations and
their subsidiaries.
Section 12. Any person, corporation, trust, firm,
partnership, association or entity which refuses or
fails to pay any of the prescribed increases or
adjustments in the wage rates made in accordance
with this Act shall be punished by a fine not
exceeding twenty five thousand pesos (P25,000.00)
and/or imprisonment of not less than one (1) year
nor more than two (2) years: Provided, That any
person convicted under this Act shall not be entitled
to the benefits provided for under the Probations
Law.
If the violation is committed by a corporation, trust
or firm, partnership, association or any other entity,
the penalty of imprisonment shall be imposed on the
entity's responsible officers, including, but not
limited to, the president, vice-president, chief
executive officer, general manager, managing
director or partner.
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Section 13. The Secretary of Labor and Employment shall
promulgate the necessary rules and regulations to
implement the provisions of this Act.
Section 14. Al laws, orders, issuances, rules and
regulations or parts thereof inconsistent with the
provisions of this Act are hereby repealed, amended or
modified accordingly. If any provision or part of this Act, or
the application thereof to any person or circumstance, is
held invalid or unconstitutional, the remainder of this Act
or the application of such provision or part thereof to other
persons or circumstances shall not be affected thereby.
Nothing in this Act shall be construed to reduce any
existing wage rates, allowances and benefits of any form
under existing laws, decrees, issuances, executive orders,
and/or under any contract or agreement between the
workers and the employers.
Section 15. This Act take effect fifteen (15) days after its
complete publication in the Official Gazette or in at least
two (2) national newspapers of general circulation,
whichever comes earlier.
10. DO No. 14 Series of 2001 (Employment and
Working Conditions of Security Guards)
SECTION 1. Coverage. - This issuance shall apply to all
private security agencies or operators, their principals or
clients, all companies allowed to directly employ security
guards and to all security guards, whether agency or
company employees, for compliance and entitlement,
respectively, to existing labor standards laws and benefits.
Sec. 2. Definition of terms. - For the purpose of this
Guidelines, the following terms are defined:
a. "Principal" refers to any employer, company or
establishment to whom a security job, service or work is
provided by a security service contractor, whether or not
the arrangement is covered by a written contract.
b. "Security service contractor" is synonymous with a
private security agency which means any person,
association, partnership, firm or private corporation, who
contracts, recruits, trains, furnishes or posts any security
guard or similar personnel to individuals, corporations,
offices and organizations, whether private or public, for
their security needs as the Philippine National Police may
approve.
Sec. 3. Employment status. -
3.1 Employer-employee relationship. - The security service
contractor is the employer of its security guard and similar
personnel. The principal where the security guards are as-
signed is considered an "indirect employer" for unpaid
wages and other wage related benefits based on the joint
and several liability of the principal with the service
contractor under the Labor Code, unless the private
security agency is owned, managed or controlled by the
principal or the facts show that the principal controls the
manner by which the security service is performed or
where the security guard is directly hired by the

establishment.
3.2 Probationary employment. - The probationary
period of a newly hired security guard or similar
personnel in the private security industry shall not
exceed six (6) months. While engaged on
probationary basis, his/her services may be
terminated for failure to meet the reasonable
standards or criteria made known by the security
agency/employer to the guard at the time of
engagement or for just cause/s.
3.3 Regular employment. - Any security guard or
similar personnel in the private se-curity industry
who is allowed to work after the probationary period
shall be considered a regular employee.
Sec. 4. Service contracts. - The security service
contractor and/or the principal shall produce or
submit the original copy of their service contract
when directed to do so by the Regional Director or
his/her duly authorized representative. The service
contract shall stipulate, among others:
a. A statement that the security guards/personnel
shall be paid not less than the minimum wage and
other benefits under the Labor Code and other
existing laws;
b. An escalation clause to immediately effect the
common provision in the wage orders that the
prescribed increase in the wage rates of the workers
shall be borne by the principal or client of the service
contractors and the contracts shall be deemed
amended accordingly.
c. A statement that security service contractor
and/or the principal shall comply with Social
Security, Employees Compensation, Philippine Health
Insurance Corporation and Home Development
Mutual Fund laws on employees' coverage or
membership.
d. The kind or nature of security service.
e. The schedule of payment of 13th month pay per
P. D. 851 and retirement pay per R. A. 7641.
Sec. 5. Employment contracts. -
5.1 The security service contractor shall provide his
security guards, detachment
commanders/supervisors and other security
personnel, a copy of the employment contract duly
signed by the parties which shall contain the terms
and conditions of employment, such as those
provided under Section 5 hereof.
5.2 For every assignment of a security
guard/personnel to a principal, the duty detail order
shall contain the following, among others:
a. Description of job, work or service to
performed
SUN TZU NOTES
b. Hours and days of work, work shift and applicable
premium, overtime and night shift pay rates.
Sec. 6. Terms and conditions of employment. -
6.1 The security guards and similar personnel in the
employ of any private security agency or company should
be duly licensed and must have passed the physical and
neuro-psychiatric examinations required by the PNP. They
are entitled to the mandatory benefits under the Labor
Code and other existing laws, including coverage by SSS,
ECC, Philhealth and HDMF.
6.2 The basic wage rate of a security guard/personnel shall
not be less than the minimum wage rate for the non-
agricultural sector in the
Region where he/she is assigned, regardless of the nature
of business of the principal, or in the Region where the
security guard has been engaged, whichever is higher.
Where a security guard/personnel is recruited through a
branch office in another Region where the principal is
likewise located, the non- agricultural minimum wage rate
applicable in the workplace of the principal shall govern.
Security guards or other personnel employed and/or
assigned by a security service contractor in one Region but
who are transferred, moved or assigned to another Region
shall be paid based on the more beneficial wage rate.
In case of transfer or reassignment to another principal
within a Region, the wage rates may be adjusted provided
that the same shall not be less than the applicable regional
minimum wage rate.
6.3. Statutory Benefits. - The security guards/personnel
are entitled to not less than the following benefits
depending on the working hours, work shift and workdays
under the given conditions, which benefits should be
included in the cost distribution in the service contract:
a. Basic salary for all actual workdays and for the ten
regular holidays (as holiday pay) which must not be lower
than the minimum wage rates above described and to be
computed by using the factors recommended herein or by
more favorable practice of the employer. In addition, one
hundred percent
(100%) of the basic salary is due whenever work is
rendered on a regular holiday.
b. Allowance in addition to the basic salary, if any, is
prescribed by the applicable Regional Wage Order.
c. Premium pay of 30% of the daily rate for work on
special days and rest days, which is increased to 50%
whenever work is performed on coinciding rest days and
special days.
d. Overtime pay for work rendered in excess of eight
(8) hours a day, equivalent to at least 25% of the regular
wage rate on ordinary days and 30% on regular holidays,
special days and rest days.
be
e. Night shift pay equivalent to 10% of the regular hourly
12 of 132
 SUN TZU NOTES
rate for work rendered between 10:00 pm to
6:00 am of the following day.
f. Five (5) day service incentive leave for every year
of service which benefits can be availed of during
days of absence and, if not used, are convertible into
its cash equivalent. A proportionate leave benefit per
month may be derived by dividing 5 days by 12
months times the daily rate.
g. Paternity leave of seven (7) days with full pay.
This leave shall be granted before, during or after
childbirth or after spontaneous miscarriage by his
legal spouse.
The paternity leave with pay is granted for only four
deliveries, including miscarriage.
h. 13th month pay which is 1/12 of the total basic
salary earned within a calendar year.
6.4 Recommended Computation of Equivalent
Monthly Rates Using the applicable daily wage rate
(ADR) and a factor representing the number of paid
days in a year, the following procedures are
recommended to facilitate computation of equivalent
monthly rates (EMR).
For those who are required to work everyday
including Sundays or rest days, special days and
regular holidays:
EMR = (ADR x 391.5) / 12
where 391.5 is derived from:
302.0 - ordinary working days
18.0 - 9 regular holidays x 200%
2.6 - a regular holiday on last Sunday of August x
200% + (30% of 200%)
66.3 - 51 rest days x 130%
2.6 - 2 special days x 130%
391.5 days considered paid in a year
For those who are considered paid on all days
including unworked Sundays or rest days, special
days and regular holidays:
EMR = (ADR x 365) / 12
where 365 days derived from:
302 - ordinary working days
2 - special days
51 - rest days
10 - regular holidays
365 days
For those who do not work and are not considered
paid on Sundays/ rest days:
EMR = (ADR x 314.6) / 12
where 314.6 is derived from:
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302.0 - ordinary working days
2.6 - 2 special days (if worked) x 130%
10.0- regular holidays
314.6 days considered paid in a year
For those who do not work and are not considered paid on
Saturdays and Sundays or rest days:
EMR = (ADR x 262.6) / 12
where 262.6 is derived from:
250.0 - ordinary working days
2.6 - 2 special days (if worked) x 130%
10.0 - regular holidays
262.6 days
By using the above indicated factors, the basic wage for
the worked days and holiday pay for the 10 regular
holidays are included in the monthly rates.
Thirty percent (30%) rest day premium has been
integrated in factor 391.5 for all the Sundays/rest days in
a year including the last Sunday of August and in factors
314.6 and 262.6 for the two special days (November 1 and
December 31) under Executive Order No. 203 of 1987.
Not included in the above formula is the premium pay due
an employee whenever work is rendered on an ordinary
working day proclaimed by the President as a special day
(that is other than Nov. 1 and Dec. 31).
6.5 Other Mandatory Benefits. In appropriate cases,
security guards/similar personnel are entitled to the
mandatory benefits as listed below, although the same
may not be included in the monthly cost distribution in the
contracts, except the required premiums for their
coverage:
a. Maternity benefit as provided under the SS Law;
b. Separation pay if the termination of employment is for
authorized cause as provided by law and as enumerated
below:
Half-Month Pay Per Year of Service, but in no case less
than One Month Pay, if separation is due to:
1. Retrenchment or reduction of personnel effected by
management to prevent serious losses;
2. Closure or cessation of operation of an establishment
not due to serious losses or financial reverses;
3. Illness or disease not curable within a period of 6
months and continued employment is prohibited by law or
prejudicial to the employee's health or that of co-
employees; or
4. Lack of service assignment for a continuous period of 6
months.
One Month Pay Per Year of Service, if separation is due to:
1. Installation of labor-saving device, such as replacement
 SUN TZU NOTES
of employees by equipment/machinery;
2. Redundancy, as when the position of the
employee has been found to be surplusage or
unnecessary in the operation of the agency;
3. Impossible reinstatement of the employee to
his/her former position or to a substantially
equivalent position for reasons not attributable to the
fault of the employer, as when the reinstatement
ordered by a competent authority cannot be
implemented due to closure or cessation of
operations of the establishment/employer, or the
position to which the employee is to be reinstated no
longer exists and there is no substantially equivalent
position to which he/she can be assigned.
c. Cash income benefits under the State Insurance
Fund in case of work-related sickness or other
contingencies.
d. Retirement pay granted by R. A. 7641 to any
security guard/personnel who retires under an
applicable employer plan or policy.
For this purpose, the security service contractor shall
create or put up a trust fund for retirement benefit.
The Trust Fund Agreement shall be executed by and
between the trustor and trustee in favor of the
employee-beneficiary for payment of re-tirement
benefit in accordance with R. A. 5487 and R. A.
7641.
The Fund shall be administered and maintained by a
trust company, bank, in-vestment house, pre-need
company or corporation duly authorized to perform
trust function exclusively for collective investment or
re-investment of certain money received in its
capacity as trustee, or similar arrangement as may
be agreed upon in accordance with law.
As such, any payment for retirement benefits
collected in advance by the contractor from the
principal/s shall be deposited by the
contractor/trustor to the trustee in favor of the
security guard as benefit upon retirement or when
his/her employment is terminated due to authorized
causes.
e. Other benefits granted by law, individual or
collective agreement or company policy or practice.
Sec. 7. Deductions from salary, - No deduction
shall be made from the salary of the security
guards/personnel, except for:
a. SSS contribution
b. EC contribution
c. HDMF contribution
d. Philhealth contribution
14 of 132
e. Withholding tax from income, provided a proper
withholding tax receipt is issued to the employee before
the filing of income tax return every year
f. Union dues, if applicable
g. Other deductions authorized by
Sec. 8. Liability and responsibilities of contractors
and clients/principals. -
8.1 Joint and several liability. - When the security service
contractor fails to pay the wages of its security
guards/personnel, the principal shall be jointly and
severally liable with the security service contractor to the
extent of the work performed by such employees under
the contract, in the same manner and extent that the
principal is liable to its direct employees.
If there are wage increases or adjustments after the
execution of the service contract, the prescribed increases
in the wage rates of guards shall be borne by the principal
and the service contract shall be deemed amended
accordingly. In the event that the principal fails to pay the
prescribed increases, the security service contractor shall
be jointly and severally liable with the principal.
The security guards' contractual relationship is with their
employer, the security ser-vice contractor. Thus, their
immediate recourse for payment of wage increase before
litigation is with their direct employer, the security service
contractor. In order for the security service contractor to
comply with the new rates, the consideration paid by the
principal for the security guards' wages has to be adjusted
in conformity with the mandated wage increase.
In case of finding of violations on wages and other labor
standards due the security guards, the DOLE Regional
Director shall serve summons to both the security service
contractor and the principal to determine the extent of
liability of the parties.
8.2 Solidary liability. - For purposes of immediate relief,
the principal shall be deemed as the direct employer of the
security guard/personnel in any of the following cases, and
therefore shall be solidarily liable for whatever monetary
claims the security guard/personnel may have against his
employer:
a. When the security service contractor is found to be
engaged in labor- only contracting; contracting out of work
which will either displace its employees or reduce their
regular work hours or any other prohibited activity;
b. When the security service contractor is declared guilty
of unfair labor practice, i.e., contracting out of a job, work
or service being performed by union members when such
will interfere with, restrain or coerce employees in the
exercise of their rights to self-organization; or
c. When a violation of the relevant provisions of the Labor
Code has been established by the Regional Director in the
exercise of his/her enforcement powers.
 SUN TZU NOTES
The principal shall also be deemed solidarily liable
with the security service contractor to the extent of
accrued claims and benefits that the latter may owe
to its security guards/personnel in the following
instances:
a. When the license or business permit of the
security service contractor is cancelled, revoked or
not renewed by the competent authority, or
b. When the contract between the principal and the
security service contractor is preterminated for
reasons not attributable to the fault of the latter.
8.3. Responsibilities and Obligations of Security
Service Contractors and Principals in the Execution
of Service Contracts. - The service contracts or
agreements between a security service contractor
and its principal/s shall ensure compliance with the
minimum wage and other labor standards under the
laws, including the mandatory coverage by the SSS,
EC, Philhealth and HDMF. Government agencies or
instrumentalities engaging security services from
private security agencies shall likewise observe
compliance with all labor laws and shall require the
security service contractor to submit, among others
requirements and as part of their bid, an under-
taking to pay their workers the above benefits.
8.4. Keeping of records. - The principals as indirect
employers shall keep and maintain their own
separate records or files on the assignment of
security guards in their premises during the period of
the service contract, which shall be open for
inspection and verification by this Department. The
security agency, however, as the direct employer
shall observe the rule on general record keeping
under the Labor Code, as amended.
Sec. 9. Right to security of tenure and due
process. -
9.1 Security guards and similar personnel who have
become regular employees shall enjoy security of
tenure in their employment as provided by law. Their
services can only be terminated for just or
authorized causes after due process.
Termination for a just cause or causes as stated in
Art. 281 of the Labor Code does not entitle the
security guard/personnel to separation pay, unless
otherwise provided in the
employer policy or individual contract or collective
agreement.
9.2 Notice of Termination. - In case of termination of
employment due to authorized causes provided in
Art. 283 and 284 of the Labor Code and in the
succeeding subsection, the employer shall serve a
written notice on the security guard/personnel and
the DOLE at least one (1) month before the intended
date thereof.
9.3 Reserved Status. - A security guard or similar
personnel may be placed in a workpool or on
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reserved status due to lack of service assignments after
expiration or termination of the service contract with the
principal where he/she is assigned, or due to the
temporary suspension of agency operations.
No security guard or personnel can be placed in a workpool
or on reserved status in any of the following situations: (a)
after expiration of a service contract if there are other
principals where he/she can be assigned; (b) as a measure
to constructively dismiss the security guard; and (c) as an
act of retaliation for filing complaints against the employer
on violations of labor laws, among others.
If, after a period of 6 months, the security
agency/employer cannot provide work or give an
assignment to the reserved security guard, the latter can
be dismissed from service and shall be entitled to
separation pay as described in subsection 5.6.
Security guards on reserved status who accept
employment in other security agencies or employers
before the end of the above six-month period may not be
given separation pay.
9.4. Preventive suspension. - Subject to the constitutional
rights of the workers to security of tenure and the right to
be protected against dismissal except for a just and
authorized cause and without prejudice to the requirement
of notice under Art. 282 of the Labor Code, a security
guard/personnel may be preventively suspended if his
continued employment poses a serious and imminent
threat to life or property of the employer, its principal or
the guard's co-workers.
No preventive suspension shall last longer than thirty (30)
days. The security agency shall thereafter reinstate the
security guard/personnel in his/her former position or it
may extend the period of suspension, provided that during
the period of extension, the agency pays the wages and
other benefits due the guard/personnel.
The employer shall designate a day, time and place within
the period of preventive suspension, with notice to the
employee, to hold a fact-finding investigation thus
enabling the suspended employee to be heard and assisted
by a counsel or representative, if he/she so desires, of the
charge against him/her and thereby be exonerated; or,
upon the employee's failure to vindicate himself/herself, to
find the employee guilty and thereby, to terminate his/her
employment. Such termination, however, shall not
prejudice the right of the employee to question the
severance of relationship in the appropriate forum.
The above procedure shall likewise be observed by the
employer/agency in case the employment is terminated
due to any of the just causes.
9.5. Report of dismissal, termination or retirement. - The
security service contractor shall submit a monthly report of
all dismissals or termination, including retirement, effected
during the month to the DOLE Regional Office having
jurisdiction over its main or branch office using the
prescribed form and indicating all information as required
by DOLE for policy and statistical purposes.
 SUN TZU NOTES
Sec. 10. Right to self-organization and
collective bargaining. -
The security guards and other personnel employed
by the security service contractor shall have the right
to form, join or assist in the formation of a labor
organization of their own choosing for purposes of
collective bargaining and to engage in concerted
activities which are not contrary to law including the
right to strike.
Sec. 11. Penal provision. - Violation of any of the
provisions of this Guidelines which are declared
unlawful or punishable by law shall be punished
accordingly.
Sec. 12. Effect on existing issuances and
agreements. - This issuance shall serve as a guide
for the DOLE and its agencies in the administration
and enforcement of applicable labor and social
legislations and their implementing regulations.
Nothing herein shall be construed to authorize
diminution or reduction of benefits being enjoyed by
the security guards and similar personnel at the time
of issuance hereof.
This Guidelines supersedes Department Order No. 40
s. 1994 and other existing orders which are
inconsistent hereto and shall take effect
immediately.
11. RA 5487 [PRIVATE SECURITY AGENCY
LAW]
AN ACT TO REGULATE THE ORGANIZATION AND
OPERATION OF PRIVATE DETECTIVE,
WATCHMEN OR SECURITY GUARDS AGENCIES.
Section 1. Short Title of Act. This Act shall be
known as "The Private Security Agency Law."
Section 2. Scope of this Act. The organization,
operation, business and activities of private
detectives, watchmen or security guards agencies
shall be governed by the provisions of this Act.
Section 3. Definition of Terms.
(a) Person. As used in this Act, person shall include
not only natural persons but also juridical persons
such as corporation, partnership, company or
association duly registered with the Securities and
Exchange Commission and/or the Bureau of
Commerce.
(b) Private Detective Agency. A private detective
agency is any person, who, for hire or reward or on
commission, conducts or carries on or holds himself
or itself out as conducting or carrying on a detective
agency, or detective service.
(c) Private Detective. A private detective is any
person who is not a member of a regular police
16 of 132
agency of the Armed Forces of the Philippines who does
detective work for hire, reward, or commission.
(d) Watchman or Security Guard, Watchman or Security
Guard Agency. Any person who offers or renders personal
service to watch or secure either residential or business
establishment, or both, or any building, compound, or area
including but not limited to logging concessions,
agricultural, mining or pasture lands for hire or
compensation, or as an employee thereof shall be known
as watchman or security guard; and any person,
association, partnership, or corporation, who recruits,
trains, muster, furnishes, solicits individuals or business
firms, private or government-owned or controlled
corporations to engage his service or those of its
watchmen, shall be known as Watchman of Security Guard
Agency. (As amended by Pres. Decree No. 11, October 3,
1972.)
Section 4. Who May Organize a Security or
Watchman Agency. Any Filipino citizen or a corporation,
partnership, or association, with a minimum capital of five
thousand pesos, one hundred per cent of which is owned
and controlled by Filipino citizens may organize a security
or watchman agency: Provided, That no person shall
organize or have an interest in, more than one such
agency except those which are already existing at the
promulgation of this Decree: Provided, further, That the
operator or manager of said agency must be at least 25
years of age, a college graduate and/or a commissioned
officer in the inactive service of the Armed Forces of the
Philippines; of good moral character; having no previous
record of any conviction of any crime or offense involving
moral turpitude and not suffering from any of the following
disqualifications:
(1) Having been dishonorably discharged or separated
from the Armed Forces of the Philippines;
(2) Being a mental incompetent;
(3) Being addicted to the use of narcotic drug or drugs;
and
(4) Being a habitual drunkard.1awphil.net
For purposes of this Act, elective or appointive government
employees who may be called upon on account of the
functions of their respective offices in the implementation
and enforcement of the provisions of this Act and any
person related to such government employees by affinity
or consanguinity in the third civil degree shall not hold any
interest, directly or indirectly in any security guard or
watchman agency. (As amended by Pres. Decree No. 11.)
Section 5. Qualifications Required. No person shall be
employed as security guard or watchman or private
detective unless he is: (a) a Filipino citizen; (b) a high
school graduate; (c) physically and mentally fit; (d) not
less than 21 nor more than 50 years of age; (e) at least 5
feet and 4 inches in height; and (f) suffering none of the
disqualifications provided for in the preceding section:
Provided, That foreigners who are already employed as
watchmen or security guards prior to the approval of this
 SUN TZU NOTES
Act shall not be subject to the above-mentioned
requirements: Provided, further, That veterans shall
be given priority in employment as security guard,
watchman or private detective: And provided, finally,
That person convicted of any crime involving moral
turpitude shall not be employed as security guard,
watchman or private detective.
Section 6. License Necessary. No person shall
engage in the business of, or act either as a private
detective, or detective agency; and either engage in
the occupation, calling or employment of watchman
or in the business of watchman's agency without first
having obtained the necessary permit from the Chief,
Philippine Constabulary which permit as approved is
prerequisite in obtaining a license or license
certificate: Provided, That all existing private
detective or watchman or security guard agencies
shall have a period of one (1) year from the approval
of this Act to secure the said license: Provided,
further, That existing agencies, and any new agency
which may hereafter apply for a license, certify
under oath that their private detectives, watchmen
or security guards, have received the appropriate
training from either the Philippine Constabulary, the
National Bureau of Investigation, any local police
department, or any other public institution duly
recognized by the government to conduct police
training.
Section 7. Application for License. The
application shall be made in writing and shall be filed
with the Chief, Philippine Constabulary. It shall
contain the full name of the applicant, his age, civil
status, his residence, and location of business. If the
applicant is a corporation, association or partnership,
a copy of the certificate of registration with the
Securities and Exchange Commission together with
its by-laws and articles of incorporation, with the
Bureau of Commerce.
Section 8. Fees to be Paid and Bonds. When all
requisites for the issuance of the license have been
complied with, the Chief of the Philippine
Constabulary or his duly authorized representative
shall issue a permit for the issuance of such license
and register the same in his office, upon payment by
the applicant of the fee in accordance with the
following schedule:
(a) the sum of one hundred pesos per annum as
national license;
(b) the sum of fifty pesos per annum as municipal
license fee in any city where it may operate, the said
fee to be payable to the city treasurer concerned;
(c) the sum of twenty-five pesos per annum as
municipal license fee for any municipality where it
may operate, the said fee to be payable to the
municipal treasurer concerned;
(d) the private Detective and Watchman Agency
shall in addition to the above pay a fixed Internal
17 of 132
Revenue Tax of one hundred pesos per annum in lieu of
percentage taxes;
(e) the individual private detective and/or watchman shall
pay for Mayor's Permit, Health and/or Sanitary fee an
amount not exceeding three pesos per annum and the
agency shall pay the sum not exceeding ten pesos for the
Mayor's Permit and Health and/or Sanitary fees; and
(f) the Chief of the Philippine Constabulary or his duly
authorized representative shall issue an appointment over
his signature and affix the seal of his office, to each license
and for each such appointment, the sum of one peso shall
be paid.1awphil.net
The application shall further be accompanied by a bond
issued by any competent or reputable surety or fidelity or
insurance company duly accredited by the office of the
Insurance Commissioner in the sum of not less than five
thousand pesos nor more than ten thousand pesos in the
discretion of the Chief, Philippine Constabulary, which bond
shall answer for any valid and legal claim against the
agency by its clients or employees: Provided, That licenses
issued in the province of an authorized representative of
the Chief of Constabulary is subject to review by the Chief
of Constabulary.
Any provision of this or other law to the contrary
notwithstanding, the Chief of Constabulary may, at any
time suspend or cancel the licenses of private watchman or
security guard agency found violating any of the provisions
of this Act or of the rules and regulations promulgated by
the Chief of Constabulary pursuant thereto. (This
paragraph was inserted by Sec. 3, Pres. Decree No. 11.)
Other provisions of Pres. Decree No. 11
Any person who commit any act in violation of Republic Act
No. 5487 and of this Decree, and the implementing rules
and regulations already promulgated which are not in
conflict herewith, and those to be promulgated by the
Chief of Constabulary pursuant hereto, shall, on conviction
thereof, suffer imprisonment of from ten to fifteen years
and a fine of not less than ten thousand pesos nor more
than fifteen thousand pesos as a military court/tribunal or
commission may direct.
The Chief of Constabulary shall promulgate the necessary
rules and regulations to carry out the provisions of this
Decree.
Section 9. Employees Need Not be Licensed. Every
person operating, managing, directing or conducting a
licensed private detective or watchmen agency shall also
be considered licensed private detective, or watchman and
no person shall be employed or used in a private detective
work unless he be a licensed private detective or
watchman: Provided, That nothing in this section shall be
construed as requiring detective license for persons
employed solely for clerical or manual work.
Section 10. Display of License. The license shall be
displayed at all times in a conspicuous and suitable place
in the agency office or headquarters of the agency and
 SUN TZU NOTES
shall be exhibited at the request of any person
whose jurisdiction is in relation with the business of
the agency or the employees thereof, or of the Chief
of the Philippine Constabulary or his duly authorized
representative or any peace officer.
Section 11. Supervision of the Philippine
Constabulary. Upon approval of this Act, the
Philippine Constabulary shall exercise general
supervision over the operation of all private detective
and watchman or security guard agencies.
Section 12. Powers of City or Municipal Mayors
in Cases of Emergency. In case of emergency or in
times of disaster or calamities where the services of
such agencies arise, the City or Municipal Mayor, as
director of Civil Defense, may muster or incorporate
the services of the agency nearest the area where
such emergency, disaster or calamity arises and its
duly licensed personnel to help maintain peace and
order; and/or the prevention or apprehension of law
violators and in the preservation of life and property.
Deputized private detectives, watchmen or security
guards shall take direct orders from the Chief of
Police for the duration of the fire, inundation,
earthquakes, riots or other emergencies.
Section 13. Issuance of Firearms. A watchman or
security agency shall be entitled to posses firearms
after having satisfactorily passed the requirements
prescribed by the Chief, Philippine Constabulary
pertinent to the possession of firearm of any caliber
not higher than 45 caliber in a number not exceeding
one firearm for every two watchmen or security
guards in its employ: Provided, however, That a
watchman or security agent shall be entitled to
possess not more than one riot gun or shotgun in
order to provide adequate security when
circumstances so demand: Provided, further, That all
the firearms mentioned herein shall be carried by the
watchman or security guard only during his tour of
duty in proper uniform within the compound of the
establishment except when he escorts big amounts
of cash or valuables in and out of said compound.
Section 14. Uniform. The uniform of watchman or
security guard as well as those organized,
maintained or under the employment of the
government or any government-owned and/or
controlled corporations, agencies or entities, shall be
different from the uniform worn and prescribed for
members of the Armed Forces of the Philippines, City
and Municipal Police Force. The Chief, Philippine
Constabulary, through his duly authorized
representative shall prescribed the uniform or
ornaments, equipment and paraphernalia to be worn
by the security guards and watchmen throughout the
Philippines.
Section 15. Compensation of Watchmen or
Security Guards. Watchmen or security guards
shall receive a salary not lower than that prescribed
in the Minimum Wage Law.
18 of 132
Section 16. Limitations and Prohibitions.
1. On Membership: (a) No agency operating in the City of
Manila and suburbs may employ more than 1,000
watchmen or security guards; (b) no agency operating in
other cities and first class municipalities may employ more
than 500 watchmen or security guards; (c) no agency
operating in municipalities other than first class may
employ more than 200 watchmen or security guards.
2. On Organization: No person, corporation, partnership or
association may organize more than one agency in any one
city or municipality.
3. On Service: No agency shall offer, render or accept its
services to gambling dens or other illegal enterprises. The
extent of the security service being provided by any
security agency shall not go beyond the whole compound
or property of the person or establishment requesting the
security service except when they escort big amount of
cash.
Section 17. Rules and Regulations by Chief,
Philippine Constabulary. The Chief of the Philippine
Constabulary, in consultation with the Philippine
Association of Detective and Protective Agency Operators,
Incorporated and subject to the provisions of existing laws,
is hereby authorized to issue the rules and regulations
necessary to carry out the purpose of this Act.
Section 18. Penal Provisions. Any violation of this Act or
the rule or regulation issued hereunder shall be punished
by suspension, or fine not exceeding P200.00 or
cancellation of his or its licenses to operate, conduct, direct
or manage a private detective, watchman or security guard
agency and all its members in the discretion of the court
together with the forfeiture of its bond filed with the
Philippine Constabulary.
If the violation is committed by those persons mentioned
under paragraph two, section four of this Act the penalty
shall be imprisonment ranging from one to four years and
fine ranging from one to four thousand pesos in the
discretion of the court.
Section 19. Repealing Clause. All laws, rules,
resolutions, municipal ordinances, regulations and
administrative orders contrary or inconsistent with the
provisions hereof are hereby repealed.
Section 20. Effectivity. This Act shall take effect upon its
approval.
SUPPLEMENTAL NOTES UNDER THIS TOPIC
Principal-(service contract)-
Contractor/Subcontractor
Direct hiring is the prerogative of the principal
Principal is the owner of the project
Contractor hires employees for a specific job or
service, i.e. security or janitorial
Under contractor is the contractual worker
Reason for contracting arrangement:
 SUN TZU NOTES
o Economy principal economize, i.e.
for security, principal does not need
to provide ammunitions and firearms
o Efficiency bona fide contractor
specializing such specific job or
service necessary for the business of
the contractor
Principal and contractor relationship is civil in
nature
Contractor and contractual worker is employer-
employee relationship, thus, contractual workers
is entitled to minimum wage, overtime pay, 13 th
month pay, retirement pay and other labor
standards.
Contractor and contractual worker apply 4-fold
test
Principal and contractual worker no
relationship; is not privy to the relationship of
contractor and principal
Who may apply as a contractor?
o Any person (juridical or natural)
o Union or cooperative
Contractor must be registered under DOLE for
presumption of legitimate contracting
arrangement
In contractualization, contractor has the
discretion of hiring you as a regular (if necessary
to the business of the employer) or contractual
worker
B. WORKERS PREFERENCE
SCOPE (ART. 110); UNPAID WAGES AND OTHER
MONETARY BENEFITS
ART. 110. Worker preference in case of
bankruptcy. - In the event of bankruptcy or
liquidation of an employers business, his workers
shall enjoy first preference as regards their wages
and other monetary claims, any provisions of law to
the contrary notwithstanding. Such unpaid wages
and monetary claims shall be paid in full before
claims of the government and other creditors may be
paid.
SCOPE:
Unpaid wages
Other monetary claims
PREFERENCE OF CREDIT VS LIEN
Art. 110 is not a lien; it is just a preference of
credit (1st preference among creditors)
Cliam is better than governments claim (other
claims are considered subordinate)
It is an ordinary preferred credit; better than the
claims of government and other claims
However, it will not prevail over special preferred
credits such as mortgage lien
This article applies only if there is judicial
proceeding (bankrupt, liquidation or insolvency
proceedings)
Reason behind judicial proceeding: creditors
19 of 132
present their respective claims so there could be an
equitable distribution of the insolvent debtors property
among the creditors, whether secured or unsecured, in
accordance with the concurrence and preference of
credit
Remedy of the worker is to go after the real and
personal properties of the employer by filing a petition
to declare employer insolvent
WORKERS LIEN
Art. 1707. The laborer's wages shall be a lien on the
goods manufactured or the work done.
Refer to AZUCENA on pp. 347-350
RULES OF PROCEDURE ON CORPORATE
REHABILITATION (2008)
RULE 1
COVERAGE
Section 1. Scope - These Rules shall apply to petitions for
rehabilitation of corporations, partnerships and
associations pursuant to Presidential Decree No. 902-A, as
amended.
Section 2. Applicability to Rehabilitation Cases
Transferred from the Securities and Exchange
Commission. - Cases for rehabilitation transferred from
Securities Exchange Commission to the Regional Trial
Court pursuant to Republic Act No. 8799, otherwise known
as The Securities Regulation Code, shall likewise be
governed by these Rules.
RULE 2
DEFINITION OF TERMS AND CONSTRUCTION
Section 1. Definition of Terms. - For purpose of these
Rules:
"Administrative Expenses" shall refer to (a) reasonable and
necessary expenses that are incurred in connection with
the filing of the petition; (b) expenses incurred in the
ordinary course of business after the issuance of the stay
order, excluding interest payable to the creditors for loans
and credit accommodations existing at the time of the
issuance of the stay order, and (c) other expenses that are
authorized under this Rules.
"Affidavit of General Financial Condition" shall refer to a
verified statement on the general financial condition of the
debtor requiredin Section 2, Rule 4 of these Rules.
"Affiliate" is a corporation that directly or indirectly,
through one or more intermediaries, is controlled by, or is
under the common control of another corporation, which
thereby becomes its parent corporation.
"Asset" is anything of value that can be in the form of
money, such as cash at the bank or amounts owed; fixed
assets such as property or equipment; or intangibles
including intellectual property, the book value of which is
 SUN TZU NOTES
shown in the last three audited financial statement
immediately preceding the filing of the petition, In
case the debtor is less than three years in operation,
it is sufficient that the book value is based on the
audited financial statement\s for the years or year
immediately preceding the filing of petition, as the
case may be.
"Board of Directors" shall include the executive
committee or the management of partnership or
association
"Claim" shall include all claims or demands of
whatever nature or charter against a debtor or its
property, whether for money or otherwise
"Control" is the power of a parent corporation to
direct or govern the financial and operating policies
of an enterprise so as to obtain benefits from its
activities. Control is presumed to exit when the
parent owns, directly or indirectly though
subsidiaries, more than one - half () of the voting
power of the voting power of an enterprise unless,
unless, in exception circumstances, it can clearly be
demonstrated that such own ship does not constitute
control. Control also exits even when the parents
owns one-half (1/2) or less of the voting power of an
enterprise when there is power.
(A) Over more than one-half () of agreement with
investors;
(B) To direct or govern the financial and operating
policies of the enterprise under a statute or
agreement;
(C) To appoint or remove the majority of the
member of the board of directors or equivalent
governing body; or
(D) To cast the majority votes at meeting of the
board of directors or equivalent governing body.
"Creditor" shall mean any holder or a Chain
"Court" shall refer to the proper Regional Trial Court
designated to hear and decide the cases
contemplated contemplated under these Rules.
"Days" shall refer to calendar days unless otherwise
provided in these Rules.
"Debtor" shall mean any corporation, partnership or
association or a group of companies, whether
supervised or regulated by the Securities and
Exchange Commission or other government
agencies, on whose behalf a petition for
rehabilitation has been filed under these rules.
"Foreign count" means a judicial or other authority
competent to control or supervise a foreign
proceeding.
"Foreign proceeding" means a collective judicial or
20 of 132
administrative proceeding in a foreign State, interim
proceeding, pursuant to a law re solvency in which
proceeding the assets and affairs of the debtor are subject
to control or supervision by a foreign count, for the
purpose of rehabilitation or re-organization
"Foreign Representative" means person or entity, including
one appointed on an interim basis, authorized in a foreign
proceeding to administer the reorganization or
rehabilitation of the debtor or act as a representative of
the foreign proceeding.
"Group of companies" refers to, and can cover only,
corporation that are financially refers to, and can cover
only, corporations that are financially rated to one another
as parent corporation, subsidiaries and affiliates.
When the petition covers a group of companies, all
reference under these Rules to "debtor" shall include and
apply include and apply to the group of companies.
"Liabilities" shall refer to monetary claims against the
debtor, including stockholders advances that have been
recoded in the debtor's audited financial statements as
advances for subscription.
"Parent" is a corporation directly or indirectly though one
or more intermediaries.
"Rehabilitation" shall mean the restoration of the debtor to
a position of successful operation and solvency, if it is
shown that its continuance of operation is economically
feasible and its creditors can recover by way of the present
value of payments projected in the plan more if the
corporation continues as a going concern than if it
immediately liquidated.
"Secured claim" shall refer to any clan whose payment or
fulfillment is secured by contract or by law, including any
clam or credit enumerated under Articles 2241 and 2242 of
the civil Code and Article 110, as amended, of the Labor
code of the Philippines.
"Subsidiary" mean a corporation more than fifty percent
(50%) of the voting stock of which is owned or controlled
directly or indirectly though one or more intermediaries by
another corporation
"Unsecured clan" shall mean any clan other than a seared
claim.
Section 2. Construction - These Rules shall be liberally
construed to carry out the objectives of Section 5(d), 6(d)
and 6(d) of Presidential Decree No. 902-A, as amended,
and to assist the parties in obtaining a jut, expeditious and
inexpensive determination of case. Where applicable, the
Rules of Court shall apply supplementary to proceedings
under these Rules.
RULES 3
GENERAL PROVISONS
Section 1. Nature of Proceeding - Any proceeding
initiated under these Rules shall be considered in rem.
 SUN TZU NOTES
Jurisdiction over all persons affected by the
proceeding shall be considered as acquired upon
publication of the notice of the commencement of
the proceedings in any newspaper or general
circulation in the Philippines in the manner
prescribed by these rules.
The proceedings shall also be summary and non-
adversarial in nature. The following pleading are
prohibited:
(a) Motion to dismiss;
(b) Motion for a bill of particulars:
(c) Petition for relief;
(d) Motion for extension;
(e) Motion for postponement
(f) Third-party complaint;
(g) Intervention;
(h) Motion to hear affirmative defenses; and
(I) Any pleading or motion which is similar to or of
like effect as any of the foregoing.
Any pleading, motion, opposition, defense or claim
filed by any interested party shall be supported by
verified statements that the affiant has read same
and that the factual allegations therein are true and
correct of his personal knowledge or based on
authentic records, and correct of his personal
knowledge or based on authentic records, and shall
contain as annexes such documents as may be
deemed by the party court may be decide matters on
the basis of affidavits and other documentary
evidence. Where necessary, the court shall conduct
clarificatory hearings before resolving any matter
submitted to it for resolution.
Section 2. Venue. - Petitions for rehabilitation
pursuant to these Rules shall be filed in the regional
trial court which has jurisdiction over the principal
office of the debtor as specified in its articles of
incorporation or partnership. Where the principal
office of the corporation, partnership or association is
registered in the Securities and Exchange
Commission as Metro Manila, the action must be filed
in the regional trial court of the city or municipality
where the head office is located.
A joint petition by a group of companies shall be filed
in the Regional Trial Court which has jurisdiction over
the principal office of the parent company, as
specified in its Articles of Incorporation.
Section 3. Service of Pleadings and Documents.
- When so authorized by the court, any pleading
and/or document required by these Rules may be
filed with the court and/or served upon the other
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parties by facsimile transmission (fax) or electronic mail
(e-mail). In such cases, the date of transmission shall be
deemed to be the dtae of service. Where the pleading or
document is voluminous, the court may, upon motion,
waive the requirement of service; provided that a copy
thereof together with all its attachments is duly filed with
the court and is made available for examination and
reproduction by any party, and provided, further, that a
notice of such filing and availability is duly served on the
parties.
Section 4. Trade Secrets and Other Confidential
Information. - Upon motion, the court may issue an
order to protect trade secrets or other confidential
research, development or commercial information
belonging to the debtor.
Section 5. Executory Nature of Orders. - Any order
issued by the court under these Rules is immediately
executory. A petition to review the order shall not stay the
execution of the order unless restrained or enjoined by the
appellate court. Unless otherwise provided in these Rules,
the review of any order or decision of the court or an
appeal therefrom shall be in accordance with the Rules of
Court; provided, however, that the reliefs ordered by the
trial or appellate courts shall take into account the need for
resolution of proceedings in a just, equitable and speedy
manner.
Section 6. Nullification of Illegal Transfers and
Preferences. - Upon motion the court may nullify any
transfer of property or any other conveyance, sale,
payment or agreement made in violation of its stay order
or in violation of these Rules.
Section 7. Stay Order. - If the court finds the petition to
be sufficient in form and substance, it shall; not later than
five (5) working days from the filing of the petition, issue
an order: (a) appointing a rehabilitation receive and fixing
his bond; (b) staying enforcement of all claims, whether
for money or otherwise and whether such enforcement is
by court action or otherwise, against the debtor, its
guarantors and persons not solidarily liable with the
debtor; provided, that the stay order shall not cover claims
against letters of credit and similar security arrangements
issued by a third party to secure the payment of the
debtor's obligations; provided, further, that the stay order
shall not cover foreclosure by a creditor of property not
belonging to a debtor under corporate rehabilitation;
provided, however, that where the owner of such property
sought to be foreclosed is also a guarantor or one who is
not solidarily liable, said owner shall be entitled to the
benefit of excussion as such guarantor; (c) prohibiting the
debtor from selling, encumbering, transferring, or
disposing in any manner any of its properties except in the
ordinary course of business; (d) prohibiting the debtor
from making any payment of its liabilities except as
provided in items (e), (f) and (g) of this Section or when
ordered by the court pursuant to Section 10 of Rule 3; (e)
prohibiting the debtor's suppliers of goods or services from
withholding supply of goods and services in the ordinary
course of business for as long as the debtor makes
payments for the services and goods supplied after the
issuance of the stay order; (f) directing the payment in full
 SUN TZU NOTES
of all administrative expenses incurred after the
issuance of the stay order; (g) directing the payment
of new loans or other forms of credit
accommodations obtained for the rehabilitation of
the debtor with prior court approval; (h) fixing the
dates of the initial hearing on the petition not earlier
than forty-five (45) days but not later than sixty (60)
days from the filing thereof; (I) directing the
petitioner to publish the Order in a newspaper of
general circulation in the Philippines once a week for
two (2) consecutive weeks; (j) directing the
petitioner to furnish a copy of the petition and its
annexes, as well as the stay order, to the creditors
named in the petition and the appropriate regulatory
agencies such as, but not limited to, the Securities
and Exchange Commission, the Bangko Sentral ng
Pilipinas, the Insurance Commission, the National
Telecommunications Commission, the Housing and
Land Use Regulatory Board and the Energy
Regulatory Commission; (k) directing the petitioner
that foreign creditors with no known addresses in the
Philippines be individually given a copy of the stay
order at their foreign addresses; (l) directing all
creditors and all interested parties (including the
regulatory agencies concerned) to file and serve on
the debtor a verified comment on or opposition to
the petition, with supporting affidavits and
documents, not later than fifteen (15) days before
the date of the first initial hearing and putting them
on notice that their failure to do so will bar them
from participating in the proceedings; and (m)
directing the creditors and interested parties to
secure from the court copies of the petition and its
annexes within such time as to enable themselves to
file their comment on or opposition to the petition
and to prepare for the initial hearing of the petition.
The issuance of a stay order does not affect the right
to commence actions or proceedings insofar as it is
necessary to preserve a claim against the debtor.
Section 8. Service of Stay Order on
Rehabilitation Receiver. - The petitioner shall
immediately serve a copy of the stay order on the
rehabilitation receiver appointed by the court, who
shall manifest his acceptance or non-acceptance of
his appointment not later than ten (10) days from
receipt of the order.
Section 9. Period of Stay Order. - The stay order
shall be effective from the date of its issuance until
the approval of the rehabilitation plan or the
dismissal of the petition.
Section 10. Relief from, Modification, or
Termination of Stay Order. -
(a) The court may, upon motion, terminate, modify,
or set conditions for the continuance of the stay
order, or relieve a claim from the coverage thereof
upon showing that (1) any of the allegations in the
petition, or any of the contents of any attachment, or
the verification thereof has ceased to be true; (2) a
creditor does not have adequate protection over
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property securing its claims; (3) the debtor's secured
obligation is more than the fair market value of the
property subject of the stay and such property is not
necessary for the rehabilitation of the debtor; or (4) the
property covered by the stay order is not essential or
necessary to the rehabilitation and the creditor's failure to
enforce its claim will cause more damage to the creditor
than to the debtor.
(b) For purposes of this Section, the creditor lacks
adequate protection if it can be shown that:
(1) The debtor fails or refuses to honor a pre-existing
agreement with the to keep the property insured;
(2) The debtor fails or refuses to take commercially
reasonable steps to maintain the property; or
(3) The property has depreciated to an extent that the
creditor is undersecured
(c) Upon showing the creditor's lack of adequate
protection, the court shall order the rehabilitation receiver
to (1) make arrangements to provide for the insurance or
maintenance of the property, or (2) to make payments or
otherwise provide additional or replacement security such
as that the obligation is fully secured. If such
arrangements are not feasible, the court shall modify the
stay order to allow the secured creditor lacking adequate
protection to enforce its claim against the debtor;
provided, however, that the court may deny the creditor
the remedies in this paragraph if such remedies would
prevent the continuation of the debtor as a going concern
or otherwise prevent the approval and implementation of a
rehabilitation plan.
Section 11. Qualifications of Rehabilitation Receiver.
-
(a) In the appointment of the rehabilitation receiver, the
following qualifications shall be taken into consideration by
the court:
(1) Expertise and acumen to manage and operate a
business similar in size and complexity to that of the
debtor;
(2) Knowledge in management, finance and rehabilitation
of distressed companies;
(3) General familiarity with the rights of creditors in
suspension of payments or rehabilitation and general
understanding of the duties and obligations of a
rehabilitation receiver;
(4) Good moral character, independence and integrity;
(5) Lack of conflict of interest as defined in this Section;
and
(6) Willingness and ability to file a bond in such amount as
may be determined by the court.
(b) Without limiting the generality of the following, a
 SUN TZU NOTES
rehabilitation receiver may be deemed to have a
conflict of interest if:
(1) He is creditor or stockholder of the debtor;
(2) He is engaged in a line of business which
competes with the debtor;
(3) He is, or was within two (2) years from the filing
of the petition, a director, officer, or employee or the
auditor or accountant of the debtor;
(4) He is or was within two (2) years from the filing
of the petition, an underwriter of the outstanding
securities of the debtor;
(5) He is related by consanguinity or affinity within
the fourth civil degree to any creditor, stockholder,
director, officer, employee, or underwriter of the
debtor; or
(6) He has any other direct or indirect material
interest in the debtor or any creditor.
Section 12. Powers and Functions of
Rehabilitation Receiver. - The rehabilitation
receiver shall not take over the management and
control of the debtor but shall closely oversee and
monitor the operations of the debtor during the
pendency of the proceedings. For this purpose, the
rehabilitation receiver shall have the powers, duties
and functions of a receiver under Presidential Decree
No. 902-A, as amended, and the Rules of Court.
The rehabilitation receiver shall be considered as an
officer of the court. He shall be primarily tasked to
study the best way to rehabilitate the debtor and to
ensure that the value of the debtor's property is
reasonably maintained pending the determination of
whether or not the debtor should be rehabilitated, as
well as implement the rehabilitation plan after its
approval. Accordingly, he shall have the following
powers and functions:
(a) To verify the accuracy of the petition, including
its annexes such as the Schedule of Debts and
Liabilities and the Inventory of Assets submitted in
support to the petition;
(b) To accept and incorporate, when justified,
amendments to the Schedule of Debts and
Liabilities;
(c) To recommend to the court the disallowance of
claims and rejection of amendments t the Schedule
of Debts and Liabilities that lack sufficient proof and
justification;
(d) To submit to the court and make available for
review by the creditors, a revised Schedule of Debts
and Liabilities;
(e) To investigate the acts, conduct, properties,
liabilities and financial condition of the debtor, the
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operation of its business and the desirability of the
continuance thereof; and, any other matter relevant to the
proceeding or to the formulation of a rehabilitation plan;
(f) To examine under oath the directors and officers of the
debtor and any other witnesses that he may deem
appropriate;
(g) To make available to the creditors documents and
notices necessary for them to follow and participate in the
proceedings;
(h) To report to the court any fact ascertained by him
pertaining to the causes of the debtor's problems, fraud,
preferences, dispositions, encumbrances, misconduct,
mismanagement and irregularities committed by the
stockholders, directors, management,, or any other person
against the debtor;
(i) To employ such person or persons such as lawyers,
accountants, appraisers and staff are necessary in
performing his functions and duties as rehabilitation
receiver;
(j) To monitor the operations of the debtor and to
immediately report to the court any material adverse
change in the debtor's business;
(k) To evaluate the existing assets and liabilities, earnings
and operations of the debtor;
(l) To determine and recommend to the court the best way
to salvage and protect the interests of the creditors,
stockholders and the general public;
(m) To study the rehabilitation plan proposed by the
debtor or any rehabilitation plan submitted during the
proceedings, together with any comments made thereon;
(n) To prohibit and report to the court any encumbrance,
transfer or disposition of the debtor's property outside of
the ordinary course of business or what is allowed by the
court;
(o) To prohibit and report to the court any payments
outside of the ordinary course of business;
(p) To have unlimited access to the debtor's employees,
premises, books, records and financial documents during
business hours;
(q) To inspect, copy, photocopy or photograph any
document, paper, book, account or letter, whether in the
possession of the debtor or other persons;
(r) To gain entry into any property for the purpose of
inspecting, measuring, surveying or photographing it or
any designated relevant object or operation thereon;
(s) To take possession, control and custody of the debtor's
assets;
(t) To notify counterparties and the court as to contracts
that the debtor has decided to continue to perform the
 SUN TZU NOTES
breach;
(u) To be notified of and to attend all meetings of the
board of directors and stockholder of the debtor;
(v) To recommend any modification of an approved
rehabilitation plan as he may deem appropriate;
(w) To bring to the attention of the court any
material change affecting the debtor's ability to meet
the obligations under the rehabilitation plan;
(x) To recommend the appointment of a
management committee in the cases provided for
under Presidential Decree No. 902-A, as amended;
(y) To recommend the termination of the
proceedings and the dissolution of the debtor if he
determines that the continuance in business of such
entity is no longer feasible or profitable or no longer
works to the best interest of the stockholders,
parties-litigants, creditors or the general public;
(z) To apply to the court for any order or directive
that he may deem necessary or desirable to aid him
in the exercise of his powers and performance of his
duties and functions; and
(aa) To exercise such other powers as may from
time to time be conferred upon him by the court.
Section 13. Oath and Bond. - Before entering
upon his powers, duties and functions, the
rehabilitation receiver must be sworn in to perform
them faithfully, and must post a bond executed in
favor of the debtor in such sum as the court may
direct, to guarantee that he will faithfully discharge
his duties and obey the orders of the court. If
necessary, he shall also declare under oath that he
will perform the duties of a trustee of the assets of
the debtor, will act honestly and in good faith, and
deal with the assets of the debtor on a commercially
reasonable manner.
Section 14. Fees and Expenses. - The
rehabilitation receiver and the persons hired by him
shall be entitled to reasonable professional fees and
reimbursement of expenses which shall be
considered as administrative expenses.
Section 15. Immunity from Suit. - The
rehabilitation receiver shall not be subject to any
action, claim or demand in connection with any act
done or omitted by him in good faith in the exercise
of his functions and powers herein conferred.
Section 16. Reports. - The rehabilitation receiver
shall file a written report every three (3) months to
the court or as often as the court may require on the
general condition of the debtor. The report shall
include, at the minimum, interim financial
statements of the debtor.
Section 17. Dismissal of Rehabilitation
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Receiver. - A rehabilitation receiver may, upon motion, be
dismissed by the court on the following grounds: (a) if he
fails, without just cause, to perform any of his powers and
functions under these Rules; or (b) on any of the grounds
for removing a trustee under the general principles of
trusts.
Section 18. Rehabilitation Plan. - The rehabilitation
plan shall include (a) the desired business targets or goals
and the duration and coverage of the rehabilitation; (b)
the terms and conditions of such rehabilitation which shall
include the manner of its implementation, giving due
regard to the interests of secured creditors such as, but
not limited, to the non-impairment of their security liens or
interests; (c) the material financial commitments to
support the rehabilitation plan; (d) the means for the
execution of the rehabilitation plan, which may include
debt to equity conversion, restructuring of the debts,
dacion en pago or sale exchange or any disposition of
assets or of the interest of shareholders, partners or
members; (e) a liquidation analysis setting out for each
creditor that the present value of payments it would
receive under the plan is more than that which it would
receive if the assets of the debtor were sold by a liquidator
within a six-month period from the estimated date of filing
of the petition; and (f) such other relevant information to
enable a reasonable investor to make an informed decision
on the feasibility of the rehabilitation plan.
Section 19. Repayment Period. - If the rehabilitation
plan extends the period for the debtor to pay its
contractual obligations, the new period should not extend
beyond fifteen (15) years from the expiration of the
stipulated term existing at the time of filing of the petition.
Section 20. Effects of Rehabilitation Plan. - The
approval of the rehabilitation plan by the court shall result
in the following:
(a) The plan and its provisions shall be binding upon the
debtor and all persons who may be affected thereby,
including the creditors, whether or not such persons have
participated in the proceedings or opposed the plan or
whether or not their claims have been scheduled;
(b) The debtor shall comply with the provisions of the plan
and shall take all actions necessary to carry out the plan;
(c) Payments shall be made to the creditors in accordance
with the provisions of the plan;
(d) Contracts and other arrangements between the debtor
and its creditors shall be interpreted as continuing to apply
to the extent that they do not conflict with the provisions
of the plan; and
(e) Any compromises on amounts or rescheduling of timing
of payments by the debtor shall be binding on creditors
regardless of whether or not the plan is successfully
implemented.
Section 21. Revocation of Rehabilitation Plan on
Grounds of Fraud. - Upon motion, within ninety (90)
days from the approval of the rehabilitation plan, and after
 SUN TZU NOTES
notice and hearing, the court may revoke the
approval thereof on the ground that the same was
secured through fraud.
Section 22. Alteration or Modification of
Rehabilitation Plan. - An approved rehabilitation
plan may, upon motion, be altered or modified if, in
the judgement of the court, such alteration or
modification is necessary to achieve the desired
targets or goals set forth therein.
Section 23. Termination of Proceedings. - The
court shall, upon motion or upon recommendation of
the rehabilitation receiver, terminate the proceeding
in any of the following cases:
(a) Dismissal of the petition;
(b) Failure of the debtor to submit the rehabilitation
plan;
(c) Disapproval of the rehabilitation plan by the
court;
(d) Failure to achieve the desired targets or goals as
set forth in the rehabilitation plan;
(e) Failure of the debtor to perform its obligations
under the plan;
(f) Determination that the rehabilitation plan may no
longer be implemented in accordance with its terms,
conditions, restrictions or assumptions; or
(g) Successful implementation of the rehabilitation
plan.
Section 24. Discharge of Rehabilitation
Receiver. - Upon termination of the rehabilitation
proceedings, the rehabilitation receiver shall submit
his final report and accounting with such period of
time as the court will allow him. Upon approval of his
report and accounting, the court shall order his
discharge.
RULE 4
DEBTOR-INITIATED REHABILITATION
Section 1. Who May Petition. - Any debtor who
foresees the impossibility of meeting its debts when
they respectively fall due, may petition the proper
regional trial court for rehabilitation.
A group of companies may jointly file a petition for
rehabilitation under these Rules when one or more of
its constituent corporations foresee the impossibility
of meeting debts when they respectively fall due,
and the financial distress would likely adversely
affect the financial condition and/or operations of the
other member companies of the group is essential
under the terms and conditions of the proposed
rehabilitation plan.
Section 2. Contents of Petition. -
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(a) The petition filed by the debtor must be verified and
must set forth with sufficient particularity all the following
material facts: (1) the name and business of the debtor;
(2) the nature of the business of the debtor; (3) the
history of the debtor; (4) the cause of its inability to pay
its debts; (5) all the pending actions or proceedings known
to the debtor and the courts or tribunals where they are
pending; (6) threats or demands to enforce claims or liens
against the debtor; and (7) the manner by which the
debtor may be rehabilitated and how such rehabilitation
may benefit the general body of creditors, employees and
stockholders.
(b) The petition shall be accompanied by the following
documents:
(1) An audited financial statement of the debtor at the end
of its last fiscal year;
(2) Interim financial statements as of the end of the month
prior to the filing of the petition;
(3) A Schedule of Debts and Liabilities which lists all the
creditors of the debtor, indicating the name and last
address of record of each creditor; the amount of each
claim as to principal, interest, or penalties due as of the
date of filing; the nature of the claim; and any pledge,
lien, mortgage judgement or other security given for the
payment thereof;
(4) An Inventory of Assets which must list with reasonable
specificity all the assets of the debtor, stating the nature of
each asset, the location and condition thereof, the book
value or market value of the asset, and attaching the
corresponding certificate of title thereof in case of real
property, or the evidence of title or ownership in case of
movable property, the encumbrances, liens or claims
thereon, if any, and the identities and addresses of the
lienholders and claimants. The Inventory shall include a
Schedule of Accounts Receivable which must indicate the
amount of each, the persons from who due, the date of
maturity and the degree of collectibility categorizing them
as highly collectible to remotely collectible;
(5) A rehabilitation plan which conforms with the minimal
requirements set out in Section 18 of Rule 3;
(6) A Schedule of Payments and Disposition of Assets
which the debtor may have effected within three (3)
months immediately preceding the filing of the petition;
(7) A Schedule of Cash Flow of the debtor for three (3)
months immediately preceding the filing of the petition,
and a detailed schedule of the projected cash flow for the
succeeding three (3) months;
(8) A Statement of Possible Claims by or against the
debtor which must contain a brief statement of the facts
which might give rise to the claim and an estimate of the
probable amount thereof;
(9) An Affidavit of General Financial Condition which shall
contain answers to the questions or matters prescribed in
 SUN TZU NOTES
Annex "A" hereof;
(10) At least three (3) nominees for the position of
rehabilitation receiver as well as their qualifications
and addresses, including but not limited to their
telephone numbers, fax numbers and e-mail
address; and
(11) A certificate attesting under oath that (i) the
filing of the petition has been duly authorized; and
(ii) the directors and stockholders of the debtor have
irrevocably approved and/or consented to, in
accordance with existing laws, all actions or matters
necessary and desirable to rehabilitate the debtor
including, but not limited to, amendments to the
articles of incorporation and by-laws or articles of
partnership; increase or decrease in the authorized
capital stock; issuance of bonded indebtedness;
alienation, transfer, or encumbrance of assets of the
debtor; and modification of shareholders' rights.
(c) Five (5) copies of the petition shall be filed with
the court.
Section 3. Verification by Debtor. - The petition
filed by the debtor must be verified by an affidavit of
a responsible officer of the debtor and shall be in a
form substantially as follows:
"I, ___________________, (position) of (name of
petitioner), do solemnly swear that the petitioner has
been duly authorized to file the petition and that the
stockholders and board of directors (or governing
body) have approved and/or consented to,
accordance with law, all actions or matters necessary
or desirable to rehabilitate the debtor. The petition is
being filed to protect the interests of the debtor, the
stockholders, the inventors and the creditors of the
debtor, which warrant the appointment of a
rehabilitation receiver. There is no petition for
insolvency filed with any other body, court of tribunal
affecting the petitioner. The Inventory of Assets and
the Schedule of Debts and Liabilities contains a full,
correct and true description of all debts and liabilities
and of all goods, effects, estate and property of
whatever kind of class belonging to petitioner. The
Inventory also contains a full, correct and true
statement of all debts owing or due to petitioner, or
to any person or persons in trust for petitioner and
of all securities and contracts whereby any money
may hereafter become due or payable to petitioner
or by or through which any benefit or advantage
may accrue to petitioner. The petition contains a
concise statement of the facts giving rise, or which
might give rise, to any cause of action in favor of
petitioner. Petitioner has no land, money, stock,
expectancy, or property of any kind, except those
set forth in the Inventory of Assets. Petitioner has, in
no instance, created or acknowledged a debt for a
greater sum than the true and correct amount.
Petitioner, its officers, directors and stockholders
have not, directly or indirectly, concealed,
fraudulently sold or otherwise fraudulently disposed
of, any part of petitioner's real or personal property,
26 of 132
estate, effects or rights of action, and petitioner, its
officers, directors and stockholders have not in any way
compounded with any of its creditors in order to give
preference to such creditors, or to receive or to accept any
profit or advantage therefrom, or to defraud or deceive in
any manner any creditor to whom petitioner is indebted.
Petitioner, its officers, directors, and stockholders have
been acting in good faith and with due diligence.
Section 4. Opposition to or Comment on Petition. -
Every creditor of the debtor or any interested party shall
file his verified opposition to or comment on the petition
not later than fifteen (15) days before the date of the
initial hearing fixed in the stay order. After such time, no
creditor or interested party shall be allowed to file any
comment thereon or opposition thereto without leave of
court.
If the Schedule of Debts and Liabilities omits a claim or
liability, the creditor concerned shall attach to its comment
or opposition a verified statement of the obligations
allegedly due it.
Section 5. Initial Hearing. -
(a) On or before the initial hearing set in the order
mentioned in Section 7 of Rule 3, the petitioner shall file a
publisher's affidavit showing that the publication
requirements and a petitioner's affidavit showing that the
notification requirement for foreign creditors had been
complied with, as required in the stay order.
(b) Before proceeding with the initial hearing, the court
shall determine whether the jurisdictional requirements set
forth above had been complied with. After finding that
such requirements are met, the court shall ensure that the
parties consider in detail all of the following:
(1) Amendments to the rehabilitation plan proposed by the
debtor;
(2) Simplification of the issues;
(3) The possibility of obtaining stipulations and admission
of facts and documents, including resort to request for
admission under Rule 26 of the Rule of Court;
(4) The possibility of amicably agreeing on any issue
brought up in the comments on, or opposition to, the
petition;
(5) Referral of any accounting, financial and other
technical issues to an expert;
(6) The possibility of submitting the petition for decision on
the basis of the comments, opposition, affidavit and other
documents on record;
(7) The possibility of a new rehabilitation plan voluntarily
agreed upon by the debtor and its creditors; and
(8) Such other matters as may aid in the speedy and
summary disposition of the case.
 SUN TZU NOTES
Section 6. Additional Hearings. - The court may
hold additional hearings as part of the initial hearing
contemplated in these Rules but the initial hearing
must be concluded not later than ninety (90) days
from the initial date of the initial hearing fixed in the
stay order.
Section 7. Order After Initial Hearing. -
(a) Within twenty (20) days after the last hearing,
the court shall issue an order which shall:
(1) Give due course to the petition and immediately
refer the petition and its annexes to the
rehabilitation receiver who shall evaluate the
rehabilitation plan and submit his recommendations
to the court not later than ninety (90) days from the
date of the last initial hearing, if the court is satisfied
that there is merit to the petition, otherwise the
court shall immediately dismiss the petition; and
(2) Recite in detail the matters taken up in the initial
hearing and the action taken thereon, including a
substitute rehabilitation plan contemplated in
Sections 5 (b)(7) and (8) of this Rule;
(b) If the debtor and creditors agree on a new
rehabilitation plan pursuant to Section 5 (b)(7) of
this Rule, the order shall so state the fact and
require the rehabilitation receiver to supply the
details of the plan and submit it for the approval of
the court not later than sixty (6) days from the date
of the last initial hearing. The court shall approve the
new rehabilitation plan not later than ninety (90)
days from the date of the last initial hearing upon
concurrence of the following:
(1) Approval or endorsement of creditors holding at
least two-thirds (2/3) of the total liabilities of the
debtor including secured creditors holding more than
fifty percent (50%) of the total secured claims of the
debtor and unsecured creditors holding more than
fifty percent (50%) of the total unsecured claims of
the debtor;
(2) The rehabilitation plan complies with the
requirements specified in Section 18 of Rule 3;
(3) The rehabilitation plan would provide the
objecting class of creditors with payments whose
present value projected in the plan would be greater
than that which they would have received if the
assets of the debtor were sold by a liquidator within
a six (6) month period from the date of filing of the
petition; and
(4) The rehabilitation receiver has recommended
approval of the plan.
The approval by the court of the new rehabilitation
plan shall have the same effect as approval of a
rehabilitation plan under Section 20 of Rule 3.
Section 8. Creditors' Meetings. - If no new
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rehabilitation plan is agreed upon by the debtor and the
creditors, the rehabilitation receiver, at any time before he
submits his evaluation on the debtor-proposed
rehabilitation plan to the court as prescribed in Section
7(a)(1) of this Rule, shall, either alone or with the debtor,
meet with the creditors or any interested party t discuss
the plan with a view to clarifying or resolving any matter
connected therewith.
Section 9. Comments on or Opposition to
Rehabilitation Plan. - Any creditor or interested party of
record may file comments on or opposition to the proposed
rehabilitation plan, with a copy given to the rehabilitation
receiver, not later than sixty (60) days from the date of
the last initial hearing. The court shall conduct summary
and non-adversarial proceedings to receive evidence, if
necessary, in hearing the comments on and opposition to
the plan.
Section 10. modification of Proposed Rehabilitation
Plan. - The debtor may modify its rehabilitation plan in the
light of the comments of the rehabilitation receiver and
creditors or any interested party and submit a revised or
substitute rehabilitation plan for the final approval of the
court. Such rehabilitation plan must be submitted to the
court not later than ten (10) moths from the date of filing
of the petition.
Section 11. Approval of Rehabilitation Plan. - The
court may approve a rehabilitation plan even over the
opposition of creditors of the debtor if, in its judgement,
the rehabilitation of the debtor is feasible and the
opposition of the creditors is manifestly unreasonable if the
following are present:
(a) The rehabilitation plan complies with the requirements
specified in Section 18 of Rule 3;
(b) The rehabilitation plan would provide the objecting
class of creditors with payments whose present value
projected in the plan would be greater than that which
they would have received if the assets of the debtor were
sold by a liquidator within a six (6)-month period from the
date of filing of the petition; and
(c) The rehabilitation receiver has recommended approval
of the plan.
In approving the rehabilitation plan, the court shall ensure
that the rights of the secured creditors are not impaired.
The court shall also issue the necessary orders or
processes for its immediate and successful
implementation. it may impose such terms, conditions, or
restrictions as the effective implementation and monitoring
thereof may reasonably require, or for the protection and
preservation of the interests of the creditors should the
plan fall.
Section 12. Period to Decide Petition. - The court shall
decide the petition within one (1) year from the date of
filing of the petition, unless the court, for good cause
shown, is able to secure an extension of the period from
the Supreme Court.
 SUN TZU NOTES
RULE 5
CREDITOR-INITIATED REHABILITATION
Section 1. Who May Petition. - Any creditor or
creditors holding at least twenty percent (20%) of
the debtor's total liabilities may file a petition with
the proper regional trial court for rehabilitation of a
debtor that cannot meet its debts as they
respectively fall due.
Section 2. Requirements for Creditor-Initiated
Petitions. - Where the petition is filed by a creditor
or creditors under this Rule, it is sufficient that the
petition is accompanied by a rehabilitation plan and a
list of at least three (3) nominees to the position of
rehabilitation receiver and verified by a sworn
statement that the affiant has read the petition and
that its contents are true and correct of his personal
knowledge or based on authentic records and that
the petition is being filed to protect the interests of
the debtor, the stockholders, the investors and the
creditors of the debtor.
Section 3. Applicability of Provisions Relating to
Debtor-Initiated Rehabilitation. - The provisions
of Sections 5 to 12 of Rule 4 shall apply to
rehabilitation under this Rule.
RULE 6
PRE-NEGOTIATED REHABILITATION
Section 1. Pre-negotiated Rehabilitation Plan. -
A debtor that foresees the impossibility of meeting
its debts as they fall due may, by itself or jointly with
any of its creditors, file a verified petition for the
approval of a pre-negotiated rehabilitation plan. The
petition shall comply with Section 2 of Rule 4 and be
supported by an affidavit showing the written
approval or endorsement of creditors holding at least
two-thirds (2/3) of the total liabilities of the debtor,
including secured creditors holding more than fifty
percent (50%) of the total secured claims of the
debtor and unsecured creditors holding more than
fifty percent (50%) of the total unsecured claims of
the debtor.
Section 2. Issuance of Order. - If the court finds
the petition sufficient in form and substance, it shall,
not later than five (5) working days from the filing of
the petition, issue an order which shall:
(a) Identify the debtor, its principal business or
activity/ies and its principal place of business;
(b) Direct the publication of the order in a newspaper
of general circulation once a week for at least two
(2) consecutive weeks, with the first publication to
be made within seven (7) days from the time of its
issuance;
(c) Direct the service by personal delivery of a copy
of the petition on each creditor who is not a
petitioner holding at least five percent (5%) of the
total liabilities of the debtor, as determined in the
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schedule attached to the petition, within three (3) days;
(d) Direct the petitioner to furnish a copy of the petition
and its annexes, as well as the stay order, to the relevant
regulatory agency;
(e) State that copies of the petition and the rehabilitation
plan are available for examination and copying by any
interested party;
(f) Direct creditors and other parties interested (including
the Securities and Exchange Commission and the relevant
regulatory agencies such as, but not limited to, the Bangko
Sentral ng Pilipinas, the Insurance Commission, the
National Telecommunications Commission, the Housing
and Land Use Regulatory Board and the Energy Regulatory
Commission) in opposing the petition or rehabilitation plan
to file their verified objections thereto or comments
thereon within a period of not later than twenty (20) days
from the second publication of the order, with a warning
that failure to do so will bar them from participating in the
proceedings;
(g) Appoint the rehabilitation receiver named in the plan,
unless the court finds that he is not qualified under these
Rules in which case it may appoint a qualified rehabilitation
receiver of its choice;
(h) Stay enforcement of all claims, whether for money or
otherwise and whether such enforcement is by court action
or otherwise, against the debtor, its guarantors and
persons not solidarily liable with the debtor; provided, that
the stay order shall not cover claims against letters of
credit and similar security arrangements issued by a third
party to secure the payment of the debtor's obligations;
provided further, that the stay order shall not cover
foreclosure by a creditor of property not belonging to a
debtor under corporate rehabilitation; provided, however,
that where the owner of such property sought to be
foreclosed is also a guarantor or one who is not solidarily
liable, said owner shall be entitled to be benefit of
excussion as such guarantor;
(i) Prohibit the debtor from selling, encumbering,
transferring, or disposing in any manner any of its
properties except in the ordinary course of business;
(j) Prohibit the debtor from making any payment of its
liabilities outstanding as of the date of filing of the petition;
(k) Prohibit the debtor's suppliers of goods or services
from withholding supply of goods and services in the
ordinary course of business for as long as the debtor
makes payments for the services and goods supplied after
the issuance of the stay order;
(l) Direct the payment in full of all administrative expenses
incurred after the issuance of the stay order; and
(m) Direct the payment of new loans or other forms of
credit accommodations obtained for the rehabilitation of
the debtor with prior court approval.
Section 3. Approval of Plan. - Within ten (10) days from
 SUN TZU NOTES
the date of the second publication of the order
referred to in Section 2 of this Rule, the court shall
approve the rehabilitation plan unless a creditor or
other interested party submits a verified objection to
it in accordance with the next succeeding section.
Section 4. Objection to Petition or
Rehabilitation Plan. - Any creditor or other
interested party may submit to the court a verified
objection to the petition or the rehabilitation plan.
The objection shall be limited to the following:
(a) The petition or the rehabilitation plan or their
attachments contain material omissions or are
materially false or misleading;
(b) The terms of rehabilitation are unattainable; or
(c) The approval or endorsement of creditors
required under Section 1 of this Rule has not been
obtained
Copies of any objection to the petition or the
rehabilitation plan shall be served on the petitioning
debtor and/or creditors.
Section 5. Hearing on Objections. - The court
shall set the case for hearing not earlier than ten
(10) days and no longer than twenty (20) days from
the date of the second publication of the order
mentioned in Section 2 of this Rule on the objections
is in accordance with the immediately preceding
section, it shall direct the petitioner to cure the
defect within a period fifteen (15) days from receipt
of the order.
Section 6. Period for Approval of Rehabilitation
Plan. - The court shall decide the petition not later
than one hundred twenty (120) days from the date
of the filing of the petition. If the court fails to do so
within said period, the rehabilitation plan shall be
deemed approved.
Section 7. Effects of Approval of Rehabilitation
Plan. - Approval of the rehabilitation plan under this
Rule shall have the same legal effect as approval of a
rehabilitation plan under Section 20 of Rule 3.
Section 8. Revocation of Approved
Rehabilitation Plan. - Not later than thirty (30)
days from the approval of a rehabilitation plan under
this Rule, the plan may, upon motion and after
notice and hearing, be revoked on the ground that
the approval was secured by fraud or that the
petitioner has failed to cure the defect ordered by
the court pursuant to Section 5 of this Rule.
Section 9. Effect of Rule on Pending Petitions. -
Any pending petition for rehabilitation that has not
undergone the initial hearing prescribed under the
Interim Rules of Procedure for Corporate
Rehabilitation at the time of the effectivity of these
Rules may be converted into a rehabilitation
proceeding under this Rule.
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RULE 7
RECOGNITION OF FOREIGN PROCEEDINGS
Section 1. Scope of Application. - This Rule applies
where (a) assistance is sought in a Philippine court by a
foreign court or a foreign representative in connection with
a foreign proceeding; (b) assistance is sought in a foreign
State in connection with a domestic proceeding governed
by these Rules; or (c) a foreign proceeding and a domestic
proceeding are concurrently taking place.
The sole fact that a petition is filed pursuant to this Rule
does not subject the foreign representative or the foreign
assets and affairs of the debtor to the jurisdiction of the
local courts for any purpose other than the petition.
Section 2. Non-Recognition of Foreign Proceeding. -
Nothing in this Rule prevents the court from refusing to
take an action governed by this Rule if (a) the action would
be manifestly contrary to the public policy of the
Philippines; and (b) if the court finds that the country of
which the petitioner is a national does not grant
recognition to a Philippine rehabilitation proceeding in a
manner substantially in accordance with this Rule.
Section 3. Petition for Recognition of Foreign
Proceeding. - A foreign representative may apply with the
Regional Trial Court where the debtor resides for
recognition of the foreign proceeding in which the foreign
representative has been appointed.
A petition for recognition shall be accompanied by:
(a) A certified copy of the decision commencing the foreign
proceeding and appointing the foreign representative; or
(b) A certificate from the foreign court affirming the
existence of the foreign proceeding and of the appointment
of the foreign representative; or
(c) In the absence of evidence referred to in subparagraph
(a) and (b), any other evidence acceptable to the court of
the existence of the foreign proceeding and of the
appointment of the foreign representative.
Section 4. Recognition of Foreign Proceeding. - A
foreign proceeding shall be recognized if:
(a) The proceeding is a foreign proceeding as defined
herein;
(b) The person or body applying for recognition is a foreign
representative as defined herein; and
(c) The petition meets the requirements of Section 3 of
this Rule;
Section 5. Period to Recognize Foreign Proceeding. -
A petition for recognition of a foreign proceeding shall be
decided within thirty (30) days from the filing thereof.
Section 6. Notification to Court. - From the time of
filing the petition for recognition f the foreign proceeding,
 SUN TZU NOTES
the foreign representative shall inform the court
promptly of:
(a) Any substantial change in the status of the
foreign proceeding or the status of the foreign
representative's appointment; and
(b) Any other foreign proceeding regarding the same
debtor that becomes known to the foreign
representative.
Section 7. Provisional Relief that May be
Granted upon Application for Recognition of
Foreign Proceeding. - From the time of filing a
petition for recognition until the same is decided
upon, the court may, upon motion of the foreign
representative where relief is urgently needed to
protect the assets of the debtor or the interests of
the creditors, grant relief of a provisional nature,
including:
(a) Staying execution against the debtor's assets;
(b) Entrusting the administration or realization of all
or part of the debtor's assets located in the
Philippines to the foreign representative or another
person designated by the court in order to protect
and preserve the value of assets that, by their
nature or because of other circumstances, are
perishable, susceptible to devaluation or otherwise in
jeopardy;
(c) Any relief mentioned in Section 9(a)(1), (2) and
(7) of this Rule.
Section 8. Effects of Recognition of Foreign
Proceeding. - Upon recognition of a foreign
proceeding:
(a) Commencement or continuation of individual
actions or individual proceedings concerning the
debtor's assets, rights, obligations or liabilities is
stayed; provided, that such stay does not affect the
right to commence individual actions or proceedings
to the extent necessary to preserve a claim against
the debtor.
(b) Execution against the debtor's assets is stayed;
and
(c) The right to transfer, encumber or otherwise
dispose of any assets of the debtor is suspended.
Section 9. Relief That May be Granted After
Recognition of Foreign Proceeding. -
(a) Upon recognition of a foreign proceeding, where
necessary to protect the assets of the debtor or the
interests of the creditors, the court may, upon
motion of the foreign representative, grant any
appropriate relief including:
(1) Staying the commencement or continuation of
individual actions or individual proceedings
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concerning the debtor's assets, rights, obligations or
liabilities to the extent they have not been stayed under
Section 8(a) of this Rule;
(2) Staying execution against the debtor's assets to the
extent it has not been stayed under Section 8(b) of this
Rule;
(3) Suspending the right to transfer, encumber or
otherwise dispose of any assets of the debtor to the extent
this right has not been suspended under Section 8(c) of
this Rule;
(4) Providing for the examination of witnesses, the taking
of evidence or the delivery of information concerning the
debtor's assets, affairs, rights, obligations or liabilities;
(5) Entrusting the administration or realization of all or
part of the debtor's assets located in the Philippines to the
foreign representative or another person designated by the
court;
(6) Extending the relief granted under Section 7 of this
Rule;
(7) Granting any additional relief that may be available to
the rehabilitation receiver under these laws.
(b) Upon recognition of a foreign proceeding, the court
may, at the request of the foreign representative, entrust
the distribution of all or part of the debtor's assets located
in the Philippines to the foreign representative or another
person designated by the court; provided that the court is
satisfied that the interests of local creditors are adequately
protected.
Section 10. Protection of Creditors and Other
Interested Persons. -
(a) In granting or denying relief under this Rule or in
modifying or terminating the relief under paragraph (c) of
this Section, the court must be satisfied that the interests
of the creditors and other interested persons, including the
debtor, are adequately protected.
(b) The court may subject the relief granted under Section
7 or Section 9. Of this Rule to conditions it considers
appropriate.
(c) The court may, upon motion of the foreign
representative or a person affected by the relief granted
under Section 7 or Section 9 of this Rule, or on its own
motion, modify or terminate such relief.
Section 11. Actions to Avoid Acts Detrimental to
Creditors. - Upon recognition of a foreign proceeding, the
foreign representative acquires the standing to initiate
actions to avoid or otherwise render ineffective acts
detrimental to creditors that are available under these
Rules.
Section 12. Intervention by Foreign Representative
in Philippine Proceedings. - Upon recognition of a
foreign proceeding, the foreign representative may
 SUN TZU NOTES
intervene in any action or proceeding in the
Philippines in which the debtor is a party.
Section 13. Cooperation and Direct
Communication with Foreign Courts and
Foreign Representatives. - In matters covered by
this Rule, the court shall cooperate to the maximum
extent possible with foreign courts or foreign
representatives.
The court is entitled to communicate directly with, or
request information or assistance directly from,
foreign courts or foreign representatives.
Section 14. Forms of Cooperation. - Cooperation
may be implemented by any appropriate means,
including but not limited to the following:
(a) Appointment of a person or body to act at the
discretion of the court;
(b) Communication of information by any means
considered appropriate by the court;
(c) Coordination of the administration and
supervision of the debtor's assets and affairs;
(d) Approval or implementation by courts of
agreements concerning the coordination of
proceedings;
(e) Coordination of concurrent proceedings regarding
the same debtor;
(f) Suspension of proceedings against the debtor;
(g) Limiting the relief of assets that should be
administered in a foreign proceeding pending in a
jurisdiction other than the place where the debtor
has its principal place of business (foreign non-main
proceeding) or information required in that
proceeding; and
(h) Implementation of rehabilitation or re-
organization plan for the debtor.
Nothing in this Rule limits the power of the court to
provide additional assistance to the foreign
representative under other applicable laws.
Section 15. Commencement of Local
Proceeding after Recognition of Foreign
Proceeding. - After the recognition of a foreign
proceeding, a local proceeding under these Rules
may be commenced only if the debtor is doing
business in the Philippines, the effects of the
proceedings shall be restricted to the assets of the
debtor located in the country and, to the extent
necessary to implement cooperation and
coordination under Sections 13 and 14 of this Rule,
to the other assets of the debtor that, under local
laws, must be administered in that proceeding.
Section 16. Local and Foreign Proceedings. -
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Where a foreign proceeding and a local proceeding are
taking place concurrently regarding the same debtor, the
court shall seek cooperation and coordination under
Section 13 and 14 of this Rule. Any relief granted to the
foreign proceeding must be made consistent with the relief
granted in the local proceeding.
RULE 8
PROCEDURAL REMEDIES
Section 1. Motion for Reconsideration. - A party may
file a motion for reconsideration of any order issued by the
court prior to the approval of the rehabilitation plan. No
relief can be extended to the party aggrieved by the
court's order on the motion through a special civil action
for certiorari under Rule 65 of the rules of Court. Such
order can only be elevated to the Court of Appeals as an
assigned error in the petition for review of the decision or
order approving or disapproving the rehabilitation plan.
An order issued after the approval of the rehabilitation plan
can de reviewed only through a special civil action for
certiorari under Rule 65 of the Rules of Court.
Section 2. Review of Decision or Order on
Rehabilitation Plan. - an order approving or disapproving
a rehabilitation plan can only be reviewed through a
petition for review to the Court of Appeals under Rule 43 of
the Rules of Court within fifteen (15) days from notice of
the decision or order.
RULE 9
FINAL PROVISIONS
Section 1. Severability. - If any provision or section of
these Rules is held invalid, the other provisions or sections
shall not be affected thereby.
Section 2. Transitory Provision. - Unless the court
orders otherwise to prevent manifest injustice, any
pending petition for rehabilitation that has not undergone
the initial hearing prescribed under the Interim Rules of
Procedure for Corporate Rehabilitation at the time of the
effectivity of these Rules shall be governed by these rules.
Section 3. Effectivity. - These Rules shall take affect on
16 January 2009 following its publication in two (2)
newspapers of general circulation in the Philippines.
ANNEX "A"
AFFIDAVIT OF GENERAL FINANCIAL CONDITION
(1) Are you an officer of the debtor referred to in these
proceedings?
(2) What is your full name and what position do you hold
in the debtor?
(3) What is the full name of the debtor and what is the
address of its head office?
(4) When was it formed or incorporated?
(5) When did the debtor commence business?
 SUN TZU NOTES
(6) What is the nature of its business? What is the
market share of the debtor in the industry in which it
is engaged?
(7) Who are the parties, members, or stockholders?
How many employees?
(8) What is the capital of the debtor?
(9) What is the capital contribution and what is the
amount of the capital, paid and unpaid, of each of
the partners or shareholders?
(10) Do any of these people hold the shares in trust
for others?
(11) Who are the directors and officers of the
debtors?
(12) Has the debtor any subsidiary corporation? If
so, give particulars?
(13) Has the debtor properly maintained its books
and are they updated?
(14) Were the books audited annually?
(15) If so, what is the name of the auditor and when
was the last audited statement drawn up?
(16) Have all proper returns been made to the
various government agencies requiring same?
(17) When did the debtor first become aware of its
problems?
(18) Has the debtor within the twelve months
preceding the filing of the petition:
(a) made any payments, returned any goods or
delivered any property to any of its creditors, except
in the normal course of business?
(b) executed any mortgage, pledge, or security over
any of its properties in favor of any creditor?
(c) transferred or disposed of any of its properties in
payment of any debt?
(d) sold, disposed of, or removed any of its property
except in the ordinary course of business?
(e) sold any merchandise at less than fair market
value or purchased merchandise or services at more
than fair market value?
(f) made or been a party to any settlement of
property in favor of any person?
If, so, give particulars.
(19) Has the debtor recorded all sales or dispositions
of assets?
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(20) What were the sales for the last three years and what
percentage of the sales represented the profit or markup?
(21) What were the profits or losses for the debtor for the
last three years?
(22) What are the causes of the problems of the debtor?
Please provide particulars?
(23) When did you first notice these problems and what
actions did the debtor take to rectify them?
(24) How much do you estimate is needed to rehabilitate
the debtor?
(25) Has any person expressed interest in investing new
money into the debtor?
(26) Are there any pending and threatened legal actions
against the debtor? If so, please provide particulars.
(27) Has the debtor discussed any restructuring or
repayment plan with any of the creditors? Please provide
status and details.
(28) Has any creditor expressed interest in restructuring
the debts of the debtor? If so, please give particulars.
(29) Have employees' wages and salaries been kept
current? If not, how much are in arrears and what time
period do the arrears represent?
(30) Have obligation to the government and its agencies
been kept current? If not, how much are in arrears and
what time period do the arrears represent?
C.ATTORNEYS FEES AND APPEARANCE OF
LAWYERS
UNLAWFUL AND LAWFUL WITHHOLDING OF WAGES;
CONCEPT
ART. 111. Attorneys fees. - (a) In cases of unlawful
withholding of wages, the culpable party may be assessed
attorneys fees equivalent to ten percent of the amount of
wages recovered.
(b) It shall be unlawful for any person to demand or
accept, in any judicial or administrative proceedings for the
recovery of wages, attorneys fees which exceed ten
percent of the amount of wages recovered.
Unlawful withholding of wages is prohibited except
when there is consent or debt due to the employee.
ATTORNEYS FEE; 2 CONCEPTS
1.) Ordinary claims for services rendered by an attorney
(goes to the attorneys pocket)
2.) Extraodrinary (Art. 111) attorneys fees in the
concept of damages awarded to the party-litigant
 SUN TZU NOTES
APPEARANCE OF LAWYERS & NON-LAWYERS
ART. 222. Appearances and Fees. - (a) Non-
lawyers may appear before the Commission or any
Labor Arbiter only:
1. If they represent themselves; or 2. If they
represent their organization or members thereof.
(b) No attorneys fees, negotiation fees or similar
charges of any kind arising from any collective
bargaining agreement shall be imposed on any
individual member of the contracting union:
Provided, However, that attorneys fees may be
charged against union funds in an amount to be
agreed upon by the parties. Any contract, agreement
or arrangement of any sort to the contrary shall be
null and void.
RULE III, SECS. 8 & 9, 2005 NLRC RULES
Section 8. Appearances. - a) A lawyer appearing for
a party is presumed to be properly authorized for
that purpose. In every case, he shall indicate in his
pleadings and motions his Attorney's Roll Number, as
well as his PTR and IBP numbers for the current
year.
b) A non-lawyer may appear as counsel in any of the
proceedings before the Labor Arbiter or Commission
only under the following conditions:
(1) he represents himself as party to the case;
(2) he represents a legitimate labor organization, as
defined under Article 212 and 242 of the Labor Code,
as amended, which is a party to the case: Provided,
that he presents: (i) a certification from the Bureau
of Labor Relations (BLR) or Regional Office of the
Department of Labor and Employment attesting that
the organization he represents is duly registered and
listed in the roster of legitimate labor organizations;
(ii) a verified certification issued by the secretary
and attested to by the president of the said
organization stating that he is authorized to
represent the said organization in the said case; and
(iii) a copy of the resolution of the board of directors
of the said organization granting him such authority;
(3) he represents a member or members of a
legitimate labor organization that is existing within
the employer's establishment, who are parties to the
case: Provided, that he presents: (i) a verified
certification attesting that he is authorized by such
member or members to represent them in the case;
and (ii) a verified certification issued by the
secretary and attested to by the president of the said
organization stating that the person or persons he is
representing are members of their organization
which is existing in the employer's establishment;
(4) he is a duly-accredited member of any legal aid
office recognized by the Department of Justice or
Integrated Bar of the Philippines: Provided, that he
(i) presents proof of his accreditation; and (ii)
represents a party to the case;
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(5) he is the owner or president of a corporation or
establishment which is a party to the case: Provided, that
he presents: (i) a verified certification attesting that he is
authorized to represent said corporation or establishment;
and (ii) a copy of the resolution of the board of directors of
said corporation, or other similar resolution or instrument
issued by said establishment, granting him such authority.
c) A non-lawyer who appears in contravention of this
Section shall not be recognized in any proceedings before
the Labor Arbiter or the Commission.
d) Appearances may be made orally or in writing. In both
cases, the complete name and office address of both
parties shall be made on record and the adverse party or
his counsel or representative properly notified.
e) Any change in the address of counsel or representative
should be filed with the records of the case and furnished
the adverse party or counsel.
f) Any change or withdrawal of counsel or representative
shall be made in accordance with the Rules of Court.
Section 9. Authority to Bind Party. - Attorneys and other
representatives of parties shall have authority to bind their
clients in all matters of procedure; but they cannot,
without a special power of attorney or express consent,
enter into a compromise agreement with the opposing
party in full or partial discharge of a client's claim.
AWARD OF ATTORNEYS FEES; LIMITATIONS [Art.
2208, NCC]
Art. 2208. In the absence of stipulation, attorney's fees
and expenses of litigation, other than judicial costs, cannot
be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has
compelled the plaintiff to litigate with third persons or to
incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against
the plaintiff;
(4) In case of a clearly unfounded civil action or
proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident
bad faith in refusing to satisfy the plaintiff's plainly valid,
just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household
helpers, laborers and skilled workers;
(8) In actions for indemnity under workmen's
compensation and employer's liability laws;
(9) In a separate civil action to recover civil liability
arising from a crime;
 SUN TZU NOTES
(10) When at least double judicial costs are
awarded;
(11) In any other case where the court deems it
just and equitable that attorney's fees and expenses
of litigation should be recovered.
In all cases, the attorney's fees and expenses of
litigation must be reasonable.
Refer to AZUCENA pp. 351-353; 101-105 of
BOOK 2
Instances when attorneys fees are awarded:
o Art. 111 of the LC
o Art. 2208 of the NCC
D. SPECIAL TYPES OF WORKERS
APPRENTICE, LEARNED & HANDICAPPED
WORKERS [ARTS. 57-81]
APPRENTICES
ART. 57. Statement of objectives. - This Title
aims:
(1) To help meet the demand of the economy for
trained manpower;
(2) To establish a national apprenticeship program
through the participation of employers, workers and
government and non-government agencies; and
(3) To establish apprenticeship standards for the
protection of apprentices.
ART. 58. Definition of Terms. - As used in this
Title:
(a) "Apprenticeship" means practical training on the
job supplemented by related theoretical instruction.
(b) An "apprentice" is a worker who is covered by a
written apprenticeship agreement with an individual
employer or any of the entities recognized under this
Chapter.
(c) An "apprenticeable occupation" means any trade,
form of employment or occupation which requires
more than three (3) months of practical training on
the job supplemented by related theoretical
instruction.
(d) "Apprenticeship agreement" is an employment
contract wherein the employer binds himself to train
the apprentice and the apprentice in turn accepts the
terms of training.
ART. 59. Qualifications of apprentice. - To
qualify as an apprentice, a person shall:
(a) Be at least fourteen (14) years of age;
(b) Possess vocational aptitude and capacity for
34 of 132
appropriate tests; and
(c) Possess the ability to comprehend and follow oral and
written instructions.
Trade and industry associations may recommend to the
Secretary of Labor appropriate educational requirements
for different occupations.
ART. 60. Employment of apprentices. - Only employers
in the highly technical industries may employ apprentices
and only in apprenticeable occupations approved by the
Secretary of Labor and Employment. (As amended by
Section 1, Executive Order No. 111, December 24, 1986).
ART. 61. Contents of apprenticeship agreements. -
Apprenticeship agreements, including the wage rates of
apprentices, shall conform to the rules issued by the
Secretary of Labor and Employment. The period of
apprenticeship shall not exceed six months.
Apprenticeship agreements providing for wage rates below
the legal minimum wage, which in no case shall start
below 75 percent of the applicable minimum wage, may be
entered into only in accordance with apprenticeship
programs duly approved by the Secretary of Labor and
Employment. The Department shall develop standard
model programs of apprenticeship. (As amended by
Section 1, Executive Order No. 111, December 24, 1986).
ART. 62. Signing of apprenticeship agreement. -Every
apprenticeship agreement shall be signed by the employer
or his agent, or by an authorized representative of any of
the recognized organizations, associations or groups and
by the apprentice.
An apprenticeship agreement with a minor shall be signed
in his behalf by his parent or guardian, if the latter is not
available, by an authorized representative of the
Department of Labor, and the same shall be binding during
its lifetime.
Every apprenticeship agreement entered into under this
Title shall be ratified by the appropriate apprenticeship
committees, if any, and a copy thereof shall be furnished
both the employer and the apprentice.
ART. 63. Venue of apprenticeship programs. - Any
firm, employer, group or association, industry organization
or civic group wishing to organize an apprenticeship
program may choose from any of the following
apprenticeship schemes as the training venue for
apprentice:
(a) Apprenticeship conducted entirely by and within the
sponsoring firm, establishment or entity;
(b) Apprenticeship entirely within a Department of Labor
and Employment training center or other public training
institution; or
(c) Initial training in trade fundamentals in a training
center or other institution with subsequent actual work
participation within the sponsoring firm or entity during the
 SUN TZU NOTES
final stage of training.
ART. 64. Sponsoring of apprenticeship
program. - Any of the apprenticeship schemes
recognized herein may be undertaken or sponsored
by a single employer or firm or by a group or
association thereof or by a civic organization. Actual
training of apprentices may be undertaken:
(a) In the premises of the sponsoring employer in
the case of individual apprenticeship programs;
(b) In the premises of one or several designated
firms in the case of programs sponsored by a group
or association of employers or by a civic
organization; or
(c) In a Department of Labor and Employment
training center or other public training institution.
ART. 65. Investigation of violation of
apprenticeship agreement. - Upon complaint of
any interested person or upon its own initiative, the
appropriate agency of the Department of Labor and
Employment or its authorized representative shall
investigate any violation of an apprenticeship
agreement pursuant to such rules and regulations as
may be prescribed by the Secretary of Labor and
Employment.
ART. 66. Appeal to the Secretary of Labor and
Employment. - The decision of the authorized
agency of the Department of Labor and Employment
may be appealed by any aggrieved person to the
Secretary of Labor and Employment within five (5)
days from receipt of the decision. The decision of the
Secretary of Labor and Employment shall be final
and executory.
ART. 67. Exhaustion of administrative
remedies. - No person shall institute any action for
the enforcement of any apprenticeship agreement or
damages for breach of any such agreement, unless
he has exhausted all available administrative
remedies.
ART. 68. Aptitude testing of applicants. -
Consonant with the minimum qualifications of
apprentice-applicants required under this Chapter,
employers or entities with duly recognized
apprenticeship programs shall have primary
responsibility for providing appropriate aptitude tests
in the selection of apprentices. If they do not have
adequate facilities for the purpose, the Department
of Labor and Employment shall perform the service
free of charge.
ART. 69. Responsibility for theoretical
instruction. - Supplementary theoretical instruction
to apprentices in cases where the program is
undertaken in the plant may be done by the
employer. If the latter is not prepared to assume the
responsibility, the same may be delegated to an
appropriate government agency.
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ART. 70. Voluntary organization of apprenticeship
programs; exemptions. - (a) The organization of
apprenticeship program shall be primarily a voluntary
undertaking by employers;
(b) When national security or particular requirements of
economic development so demand, the President of the
Philippines may require compulsory training of apprentices
in certain trades, occupations, jobs or employment levels
where shortage of trained manpower is deemed critical as
determined by the Secretary of Labor and Employment.
Appropriate rules in this connection shall be promulgated
by the Secretary of Labor and Employment as the need
arises; and
(c) Where services of foreign technicians are utilized by
private companies in apprenticeable trades, said
companies are required to set up appropriate
apprenticeship programs.
ART. 71. Deductibility of training costs. - An additional
deduction from taxable income of one-half (1/2) of the
value of labor training expenses incurred for developing
the productivity and efficiency of apprentices shall be
granted to the person or enterprise organizing an
apprenticeship program: Provided, That such program is
duly recognized by the Department of Labor and
Employment: Provided, further,
That such deduction shall not exceed ten (10%) percent of
direct labor wage: and Provided, finally, That the person or
enterprise who wishes to avail himself or itself of this
incentive should pay his apprentices the minimum wage.
ART. 72. Apprentices without compensation. - The
Secretary of Labor and Employment may authorize the
hiring of apprentices without compensation whose training
on the job is required by the school or training program
curriculum or as requisite for graduation or board
examination.
RULE VI, BOOK II
Apprenticeship Training and Employment of Special
Workers
SECTION 1. Objectives. The promotion, development,
and maintenance of apprenticeship programs shall have
the following objectives:
(a) To meet the needs of the economy for training
manpower in the widest possible range of employment;
(b) To establish a national apprenticeship program
through the participation of employers, workers,
government, civic and other groups; and
(c) To establish apprenticeship standards for the
protection of apprentices and upgrading of skills.
SECTION 2. Definition of terms.
(a) "Apprenticeship" means any training on the job
 SUN TZU NOTES
supplemented by related theoretical instructions
involving apprenticeable occupations and trades as
may be approved by the Secretary of Labor and
Employment.
(b) "Apprentice" is a worker who is covered by a
written apprenticeship agreement with an employer.
(c) "Apprenticeship agreement" is a written
employment contract wherein the employer binds
himself to train the apprentice and the latter in turn
agrees to work for the employer.
(d) "Apprenticeable occupation" means any trade,
form of employment or occupation approved for
apprenticeship by the Secretary of Labor and
Employment, which requires for proficiency more
than three months of practical training on the job
supplemented by related theoretical instructions.
(e) "Apprenticeship standards" means the written
implementing plans and conditions of an
apprenticeship program.
(f) "Bureau" means the Bureau of Apprenticeship.
(g) "Employer" means the individual firm or any
other entity qualified to hire apprentice under the
Code.
(h) "On the job training" is the practical work
experience through actual participation in productive
activities given to or acquired by an apprentice.
(i) "Related theoretical instructions" means
technical information based on apprenticeship
standards approved by the Bureau designed to
provide the apprentice theoretical competence in his
trade.
(j) "Highly Technical Industries" means trade,
business, enterprise, industry, or other activity,
which is engaged in the application of advanced
technology.
SECTION 3. Voluntary nature of apprenticeship
program. The organization of apprenticeship
program shall be primarily a voluntary undertaking
of employers, except as otherwise provided.
SECTION 4. Venue of on-the-job training. The
practical aspect of on-the-job training of apprentices
may be undertaken:
(a) In the plant, shop or premises of the employer
or firm concerned if the apprenticeship program is
organized by an individual employer or firm;
(b) In the premises of one or several firms
designated for the purpose by the organizer of the
program if such organizer is an association of
employers, civic group and the like; and
(c) In a Department of Labor and Employment
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Training Center or other public training institutions with
which the Bureau has made appropriate arrangements.
SECTION 5. On-the-job training to be explicitly
described. The manner in which practical or on-the-job
training shall be provided must be specifically described in
the apprenticeship standards of a particular program.
SECTION 6. Recognition of apprenticeship programs.
To enjoy the benefits which the Bureau or other
government agencies may extend to duly recognized
apprenticeship programs, an employer shall submit in
quadruplicate to the Training Section of the appropriate
Apprenticeship Division of the appropriate Regional Office
the apprenticeship standards of the proposed program
prepared in accordance with guidelines set by the Bureau.
If the apprenticeship standards are found in order, a
certificate of recognition shall be issued by the
Apprenticeship Division concerned within five (5) days
from receipt thereof.
SECTION 7. Benefits accruing to recognition. An
entity with a recognized apprenticeship program shall be
entitled to technical and other assistance from the Bureau
and other government agencies and to the corresponding
training-expense deduction from its income tax. The rate
of such tax deduction incentive and the procedure of
availment thereof are provided in Section 42 of this Rule.
SECTION 8. Trades to be included in apprenticeship
programs. Only trades and occupations declared
apprenticeable by the Secretary of Labor and Employment
may be included in apprenticeship programs.
SECTION 9. Who may establish programs. Any
entity, whether or not organized for profit may establish or
sponsor apprenticeship programs and employ apprentices.
SECTION 10. Assistance by non-profit entities. In
lieu of organizing programs, non-profit entities may:
(a) Execute an agreement with firms of their choice with
on-going apprenticeship programs, directly or through the
Department of Labor and Employment, assuming
responsibility for training deserving apprentices selected
by an employer who shall pay the apprentices;
(b) Give financial and other contributions for the
promotion of apprenticeship programs; or
(c) Provide other forms of assistance.
Apprentices who train under such programs shall be
properly identified in apprenticeship agreements with the
employer. However, responsibility for compliance with
employees' compensation, social security, medicare and
other labor laws shall remain with the employer who
benefits from the productive efforts of the apprentices.
SECTION 11. Qualifications of apprentices. To
qualify as apprentice, an applicant shall:
(a) Be at least fifteen years of age; provided those who
 SUN TZU NOTES
are at least fifteen years of age but less than
eighteen may be eligible for apprenticeship only in
non-hazardous occupations;
(b) Be physically fit for the occupation in which he
desires to be trained;
(c) Possess vocational aptitude and capacity for
the particular occupation as established through
appropriate tests; and
(d) Possess the ability to comprehend and follow
oral and written instructions.
Trade and industry associations may, however,
recommend to the Secretary of Labor and
Employment appropriate educational qualifications
for apprentices in certain occupations. Such
qualifications, if approved, shall be the educational
requirements for apprenticeship in such occupations
unless waived by an employer in favor of an
applicant who has demonstrated exceptional ability.
A certification explaining briefly the ground for such
waiver, and signed by the person in charge of the
program, shall be attached to the apprenticeship
agreement of the applicant concerned.
SECTION 12. Aptitude tests. An employer who
has a recognized apprenticeship program shall
provide aptitude tests to apprentice-applicants.
However, if the employer does not have adequate
facilities, the Department of Labor and Employment
may provide the service free of charge.
SECTION 13. Physical fitness. Total physical
fitness need not be required of an apprentice-
applicant unless it is essential to the expeditious and
effective learning of the occupation. Only physical
defects which constitute real impediments to
effective performance as determined by the plant
apprenticeship committee may disqualify an
applicant.
SECTION 14. Free physical examination.
Physical examination of apprentice-applicant
preparatory to employment shall be provided free of
charge by the Department of Health or any
government hospital. If this is not feasible, the firm
or entity screening the applicant shall extend such
service free of charge.
Any entity with an apprenticeship program may elect
to assume the responsibility for physical examination
provided its facilities are adequate and all expenses
are borne exclusively by it.
SECTION 15. Apprenticeable trades. The
Bureau shall evaluate crafts and operative, technical,
nautical, commercial, clerical, technological,
supervisory, service and managerial activities which
may be declared apprenticeable by the Secretary of
Labor and Employment and shall have exclusive
jurisdiction to formulate model national
apprenticeship standards therefor.
37 of 132
SECTION 16. Model standards. Model apprenticeship
standards to be set by the Bureau shall include the
following:
(a) Those affecting employment of apprentices under
different occupational conditions;
(b) Those involving theoretical and proficiency tests for
apprentices during their training;
(c) Areas and duration of work and study covered by
on-the-job training and theoretical instructions of
apprenticeable trades and occupations; and
(d) Those referring to the qualifications of trainers of
apprentices.
SECTION 17. Participation in standards setting.
The Bureau may request any legitimate worker's and
employer's organizations, civic and professional groups,
and other entities whether public or private, to assist in
the formulation of national apprenticeship standards.
SECTION 18. Contents of agreement. Every
apprenticeship agreement shall include the following:
(a) The full names and addresses of the contracting
parties;
(b) Date of birth of the apprentice;
(c) Name of the trade, occupation or job in which the
apprentice will be trained and the dates on which such
training will begin and will approximately end;
(d) The approximate number of hours of on-the-job
training as well as of supplementary theoretical
instructions which the apprentice shall undergo during his
training;
(e) A schedule of the work processes of the
trade/occupation in which the apprentice shall be trained
and the approximate time to be spent on the job in each
process;
(f) The graduated scale of wages to be paid the
apprentice;
(g) The probationary period of the apprentice during
which either party may summarily terminate their
agreement; and
(h) A clause that if the employer is unable to fulfill his
training obligation, he may transfer the agreement, with
the consent of the apprentice, to any other employer who
is willing to assume such obligation.
SECTION 19. Apprenticeship period. The period of
apprenticeship shall not exceed six (6) months.
(a) Four hundred (400) hours or two (2) months for
trades or occupations which normally require a year or
more for proficiency; and
 SUN TZU NOTES
(b) Two hundred (200) hours or one (1) month for
occupations and jobs which require more than three
months but less than one year for proficiency.
At least five (5) working days before the actual date
of termination, the party terminating shall serve a
written notice on the other, stating the reason for
such decision and a copy of said notice shall be
furnished the Apprenticeship Division concerned.
SECTION 20. Hours of work. Hours of work of
the apprentice shall not exceed the maximum
number of hours of work prescribed by law, if any,
for a worker of his age and sex. Time spent in
related theoretical instructions shall be considered as
hours of work and shall be reckoned jointly with on-
the-job training time in computing in the agreement
the appropriate periods for giving wage increases to
the apprentice.
An apprentice not otherwise barred by law from
working eight hours a day may be requested by his
employer to work overtime and paid accordingly,
provided there are no available regular workers to do
the job, and the overtime work thus rendered is duly
credited toward his training time.
SECTION 21. Previous training or experience.
A prospective apprentice who has completed or
otherwise attended a vocational course in a duly
recognized trade or vocational school or training
center or who has had previous experience in the
trade or occupation in which he desires to be
apprenticed shall be given due credit therefor.
Both practical and theoretical knowledge shall be
evaluated and the credit shall appear in the
apprenticeship agreement which shall have the effect
of shortening the training and servicing as a basis for
promoting him to a higher wage level. Such credit
shall be expressed in terms of hours.
SECTION 22. Parties to agreement. Every
apprenticeship agreement shall be signed by the
employer or his duly authorized representative and
by the apprentice.
An apprenticeship agreement with a minor shall be
signed in his behalf by his parent or guardian, or if
the latter is not available, by an authorized
representative of the Department of Labor and
Employment.
SECTION 23. Bureau and Apprenticeship
Division of Regional Office concerned to be
furnished copy of agreement. The employer
shall furnish a copy of the apprenticeship agreement
to the Bureau and Apprenticeship Division of
Regional Office concerned and the agency which
shall provide related theoretical instructions if the
employer is not the one who will give such
instructions. The copies shall be sent by the
employer within five (5) working days from the date
38 of 132
of execution thereof. If the agreement is found defective
and serious damage would be sustained by either party if
such defect is not corrected, the Apprenticeship Division
shall advise the employer within five (5) working days not
to implement the agreement pending amendment thereof.
Other defects may be correlated without suspending the
effectivity of the agreement.
SECTION 24. Enforcement of agreement. No person
shall institute any action for the enforcement of any
apprenticeship agreement or for damages for breach
thereof, unless he has exhausted all available
administrative remedies. The plant apprenticeship
committee shall have initial responsibility for settling
differences arising out of apprenticeship agreements.
SECTION 25. Valid cause to terminate agreement.
Either party to an agreement may terminate the same
after the probationary period only for a valid cause. The
following are valid causes for termination:
By the employer (a) Habitual absenteeism in on-the-job
training and related theoretical instructions;
(b) Willful disobedience of company rules or
insubordination to lawful order of a superior;
(c) Poor physical condition, permanent disability or
prolonged illness which incapacitates the apprentice from
working;
(d) Theft or malicious destruction of company property
and/or equipment;
(e) Poor efficiency or performance on the job or in the
classroom for a prolonged period despite warnings duly
given to the apprentice; and
(f) Engaging in violence or other forms of gross
misconduct inside the employer's premises.
By the apprentice (a) Substandard or deleterious
working conditions within the employer's premises:
(b) Repeated violations by the employer of the terms of
the apprenticeship agreement;
(c) Cruel or inhuman treatment by the employer or his
subordinates;
(d) Personal problems which in the opinion of the
apprentice shall prevent him from a satisfactory
performance of his job; and
(e) Bad health or continuing illness.
SECTION 26. Procedure of termination. The
procedure for effecting termination shall be embodied in
appropriate instructions to be prepared by the Bureau and
approved by the Secretary of Labor and Employment.
SECTION 27. Theoretical instructions by employer.
Related theoretical instructions to apprentices may be
undertaken by the employer himself if he has adequate
 SUN TZU NOTES
facilities and qualified instructors for the purpose. He
shall indicate his intention to assume such
responsibility in the apprenticeship standard of his
program. The course outline and the bio-data of the
instructors who will conduct the course shall conform
with the standards set by the Department.
SECTION 28. Ratio of theoretical instruction
and on-the-job training. The normal ratio is one
hundred (100) hours of theoretical instructions for
every two thousand (2,000) hours of practical or on-
the-job training. Theoretical instructions time for
occupations requiring less than two thousand hours
for proficiency shall be computed on the basis of
such ratio.
SECTION 29. Wages. The wage rate of the
apprentice shall start at seventy five (75%) per cent
of the statutory minimum wage for the first six (6)
months; thereafter, he shall be paid the full
minimum wage, including the full cost of living
allowance.
SECTION 30. Tripartite apprenticeship
committees. The creation of a plant
apprenticeship committee for every apprenticeship
program shall be necessary. The Department of
Labor and Employment shall encourage the
organization of apprenticeship committees at trade,
industry or other levels. As much as possible these
committees shall consist of management, labor and
government representatives.
SECTION 31. Non-tripartite committees.
Where tripartism is not feasible, the apprenticeship
committee may be composed of:
(a) Technical personnel in the plant, trade or
industry concerned;
(b) Labor and management representatives.
Representatives of cooperative, civic and other
groups may also participate in such committees.
SECTION 32. Duties of apprenticeship
committees. An apprenticeship committee at any
level shall be responsible for the following duties:
(a) Act as liaison between the apprentice and the
employees;
(b) Mediate and/or settle in the first instance
differences between the employer and the
apprentices arising out of an apprenticeship
agreement;
(c) Maintain a constant follow-up on the technical
progress of the program and of the apprentices in
particular;
(d) Recommend to the Apprenticeship Division of
the Regional Office concerned the issuance of
certificates of completion to apprentices.
39 of 132
SECTION 33. Creation of ad hoc advisory
committees. The Secretary of Labor and Employment
may create ad hoc committees consisting of
representatives of management, labor and government on
the national, regional and local levels to advise and assist
him in the formulation of policy, promotion of
apprenticeship and other matters he may deem
appropriate to refer to them.
SECTION 34. Use of training centers. The
Department may utilize the facilities and services of the
National Manpower and Youth Council, the Department of
Education, Culture and Sports and other public training
institutions for the training of apprentices.
SECTION 35. Coordination of training activities.
The apprenticeship Division shall coordinate with the above
training centers all activities relating to apprenticeship. The
Bureau, through the Apprenticeship Division, shall provide
technical guidance and advice to the centers.
SECTION 36. Priority in use of training centers.
Priority in the use of training centers shall be given to
recognized apprenticeship programs in skills which are
highly in demand in specific regions or localities as
determined through surveys. The Bureau shall recommend
to the Secretary of Labor and Employment the
establishment of priorities based on data supplied by the
Bureau of Local Employment, Labor Statistics Service, the
National Manpower and Youth Council, and its own
fundings. The Secretary of Labor and Employment may,
however, also act on the basis of petitions presented by
qualified entities which are willing to bear the costs of
training.
SECTION 37. Issuance of certificates. Upon
completion of his training, the apprentice shall be issued a
certificate of completion of apprenticeship by the
Apprenticeship Division of the Regional Office concerned.
SECTION 38. Certificate of meritorious service. A
certificate of meritorious service may be awarded by the
Secretary of Labor and Employment to apprenticeship
committees or other entities which have rendered
outstanding service to the cause of apprenticeship.
SECTION 39. Certificate, evidence of skills. A
certificate of completion of apprenticeship shall be
evidence of the skills specified therein in accordance with
national skills standards established by the Department.
SECTION 40. Apprenticeship without compensation.
The Secretary of Labor and Employment through the
Apprenticeship Division, may authorize the hiring of
apprentices without compensation whose training on the
job is required by the school curriculum as a prerequisite
for graduation or for taking a government board
examination.
SECTION 41. Compulsory apprenticeship. (a) When
grave national emergencies, particularly those involving
the security of the state, arise or particular requirements
of economic development so demand, the Secretary of
 SUN TZU NOTES
Labor and Employment may recommend to the
President of the Philippines the compulsory training
of apprentices required in a certain trades,
occupations, jobs or employment levels where
shortage of trained manpower is deemed critical;
(b) Where services of foreign technicians are utilized
by private companies in apprenticeable trades said
companies are required to set up appropriate
apprenticeship programs.
SECTION 42. Certification from Apprenticeship
Division. An employer desiring to avail of the tax
deduction provided under the Code shall secure from
the Apprenticeship Division a certification that his
apprenticeship program was operational during the
taxable year concerned. Such certification shall be
attached to the employer's income tax returns for
the particular year. Guidelines for the issuance of
such certification shall be prepared by the Bureau
and approved by the Secretary of Labor and
Employment.
SUPPLEMENTAL NOTES
They are trainees
No ER-EE relationship no right to labor
standards (SPECIAL TYPES OF WORKERS)
Benefits derived by an employer for
apprencticeship programs:
o Entitled to apply for tax deduction
o Employer can pay substandard rates
No commitmnt to hire after termination of
apprencticeship program
LEARNERS
ART. 73. Learners defined. - Learners are persons
hired as trainees in semi-skilled and other industrial
occupations which are non-apprenticeable and which
may be learned through practical training on the job
in a relatively short period of time which shall not
exceed three (3) months.
ART. 74. When learners may be hired. - Learners
may be employed when no experienced workers are
available, the employment of learners is necessary to
prevent curtailment of employment opportunities,
and the employment does not create unfair
competition in terms of labor costs or impair or lower
working standards.
ART. 75. Learnership agreement. - Any employer
desiring to employ learners shall enter into a
learnership agreement with them, which agreement
shall include:
(a) The names and addresses of the learners;
(b) The duration of the learnership period, which
shall not exceed three (3) months;
(c) The wages or salary rates of the learners which
shall begin at not less than seventy- five percent
40 of 132
(75%) of the applicable minimum wage; and
(d) A commitment to employ the learners if they so desire,
as regular employees upon completion of the learnership.
All learners who have been 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.
The learnership agreement shall be subject to inspection
by the Secretary of Labor and Employment or his duly
authorized representative.
ART. 76. Learners in piecework. - Learners employed in
piece or incentive-rate jobs during the training period shall
be paid in full for the work done.
ART. 77. Penalty clause. - Any violation of this Chapter
or its implementing rules and regulations shall be subject
to the general penalty clause provided for in this Code.
RULE VII, BOOK II
Learners
SECTION 1. Definition of terms. (a) "Learner" is a
person hired as a trainee in industrial occupations which
are non-apprenticeable and which may be learned through
practical training on the job for a period not exceeding
three (3) months, whether or not such practical training is
supplemented by theoretical instructions.
(b) "Learnership agreement" refers to the employment and
training contract entered into between the employer and
the learner.
SECTION 2. When learners may be employed.
Learners may be employed when no experienced workers
are available, the employment of learners being necessary
to prevent curtailment of employment opportunities, and
such employment will not create unfair competition in
terms of labor costs nor impair working standards.
SECTION 3. Approval of learnership program. Any
employer who intends to employ learners shall submit in
writing to the Apprenticeship Division of the Regional
Office concerned, copy furnished the Bureau, his
learnership program, which the Division shall evaluate to
determine if the occupation involved is learnable and the
program is sufficient for the purpose of training. Within
five (5) working days from receipt of the program, the
Division shall make known its decision to the employer
concerned. A learnership program shall be subject to
periodic inspection by the Secretary of Labor and
Employment or his duly authorized representative.
SECTION 4. Contents of learnership agreement. A
learnership agreement, shall include:
(a) The names and addresses of the employer and the
learner;
(b) The occupation to be learned and the duration of the
 SUN TZU NOTES
training period which shall not exceed three (3)
months;
(c) The wage of learner which shall be at least 75
percent of the applicable minimum wage; and
(d) A commitment to employ the learner, if he so
desires, as a regular employee upon completion of
training.
A learner who has worked during the first two
months shall be deemed a regular employee if
training is terminated by the employer before the
end of the stipulated period through no fault of the
learner.
SECTION 5. Parties to learnership agreement.
Every learnership agreement shall be signed by
the employer or his duly authorized agent and by the
learner. A learnership agreement with a minor shall
be signed by the learner with the conformity of his
parent or guardian.
The employer shall furnish a copy each of the
learnership agreement to the learner, the Bureau,
and the Apprenticeship Division of the appropriate
Regional Office within five (5) working days following
its execution by the parties.
SECTION 6. Employment of minors as learners.
A minor below fifteen (15) years of age shall not
be eligible for employment as a learner. Those below
eighteen (18) years of age may only be employed in
non-hazardous occupations.
SECTION 7. Cancellation of learnership
programs. The Secretary of Labor and
Employment may cancel any learnership program if
upon inquiry it is found that the justification for the
program no longer exists.
SUPPLEMENTAL NOTES
Employers obligation to hire tham as a regular
worker (right to security of tenure and cannot be
illegally dismissed without a valid cause) if the
learner so desires
HANDICAPPED WORKERS
ART. 78. Definition. - Handicapped workers are
those whose earning capacity is impaired by age or
physical or mental deficiency or injury.
ART. 79. When employable. - Handicapped
workers may be employed when their employment is
necessary to prevent curtailment of employment
opportunities and when it does not create unfair
competition in labor costs or impair or lower working
standards.
ART. 80. Employment agreement. - Any employer
who employs handicapped workers shall enter into
an employment agreement with them, which
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agreement shall include:
a. The names and addresses of the handicapped workers
to be employed;
b. The rate to be paid the handicapped workerswhich shall
not be less than seventy five (75%) percent of the
applicable legal minimum wage;
c. The duration of employment period; and
d. The work to be performed by handicapped workers.
The employment agreement shall be subject to inspection
by the Secretary of Labor or his duly authorized
representative.
ART. 81. Eligibility for apprenticeship. - Subject to the
appropriate provisions of this
Code, handicapped workers may be hired as apprentices or
learners if their handicap is not such as to effectively
impede the performance of job operations in the particular
occupations for which they are hired.
RULE VIII, BOOK II
Handicapped Workers
SECTION 1. Definition of terms. (a) "Handicapped
workers" are those whose earning capacity is impaired by
age or physical or mental deficiency or injury.
(b) "Employment agreement" is the contract of
employment entered into between the employer and the
handicapped worker.
SECTION 2. When handicapped workers may be
employed. Handicapped workers may be employed
when their employment is necessary to prevent
curtailment of employment opportunities and when it does
not create unfair competition in labor costs or impair
working standards.
SECTION 3. Contents of employment agreement.
An employer who hires a handicapped worker shall enter
into an employment agreement with the latter which shall
include:
(a) The names and addresses of the employer and the
handicapped worker;
(b) The rate of pay of the handicapped worker which shall
not be less than seventy-five (75%) percent of the legal
minimum wage;
(c) The nature of work to be performed by the
handicapped worker; and
(d) The duration of the employment.
SECTION 4. Copy of agreement to be furnished to
Division. A copy each of the employment agreement
shall be furnished by the employer to the handicapped
worker and the Apprenticeship Division involved. The
 SUN TZU NOTES
Secretary of Labor and Employment or his duly
authorized representative may inspect from time to
time the working conditions of handicapped workers
to verify compliance by the parties with their
employment agreement.
SECTION 5. Eligibility for apprenticeship.
Handicapped workers shall not be precluded from
employment as apprentices or learners if their
handicap is not such as to effectively impede the
performance of job operations in the particular trade
or occupation which is the subject of the
apprenticeship or learnership program.
SUPPLEMENTAL NOTES
Handicapped workers earning capacity is
impaired by reason of age, physical disability or
mental deficiency
They are contractual workers
DEPARTMENT ORDER NO. 68-04
Guidelines in the Implementation of the Kasanayan
at Hanapbuhay Program
(An Apprenticeship and Employment Program)
A. OBJECTIVE
Specifically, the program shall:
1. provide opportunity for new entrants to the labor
force to acquire experience and skills;
2. generate commitment from enterprises in
developing the skills of the Filipino workforce;
3. facilitate the absorption of apprentices into the
regular workforce after their apprenticeship.
B. DEFINITION OF TERMS
1.Apprenticeship training within employment
involving a contract between an apprentice and an
enterprise on an apprenticeable occupation.
2. Apprentice a person undergoing training for an
approved apprenticeable occupation during an
established period and covered by an apprenticeship
agreement.
3. Apprenticeship Agreement A contract wherein a
prospective enterprise binds himself to train the
apprentice who, in turn, accepts the terms of
training for a recognized apprenticeable occupation
emphasizing the rights, duties and responsibilities of
each party.
4. Apprenticeable Occupation an occupation
officially approved for apprenticeship by TESDA.
5. Training Certificate a document issued by the
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participating enterprise to an apprentice who completes
the apprenticeship period.
6. Enterprise a participating establishment that directly
engages an apprentice based on an approved
Apprenticeship Program.
7. Letter of Application a letter signifying the intentions
of the enterprise to register in the Apprenticeship Program.
8. Certificate of Registration a document issued by
TESDA granting an authority to a participating enterprise
to offer the program in a particular occupation.
C. COVERAGE:
1. Any enterprise duly registered with the appropriate
government authorities with ten (10) or more regular
workers is qualified to join the program. The number of
apprentices for each participating enterprise shall not be
more than 20 percent of its total regular workforce.
2. Any unemployed person 15 years old and above may
apply for apprenticeship with any participating enterprise.
D. APPRENTICESHIP PERIOD
The apprenticeship period shall not be less than four (4)
months but not more than six (6) months. However, the
participating employer has the option to hire the
apprentice even prior to the completion of the
apprenticeship period.
E. ENTITLEMENT OF THE APPRENTICES
Apprentices shall be entitled to receive a wage not less
than 75 percent of the prevailing minimum wage and
benefits such as social security and health benefits and
overtime pay. An apprentice can work overtime provided
there are no regular workers to do the job and the time
spent on overtime work is duly credited to his training
hours.
F. INCENTIVES TO PARTICIPATING ENTERPRISES
Participating enterprises shall be entitled to any of the
following:
1. Payment of 75% of the prevailing minimum wage to
apprentices;
2. an additional deduction from taxable income of 12 of
the value of labor training expenses incurred for
developing the productivity and efficiency of apprentices
shall be granted to the person or enterprise organizing an
apprenticeship program: Provided, however, that such
deduction shall not exceed 10% of direct labor wage; and
that the person or enterprise who wishes to avail himself
or itself of this incentive should pay his apprentices the
minimum wage. (As provided for under Book II, Title II,
Chapter I, Article 71 of the Labor Code)
G. REGISTRATION OF APPRENTICESHIP PROGRAM
 SUN TZU NOTES
The enterprise shall register its apprenticeship
program with any of the TESDA Provincial Offices. It
shall submit the following:
1. Letter of Application
2. Certification that the number of apprentices to be
hired is not more than 20% of the total regular
workforce; and
3. Skills Training Outline.
No enterprise shall be allowed to hire apprenticeship
unless its apprenticeship program is registered and
approved by TESDA.
H. APPRENTICESHIP AGREEMENT
No apprenticeship training will commence until an
Apprenticeship Agreement has been forged between
an enterprise and an apprentice.
D.O.L.E. CIRCULAR No. 2
Series of 2006
Amending Certain Provisions of Department
Order No. 68-04
Consistent with the provisions of Article 58 (c) of
Title II, Book II, of the Labor Code of the Philippines,
Section D of the Department Order No. 68-04, Series
of 2004, entitled
"Guidelines in the Implementation of the
Kasanayan at Hanapbuhay Program
(Apprenticeship and Employment Program),">
is hereby amended to read as follows:
"D. Apprenticeship Period
The apprenticeship shall be for a period of more than
three months but not over six months.
However, the employer has the option to employ the
apprentice even before the completion of the
apprenticeship period."-qualifications; importance;
nature; qualified employers; approval of DOLE;
incentives of employer; duration; wage rates; hours
of work/overtime; enforcement of agreement
QUALIFICATIONS
Apprentices:
1. Must be fifteen (15) years old or above.
2. Be physically fit for the occupation in which he
desires to be trained.
3. Possess vocational aptitude and capacity for
appropriate tests.
4. With the ability to comprehend and follow oral and
written instructions.
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Learners:
1. May be employed when no experienced workers are
available.
2. When the employment of learners is necessary to
prevent curtailment of employment opportunities.
3. When the employment of learners does not create unfair
competition in terms of labor costs or impair or lower
working standards.
Handicapped Workers:
1. May be employed when their employment is necessary
to prevent curtailment of employment opportunities.
2. When it does not create unfair competition in labor costs
or impair or lower working standards.
NATURE
Apprentices: trains highly-skilled job.
Learners: trains in semi-skilled job or in industrial
occupations that requires training.
Handicapped Workers: Contractual type of employment.
QUALIFIED EMPLOYERS
Apprentices: Employers in the highly technical industries
and only in apprenticeable occupation approved by the
minister of Labor and Employment.
APPROVAL OF DOLE
Apprentices: It needs prior approval of DOLE through the
TESDA. Absence of the approval considers the hired
apprentice as an employee.
Learners: Do not need prior approval by DOLE but subject
to DOLEs inspection
INCENTIVES OF EMPLOYER
Apprentices:
1. 75 % payment of the minimum wage to apprentices.
2. deduction from taxable income of 12 of the value of
labor training expenses.
3.Technical and other assistance from DOLE and other
government agencies.
4. Employers are assured of regular employees after six
(6) months of apprenticeship.
Handicapped Workers:
1. Entitled to an additional deduction from their gross
income of 25% of the total amount paid to disabled.

2. Deduction from their taxable income of 50% of
the direct costs of the improvements or
modifications.
DURATION
Apprentices: Not less than four (4) months nor
more than six (6) months.
Learners: less than three (3) months.
Handicapped: No fixed duration as to hiring so that
the employer may fix the duration.
WAGE RATES
Apprentice: Gen. Rule- employer must pay at least
75% of the minimum wage.
Exceptions:
1. Training on the job is required by the school or
training program curriculum; or
2. It is a requisite for graduation or
examination.
Learners: Must be paid not less than 75% of the
minimum wage if the agreement is silent on the
wage rate or if employed in piece-rate jobs or
incentive-rate jobs during the training period, must
be paid in full for the work done.
Handicapped Workers: Payment shall not be less
than 75% of the minimum wage.
HOURS OF WORK/OVERTIME
Apprentices: Hours of work shall not exceed the
minimum number of hours of work prescribed by
law.
Can work overtime provided there are no regular
workers to do the job, is paid overtime pay
accordingly and the time spent on overtime work is
duly credited to his training hours.
ENFORCEMENT OF AGREEMENT
Apprentices: No person shall institute any action
for the enforcement of any apprenticeship agreement
or for damages for breach thereof, unless he has
exhausted all available administrative remedies.
The plant apprenticeship committee shall have initial
responsibility for settling differences arising out of
apprenticeship agreements.
RA 7796 (TESDA ACT of 1994)
REPUBLIC ACT NO. 7796
AN ACT CREATING THE TECHNICAL EDUCATION
AND SKILLS DEVELOPMENT AUTHORITY,
SUN TZU NOTES
PROVIDING FOR ITS POWERS, STRUCTURE AND FOR
OTHER PURPOSES.
SEC. 2. Declaration of Policy. - It is hereby declared the
policy of the State to provide relevant, accessible, high
quality and efficient technical education and skills
development in support of the development of high quality
Filipino middle-level manpower responsive to and in
accordance with Philippine development goals and
priorities.
The State shall encourage active participation of various
concerned sectors, particularly private enterprises, being
direct participants in and immediate beneficiaries of a
trained and skilled workforce, in providing technical
education and skills development opportunities.
SEC. 4. Definition of Terms. - As used in this Act:
"Skill" shall mean the acquired and practiced ability to
carry out a task or job;
"Skills Development" shall mean the process through
which learners and workers are systematically provided
board with learning opportunities to acquire or upgrade, or both,
their ability, knowledge and behavior pattern required as
qualifications for a job or range of jobs in a given
occupational area;
"Technical Education" shall refer to the education process
designed at post-secondary and lower tertiary levels,
officially recognized as non-degree programs aimed at
preparing technicians, para-professionals and other
categories of middle-level workers by providing them with
a broad range of general education, theoretical, scientific
and technological studies, and related job skills training;
"Trade" shall mean any group of interrelated jobs or any
occupation which is traditionally or officially recognized as
craft or artisan in nature requiring specific qualifications
that can be acquired through work experience and/or
training;
"Middle-Level Manpower" refers to those:
1.who have acquired practical skills and knowledge
through formal or non-formal education and training
equivalent to at least a secondary education but preferably
at post- secondary education with a corresponding degree
of diploma; or
2.skilled workers who have become highly competent in
their trade or craft as attested by industry;
"Private Enterprises" refers to an economic system under
which property of all kinds can be privately owned and in
which individuals, alone or in association with another, can
embark on a business activity. This includes industrial,
agricultural, or agro-industrial establishments engaged in
the production, manufacturing, processing, repacking or
assembly of goods including service-oriented enterprises;
"Trainers" shall mean persons who direct the practice of
skills towards immediate improvement in some task;
44 of 132
 SUN TZU NOTES
"Trainors/trainers" shall mean persons who provide
training to trainers aimed at developing the latter's
capacities for imparting attitudes, knowledge, skills
and behavior patterns required for specific jobs,
tasks, occupations or group of related occupations.
"Trainees" shall mean persons who are participants
in a vocational, administrative or technical training
program for the purpose of acquiring and developing
job-related skills;
"Apprenticeship" training within employment with
compulsory related theoretical instruction involving a
contract between an apprentice and an employer on
an approved apprenticeable occupation;
"Apprentice" is a person undergoing training for an
approved apprenticeable occupation during an
apprenticeship agreement;
"Apprenticeship Agreement" is a contract wherein a
prospective employer binds himself to train the
apprentice who in turn accepts the terms of training
for a recognized apprenticeable occupation
emphasizing the rights, duties and responsibilities of
each party;
"Apprenticeable Occupation" is an occupation
officially endorsed by a tripartite body and approved
for apprenticeable by the Authority;
"Learners" refers to persons hired as trainees in
semi-skilled and other industrial occupations which
are non-apprenticeable. Learnership programs must
be approved by the
Authority;
"User-Led" or "Market-Driven Strategy" refers to a
strategy which promotes strengthened linkages
between educational/training institutions and
industry to ensure that appropriate skills and
knowledge are provided by the educational system;
"Dual System/Training" refers to a delivery system of
quality technical and vocational education which
requires training to be carried out alternately in two
venues: in-school and in the production plant. In-
school training provides the trainee the theoretical
foundation, basic training, guidance and human
formation, while in-plant training develops his skills
and proficiency in actual work conditions as it
continues to inculcate personal discipline and work
values;
"Levy Grant System" refers to a legal contribution
from participating employers who would be
beneficiaries of the program (often as a percentage
of the payroll) which is subsequently turned over or
rebated to enterprises offering employee training
programs.
SEC. 5. Technical Education and Skills
Development Authority; Creation. - To implement
the policy declared in this Act, there is hereby
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created a Technical Education and
Skills Development Authority (TESDA), hereinafter referred
to as the Authority, which shall replace and absorb the
NationalManpower and Youth Council (NMYC), the Bureau
of
Technical and Vocational Education (BTVE) and the
personnel and functions pertaining to technical-vocational
education in the regional offices of the Department of
Education, Culture and Sports (DECS) and the
apprenticeship program of the Bureau of Local
Employment of the Department of Labor and Employment.
SEC. 8. Powers and Functions of the Board. - The Authority
shall primarily be responsible for formulating, continuing,
coordinated and fully integrated technical education and
skills development policies, plans and programs taking into
consideration the following:
The State policy declared herein of giving new direction
and thrusts to efforts in developing the quality of Filipino
human resource through technical education and skills
development;
The implementation of the above-mentioned policy
requires the coordination and operation of policies, plans,
and programs of different concerned sectors of Philippine
society;
Equal participation of representatives of industry
groups, trade associations, employers, workers and
government shall be made the rule in order to ensure that
urgent needs and recommendations are readily addressed;
and
Improved linkages between industry, labor and
government shall be given priority in the formulation of
any national-level plan.
The Board, shall have the following powers:
1. promulgate, after due consultation with industry
groups, trade associations, employers, workers, policies,
plans, programs and guidelines as may be necessary for
the effective implementation of this Act;
2. organize and constitute various standing
committees, subsidiary groups, or technical working
groups for efficient integration, coordination and
monitoring technical education and skills development
programs at the national, regional, and local levels;
3. enter into, make, execute, perform and carry-out
domestic and foreign contracts subject to existing laws,
rules and regulations.
4. restructure the entire sub-sector consisting of all
institutions and programs involved in the promotion and
development of middle-level manpower through
upgrading, merger and/or phase-out following a user-led
strategy;
5. approve trade skills standards and trade tests as
established and conducted by private industries;
 SUN TZU NOTES
6. establish and administer a system of
accreditation of both public and private institutions;
7. establish, develop and support institutions'
trainors' training and/or programs;
8. lend support and encourage increasing
utilization of the dual training system as provided for
by Republic Act. No. 7686;
9. exact reasonable fees and charges for such
tests and trainings conducted and retain such
earnings for its own use, subject to guidelines
promulgated by the Authority;
10. allocate resources, based on the Secretariat's
recommendations for the programs and subjects it
shall undertake pursuant to approved National
Technical Education and Skills
Development Plan;
11. determine and approve systematic funding
schemes such as the Levy and Grant scheme for
technical education and skills development purposes;
12. create, when deemed necessary, an Advisory
Committee which shall provide expert and technical
advice to the Board to be chosen from the academe
and the private sector:
Provided, That in case the Advisory Committee is
created, the Board is hereby authorized to set aside
a portion of its appropriation for its operation; and
13. perform such other duties and functions
necessary to carry out the provisions of this Act
consistent with the purposes of the creation of
TESDA.
SEC. 18. Transfer of the Apprenticeship
Program. - The Apprenticeship Program of the
Bureau of Local Employment of the Department of
Labor and Employment shall be transferred to the
Authority which shall implement and administer said
program in accordance with existing laws, rules and
regulations.
SEC. 19. Technical Education and Skills
Development Committees. - The Authority shall
establish Technical Education and Skills
Development Committees at the regional and local
levels to coordinate and monitor the delivery of all
skills development activities by the public and
private sectors. These committees shall likewise
serve as the Technical Education and Skills
Development Committees of the Regional and local
development councils. The compositions of the
Technical Education and Skills development
Committees shall be determined by the Director-
General subject to the guidelines to be promulgated
by the Authority.
SEC. 20. Skills Development Centers. - The
Authority shall strengthen the network of national,
regional and local skills training centers for the
46 of 132
purpose of promoting skills development. This network
shall include skills training centers in vocational and
technical schools, technical institutes, polytechnic colleges,
and all other duly accredited public and private dual
system educational institutions. The technical education
and skills development centers shall be administered and
operated under such rules and regulations as may be
established by the Authority in accordance with the
National Technical Education and Skills
Development Plan.
SEC. 21. Formulation of a Comprehensive
Development Plan for Middle-Level
Manpower. - The Authority shall formulate a
comprehensive development plan for middle- level
manpower based on a national employment plan or
policies for the optimum allocation, development and
utilization of skilled workers for employment
entrepreneurship and technology development for
economic and social growth. This plan shall after adoption
by the Authority be updated periodically and submitted to
the President of the Philippines for approval. Thereafter, it
shall be the plan for the technical education and skills
development for the entire country within the framework
of the National Development Plan. The Authority shall
direct the TESDA Secretariat to call on its member-
agencies, the private sector and the academe to assist in
this effort. The comprehensive plan shall provide for a
reformed industry-based training program including
apprenticeship, dual training system and other similar
schemes intended to:
Promote maximum protection and welfare of the
worker-trainee;
Improve the quality and relevance and social
accountability of technical education and skills
development;
Accelerate the employment-generation effort of the
government; and
Expand the range of opportunities for upward social
mobility of the school-going population beyond the
traditional higher levels of formal education. All
government and non-government agencies receiving
financial and technical assistance from the government
shall be required to formulate their respective annual
agency technical education and skills development plan in
line with the national technical education and skills
development plan.
The budget to support such plans shall be subject to
review and endorsement by the Authority to the
Department of Budget and Management. The Authority
shall evaluate the efficiency and effectiveness of agencies
skills development program and schemes to make them
conform with the quantitative and qualitative objectives of
the national technical education and skills development
plan.
SEC. 24. Assistance to Employers and Organizations.
- The Authority shall assist any employer or organization
engaged in skills training schemes designed to attain its
 SUN TZU NOTES
objectives under rules and regulations which the
Authority shall establish for this purpose.
SEC. 27. Incentives Schemes. - The Authority
shall develop and administer appropriate
Incentive schemes to encourage government and
private industries and institutions to provide high-
quality technical education and skills development
opportunities.
SEC. 28. Skills Development Opportunities. -
The Authority shall design and implement an
effective and efficient delivery system for quality
technical education and skills development
opportunities particularly in disadvantaged sectors,
with new tools of wealth creation and with the
capability to take on higher value-added gainful
activities and to share equitably in productivity
gains.
RA 7277 (Magna Carta for Disabled Persons;
Incentives of Employer)
Republic Act No. 7277
AN ACT PROVIDING FOR THE
REHABILITATION, SELF-DEVELOPMENT AND
SELF-RELIANCE OF DISABLED PERSON AND
THEIR INTEGRATION INTO THE MAINSTREAM
OF SOCIETY AND FOR OTHER PURPOSES.
SECTION 2. Declaration of Policy The grant of
the rights and privileges for disabled persons shall be
guided by the following principles:
(a). Disabled persons are part of the Philippine
society, thus the Senate shall give full support to the
improvement of the total well-being of disabled
persons and their integration into the mainstream of
society. Toward this end, the State shall adopt
policies ensuring the rehabilitation, self-development
and self-reliance of disabled persons. It shall develop
their skills and potentials to enable them to compete
favorably for available opportunities.
(b). Disabled persons have the same rights as other
people to take their proper place in society. They
should be able to live freely and as independently as
possible. This must be the concern of everyone the
family, community and all government and non-
government organizations. Disabled persons rights
must never be perceived as welfare services by the
Government.
(c). The rehabilitation of the disabled persons shall
be the concern of the Government in order to foster
their capability to attain a more meaningful,
productive and satisfying life. To reach out to a
greater number of disabled persons, the
rehabilitation services and benefits shall be
expanded beyond the traditional urban-based
centers to community based programs, that will
ensure full participation of different sectors as
supported by national and local government
47 of 132
agencies.
(d). The State also recognizes the role of the private sector
in promoting the welfare of disabled persons and shall
encourage partnership in programs that address their
needs and concerns.
(e). To facilitate integration of disabled persons into the
mainstream of society, the State shall advocate for and
encourage respect for disabled persons. The State shall
exert all efforts to remove all social, cultural, economic,
environmental and attitudinal barriers that are prejudicial
to disabled persons.
SECTION 4. Definition of Terms For purposes of this
Act, these terms are defined 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;
(e). Rehabilitation is an integrated approach to physical,
social, cultural, spiritual, educational and vocational
measures that create conditions for the individual to attain
the highest possible level of functional ability;
(f). Social Barriers refer to the characteristics of
institutions, whether legal, economic, cultural, recreational
or other, any human group, community, or society which
limit the fullest possible participation of disabled persons in
the life of the group. Social barriers include negative
attitudes which tends to single out and exclude disabled
persons and which distort roles and interpersonal
relationship;
(g). Auxiliary Aids and Services include:
1) qualified interpreters or other effective methods of
delivering materials to individuals with hearing
impairments;
2) qualified readers, taped tests, or other effective
methods of delivering materials to individuals with visual
impairments;
3) acquisition or modification of equipment or devices; and
 SUN TZU NOTES
4) other similar services and actions or all types of
aids and services that facilitate the learning process
of people with mental disability;
(h). Reasonable Accommodation include (1)
improvement of existing facilities used by employees
in order to render these readily accessible to and
usable by disabled persons; and (2) modification of
work schedules, reassignment to a vacant position,
acquisition or modification of equipment or devices,
appropriate adjustments or modifications of
examinations, training materials or company policies,
rules and regulations, the provisions of auxiliary aids
and services, and other similar accommodations for
disabled persons;
(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;
TITLE TWO RIGHTS AND PRIVILEGES OF
DISABLED PERSONS
CHAPTER I Employment
SECTION 5. Equal Opportunity for Employment
No disabled persons shall be denied access to
opportunities for suitable employment. A qualified
disabled employee shall be subject to the same
terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits,
incentives or allowances as a qualified able-bodied
person. Five percent (5%) of all casual, emergency
and contractual positions in the
Department of Social Welfare and Development;
Health; Education, Culture and Sports; and other
government agencies, offices or corporations
engaged in social development shall be reserved for
disabled persons.
SECTION 6. Sheltered Employment If suitable
employment for disabled persons cannot be found
through open employment as provided in the
immediately preceding Section, the State shall
endeavor to provide it by means of sheltered
employment. In the placement of disabled persons in
sheltered employment, it shall accord due regard to
the individual qualities, vocational goals and
inclinations to ensure a good working atmosphere
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and efficient production.
SECTION 7. Apprenticeship 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 8. Incentives for 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 9. Vocational Rehabilitation Consistent with
the principle of equal opportunity for disabled workers and
workers in general, the State shall take appropriate
vocational rehabilitation measures that shall serve to
develop the skills and potential of disabled persons and
enable them to compete favorably for available productive
and remunerative employment opportunities in the labor
market. The State shall also take measures to ensure the
provisions of vocational rehabilitation and livelihood
services for disabled persons in the rural areas. In
addition, it shall promote cooperation and coordination
between the government and non-government
organization and other private entities engaged in
vocational rehabilitation activities. The Department of
Social Welfare and Development shall design and
implement training programs that will provide disabled
persons with vocational skills to enable them to engage in
livelihood activities or obtain gainful employment. The
Department of Labor and Employment shall likewise design
and conduct training programs geared towards providing
disabled persons with skills for livelihood.
TITLE THREE PROHIBITION ON DISCRIMINATION
AGAINST DISABLED PERSONS
CHAPTER 1 Discrimination on Employment
 SUN TZU NOTES
SECTION 32. Discrimination on Employment
No entity, whether public or private, shall
discriminate against a qualified disabled person by
reason of disability in regard to job application
procedures, the hiring, promotion, or discharge of
employees, employee compensation, job training,
and other terms, conditions, and privileges of
employment. The following constitute acts of
discrimination:
(a). Limiting, segregating or classifying a disabled
job applicant in such a manner that adversely affects
his work opportunities;
(b). Using qualification standards, employment tests
or other selection criteria that screen out or tend to
screen out a disabled person unless such standards,
tests or other selection criteria are shown to be
jobrelated for the position on question and are
consistent with business necessity;
(c). Utilizing standards, criteria, or methods of
administration that: 1). have the effect of
discrimination on the basis of disability; or 2).
perpetuate the discrimination of others who are
subject to common administrative control;
(d). Providing less compensation, such as salary,
wage or other forms of remuneration and fringe
benefits, to a qualified disabled employee, by reason
of his disability, than the amount to which a non-
disabled person performing the same work is
entitled;
(e). Favoring a non-disabled employee over a
qualified disabled employee with respect to
promotion, training opportunities, study and
scholarship grants, solely on account of the latters
disability;
(f). Re-assigning or transferring a disabled employee
to a job or position he cannot perform by reason of
his disability;
(g). Dismissing or terminating the services of a
disabled employee by reason of his disability unless
the employer can prove that he impairs the
satisfactory performance of the work involve to the
prejudice of the business entities; Provided,
however, That the employer first sought provide
reasonable accommodations for disabled persons;
(h). Failing to select or administer in the effective
manner employment tests which accurately reflect
the skills, aptitude or other factor of the disabled
applicant or employee that such test purports to
measure, rather than the impaired sensory, manual
or speaking skills of such applicant or employee, if
any; and
(i). Excluding disabled persons from membership in
labor unions or similar organization.
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SECTION 33. Employment Entrance Examination
Upon an offer of employment, a disabled applicant may be
subjected to medical examination, on the following
occasions:
(a). all entering employees are subjected to such an
examination regardless of disability;
(b). information obtained during the medical condition or
history of the applicant is collected and maintained on
separate forms and in separate medical files and is treated
as a confidential medical record,
Provided, however, That:
1). supervisors and managers may be informed regarding
necessary restrictions on the work or duties of the
employees and necessary accommodations;
2). first aid and safety personnel my be informed, when
appropriate, if the disability might require emergency
treatment;
3). government officials investigating compliance with this
Act shall be provided relevant information on request; and
4). the results of such examination are used only
accordance with this Act.
E.EMPLOYMENT OF WOMEN
Sec. 14, Art II, Constitution & Sec. 14, Art. XIII
Art. II, Section 14. The State recognizes the role of
women in nation-building, and shall ensure the
fundamental equality before the law of women and men.
Art. XIII, Section 14. 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 themto realize their full potential in the
service of the nation.
Night work prohibition (Arts. 130 & 131)
ART. 130. Nightwork prohibition. - No woman,
regardless of age, shall be employed or permitted or
suffered to work, with or without compensation:
(a) In any industrial undertaking or branch thereof
between ten oclock at night and six oclock in the morning
of the following day; or
(b) In any commercial or non-industrial undertaking or
branch thereof, other than agricultural, between midnight
and six oclock in the morning of the following day; or
(c) In any agricultural undertaking at nighttime unless she
is given a period of rest of not less than nine (9)
consecutive hours.
ART. 131. Exceptions. - The prohibitions prescribed by
the preceding Article shall not apply in any of the following
 SUN TZU NOTES
cases:
(a) In cases of actual or impending emergencies
caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disasters or calamity,
to prevent loss of life or property, or in cases of
force majeure or imminent danger to public safety;
(b) In case of urgent work to be performed on
machineries, equipment or installation, to avoid
serious loss which the employer would otherwise
suffer;
(c) Where the work is necessary to prevent serious
loss of perishable goods;
(d) Where the woman employee holds a responsible
position of managerial or technical nature, or where
the woman employee has been engaged to provide
health and welfare services;
(e) Where the nature of the work requires the
manual skill and dexterity of women workers and the
same cannot be performed with equal efficiency by
male workers;
(f) Where the women employees are immediate
members of the family operating the establishment
or undertaking; and
(g) Under other analogous cases exempted by the
Secretary of Labor and Employment in appropriate
regulations.
Facilities for women (Art. 132)
ART. 132. Facilities for women. - The Secretary
of Labor and Employment shall establish standards
that will ensure the safety and health of women
employees. In appropriate cases, he shall, by
regulations, require any employer to:
(a) Provide seats proper for women and permit them
to use such seats when they are free from work and
during working hours, provided they can perform
their duties in this position without detriment to
efficiency;
(b) To establish separate toilet rooms and lavatories
for men and women and provide at least a dressing
room for women;
(c) To establish a nursery in a workplace for the
benefit of the women employees therein; and
(d) To determine appropriate minimum age and
other standards for retirement or termination in
special occupations such as those of flight attendants
and the like.
Maternity leave benefits (Art. 133)
ART. 133. Maternity leave benefits. - (a) Every
employer shall grant to any pregnant woman
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employee who has rendered an aggregate service of at
least six (6) months for the last twelve (12) months,
maternity leave of at least two (2) weeks prior to the
expected date of delivery and another four (4) weeks after
normal delivery or abortion with full pay based on her
regular or average weekly wages. The employer may
require from any woman employee applying for maternity
leave the production of a medical certificate stating that
delivery will probably take place within two weeks.
(b) The maternity leave shall be extended without pay on
account of illness medically certified to arise out of the
pregnancy, delivery, abortion or miscarriage, which
renders the woman unfit for work, unless she has earned
unused leave credits from which such extended leave may
be charged.
(c) The maternity leave provided in this Article shall be
paid by the employer only for the first four (4) deliveries
by a woman employee after the effectivity of this Code.
REPUBLIC ACT NO. 8282 (SOCIAL SECURITY ACT OF
1997)
AN ACT FURTHER STRENGTHENING THE SOCIAL
SECURITY SYSTEM THEREBY AMENDING FOR THIS
PURPOSE REPUBLIC ACT NO. 1161, AS AMENDED,
OTHERWISE KNOWN AS THE SOCIAL SECURITY LAW
"SEC. 14-A. Maternity Leave Benefit. - A female
member who has paid at least three (3) monthly
contributions in the twelve-month period immediately
preceding the semester of her childbirth or miscarriage
shall be paid a daily maternity benefit equivalent to one
hundred percent (100%) of her average daily salary credit
for sixty (60) days or seventy-eight (78) days in case of
caesarean 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
 SUN TZU NOTES
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.
Family planning services (Art. 134)
ART. 134. Family planning services; incentives
for family planning. - (a) Establishments which are
required by law to maintain a clinic or infirmary shall
provide free family planning services to their
employees which shall include, but not be limited to,
the application or use of contraceptive pills and
intrauterine devices.
(b) In coordination with other agencies of the
government engaged in the promotion of family
planning, the Department of Labor and Employment
shall develop and prescribe incentive bonus schemes
to encourage family planning among female workers
in any establishment or enterprise.
Prohibited Discrimination (Art. 135); also Art.
248 (Union membership)
ART. 135. Discrimination prohibited. - It shall be
unlawful for any employer to discriminate against
any woman employee with respect to terms and
conditions of employment solely on account of her
sex.
The following are acts of discrimination:
(a) Payment of a lesser compensation, including
wage, salary or other form of remuneration and
fringe benefits, to a female employees as against a
male employee, for work of equal value; and
(b) Favoring a male employee over a female
employee with respect to promotion, training
opportunities, study and scholarship grants solely on
account of their sexes.
Criminal liability for the willful commission of any
unlawful act as provided in this Article or any
violation of the rules and regulations issued pursuant
to Section 2 hereof shall be penalized as provided in
Articles 288 and 289 of this Code: Provided, That the
institution of any criminal action under this provision
shall not bar the aggrieved employee from filing an
entirely separate and distinct action for money
claims, which may include claims for damages and
other affirmative reliefs. The actions hereby
authorized shall proceed independently of each
other. (As amended by Republic Act No. 6725, May
12, 1989).
ART. 248. Unfair labor practices of employers. -
It shall be unlawful for an employer to commit any of
the following unfair labor practice:
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(e) To discriminate in regard to wages, hours of work and
other terms and conditions of employment in order to
encourage or discourage membership in any labor
organization.
Nothing in this Code or in any other law shall stop the
parties from requiring membership in a recognized
collective bargaining agent as a condition for employment,
except those employees who are already members of
another union at the time of the signing of the collective
bargaining agreement. Employees of an appropriate
bargaining unit who are not members of the recognized
collective bargaining agent may be assessed a reasonable
fee equivalent to the dues and other fees paid by members
of the recognized collective bargaining agent, if such non-
union members accept the benefits under the collective
bargaining agreement: Provided, that the individual
authorization required under Article 242, paragraph (o) of
this Code shall not apply to the non-members of the
recognized collective bargaining agent;
Criminal liability
Criminal liability for the willful commission of any
unlawful act as provided in this Article or any violation of
the rules and regulations issued pursuant to Section 2
hereof shall be penalized as provided in Articles 288 and
289 of this Code: Provided, That the institution of any
criminal action under this provision shall not bar the
aggrieved employee from filing an entirely separate and
distinct action for money claims, which may include claims
for damages and other affirmative reliefs. The actions
hereby authorized shall proceed independently of each
other. (As amended by Republic Act No. 6725, May 12,
1989).
Prohibited Acts (Art. 137)
ART. 137. Prohibited acts. - (a) It shall be unlawful for
any employer:
(1) To deny any woman employee the benefits provided
for in this Chapter or to discharge any woman employed
by him for the purpose of preventing her from enjoying
any of the benefits provided under this Code.
(2) To discharge such woman on account of her
pregnancy, or while on leave or in confinement due to her
pregnancy;
(3) To discharge or refuse the admission of such woman
upon returning to her work for fear that she may again be
pregnant.
Women working in nightclubs, etc. (Art. 138)
ART. 138. Classification of certain women workers . -
Any woman who is permitted or suffered to work, with or
without compensation, in any night club, cocktail lounge,
massage clinic, bar or similar establishments under the
effective control or supervision of the employer for a
substantial period of time as determined by the Secretary
of Labor and Employment, shall be considered as an
 SUN TZU NOTES
employee of such establishment for purposes of
labor and social legislation.
RULE XII, BOOK III
Employment of Women and Minors
SECTION 1. General statement on coverage.
This Rule shall apply to all employers, whether
operating for profit or not, including educational,
religious and charitable institutions, except to the
Government and to government-owned or controlled
corporations and to employers of household helpers
and persons in their personal service insofar as such
workers are concerned.
SECTION 2. Employable age. Children below
fifteen (15) years of age may be allowed to work
under the direct responsibility of their parents or
guardians in any non-hazardous undertaking where
the work will not in any way interfere with their
schooling. In such cases, the children shall not be
considered as employees of the employers or their
parents or guardians.
SECTION 3. Eligibility for employment. Any
person of either sex, between 15 and 18 years of
age, may be employed in any non-hazardous work.
No employer shall discriminate against such person
in regard to terms and conditions of employment on
account of his age.
For purposes of this Rule, a non-hazardous work or
undertaking shall mean any work or activity in which
the employee is not exposed to any risk which
constitutes an imminent danger to his safety and
health. The Secretary of Labor and Employment shall
from time to time publish a list of hazardous work
and activities in which persons 18 years of age and
below cannot be employed.
SECTION 4. Status of women workers in certain
work places. 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, 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. No
employer shall discriminate against such employees
or in any manner reduce whatever benefits they are
now enjoying by reason of the provisions of this
Section.
SECTION 5. Night work of women employees.
Any woman employed in any industrial undertaking
may be allowed to work beyond 10:00 o'clock at
night, or beyond 12:00 o'clock midnight in the case
of women employees of commercial or non-industrial
enterprises, in any of the following cases:
(a) In cases of actual or impending emergencies
52 of 132
caused by serious accident, fire, flood, typhoon,
earthquakes, epidemic or other disaster or calamity, to
prevent loss of life or property or in cases of force majeure
or imminent danger to public safety;
(b) In case of urgent work to be performed on
machineries, equipment or installation, to avoid serious
loss which the employer would otherwise suffer;
(c) Where the work is necessary to prevent serious loss of
perishable goods;
(d) Where the woman employee holds a responsible
position of a managerial or technical nature, or where the
woman employee has been engaged to provide health and
welfare services;
(e) Where the nature of the work requires the manual skill
and dexterity of women and the same cannot be
performed with equal efficiency by male workers or where
the employment of women is the established practice in
the enterprises concerned on the date these Rules become
effective; and
(f) Where the women employees are immediate members
of the family operating the establishment or undertaking.
The Secretary of Labor and Employment shall from time to
time determine cases analogous to the foregoing for
purposes of this Section.
SECTION 6. Agricultural work. No woman, regardless
of age, shall be permitted or suffered to work, with or
without compensation, in any agricultural undertaking at
night time unless she is given a rest period of not less than
nine (9) consecutive hours, subject to the provisions of
Section 5 of this Rule.
SECTION 7. Maternity leave benefits. Every
employer shall grant to a pregnant woman employee who
has rendered an aggregate service of at least six (6)
months for the last twelve (12) months immediately
preceding the expected date of delivery, or the complete
abortion or miscarriage, maternity leave of at least two (2)
weeks before and four (4) weeks after the delivery,
miscarriage or abortion, with full pay based on her regular
or average weekly wages.
SECTION 8. Accreditation of leave credits. Where
the pregnant woman employee fails to avail of the two-
week pre-delivery leave, or any portion thereof, the same
shall be added to her post-delivery leave with pay.
SECTION 9. Payment of extended maternity leave.
When so requested by the woman employee, the extension
of her maternity leave beyond the four-week post-delivery
leave shall be paid by the employer from her unused
vacation and/or sick leave credits, if any, or allowed
without pay in the absence of such leave credits, where
the extended leave is due to illness medically certified to
arise out of her pregnancy, delivery, complete abortion or
miscarriage which renders her unfit for work.
SECTION 10. Limitation on leave benefits. The
 SUN TZU NOTES
maternity benefits provided herein shall be paid by
an employer only for the first four (4) deliveries,
miscarriages, and/or complete abortions of the
employee from March 13, 1973, regardless of the
number of employees and deliveries, complete
abortions or miscarriages the woman employee had
before said date. For purposes of determining the
entitlement of a woman employee to the maternity
leave benefits as delimited herein, the total number
of her deliveries, complete abortions, or miscarriages
after said date shall be considered regardless of the
identity or number of employers she has had at the
time of such determination, provided that she
enjoyed the minimum benefits therefor as provided
in these regulations.
SECTION 11. Family planning services.
Employers who habitually employ more than two
hundred (200) workers in any locality shall provide
free family-planning services to their employees and
their spouses which shall include but not limited to,
the application or use of contraceptives.
Subject to the approval of the Secretary of Labor and
Employment, the Bureau of Women and Young
Workers shall, within thirty (30) days from the
effective date of these Rules, prescribe the minimum
requirements of family planning services to be given
by employers to their employees.
SECTION 12. Relation to agreements. Nothing
herein shall prevent the employer and his employees
or their representatives from entering into any
agreement with terms more favorable to the
employees than those provided herein, or be used to
diminish any benefit granted to the employees under
existing laws, agreements, and voluntary employer
practices.
SECTION 13. Prohibited acts. 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
(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
53 of 132
resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee
merely by reason of her marriage.
SECTION 14. Facilities for woman employees.
Subject to the approval of the Secretary of Labor and
Employment, the Bureau of Women and Young Workers
shall, within thirty (30) days from the effective date of
these Rules, determine in an appropriate issuance the
work situations for which the facilities enumerated in
Article 131 of the Code shall be provided, as well as the
appropriate minimum age and other standards for
retirement or termination of employment in special
occupations in which women are employed.
Anti-Violence Against Women & their Childrens Act
of 2004 (RA 9262)
[REPUBLIC ACT NO. 9262 ]
AN ACT DEFINING VIOLENCE AGAINST WOMEN AND
THEIR CHILDREN, PROVIDING FOR PROTECTIVE
MEASURES FOR VICTIMS, PRESCRIBING PENALTIES
THEREFORE, AND FOR OTHER PURPOSES
SEC. 3. Definition of Terms.- As used in this Act, (a)
"Violence against women and their children" refers to any
act or a series of acts committed by any person against a
woman who is his wife, former wife, or against a woman
with whom the person has or had a sexual or dating
relationship, or with whom he has a common child, or
against her child whether legitimate or illegitimate, within
or without the family abode, which result in or is likely to
result in physical, sexual, psychological harm or suffering,
or economic abuse including threats of such acts, battery,
assault, coercion, harrasment or arbitrary deprivation of
liberty. It includes, but is not limited to, the following acts:
A. "Physical Violence" refers to acts that include bodily or
physical harm;
B. "Sexual violence" refers to an act which is sexual in
nature, committed against a woman or her child. It
includes, but is not limited to:
a. rap, sexual harassment, acts of lasciviousness, treating
a woman or her child as a sex object, making demeaning
and sexually suggestive remarks, physically attacking the
sexual parts of the victims body, forcing her/him to watch
obscene publications and indecent shows or forcing the
woman or her child to do indecent acts and/or make films
thereof, forcing the wife and mistress/lover to live in the
conjugal home or sleep together in the same room with
the abuser;
b. acts causing or attempting to cause the victim to
engage in any sexual activity by force, threat of force,
physical or other harm or threat of physical or other harm
or coercion;
c. Prostituting the woman or child.
C. "Psychological violence" refers to acts or omissions
causing or likely to cause mental or emotional suffering of
the victim such as but not limited to intimidation,
 SUN TZU NOTES
harassment, stalking, damage to property, public
ridicule or humiliation, repeated verbal abuse and
mental infidelity. It includes causing or allowing the
victim to witness the physical, sexual or
psychological abuse of a member of the family to
which the victim belongs, or to witness pornography
in any form or to witness abusive injury to pets or to
unlawful or unwanted deprivation of the right to
custody and/or visitation of common children.
D. "Economic abuse" refers to acts that make or
attempt to make a woman financially dependent
which includes, but is not limited to the following:
1. withdrawal of financial support or preventing the
victim from engaging in any legitimate profession,
occupation, business or activity, except in cases
wherein the other spouse/partner objects on valid,
serious and moral grounds as defined in Article 73 of
the Family Code;
2. deprivation or threat of deprivation of financial
resources and the right to the use and enjoyment of
the conjugal, community or property owned in
common;
3. destroying household property;
4. controlling the victims own money or properties
or solely controlling the conjugal money or
properties.
SEC. 5. Acts of Violence Against Women and
Their Children.- The crime of violence against
women and their children is committed through any
of the following acts:
a. Causing physical harm to the woman or her child;
b. Threatening to cause the woman or her child
physical harm;
c. Attempting to cause the woman or her child
physical harm;
d. Placing the woman or her child in fear of imminent
physical harm;
e. Attempting to compel or compelling the woman or
her child to engage in conduct which the woman or
her child has the right to desist from or desist from
conduct which the woman or her child has the right
to engage in, or attempting to restrict or restricting
the womans or her childs freedom of movement or
conduct by force or threat of force, physical or other
harm or threat of physical or other harm, or
intimidation directed against the woman or child.
This shall include, but not limited to, the following
acts committed with the purpose or effect of
controlling or restricting the womans or her childs
movement or conduct:
1. Threatening to deprive or actually depriving the
woman or her child of custody to her/his family;
54 of 132
2. Depriving or threatening to deprive the woman or her
children of financial support legally due her or her family,
or deliberately providing the womans children insufficient
financial support;
3. Depriving or threatening to deprive the woman or her
child of a legal right;
4. Preventing the woman in engaging in any legitimate
profession, occupation, business or activity or controlling
the victims own mon4ey or properties, or solely
controlling the conjugal or common money, or properties;
f. Inflicting or threatening to inflict physical harm on
oneself for the purpose of controlling her actions or
decisions;
g. Causing or attempting to cause the woman or her child
to engage in any sexual activity which does not constitute
rape, by force or threat of force, physical harm, or through
intimidation directed against the woman or her child or
her/his immediate family;
h. Engaging in purposeful, knowing, or reckless conduct,
personally or through another, that alarms or causes
substantial emotional or psychological distress to the
woman or her child. This shall include, but not be limited
to, the following acts:
1. Stalking or following the woman or her child in public or
private places;
2. Peering in the window or lingering outside the residence
of the woman or her child;
3. Entering or remaining in the dwelling or on the property
of the woman or her child against her/his will;
4. Destroying the property and personal belongingness or
inflicting harm to animals or pets of the woman or her
child; and
5. Engaging in any form of harassment or violence;
i. Causing mental or emotional anguish, public ridicule or
humiliation to the woman or her child, including, but not
limited to, repeated verbal and emotional abuse, and
denial of financial support or custody of minor children of
access to the womans child/children.
SEC. 39. Inter-Agency Council on Violence Against
Women and Their Children (IAC-VAWC). In pursuance
of the abovementioned policy, there is hereby established
an Inter- Agency Council on Violence Against Women and
their children, hereinafter known as the Council, which
shall be composed of the following agencies:
a. Department of Social Welfare and Development
(DSWD);
b. National Commission on the Role of Filipino Women
(NCRFW);
c. Civil Service Commission (CSC);
 SUN TZU NOTES
d. Council for the Welfare of Children (CWC);
e. Department of Justice (DOJ);
f. Department of the Interior and Local Government
(DILG);
g. Philippine National Police (PNP);
h. Department of Health (DOH);
i. Department of Education (DepEd);
j. Department of Labor and Employment (DOLE);
and
k. National Bureau of Investigation (NBI).
These agencies are tasked to formulate programs
and projects to eliminate VAW based on their
mandates as well as develop capability programs for
their employees to become more sensitive to the
needs of their clients. The Council will also serve as
the monitoring body as regards to VAW initiatives.
The Council members may designate their duly
authorized representative who shall have a rank not
lower than an assistant secretary or its equivalent.
These representatives shall attend Council meetings
in their behalf, and shall receive emoluments as may
be determined by the Council in accordance with
existing budget and accounting rules and
regulations.
SEC. 40. Mandatory Programs and Services for
Victims. The DSWD, and LGUs shall provide the
victims temporary shelters, provide counseling,
psycho-social services and /or, recovery,
rehabilitation programs and livelihood assistance.
SEC. 43. 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.
Other special laws, e.g. RA 6727; RA 6955; RA
7192; RA 7322; RA 7877 & RA 8042, MAGNA
CARTA OF WOMEN (RA 9710)
1. REPUBLIC ACT NO. 6727
AN ACT TO RATIONALIZE WAGE POLICY
DETERMINATION BY ESTABLISHING THE
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MECHANISM AND PROPER STANDARDS THEREFOR,
AMENDING FOR THE PURPOSE ARTICLE 99 OF, AND
INCORPORATING ARTICLES 120, 121, 122, 123, 124,
126 AND 127 INTO, PRESIDENTIAL DECREE NO. 442,
AS AMENDED, OTHERWISE KNOWN AS THE LABOR
CODE OF THE PHILIPPINES, FIXING NEW WAGE
RATES, PROVIDING WAGE INCENTIVES FOR
INDUSTRIAL DISPERSAL TO THE COUNTRYSIDE,
AND FOR OTHER PURPOSES
SECTION 1. This Act shall be known as the "Wage
Rationalization Act."
Section 2. It is hereby declared the policy of the State to
rationalize the fixing of minimum wages and to promote
productivity-improvement and gain-sharing measures to
ensure a decent standard of living for the workers and
their families; to guarantee the rights of labor to its just
share in the fruits of production; to enhance employment
generation in the countryside through industry dispersal;
and to allow business and industry reasonable returns on
investment, expansion and growth.
The State shall promote collective bargaining as the
primary mode of settling wages and other terms and
conditions of employment; and whenever necessary, the
minimum wage rates shall be adjusted in a fair and
equitable manner, considering existing regional disparities
in the cost of living and other socio-economic factors and
the national economic and social development plans.
Section 3. In line with the declared policy under this Act,
Article 99 of Presidential Decree No. 442, as amended, is
hereby amended and Articles 120, 121, 122, 123, 124,
126 and 127 are hereby incorporated into Presidential
Decree No. 442, as amended, to read as follows:
"Art. 99. Regional Minimum Wages. The minimum wage
rates for agricultural and non-agricultural employees and
workers in each and every region of the country shall be
those prescribed by the Regional Tripartite Wages and
Productivity Boards."
"Art. 120. Creation of the National Wages and Productivity
Commission. There is hereby created a National Wages
and Productivity Commission, hereinafter referred to as
the Commission, which shall be attached to the
Department of Labor and Employment (DOLE) for policy
and program coordination."
"Art. 121. Powers and Functions of the Commission. The
Commission shall have the following powers and functions:
"(a) To act as the national consultative and advisory body
to the President of the Philippines and Congress on matters
relating to wages, incomes and productivity;
"(b) To formulate policies and guidelines on wages,
incomes and productivity improvement at the enterprise,
industry and national levels;
"(c) To prescribe rules and guidelines for the determination
of appropriate minimum wage and productivity measures
at the regional, provincial or industry levels;
 SUN TZU NOTES
"(d) To review regional wage levels set by the
Regional Tripartite Wages and Productivity Boards to
determine if these are in accordance with prescribed
guidelines and national development plans;
"(e) To undertake studies, researches and surveys
necessary for the attainment of its functions and
objectives, and to collect and compile data and
periodically disseminate information on wages and
productivity and other related information, including,
but not limited to, employment, cost-of-living, labor
costs, investments and returns;
"(f) To review plans and programs of the Regional
Tripartite Wages and Productivity Boards to
determine whether these are consistent with national
development plans;
"(g) To exercise technical and administrative
supervision over the Regional Tripartite Wages and
Productivity Boards;
"(h) To call, from time to time, a national tripartite
conference of representatives of government,
workers and employers for the consideration of
measures to promote wage rationalization and
productivity; and
"(i) To exercise such powers and functions as may be
necessary to implement this Act.
"The Commission shall be composed of the Secretary
of Labor and Employment as ex-officio chairman, the
Director-General of the National Economic and
Development Authority (NEDA) as ex-officio vice-
chairman, and two (2) members each from workers
and employers sectors who shall be appointed by the
President of the Philippines upon recommendation of
the Secretary of Labor and Employment to be made
on the basis of the list of nominees submitted by the
workers and employers sectors, respectively, and
who shall serve for a term of five (5) years. The
Executive Director of the Commission shall also be a
member of the Commission.
"The Commission shall be assisted by a Secretariat
to be headed by an Executive Director and two (2)
Deputy Directors, who shall be appointed by the
President of the Philippines, upon the
recommendation of the Secretary of Labor and
Employment.
"The Executive Director shall have the same rank,
salary, benefits and other emoluments as that of a
Department Assistant Secretary, while the Deputy
Directors shall have the same rank, salary, benefits
and other emoluments as that of a Bureau Director.
The members of the Commission representing labor
and management shall have the same rank,
emoluments, allowances and other benefits as those
prescribed by law for labor and management
representatives in the Employees' Compensation
Commission.
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"Art. 122. Creation of Regional Tripartite Wages and
Productivity Boards. There is hereby created Regional
Tripartite Wages and Productivity Boards, hereinafter
referred to as Regional Boards, in all regions, including
autonomous regions as may be established by law. The
Commission shall determine the offices/headquarters of
the respective Regional Boards.
"The Regional Boards shall have the following powers and
functions in their respective territorial jurisdiction:
"(a) To develop plans, programs and projects relative to
wages, incomes and productivity improvement for their
respective regions;
"(b) To determine and fix minimum wage rates applicable
in their region, provinces or industries therein and to issue
the corresponding wage orders, subject to guidelines
issued by the Commission;
"(c) To undertake studies, researches and surveys
necessary for the attainment of their functions, objectives
and programs, and to collect and compile data on wages,
incomes, productivity and other related information and
periodically disseminate the same;
"(d) To coordinate with the other Regional Boards as may
be necessary to attain the policy and intention of this
Code;
"(e) To receive, process and act on applications for
exemption from prescribed wage rates as may be provided
by law or any Wage Order; and
"(f) To exercise such other powers and functions as may
be necessary to carry out their mandate under this Code.
Implementation of the plans, programs and projects of the
Regional Boards referred to in the second paragraph, letter
(a) of this Article, shall be through the respective regional
offices of the Department of Labor and Employment within
their territorial jurisdiction; Provided, however, That the
Regional Boards shall have technical supervision over the
regional office of the Department of Labor and
Employment with respect to the implementation of said
plans, programs and projects.
"Each Regional Board shall be composed of the Regional
Director of the Department of Labor and Employment as
chairman, the Regional Directors of the National Economic
and Development Authority and the Department of Trade
and Industry as vice-chairmen and two (2) members each
from workers and employers sectors who shall be
appointed by the President of the Philippines, upon the
recommendation of the Secretary of Labor and
Employment, to be made on the basis of the list of
nominees submitted by the workers and employers
sectors, respectively, and who shall serve for a term of five
(5) years.
"Each Regional Board to be headed by its chairman shall
be assisted by a Secretariat.
 SUN TZU NOTES
"Art. 123. Wage Order. Whenever conditions in
the region so warrant, the Regional Board shall
investigate and study all pertinent facts; and based
on the standards and criteria herein prescribed, shall
proceed to determine whether a Wage Order should
be issued. Any such Wage Order shall take effect
after fifteen (15) days from its complete publication
in at least one (1) newspaper of general circulation
in the region.
"In the performance of its wage determining
functions, the Regional Board shall conduct public
hearings/consultations, giving notices to employees'
and employers' groups, provincial, city and municipal
officials and other interested parties.
"Any party aggrieved by the Wage Order issued by
the Regional Board may appeal such order to the
Commission within ten (10) calendar days from the
publication of such order. It shall be mandatory for
the Commission to decide such appeal within sixty
(60) calendar days from the filing thereof.
"The filing of the appeal does not stay the order
unless the person appealing such order shall file with
the Commission an undertaking with a surety or
sureties satisfactory to the Commission for the
payment to the employees affected by the order of
the corresponding increase, in the event such order
is affirmed."
"Art. 124. Standards/Criteria for Minimum Wage
Fixing. The regional minimum wages to be
established by the Regional Board shall be as nearly
adequate as is economically feasible to maintain the
minimum standards of living necessary for the
health, efficiency and general well-being of the
employees within the framework of the national
economic and social development program. In the
determination of such regional minimum wages, the
Regional Board shall, among other relevant factors,
consider the following:
"(a) The demand for living wages;
"(b) Wage adjustment vis-a-vis the consumer price
index;
"(c) The cost of living and changes or increases
therein;
"(d) The needs of workers and their families;
"(e) The need to induce industries to invest in the
countryside;
"(f) Improvements in standards of living;
"(g) The prevailing wage levels;
"(h) Fair return of the capital invested and capacity
to pay of employers;
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"(i) Effects on employment generation and family income;
and
"(j) The equitable distribution of income and wealth along
the imperatives of economic and social development.
"The wages prescribed in accordance with the provisions of
this Title shall be the standard prevailing minimum wages
in every region. These wages shall include wages varying
within industries, provinces or localities if in the judgment
of the Regional Board conditions make such local
differentiation proper and necessary to effectuate the
purpose of this Title.
"Any person, company, corporation, partnership or any
other entity engaged in business shall file and register
annually with the appropriate Regional Board, Commission
and the National Statistics Office an itemized listing of their
labor component, specifying the names of their workers
and employees below the managerial level, including
learners, apprentices and disabled/handicapped workers
who were hired under the terms prescribed in the
employment contracts, and their corresponding salaries
and wages.
"Where the application of any prescribed wage increase by
virtue of 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
arbitrator or panel of voluntary arbitrators within ten (10)
calendar days from the time said dispute was referred to
voluntary arbitration.
"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.
"The pendency of a dispute arising from a wage distortion
shall not in any way delay the applicability of any increase
in prescribed wage rates pursuant to the provisions of law
or Wage Order.
"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.
 SUN TZU NOTES
"All workers paid by result, including those who are
paid on piecework, takay, pakyaw or task basis, shall
receive not less than the prescribed wage rates per
eight (8) hours work a day, or a proportion thereof
for working less than eight (8) hours.
"All recognized learnership and apprenticeship
agreements shall be considered automatically
modified insofar as their wage clauses are concerned
to reflect the prescribed wage rates."
"Art. 126. Prohibition Against Injunction. No
preliminary or permanent injunction or temporary
restraining order may be issued by any court,
tribunal or other entity against any proceedings
before the Commission or the Regional Boards."
"Art. 127. Non-diminution of Benefits. No Wage
Order issued by any Regional Board shall provide for
wage rates lower than the statutory minimum wage
rates prescribed by Congress."
Section 4. (a) Upon the effectivity of this Act, the
statutory minimum wage rates of all workers and
employees in the private sector, whether agricultural
or non-agricultural, shall be increased by twenty-five
pesos (P25.00) per day, except that workers and
employees in plantation agricultural enterprises
outside of the National Capital Region (NCR) with an
annual gross sales of less than five million pesos
(P5,000,000.00) in the preceding year shall be paid
an increase of twenty pesos (P20.00), and except
further that workers and employees of
cottage/handicraft industries, non-plantation
agricultural enterprises, retail/service establishments
regularly employing not more than ten (10) workers,
and business enterprises with a capitalization of not
more than five hundred thousand pesos
(P500,000.00) and employing not more than twenty
(20) employees, which are located or operating
outside the NCR, shall be paid only an increase of
fifteen pesos (P15.00): Provided, That those already
receiving above the minimum wage rates up to one
hundred pesos (P100.00) shall also receive an
increase of twenty-five pesos (P25.00) per day,
except that the workers and employees mentioned in
the first exception clause of this Section shall also be
paid only an increase of twenty pesos (P20.00), and
except further that those employees enumerated in
the second exception clause of this Section shall also
be paid an increase of fifteen pesos (P15.00):
Provided, further, That the appropriate Regional
Board is hereby authorized to grant additional
increases to the workers and employees mentioned
in the exception clauses of this Section if, on the
basis of its determination pursuant to Article 124 of
the Labor Code such increases are necessary.
(b) The increase of twenty-five pesos (P25.00)
prescribed under this Section shall apply to all
workers and employees entitled to the same in
private educational institutions as soon as they have
increased or are granted authority to increase their
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tuition fees during school year 1989-1990. Otherwise, such
increase shall be so applicable not later than the opening
of the next school year beginning 1990.
(c) Exempted from the provisions of this Act are household
or domestic helpers and persons employed in the personal
service of another, including family drivers.
Retail/service establishments regularly employing not more
than ten (10) workers may be exempted from the
applicability of this Act upon application with and as
determined by the appropriate Regional Board in
accordance with the applicable rules and regulations issued
by the Commission. Whenever an application for
exemption has been duly filed with the appropriate
Regional Board, action on any complaint for alleged non-
compliance with this Act shall be deferred pending
resolution of the application for exemption by the
appropriate Regional Board.
In the event that applications for exemptions are not
granted, employees shall receive the appropriate
compensation due them as provided for by this Act plus
interest of one per cent (1%) per month retroactive to the
effectivity of this Act.
(d) If expressly provided for and agreed upon in the
collective bargaining agreements, all increases in the daily
basic wage rates granted by the employers three (3)
months before the effectivity of this Act shall be credited
as compliance with the increases in the wage rates
prescribed herein, provided that, where such increases are
less than the prescribed increases in the wage rates under
this Act, the employer shall pay the difference. Such
increases shall not include anniversary wage increases,
merit wage increases and those resulting from the
regularization or promotion of employees.
Where the application of the increases in the wage rates
under this Section results in distortions as defined under
existing laws in the wage structure within an establishment
and gives rise to a dispute therein, such dispute shall first
be settled voluntarily between the parties and in the event
of a deadlock, the same shall be finally resolved through
compulsory arbitration by the regional branches of the
National Labor Relations Commission (NLRC) having
jurisdiction over the workplace.
It shall be mandatory for the NLRC to conduct continuous
hearings and decide any dispute arising under this Section
within twenty (20) calendar days from the time said
dispute is formally submitted to it for arbitration. The
pendency of a dispute arising from a wage distortion shall
not in any way delay the applicability of the increase in the
wage rates prescribed under this Section.
Section 5. Within a period of four (4) years from the
effectivity of this Act and without prejudice to collective
bargaining negotiations or agreements or other
employment contracts between employers and workers,
new business enterprises that may be established outside
the NCR and export processing zones whose operation or
investments need initial assistance as may be determined
by the Department of Labor and Employment in
 SUN TZU NOTES
consultation with the Department of Trade and
Industry or the Department of Agriculture, as the
case may be, shall be exempt from the applicability
of this Act for not more than three (3) years from
the start of their operations: Provided, That such
new business enterprises established in Region III
(Central Luzon) and Region IV (Southern Tagalog)
shall be exempt from such increases only for two (2)
years from the start of their operations, except those
established in the Provinces of Palawan, Oriental
Mindoro, Occidental Mindoro, Marinduque, Romblon,
Quezon and Aurora, which shall enjoy such
exemption for not more than three (3) years from
the start of their operations.
Section 6. In the case of contracts for construction
projects and for security, janitorial and similar
services, the prescribed increases in the wage rates
of the workers shall be borne by the principals or
clients of the construction/service contractors and
the contract shall be deemed amended accordingly.
In the event, however, that the principal or client
fails to pay the prescribed wage rates, the
construction/service contractor shall be jointly and
severally liable with his principal or client.
Section 7. Upon written permission of the majority
of the employees or workers concerned, all private
establishments, companies, businesses, and other
entities with twenty five (25) or more employees and
located within one (1) kilometer radius to a
commercial, savings or rural bank shall pay the
wages and other benefits of their employees through
any of said banks and within the period of payment
of wages fixed by Presidential Decree No. 442, as
amended, otherwise known as the Labor Code of the
Philippines.
Section 8. Whenever applicable and upon request of
a concerned worker or union, the bank shall issue a
certification of the record of payment of wages of a
particular worker or workers for a particular payroll
period.
Section 9. The Department of Labor and
Employment shall conduct inspections as often as
possible within its manpower constraint of the payroll
and other financial records kept by the company or
business to determine whether the workers are paid
the prescribed minimum wage rates and other
benefits granted by law or any Wage Order. In
unionized companies, the Department of Labor and
Employment inspectors shall always be accompanied
by the president or any responsible officer of the
recognized bargaining unit or of any interested union
in the conduct of the inspection. In non-unionized
companies, establishments or businesses, the
inspection should be carried out in the presence of a
worker representing the workers in the said
company. The workers' representative shall have the
right to submit his own findings to the Department of
Labor and Employment and to testify on the same if
he cannot concur with the findings of the labor
inspector.
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Section 10. The funds necessary to carry out the
provisions of this Act shall be taken from the
Compensation and Organizational Adjustment Fund, the
Contingent Fund, and other savings under the Republic Act
No. 6688, otherwise known as the General Appropriations
Act of 1989, or from any unappropriated funds of the
National Treasury: Provided, That the funding
requirements necessary to implement this Act shall be
included in the annual General Appropriations Act for the
succeeding years.
Section 11. The National Wages Council created under
Executive Order No. 614 and the National Productivity
Commission created under Executive Order No. 615 are
hereby abolished. All properties, records, equipment,
buildings, facilities, and other assets, liabilities and
appropriations of and belonging to the abovementioned
offices, as well as other matters pending therein, shall be
transferred to the Commission. All personnel of the above
abolished offices shall continue to function in a holdover
capacity and shall be preferentially considered for
appointments to or placement in the Commission.
Any official or employee separated from the service as a
result of the abolition of office pursuant to this Act shall be
entitled to appropriate separation pay and retirement and
other benefits accruing to them under existing laws. In
lieu, thereof, at the option of the employee, he shall be
preferentially considered for employment in the
government or in any of its subdivisions, instrumentalities,
or agencies, including government-owned or controlled
corporations and their subsidiaries.
Section 12. Any person, corporation, trust, firm,
partnership, association or entity which refuses or fails to
pay any of the prescribed increases or adjustments in the
wage rates made in accordance with this Act shall be
punished by a fine not exceeding twenty five thousand
pesos (P25,000.00) and/or imprisonment of not less than
one (1) year nor more than two (2) years: Provided, That
any person convicted under this Act shall not be entitled to
the benefits provided for under the Probations Law.
If the violation is committed by a corporation, trust or
firm, partnership, association or any other entity, the
penalty of imprisonment shall be imposed on the entity's
responsible officers, including, but not limited to, the
president, vice-president, chief executive officer, general
manager, managing director or partner.
Section 13. The Secretary of Labor and Employment shall
promulgate the necessary rules and regulations to
implement the provisions of this Act.
Section 14. Al laws, orders, issuances, rules and
regulations or parts thereof inconsistent with the
provisions of this Act are hereby repealed, amended or
modified accordingly. If any provision or part of this Act, or
the application thereof to any person or circumstance, is
held invalid or unconstitutional, the remainder of this Act
or the application of such provision or part thereof to other
persons or circumstances shall not be affected thereby.
 SUN TZU NOTES
Nothing in this Act shall be construed to reduce any
existing wage rates, allowances and benefits of any
form under existing laws, decrees, issuances,
executive orders, and/or under any contract or
agreement between the workers and the employers.
Section 15. This Act take effect fifteen (15) days
after its complete publication in the Official Gazette
or in at least two (2) national newspapers of general
circulation, whichever comes earlier.
2. REPUBLIC ACT NO. 6955
AN ACT TO DECLARE UNLAWFUL THE PRACTICE
OF MATCHING FILIPINO WOMEN FOR
MARRIAGE TO FOREIGN NATIONALS ON A MAIL
ORDER BASIS AND OTHER SIMILAR
PRACTICES, INCLUDING THE ADVERTISEMENT,
PUBLICATION, PRINTING OR DISTRIBUTION
OF BROCHURES, FLIERS AND OTHER
PROPAGANDA MATERIALS IN FURTHERANCE
THEREOF AND PROVIDING PENALTY
THEREFORE
Section 1. It is the policy of the State to ensure and
guarantee the enjoyment of the people of a decent
standard of living. Towards this end, the State shall
take measures to protect Filipino women from being
exploited in utter disregard of human dignity in their
pursuit of economic upliftment.
Section 2. Pursuant thereto, it is hereby declared
unlawful:
(a) For a person, natural or juridical, association,
club or any other entity to commit, directly or
indirectly, any of the following acts:
(1) To establish or carry on a business which has for
its purpose the matching of Filipino women for
marriage to foreign nationals either on a mail-order
basis or through personal introduction;
(2) To advertise, publish, print or distribute or cause
the advertisement, publication, printing or
distribution of any brochure, flier, or any propaganda
material calculated to promote the prohibited acts in
the preceding subparagraph;
(3) To solicit, enlist or in any manner attract or
induce any Filipino woman to become a member in
any club or association whose objective is to match
women for marriage to foreign nationals either on a
mail-order basis or through personal introduction for
a fee;
(4) To use the postal service to promote the
prohibited acts in subparagraph hereof.
(b) For the manager or officer-in-charge or
advertising manager of any newspaper, magazine,
television or radio station, or other media, or of an
advertising agency, printing company or other
similar entities, to knowingly allow, or consent to,
the acts prohibited in the preceding paragraph.
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Section 3. In case of violation of this Act by an
association, club, partnership, corporation, or any other
entity, the incumbent officers thereof who have knowingly
participated in the violation of this Act shall be held liable.
Section 4. Any person found guilty by the court to have
violated any of the acts herein prohibited shall suffer an
imprisonment of not less than six (6) years and one (1)
day but not more than eight (8) years, and a fine of not
less than Eight thousand pesos (P8,000) but not more than
Twenty thousand pesos (P20,000): Provided, That if the
offender is a foreigner, he shall be immediately deported
and barred forever from entering the country after serving
his sentence and payment of fine.
3. REPUBLIC ACT NO. 7192
AN ACT PROMOTING THE INTEGRATION OF WOMEN
AS FULL AND EQUAL PARTNERS OF MEN IN
DEVELOPMENT AND NATION BUILDING AND FOR
OTHER PURPOSES.
Section 1. Title. This Act shall be cited as the "Women
in Development and Nation Building Act."
Sec. 2. Declaration of Policy. The State recognizes
the role of women in nation building and shall ensure the
fundamental equality before the law of women and men.
The State shall provided women rights and opportunities
equal to that of men.
To attain the foregoing policy:
(1) A substantial portion of official development assistance
funds received from foreign governments and multilateral
agencies and organizations shall be set aside and utilized
by the agencies concerned to support programs and
activities for women;
(2) All government departments shall ensure that women
benefit equally and participate directly in the development
programs and projects of said department, specifically
those funded under official foreign development
assistance, to ensure the full participation and involvement
of women in the development process; and
(3) All government departments and agencies shall review
and revise all their regulations, circulars, issuances and
procedures to remove gender bias therein.
Sec. 3. Responsible Agency. The National Economic
and Development Authority (NEDA) shall primarily be
responsible for ensuring the participation of women as
recipients in foreign aid, grants and loans. It shall
determine and recommend the amount to be allocated for
the development activity involving women.
Sec. 4. Mandate. The NEDA, with the assistance of the
National Commission on the
Role of Filipino Women, shall ensure that the different
government departments, including its agencies and
instrumentalities which, directly or indirectly, affect the
participation of women in national development and their
 SUN TZU NOTES
integration therein:
(1) Formulate and prioritize rural or countryside
development programs or projects, provide income
and employment opportunities to women in the rural
areas and thus, prevent their heavy migration from
rural to urban or foreign countries;
(2) Include an assessment of the extent to which
their programs and/or projects integrate women in
the development process and of the impact of said
programs or projects on women, including their
implications in enhancing the self-reliance of women
in improving their income;
(3) Ensure the active participation of women and
women's organizations in the development programs
and/or projects including their involvement in the
planning, design, implementation, management,
monitoring and evaluation thereof;
(4) Collect sex-disaggregated data and include such
data in its program/project paper, proposal or
strategy;
(5) Ensure that programs and/or projects are
designed so that the percentage of women who
receive assistance is approximately proportionate to
either their traditional participation in the targeted
activities or their proportion of the population,
whichever is higher. Otherwise, the following should
be stated in the program/project paper, proposal or
strategy;
(a) The obstacle in achieving the goal;
(b) The steps being taken to overcome those
obstacles; and
(c) To the extent that steps are not being taken to
overcome those obstacles, why they are not being
taken.
(6) Assist women in activities that are of critical
significance to their self-reliance and development.
Sec. 5. Equality in Capacity to Act. Women of
legal age, regardless of civil status, shall have the
capacity to act and enter into contracts which shall in
every respect be equal to that of men under similar
circumstances.
In all contractual situations where married men have
the capacity to act, married women shall have equal
rights.
To this end:
(1) Women shall have the capacity to borrow and
obtain loans and execute security and credit
arrangement under the same conditions as men;
(2) Women shall have equal access to all
government and private sector programs granting
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agricultural credit, loans and non-material resources and
shall enjoy equal treatment in agrarian reform and land
resettlement programs;
(3) Women shall have equal rights to act as incorporators
and enter into insurance contracts; and
(4) Married women shall have rights equal to those of
married men in applying for passport, secure visas and
other travel documents, without need to secure the
consent of their spouses.
In all other similar contractual relations, women shall
enjoy equal rights and shall have the capacity to act which
shall in every respect be equal to those of men under
similar circumstances.
Sec. 6. Equal Membership in Clubs. Women shall
enjoy equal access to membership in all social, civic and
recreational clubs, committees, associations and similar
other organizations devoted to public purpose. They shall
be entitled to the same rights and privileges accorded to
their spouses if they belong to the same organization.
Sec. 7. Admission to Military Schools. Any provision
of the law to the contrary notwithstanding, consistent with
the needs of the services, women shall be accorded equal
opportunities for appointment, admission, training,
graduation and commissioning in all military or similar
schools of the Armed Forces of the Philippines and the
Philippine
National Police not later than the fourth academic year
following the approval of this Act in accordance with the
standards required for men except for those minimum
essential adjustments required by physiological differences
between sexes.
Sec. 8. Voluntary Pag-IBIG, GSIS and SSS Coverage.
Married persons who devote full time to managing the
household and family affairs shall, upon the working
spouse's consent, be entitled to voluntary Pag-IBIG
(Pagtutulungan Ikaw, Bangko, Industriya at Gobyerno),
Government Service Insurance System (GSIS) or Social
Security System (SSS) coverage to the extent of one-half
(1/2) of the salary and compensation of the working
spouse. The contributions due thereon shall be deducted
from the salary of the working spouse.
The GSIS or the SSS, as the case may be, shall issue rules
and regulations necessary to effectively implement the
provisions of this section.
4. REPUBLIC ACT NO. 7322
AN ACT INCREASING MATERNITY BENEFITS IN
FAVOR OF WOMEN WORKERS IN THE PRIVATE
SECTOR, AMENDING FOR THE PURPOSE SECTION
14-A OF REPUBLIC ACT NO. 1161, AS AMENDED, AND
FOR OTHER PURPOSES
SECTION 1. Section 14-A of Republic Act No. 1161, as
amended, is further amended to read as follows:
"SEC. 14-A. Maternity Leave Benefit. - A covered
female employee who has paid at least three monthly
 SUN TZU NOTES
maternity contributions in the twelve-month period
preceding the semester of her childbirth, abortion or
miscarriage and who is currently employed shall be
paid a daily maternity benefit equivalent to one
hundred percent (100%) of her present basic salary,
allowances and other benefits or the cash equivalent
of such benefits for sixty (60) days 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) That the payment shall be advanced by
the employer in two equal installments within thirty
(30) days from the filing of the maternity leave
application:
"(c) That in case of caesarian delivery, the
employee shall be paid the daily maternity benefit
for seventy-eight (78) days;
"(d) That payment of daily maternity benefits
shall be a bar to the recovery of sickness benefits
provided by this Act for the same compensable
period of sixty (60) days for the same childbirth,
abortion, or miscarriage;
"(e) That the maternity benefits provided
under this Section shall be paid only for the first four
deliveries after March 13, 1973;
"(f) 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
"(g) That if an employee should give birth or
suffer abortion or 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 would otherwise have been entitled to,
and the SSS shall in turn pay such amount to the
employee concerned."
SEC. 2. Nothing in this Act shall be construed as to
diminish existing maternity benefits under present
laws and collective bargaining agreements.
5. REPUBLIC ACT NO. 7877
ANTI-SEXUAL HARRASSMENT ACT
SECTION 3. Work, Education or Training
-Related, Sexual Harassment Defined. - Work,
education or training-related sexual harassment is
committed by an employer, employee, manager,
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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, re- employment 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 ordiminish 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.
SECTION 4. Duty of the Employer or Head of Office
in a Work-related, Education or Training
Environment. - It shall be the duty of the employer or the
head of the work-related, educational or training
environment or institution, to prevent or deter the
commission of acts of sexual harassment and to provide
the procedures for the resolution, settlement or
prosecution of acts of sexual harassment. Towards this
end, the employer or head of office shall:
(a) Promulgate appropriate rules and regulations in
consultation with and joint1y approved by the employees
or students or trainees, through their duly designated
representatives, prescribing the procedure for the
investigation of sexual harassment cases and the
administrative sanctions therefor.
Administrative sanctions shall not be a bar to
prosecution in the proper courts for unlawful acts of sexual
harassment.
The said rules and regulations issued pursuant to this
subsection:
(a) shall include, among others, guidelines on proper
decorum in the workplace and educational or training
institutions.
(b) Create a committee on decorum and investigation of
cases on sexual harassment.
The committee shall conduct meetings, as the case may
be, with officers and employees, teachers, instructors,
professors, coaches, trainors, and students or trainees to
increase understanding and prevent incidents of sexual
harassment. It shall also conduct the investigation of
 SUN TZU NOTES
alleged cases constituting sexual harassment.
In the case of a work-related environment, the
committee shall be composed of at least one (1)
representative each from the management, the
union, if any, the employees from the supervisory
rank, and from the rank and file employees.
In the case of the educational or training
institution, the committee shall be composed of at
least one (1) representative from the administration,
the trainors, instructors, professors or coaches and
students or trainees, as the case may be.
The employer or head of office, educational or
training institution shall disseminate or post a copy
of this Act for the information of all concerned.
SECTION 5. Liability of the Employer, Head
of Office, Educational or Training Institution. -
The employer or head of office, educational or
training institution shall be solidarily liable for
damages arising from the acts of sexual
harassment committed in the employment,
education or training environment if the employer or
head of office, educational or training institution is
informed of such acts by the offended party and no
immediate action is taken.
6. REPUBLIC ACT NO. 8042
Migrant Workers and Overseas Filipinos Act of
1995
Section 2. Declaration of Policies.
(a) In the pursuit of an independent foreign policy
and while considering national sovereignty, territorial
integrity, national interest and the right to self-
determination paramount in its relations with other
states, the State shall, at all times, uphold the
dignity of its citizens whether in country or overseas,
in general, and Filipino migrant workers, in
particular.
(b) 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. Towards this end,
the State shall provide adequate and timely social,
economic and legal services to Filipino migrant
workers.
(c) While recognizing the significant contribution of
Filipino migrant workers to the national economy
through their foreign exchange remittances, the
State does not promote overseas employment as a
means to sustain economic growth an achieve
national development. The existence of the overseas
employment program rests solely on the assurance
that the dignity and fundamental human rights and
freedoms of the Filipino citizen shall not, at any time,
be compromised or violated. The State, therefore,
shall continuously create local employment
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opportunities and promote the equitable distribution of
wealth and the benefits of development.
(d) The State affirms the fundamental equality before the
law of women and men and the significant role of women
in nation-building. Recognizing the contribution of overseas
migrant women workers and their particular vulnerabilities,
the State shall apply gender sensitive criteria in the
formulation and implementation of policies and programs
affecting migrant workers and the composition of bodies
tasked for the welfare of migrant workers.
(e) Free access to the courts and quasi-judicial bodies and
adequate legal assistance shall not be denied to any
person by reason of poverty. In this regard, it is
imperative that an effective mechanism be instituted to
ensure that the rights and interest of distressed overseas
Filipinos, in general, and Filipino migrant workers, in
particular, documented or undocumented, are adequately
protected and safeguarded.
(f) The right of Filipino migrant workers and all overseas
Filipinos to participate in the democratic decision-making
processes of the State and to be represented in institutions
relevant to overseas employment is recognized and
guaranteed.
(g) The State recognizes that the ultimate protection to all
migrant workers is the possession of skills. Pursuant to this
and as soon as practicable, the government shall deploy
and/or allow the deployment only of skilled Filipino
workers.
(h) Non-governmental organizations, duly recognized as
legitimate, are partners of the State in the protection of
Filipino migrant workers and in the promotion of their
welfare.
The State shall cooperate with them in a spirit of trust and
mutual respect.
(i) Government fees and other administrative costs of
recruitment, introduction, placement and assistance to
migrant workers shall be rendered free without prejudice
to the provision of Section 36 hereof.
Nonetheless, the deployment of Filipino overseas workers,
whether land- based or sea- based, by local service
contractors and manning agencies employing them shall
be encouraged. Appropriate incentives may be extended to
them.
Section 3. Definitions. - For purposes of this Act:
(a) Migrant worker refers to a person who is to be
engaged, is engaged or has been engaged in a
remunerated activity in a state of which he or she is not a
legal resident; to
be used interchangeably with overseas Filipino worker.
(b) Gender-sensitivity shall mean cognizance of the
inequalities and inequities prevalent in society between
women and men and a commitment to address issues with
concern for the respective interests of the sexes.
 SUN TZU NOTES
(c) Overseas Filipinos refers to dependents of
migrant workers and other Filipino nationals abroad
who are in distress as mentioned in Sections 24 and
26 of this Act.
I. DEPLOYMENT
Section 4. Deployment of Migrant Workers. -
The State shall deploy overseas Filipino workers only
in countries where the rights of Filipino migrant
workers are protected. The government recognizes
any of the following as a guarantee on the part of
the receiving country for the protection and the
rights of overseas Filipino workers:
(a) It has existing labor and social laws protecting
the rights of migrant workers;
(b) It is a signatory to multilateral conventions,
declarations or resolutions relating to the protection
of migrant workers;
(c) It has concluded a bilateral agreement or
arrangement with the government protecting the
rights of overseas Filipino workers; and
(d) It is taking positive, concrete measures to
protect the rights of migrant workers.
Section 5. Termination or Ban on Deployment. -
Notwithstanding the provisions of Section 4 hereof,
the government, in pursuit of the national interest or
when public welfare so requires, may, at any time,
terminate or impose a ban on the deployment of
migrant workers.
II. ILLEGAL RECRUITMENT
Section 6. Definition. - For purposes of this Act,
illegal recruitment shall mean any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring,
or procuring workers and includes referring, contract
services, promising or advertising for employment
abroad, whether for profit or not, when undertaken
by a non-licensee or non-holder of authority
contemplated under Article 13(f) of Presidential
Decree No. 442, as amended, otherwise known as
the Labor Code of the Philippines: Provided, That any
such non-licensee or non-holder who, in any manner,
offers or promises for a fee employment abroad to
two or more persons shall be deemed so engaged. It
shall likewise include the following acts, whether
committed by any person, whether a non-licensee,
non-holder, licensee or holder of authority:
(a) To charge or accept directly or indirectly any
amount greater than that specified in the schedule of
allowable fees prescribed by the Secretary of Labor
and Employment, or to make a worker pay any
amount greater than that actually received by him as
a loan or advance;
(b) To furnish or publish any false notice or
information or document in relation to recruitment or
64 of 132
employment;
(c) To give any false notice, testimony, information or
document or commit any act of misrepresentation for the
purpose of securing a license or authority under the Labor
Code;
(d) To induce or attempt to induce a worker already
employed to quit his employment in order to offer him
another unless the transfer is designed to liberate a worker
from oppressive terms and conditions of employment;
(e) To influence or attempt to influence any person or
entity not to employ any worker who has not applied for
employment through his agency;
(f) To engage in the recruitment or placement of workers
in jobs harmful to public health or morality or to the
dignity of the Republic of the Philippines;
(g) To obstruct or attempt to obstruct inspection by the
Secretary of Labor and Employment or by his duly
authorized representative;
(h) To fail to submit reports on the status of employment,
placement vacancies, remittance of foreign exchange
earnings, separation from jobs, departures and such other
matters or information as may be required by the
Secretary of Labor and Employment;
(i) To substitute or alter to the prejudice of the worker,
employment contracts approved and verified by the
Department of Labor and Employment from the time of
actual signing thereof by the parties up to and including
the period of the expiration of the same without the
approval of the Department of Labor and Employment;
(j) For an officer or agent of a recruitment or placement
agency to become an officer or member of the Board of
any corporation engaged in travel agency or to be engaged
directly or indirectly in the management of a travel
agency;
(k) To withhold or deny travel documents from applicant
workers before departure for monetary or financial
considerations other than those authorized under the
Labor Code and its implementing rules and regulations;
(l) Failure to actually deploy without valid reason as
determined by the Department of Labor and Employment ;
and
(m) Failure to reimburse expenses incurred by the worker
in connection with his documentation and processing for
purposes of deployment, in cases where the deployment
does not actually take place without the worker's fault.
Illegal recruitment when committed by a syndicate or in
large scale shall be considered an offense involving
economic sabotage. Illegal recruitment is deemed
committed by a syndicate if carried out by a group of three
(3) or more persons conspiring or confederating with one
another. It is deemed committed in large scale if
committed against three (3) or more persons individually
or as a group.
 SUN TZU NOTES
The persons criminally liable for the above offenses
are the principals, accomplices and accessories. In
case of juridical persons, the officers having control,
management or direction of their business shall be
liable.
Section 7. Penalties. -
(a) Any person found guilty of illegal recruitment
shall suffer the penalty of imprisonment of not less
than six (6) years and one (1) day but not more than
twelve (12) years and a fine of not less than Two
hundred thousand pesos (P200,000.00) nor more
than Five hundred thousand pesos (P500,000.00).
(b) The penalty of life imprisonment and a fine of not
less than Five hundred thousand pesos
(P500,000.00) nor more than One million pesos
(P1,000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as
defined herein. Provided, however, That the
maximum penalty shall be imposed if the person
illegally recruited is less than eighteen (18) years of
age or committed by a non-licensee or non- holder of
authority.
Section 8. Prohibition on Officials and
Employees. - It shall be unlawful for any official or
employee of the Department of Labor and
Employment, the Philippine Overseas Employment
Administration (POEA), or the OverseasWorkers
Welfare Administration (OWWA), or the Department
of Foreign Affairs, or other government agencies
involved in the implementation of this Act, or their
relatives within the fourth civil degree of
consanguinity or affinity, to engage, directly or
indirectly in the business of recruiting migrant
workers as defined in this Act. The penalties
provided in the immediate preceding paragraph shall
be imposed upon them.
Section 9. Venue. - A criminal action arising from
illegal recruitment as defined herein shall be filed
with the Regional Trial Court of the province or city
where the offense was committed or where the
offended party actually resides at the time of the
commission of the offense: Provided, That the court
where the criminal action is first filed shall acquire
jurisdiction to the exclusion of other courts:
Provided, however, That the aforestated provisions
shall also apply to those criminal actions that have
already been filed in court at the time of the
effectivity of this Act.
Section 10. Money Claims. - Notwithstanding any
provision of law to the contrary, the Labor Arbiters of
the National Labor Relations Commission (NLRC)
shall have the original and exclusive jurisdiction to
hear and decide, within ninety (90) calendar days
after the filing of the complaint, the claims arising
out of an employer-employee relationship or by
virtue of any law or contract involving Filipino
workers for overseas deployment including claims for
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actual, moral, exemplary and other forms of damages.
The liability of the principal/employer and the
recruitment/placement agency for any and all claims under
this section shall be joint and several. This provision shall
be incorporated in the contract for overseas employment
and shall be a condition precedent for its approval. The
performance bond to be filed by the
recruitment/placement agency, asprovided by law, shall be
answerable for all money claims or damages that may be
awarded to the workers. If the recruitment/placement
agency is a juridical being, the corporate officers and
directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the
corporation or partnership for the aforesaid claims and
damages. Such liabilities shall continue during the entire
period or duration of the employment contract and shall
not be affected by any substitution, amendment or
modification made locally or in a foreign country of the
said contract.
Any compromise/amicable settlement or voluntary
agreement on money claims inclusive of damages under
this section shall be paid within four (4) months from the
approval of the settlement by the appropriate authority.
In case of termination of overseas employment without
just, valid or authorized cause as defined by law or
contract, the worker shall be entitled to the full
reimbursement of his placement fee with interest at twelve
percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three
(3) months for every year of the unexpired term,
whichever is less. Noncompliance with the mandatory
periods for resolutions of cases provided under this section
shall subject the responsible officials to any or all of the
following penalties:
(a) The salary of any such official who fails to render his
decision or resolution within the prescribed period shall be,
or caused to be, withheld until the said official complies
therewith;
(b) Suspension for not more than ninety (90) days; or
(c) Dismissal from the service with disqualification to hold
any appointive public office for five (5) years. Provided,
however, That the penalties herein provided shall be
without prejudice to any liability which any such official
may have incurred under other existing laws or rules and
regulations as a consequence of violating the provisions of
this paragraph.
Section 11. Mandatory Periods for Resolution of
Illegal Recruitment Cases. - The preliminary
investigations of cases under this Act shall be terminated
within a period of thirty (30) calendar days from the date
of their filing. Where the preliminary investigation is
conducted by a prosecution officer and a prima facie case
is established, the corresponding information shall be filed
in court within twenty-four (24) hours from the
termination of the investigation. If the preliminary
investigation is conducted by a judge and a prima facie
case is found to exist, the corresponding information shall
 SUN TZU NOTES
be filed by the proper prosecution officer within
forty-eight (48) hours from the date of receipt of the
records of the case.
Section 12. Prescriptive Periods. - Illegal
recruitment cases under this Act shall prescribe in
five (5) years: Provided, however, That illegal
recruitment cases involving economic sabotage as
defined herein shall prescribe in twenty (20) years.
Section 13. Free Legal Assistance; Preferential
Entitlement Under the Witness Protection
Program. - A mechanism for free legal assistance
for victims of illegal recruitment shall be established
within the Department of Labor and Employment
including its regional offices. Such mechanism must
include coordination and cooperation with the
Department of Justice, the Integrated Bar of the
Philippines, and other non- governmental
organizations and volunteer groups.
The provisions of Republic Act No. 6981 to the
contrary notwithstanding, any person who is a victim
of illegal recruitment shall be entitled to the Witness
Protection Program provided thereunder.
III. SERVICES
Section 14. Travel Advisory/Information
Dissemination. - To give utmost priority to the
establishment of programs and services to prevent
illegal recruitment, fraud and exploitation or abuse of
Filipino migrant workers, all embassies and consular
offices, through the Philippine Overseas Employment
Administration (POEA), shall issue travel advisories
or disseminate information on labor and employment
conditions, migration realities and other facts; and
adherence of particular countries to international
standards on human and workers' rights which will
adequately prepare individuals into making informed
and intelligent decisions about overseas
employment. Such advisory or information shall be
published in a newspaper of general circulation at
least three (3) times in every quarter.
Section 15. Repatriation of Workers;
Emergency Repatriation Fund. - The repatriation
of the worker and the transport of his personal
belongings shall be the primary responsibility of the
agency which recruited or deployed the worker
overseas. All costs attendant to repatriation shall be
borne by or charged to the agency concerned and/or
its principal. Likewise, the repatriation of remains
and transport of the personal belongings of a
deceased worker and all costs attendant thereto shall
be borne by the principal and/or the local agency.
However, in cases where the termination of
employment in due solely to the fault of the worker,
the principal/employer or agency shall not in any
manner be responsible for the repatriation of the
former and/or his belongings.
The Overseas Workers Welfare Administration
(OWWA), in coordination with appropriate
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international agencies, shall undertake the repatriation of
workers in cases of war, epidemic, disaster or calamities,
natural or man-made, and other similar events without
prejudice to reimbursement by the responsible principal or
agency. However, in cases where the principal or
recruitment agency cannot be identified, all costs
attendant to repatriation shall be borne by the OWWA.
For this purpose, there is hereby created and established
an emergency repatriation fund under the administration,
control and supervision of the OWWA, initially to consist of
One hundred million pesos (P100,000,000.00), which shall
be taken from the existing fund controlled and
administered by the OWWA. Thereafter, such fund shall be
provided for in the General Appropriations Act from year to
year: Provided, That the amount appropriated shall in no
case be less than One hundred million pesos
(P100,000,000.00), inclusive of outstanding balances.
Section 16. Mandatory Repatriation of Underage
Migrant Workers. - Upon discovery or being informed of
the presence of migrant workers whose actual ages fall
below the minimum age requirement for overseas
deployment, the responsible officers in the foreign service
shall without delay repatriate said workers and advise the
Department of Foreign Affairs through the fastest means of
communication available of such discovery and other
relevant information.
Section 17. Establishment of Replacement and
Monitoring Center. - A re- placement and monitoring
center is hereby created in the Department of Labor and
Employment for returning Filipino migrant workers which
shall provide a mechanism for their reintegration into the
Philippine society, serve as a promotion house for their
local employment, and tap their skills and potentials for
national development.
The Department of Labor and Employment, the Overseas
Workers Welfare Administration, and the Philippine
Overseas Employment Administration shall, within ninety
(90) days from the effectivity of this Act, formulate a
program that would motivate migrant workers to plan for
productive options such as entry into highly technical jobs
or undertakings, livelihood and entrepreneurial
development, better wage employment, and investment of
savings.
For this purpose, the Technical Education and Skills
Development Authority (TESDA), the
Technology Livelihood Resource Center (TLRC), and other
government agencies involved in training and livelihood
development shall give priority to returnees who had been
employed as domestic helpers and entertainers.
Section 18. Functions of the Re-placement and
Monitoring Center. - The Center shall provide the
following services:
(a) Develop livelihood programs and projects for returning
Filipino migrant workers in coordination with the private
sector;
(b) Coordinate with appropriate private and government
 SUN TZU NOTES
agencies in the promotion, development, re-
placement and the full utilization of their potentials;
(c) Institute, in cooperation with other government
agencies concerned, a computer-based information
system on skilled Filipino migrant workers which
shall be accessible to all local recruitment agencies
and employers, both public and private;
(d) Provide a periodic study and assessment of job
opportunities for returning Filipino migrant workers;
and
(e) Develop and implement other appropriate
programs to promote the welfare of returning Filipino
migrant workers.
Section 19. Establishment of a Migrant Workers
and other Overseas Filipinos Resource Center. -
Within the premises and under the administrative
jurisdiction of the Philippine Embassy in countries
where there are large concentrations of Filipino
migrant workers, there shall be established a Migrant
Workers and Other Overseas Filipinos
Resource Center with the following services:
(a) Counselling and legal services;
(b) Welfare assistance including the procurement of
medical and hospitalization services;
(c) Information, advisory and programs to promote
social integration such as post-arrival orientation,
settlement and community networking services and
activities for social interaction;
(d) Institute a scheme of registration of
undocumented workers to bring them within the
purview of this Act. For this purpose, the Center is
enjoined to compel existing undocumented workers
to registered with it within six (6) months from the
effectivity of this Act, under pain of having his/her
passport cancelled;
(e) Human resource development, such as training
and skills upgrading;
(f) Gender sensitive program and activities to assist
particular needs of women migrant workers;
(g) Orientation program for returning worker and
other migrants; and
(h) Monitoring of daily situations, circumstances and
activities affecting migrant workers and other
overseas Filipinos.
The establishment and operations of the Center shall
be a joint undertaking of the various government
agencies. The Center shall be open for twenty-four
(24) hours daily including Saturdays, Sunday and
holidays, and shall be staffed by Foreign Service
personnel, service attaches or officers who represent
other Philippine government agencies abroad and, if
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available, individual volunteers and bona fide non-
government organizations from the host countries.
In countries categorized as highly problematic by the
Department of Foreign Affairs and the Department of Labor
and Employment and where there is a concentration of
Filipino migrant workers, the government must provide a
lawyer and a social worker for the Center. The Labor
Attache shall coordinate the operation of the Center and
shall keep the Chief of Mission informed and updated on all
matters affecting it.
The Center shall have a counterpart 24-hour information
and assistance center at the Department of Foreign Affairs
to ensure a continuous network and coordinative
mechanism at the home office.
Section 20. Establishment of a Shared Government
Information System for Migration. - An inter-agency
committee composed of the Department of Foreign Affairs
and its attached agency, the Commission on Filipinos
Overseas, the Department of Labor and Employment, the
Philippine Overseas Employment Administration, the
Overseas
Workers Welfare Administration, the Department of
Tourism, the Department of Justice, the Bureau of
Immigration, the National Bureau of Investigation, and the
National Statistics Office shall be established to implement
a shared government information system for migration.
The inter- agency committee shall initially make available
to itself the information contained in existing data
bases/files. The second phase shall involve linkaging of
computer facilities in order to allow free flow data changes
and sharing among concerned agencies.
The inter-agency committee shall convene to identify
existing data bases which shall be declassified and shared
among member agencies. These shared data bases shall
initially include, but not be limited to, the following
information:
(a) Masterlists of Filipino migrant workers/overseas
Filipinos classified according to occupation/job category,
civil status, by country/state of destination including visa
classification;
(b) Inventory of pending legal cases involving Filipino
migrant workers and other Filipino nationals, including
those serving prison terms;
(c) Masterlist of departing/arriving Filipinos;
(d) Statistical profile on Filipino migrant workers/overseas
Filipinos/tourists;
(e) Blacklisted foreigners/undesirable aliens;
(f) Basic data on legal systems, immigration policies,
marriage laws and civil and criminal codes in receiving
countries particularly those with large numbers of Filipinos;
(g) List of labor and other human rights instruments where
receiving countries are signatories;
 SUN TZU NOTES
(h) A tracking system of past and present gender
disaggregated cases involving male and female
migrant workers; and
(i) Listing of overseas posts which may render
assistance to overseas Filipinos, in general, and
migrant workers, in particular.
Section 21. Migrant Workers Loan Guarantee
Fund. - In order to further prevent unscrupulous
illegal recruiters from taking advantage of workers
seeking employment abroad, the OWWA, in
coordination with government financial institutions,
shall institute financing schemes that will expand the
grant of pre- departure loan and family assistance
loan. For this purpose, a Migrant Workers Loan
Guarantee Fund is hereby created and the revolving
amount of One hundred million pesos
(P100,000,000.00) from the OWWA is
set aside as a guarantee fund in favor of
participating government financial institutions.
Section 22. Rights and Enforcement Mechanism
Under International and Regional Human
Rights Systems. - The Department of Foreign
Affairs is mandated to undertake the necessary
initiative such as promotions, acceptance or
adherence of countries receiving Filipino workers to
multilateral convention, declaration or resolutions
pertaining to the protection of migrant workers'
rights. The Department of Foreign Affairs is also
mandated to make an assessment of rights and
avenues of redress under international and regional
human rights systems that are available to Filipino
migrant workers who are victims of abuse and
violation and, as far as practicable and through the
Legal Assistant for Migrant Workers Affairs created
under this Act, pursue the same on behalf of the
victim if it is legally impossible to file individual
complaints. If a complaints machinery is available
under international or regional systems, the
Department of Foreign Affairs shall fully apprise the
Filipino migrant workers of the existence and
effectiveness of such legal options.
IV. GOVERNMENT AGENCIES
Section 23. Role of Government Agencies. - The
following government agencies shall perform the
following to promote the welfare and protect the
rights of migrant workers and, as far as applicable,
all overseas Filipinos:
(a) Department of Foreign Affairs - The Department,
through its home office or foreign posts, shall take
priority action or make representation with the
foreign authority concerned to protect the rights of
migrant workers and other overseas Filipinos and
extend immediate assistance including the
repatriation of distressed or beleaguered migrant
workers and other overseas Filipinos;
(b) Department of Labor and Employment - The
Department of Labor and Employment shall see to it
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that labor and social welfare laws in the foreign countries
are fairly applied to migrant workers and whenever
applicable, to other overseas Filipinos including the grant
of legal assistance and the referral to proper medical
centers or hospitals:
(b.1) Philippine Overseas Employment Administration -
Subject to deregulation and phase-out as provided under
Sections 29 and 30 herein, the Administration shall
regulate private sector participation in the recruitment and
overseas placement of workers by setting up a licensing
and registration system. It shall also formulate and
implement, in coordination with appropriate entities
concerned, when necessary, a system for promoting and
monitoring the overseas employment of Filipino workers
taking into consideration their welfare and the domestic
manpower requirements.
(b.2) Overseas Workers Welfare Administration - The
Welfare officer or in his absence, the coordinating officer
shall provide the Filipino migrant worker and his family all
the assistance they may need in the enforcement of
contractual obligations by agencies or entities and/or by
their principals. In the performance of this function, he
shall make representation and may call on the agencies or
entities concerned to conferences or conciliation meetings
for the purpose of settling the complaints or problems
brought to his attention.
V. THE LEGAL ASSISTANT FOR MIGRANT WORKERS
AFFAIRS
Section 24. Legal Assistant for Migrant Workers
Affairs. - There is hereby created the position of Legal
Assistant for Migrant Workers Affairs under the
Department of Foreign Affairs who shall be primarily
responsible for the provision and overall coordination of all
legal assistance services to be provided to Filipino migrant
workers as well as overseas Filipinos in distress. He shall
have the rank, salary and privileges equal to that of an
undersecretary of said Department. The said Legal
Assistant for Migrant Workers Affairs, shall be appointed by
the President and must be of proven competence in the
field of law with at least ten (10) years of experience as a
legal practitioner and must not have been a candidate to
an elective office in the last local or national elections.
Among the functions and responsibilities of the aforesaid
Legal Assistant are:
(a) To issue the guidelines, procedures and criteria for the
provision of legal assistance services to Filipino migrant
workers;
(b) To establish close linkages with the Department of
Labor and Employment, the POEA, the OWWA and other
government agencies concerned, as well as with non-
governmental organizations assisting migrant workers, to
ensure effective coordination and cooperation in the
provision of legal assistance to migrant workers;
(c) To tap the assistance of reputable law firms and the
Integrated Bar of the Philippines and other bar associations
to complement the government's efforts to provide legal
 SUN TZU NOTES
assistance to our migrant workers;
(d) To administer the legal assistance fund for
migrant workers established under Section 25
thereof and to authorize disbursements therefrom in
accordance with the purposes for which the fund was
set up; and
(e) To keep and maintain the information system as
provided in Section 20.
The Legal Assistant for Migrant Workers Affairs shall
have authority to hire private lawyers, domestic or
foreign, in order to assist him in the effective
discharge of the above functions.
Section 25. Legal Assistance Fund. - There is
hereby established a legal assistance fund for
migrant workers, hereinafter referred to as the Legal
Assistance Fund, in the amount of One hundred
million pesos (P100,000,000.00) to be constituted
from the following sources:
Fifty million pesos (P50,000,000.00) from the
Contingency Fund of the President;
Thirty million pesos (P30,000,000.00) from the
Presidential Social Fund; and
Twenty million pesos (P20,000,000.00) from the
Welfare Fund for Overseas Workers established
under Letter of Instruction No. 537, as amended by
Presidential Decrees Nos.
1694 and 1809.
Any balances of existing funds which have been set
aside by the government specifically as legal
assistance or defense fund to help migrant workers
shall, upon effectivity of this Act, be turned over to,
and form part of, the Fund created under this Act.
Section 26. Uses of the Legal Assistance Fund. -
The Legal Assistance Fund created under the
preceding section shall be used exclusively to
provide legal services to migrant workers and
overseas Filipinos in distress in accordance with the
guidelines, criteria and procedures promulgated in
accordance with Section 24(a) hereof. The
expenditures to be charged against the Fund shall
include the fees for the foreign lawyers to be hired
by the Legal Assistant for Migrant Workers Affairs to
represent migrant workers facing charges abroad,
bail bonds to secure the temporary release of
workers under detention, court fees and charges and
other litigation expenses.
VI. COUNTRY-TEAM APPROACH
Section 27. Priority Concerns of Philippine
Foreign Service Posts. - The country- team
approach, as enunciated under Executive Order No.
74, series of 1993, shall be the mode under which
Philippine embassies or their personnel will operate
in the protection of the Filipino migrant workers as
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well as in the promotion of their welfare. The protection of
the Filipino migrant workers and the promotion of their
welfare, in particular, and the protection of the dignity and
fundamental rights and freedoms of the Filipino citizen
abroad, in general, shall be the highest priority concerns of
the Secretary of Foreign Affairs and the Philippine Foreign
Service Posts.
Section 28. Country-Team Approach. - Under the
country-team approach, all officers, representatives and
personnel of the Philippine government posted abroad
regardless of their mother agencies shall, on a per country
basis, act as one country-team with a mission under the
leadership of the ambassador. In this regard the
ambassador may recommend to the Secretary of the
Department of Foreign Affairs the recall of officers,
representatives and personnel of the Philippine
government posted abroad for acts inimical to the national
interest such as, but not limited to, failure to provide the
necessary services to protect the rights of overseas
Filipinos.
Upon receipt of the recommendation of the ambassador,
the Secretary of the Department of Foreign Affairs shall, in
the case of officers, representatives and personnel of other
departments, endorse such recommendation to the
department secretary concerned for appropriate action.
Pending investigation by an appropriate body in the
Philippines, the person recommended for recall may be
placed under preventive suspension by the ambassador.
In host countries where there are Philippine consulates,
such consulates shall also constitute part of the country-
team under the leadership of the ambassador.
In the implementation of the country-team approach,
visiting Philippine delegations shall be provided full support
and information.
VII. DEREGULATION AND PHASE-OUT
Section 29. Comprehensive Deregulation Plan
onRecruitment Activities. - Pursuant to a progressive
policy of deregulation whereby the migration of workers
becomes strictly a matter between the worker and his
foreign employer, the DOLE, within one (1) year from the
effectivity of this Act, is hereby mandated to formulate a
five-year comprehensive deregulation plan on recruitment
activities taking into account labor market trends,
economic conditions of the country and emerging
circumstances which may affect the welfare of migrant
workers.
Section 30. Gradual Phase-out of Regulatory
Functions. - Within a period of five (5) years from the
effectivity of this Act, the DOLE shall phase-out the
regulatory functions of the POEA pursuant to the objectives
of deregulation.
VIII. PROFESSIONAL AND OTHER HIGHLY-SKILLED
FILIPINOS ABROAD
Section 31. Incentives to Professionals and Other
Highly-Skilled Filipinos Abroad. - Pursuant to the
objective of encouraging professionals and other highly-
 SUN TZU NOTES
skilled Filipinos abroad especially in the field of
science and technology to participate in, and
contribute to national development, the government
shall provide proper and adequate incentives and
programs so as to secure their services in priority
development areas of the public and private sectors.
IX. MISCELLANEOUS PROVISIONS
Section 32. POEA and OWWA Board; Additional
Memberships. - Notwithstanding any
provision of law to the contrary, the respective
Boards of the POEA and the OWWA shall, in addition
to their present composition, have three (3)
members each who shall come from the women,
sea-based and land-based sectors respectively, to be
appointed by the President in the same manner as
the other members.
Section 33. Report to Congress. - In order to
inform the Philippine Congress on the
implementation of the policy enunciated in Section 4
hereof, the Department of Foreign Affairs and the
Department of Labor and Employment shall submit
to the said body a semi- annual report of Philippine
foreign posts located in countries hosting Filipino
migrant workers. The report shall include, but shall
not be limited to, the following information:
(a) Masterlist of Filipino migrant workers, and
inventory of pending legal cases involving them and
other Filipino nationals including those serving prison
terms;
(b) Working conditions of Filipino migrant workers;
(c) Problems encountered by the migrant workers,
specifically violations of their rights;
(d) Initiatives/actions taken by the Philippine foreign
posts to address the problems of
Filipino migrant workers;
(e) Changes in the laws and policies of host
countries; and
(f) Status of negotiations on bilateral labor
agreements between the Philippines and the host
country.
Any officer of the government who fails to report as
stated in the preceding section shall be subject to
administrative penalty.
Section 34. Representation in Congress. -
Pursuant to Section 5(2), Article VI of the
Constitution and in line with the objective of
empowering overseas Filipinos to participate in the
policy making process to address Filipino migrant
concerns, two (2) sectoral representatives for
migrant workers in the House of Representatives
shall be appointed by the President from the ranks of
migrant workers: Provided, That at least one (1) of
the two
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(2) sectoral representatives shall come from the women
migrant workers sector: Provided, further, That all
nominees must have at least two (2) years experience as a
migrant worker.
Section 35. Exemption from Travel Tax and Airport
Fee. - All laws to the contrary notwithstanding, the
migrant worker shall be exempt from the payment of
travel tax and airport fee upon proper showing of proof of
entitlement by the POEA.
Section 36. Non-increase of Fees; Abolition of
Repatriation Bond. - Upon approval of this Act, all fees
being charged by any government office on migrant
workers shall remain at their present levels and the
repatriation bond shall be abolished.
Section 37. The Congressional Migrant Workers
Scholarship Fund. - There is hereby created a
Congressional Migrant Workers Scholarship Fund which
shall benefit deserving migrant workers and/or their
immediate descendants below twenty-one (21) years of
age who intend to pursue courses or training primarily in
the field of science and technology.
The initial seed fund of Two hundred million pesos
(P200,000,000.00) shall be constituted from the following
sources:
(a) Fifty million pesos (P50,000,000.00) from the
unexpended Countrywide Development Fund for 1995 in
equal sharing by all Members of Congress; and
(b) The remaining One hundred fifty million pesos
(P150,000,000.00) shall be funded from the proceeds of
Lotto draws.
The Congressional Migrant Workers Scholarship Fund as
herein created shall be administered by the DOLE in
coordination with the Department of Science and
Technology (DOST). To carry out the objectives of this
section, the DOLE and the DOST shall formulate the
necessary rules and regulations.
Section 38. Appropriation and Other Sources of
Funding. - The amount necessary to carry out the
provisions of this Act shall be provided for in the General
Appropriations Act of the year following its enactment into
law and thereafter.
Section 39. Migrant Workers Day. - The day of signing
by the President of this Act shall be designated as the
Migrant Workers Day and shall henceforth be
commemorated as such annually.
Section 40. Implementing Rules and Regulations. -
The departments and agencies charged with carrying out
the provisions of this Act shall, within ninety (90) days
after the effectivity of this Act, formulate the necessary
rules and regulations for its effective implementation.
7. RA 9710 (MAGNA CARTA OF WOMEN)
 SUN TZU NOTES
President Arroyo signed into law Republic Act 9710
banning discrimination against women, and
recognizing and protecting their rights.
The Magna Carta of Women ensures the
equitable participation and representation of
women in government, political parties, the
civil service and the private sector.
Under RA 9710, the National Commission on the Role
of Filipino Women is renamed the Philippine
Commission for Women, the primary policy-making
and coordinating body for women and gender
equality concerns.
It mandates the Department of Labor and
Employment and the Department of Social
Welfare and Development to strengthen the
delivery of services to women migrant workers
abroad.
As the gender and development ombudsman, the
Commission on Human Rights has the major role of
helping government agencies monitor compliance
with the laws provisions.
The law also tasked the government to ensure that
women are protected from all forms of violence.
It is the right of women to seek protection and
security in situations of armed conflict and
militarization, according to the law.
Towards this end, they shall be protected from all
forms of gender-based violence, particularly rape
and other forms of sexual abuse, read the law.
It (government) shall not force women, especially
indigenous peoples, to abandon their lands,
territories and means of subsistence or relocate
them in special centers for military purposes under
any discriminatory condition.
Equal opportunity for women is emphasized under
the law in all fields and endeavors.
The law states that the number of women in
third level or supervisory positions in
government must be increased within the next
five years to achieve a 50-50 gender balance.
It also provides for an increase in the
recruitment and training of women in the police
force and forensics and medico-legal services
until women make up 50 percent of their
personnel.
The law mandates the establishment of violence
against womens desks in every barangay.
Political parties are encouraged to integrate women
in their roster of leaders and the government to
provide them incentives for this purpose.
In education, the law requires that all educational
materials and curriculums that tend to stereotype
women be revised.
No educational institution will be allowed to
expel or refuse readmission to women faculty
members due to pregnancy outside of wedlock.
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In the same manner, no school would be allowed to expel
or refuse admission to a female student solely on the
account of her getting pregnant outside of marriage.
In the military and police force, the law states that
women should no longer be confined to
administrative tasks and should be allowed to avail
of combat and non-combat training.
Women in military shall be accorded the same
promotional privileges and opportunities as men,
including pay increases, additional remunerations
and benefits and awards based on their competency
and quality of performance, read the law.
In the workplace, women employees would be
allowed to avail of a special leave benefit of two
months with full pay after undergoing surgery
caused by gynecological disorders, provided that she
has rendered at least six months of continuous
aggregate employment.
In family relations, the law grants women equal weight in
all decision making processes such as number and spacing
of children and even nationality.
Women in marginalized sectors are guaranteed all civil,
political, social and economic rights recognized, promoted
and protected under existing laws.
The law mandates the government to ensure the
protection and promotion of migrant womens rights
and welfare, regardless of work status, and protect
them against discrimination in wages, conditions of
work and employment opportunities.
RA 9710 will also give way to the creation of the Gender
Ombudsman under the Commission on Human Rights that
will specifically handle womens rights concerns.
The law will also provide penalties for the violation
of the provisions of the magna carta.
Other salient features:
The review and, if necessary, amendment or repeal
of laws that are discriminatory to women.
Ensures womens equitable participation and
representation in government, political parties,
international bodies, civil service, and the private
sector.
Affords equal opportunities to women in relation to
education, employment, livelihood, social protection,
and others, and including women in the military.
Mandates access to information and services
pertaining to womens health.
F. EMPLOYMENT OF CHILDREN
1. LABOR CODE PROVISIONS
EMPLOYMENT OF MINORS
ART. 139. Minimum employable age. - (a) No child
below fifteen (15) years of age shall be employed, except
when he works directly under the sole responsibility of his
 SUN TZU NOTES
parents or guardian, and his employment does not in
any way interfere with his schooling.
(b) Any person between fifteen (15) and eighteen
(18) years of age may be employed for such number
of hours and such periods of the day as determined
by the Secretary of Labor and Employment in
appropriate regulations.
(c) The foregoing provisions shall in no case allow
the employment of a person below eighteen (18)
years of age in an undertaking which is hazardous or
deleterious in nature as determined by the Secretary
of Labor and Employment.
ART. 140. Prohibition against child
discrimination. - No employer shall discriminate
against any person in respect to terms and
conditions of employment on account of his age.
2. SPECIAL LAWS
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."
Section 1. Sec. 2 of Republic Act No. 7610, as
amended, otherwise known as the "Special
Protection of Children Against Child Abuse,
Exploitation and Discrimination Act", is hereby
amended to read as follows:
"Sec. 2. Declaration of State Policy and Principles.
It is hereby declared to be the policy of the State
to provide special protection to children from all
forms of abuse, neglect, cruelty, exploitation and
discrimination, and other conditions prejudicial to
their development including child labor and its worst
forms; provide sanctions for their commission and
carry out a program for prevention and deterrence of
and crisis intervention in situations of child abuse,
exploitation and discrimination. The State shall
intervene on behalf of the child when the parent,
guardian, teacher or person having care or custody
of the child fails or is unable to protect the child
against abuse, exploitation and discrimination or
when such acts against the child are committed by
the said parent, guardian, teacher or person having
care and custody of the same.
"It shall be the policy of the State to protect and
rehabilitate children gravely threatened or
endangered by circumstances which affect or will
affect their survival and normal development and
over which they have no control.
72 of 132
"The best interests of children shall be the paramount
consideration in all actions concerning them, whether
undertaken by public or private social welfare institutions,
courts of law, administrative authorities, and legislative
bodies, consistent with the principle of First Call for
Children as enunciated in the United Nations Convention
on the Rights of the Child. Every effort shall be exerted to
promote the welfare of children and enhance their
opportunities for a useful and happy life."
Sec. 2. Sec. 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 child's employment or participation in public
entertainment or information through cinema, theater,
radio, television or other forms of media is essential:
provided, that the employment contract is concluded by
the child's parents or legal guardian, with the express
agreement of the child concerned, if possible, and the
approval of the Department of Labor and Employment:
provided, further, that the following requirements in all
instances are strictly complied with:
"(a) The employer shall ensure the protection, health,
safety, morals and normal development of the child;
"(b) The employer shall institute measures to prevent
the child's exploitation or discrimination taking into
account the system and level of remuneration, and the
duration and arrangement of working time; and
"(c) The employer shall formulate and implement,
subject to the approval and supervision of competent
authorities, a continuing program for training and skills
acquisition of the child.
"In the above-exceptional cases where any such child may
be employed, the employer shall first secure, before
engaging such child, a work permit from the Department
of Labor and Employment which shall ensure observance of
the above requirements.
"For purposes of this Article, the term "child" shall apply to
all persons under eighteen (18) years of age."
Sec. 3. The same Act, as amended, is hereby
furtheramended by adding new Sec.s to be denominated
as Sec.s 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 Sec. 12 of this Act, as
 SUN TZU NOTES
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 o'clock in the
evening and six o'clock in the morning of the
following day and no child fifteen (15) years of age
but below eighteen (18) shall be allowed to work
between ten o'clock in the evening and six o'clock in
the morning of the following day."
"Sec. 12-B. Ownership, Usage and Administration
of the Working Child's Income. The wages,
salaries, earnings and other income of the working
child shall belong to him/her in ownership and shall
be set aside primarily for his/her support, education
or skills acquisition and secondarily to the collective
needs of the family: provided, that not more than
twenty percent (20%) of the child's income may be
used for the collective needs of the family.
"The income of the working child and/or the property
acquired through the work of the child shall be
administered by both parents. In the absence or
incapacity of either of the parents, the other parent
shall administer the same. In case both parents are
absent or incapacitated, the order of preference on
parental authority as provided for under the Family
Code shall apply.
"Sec. 12-C. Trust Fund to Preserve Part of the
Working Child's Income. The parent or legal
guardian of a working child below eighteen (18)
years of age shall set up a trust fund for at least
thirty percent (30%) of the earnings of the child
whose wages and salaries from work and other
income amount to at least two hundred thousand
pesos (P200,000.00) annually, for which he/she shall
render a semi-annual accounting of the fund to the
Department of Labor and Employment, in compliance
with the provisions of this Act. The child shall have
full control over the trust fund upon reaching the age
of majority.
"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
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"(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."
Sec. 4. Sec. 13 of the same Act is hereby amended to
read as follows:
"Sec. 13. Access to Education and Training for Working
Children. "a) No child shall be deprived of formal or
non-formal education. In all cases of employment allowed
in this Act, the employer shall provide a working child with
access to at least primary and secondary education.
"b) To ensure and guarantee the access of the working
child to education and training, the Department of
Education (DEPED) shall: (1) formulate, promulgate, and
implement relevant and effective course designs and
educational programs; (2) conduct the necessary training
 SUN TZU NOTES
for the implementation of the appropriate curriculum
for the purpose; (3) ensure the availability of the
needed educational facilities and materials; and (4)
conduct continuing research and development
program for the necessary and relevant alternative
education of the working child.
"c) The DEPED shall promulgate a course design
under its non-formal education program aimed at
promoting the intellectual, moral and vocational
efficiency of working children who have not
undergone or finished elementary or secondary
education. Such course design shall integrate the
learning process deemed most effective under given
circumstances."
Sec. 5. Sec. 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."
Sec. 6. Sec. 16 of the same Act, is hereby
amended to read as follows:
"Sec. 16. Penal Provisions.
"a) Any employer who violates Sec.s 12, 12-A, and
Sec. 14 of this Act, as amended, shall be penalized
by imprisonment of six (6) months and one (1) day
to six (6) years or a fine of not less than Fifty
thousand pesos (P50,000.00) but not more than
Three hundred thousand pesos (P300,000.00) or
both at the discretion of the court.
"b) Any person who violates the provision of Sec.
12-D of this Act or the employer of the subcontractor
who employs, or the one who facilitates the
employment of a child in hazardous work, shall
suffer the penalty of a fine of not less than One
hundred thousand pesos (P100,000.00) but not more
than One million pesos (P1,000,000.00), or
imprisonment of not less than twelve (12) years and
one (1) day to twenty (20) years, or both such fine
and imprisonment at the discretion of the court.
"c) Any person who violates Sec.s 12-D(1) and 12-
D(2) shall be prosecuted and penalized in accordance
with the penalty provided for by R.A. 9208 otherwise
known as the "Anti-trafficking in Persons Act of
2003": provided, that such penalty shall be imposed
in its maximum period.
"d) Any person who violates Sec. 12-D(3) shall be
prosecuted and penalized in accordance with R.A.
9165, otherwise known as the "Comprehensive
Dangerous Drugs Act of 2002": provided, that such
penalty shall be imposed in its maximum period.
"e) If a corporation commits any of the violations
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aforecited, the board of directors/trustees and officers,
which include the president, treasurer and secretary of the
said corporation who participated in or knowingly allowed
the violation, shall be penalized accordingly as provided for
under this Sec.
"f) Parents, biological or by legal fiction, and legal
guardians found to be violating Sec.s 12, 12-A, 12-B and
12-C of this Act shall pay a fine of not less than Ten
thousand pesos (P10,000.00) but not more than One
hundred thousand pesos (P100,000.00), or be required to
render community service for not less than thirty (30)
days but not more than one (1) year, or both such fine and
community service at the discretion of the court: provided,
that the maximum length of community service shall be
imposed on parents or legal guardians who have violated
the provisions of this Act three (3) times: provided,
further, that in addition to the community service, the
penalty of imprisonment of thirty (30) days but not more
than one (1) year or both at the discretion of the court,
shall be imposed on the parents or legal guardians who
have violated the provisions of this Act more than three
(3) times.
"g) The Secretary of Labor and Employment or his/her
duly authorized representative may, after due notice and
hearing, order the closure of any business firm or
establishment found to have violated any of the provisions
of this Act more than three (3) times. He/she shall likewise
order the immediate closure of such firm or establishment
if:
"(1) The violation of any provision of this Act has
resulted in the death, insanity or serious physical injury of
a child employed in such establishment; or
"(2) Such firm or establishment is engaged or employed
in prostitution or in obscene or lewd shows.
"h) In case of such closure, the employer shall be
required to pay the employee(s) the separation pay and
other monetary benefits provided for by law."
Sec. 7. The same Act is hereby further amended by
adding a new Sec. to be denominated as Sec. 16-A, to
read as follows:
"Sec. 16-A. Trust Fund from Fines and Penalties. The
fine imposed by the court shall be treated as a Trust Fund,
administered by the Department of Labor and Employment
and disbursed exclusively for the needs, including the costs
of rehabilitation and reintegration into the mainstream of
society of the working children who are victims of the
violations of this Act, and for the programs and projects
that will prevent acts of child labor."
Sec. 8. Sec. 27 of the same Act is hereby amended to
read as follows:
"Sec. 27. Who May File a Complaint. Complaints on
cases of unlawful acts committed against children as
enumerated herein may be filed by the following:
"(a) Offended party;
 SUN TZU NOTES
private sectors, within sixty (60) days from the effectivity
"(b) Parents or guardians; of this Act.

"(c) Ascendant or collateral relative within the third
degree of consanguinity;
"(d) Officer, social worker or representative of a
licensed child-caring institution;
"(e) Officer or social worker of the Department of
Social Welfare and Development;
Such rules and regulations shall take effect upon their
publication in two (2) national newspapers of general
circulation.
Sec. 11. Separability Clause. If any provision of this
Act is declared invalid or unconstitutional, the validity of
the remaining provisions hereof shall remain in full force
and effect.

"(f) Barangay chairman of the place where the
violation occurred, where the child is residing or
employed;
or
"(g) At least three (3) concerned, responsible
citizens where the violation occurred."
Sec. 9. The same Act is hereby further amended
by adding new Sec.s to Sec. 16 to be denominated
as Sec.s 16-A, 16-B and 16-C to read as follows:
Sec. 12. Repealing Clause. All laws, decrees, or rules
inconsistent with the provisions of this Act are hereby
repealed or modified accordingly.
Sec. 13. Effectivity. This Act shall take effect fifteen
(15) days from the date of its complete publication in the
Official Gazette or in at least two (2) national newspapers
of general circulation.
DEPARTMENT ORDER NO. 65-04
SERIES OF 2003

"Sec. 16-A. Jurisdiction. The family courts shall
have original jurisdiction over all cases involving
offenses punishable under this Act: provided, that in
cities or provinces where there are no family courts
yet, the regional trial courts and the municipal trial
courts shall have concurrent jurisdiction depending
on the penalties prescribed for the offense charged.
"The preliminary investigation of cases filed under
this Act shall be terminated within a period of thirty
(30) days from the date of filing.
"If the preliminary investigation establishes a prima
facie case, then the corresponding information shall
be filed in court within forty eight (48) hours from
the termination of the investigation.
"Trial of cases under this Act shall be terminated by
the court not later than ninety (90) days from the
date of filing of information. Decision on said cases
shall be rendered within a period of fifteen (15) days
from the date of submission of the case.
RULES AND REGULATIONS IMPLEMENTING
REPUBLIC ACT 9231, AMENDINDING R.A. 7610, AS
AMENDED
CHAPTER I PRELIMINARY PROVISIONS
XXXXXXXXXX
CHAPTER II PROHIBITION ON THE EMPLOYMENT
OF CHILDREN
SECTION 4 GENERAL PROHIBITION Except as
otherwise provided in these Rules, no child below 15 years
of age shall be employed, permitted or suffered to work, in
any public or private establishment.
SECTION 5- PROHIBITION ON THE EMPLOYMENT OF
CHILDREN IN 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:
a) All forms of slavery,

"Sec. 16-B. Exemptions from Filing Fees. When REPUBLIC ACT NO. 9208
the victim of child labor institutes a separate civil
action for the recovery of civil damages, he/she shall AN ACT TO INSTITUTE POLICIES TO ELIMINATE
be exempt from payment of filing fees. TRAFFICKING IN PERSONS ESPECIALLY WOMEN AND
CHILDREN, ESTABLISHING THE NECESSARY
"Sec. 16-C. Access to Immediate Legal, Medical INSTITUTIONAL MECHANISMS FOR THE
and Psycho-Social Services. The working child PROTECTION AND SUPPORT OF TRAFFICKED
shall have the right to free legal, medical and PERSONS, PROVIDING PENALTIES FOR ITS
psycho-social services to be provided by the State." VIOLATIONS, AND FOR OTHER PURPOSES.

Sec. 10. Implementing Rules and Regulations.
The Secretary of Labor and Employment, in
coordination with the Committees on Labor and
Employment of both Houses of Congress, shall issue
the necessary Implementing Rules and Regulations
(IRR) to effectively implement the provisions of this
Act, in consultation with concerned public and
Section 1. Title. This Act shall be known as the
"Anti-Trafficking in Persons Act of 2003."
Sec. 2. Declaration of Policy. It is hereby declared
that the State values the dignity of every human person
and guarantees the respect of individual rights. In pursuit
of this policy, the State shall give highest priority to the

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 SUN TZU NOTES
enactment of measures and development of
programs that will promote human dignity, protect
the people from any threat of violence and
exploitation, eliminate trafficking in persons, and
mitigate pressures for involuntary migration and
servitude of persons, not only to support trafficked
persons but more importantly, to ensure their
recovery, rehabilitation and reintegration into the
mainstream of society.
It shall be a State policy to recognize the equal
rights and inherent human dignity of women and
men as enshrined in the United Nations Universal
Declaration on Human Rights, United Nations
Convention on the Rights of the Child, United Nations
Convention on the Protection of Migrant Workers and
their Families, United Nations Convention Against
Transnational Organized Crime Including its Protocol
to Prevent, Suppress and Punish Trafficking in
Persons, Especially Women and Children and all
other relevant and universally accepted human rights
instruments and other international conventions to
which the Philippines is a signatory.
Sec. 3. Definition of Terms. As used in this
Act:
(a) Trafficking in Persons refers to the
recruitment, transportation, transfer or harboring, or
receipt of arsons with or without the victim's consent
or knowledge, within or across national borders by
means of threat or use of force, or other forms of
coercion, abduction, fraud, deception, abuse of
power or of position, taking advantage of the
vulnerability of the persons, or, the giving or
receiving of payments or benefits to achieve the
consent of a person having control over another
person for the purpose of exploitation which includes
at a minimum, the exploitation or the prostitution of
others or other forms of sexual exploitation, forced
labor or services, slavery, servitude or the removal
or sale of organs.
The recruitment transportation, transfer, harboring
or receipt of a child for the purpose of exploitation
shall also be considered as "trafficking in persons"
even if it does not involve any of the means set forth
in the preceding paragraph.
(b) Child refers to a person below eighteen (18)
years of age or one who is over eighteen (18) but is
unable to fully take care of or protect himself/herself
from abuse, neglect, cruelty, exploitation, or
discrimination because of a physical or mental
disability or condition.
(c) Prostitution refers to any act, transaction,
scheme or design involving the use of a person by
another, for sexual intercourse or lascivious conduct
in exchange for money, profit or any other
consideration.
(d) Forced Labor and Slavery refer to the
extraction of work or services from any person by
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means of enticement, violence, intimidation or threat, use
of force or coercion, including deprivation of freedom,
abuse of authority or moral ascendancy, debt-bondage or
deception.
(e) Sex Tourism refers to a program organized by
travel and tourism-related establishment and individuals
which consists of tourism packages or activities, utilizing
and offering escort and sexual services as enticement for
tourists. This includes sexual services and practices offered
during rest and recreation periods for members of the
military.
(f) Sexual Exploitation refers to participation by a
person in prostitution or the production of pornographic
materials as a result of being subjectedto a threat,
deception, coercion, abduction, force, abuse of authority,
debt bondage, fraud or through abuse of a victim's
vulnerability.
(g) Debt Bondage refers to the pledging by the debtor
of his/her personal services or labor or those of a person
under his/her control as security or payment for a debt,
when the length and nature of services is not clearly
defined or when the value of the services as reasonably
assessed is not applied toward the liquidation of the debt.
(h) Pornography refers to any representation, through
publication, exhibition, cinematography, indecent shows,
information technology, or by whatever means, of a person
engaged in real or simulated explicit sexual activities or
any representation of the sexual parts of a person for
primarily sexual purposes.
(i) Council shall mean the Inter-Agency Council
Against Trafficking created under Sec. 20 of this Act.
Sec. 4. Acts of Trafficking in Persons. It shall be
unlawful for any person, natural or judicial, to commit any
of the following acts.
(a) To recruit, transport, transfer, harbor, provide, or
receive a person by any means, including those done
under the pretext of domestic or overseas employment or
training or apprenticeship, for the purpose of prostitution,
pornography, sexual exploitation, forced labor, slavery,
involuntary servitude or debt bondage;
(b) To introduce or match for money, profit, or material,
economic or other consideration, any person or, as
provided for under Republic Act No. 6955, any Filipino
women to a foreign national, for marriage for the purpose
of acquiring, buying, offering, selling or trading him/her to
engage in prostitution, pornography, sexual exploitation,
forced labor, slavery, involuntary servitude or debt
bondage;
(c) To offer or contract marriage, real or simulated, for
the purpose of acquiring, buying, offering, selling, or
trading them to engage in prostitution, pornography,
sexual exploitation, forced labor or slavery, involuntary
servitude or debt bondage;
(d) To undertake or organize tours and travel plans
 SUN TZU NOTES
consisting of tourism packages or activities for the
purpose of utilizing and offering persons for
prostitution, pornography or sexual exploitation;
(e) To maintain or hire a person to engage in
prostitution or pornography;
(f) To adopt or facilitate the adoption of persons
for the purpose of prostitution, pornography, sexual
exploitation, forced labor, slavery, involuntary
servitude or debt bondage;
(g) To recruit, hire, adopt, transport or abduct a
person, by means of threat or use of force, fraud
deceit, violence, coercion, or intimidation for the
purpose of removal or sale of organs of said person;
and
(h) To recruit, transport or adopt a child to engage
in armed activities in the Philippines or abroad.
Sec. 5. Acts that Promote Trafficking in
Persons. The following acts which promote or
facilitate trafficking in persons shall be unlawful:
(a) To knowingly lease or sublease, use or allow to
be used any house, building or establishment for the
purpose of promoting trafficking in persons;
(b) To produce, print and issue or distribute
unissued, tampered or fake counseling certificates,
registration stickers and certificates of any
government agency which issued these certificates
and stickers as proof of compliance with government
regulatory and pre-departure requirements for the
purpose of promoting trafficking in persons;
(c) To advertise, publish, print, broadcast or
distribute, or cause the advertisement, publication,
printing broadcasting or distribution by any means,
including the use of information technology and the
internet, of any brochure, flyer, or any propaganda
material that promotes trafficking in persons;
(d) To assist in the conduct of misrepresentation or
fraud for purposes of facilitating the acquisition of
clearances and necessary exit documents from
government agencies that are mandate to provide
pre-departure registration and services for departing
persons for the purpose of promoting trafficking in
persons;
(e) To facilitate, assist or help in the exit and entry
of persons from/to the country at international and
local airports, territorial boundaries and seaports
who are in possession of unissued, tampered or
fraudulent travel documents for the purpose of
promoting trafficking in persons;
(f) To confiscate, conceal, or destroy the passport,
travel documents, or personal documents or
belongings of trafficked persons in furtherance of
trafficking or to prevent them from leaving the
country or seeking redress from the government or
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appropriate agencies; and
(h) To knowingly benefit from, financial or otherwise, or
make use of, the labor or services of a person held to a
condition of involuntary servitude, forced labor, or slavery.
Sec. 6. Qualified Trafficking in Persons. The
following are considered as qualified trafficking:
(a) When the trafficked person is a child;
(b) When the adoption is effected through Republic Act
No. 8043, otherwise known as the "Inter-Country
Adoption Act of 1995" and said adoption is for the purpose
of prostitution, pornography, sexual exploitation, forced
labor, slavery, involuntary servitude or debt bondage;
(c) When the crime is committed by a syndicate, or in
large scale. Trafficking is deemed committed by a
syndicate if carried out by a group of three (3) or more
persons conspiring or confederating with one another. It is
deemed committed in large scale if committed against
three (3) or more persons, individually or as a group;
(d) When the offender is an ascendant, parent, sibling,
guardian or a person who exercise authority over the
trafficked person or when the offense is committed by a
public officer or employee;
(e) When the trafficked person is recruited to engage in
prostitution with any member of the military or law
enforcement agencies;
(f) When the offender is a member of the military or law
enforcement agencies; and
(g) When by reason or on occasion of the act of
trafficking in persons, the offended party dies, becomes
insane, suffers mutilation or is afflicted with Human
Immunodeficiency Virus (HIV) or the Acquired Immune
Deficiency Syndrome (AIDS).
Sec. 7. Confidentiality. At any stage of the
investigation, prosecution and trial of an offense under this
Act, law enforcement officers, prosecutors, judges, court
personnel and medical practitioners, as well as parties to
the case, shall recognize the right to privacy of the
trafficked person and the accused. Towards this end, law
enforcement officers, prosecutors and judges to whom the
complaint has been referred may, whenever necessary to
ensure a fair and impartial proceeding; and after
considering all circumstances for the best interest of the
parties order a closed-door investigation, prosecution or
trial. The name and personal circumstances of the
trafficked person or of the accused, or any other
information tending to establish their identities and such
circumstances or information shall not be disclosed to the
public.
In cases when prosecution or trial is conducted behind
closed-doors, it shall be unlawful for any editor, publisher,
and reporter or columnist in case of printed materials,
announcer or producer in case of television and radio,
producer and director of a film in case of the movie
 SUN TZU NOTES
industry, or any person utilizing tri-media facilities or
information technology to cause publicly of any case
of trafficking in persons.
Sec. 8. Prosecution of Cases. Any person who
has personal knowledge of the commission of any
offense under this Act, the trafficked person, the
parents,spouse, siblings, children or legal guardian
may file a complaint for trafficking.
Sec. 9. Venue. A criminal action arising from
violation of this Act shall be filed where the offense
was committed, or where any of its elements
occurred, or where the trafficked person actually
resides at the time of the commission of the offense:
provided, that the court where the criminal action is
first filed shall acquire jurisdiction to the exclusion of
other courts.
Sec. 10. Penalties and Sanctions. The
following penalties and sanctions are hereby
established for the offenses enumerated in this Act:
(a) Any person found guilty of committing any of
the acts enumerated in Sec. 4 shall suffer the
penalty of imprisonment of twenty (20) years and a
fine of not less than One million pesos
(P1,000,000.00) but not more than Two million
pesos (P2,000,000.00);
(b) Any person found guilty of committing any of
the acts enumerated in Sec. 5 shall suffer the
penalty of imprisonment of fifteen (15) years and a
fine of not less than Five hundred thousand pesos
(P500,000.00) but not more than One million pesos
(P1,000,000.00);
(c) Any person found guilty of qualified trafficking
under Sec. 6 shall suffer the penalty of life
imprisonment and a fine of not less than Two million
pesos (P2,000,000.00) but not more than Five
million pesos
(P5,000,000.00);
(d) Any person who violates Sec. 7, hereof shall
suffer the penalty of imprisonment of six (6) years
and a fine of not less than Five hundred thousand
pesos (P500,000.00) but not more than One million
pesos (P1,000,000.00);
(e) If the offender is a corporation, partnership,
association, club, establishment or any judicial
person, the penalty shall be imposed upon the
owner, president, partner, manager; and/or any
responsible officer who participated in the
commission of the crime or who shall have knowingly
permitted or failed to prevent its commission;
(f) The registration with the Securities and
Exchange Commission (SEC) and license to operate
of the erring agency, corporation, association
religious group, touror travel agent, club or
establishment, or any place of entertainment shall be
cancelled and revoked permanently. The owner,
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president, partner or manager thereof shall not be allowed
to operate similar establishments in different name;
(g) If the offender is a foreigner, he shall be immediately
deported after serving his sentence and be barred
permanently from entering the country;
(h) Any employee or official of government agencies who
shall issue or approve the issuance of travel exit
clearances, passports, registration certificates, counseling
certificates, marriage license, and other similar documents
to persons, whether judicial or natural, recruitment
agencies, establishments or other individuals or groups,
who fail to observe the prescribed procedures and the
requirements as provided for by laws, rules and
regulations, shall beheld administratively liable, without
prejudice to criminal liability under this Act. The concerned
government official or employee shall, upon conviction, be
dismissed from the service and be barred permanently to
hold public office. His/her retirement and other benefits
shall likewise be forfeited; and
(i) Conviction by final judgment of the adopter for any
offense under this Act shall result in the immediate
rescission of the decree of adoption.
Sec. 11. Use of Trafficked Persons. Any person
who buy or engages the services of trafficked persons for
prostitution shall be penalized as follows:
(a) First offense six (6) months of community service
as may be determined by the court and a fine of Fifty
thousand pesos (P50,000.00); and
(b) Second and subsequent offenses Imprisonment of
one (1) year and a fine of One hundred thousand pesos
(P100,000.00).
Sec. 12. Prescriptive Period. Trafficking cases
under this Act shall prescribe in ten (10) years: provided,
however, that trafficking cases committed by a syndicate
or in a large scale as defined under Sec. 6 shall prescribe
in twenty (20) years.
The prescriptive period shall commence to run from the
day on which the trafficked person is delivered or released
from the conditions of bondage and shall be interrupted by
the filing of the complaint or information and shall
commence to run again when such proceedings terminate
without the accused being convicted or acquitted or are
unjustifiably stopped for any reason not imputable to the
accused.
Sec. 13. Exemption from Filing Fees. When the
trafficked person institutes a separate civil action for the
recovery of civil damages, he/she shall be exempt from
the payment of filing fees.
Sec. 14. Confiscation and Forfeiture of the
Proceeds and Instruments Derived from Trafficking
in Persons. In addition to the penalty imposed for the
violation of this Act, the court shall order the confiscation
and forfeiture, in favor of the government, of all the
proceeds and properties derived from the commission of
 SUN TZU NOTES
the crime; unless they are the property of a third
person not liable for the unlawful act: provided,
however, that all awards for damages shall be taken
from the personal and separate properties of the
offender: provided further, that if such properties are
insufficient, the balance shall be taken from the
confiscated and forfeited properties.
When the proceeds, properties and instruments of
the offense have been destroyed, diminished in value
or otherwise rendered worthless by any act or
omission, directly or indirectly, or it has been
concealed, removed, converted or transferred to
prevent the same from being found or to avoid
forfeiture or confiscation, the offender shall be
ordered to pay the amount equal to the value of the
proceeds, property or instruments of the offense.
Sec. 15. Trust Fund. All fines imposed under
this Act and the proceeds and properties forfeited
and confiscated pursuant to Sec. 14 hereof shall
accrue to a Trust Fund to be administered and
managed by the Council to be used exclusively for
programs that will prevent acts of trafficking and
protect, rehabilitate, reintegrate trafficked persons
into the mainstream of society. Such programs shall
include, but not limited to, the following:
(a) Provision for mandatory services set forth in
Sec. 23 of this Act;
(b) Sponsorship of a national research program on
trafficking and establishment of a data collection
system or monitoring and evaluation purposes;
(c) Provision of necessary technical and material
support services to appropriate government agencies
and non-government organizations (NGOs);
(d) Sponsorship of conferences and seminars to
provide venue for consensus building amongst the
public,
the academe, government, NGOs and international
organizations; and
(e) Promotion of information and education
campaign on trafficking.
Sec. 16. Programs that Address Trafficking in
Persons. The government shall establish and
implement preventive, protective and rehabilitative
programs for trafficked persons. For this purpose,
the following agencies are hereby mandated to
implement the following programs:
(a) Department of Foreign Affairs (DFA) shall
make available its resources and facilities overseas
for trafficked persons regardless of their manner of
entry to the receiving country, and explore means to
further enhance its assistance in eliminating
trafficking activities through closer networking with
government agencies in the country and overseas,
particularly in the formulation of policies and
implementation of relevant programs.
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The DFA shall take necessary measures for the efficient
implementation of the Machine Readable Passports to
protect the integrity of Philippine passports, visas and
other travel documents to reduce the incidence of
trafficking through the use of fraudulent identification
documents. It shall establish and implement a pre-
marriage, on-site and pre-departure counseling program
on intermarriages.
(b) Department of Social Welfare and Development
(DSWD) shall implement rehabilitative and protective
programs for trafficked persons. It shall provide counseling
and temporary shelter to trafficked persons and develop a
system for accreditation among NGOs for purposes of
establishing centers and programs for intervention in
various levels of the community.
(c) Department of Labor and Employment (DOLE)
shall ensure the strict implementation and compliance with
the rules and guidelines relative to the employment of
persons locally and overseas. It shall likewise monitor,
document and report cases of trafficking in persons
involving employers and labor
recruiters.
(d) Department of Justice (DOJ) shall ensure the
prosecution of persons accused of trafficking and
designate and train special prosecutors who shall handle
and prosecute cases of trafficking. It shall also establish a
mechanism for free legal assistance for trafficked persons,
in coordination with the DSWD, Integrated Bar of the
Philippines (IBP) and other NGOs and volunteer groups.
(e) National Commission on the Role of Filipino Women
(NCRFW) shall actively participate and coordinate in the
formulation and monitoring of policies addressing the issue
of trafficking in persons in both its local and international
advocacy for women's issues.
(f) Bureau of Immigration (BI) shall strictly administer
and enforce immigration and alien administration laws. It
shall adopt measures for the apprehension of suspected
traffickers both at the place of arrival and departure and
shall ensure compliance by the Filipino fiances/fiancees
and spouses of foreign nationals with the guidance and
counseling requirements as provided for in this Act.
(g) Philippine National Police (PNP) shall be the
primary law enforcement agency to undertake
surveillance, investigation and arrest of individuals or
persons suspected to be engaged in trafficking. It shall
closely coordinate with various law enforcement agencies
to secure concerted efforts for effective investigations and
apprehension of suspected traffickers. It shall also
establish a system to receive
complaints and calls to assist trafficked persons and
conduct rescue operations.
(h) Philippine Overseas Employment Administration
(POEA) shall implement an effective pre-employment
orientation seminars and pre-departure counseling
programs to applicants for overseas employment. It shall
likewise formulate a system of providing free legal
 SUN TZU NOTES
assistance to trafficked persons.
(i) Department of the Interior and Local
Government (DILG) shall institute a systematic
information and prevention campaign and likewise
maintain a databank for the effective monitoring
documentation and prosecution of cases on
trafficking in persons.
(j) Local government units (LGUs) shall monitor
and document cases of trafficking in persons in their
areas of jurisdiction, effect the cancellation of
licenses of establishments which violate the
provisions of this Act and ensure effective
prosecution of such cases. They shall also undertake
an information campaign against trafficking in
persons through the establishment of the Migrants
Advisory and Information Network (MAIN) desks in
municipalities or provinces in coordination with DILG,
Philippine Information Agency (PIA), Commission on
Filipinos Overseas (CFO), NGOs and other concerned
agencies. They shall encourage and support
community based initiatives which address the
trafficking in persons. In implementing this Act, the
agencies concerned may seek and enlist the
assistance of NGOs, people's organizations (POs),
civic organizations and other volunteer groups.
Sec. 17. Legal Protection to Trafficked
Persons. Trafficked persons shall be recognized
as victims of the act or acts of trafficking and as such
shall not be penalized for crimes directly related to
the acts of trafficking enumerated in this Act or in
obedience to the order made by the trafficker in
relation thereto. In this regard, the consent of a
trafficked person to the intended exploitation set
forth in this Act shall be irrelevant.
Sec. 18. Preferential Entitlement Under the
Witness Protection Program. Any provision of
Republic Act No. 6981 to the contrary
notwithstanding, any trafficked person shall be
entitled to the witness protection program provided
therein.
Sec. 19. Trafficked Persons Who are Foreign
Nationals. Subject to the guidelines issued by the
Council, trafficked persons in the Philippines who are
nationals of a foreign country shall also be entitled to
appropriate protection, assistance and services
available to trafficked persons under this Act:
provided, that they shall be permitted continued
presence in the Philippines for a length of time
prescribed by the Council as necessary to effect the
prosecution of offenders.
Sec. 20. Inter-Agency Council Against
Trafficking. There is hereby established an Inter-
Agency Council Against Trafficking, to be composed
of the Secretary of the Department of Justice as
Chairperson and the Secretary of the Department of
Social Welfare and Development as Co-Chairperson
and shall have the following as members:
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(a) Secretary, Department of Foreign Affairs;
(b) Secretary, Department of Labor and Employment;
(c) Administrator, Philippine Overseas Employment
Administration;
(d) Commissioner, Bureau of Immigration;
(e) Director-General, Philippine National Police;
(f) Chairperson, National Commission on the Role of
Filipino Women; and
(g) Three (3) representatives from NGOs, who shall be
composed of one (1) representative each from among the
sectors representing women, overseas Filipino workers
(OFWs) and children, with a proven record of involvement
in the prevention and suppression of trafficking in persons.
These representatives shall be nominated by the
government agency representatives of the Council, for
appointment by the President for a term of three (3) years.
The members of the Council may designate their
permanent representatives who shall have a rank not
lower than an assistant secretary or its equivalent to
meetings, and shall receive emoluments as may be
determined by the Council in accordance with existing
budget and accounting rules and regulations.
Sec. 21. Functions of the Council. The Council shall
have the following powers and functions:
(a) Formulate a comprehensive and integrated program
to prevent and suppress the trafficking in persons;
(b) Promulgate rules and regulations as may be
necessary for the effective implementation of this Act;
(c) Monitor and oversee the strict implementation of this
Act;
(d) Coordinate the programs and projects of the various
member agencies to effectively address the issues and
problems attendant to trafficking in persons,
(e) Coordinate the conduct of massive information
dissemination and campaign on the existence of the law
and the various issues and problems attendant to
trafficking through the LGUs, concerned agencies, and
NGOs;
(f) Direct other agencies to immediately respond to the
problems brought to their attention and report to
the Council on action taken;
(g) Assist in filing of cases against individuals, agencies,
institutions or establishments that violate the provisions of
this Act;
(h) Formulate a program for the reintegration of
trafficked persons in cooperation with DOLE, DSWD,
Technical Education and Skills Development Authority
(TESDA), Commission on Higher Education (CHED), LGUs
 SUN TZU NOTES
and NGO's.
(i) Secure from any department, bureau, office,
agency, or instrumentality of the government or
from NGOs and other civic organizations such
assistance as may be needed to effectively
implement this Act;
(j) Complement the shared government
information system for migration established under
Republic Act No. 8042, otherwise known as the
"Migrant Workers and Overseas Filipinos Act of 1995"
with data on cases of trafficking in persons, and
ensure that the proper agencies conduct a continuing
research and study on the patterns and scheme of
trafficking in persons which shall form the basis for
policy formulation and program direction;
(k) Develop the mechanism to ensure the timely,
coordinated, and effective response to cases of
trafficking in persons;
(l) Recommend measures to enhance cooperative
efforts and mutual assistance among foreign
countries through bilateral and/or multilateral
arrangements to prevent and suppress international
trafficking in persons;
(m) Coordinate with the Department of
Transportation and Communications (DOTC),
Department of Trade and Industry (DTI), and other
NGOs in monitoring the promotion of advertisement
of trafficking in the internet;
(n) Adopt measures and policies to protect the
rights and needs of trafficked persons who are
foreign nationals in the Philippines;
(o) Initiate training programs in identifying and
providing the necessary intervention or assistance to
trafficked persons; and
(p) Exercise all the powers and perform such other
functions necessary to attain the purposes and
objectives of this Act.
Sec. 22. Secretariat to the Council. The
Department of Justice shall establish the necessary
Secretariat for the Council.
Sec. 23. Mandatory Services to Trafficked
Persons. To ensure recovery, rehabilitation and
reintegration into the mainstream of society;
concerned government agencies shall make available
the following services to trafficked persons:
(a) Emergency shelter or appropriate housing;
(b) Counseling;
(c) Free legal services which shall include
information about the victims rights and the
procedure for filling complaints, claiming
compensation and such other legal remedies
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available to them, in a language understood by the
trafficked person;
(d) Medical or psychological services;
(e) Livelihood and skills training; and
(f) Educational assistance to a trafficked child.
Sustained supervision and follow through mechanism that
will track the progress of recovery, rehabilitation and
reintegration of the trafficked persons shall be adopted and
carried out.
Sec. 24. Other Services for Trafficked Persons.
(a) Legal Assistance. Trafficked persons shall be
considered under the category "Overseas Filipino in
Distress" and may avail of the legal assistance created by
Republic Act No. 8042, subject to the guidelines as
provided by law.
(b) Overseas Filipino Resource Centers. The services
available to overseas Filipinos as provided for by Republic
Act No. 8042 shall also be extended to trafficked persons
regardless of their immigration status in the host country.
(c) The Country Team Approach. The country team
approach under Executive Order No. 74 of 1993, shall be
the operational scheme under which Philippine embassies
abroad shall provide protection to trafficked persons
insofar as the promotion of their welfare, dignity and
fundamental rights are concerned.
Sec. 25. Repatriation of Trafficked Persons. The
DFA, in coordination with DOLE and other appropriate
agencies, shall have the primary responsibility for the
repatriation of trafficked persons, regardless of whether
they are documented or undocumented.
If, however, the repatriation of the trafficked persons shall
expose the victims to greater risks, the DFA shall make
representation with the host government for the extension
of appropriate residency permits and protection, as may be
legally permissible in the host country.
Sec. 26. Extradition. The DOJ, in consultation with
DFA, shall endeavor to include offenses of trafficking in
persons among extraditable offenses.
Sec. 27. Reporting Requirements. The Council
shall submit to the President of the Philippines and to
Congress an annual report of the policies, programs and
activities relative to the implementation of this Act.
Sec. 28. Funding. The heads of the departments and
agencies concerned shall immediately include in their
programs and issue such rules and regulations to
implement the provisions of this Act, the funding of which
shall be included in the annual General Appropriations Act.
Sec. 29. Implementing Rules and Regulations.
The Council shall promulgate the necessary implementing
rules and regulations within sixty (60) days from the
 SUN TZU NOTES
effectivity of this Act.
Sec. 30. Non-restriction of Freedom of Speech
and of Association, Religion and the Right to
Travel. Nothing in this Act shall be interpreted as
a restriction of the freedom of speech and of
association, religion and the right to travel for
purposes not contrary to law as guaranteed by the
Constitution.
Sec. 31. Separability Clause. If, for any
reason, any Sec. or provision of this Act is held
unconstitutional or invalid, the other Sec.s or
provisions hereof shall not be affected thereby.
Sec. 32. Repealing Clause. All laws,
presidential decrees, executive orders and rules and
regulations, or parts thereof, inconsistent with the
provisions of this Act are hereby repealed or
modified accordingly: provided, that this Act shall
not in any way amend or repeal the provision of
Republic Act No. 7610, otherwise known as the
"Special Protection of Children Against Child Abuse,
Exploitation and Discrimination
Act."
Sec. 33. Effectivity. This Act shall take effect
fifteen (15) days from the date of its complete
publication in at least two (2) newspapers of general
circulation.
3. REVISED PENAL CODE
ARTICLE 272. SLAVERY
The penalty of prision mayor and a fine of not
exceeding 10,000 pesos shall be imposed upon
anyone who shall purchase, sell, kidnap, or detain a
human being for the purpose of enslaving him.
If the crime be committed for the purpose of
assigning the offended party to some immoral traffic,
the penalty shall be impose in its maximum period.
ARTICLE 273. EXPLOITATION OF CHILD LABOR
The penalty of prision correccional in its minimum
and medium periods and a fine not exceeding 500
pesos shall be imposed upon anyone who, under the
pretext of reimbursing himself of a debt incurred by
an ascendant, guardian, or person entrusted with the
custody of a minor, shall, against the latters will,
retain him in his service.
ARTICLE 274. SERVICES RENDERED UNDER
COMPULSION IN PAYMENT OF DEBT
The penalty of arresto mayor in its maximum period
shall be imposed upon any person who, in order to
require or enforce the payment of a debt, shall
compel the debtor to work for him, against his will,
as household servant or farm laborer
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ARTICLE 278. EXPLOITATION OF MINORS.
The penalty of prision correccional in its minimum and
medium periods and a fine not exceeding 500 pesos shall
be imposed upon:
1. Any person who shall cause any boy or girl under
sixteen years of age to perform any dangerous feat of
balancing, physical strength, or contortion.
2. Any person who, being an acrobat, gymnast,
ropewalker, diver, wild-animal tamer or circus manager, or
engaged in a similar calling, shall employ in exhibitions of
these kinds, children under sixteen years of age who are
not his children or descendants.
3. Any person engaged in any of the callings enumerated
in the next preceding paragraph who shall employ any
descendant of his under twelve years of age in such
dangerous exhibitions.
4. Any ascendant, guardian, teacher, or person entrusted
in any capacity with the care of a child under sixteen years
of age, who shall deliver such child gratuitously to any
person following any of the callings enumerated in
paragraph 2 hereof, or to any habitual vagrant or beggar.
If the delivery shall have been made in consideration of
any price, compensation, or promise, the penalty shall in
every case be imposed in its maximum period.
In either case, the guardian or curator convicted shall also
be removed from office as guardian or curator; and in the
case of the parents of the child, they may be deprived,
temporarily or perpetually, in the discretion of the court, of
their authority.
5. Any person who shall induce any child under sixteen
years of age to abandon the home of its ascendants,
guardians, curators, or teachers to follow any person
engaged in any of the callings mentioned in paragraph 2
hereof, or to accompany any habitual vagrant or beggar.
G. EMPLOYMENT OF HOUSEHELPER
ARTS. 141-152 OF LC
ART. 141. Coverage. - This Chapter shall apply to all
persons rendering services in households for
compensation.
"Domestic or household service" shall mean service in the
employers home which is usually necessary or desirable
for the maintenance and enjoyment thereof and includes
ministering to the personal comfort and convenience of the
members of the employers household, including services
of family drivers.
ART. 142. Contract of domestic service. - The original
contract of domestic service shall not last for more than
two (2) years but it may be renewed for such periods as
may be agreed upon by the parties.
ART. 143. Minimum wage. - (a) Househelpers shall be
 SUN TZU NOTES
paid the following minimum wage rates:
(1) Eight hundred pesos (P800.00) a month for
househelpers in Manila, Quezon, Pasay, and
Caloocan cities and municipalities of Makati, San
Juan, Mandaluyong, Muntinlupa, Navotas, Malabon,
Paraaque, Las Pias, Pasig, Marikina, Valenzuela,
Taguig and Pateros in Metro Manila and in highly
urbanized cities;
(2) Six hundred fifty pesos (P650.00) a month for
those in other chartered cities and first-class
municipalities; and
(3) Five hundred fifty pesos (P550.00) a month for
those in other municipalities. Provided, That the
employers shall review the employment contracts of
their househelpers every three (3) years with the
end in view of improving the terms and conditions
thereof. Provided, further, That those househelpers
who are receiving at least One thousand pesos
(P1,000.00) shall be covered by the Social Security
System (SSS) and be entitled to all the benefits
provided thereunder. (As amended by Republic Act
No. 7655, August 19, 1993).
ART. 144. Minimum cash wage. - The minimum
wage rates prescribed under this Chapter shall be
the basic cash wages which shall be paid to the
househelpers in addition to lodging, food and medical
attendance.
ART. 145. Assignment to non-household work. -
No househelper shall be assigned to work in a
commercial, industrial or agricultural enterprise at a
wage or salary rate lower than that provided for
agricultural or non-agricultural workers as prescribed
herein.
ART. 146. Opportunity for education. - If the
househelper is under the age of eighteen (18) years,
the employer shall give him or her an opportunity for
at least elementary education. The cost of education
shall be part of the househelpers compensation,
unless there is a stipulation to the contrary.
ART. 147. Treatment of househelpers. - The
employer shall treat the househelper in a just and
humane manner. In no case shall physical violence
be used upon the househelper.
ART. 148. Board, lodging, and medical
attendance. - The employer shall furnish the
househelper, free of charge, suitable and sanitary
living quarters as well as adequate food and medical
attendance.
ART. 149. Indemnity for unjust termination of
services. - If the period of household service is
fixed, neither the employer nor the househelper may
terminate the contract before the expiration of the
term, except for a just cause. If the househelper is
unjustly dismissed, he or she shall be paid the
compensation already earned plus that for fifteen
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(15) days by way of indemnity.
If the househelper leaves without justifiable reason, he or
she shall forfeit any unpaid salary due him or her not
exceeding fifteen (15) days.
ART. 150. Service of termination notice. - If the
duration of the household service is not determined either
in stipulation or by the nature of the service, the employer
or the househelper may give notice to put an end to the
relationship five (5) days before the intended termination
of the service.
ART. 151. Employment certification. - Upon the
severance of the household service relation, the employer
shall give the househelper a written statement of the
nature and duration of the service and his or her efficiency
and conduct as househelper.
ART. 152. Employment record. - The employer may
keep such records as he may deem necessary to reflect
the actual terms and conditions of employment of his
househelper, which the latter shall authenticate by
signature or thumbmark upon request of the employer.
SALIENT FEATURES
Employer is the head of the family
Services are performed in and about employers home
Services are exclusively rendered for the personal
comfort and convenience of the employer and
members of his family
DO No. 4, Series of 1999 [Hazardous Work and
Activities for Persons Below 18 years of age]
Sec. 3 Coverage The following work and activities are
hereby declared hazardous to persons below 18 years old
without prejudice to Sec. 14, Art. VII of RA 7610 and DOLE
Memorandum Circular No. 2 series of 1998:
a) Work which exposes children to physical,
psychological or sexual abuses
Ex. Lewd shows (stripteases, burlesque dancers),
cabarets, Bars (KTV/Karaoke bars), dance halls, bath
houses and massage clinics, escort service, gambling
halls and places
b) Work underground, underwater at dangerous
heights two meters and above, or in confined
places
Ex. Mining, deep sea fishing/diving, installing and
repairing of telephone, telegraph and electrical lines,
cable fitters, painting buildings, window cleaning, fruit
picking involving climbing
c) Work with dangerous machinery, equipment and
tools or which involves manual handling or
transport of heavy tools

Ex. Logging, construction, quarrying, operating
agricultural machinery in mechanized farming,
metal work and wielding, driving or operating
heavy equipment, operating or setting motor-
driven machines such as saws, presses and wood
working machines, operating power driven tools
such as chills and jack hammers, stevedoring,
working in airport hangars, working in
warehouses, working in docks
d) Work in an unhealthy environment, which
may expose children to hazardous processes,
to temperatures, noise levels or vibrations
damaging to their health, to toxic, corrosive,
poisonous, noxious, explosive, flammable
and combustible substances or composite, to
harmful biological agents, or to dangerous
chemicals including pharmaceuticals.
Ex. Pyrotechnics, tanning, pesticide spraying,
smithing works, bleach and dye, applying
adhesive/solvent in footwear and handicrafts,
brewing, recycling of materials with chemicals,
slaughter house, hospitals, laboratories and x-
rays, video arcades, discotheques, embalming
e) Work under particularly difficult conditions
such as work for long hours or during the
night, or work where the child is
unreasonably confined to the premises of the
employer
Sec. 4 15-18 years old may be allowed to engage
in domestic or household service subject to the
coverage of this D.O.
R.A. 7655 MINIMUM WAGE OF HOUSEHELPERS
The minimum compensation of P800 a month is
required for househelpers in Manila, Quezon, Pasay,
Caloocan, Makati, Mandaluyong, Pasig, Muntinlupa
cities and in the municipalities of San Juan, Navotas,
Malabon, Paranaque, Las Pinas, Marikina,
Valenzuela, Taguig, and Pateros in Metro Manila and
highly urbanized cities.
P 650. 00 a month in other chartered cities and first
class municipalities like cities other than Manila,
Pasay, Quezon and Caloocan cities and highly
urbanized cities.
P550.00 a month in those other municipalities.
Househelpers who are receiving at least P1,000 a
month shall be covered by the Social Security
System.
CIVIL CODE PROVISIONS
SECTION 1. - Household Service
Art. 1689. Household service shall always
SUN TZU NOTES
reasonably compensated. Any stipulation that household
service is without compensation shall be void. Such
compensation shall be in addition to the house helper's
lodging, food, and medical attendance.
Art. 1690. The head of the family shall furnish, free of
charge, to the house helper, suitable and sanitary quarters
as well as adequate food and medical attendance.
Art. 1691. If the house helper is under the age of
eighteen years, the head of the family shall give an
opportunity to the house helper for at least elementary
education. The cost of such education shall be a part of the
house helper's compensation, unless there is a stipulation
to the contrary.
Art. 1692. No contract for household service shall last for
more than two years. However, such contract may be
renewed from year to year.
Art. 1693. The house helper's clothes shall be subject to
stipulation. However, any contract for household service
shall be void if thereby the house helper cannot afford to
acquire suitable clothing.
Art. 1694. The head of the family shall treat the house
helper in a just and humane manner. In no case shall
physical violence be used upon the house helper.
Art. 1695. House helper shall not be required to work
more than ten hours a day. Every house helper shall be
allowed four days' vacation each month, with pay.
Art. 1696. In case of death of the house helper, the head
of the family shall bear the funeral expenses if the house
helper has no relatives in the place where the head of the
family lives, with sufficient means therefor.
Art. 1697. If the period for household service is fixed
neither the head of the family nor the house helper may
terminate the contract before the expiration of the term,
except for a just cause. If the house helper is unjustly
dismissed, he shall be paid the compensation already
earned plus that for fifteen days by way of indemnity. If
the house helper leaves without justifiable reason, he shall
forfeit any salary due him and unpaid, for not exceeding
fifteen days.
Art. 1698. If the duration of the household service is not
determined either by stipulation or by the nature of the
service, the head of the family or the house helper may
give notice to put an end to the service relation, according
to the following rules:
(1) If the compensation is paid by the day, notice may be
given on any day that the service shall end at the close of
the following day;
(2) If the compensation is paid by the week, notice may be
given, at the latest on the first business day of the week,
that the service shall be terminated at the end of the
seventh day from the beginning of the week;
be (3) If the compensation is paid by the month, notice may
84 of 132
 SUN TZU NOTES
be given, at the latest, on the fifth day of the month,
that the service shall cease at the end of the month.
Art. 1699. Upon the extinguishment of the service
relation, the house helper may demand from the
head of the family a written statement on the nature
and duration of the service and the efficiency and
conduct of the house helper.
RULE XIII, BOOK III
Employment of Househelpers
SECTION 1. General statement on coverage.
(a) The provisions of this Rule shall apply to all
househelpers whether employed on full or part-time
basis.
(b) The term "househelper" as used herein is
synonymous to the term "domestic servant" and
shall refer to any person, whether male or female,
who renders services in and about the employer's
home and which services are usually necessary or
desirable for the maintenance and enjoyment
thereof, and ministers exclusively to the personal
comfort and enjoyment of the employer's family.
SECTION 2. Method of payment not
determinant. The provisions of this Rule shall
apply irrespective of the method of payment of
wages agreed upon by the employer and
househelper, whether it be hourly, daily, weekly, or
monthly, or by piece or output basis.
SECTION 3. Children of househelpers. The
children and relatives of a househelper who live
under the employer's roof and who share the
accommodations provided for the househelpers by
the employer shall not be deemed as househelpers if
they are not otherwise engaged as such and are not
required to perform any substantial household work.
SECTION 4. Employment contract. The initial
contract for household service shall not last for more
than two (2) years. However, such contract may be
renewed from year to year.
SECTION 5. Minimum monthly wage. The
minimum compensation of househelpers shall not be
less than the following rates:
(a) Sixty pesos (P60.00) a month for those employed
in the cities of Manila, Quezon, Pasay and Caloocan,
and in the municipalities of Makati, San Juan,
Mandaluyong, Muntinlupa, Navotas, Malabon,
Paraaque, Las Pias, Pasig and Marikina, in the
Province of Rizal.
(b) Forty-five pesos (P45.00) a month for those
employed in other chartered cities and first class
municipalities; and
(c) Thirty pesos (P30.00) a month for those in other
municipalities.
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SECTION 6. Equivalent daily rate. The equivalent
minimum daily wage rate of househelpers shall be
determined by dividing the applicable minimum monthly
rate by thirty (30) days.
SECTION 7. Payment by results. Where the method
of payment of wages agreed upon by the employer and the
househelper is by piece or output basis, the piece or
output rates shall be such as will assure the househelper of
the minimum monthly or the equivalent daily rate as
provided in this issuance.
SECTION 8. Minimum cash wage. The minimum
wage rates prescribed under this Rule shall be basic cash
wages which shall be paid to the househelpers in addition
to lodging, food and medical attendance.
SECTION 9. Time and manner of payment. Wages
shall be paid directly to the househelper to whom they are
due at least once a month. No deductions therefrom shall
be made by the employer unless authorized by the
househelper himself or by existing laws.
SECTION 10. Assignment to non-household work.
No househelper shall be assigned to work in a commercial,
industrial or agricultural enterprise at a wage or salary rate
lower than that provided for agricultural and non-
agricultural workers.
SECTION 11. Opportunity for education. If the
househelper is under the age of eighteen (18) years, the
employer shall give him or her an opportunity for at least
elementary education. The cost of such education shall be
part of the househelper's compensation, unless there is a
stipulation to the contrary.
SECTION 12. Treatment of househelpers. The
employer shall treat the househelper in a just and humane
manner. In no case shall physical violence be inflicted
upon the househelper.
SECTION 13. Board, lodging and medical attendance.
The employer shall furnish the househelper free suitable
and sanitary living quarters as well as adequate food and
medical attendance.
SECTION 14. Indemnity for unjust termination of
service. If the period for household service is fixed,
neither the employer nor the househelper may terminate
the contract before the expiration of the term, except for a
just cause. If the househelper is unjustly dismissed, he or
she shall be paid the compensation already earned plus
that for fifteen (15) days by way of indemnity.
If the househelper leaves without justifiable reason, he or
she shall forfeit any unpaid salary due him or her not
exceeding fifteen (15) days.
SECTION 15. Employment certification. Upon the
severance of the household service relationship, the
househelper may demand from the employer a written
statement of the nature and duration of the service and his
or her efficiency and conduct as househelper.
 SUN TZU NOTES
SECTION 16. Funeral expenses. In case of
death of the househelper, the employer shall bear
the funeral expenses commensurate to the standards
of life of the deceased.
SECTION 17. Disposition of the househelper's
body. Unless so desired by the househelper or by
his or her guardian with court approval, the transfer
or use of the body of the deceased househelper for
purposes other than burial is prohibited. When so
authorized by the househelper, the transfer, use and
disposition of the body shall be in accordance with
the provisions of Republic Act No. 349.
SECTION 18. Employment records. The
employer may keep such records as he may deem
necessary to reflect the actual terms and conditions
of employment of his househelper which the latter
shall authenticate by signature or thumbmark upon
request of the employer.
SECTION 19. Prohibited reduction of pay.
When the compensation of the househelper before
the promulgation of these regulations is higher than
that prescribed in the Code and in this issuance, the
same shall not be reduced or diminished by the
employer on or after said date.
SECTION 20. Relation to other laws and
agreements. Nothing in this Rule shall deprive a
househelper of the right to seek higher wages,
shorter working hours and better working conditions
than those prescribed herein, nor justify an employer
in reducing any benefit or privilege granted to the
househelper under existing laws, agreements or
voluntary employer practices with terms more
favorable to the househelpers than those prescribed
in this Rule.
H. EMPLOYMENT OF HOMEWORKERS
ART. 153 TO 155 OF THE LC
ART. 153. Regulation of industrial
homeworkers. - The employment of industrial
homeworkers and field personnel shall be regulated
by the government through the appropriate
regulations issued by the Secretary of Labor and
Employment to ensure the general welfare and
protection of homeworkers and field personnel and
the industries employing them.
ART. 154. Regulations of Secretary of Labor. -
The regulations or orders to be issued pursuant to
this Chapter shall be designed to assure the
minimum terms and conditions of employment
applicable to the industrial homeworkers or field
personnel involved.
ART. 155. Distribution of homework. - For
purposes of this Chapter, the "employer" of
homeworkers includes any person, natural or
artificial who, for his account or benefit, or on behalf
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of any person residing outside the country, directly or
indirectly, or through an employee, agent contractor, sub-
contractor or any other person:
(1) Delivers, or causes to be delivered, any goods, articles
or materials to be processed or fabricated in or about a
home and thereafter to be returned or to be disposed of or
distributed in accordance with his directions; or
(2) Sells any goods, articles or materials to be processed
or fabricated in or about a home and then rebuys them
after such processing or fabrication, either by himself or
through some other person.
D.O No. 5, Series of 1992 (Industrial Homeworkers)
Revision and implementation of Department Order No. 5
on Homeworkers, and its integration, together with other
homebased workers concerns, into the Labor
CodeHomeworkers groups succeeded in lobbying for the
issuance in February 1992 of DOLE [Department of Labor
and Employment] Department Order No. 5 implementing
the Labor Code provisions for industrial homeworkers.
Among the salient provisions of D.O. 5 are:
The affirmation of homeworkers right to self-
organization;
Registration of homeworkers organizations, and their
employers, contractors and subcontractors (and
provision of assistance to those who have registered);
Immediate payment for home work;
Standard output rates based on time and motion
studies, individual/collective agreement between the
employer and workers; or consultation with
representatives of employers and workers in a
tripartite conference;
Prohibition of home work in the production of
explosives, fireworks, poisons, and other toxic
substances; and
Designation of the DOLE regional directors to
administer compliance and hear complaints.
Processing (manufacturing, fabricating, finishing,
repairing, altering, packing, wrapping production
of article or material)
Exemption from Minimum Wage (Art. 98) if engaged
in needlework
ART. 98. Application of Title. - This Title shall not apply
to farm tenancy or leasehold, domestic service and
persons working in their respective homes in needle work
or in any cottage industry duly registered in accordance
with law.
Rigt to form organization; method of payment based
on standard output rate or standard minimum rate
(time & motion studies)
 SUN TZU NOTES
Prohibition: explosive, fireworks; drugs;
poison, etc.
RULE XIV, BOOK III
Employment of Homeworkers
SECTION 1. General statement on coverage.
This Rule shall apply to any homeworker who
performs in or about his home any processing of
goods or materials, in whole or in part, which have
been furnished directly or indirectly by an employer
and thereafter to be returned to the latter.
SECTION 2. Definitions. As used in this Rule,
the following terms shall have the meanings
indicated hereunder:
(a) "Home" means any room, house, apartment, or
other premises used regularly, in whole or in part, as
a dwelling place, except those situated within the
premises or compound of an employer, contractor,
and the work performed therein is under the active
or personal supervision by, or for, the latter.
(b) "Employer" means any natural or artificial person
who, for his own account or benefit, or on behalf of
any person residing outside the Philippines, directly
or indirectly, or through any employee, agent,
contractor, sub-contractor; or any other person:
(1) Delivers or causes to be delivered any goods or
articles to be processed in or about a home and
thereafter to be returned or to be disposed of or
distributed in accordance with his direction; or
(2) Sells any goods or articles for the purpose of
having such goods or articles processed in or about a
home and then repurchases them himself or through
another after such processing.
(c) "Contractor" or "sub-contractor" means any
person who, for the account or benefit of an
employer, delivers or caused to be delivered to a
homeworker goods or articles to be processed in or
about his home and thereafter to be returned,
disposed of or distributed in accordance with the
direction of the employer.
(d) "Processing" means manufacturing, fabricating,
finishing, repairing, altering, packing, wrapping or
handling any material.
SECTION 3. Payment for work. (a)
Immediately upon receipt of the finished goods or
articles, the employer shall pay the homeworker or
the contractor or sub-contractor, as the case may
be, for the work performed; Provided, However, that
where payment is made to a contractor or sub-
contractor, the homeworker shall be paid within the
week after the contractor or sub-contractor has
collected the goods or articles from the
homeworkers.
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(b) The Secretary of Labor and Employment shall from
time to time establish the standard minimum piece or
output rate in appropriate orders for the particular work or
processing to be performed by the homeworkers.
SECTION 4. Deductions. No employee, contractor, or
sub-contractor shall make any deduction from the
homeworker's earnings for the value of materials which
have been lost, destroyed, soiled or otherwise damaged
unless the following conditions are met:
(a) The homeworker concerned is clearly shown to be
responsible for the loss or damage;
(b) The employee is given reasonable opportunity to show
cause why deductions should not be made;
(c) The amount of such deduction is fair and reasonable
and shall not exceed the actual loss or damages; and
(d) The deduction is made at such rate that the amount
deducted does not exceed 20% of the homeworker's
earnings in a week.
SECTION 5. Conditions for payment of work. (a)
The employer may require the homeworker to re-do work
which has been improperly executed without having to pay
the stipulated rate more than once.
(b) An employer, contractor, or sub-contractor need not
pay the homeworker for any work which has been done on
goods and articles which have been returned for reasons
attributable to the fault of the homeworker.
SECTION 6. Disagreement between homeworkers
and employer. In cases of disagreement between the
homeworker and the employer, contractor or sub-
contractor on matters falling under Section 4 (a), 5 and 6
of this Rule, either party may refer the case to the
Regional Office having jurisdiction over the homeworker.
The Regional Office shall decide the case within ten (10)
working days from receipt of the case. Its decision shall be
final and unappealable.
SECTION 7. Liability of employer and contractor.
Whenever an employer shall contract with another for the
performance of the employer's work, it shall be the duty of
such employer to provide in such contract that the
employees or homeworkers of the contractor and the
latter's sub-contractor shall be paid in accordance with the
provisions of this Rule. In the event that such contractor or
sub-contractor fails to pay the wages or earnings of his
employees or homeworkers as specified in this Rule, such
employer shall be jointly and severally liable with the
contractor or sub-contractor to the workers of the latter, to
the extent that such work is performed under such
contract, in the same manner as if the employees or
homeworkers were directly engaged by the employer.
I. EMPLOYMENT OF NON-RESIDENT ALIENS
ARTS. 40-42 OF THE LC
ART. 40. Employment permit of non-resident aliens. -
 SUN TZU NOTES
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.
The employment permit may be issued to a non-
resident alien or to the applicant employer after a
determination of the non-availability of a person in
the Philippines who is competent, able and willing at
the time of application to perform the services for
which the alien is desired.
For an enterprise registered in preferred areas of
investments, said employment permit may be issued
upon recommendation of the government agency
charged with the supervision of said registered
enterprise.
ART. 41. Prohibition against transfer of
employment. - (a) After the issuance of an
employment permit, the alien shall not transfer to
another job or change his employer without prior
approval of the Secretary of Labor.
(b) Any non-resident alien who shall take up
employment in violation of the provision of this Title
and its implementing rules and regulations shall be
punished in accordance with the provisions of
Articles 289 and 290 of the Labor Code.
In addition, the alien worker shall be subject to
deportation after service of his sentence.
ART. 42. Submission of list. - Any employer
employing non-resident foreign nationals on the
effective date of this Code shall submit a list of such
nationals to the Secretary of Labor within thirty (30)
days after such date indicating their names,
citizenship, foreign and local addresses, nature of
employment and status of stay in the country. The
Secretary of Labor shall then determine if they are
entitled to an employment permit.
TRADE UNION ACTIVITIES
Alien employees with valid working permits issued by
the Department if they are nationals of a country
which grants the same or similar rights to Filipino
workers as certified by the Department of Foreign
Affairs are qualified to be union members.
(Reciprocity rule)
ART. 270. Regulation of foreign assistance. - (a)
No foreign individual, organization or entity may give
any donations, grants or other forms of assistance,
in cash or in kind, directly or indirectly, to any labor
organization, group of workers or any auxiliary
thereof, such as cooperatives, credit unions and
institutions engaged in research, education or
communication, in relation to trade union activities,
without prior permission by the Secretary of Labor.
"Trade union activities" shall mean:
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(1) organization, formation and administration of labor
organization;
(2) negotiation and administration of collective bargaining
agreements;
(3) all forms of concerted union action;
(4) organizing, managing, or assisting union conventions,
meetings, rallies, referenda, teach-ins, seminars,
conferences and institutes;
(5) any form of participation or involvement in
representation proceedings, representation elections,
consent elections, union elections; and
(6) other activities or actions analogous to the foregoing.
(b) This prohibition shall equally apply to foreign
donations, grants or other forms of assistance, in cash or
in kind, given directly or indirectly to any employer or
employers organization to support any activity or activities
affecting trade unions.
(c) The Secretary of Labor shall promulgate rules and
regulations to regulate and control the giving and receiving
of such donations, grants, or other forms of assistance,
including the mandatory reporting of the amounts of the
donations or grants, the specific recipients thereof, the
projects or activities proposed to be supported, and their
duration.
DO No. 75-06, Series of 2006, Revised Guidelines for
Issuance of Employment Permits to Foreign
Nationals
See AZUCENA on page 115
BI Memo Order No. AFFJr. No. 05-009 ISSUANCE
OF SWP & 9 (g) VISA
New Regulations on Issuance of Alien Employment Permit
Under Memorandum Order AFFJr.-No. 05-009 issued by
the Bureau of Immigration (BI) on 9 February 2005,
foreign nationals who will work in the Philippines for a
period of not more than six (6) months are no longer
required to secure an Alien Employment Permit (AEP)
from the Department of Labor and Employment (DOLE).
In lieu of AEP, such foreign nationals are required to apply
with the BI for issuance of a Special Work Permit (SWP)
which shall be non-extendible. In case there is a need to
extend the employment of foreign nationals working under
an SWP, the foreign national must apply for an AEP with
the DOLE at least 21 working days prior to the expiration
of his/her SWP.
Foreign nationals who will work in the Philippines for more
than six (6) months shall continue to be subject to the AEP
requirement. Issuance of employment visa by the BI shall
be in accordance with the existing applicable rules and
regulations.
 SUN TZU NOTES
J. EMPLOYMENT OF STUDENTS & WORKING
SCHOLAR
Working Scholar under Omnibus Rule
No employer-employee relationship with school.
REPUBLIC ACT NO. 7323
AN ACT TO HELP POOR BUT DESERVING STUDENTS
PURSUE THEIR EDUCATION BY ENCOURAGING
THEIR EMPLOYMENT DURING SUMMER AND/OR
CHRISTMAS VACATIONS, THROUGH INCENTIVES
GRANTED TO EMPLOYERS, ALLOWING THEM TO PAY
ONLY SIXTY PER CENTUM OF THEIR SALARIES OR
WAGES AND THE FORTY PER CENTUM THROUGH
EDUCATION VOUCHERS TO BE PAID BY THE
GOVERNMENT, PROHIBITING AND PENALIZING THE
FILING OF FRAUDULENT OR FICTITIOUS CLAIMS,
AND FOR OTHER PURPOSES.
Section 1. Any provision of law to the contrary
notwithstanding, any person or entity employing at
least fifty (50) persons may during the summer
and/or Christmas vacation employ poor but
deserving students fifteen (15) years of age but not
more than the minimum wage provided by law and
other applicable labor rules and regulations.
For purposes of this Act, poor but deserving students
refer to those whose parent's combined incomes,
together with their income, if any, do not exceed
Thirty six thousand pesos (P36,000) per annum.
Employment should be at the Labor Exchange Center
of the Department of Labor and Employment (DOLE).
Sec. 2. Sixty per centum (60%) of said salary or
wage shall be paid by the employer in cash and forty
per centum (40%) by the Government in the form of
a voucher which shall be applicable in the payment
for his tuition fees and books in any educational
institution for secondary, tertiary, vocational or
technological education. The amount of the
education voucher shall be paid by the Government
to the educational institution concerned within thirty
(30) days from its presentation to the officer or
agency designated by the Secretary of Finance.
The voucher shall not be transferable except when
the payee thereof dies or for a justifiable cause stops
in his duties in which case it can be transferred to his
brothers or sisters. If there be none, the amount
thereof shall be paid his heirs or to the payee
himself, as the case may be.
Sec. 3. The Secretary of Labor and Employment,
the Secretary of Education, Culture and Sports and
the Secretary of Finance shall issue the
corresponding rules and regulations to carry out the
purposes of this Act.
The Secretary of Labor and Employment shall be the
Project Director of this program.
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Sec. 4. Any person or entity who shall make any
fraudulent of fictitious claim under this Act, regardless of
whether payment has been made, shall upon conviction be
punished with imprisonment of not less than six (6)
months and not more than one (1) year and a fine of not
less than Ten thousand pesos (P10,000), without prejudice
to their prosecution and punishment for any other offenses
punishable under the Revised Penal Code or any other
penal statute.
In case of partnerships or corporations, the managing
partner, general manager, or chief executive officer, as the
case may be, shall be criminally liable.
Sec. 5. The amount necessary to carry out the purposes of
this Act is hereby authorized to be appropriated in the
General Appropriations Act for 1992 and the subsequent
annual general appropriations acts.
Sec. 6. This Act shall take effect after its publication in the
Official Gazette or in at least two (2) national newspapers
of general circulation.
Republic Act No. 9547 April 1, 2009
AN ACT STRENGTHENING AND EXPANDING THE
COVERAGE OF THE SPECIAL PROGRAM FOR
EMPLOYMENT OF STUDENTS, AMENDING FOR THE
PURPOSE PROVISIONS OF R.A. NO. 7323,
OTHERWISE KNOWN AS THE SPECIAL PROGRAM FOR
EMPLOYMENT OF STUDENTS
Be it enacted by the Senate and House of Representatives
of the Philippines in Congress assembled::
Section 1. Section 1 of R.A. 7323, otherwise known as the
"Special Program for Employment of Students (SPES)", is
hereby amended to read as follows:
"SECTION 1. Any provision of law to the contrary
notwithstanding, any person or entity employing at least
ten (10) persons may employ poor but deserving students
fifteen (15) years of age but not more than twenty-five
(25) years old, paying them a salary or wage not lower
than the minimum wage for private employers and the
applicable hiring rate for the national and local government
agencies: Provided, that student enrolled in the secondary
level shall only be employed during summer and/or
christmas vacations, while those enrolled in the tertiary,
vocational or technical education may be employed at any
time of the year: Provided, further, That their period of
employment shall be from twenty (20) to fifty-two (52)
working days only, except that during Christmas vacation,
employment shall be from ten (10) to fifteen (15) days
which may be counted as part of the students'
probationary period should they apply in the same
company or agency after graduation: Provided, finally,
That students employed in activities related to their course
may earn equivalent academic credits as may be
determined by the appropriate government agencies.
"For purposes of this Act, poor but deserving students
refer to those whose parents' combined income, together
 SUN TZU NOTES
with their own, if any, does not exceed the annual
regional poverty threshold level for a family of six
(6) for the preceding year as may be determined by
the National Economic and Development Authority
(NEDA). Employment facilitation services for
applicants to the program shall be done by the Public
Employment Service Office (PESO).
"Participating employers in coordination with the
PESO, must inform their SPES employees of their
rights, benefits, and privileges under existing laws,
company policies, and employment contracts."
Section 2. Section 2 of the same Act is hereby
amended to read as follows:
"SEC. 2. Sixty per centum (60%) of the said salary
or wage shall be paid by the employers in cash and
forty per centum (40%) by the government in the
form of a voucher which shall be applicable in the
payment for the students' tuition fees and books in
any educational institution for secondary, tertiary,
vocational or technical education: Provided, That
local government units (LGUs) may assume
responsibility for paying in full his salary or wages.
The amount of the education vouchers shall be paid
by the government to the educational institutions
concerned within thirty (30) days from its
presentation to the officer or agency designated by
the Secretary of Finance.
"The vouchers shall not be transferable except when
the payees thereof dies or for a justifiable cause
stops in his duties, in which case it can be
transferred to his brothers or sisters. If there be
none, the amount thereof shall be paid his heirs or to
the payee himself, as the case may be."
Section 3. Section 3 of the same Act is hereby
amended to read as follows:
"SEC. 3. The Secretary of Labor and Employment,
the Secretary of Education, the Chairman of the
Commission on Higher Education, the Secretary of
Budget and Management, the Secretary of Social
Welfare and Development and the Secretary of
Finance shall issue the corresponding rules and
regulations to carry out the purposes of this act.
"The Secretary of Labor and Employment shall be
the Program Chairman."
Section 4. Section 4 of the same Act is hereby
amended to read as follows:
"SEC. 4. Any persons or entity who refuses to honor
education vouchers or makes any fraudulent or
fictitious claim under this Act, regardless of whether
payment has been made, shall upon conviction be
punished with imprisonment of not less than six (6)
months and not more than one (1) year and a fine of
not less than Ten thousand pesos (P10,000.00),
without prejudice to their prosecution and
punishment for any other offense punishable under
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the Revised Penal Code or any other penal statute.
"In case of partnerships or corporations, the managing
partner, general manager, or chief executive officer, as the
case may be, shall be criminally liable."
Section 5. Section 5 of the same Act is hereby amended
to read as follows:
"SEC. 5. The Secretary of the Department of Labor and
Employment shall include in the Department's program the
operationalization of the expanded Special Program for the
Employment of Students.
"The amount necessary to carry out the purposes of this
Act is hereby authorized to be appropriated in the General
Appropriations Act for 1992 and the subsequent annual
general appropriations acts: Provided, That the
appropriation, for the purposes of this Act, shall not be
reduced by Congress below the amount appropriated for
the previous year and, after approval; shall be
automatically and regularly released: Provided, further,
That the appropriation herein shall be increased by at least
twenty per centum (20%) annually."
Section 6. If any provision or part of this Act, or the
application thereof to any person or circumstance is held
invalid or unconstitutional, the remainder of this Act or the
application of such provision or part thereof to other
persons or circumstances shall not be affected thereby.
Section 7. All laws, orders, issuances, rules and
regulations or parts thereof inconsistent with the
provisions of this Act are hereby repealed, amended or
modified accordingly.
Section 8. This Act shall take effect fifteen (15) days after
its complete publication in the Official Gazette or in at least
two (2) newspapers of national circulation, whichever
comes earlier.
RA 7796 (TESDA ACT of 1994)
REPUBLIC ACT NO. 7796
AN ACT CREATING THE TECHNICAL EDUCATION AND
SKILLS DEVELOPMENT AUTHORITY, PROVIDING FOR
ITS POWERS, STRUCTURE AND FOR OTHER
PURPOSES.
SEC. 2. Declaration of Policy. - It is hereby declared the
policy of the State to provide relevant, accessible, high
quality and efficient technical education and skills
development in support of the development of high quality
Filipino middle-level manpower responsive to and in
accordance with Philippine development goals and
priorities.
The State shall encourage active participation of various
concerned sectors, particularly private enterprises, being
direct participants in and immediate beneficiaries of a
trained and skilled workforce, in providing technical
education and skills development opportunities.
 SUN TZU NOTES
SEC. 4. Definition of Terms. - As used in this Act:
"Skill" shall mean the acquired and practiced ability
to carry out a task or job;
"Skills Development" shall mean the process through
which learners and workers are systematically
provided with learning opportunities to acquire or
upgrade, or both, their ability, knowledge and
behavior pattern required as qualifications for a job
or range of jobs in a given occupational area;
"Technical Education" shall refer to the education
process designed at post-secondary and lower
tertiary levels, officially recognized as non-degree
programs aimed at preparing technicians, para-
professionals and other categories of middle-level
workers by providing them with a broad range of
general education, theoretical, scientific and
technological studies, and related job skills training;
"Trade" shall mean any group of interrelated jobs or
any occupation which is traditionally or officially
recognized as craft or artisan in nature requiring
specific qualifications that can be acquired through
work experience and/or training;
"Middle-Level Manpower" refers to those:
1.who have acquired practical skills and knowledge
through formal or non-formal education and training
equivalent to at least a secondary education but
preferably at post- secondary education with a
corresponding degree of diploma; or
2.skilled workers who have become highly
competent in their trade or craft as attested by
industry;
"Private Enterprises" refers to an economic system
under which property of all kinds can be privately
owned and in which individuals, alone or in
association with another, can embark on a business
activity. This includes industrial, agricultural, or
agro-industrial establishments engaged in the
production, manufacturing, processing, repacking or
assembly of goods including service-oriented
enterprises;
"Trainers" shall mean persons who direct the practice
of skills towards immediate improvement in some
task;
"Trainors/trainers" shall mean persons who provide
training to trainers aimed at developing the latter's
capacities for imparting attitudes, knowledge, skills
and behavior patterns required for specific jobs,
tasks, occupations or group of related occupations.
"Trainees" shall mean persons who are participants
in a vocational, administrative or technical training
program for the purpose of acquiring and developing
job-related skills;
"Apprenticeship" training within employment with
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compulsory related theoretical instruction involving a
contract between an apprentice and an employer on an
approved apprenticeable occupation;
"Apprentice" is a person undergoing training for an
approved apprenticeable occupation during an
apprenticeship agreement;
"Apprenticeship Agreement" is a contract wherein a
prospective employer binds himself to train the apprentice
who in turn accepts the terms of training for a recognized
apprenticeable occupation emphasizing the rights, duties
and responsibilities of each party;
"Apprenticeable Occupation" is an occupation officially
endorsed by a tripartite body and approved for
apprenticeable by the Authority;
"Learners" refers to persons hired as trainees in semi-
skilled and other industrial occupations which are non-
apprenticeable. Learnership programs must be approved
by the
Authority;
"User-Led" or "Market-Driven Strategy" refers to a
strategy which promotes strengthened linkages between
educational/training institutions and industry to ensure
that appropriate skills and knowledge are provided by the
educational system;
"Dual System/Training" refers to a delivery system of
quality technical and vocational education which requires
training to be carried out alternately in two venues: in-
school and in the production plant. In- school training
provides the trainee the theoretical foundation, basic
training, guidance and human formation, while in-plant
training develops his skills and proficiency in actual work
conditions as it continues to inculcate personal discipline
and work values;
"Levy Grant System" refers to a legal contribution from
participating employers who would be beneficiaries of the
program (often as a percentage of the payroll) which is
subsequently turned over or rebated to enterprises offering
employee training programs.
SEC. 5. Technical Education and Skills Development
Authority; Creation. - To implement the policy declared
in this Act, there is hereby created a Technical Education
and Skills Development Authority (TESDA), hereinafter
referred to as the Authority, which shall replace and
absorb the NationalManpower and Youth Council (NMYC),
the Bureau of Technical and Vocational Education (BTVE)
and the personnel and functions pertaining to technical-
vocational education in the regional offices of the
Department of Education, Culture and Sports (DECS) and
the apprenticeship program of the Bureau of Local
Employment of the Department of Labor and Employment.
SEC. 8. Powers and Functions of the Board. - The
Authority shall primarily be responsible for formulating,
continuing, coordinated and fully integrated technical
education and skills development policies, plans and
programs taking into consideration the following:
 SUN TZU NOTES
The State policy declared herein of giving new
direction and thrusts to efforts in developing the
quality of Filipino human resource through technical
education and skills development;
The implementation of the above-mentioned
policy requires the coordination and operation of
policies, plans, and programs of different concerned
sectors of Philippine society;
Equal participation of representatives of industry
groups, trade associations, employers, workers and
government shall be made the rule in order to
ensure that urgent needs and recommendations are
readily addressed; and
Improved linkages between industry, labor and
government shall be given priority in the formulation
of any national-level plan.
The Board, shall have the following powers:
1. promulgate, after due consultation with
industry groups, trade associations, employers,
workers, policies, plans, programs and guidelines as
may be necessary for the effective implementation of
this Act;
2. organize and constitute various standing
committees, subsidiary groups, or technical working
groups for efficient integration, coordination and
monitoring technical education and skills
development programs at the national, regional, and
local levels;
3. enter into, make, execute, perform and carry-
out domestic and foreign contracts subject to
existing laws, rules and regulations.
4. restructure the entire sub-sector consisting of
all institutions and programs involved in the
promotion and development of middle-level
manpower through upgrading, merger and/or phase-
out following a user-led strategy;
5. approve trade skills standards and trade tests
as established and conducted by private industries;
6. establish and administer a system of
accreditation of both public and private institutions;
7. establish, develop and support institutions'
trainors' training and/or programs;
8. lend support and encourage increasing
utilization of the dual training system as provided for
by Republic Act. No. 7686;
9. exact reasonable fees and charges for such
tests and trainings conducted and retain such
earnings for its own use, subject to guidelines
promulgated by the Authority;
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10. allocate resources, based on the Secretariat's
recommendations for the programs and subjects it shall
undertake pursuant to approved National Technical
Education and Skills
Development Plan;
11. determine and approve systematic funding
schemes such as the Levy and Grant scheme for technical
education and skills development purposes;
12. create, when deemed necessary, an Advisory
Committee which shall provide expert and technical advice
to the Board to be chosen from the academe and the
private sector:
Provided, That in case the Advisory Committee is created,
the Board is hereby authorized to set aside a portion of its
appropriation for its operation; and
13. perform such other duties and functions necessary
to carry out the provisions of this Act consistent with the
purposes of the creation of TESDA.
SEC. 18. Transfer of the Apprenticeship Program. -
The Apprenticeship Program of the Bureau of Local
Employment of the Department of Labor and Employment
shall be transferred to the Authority which shall implement
and administer said program in accordance with existing
laws, rules and regulations.
SEC. 19. Technical Education and Skills Development
Committees. - The Authority shall establish Technical
Education and Skills Development Committees at the
regional and local levels to coordinate and monitor the
delivery of all skills development activities by the public
and private sectors. These committees shall likewise serve
as the Technical Education and Skills Development
Committees of the Regional and local development
councils. The compositions of the Technical Education and
Skills development Committees shall be determined by
the Director-General subject to the guidelines to be
promulgated by the Authority.
SEC. 20. Skills Development Centers. - The Authority
shall strengthen the network of national, regional and
local skills training centers for the purpose of promoting
skills development. This network shall include skills
training centers in vocational and technical schools,
technical institutes, polytechnic colleges, and all other duly
accredited public and private dual system educational
institutions. The technical education and skills
development centers shall be administered and operated
under such rules and regulations as may be established by
the Authority in accordance with the National Technical
Education and Skills
Development Plan.
SEC. 21. Formulation of a Comprehensive
Development Plan for Middle-Level
Manpower. - The Authority shall formulate a
comprehensive development plan for middle- level
manpower based on a national employment plan or
policies for the optimum allocation, development and
utilization of skilled workers for employment
entrepreneurship and technology development for
 SUN TZU NOTES
economic and social growth. This plan shall after
adoption by the Authority be updated periodically
and submitted to the President of the Philippines for
approval. Thereafter, it shall be the plan for the
technical education and skills development for the
entire country within the framework of the National
Development Plan. The Authority shall direct the
TESDA Secretariat to call on its member-agencies,
the private sector and the academe to assist in this
effort. The comprehensive plan shall provide for a
reformed industry-based training program including
apprenticeship, dual training system and other
similar schemes intended to:
Promote maximum protection and welfare of the
worker-trainee;
Improve the quality and relevance and social
accountability of technical education and skills
development;
Accelerate the employment-generation effort of
the government; and
Expand the range of opportunities for upward
social mobility of the school-going population beyond
the traditional higher levels of formal education. All
government and non-government agencies receiving
financial and technical assistance from the
government shall be required to formulate their
respective annual agency technical education and
skills development plan in line with the national
technical education and skills development plan.
The budget to support such plans shall be subject to
review and endorsement by the Authority to the
Department of Budget and Management. The
Authority shall evaluate the efficiency and
effectiveness of agencies skills development program
and schemes to make them conform with the
quantitative and qualitative objectives of the national
technical education and skills development plan.
SEC. 24. Assistance to Employers and
Organizations. - The Authority shall assist any
employer or organization engaged in skills training
schemes designed to attain its objectives under rules
and regulations which the Authority shall establish
for this purpose.
SEC. 27. Incentives Schemes. - The Authority
shall develop and administer appropriate
Incentive schemes to encourage government and
private industries and institutions to provide high-
quality technical education and skills development
opportunities.
SEC. 28. Skills Development Opportunities. -
The Authority shall design and implement an
effective and efficient delivery system for quality
technical education and skills development
opportunities particularly in disadvantaged sectors,
with new tools of wealth creation and with the
capability to take on higher value-added gainful
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activities and to share equitably in productivity gains.
SEC 32. Scholarship Grants. - The authority shall adopt
a system of allocation and funding of scholarship grants
which shall be responsive to the technical education and
skills development needs of the different regions in the
country.
REPUBLIC ACT NO. 7686
DUAL TRAINING SYSTEM ACT OF 1994
AN ACT TO STRENGTHEN MANPOWER EDUCATION
AND TRAINING IN THE PHILIPPINES BY
INSTITUTIONALIZING THE DUAL TRAINING SYSTEM
AS AN INSTRUCTIONAL DELIVERY SYSTEM OF
TECHNICAL AND VOCATIONAL EDUCATION AND
TRAINING, PROVIDING THE MECHANISM,
APPROPRIATING FUNDS THEREFOR AND FOR OTHER
PURPOSES.
Section 1. Short title. This Act shall be known as the
"Dual Training System Act of 1994".
Section 2. Declaration of policy. It is hereby declared
the policy of the State to strengthen manpower education
and training in the country so that the latter may be
assured of an ever-growing supply of an educated and
skilled manpower equipped with appropriate skills and
desirable work habits and attitudes. The dual training
system, as successfully tested in some highly developed
countries, shall be adopted in duly accredited vocational
and technical schools, in cooperation with accredited
agricultural, industrial and business establishments, as one
of the preferred means of creating a dependable pool of
well-trained operators, craftsmen and technicians for the
economy.
Section 3. Objectives. This Act shall have the following
objectives:
(a) encourage increasing utilization of the dual system in
technical and vocational education and training by both
public and private schools within the context of the
existing education system;
(b) encourage increasing levels of investment in technical
and vocational education and training by both public and
private sectors specially in the rural areas;
(c) enhance the employability and productivity of
graduates by equipping them with analytical and creative
thinking and problem-solving abilities; manipulative
competencies which meet occupational standards and
requirements; values and attitudes with emphasis on work
ethics, quality orientation, discipline, honesty, self-reliance
and patriotism; and
(d) strengthen training cooperation between agricultural,
industrial and business establishments and educational
institutions by designing and implementing relevant
training programmes in close coordination with concerned
local government units.
Section 4. Definition of terms. For purposes of this
 SUN TZU NOTES
Act, the following terms shall mean:
(a) "Appropriate authority" refers to the government
entity in charge of formal technical and vocational
education training;
(b) "Dual training system" refers to an instructional
delivery system of technical and vocational education
and training that combines in-plant training and in-
school training based on a training plan
collaboratively designed and implemented by an
accredited dual system educational
institution/training centre and accredited dual
system agricultural, industrial and business
establishments with prior notice and advice to the
local government unit concerned. Under this system,
said establishments and the educational institution
share the responsibility of providing the trainee with
the best possible job qualifications, the former
essentially through practical training and the latter
by securing an adequate level of specific, general
and occupation-related theoretical instruction. The
word "dual" refers to the two parties providing
instruction: the concept "system" means that the
two instructing parties do not operate independently
of one another, but rather coordinate their efforts;
(c) "Trainee" refers to a person qualified to undergo
the dual training system for the purpose of acquiring
and developing job qualifications;
(d) "Accredited dual training system educational
institution/training centre" refers to a public or
private institution duly recognized and authorized by
the appropriate authority, in coordination with
business and industry, to participate in the dual
training system;
(e) "Establishments" refer to enterprises and/or
services of agricultural, industrial or business
establishments;
(f) "Accredited dual training system agricultural,
industrial and business establishments" hereinafter
referred to as agricultural, industrial and business
establishments, refer to a sole proprietorship,
partnership, corporation or cooperative which is duly
recognized and authorized by the appropriate
authority to participate in the dual training system
educational institution.
Section 5. Institutionalization of the dual
training system. The dual training system,
hereinafter referred to as the system, is hereby
institutionalized in the Philippines in accordance with
the provisions of this Act.
Section 6. Coverage. This Act shall apply to all
public and private educational institutions/training
centres and agricultural, industrial and business
establishments duly accredited to participate in the
dual training system.
Section 7. Planning and coordination. The
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appropriate authority shall plan, set standards, coordinate,
monitor and allocate resources in support of the
implementation of the system.
Every accredited educational institution/training centre
shall establish an industrial coordinating office which shall
supervise the in-plant training: provided that the industrial
establishment shall be required to furnish the educational
institution with the necessary information for the purpose
of supervision.
The industrial coordinating office shall be headed by an
industrial coordinator with at least an officer-level rank.
The industrial coordinator may be assisted by such other
personnel as may be necessary for the effective discharge
of the functions of the office.
Section 8. Status of trainee. For the duration of the
training under the system, the trainee is to be considered
not an employee of the business/industrial establishment
but rather a trainee of both the accredited dual training
system educational institution and the agricultural,
industrial and business establishments: provided that the
union or the workers of the latter have been duly informed
in advance of such an agreement.
A trainee who has successfully completed a training
programme in a particular agricultural, industrial or
business establishment shall be given priority of
employment in that agricultural, industrial or business
establishment. The appropriate authority shall keep a roll
of these successful trainees for purposes of identifying
them for employment.
Section 9. Incentives for participating
establishments. To encourage agricultural, industrial
and business establishments to participate in the system,
they shall be allowed to deduct from their taxable income
the amount of fifty (50) per cent of the system expenses
paid to the accredited dual training system educational
institution for the establishment's trainees: provided that
such expenses shall not exceed five (5) per cent of their
total direct labour expenses but in no case to exceed
twenty-five million pesos (P25,000,000) a year.
Donations for the operation of the system shall be
deductible from the taxable income of the donors.
The Department of Finance shall issue the necessary rules
and regulations for the purpose of tax incentives provided
herein.
Section 10. Obligations of accredited agricultural,
industrial and business establishments. The
agricultural, industrial and business establishments shall:
(a) ensure that the necessary abilities and knowledge for
the trainee to achieve the purpose of his training are
imparted to him and shall provide such training
systematically in accordance with an approved training
plan;
(b) appoint the training officer to implement the training
plan;
 SUN TZU NOTES
(c) make available, free of charge, the consumable
materials and basic hand tools and equipment
necessary for his training;
(d) allow the trainee to attend his in-school training
and to sit for his examinations;
(e) require the trainee to keep his report book up to
date and inspect such books;
(f) ensure that the trainee is encouraged to develop
his personality and that he is protected from physical
or moral danger;
(g) entrust to the trainee such jobs as are related to
the purpose of his training and are commensurate
with his capabilities;
(h) pay to the accredited educational
institution/training centre the daily allowance of the
trainee;
and
(i) allow the trainee the necessary time off for his in-
school training.
Section 11. Obligations of the trainee. A trainee
shall exert every effort to acquire the abilities and
knowledge necessary for him to achieve the purpose
of his training. Towards this end, he shall:
(a) carefully perform the jobs entrusted to him as
part of his training;
(b) take part in training programmes for which he
has been granted time off under this Act;
(c) follow the instruction given to him as part of his
training by the training officer or any other person
entitled to give him such instructions;
(d) observe rules of behaviour in the training
premises;
(e) use tools, instruments, machines and other
equipment with due care;
(f) not reveal any business or trade secrets that have
come to his knowledge in the course of his training;
and
(g) keep his record books up to date.
Section 12. Obligations of the accredited
educational institutions/training centres. The
educational institutions/training centres that have
entered into a memorandum of agreement with
agricultural, industrial or business establishments to
undertake training shall:
(a) design, implement and evaluate jointly the
training plan with the accredited establishments;
95 of 132
(b) provide specific, general and occupation-related
theoretical instruction;
(c) appoint industrial coordinators to supervise the in-plant
training;
(d) pay the trainee his daily allowance; and
(e) perform such other tasks and activities as may be
necessary and in furtherance of the
objectives of the training.
Section 13. Non-diminution of incentives. Nothing in
this Act shall be construed to diminish or reduce any
privilege already enjoyed by the parties concerned under
existing laws, decrees or executive orders.
Section 14. Signing of memorandum of agreements
by the accredited dual training system agricultural,
industrial and business establishments, the
accredited dual training system, educational
institution/training centre and the trainee. Before an
individual establishment begins with an accredited
education institution/training centre and the trainee or his
representative, the individual establishment shall provide
the accredited educational institution/training centre and
the trainee with a copy of the signed agreement.
The memorandum of agreement shall set forth, among
others, the following:
(a) the training plan;
(b) the nature and objective of the training;
(c) the commencement and duration of the training period,
including the total number of in-school and in-plant
training hours;
(d) the normal daily training hours;
(e) the trainee's allowance and the rate to be applied,
which in no case shall start below seventy- five (75) per
cent of the applicable minimum daily wage for days spent
in the establishments;
(f) the rights and obligations of the parties concerned in
addition to those provided in Sections 10,
11 and 12;
(g) the definition of the status of the trainee according to
Section 8 of this Act;
(h) the conditions for the termination of the training
agreement;
(i) the performance, monitoring and evaluation system;
and
(j) such other essential particulars as would mutually
benefit all parties concerned.
Section 15. Insurance coverage of the trainee. Every
agricultural, industrial and business establishment
undertaking training, in accordance with the provisions of
 SUN TZU NOTES
this Act, shall sign a life and/or accident insurance
policy on the life of the trainee with the insured and
the spouse, children or parents of the trainee as the
beneficiaries thereof: provided that the agricultural,
industrial and business establishments shall pay for
the premiums of said insurance policy.
Section 16. Revolving fund. Any law, rule or
regulation to the contrary notwithstanding, the
accredited dual training system educational
institution/training centre is hereby authorized to
retain as a revolving fund the amount paid to it by
the agricultural, industrial and business
establishments representing the actual dual training
expenses. The fund shall be used to improve the
operation of the dual training system.
Section 17. Implementing rules. The
appropriate authority and the Department of
Finance, upon prior consultation with the business
and industry concerned, shall issue the necessary
rules and regulations for the effective
implementation of this Act within a period of ninety
(90) days after its effectivity. Any violation of this
section shall render the concerned officials liable
under R.A. No. 6713, otherwise known as the "Code
of Conduct and Ethical Standards for Public Officials
and Employees" and other existing administrative
and/or criminal laws.
Section 18. Other exemption from taxes and
duties. Any donation, contribution, bequest,
subsidy or financial aid which may be made for the
operation of the system shall constitute an allowable
deduction from the income of the donors for income
tax purposes and shall be exempt from donor's tax,
subject to such conditions as provided under the
National Internal Revenue Code, as amended.
Essential equipment, apparatus and materials
imported by accredited dual training private
educational institutions shall be exempt from taxes
and duties: provided that the importation of these
items shall be subject to the following qualifications:
(a) that the importation shall be certified by the
appropriate authority;
(b) that they should be actually, directly and
exclusively used in connection with the dual training
system and any unauthorized use shall subject the
accredited dual training private educational
institutions to payment of taxes and duties thereon;
and
(c) that they are not available locally in sufficient
quantity of comparable quality, and at reasonable
prices: Provided, however, that taxes and duties
pertaining to the importations of accredited
government and dual training educational institutions
are deemed automatically appropriated.
The Department of Finance shall accumulate the
necessary rules and regulations to implement the
provisions of this section.
96 of 132
Section 19. Appropriations. For the initial
implementation of this Act, an amount of one million pesos
(P1,000,000) shall be charged against the current year's
appropriation of the contingency fund. Thereafter, such
sums as may be necessary for its continued
implementation shall be included in the annual General
Appropriations Act.
Section 20. Separability clause. If for any reason any
provision of this Act is declared invalid or unconstitutional,
the rest shall not be affected thereby.
Section 21. Repealing clause. All laws, decrees,
orders, rules and regulations or parts thereof inconsistent
with this Act are hereby repealed or modified accordingly.
Section 22. Effectivity. This Act shall take effect after
completion of its publication in the Official Gazette or in
two (2) newspapers of general circulation.
EXECUTIVE ORDER NO. 139 November 28, 1993
CREATING THE KABATAAN: 2000 STEERING
COMMITTEE THE ACTION OFFICERS COMMITTEE AND
THE REGIONAL STEERING COMMITTEE IN
IMPLEMENTATION OF THE YEAR-ROUND YOUTH
WORK PROGRAM, KABATAAN: 2000 AND FOR OTHER
PURPOSES
WHEREAS, there is a need to implement a year-round
program for the youth, which will make the youth
contribute directly to the government's Vision of
Philippines: 2000;
WHEREAS, the 1993 President's Summer Youth Work
Program (PSYWP) implementation was a success,
considering that 90,000 youths from all over the country
benefited directly from the program;
WHEREAS, the PSYWP should be expanded to a year-round
program in order to involve more youths in the
implementation of community building projects, which
contributes to the economic pump-priming program of the
government;
WHEREAS, the attainment of the people empowerment
objective of the government requires the active
involvement of the youth, which comprises 68% of the
country's population, as driving force for advocacy and for
attaining economic and political stability;
WHEREAS, to ensure the continued success of the
Program, it is imperative to strengthen the mechanism
therefor and its Steering Committee for the purpose;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the
Philippines, by virtue of the powers vested in me by law,
do hereby order:
Sec. 1. The Steering Committee; the Action Officers
Committee, and the Regional Steering Committee.
1.1 The Steering Committee. - There is hereby created the
 SUN TZU NOTES
KABATAAN: 2000 Steering Committee, composed of
the following:
a. Secretary of Labor and Employment (DOLE)
Chairman
b. Head, Presidential Management Saff (PMS) - Co-
Chairman
c. Secretary of Education, Culture and Sports (DECS)
- Member
d. Secretary of Interior and Local Government
(DILG) - Member
e. Secretary of Tourism (DOT) - Member
f. Secretary of Social Welfare and Development
(DSWD) - Member
g. Secretary of Health (DOH) - Member
h. Secretary of Public Works and Highways (DPWH) -
Member
i. Secretary of Agriculture (DA) - Member
j. Secretary of Environment and Natural Resources
(DENR) - Member
k. Secretary of Budget and Management (DBM) -
Member
l. Director General, National Economic Development
Authority(NEDA) - Member
m. Director General, Philippine Information Agency
(PIA) - Member
n. Chairman, Presidential Council for Youth Affairs
(PCYA) - Member
1.2 The Action Officers Committee. There is hereby
created the KABATAAN: 2000 Action Officers
Committee composed of the following:
a. Representative, DOLE - Chairman
b. Representative, PMS - Co-Chairman
c. Representative, DECS - Member
d. Representative, DILG - Member
e. Representative, DOT - Member
f. Representative, DSWD - Member
g. Representative, DOH - Member
h. Representative, DPWH - Member
i. Representative, DA - Member
97 of 132
j. Representative, DENR - Member
k. Representative, DBM - Member
l. Representative, NEDA - Member
m. Representative, PIA - Member
n. Chief Executive Officer, PCYA - Member
o. Chairman, Sangguniang Kabataan National Federation
(SKNF) - Member
1.3 The Regional Steering Committee. There is hereby
created the KABATAAN: 2000 Regional Steering Committee
composed of the following:
a. Regional Director, DOLE - Chairman
b. Regional Director, DILG - Co-Chairman
c. Regional Director, DECS - Member
d. Regional Director, DOT - Member
e. Regional Director, DSWD - Member
f. Regional Director, DOH - Member
g. Regional Director, DPWH - Member
h. Regional Director, DA - Member
i. Regional Director, DENR - Member
j. Regional Director, PIA - Member
k. Regional Coordinator, PCYA - Member
l. Regional Board of Directors, SKNF - Member
Sec. 2. Functions and Responsibilities of the different
Committees.
2.1 Functions and Responsibilities of the Steering
Committee:
a. Oversee the implementation and ensure the success of
the Program;
b. Solicit and review the support and contribution for the
purposes of the Program;
c. Call upon any government department or agency for the
necessary assistance and support for the Program; and
d. Perform such other functions as may be assigned by the
President.
2.2 Functions and Responsibilities of the Action Officers
Committee:
a. Formulate the guidelines for the implementation of the
Program;
 SUN TZU NOTES
b. Review and evaluate the implementation of the
various components of the Program;
c. Prepare and submit a regular report and
assessment of the Program; and
d. Perform such other functions as may be assigned
by the Steering Committee.
2.3 Functions and Responsibilities of the Regional
Steering Committee:
a. Supervise the implementation of the Program in
the Regional Level;
b. Seek the support of the local government units
and non-government organizations to ensure the
success of the Program;
c. Prepare and submit a regular report and
assessment of the Program in the Regional level;
and
d. Perform some other functions as may be assigned
by the Steering Committee.
Sec. 3. Program Secretariat. The Chief Executive
Officer of the Presidential Council for Youth Affairs
(PCYA) is hereby directed to provide a Secretariat for
the KABATAAN: 2000 Steering Committee. The
Secretariat shall provide technical and administrative
support to the Committee, and perform such other
functions as may be assigned to it by the
Committee.
The Chief Executive Officer of the PCYA shall also act
as the Overall Program Coordinator of the program.
Sec. 4. Program Components. KABATAAN: 2000
shall have two (2) program components. The
President's Youth Work Program (PYWP) and the
Weekend Youth Brigades (WYB).
4.1 The President's Youth Work Program (PYWP) -
The PYWP is the year-round implementation of the
component programs of the President's Summer
Youth Work Program (PSWYP). The program shall
have eight (8) components, as follows:
a. Government Internship Program (GIP). The GIP
shall seek to initiate its youth participants into public
service by involving them with government programs
and projects, through the various departments and
agencies. The implementation of the program
components shall be coordinated by the Presidential
Council for Youth Affairs (PCYA);
b. Work Appreciation Program (WAP) The WAP shall
develop the values of work appreciation and ethics
among college and high school students by providing
them with apprenticeship and actual work
opportunities in private establishments. The Program
shall involve various private sector groups and
98 of 132
employers federations and shall be coordinated by the
Department of Labor and Employment (DOLE);
c. Special Program for Employment of Students (SPES).
The objective of SPES is to develop the intellectual
capacities of children of poor families and harness their
potentials for the country's development. Specifically, the
Program aims to help poor but deserving students pursue
their education by providing income or augment their
income by encouraging their employment during summer
and/or Christmas vacations;
d. Program on Literacy cum Livelihood, Culture, Arts
(PLLCA). The Program aims to empower the youth with
devisable knowledge, skills, attitudes and values to make
them self-reliant, responsible, productive, humane and
upright citizens who can contribute to the sustainable
development of the country. Program implementation shall
be undertaken by the Department of Education, Culture
and Sports (DECS);
e. Immersion and Outreach Program (IOP). The IOP aims
to instill in the youth a sense of community service and
volunteerism for the less privileged sectors of the society.
The Department of Social Welfare and Development
(DSWD) shall be the lead agency in the implementation of
this program;
f. Health Outreach Program. (HOP). The HOP aims to
promote an understanding and sense of awareness among
the youth on critical health programs and issues, such as
population, environmental health, immunization, nutrition,
and drug abuse, among others;
g. Youth and Infrastructure Development (YID). The
program aims to train and involve the youth in labor
intensive infrastructure programs in their respective
localities. Through hands-on-training, the youths are
introduced to the values of discipline, hardwork and labor;
and
h. Tourism Training and Appreciation Program (TTAP). The
TTAP aims to increase the level of knowledge and exposure
of students and instill in the minds of the youths the
history, heritage, and proud accomplishments of our
forefathers. The program shall also be geared towards
environmental awareness and protection, educational and
leisure trips, and preservation of our cultural heritage.
4.2. The Weekend Youth Brigades (WYB) - The WYB are
the low-cost by high-impact weekend youth programs of
various government agencies and local government units.
The WYB aims to involve the youth in community building
projects during the weekends.
Sec. 5. Fund. - The lead agencies are hereby urged to
realign their 1993 and 1994 budgets to provide for the
implementation expenses of the KABATAAN: 2000. The
Department of Budget and Management shall facilitate the
realignment of the lead agencies implementing the
program components of KABATAAN: 2000. The PCYA shall
have a yearly appropriation of P2,000,000.00 to provide
for the operational expenses of the KABATAAN: 2000.
 SUN TZU NOTES
Sec. 6. Repealing Clause. - All orders, rules,
regulations and other administrative issuances or
provisions thereof, which are contrary to or
inconsistent herewith, are hereby repealed or
modified accordingly.
Sec. 7. Effectivity. - This Executive Order shall take
effect immediately.
K. EMPLOYMENT OF ACADEMIC/NON-
ACADEMIC PERSONNEL IN PRIVATE
EDUCATIONAL INSTITUTION
1992 MANUAL OF REGULATIONS FOR PRIVATE
SCHOOLS; ACADEMIC & NON-ACADEMIC
PERSONNEL; FULL-TIME & PART TIME
Sec. 93. Regular or Permanent status. Those
who have served the probationary period shall be
made regular or permanent. Full-time teachers who
have satisfactorily completed their probationary
period shall be considered as regular or permanent.
Academic personnel includes all school
personnel who are formally engaged in actual
teaching service or research assignments, either on
full-time or part-time basis, as well as those who
possess certain prescribed academic functions, such
as registrars, librarians, guidance councilors,
researchers and other similar persons (Sec. 4,
par.c). [note: manual of regulations for private
educational institution applies here and not labor
code]
Non-academic personnel means school
personnel usually engaged in ADMINISTRATIVE
functions, who are not covered under the definition
of academic personnel. They may include school
officials. [Note: labor code applies here]
In Private Educational Institutions (Manual of
Regulations for Private School)
* as simply classified by Marquez
a. Academic Personnel
a.1. Academic teaching
a.2. Academic non-teaching (ex. The librarian)
b. Non-Academic Personnel those staff who
perform administrative functions but are not involved
in academic work
* Their employment is NOT covered by the MRPS or
by the TVET Manual but by the Labor Code.
Section 45 of the 1992 Manual of Regulations
for Private Schools provides that full-time
academic personnel are those meeting all the
following requirements:
a. Who possess at least the minimum academic
qualifications prescribed by the Department under
99 of 132
this Manual for all academic personnel;
b. Who are paid monthly or hourly, based on the regular
teaching loads as provided for in the policies, rules and
standards of the Department and the school;
c. Whose total working day of not more than eight hours
a day is devoted to the school;
d. Who have no other remunerative occupation elsewhere
requiring regular hours of work that will conflict with the
working hours in the school; and
e. Who are not teaching full-time in any other educational
institution.
All teaching personnel who do not meet the foregoing
qualifications are considered part-time.
DOLE MEMO CIR. 2-89, SERIES OF 1989
(COMPUTATION OF MINIMUM WAGE FOR PRIVATE
SCHOOL TEACHERS)
XIV. MEDICAL, DENTAL AND OCCUPATIONAL SAFETY
ARTS. 156-165 OF THE LC
ART. 156. FIRST-AID TREATMENT
Every employer shall keep in his establishment such first-
aid medicines, and equipment as the nature and conditions
of work may require, in accordance with such regulations
as the Department of Labor shall prescribe.
The employer shall take steps for the training of a
sufficient number of employees in first-aid
treatment.
Definitions (IRR, Bk IV, Rule 1, Sec. 2)
First-aid treatment - means adequate, immediate and
necessary medical and dental attention or remedy given
in case of injury or sudden illness suffered by a worker
during employment, irrespective of whether or not such
injury or illness is work-connected, before more extensive
medical and/or dental treatment can be secured.
It does not include continued treatment or follow-up
treatment for any injury or illness.
Workplace means the office, premises or worksite where
the workers are habitually employed and shall include the
office or place where the workers who have no fixed or
definite worksite regularly report for assignment in the
course of their employment.
First-Aider - means any person trained and duly certified
as qualified to administer first aid by the Philippine
National Red Cross or by any other organization accredited
by the former.
Qualification of a First-aider:
Must be able to read and write and must have completed a
 SUN TZU NOTES
course in first-aid duly certified by the National Red (Rule 1, Sec.
Cross or any other organization accredited by the 4(a), Bk IV,
same. (Sec. 6 (a), Bk IV, Rule 1, IRR) IRR)

ART. 157. EMERGENCY MEDICAL AND DENTAL 2.) More than *Hazardous - Full-time
SERVICES 50 but not registered
more than nurse
It shall be the duty of every employer to furnish his 200
employees in any locality with free medical and *Non- - Graduate
dental attendance and facilities consisting of: hazardous first-aider, if
no registered
(a.) The services of a full-time registered nurse when nurse
the number of employees exceeds fifty (50) but not available
more than two hundred (200) EXCEPT when the 3.) More than *Hazardous & a. Full-time
employer does not maintain hazardous workplaces, 200 but not Non- registered
in which case the services of a graduate first-aider more than hazardous nurse
shall be provided for the protection of the workers, 300
where no registered nurse is available. The b. Part-time
Secretary of Labor shall provide by appropriate physician and
regulations the services that shall be required where part-time
the number of employees does not exceed fifty (50) dentist
and shall determine by appropriate order hazardous
workplaces for purposes of this Article. *Hazardous
workplace
(b.) The services of a full-time registered nurse, a shoud stay in
part-time physician and dentist, and an emergency the premises
clinic, when the number of employees exceeds two for at least
hundred (200) but not more than three hundred two (2) hours
(300); and
*Non-
(c.) The services of a full-time physician, dentist and hazardous
a full-time registered nurse as well as a dental clinic, workplace
and an infirmary or emergency hospital with one bed physician and
capacity for every one hundred (100) employees dentist may
when the number of employees exceeds three be engaged on
hundred (300). retained basis
subject to
In cases of hazardous work-places, no employer regulations by
shall engage the services of a physician or dentist the SOLE (Art.
who cannot stay in the premises of the 157, LC)
establishment for at least two (2) hours, in the case
of those engaged on part-time basis, and not less *Additional
than eight (8) hours in the case of those employed requirements
on full-time basis. Where the undertaking is non- under the
hazardous in nature, the physician and dentist may Implementing
be engaged on retained basis, subject to such Rules for
regulations as the Secretary of Labor may prescribe Workplaces
to insure immediate availability of medical and with more
dental treatment and attendance in case of than one
emergency. workshift a
day:
No. of Nature of Requirement
Employees Undertaking - The
1.) From 10 - a graduate physician and
to 50 first-aider who dentist shall
may be one of be at the
the workers in workplace
the workplace during the
and who has workshift
immediate which has the
access to the biggest
first-aid number of
medicines in workers and
the workplace shall be

100 of 132
 SUN TZU NOTES
subject to call (Sec. 4 (d),
at anytime Rule I, Bk IV,
during the IRR)
other
workshifts to * Additional
attend to requirements
emergency under the
cases Implementing
Rules for
- A full-time Workplaces
first-aider with moe than
must be one workshift
provided for a day:
each
workshift, - The
(Sec. 4 (d) & physician and
(e), Bk IV, dentist shall
Rule 1, IRR) be at the
workplace
c. An during the
emergency workshift
clinic which has the
4.) More than *Hazardous a. Full-time biggest
300 and Non- physician and number of
hazardous full-time workers and
dentist shall be
subject to cal
*Hazardous at anytime
workplace during the
full-time other
physician and workshifts to
full-time attend to
dentist should emergency
stay in the cases.
premises for
at least 8 - A full-time
hours first-aider
must be
*Non- provided for
hazardous each
workplace workshift.
physician and (Sec. 4 (d) &
dentist may (e), Bk IV,
be engaged on Rule I, IRR)
retained basis
subject to b. Full-time
regulations by registered
the SOLE (Art. nurse
157, LC)
c. Dental clinic
- employer
may engage d. Infirmary or
the services of emergency
a part-time hospital with
physician and one bed
a part-time capacity for
dentist who every 100
shall have the employees.
same Exceptions
responsibilities (IRR, Sec. 5,
as those Bk IV, Rule
provided 1):
under number
3(b) above. *In urban

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 SUN TZU NOTES
area where c. Where the workers are engaged in the manufacture or
there is a handling of explosives and other pyrotechnic products.
hospital or
dental clinic d. Where the workers use or are exposed to heavy or
which is not power-driven machinery or equipment.
more than 5
km. away e. Where workers use or are exposed to power-driven
from the tools.
workplace
ART. 158. WHEN EMERGENCY HOSPITAL NOT
*In rural area REQUIRED
where a
hospital or The requirement for an emergency hospital or dental clinic
dental clinic shall not be applicable in case there is a hospital or dental
can be clinic which is accessible from the employers establishment
reached by and he makes arrangement for the reservation therein of
motor vehicle the necessary beds and dental facilities for the use of his
in 25 mins. employees.

In both cases, Under IRR, Sec. 5, Bk IV, Rule 1.:

the employer In Urban Area: where there is a hospital or dental clinic
should have which is not more than five (5) kilometers away from the
readily workplace.
available
facilities for In Rural Area: where a hospital or dental clinic can be
transporting a reached by motor vehicle in twenty-five (25)
worker to the minutes.
hospital or
clinic in case In both cases, the employer should have readily available
of emergency. facilities for transporting a worker to the hospital or clinic
Provided in case of emergency.
further, that
the employer ART. 159. HEALTH PROGRAM
shall enter
into a written The physician engaged by an employer shall, in addition to
contract with his duties under this Chapter, develop and implement a
the hospital or comprehensive occupational health program for the benefit
dental clinic of the employees of his employer.
for the use
thereof in the ART. 160. QUALIFICATIONS OF HEALTH PERSONNEL
treatment of
workers in The physicians, dentists and nurses employed by
case of employers pursuant to this Chapter shall have the
emergency. necessary training in industrial medicine and occupational
safety and health. The Secretary of Labor, in consultation
* HAZARDOUS WORKPLACES (Sec. 8, Bk IV, Rule 1, with industrial, medical and occupational safety and health
IRR) associations, shall establish the qualifications, criteria and
conditions of employment of such health personnel.
In addition to the following, the Bureau of Labor
Standards shall, with the approval of the Secretary Sec. 6, BK IV, Rule 1, IRR. Training and
of Labor, issue from time to time a detailed list of qualifications of medical and dental personnel.
hazardous workplaces for purposes of this Rule:
The health personnel required to be hired by an employer
a. Where the nature of the work exposes the
pursuant to the Code and these Rules shall have the
workers to dangerous environmental elements,
following minimum qualifications:
contaminants in work conditions including ionizing
radiations, chemicals, fire, flammable substances, (a) A first-aider must be able to read and write and must
noxious components and the like. have completed a course in first-aid duly certified by the
National Red Cross or any other organization accredited by
b. Where the workers are engaged in construction the same.
work, logging, firefighting, mining, quarrying,
blasting, stevedoring, dock work, deep-sea fishing (b) A nurse must have passed the examination given by
and mechanical farming. the Board of Examiners and duly licensed to practice
nursing in the Philippines and preferably with at least fifty

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(50) hours of training in occupational nursing
conducted by the Department of Health, the Institute
of Public Health of the University of the Philippines or
by any organization accredited by the former.
(c) A physician, whether permanent or part-time,
must have passed the examinations given by the
Board of Examiners for physicians, is licensed to
practice medicine in the Philippines, and is preferably
a graduate of a training course in occupational
medicine conducted by the Bureau of Working
Conditions, the Institute of Public Health of the
University of the Philippines or any organization duly
accredited by the former.
(d) A dentist, whether permanent or part-time, must
have passed the examinations given by the Board of
Examiners for dentists, is licensed to practice
dentistry in the Philippines, and preferably has
completed a training course in occupational dentistry
conducted by the Bureau of Dental Health Services
of the Department of Health or any organization duly
accredited by the former.
ART. 161. ASSISTANCE OF EMPLOYER
It shall be the duty of any employer to provide all
the necessary assistance to ensure the adequate and
immediate medical and dental attendance and
treatment to an injured or sick employee in case of
emergency.
ART. 162. SAFETY AND HEALTH STANDARDS
The Secretary of Labor and Employment shall, by
appropriate orders, set and enforce mandatory
occupational safety and health standards to eliminate
or reduce occupational safety and health hazards in
all workplaces and institute new, and update
existing, programs to ensure safe and healthful
working conditions in all places of employment.
ART. 163. RESEARCH
It shall be the responsibility of the Department of
Labor and Employment to conduct continuing studies
and research to develop innovative methods,
techniques and approaches for dealing with
occupational safety and health problems; to discover
latent diseases by establishing causal connections
between diseases and work in environmental
conditions; and to develop medical criteria which will
assure insofar as practicable that no employee will
suffer impairment or diminution in health, functional
capacity, or life expectancy as a result of his work
and working conditions.
ART. 164. TRAINING PROGRAMS
The Department of Labor and Employment shall
develop and implement training programs to
increase the number and competence of personnel in
the field of occupational safety and industrial health.
ART. 165. ADMINISTRATION OF SAFETY AND
HEALTH LAWS
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(a) The Department of Labor and Employment shall be
solely responsible for the administration and enforcement
of occupational safety and health laws, regulations and
standards in all establishments and workplaces wherever
they may be located; however, chartered cities may be
allowed to conduct industrial safety inspections of
establishments within their respective jurisdictions where
they have adequate facilities and competent personnel for
the purpose as determined by the Department of Labor
and Employment and subject to national standards
established by the latter.
(b) The Secretary of Labor and Employment may, through
appropriate regulations, collect reasonable fees for the
inspection of steam boilers, pressure vessels and pipings
and electrical installations, the test and approval for safe
use of materials, equipment and other safety devices and
the approval of plans for such materials, equipment and
devices. The fee so collected shall be deposited in the
national treasury to the credit of the occupational safety
and health fund and shall be expended exclusively for the
administration and enforcement of safety and other labor
laws administered by the Department of Labor and
Employment.
EMPLOYEES COMPENSATION ACT
ART. 166 (LC). POLICY.
The State shall promote and develop a tax-exempt
employees compensation program whereby employees
and their dependents, in the event of work-connected
diability or death, may promptly secure adequate income
benefit, and medical or related benefits.
Workmens Compensation - is a general and
comprehensive term applied to those laws providing for
compensation for loss resulting from the injury,
disablement, or death of workmen through industrial
accident, casualty, or disease. (Azucena, p.353).
Compensation, under the workmens compensation
statute, means the money relief afforded according to the
scale established under the statute, as differentiated from
compensatory damages recoverable in an action at law
for breach of contract or for a tort. (Azucena, p. 353).
ECC RULES, Rule I. COVERAGE
Sec. 1. Nature. Coverage shall be compulsory.
Sec. 2. Scope -
(a.) Every employer shall be covered.
(b.) Every employee not over 60 years of age shall be
covered.
(c.) An employee who is coverable by both the GSIS and
SSS shall be compulsorily
covered by both Systems.
ART. 167 (k), (LC). Injury means any harmful change in
the human organism from any accident arising out of and
in the course of employment.
Under Bk IV, Rule III, Sec. 1 (a), Implementing Rules:
 SUN TZU NOTES
(a.) For the injury and the resulting disability or
death to be compensable, the injury must be the
result of an employment accident satisfying all of
the following grounds:
1. The employee must have been injured at the
place where his work requires him to be;
2. The employee must have been performing his
official functions; and
3. If the injury is sustained elsewhere, the
employee must have been executing an order for the
employer.
ART. 167. Definition of terms. - As used in this
Title, unless the context indicates otherwise:
(a) "Code" means the Labor Code of the Philippines
instituted under Presidential Decree Numbered four
hundred forty-two, as amended.
(b) "Commission" means the Employees
Compensation Commission created under this Title.
(c) "SSS" means the Social Security System created
under Republic Act Numbered Eleven hundred sixty-
one, as amended.
(d) "GSIS" means the Government Service Insurance
System created under Commonwealth Act Numbered
One hundred eighty-six, as amended.
(e) "System" means the SSS or GSIS, as the case
may be.
(f) "Employer" means any person, natural or
juridical, employing the services of the employee.
(g) "Employee" means any person compulsorily
covered by the GSIS under Commonwealth Act
Numbered One hundred eighty-six, as amended,
including the members of the Armed Forces of the
Philippines, and any person employed as casual,
emergency, temporary, substitute or contractual, or
any person compulsorily covered by the SSS under
Republic Act Numbered Eleven hundred sixty-one, as
amended.
(h) "Person" means any individual, partnership, firm,
association, trust, corporation or legal representative
thereof.
(i) "Dependent" means the legitimate, legitimated or
legally adopted or acknowledged natural child who is
unmarried, not gainfully employed, and not over
twenty-one (21) years of age or over twenty-one
(21) years of age provided he is incapacitated and
incapable of self-support due to a physical or mental
defect which is congenital or acquired during
minority; the legitimate spouse living with the
employee and the parents of said employee wholly
dependent upon him for regular support.
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chanroblesvirtuallawlibrary
(j) "Beneficiaries" means the dependent spouse until
he/she remarries and dependent children, who are the
primary beneficiaries. In their absence, the dependent
parents and subject to the restrictions imposed on
dependent children, the illegitimate children and legitimate
descendants, who are the secondary beneficiaries:
Provided, That the dependent acknowledged natural child
shall be considered as a primary beneficiary when there
are no other dependent children who are qualified and
eligible for monthly income benefit.
(k) "Injury" means any harmful change in the human
organism from any accident arising out of and in the
course of the employment.
(l) "Sickness" means any illness definitely accepted as an
occupational disease listed by the Commission, or any
illness caused by employment subject to proof that the risk
of contracting the same is increased by working conditions.
For this purpose, the Commission is empowered to
determine and approve occupational diseases and work-
related illnesses that may be considered compensable
based on peculiar hazards of employment.
(m) "Death" means loss of life resulting from injury or
sickness.
(n) "Disability" means loss or impairment of a physical or
mental function resulting from injury or sickness.
(o) "Compensation" means all payments made under this
Title for income benefits and medical or related benefits.
(p) "Income benefit" means all payments made under this
Title to the providers of medical care, rehabilitation
services and hospital care. chanroblesvirtuallawlibrary
(q) "Medical benefit" means all payments made under this
Title to the providers of medical care, rehabilitation
services and hospital care. chanroblesvirtuallawlibrary
(r) "Related benefit" means all payments made under this
Title for appliances and supplies.
(s) "Appliances" means crutches, artificial aids and other
similar devices.
(t) "Supplies" means medicine and other medical, dental or
surgical items.
(u) "Hospital" means any medical facility, government or
private, authorized by law, an active member in good
standing of the Philippine Hospital Association and
accredited by the Commission.
(v) "Physician" means any doctor of medicine duly licensed
to practice in the Philippines, an active member in good
standing of the Philippine Medical Association and
accredited by the Commission.
(w) "Wages" or "Salary", insofar as they refer to the
computation of benefits defined in Republic Act No. 1161,
 SUN TZU NOTES
as amended, for SSS and Presidential Decree No.
1146, as amended, for GSIS, respectively, except
that part in excess of Three Thousand Pesos.
(x) "Monthly salary credit" means the wage or salary
base for contributions as provided in Republic Act
Numbered Eleven hundred sixty-one, as amended,
or the wages or salary.
(y) "Average monthly salary credit" in the case of the
SSS means the result obtained by dividing the sum
of the monthly salary credits in the sixty-month
period immediately following the semester of death
or permanent disability by sixty (60), except where
the month of death or permanent disability falls
within eighteen (18) calendar months from the
month of coverage, in which case, it is the result
obtained by dividing the sum of all monthly salary
credits paid prior to the month of contingency by the
total number of calendar months of coverage in the
same period. chanroblesvirtuallawlibrary
(z) "Average daily salary credit" in the case of the
SSS means the result obtained by dividing the sum
of the six (6) highest monthly salary credits in the
twelve-month period immediately preceding the
semester of sickness or injury by one hundred eighty
(180), except where the month of injury falls within
twelve (12) calendar months from the first month of
coverage, in which case it is the result obtained by
dividing the sum of all monthly salary credits by
thirty (30) times the number of calendar months of
coverage in the period.
In the case of the GSIS, the average daily salary
credit shall be the actual daily salary or wage, or the
monthly salary or wage divided by the actual number
of working days of the month of contingency.
(aa) "Quarter" means a period of three (3)
consecutive months ending on the last days of
March, June, September and December.
(bb) "Semester" means a period of two consecutive
quarters ending in the quarter of death, permanent
disability, injury or sickness.
(cc) "Replacement ratio" - The sum of twenty
percent and the quotient obtained by dividing three
hundred by the sum of three hundred forty and the
average monthly salary credit.
(dd) "Credited years of service" - For a member
covered prior to January, 1975, nineteen hundred
seventy-five minus the calendar year of coverage,
plus the number of calendar years in which six or
more contributions have been paid from January,
1975 up to the calendar year containing the
semester prior to the contingency. For a member
covered on or after January, 1975, the number of
calendar years in which six or more contributions
have been paid from the year of coverage up to the
calendar year containing the semester prior to the
contingency.
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(ee) "Monthly income benefit" means the amount
equivalent to one hundred fifteen percent of the sum of
the average monthly salary credit multiplied by the
replacement ratio, and one and a half percent of the
average monthly salary credit for each credited year of
service in excess of ten years: Provided, That the monthly
income benefit shall in no case be less than two hundred
fifty pesos.
LIABILITY OF STATE INSURANCE FUND
ART. 172 (LC). LIMITATIONS OF LIABILITY
The State Insurance Fund shall be liable for compensation
to the employee or his dependents, EXCEPT when the
diability or death was occasioned by the employees:
a. Intoxication
b. Willful intention to injure or kill himself or another,
c. Notorious negligence, or otherwise provided under this
Title.
-Intoxication or Drunkennes - under this Article consists
in being under the influence of intoxicating liquor to the
extent that one is not entirely himself or so that his
judgment is impaired and his act, words, or conduct is
visibly impaired.
-Self-inflicted Injuries - must be intentionally self-
inflicted, that is, there must be a deliberate intent on the
part of the employee, not a failure on his part to realize
the probable consequences to himself of his foolish act.
-Notorious Negligence - is something more than simple
contributory negligence. It signifies a deliberate act
of the employee to disregard his own personal safety.
ART. 173 (LC). EXTENT OF LIABILITY.
Unless otherwise provided, the liability of the State
Insurance Fund under this Title shall be exclusive and in
place of all other liabilities of the employer to the
employee, his dependents or anyone otherwise entitled to
receive damages on behalf of the employee or his
dependents. The payment of compensation under this
Title shall not bar the recovery of benefits as provided for
in Section 699 of the Revised Administrative Code, RA No.
1161, as amended, Commonwealth Act No. 186, as
amended,
Republic Act No. 610, as amended, and other laws whose
benefits are administered by the System, or by other
agencies of the government.
RULE AGAINST DOUBLE RECOVERY:
OPTIONS AVAILABLE: Benefits under the Compensation
Law OR Under the Civil Code.
[ Ysmael Maritime Corporation vs. Avelino, G.R. No.
43674, June 30, 1987 ]
HELD: The action is selective and the employee or his heirs
have a choice of availing themselves of the benefits under
 SUN TZU NOTES
the WCA or of suing in the regular courts under the
Civil Code for higher damages from the employer by
reason of his negligence. BUT once the election has
been exercised, the employee or his heirs are no
longer free to opt for the other remedy, i.e., THE
EMPLOYEE CANNOT PURSUE BOTH
ACTIONS SIMULTANEOUSLY.
Thus, the employees parents cannot be allowed to
maintain their present action to recover additional
damages under the Civil Code. They had previously
filed and had received the compensation payable to
them under the WCA. They not only opted to recover
under this Act but had also been duly paid.
A sense of fair play demands that if a person entitled
to a choice of remedies made a first selection and
accepted the benefits thereof, he should no longer
be allowed to exercise the second option.
CIVIL LIABILITY OF EMPLOYERS
ART. 1711 (NCC). Owners of enterprises and other
employers are obliged to pay compensation for the
death of or injuries to their laborers, workmen,
mechanics or other employees even though the
event may have been purely accidental or entirely
due to a fortuitous cause, if the death or personal
injury arose out of and in the course of the
employment. The employer is also liable for
compensation if the employee contracts any illness
or disease caused by such employment or as the
result of the nature of the employment. If the
mishap was due to the employees own notorious
negligence, or voluntary act, or drunkenness, the
employer shall not be liable for compensation. When
the employees lack of due care contributed to his
death or injury, the compensation shall be equitably
reduced.
ART. 1712 (NCC). If the death or injury is due to
the negligence of a fellow-worker, the latterand the
employer shall be solidarily liable for compensation.
If a fellow-workers intentional or malicious act is the
only cause of the death or injury, the employer shall
not be answerable, unless it should be shown that
the latter did not exercise due diligence in the
selection or supervision of the plaintiffs fellow-
worker.
* RULES Re Employers Liability for Death or
Personal Injuries of Employees
a. Employer LIABLE - if the cause of death or
personal injury arose out of and in the course of
Employment, even if the event was purely accidental
or fortuitous.
b. Employer NOT LIABLE if the cause of death or
personal injury was due to the employees own
notorious negligence, or voluntary act or
drunkenness.
c. Compensation EQUITABLY REDUCED if the cause
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was partly due to the employees lack of due care.
d. Employer SOLIDARILY LIABLE with guilty fellow worker
if the cause was due to the negligence of a fellow worker
e. Employer LIABLE - if the cause was due to the
intentional or malicious act of a fellow worker, UNLESS the
employer can prove that he exercised due diligence in
selecting and supervising said fellow worker, in which case,
only said fellow worker will be held liable.
RA 7875 National Health Insurance Act of 1995
The Phil. Health Insurance Corporation (PHIC) created
under this law took over the assets and functions of
the Philippine Medical Care Commission (Art. 209, LC)
which therefore rendered the latter inoperative.
SECTION 1. Short Title. This Act shall be known as
the "National Health Insurance Act of 1995."
ARTICLE I
GUIDING PRINCIPLES
SECTION 2. Declaration of Principles and Policies.
Section 11, Article XIII of the 1987 Constitution of the
Republic of the Philippines declares that the State shall
adopt an integrated and comprehensive approach to health
development which shall endeavor to make essential
goods, health and other social services available to all the
people at affordable cost. Priority for the needs of the
underprivileged, sick, elderly, disabled, women, and
children shall be recognized. Likewise, it shall be the
policy of the State to provide free medical care to paupers.
In the pursuit of a National Health Insurance Program, this
Act shall adopt the following guiding principles:
a) Allocation of National Resources for Health The
Program shall underscore the importance for government
to give priority to health as a strategy for bringing about
faster economic development and improving quality of life.
b) Universality The Program shall provide all citizens
with the mechanism to gain financial access to health
services, in combination with other government health
programs. The National Health Insurance Program shall
give the highest priority to achieving coverage of the entire
population with at least a basic minimum package of
health insurance benefits;
c) Equity The Program shall provide for uniform basic
benefits. Access to care must be a function of a person's
health needs rather than his ability to pay;
d) Responsiveness The Program shall adequately
meet the needs for personal health services at various
stages of a member's life;
e) Social Solidarity The Program shall be guided by
community spirit. It must enhance risk sharing among
income groups, age groups, and persons of differing health
status, and residing in different geographic areas;
f) Effectiveness The Program shall balance economical
use of resources with quality of care;
 SUN TZU NOTES
g) Innovation The Program shall adapt to
changes in medical technology, health service
organizations, health care provider payment
systems, scopes of professional practice, and other
trends in the health sector. It must be cognizant of
the appropriate roles and respective strengths of the
public and private sectors in health care, including
people's organizations and community-based health
care organizations;
h) Devolution The Program shall be
implemented in consultation with local government
units (LGUs), subject to the overall policy directions
set by the National Government;
i) Fiduciary Responsibility The Program shall
provide effective stewardship, funds management,
and maintenance of reserves;
j) Informed Choice The Program shall encourage
members to choose from among accredited health
care providers. The Corporation's local offices shall
objectively apprise its members of the full range of
providers involved in the Program and of the services
and privileges to which they are entitled as
members. This explanation, which the members
may use as a guide in selecting the appropriate and
most suitable provider, shall be given in clear and
simple Filipino and in the local languages that is
comprehensible to the member;
k) Maximum Community Participation The
Program shall build on existing community initiatives
for its organization and human resource
requirements;
l) Compulsory Coverage All citizens of the
Philippines shall be required to enroll in the National
Health Insurance Program in order to avoid adverse
selection and social inequity;
m) Cost Sharing The Program shall continuously
evaluate its cost sharing schedule to ensure that
costs borne by the members are fair and equitable
and that the charges by health care providers are
reasonable;
n) Professional Responsibility of Health Care
Providers The Program shall assure that all
participating health care providers are responsible
and accountable in all their dealings with the
Corporation and its members;
o) Public Health Services The Government shall
be responsible for providing public health services for
all groups such as women, children, indigenous
people, displaced communities and communities in
environmentally endangered areas, while the
Program shall focus on the provision of personal
health services. Preventive and promotive public
health services are essential for reducing the need
and spending for personal health services;
p) Quality of Services The Program shall
promote the improvement in the quality of health
services provided through the institutionalization of
programs of quality assurance at all levels of the
health service delivery system. The satisfaction of
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the community, as well as individual beneficiaries, shall be
a determinant of the quality of service delivery;
q) Cost Containment The program shall incorporate
features of cost containment in its design and operations
and provide a viable means of helping the people pay for
health care services; and
r) Care for the Indigent The Government shall be
responsible for providing a basic package of needed
personal health services to indigents through premium
subsidy, or through direct service provision until such time
that the program is fully implemented.
SECTION 3. General Objectives. This Act seeks to:
a) provide all citizens of the Philippines with the
mechanism to gain financial access to health services;
b) create the National Health Insurance Program,
hereinafter referred to as the Program, to serve as the
means to help the people pay for health care services;
c) prioritize and accelerate the provision of health
services to all Filipinos, especially that segment of the
population who cannot afford such services; and
d) establish the Philippine Health Insurance Corporation,
hereinafter referred to as the Corporation, that will
administer the Program at central and local levels.
ARTICLE II
DEFINITIONS OF TERMS
SECTION 4. Definitions of Terms. For the purpose
of this Act, the following terms shall be defined as follows:
a) Beneficiary Any person entitled to health care
benefits under this Act.
b) Benefit Package Services that the Program offers to
its members.
c) Capitation A payment mechanism where a fixed
rate, whether per person, family, household, or group, is
negotiated with a health care provider who shall be
responsible for delivering or arranging for the delivery of
health services required by the covered person under the
conditions of a health care provider contract.
d) Contribution The amount paid by or in behalf of a
member to the Program for coverage, based on salaries or
wages in the case of formal sector employees, and on
household earnings and assets, in the case of the self-
employed, or on other criteria as may be defined by the
Corporation in accordance with the guiding principles set
forth in Article I of this Act.
e) Coverage The entitlement of an individual, as a
member or as a dependent, to the benefits of the Program.
f) Dependent The legal dependents of a member are:
1) the legitimate spouse who is not a member; 2) the
unmarried and unemployed legitimate, legitimated,
illegitimate, acknowledged children as appearing in the
birth certificate; legally adopted or stepchildren below
twenty-one (21) years of age; 3) children who are twenty-
one (21) years old or above but suffering from congenital
disability, either physical or mental, or any disability
acquired that renders them totally dependent on the
 SUN TZU NOTES
member for support; 4) the parents who are sixty
(60) years old or above whose monthly income is
below an amount to be determined by the
Corporation in accordance with the guiding principles
set forth in Article I of this Act.
g) Diagnostic Procedure Any procedure to
identify a disease or condition through analysis and
examination.
h) Emergency An unforeseen combination of
circumstances which calls for immediate action to
preserve the life of a person or to preserve the sight
of one or both eyes; the hearing of one or both ears;
or one or two limbs at or above the ankle or wrist.
i) Employee Any person who performs services
for an employer in which either or both mental and
physical efforts are used and who receives
compensation for such services, where there is an
employer-employee relationship.
j) Employer A natural or juridical person who
employs the services of an employee.
k) Enrollment The process to be determined by
the Corporation in order to enlist individuals as
members or dependents covered by the Program.
l) Fee for Service A reasonable and equitable
health care payment system under which physicians
and other health care providers receive a payment
that does not exceed their billed charge for each unit
of service provided.
m) Global Budget An approach to the purchase
of medical services by which health care provider
negotiations concerning the costs of providing a
specific package of medical benefits is based solely
on a predetermined and fixed budget.
n) Government Service Insurance System The
Government Service Insurance System created
under Commonwealth Act No. 186, as amended.
o) Health Care Provider Refers to:
1) a health care institution, which is duly licensed
and accredited devoted primarily to the maintenance
and operation of facilities for health promotion,
prevention, diagnosis, treatment, and care of
individuals suffering from illness, disease, injury,
disability or deformity, or in need of obstetrical or
other medical and nursing care. It shall also be
construed as any institution, building, or place where
there are installed beds, cribs, or bassinets for
twenty-four hour use or longer by patients in the
treatment of diseases, injuries, deformities, or
abnormal physical and mental states, maternity
cases or sanitarial care; or infirmaries, nurseries,
dispensaries, and such other similar names by which
they may be designated; or
2) a health care professional, who is any doctor of
medicine, nurse, midwife, dentist, or other health
care professional or practitioner duly licensed to
practice in the Philippines and accredited by the
Corporation; or
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3) a health maintenance organization, which is an entity
that provides, offers, or arranges for coverage of
designated health services needed by plan members for a
fixed prepaid premium; or
4) a community-based health care organization, which is
an association of indigenous members of the community
organized for the purpose of improving the health status of
that community through preventive, promotive and
curative health services.
p) Health Insurance Identification (ID) Card The
document issued by the Corporation to members and
dependents upon their enrollment to serve as the
instrument for proper identification, eligibility verification,
and utilization recording.
q) Indigent A person who has no visible means of
income, or whose income is insufficient for the subsistence
of his family, as identified by the Local Health Insurance
Office and based on specific criteria set by the Corporation
in accordance with the guiding principles set forth in Article
1 of this Act;
r) Inpatient Education Package A set of informational
services made available to an individual who is confined in
a hospital to afford him with knowledge about his illness
and its treatment, and of the means available, particularly
lifestyle changes, to prevent the recurrence or aggravation
of such illness and to promote his health in general.
s) Member Any person whose premiums have been
regularly paid to the National Health Program. He may be
a paying member, an indigent member, or a
pensioner/retiree member.
t) Means Test A protocol administered at the barangay
level to determine the ability of individuals or households
to pay varying levels of contributions to the Program,
ranging from the indigent in the community whose
contributions should be totally subsidized by government,
to those who can afford to subsidize part but not all the
required contributions for the Program.
u) Medicare The health insurance program currently
being implemented by the Philippine Medical Care
Commission. It consists of:
1) Program I, which covers members of the SSS and
GSIS including their legal dependents; and
2) Program II, which is intended for those not covered
under Program I.
v) National Health Insurance Program The compulsory
health insurance program of the government as
established in this Act, which shall provide universal health
insurance coverage and ensure affordable, acceptable,
available and accessible health care services for all citizens
of the Philippines.
w) Pensioner An SSS or GSIS member who receives
pensions therefrom.
x) Personal Health Services Health services in which
benefits accrue to the individual person. These are
categorized into inpatient and outpatient services.
 SUN TZU NOTES
y) Philippine Medical Care Commission The
Philippine Medical Care Commission created under
Republic Act No. 6111, as amended.
z) Philippine National Drug Formulary The
essential drugs list for the Philippines which is
prepared by the National Drug Committee of the
Department of Health in consultation with experts
and specialists from organized professional medical
societies, medical academe and the pharmaceutical
industry, and which is updated every year.
aa) Portability The enablement of a member to
avail of Program benefits in an area outside the
jurisdiction of his Local Health Insurance Office.
bb) Prescription Drug A drug which has been
approved by the Bureau of Food and Drug and which
can be dispensed only pursuant to a prescription
order from a physician who is duly licensed to do so.
cc) Public Health Services Services that
strengthen preventive and promotive health care
through improving conditions in partnership with the
community at large. These include control of
communicable and non-communicable diseases,
health promotion, public information and education,
water and sanitation, environmental protection, and
health-related data collection, surveillance, and
outcome monitoring.
dd) Quality Assurance A formal set of activities
to review and ensure the quality of services
provided. Quality assurance includes quality
assessment and corrective actions to remedy any
deficiencies identified in the quality of direct patient,
administrative, and support services.
ee) Residence The place where the member
actually lives.
ff) Retiree A member of the Program who has
reached the age of retirement or who was retired on
account of disability.
gg) Self-employed A person who works for
himself and is thereforee both employee and
employer at the same time.
hh) Social Security System The Social Security
System created under Republic Act No. 1161, as
amended.
ii) Treatment Procedure Any method used to
remove the symptoms and cause of a disease.
jj) Utilization Review A formal review of patient
utilization or of the appropriateness of health care
services, on a prospective, concurrent or
retrospective basis.
ARTICLE III
THE NATIONAL HEALTH INSURANCE
PROGRAM
SECTION 5. Establishment and Purposes.
There is hereby created the National Health
Insurance Program which shall provide health
insurance coverage and ensure affordable,
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acceptable, available and accessible health care services
for all citizens of the Philippines, in accordance with the
policies and specific provisions of this Act. This social
insurance program shall serve as the means for the
healthy to help pay for the care of the sick and for those
who can afford medical care to subsidize those who
cannot. It shall initially consist of programs I and II of
Medicare and be expanded progressively to constitute one
universal health insurance program for the entire
population. The Program shall include a sustainable
system of funds constitution, collection, management and
disbursement for financing the availment of a basic
minimum package and other supplementary packages of
health insurance benefits by a progressively expanding
proportion of the population. The Program shall be limited
to paying for the utilization of health services by covered
beneficiaries or to purchasing health services in behalf of
such beneficiaries. It shall be prohibited from providing
health care directly, from buying and dispensing drugs and
pharmaceuticals, from employing physicians and other
professionals for the purpose of directly rendering care,
and from owning or investing in health care facilities.
SECTION 6. Coverage. All citizens of the Philippines
shall be covered by the National Health Insurance
Program. In accordance with the principles of universality
and compulsory coverage enunciated in Section 2 (b) and
2 (l) hereof, implementation of the Program shall,
furthermore, be gradual and phased in over a period of not
more than fifteen (15) years: provided, that the Program
shall not be made compulsory in certain provinces and
cities until the Corporation shall be able to ensure that
members in such localities shall have reasonable access to
adequate and acceptable health care services.
SECTION 7. Enrollment. The Program shall enroll
beneficiaries in order for them to be placed under coverage
that entitles them to avail of benefits with the assistance of
the financial arrangements provided by the Program. The
process of enrollment shall include the identification of
beneficiaries, issuance of appropriate documentation
specifying eligibility to benefits, and indicating how
membership was obtained or is being maintained. The
enrollment shall proceed in accordance with these specific
policies:
a) all persons currently eligible for benefits under
Medicare Program I, including SSS and GSIS members,
retirees, pensioners and their dependents, shall
immediately and automatically be made members of the
National Health Insurance Program;
b) all persons eligible through health insurance plans
established by local governments as part of Program II of
Medicare or in accordance with the provisions of this Act,
including indigent members, shall also be enrolled in the
Program;
c) all persons eligible for benefits as member of local
health insurance plans established by the Corporation in
accordance with the implementing rules and regulations of
this Act shall also be deemed to have enrolled in the
Program. Enrollment of persons who have no current
health insurance coverage shall be given priority by the
corporation; and
 SUN TZU NOTES
d) all persons eligible for benefits as members of
other government initiated health insurance
programs, community-based health care
organizations, cooperatives, or private non-profit
health insurance plans shall be enrolled in the
Program upon accreditation by the Corporation which
shall devise and provide incentives to ensure that
such accredited organizations will benefit from their
participation in the program.
All indigents not enrolled in the Program shall have
priority in the use and availment of the services and
facilities of government hospitals, health care
personnel, and other health organizations: provided,
however, that such government health care
providers shall ensure that said indigents shall
subsequently be enrolled in the Program.
SECTION 8. Health Insurance ID Card. In
conjunction with the enrollment provided above, the
Corporation through its local office shall issue a
health insurance ID which shall be used for purposes
of identification, eligibility verification, and utilization
recording. The issuance of this ID card shall be
accompanied by a clear explanation to the enrollee
of his rights, privileges and obligations as a member.
A list of health care providers accredited by the Local
Health Insurance Office shall likewise be attached
thereto.
SECTION 9. Change of Residence. A citizen
can be under only one Local Health Insurance Office
which shall be located in the province or city of his
place of residence. A person who changes residence,
becomes temporarily employed, or for other
justifiable reasons, is transferred to another locality
should inform said Office of such transfer and
subsequently transfer his Program membership.
SECTION 10. Benefit Package. Subject to the
limitations specified in this Act and as may be
determined by the Corporation, the following
categories of personal health services granted to the
member or his dependents as medically necessary or
appropriate shall include:
a) Inpatient hospital care:
1) room and board;
2) services of health care professionals;
3) diagnostic, laboratory, and other medical
examination services;
4) use of surgical or medical equipment and
facilities;
5) prescription drugs and biologicals; subject to
the limitations stated in Section 37 of this Act;
6) inpatient education packages;
b) Outpatient care:
1) services of health care professionals;
2) diagnostic, laboratory, and other medical
examination services;
3) personal preventive services; and
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4) prescription drugs and biologicals, subject to the
limitations described in Section 37 of this Act;
c) Emergency and transfer services; and
d) Such other health care services that the Corporation
shall determine to be appropriate and cost-effective:
provided, that the Program, during its initial phase of
implementation, which shall not be more than five (5)
years, shall provide a basic minimum package of benefits
which shall be defined according to the following
guidelines:
1) the cost of providing said package is such that the
available national and local government subsidies for
premium payments of indigents are sufficient to extend
coverage to the widest possible population.
2) the initial set of services shall not be less than half of
those provided under the current Medicare Program I in
terms of overall average cost of claims paid per beneficiary
household per year.
3) the services included are prioritized, first, according to
its effectiveness and, second, according to its potential of
providing maximum relief from the financial burden on the
beneficiary: provided, that in addition to the basic
minimum package, the Program shall provide
supplemental health benefit coverage to beneficiaries of
contributory funds, taking into consideration the
availability of funds for the purpose from said contributory
funds: provided, further, that the Program shall
progressively expand the basic minimum benefit package
as the proportion of the population covered reaches
targeted milestones so that the same benefits are
extended to all members of the Program within five (5)
years after implementation of this Act. Such expansion will
provide for the gradual incorporation of supplementary
health benefits previously extended only to some
beneficiaries into the basic minimum package extended to
all beneficiaries: and provided finally, that in the phased
implementation of this Act, there should be no reduction or
interruption in the benefits currently enjoyed by present
members of Medicare.
SECTION 11. Excluded Personal Health Services.
The benefits granted under this Act shall not cover
expenses for the services enumerated hereunder except
when the Corporation, after actuarial studies, recommend
their inclusion subject to the approval of the Board:
a) non-prescription drugs and devices;
b) outpatient psychotherapy and counselling for mental
disorders;
c) drug and alcohol abuse or dependency treatment;
d) cosmetic surgery;
e) home and rehabilitation services;
f) optometric services;
g) normal obstetrical delivery; and
h) cost-ineffective procedures which shall be defined by
the Corporation.
SECTION 12. Entitlement to Benefits. A member
whose premium contributions for at least three (3) months
 SUN TZU NOTES
have been paid within the six (6) months prior to the
first day of his or his dependents' availment, shall be
entitled to the benefits of the Program: provided,
that such member can show that he contributes
thereto with sufficient regularity, as evidenced in
their health insurance ID card: and provided further,
that he is not currently subject to legal penalties as
provided for in Section 44 of this Act.
The following need not pay the monthly contributions
to be entitled to the Program's benefits:
a) Retirees and pensioners of the SSS and GSIS
prior to the effectivity of this Act;
b) Members who reach the age of retirement as
provided for by law and have paid at least one
hundred twenty (120) monthly contributions; and
c) Enrolled indigents.
SECTION 13. Portability of Benefits. The
corporation shall develop and enforce mechanisms
and procedures to assure that benefits are portable
across Offices.
ARTICLE IV
THE PHILIPPINE HEALTH INSURANCE
CORPORATION
SECTION 14. Creation and Nature of the
Corporation. There is hereby created a Philippine
Health Insurance Corporation, which shall have the
status of a tax-exempt government corporation
attached to the Department of Health for Policy
coordination and guidance.
SECTION 15. Exemption from Taxes and
Duties. The Corporation shall be exempt from the
payment of taxes on all contributions thereto and all
accruals on its income or investment earnings.
Any donation, contribution, bequest, subsidy or
financial aid which may be made to the Corporation
shall constitute as allowable deduction from the
income of the donor for income tax purposes and
shall be exempt from donor's tax, subject to such
conditions as provided in the National Internal
Revenue Code, as amended.
SECTION 16. Powers and Functions. The
Corporation shall have the following powers and
functions:
a) to administer the National Health Insurance
Program;
b) to formulate and promulgate policies for the
sound administration of the Program;
c) to set standards, rules, and regulations
necessary to ensure quality of care, appropriate
utilization of services, fund viability, member
satisfaction, and overall accomplishment of Program
objectives;
d) to formulate and implement guidelines on
contributions and benefits, cost containment and
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quality assurance; and health care provider arrangements,
payment methods; and referral systems;
e) to establish branch offices as mandated in Article V of
this Act;
f) to receive and manage grants, donations, and other
forms of assistance;
g) to sue and be sued in court;
h) to acquire property, real and personal, which may be
necessary or expedient for the attainment of the purposes
of this Act;
i) to collect, deposit, invest, administer, and disburse the
National Health Insurance Fund in accordance with the
provisions of this Act;
j) to negotiate and enter into contracts with health care
institutions, professionals, and other persons, juridical or
natural, regarding the pricing, payment mechanisms,
design and implementation of administrative and operating
systems and procedures, financing, and delivery of health
services;
k) to authorize Local Health Insurance Offices to
negotiate and enter into contracts in the name and on
behalf of the Corporation with any accredited government
or private sector health provider organization, including
but not limited to health maintenance organizations,
cooperatives and medical foundations, for the provision of
at least the minimum package of personal health services
prescribed by the Corporation;
l) to determine requirements and issue guidelines for the
accreditation of health care providers for the Program in
accordance with this Act;
m) to supervise the provision of health benefits with the
power to inspect medical and financial records of health
care providers and patients who are participants in or
members of the Program, and the power to enter and
inspect accredited health care institutions, subject to the
rules and regulations to be promulgated by the
Corporation;
n) to organize its office, fix the compensation of and
appoint personnel as may be deemed necessary and upon
the recommendation of the president of the Corporation;
o) to submit to the President of the Philippines and to
both Houses of Congress its Annual Report which shall
contain the status of the National Health Insurance Fund,
its total disbursements, reserves, average costings to
beneficiaries, any request for additional appropriation, and
other data pertinent to the implementation of the Program
and publish a synopsis of such report in two (2)
newspapers of general circulation;
p) to keep records of the operations of the Corporation
and investments of the National Health Insurance Fund;
and
q) to perform such other acts as it may deem
appropriate for the attainment of the objectives of the
Corporation and for the proper enforcement of the
provisions of this Act.
 SUN TZU NOTES
SECTION 17. Quasi-Judicial Powers. The
Corporation, to carry out its tasks more effectively,
shall be vested with the following powers:
a) to conduct investigations for the determination
of a question, controversy, complaint, or unresolved
grievance brought to its attention, and render
decisions, orders, or resolutions thereon. It shall
proceed to hear and determine the case even in the
absence of any party who has been properly served
with notice to appear. It shall conduct its
proceedings or any part thereof in public or in
executive session; adjourn its hearings to any time
and place; refer technical matters or accounts to an
expert and to accept his reports as evidence; direct
parties to be joined in or excluded from the
proceedings; and give all such directions as it may
deem necessary or expedient in the determination of
the dispute before it;
b) to summon the parties to a controversy, issue
subpoenas requiring the attendance and testimony of
witnesses or the production of documents and other
materials necessary to a just determination of the
case under investigation;
c) to suspend temporarily, revoke permanently, or
restore the accreditation of a health care provider or
the right to benefits of a member and/or impose
fines after due notice and hearing. The decision shall
immediately be executory, even pending appeal,
when the public interest so requires and as may be
provided for in the implementing rules and
regulations. Suspension of accreditation shall not
exceed twenty-four (24) months. Suspension of the
rights of members shall not exceed six (6) months.
The revocation of a health care provider's
accreditation shall operate to disqualify him from
obtaining another accreditation in his own name,
under a different name, or through another person,
whether natural or juridical.
The Corporation shall not be bound by the technical
rules of evidence.
SECTION 18. The Board of Directors.
a) Composition The Corporation shall be
governed by a Board of Directors hereinafter referred
to as the Board, composed of eleven members as
follows:
The Secretary of Health;
The Secretary of Labor and Employment or his
representative;
The Secretary of the Interior and Local Government
or his representative;
The Secretary of Social Welfare and Development or
his representative;
The President of the Corporation;
A representative of the labor sector;
A representative of employers;
The SSS Administrator or his representative;
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The GSIS General Manager or his representative;
A representative of the self-employed sector; and
A representative of health care providers.
The Secretary of Health shall be the ex officio Chairperson
while the President of the Corporation shall be the Vice
Chairperson of the Board.
b) Appointment and Tenure The President of the
Philippines shall appoint the Members of the Board upon
the recommendation of the Chairman of the Board and in
consultation with the sectors concerned. Members of the
Board shall have a term of four (4) years each, renewable
for a maximum of two (2) years, except for members
whose terms shall be co-terminus with their respective
positions in government. Any vacancy in the Board shall
be filled in the manner in which the original appointment
was made and the appointee shall serve only the
unexpired term of his predecessor.
c) Meetings and Quorum The Board shall hold regular
meetings at least once a month. Special meetings may be
convened at the call of the chairperson or by a majority of
the members of the Board. The presence of six (6) voting
members shall constitute a quorum. In the absence of the
Chairperson and Vice Chairperson, a temporary presiding
officer shall be designated by the majority of the quorum.
d) Allowances and Per Diems The members of the
Board shall receive a per diem for every meeting actually
attended subject to the pertinent budgetary laws, rules
and regulations on compensation, honoraria and
allowances.
SECTION 19. The President of the Corporation.
a) Appointment and Tenure The President of the
Philippines shall appoint for a non-renewable term of six
(6) years the President of the Corporation, hereinafter
referred to as the President, upon the recommendation of
the Board. The President shall not be removed from office
except in accordance with existing laws.
b) Duties and Functions The President shall have the
duty of advising the Board and carrying into effect its
policies and decisions. His functions are as follows:
1) to act as the chief executive officer of the
Corporation; and
2) to be responsible for the general conduct of the
operations and management functions of the Corporation
and for other duties assigned to him by the Board.
c) Qualifications The President must a Filipino citizen
and must possess adequate and appropriate training and
at least five (5) years experience in the field of health care
financing and corporate management.
d) Salary The President shall receive a salary to be
fixed by the Board, with the approval of the President of
the Philippines, payable from the funds of the Corporation.
e) Prohibition To avoid conflict of interest, the
President must not be involved in any health care
institution as owner or member of its board.
SECTION 20. Health Finance Policy Research.
Among the staff departments that will be established by
 SUN TZU NOTES
the Corporation shall be the Health Finance Policy
Research Department, which shall have the following
duties and functions:
a) development of broad conceptual framework for
implementation of the Program through a national
health finance master plan to ensure sustained
investments in health care, and to provide guidance
for additional appropriations from the National
Government;
b) conduct of researches and studies toward the
development of policies necessary to ensure the
viability, adequacy and responsiveness of the
Program;
c) review, evaluation, and assessment of the
Program's impact on the access to, as well as the
quality and cost of, health care in the country;
d) periodic review of fees, charges, compensation
rates, capitation rates, medical standards, health
outcomes and satisfaction of members, benefits, and
other matters pertinent to the operations of the
Program;
e) comparison in the delivery, quality, use, and
cost of health care services of the different Offices;
f) submission for consideration of program of
quality assurance, utilization review, and technology
assessment; and
g) submission of recommendations on policy and
operational issues that will help the Corporation
meet the objectives of this Act.
SECTION 21. Actuary of the Corporation. An
Office of Actuary shall be created within the
Corporation to conduct the necessary actuarial
studies and present recommendations on insurance
premium, investments and other related matters.
ARTICLE V
LOCAL HEALTH INSURANCE OFFICE
SECTION 22. Establishment. The Corporation
shall establish a Local Health Insurance Office,
hereinafter referred to as the Office, in every
province or chartered city, or wherever it is deemed
practicable, to bring its services closer to members
of the Program. However, one office may serve the
needs of more than one province or city when the
merged operations will result in lower administrative
cost and greater cross-subsidy between rich and
poor localities.
Provinces and cities where prospective members are
organized shall receive priority in the establishment
of local health insurance offices.
SECTION 23. Functions. Each Office shall
have the following powers and functions:
a) to consult and coordinate, as needed, with the
local government units within its jurisdiction in the
implementation of the Program;
b) to recruit and register members of the Program
from all areas within its jurisdiction;
c) to collect and receive premiums and other payment
contributions to the Program;
d) to maintain and update the membership eligibility list
at community levels;
e) to supervise the conduct of means testing which shall
be based on the criteria set by the Corporation and
undertaken by the Barangay Captain in coordination with
the social welfare officer and community-based health care
organizations to determine the economic status of all
households and individuals, including those who are
indigent;
f) to issue health insurance ID cards to persons whose
premiums have been paid according to the requirements of
the Office and the guidelines issued by the Board;
g) to recommend to the Board premium schedules that
provide for lower rates to be paid by members whose
dependents include those with reduced probability of
utilization, as in fully immunized children;
h) to recommend to the Board a contribution schedule
which specifies contribution levels by individuals and
households, and a corresponding uniform package of
personal health service benefits which is at least equal to
the minimum package of such benefits prescribed by the
Board as applying to the nation;
i) to grant or deny accreditation to health care providers,
within a period not exceeding sixty (60) days whenever
applicable in accordance with the rules and guidelines of
the Corporation;
j) to process, review and pay the claims of providers,
within a period not exceeding sixty (60) days whenever
applicable in accordance with the rules and guidelines of
the Corporation;
k) to pay fees, as necessary, for claims review and
processing when such are conducted by the central office
of the Corporation or by any of its contractors;
l) to establish referral systems and network
arrangements with other Offices, as may be necessary and
following the guidelines set by the Corporation;
m) to establish mechanisms by which private and public
sector health facilities and human resources may be
shared in the interest of optimizing the use of health
resources;
n) to support the management information system
requirements of the Corporation;
o) to serve as the first level for appeals and grievance
cases;
p) to tap community-based volunteer health workers and
barangay officials, if necessary, for member recruitment,
premium collection and similar activities, and to grant such
workers incentives according to the guidelines set by the
Corporation and in accordance with applicable laws.
However, the incentives for the barangay officials shall
accrue to the barangay and not to the said officials.
q) to participate in information and education activities
that are consistent with the government's priority

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 SUN TZU NOTES
programs on disease prevention and health
promotion; and
r) to prepare an annual report according to
guidelines set by the Board and to submit the same
to the central office of the Corporation.
ARTICLE VI
THE NATIONAL HEALTH INSURANCE FUND
SECTION 24. Creation of the National Health
Insurance Fund. There is hereby created a
National Health Insurance Fund, hereinafter referred
to as the Fund, that shall consist of:
a) Contributions from Program members;
b) Current balances of the Health Insurance Funds
of the SSS and the GSIS collected under the
Philippine Medical Care Act of 1969, as amended,
including arrearages of the Government of the
Philippines with the GSIS for the said Fund;
c) Other appropriations earmarked by the national
and local governments purposely for the
implementation of the Program;
d) Subsequent appropriations provided for under
Sections 46 and 47 of this Act;
e) Donations and grants-in-aid; and
f) All accruals thereof.
SECTION 25. Components of the National
Health Insurance Fund. The National Health
Insurance Fund shall have the following components:
a) The Basic Benefit Fund. This Fund shall
finance the availment of the basic minimum benefit
package by eligible beneficiaries. All liabilities
associated with the extension of entitlement to the
basic minimum benefit package to the enrolled
population shall be borne by the basic benefit fund.
It shall be constituted and maintained through the
following process:
1) upon the determination of the amount of
government subsidies and donations available for
paying fully or partially the premium of indigent
beneficiaries, a basic minimum benefit package
affordable for enrolling as many of the indigent
beneficiaries as possible shall be defined. The
government subsidies will then be constituted as
premium payments for enrolled indigents and
contributed into the basic benefit fund.
2) for extending coverage of this same minimum
benefit package to non-indigents who are not
members of Medicare, premium prices for specific
population shall be actuarially determined based on
variations in risk, capacity to pay, and projected
costs of services utilized. The amounts
corresponding to the premium required, including
costs of direct benefit payments, all costs of
administration, and provision of adequate reserves,
for extending the coverage of the basic minimum
benefit package for such population groups shall be
contributed into the basic benefit fund.
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3) for the population enrolled through Medicare Program
I under SSS, the corresponding premium for the basic
minimum benefit package, including costs of direct benefit
payments, all costs of administration, and provision of
adequate reserves, for extending the coverage of the basic
minimum benefit package for such population groups shall
be contributed into the basic benefit fund.
4) for the population enrolled through Medicare Program
I under GSIS, the corresponding premium for the basic
minimum benefit package, including costs of direct benefit
payments, all costs of administration, and provision of
adequate reserves, shall be charged to the health
insurance fund of the GSIS and paid into the basic benefit
fund.
5) for groups enrolled through any of the existing or
future health insurance schemes and plans, including those
created under Medicare Programs II and those organized
by local government units, national agencies, cooperatives,
and other similar organizations, the corresponding
premium, including costs of direct benefit payments, all
costs of administration, and provision of adequate
reserves, for extending the basic minimum benefit package
to their respective enrollees will be charged to their
respective funds and paid into the basic benefit fund.
b) Supplementary Benefit Funds. These are separate
and distinct supplementary benefit funds created by the
Corporation as eligible for use to provide supplementary
coverage to various groups of the population enjoying the
basic benefit coverage as are affordable by their respective
funding sources. Each supplementary benefit fund shall
finance the extension and availment of additional benefits
not included in the basic minimum benefit package but
approved by the Board. Such supplementary benefits shall
be financed by whatever amounts are available after
deducting the costs of providing the basic minimum benefit
package, including costs of direct benefit payments, all
costs of administration, and provision of adequate
reserves. All liabilities associated with the extension of
supplementary benefits to the defined group of enrollees
shall be borne exclusively by the respective supplementary
benefit fund. Upon the implementation of this Act, the
following supplementary benefit funds shall be established:
1) supplementary benefit fund for SSS-Medicare
members and beneficiaries. After deducting the amount
corresponding to the premium of the basic minimum
benefit package, the balance of the SSS-Health Insurance
Fund (HIF) shall be constituted into a supplementary
benefit fund to finance the extension of benefits in addition
to the minimum basic package to SSS members and
beneficiaries; and
2) supplementary benefit fund for GSIS-Medicare
members and beneficiaries. After deducting the amount
corresponding to the premium for the basic minimum
benefit package, the balance of the GSIS-HIF plus the
arrearages of the Government of the Philippines with the
GSIS for the said HIF shall be constituted into a
supplementary benefit fund to finance the extension of
benefits in addition to the minimum basic package to GSIS
members and beneficiaries.
 SUN TZU NOTES
In accordance with the principles of equity and social
solidarity, as enunciated in Section 2 of this Act, the
above supplementary benefit funds shall be
maintained for not more than five (5) years, after
which, such funds shall be merged into the basic
benefit fund.
SECTION 26. Financial Management. The
use, disposition, investment, disbursement,
administration and management of the National
Health Insurance Fund, including any subsidy, grant
or donation received for program operations shall be
governed by resolution of the Board of Directors of
the Corporation, subject to the following limitations:
a) All funds under the management and control of
the Corporation shall be subject to all rules and
regulations applicable to public funds.
b) The corporation is authorized to charge the
various funds under its control for the costs of
administering the Program. Such costs may include
administration, monitoring, marketing and
promotion, research and development, audit and
evaluation, information services, and other
necessary activities for the effective management of
the Program. The total annual costs for these shall
not exceed twelve percent (12%) of the total
contributions, including government contributions to
the Program and not more than three percent (3%)
of the investment earnings collected during the
immediately preceding year.
SECTION 27. Reserve Fund. The Corporation
shall set aside a portion of its accumulated revenues
not needed to meet the cost of the current year's
expenditures as reserve funds: provided, that the
total amount of reserves shall not exceed a ceiling
equivalent to the amount actuarially estimated for
two years' projected Program expenditures:
provided, further, that whenever actual reserves
exceed the required ceiling at the end of the
Corporation's fiscal year, the Program's benefits shall
be increased or member contributions decreased
prospectively in order to adjust expenditures or
revenues to meet the required ceiling for reserve
funds. Such portions of the reserve fund as are not
needed to meet the current expenditure obligations
shall be invested in short-term investments to earn
an average annual income at prevailing rates of
interest and shall be known as the "Investment
Reserve Fund" which shall be invested in any or all of
the following:
a) In interest-bearing bonds, securities or other
evidences of indebtedness of the Government of the
Philippines, or in bonds, securities, promissory notes
and other evidences of indebtedness to which full
faith and credit and unconditional guarantee of the
Republic of the Philippines is pledged;
b) In interest-bearing deposits and loans to or
securities in any domestic bank doing business in
the Philippines: provided, that in the case of such
deposits, this shall not exceed at any time the
unimpaired capital and surplus or total private
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deposits of the depository bank, whichever is smaller:
provided, further, that said bank shall first have been
designated as a depository for this purpose by the
Monetary Board of the Bangko Sentral ng Pilipinas; and
c) In preferred stocks of any solvent corporation or
institution created or existing under the laws of the
Philippines: provided, that the issuing, assuming, or
guaranteeing entity or its predecessor has paid regular
dividends upon its preferred or guaranteed stocks for a
period of at least three (3) years immediately preceding
the date of investment in such preferred or guaranteed
stocks: provided, further, that if the stocks are guaranteed
the amount of stocks so guaranteed is not in excess of fifty
percent (50%) of the amount of the preferred common
stocks as the case may be of the issuing corporations:
provided, furthermore, that if the corporation or institution
has not paid dividends upon its preferred stocks, the
corporation or institution has sufficient retained earnings to
declare dividends for at least two (2) years on such
preferred stocks and in common stocks option or warrants
to common stocks of any solvent corporation or institution
created or existing under the laws of the Philippines in the
stock exchange with proven track record of profitability
and payment of dividends over the last three (3) years or
in common stocks of a newly organized corporation about
to be listed in the stock exchange: provided, finally, that
such duly organized corporations shall have been rated 'A',
double 'A's or triple 'A's by authorized accredited domestic
rating agencies or by Corporation or in mutual funds
including allied investments.
ARTICLE VII
FINANCING
SECTION 28. Contributions. All members of the
Program shall contribute to the Fund, in accordance with a
reasonable, equitable and progressive contribution
schedule to be determined by the Corporation on the basis
of applicable actuarial studies and in accordance with the
following guidelines:
a) Formal sector employees and current medicare
members and their employers shall continue paying the
same monthly contributions as provided for by law until
such time that the Corporation shall have determined the
contribution schedule mentioned herein: provided, that
their monthly contribution shall not exceed three percent
(3%) of their respective monthly salaries.
b) Contributions from self-employed members shall be
based primarily on household earnings and assets; their
total contributions for one year shall not, however, exceed
three percent (3%) of their estimated actual net income
for the preceding year.
c) Contributions made in behalf of indigent members
shall not exceed the minimum contributions set for
employed members.
SECTION 29. Payment for Indigent Contributions.
Contributions for indigent members shall be subsidized
partially by the local government unit where the member
resides. The Corporation shall provide counterpart
financing equal to the LGU's subsidy for indigents:
provided, that in the case of fourth, fifth and sixth class
 SUN TZU NOTES
LGUs, the National Government shall provide up to
ninety percent (90%) of the subsidy for indigents for
a period not exceeding five (5) years. The share of
the LGUs shall be progressively increased until such
time that its share becomes equal to that of the
National Government.
ARTICLE VIII
HEALTH CARE PROVIDERS
SECTION 30. Free Choice of Health Facility,
Medical or Dental Practitioner. Beneficiaries
requiring treatment or confinement shall be free to
choose from accredited health care providers. Such
choice shall, however, be subject to limitations based
on the area of jurisdiction of the concerned Office
and on the appropriateness of treatment in the
facility chosen or by the desired provider.
SECTION 31. Authority to Grant Accreditation.
The Corporation shall have the authority to grant
to health care providers accreditation which confers
the privilege of participating in the Program.
SECTION 32. Accreditation Eligibility. All
health care providers, as enumerated in Sec. 4(o)
hereof and operating for at least three (3) years may
apply for accreditation.
SECTION 33. Minimum Requirements for
Accreditation. The minimum accreditation
requirements for health care providers are as
follows:
a) human resource, equipment and physical
structure in conformity with the standards of the
relevant facility, as determined by the Department of
Health;
b) acceptance of formal program of quality
assurance and utilization review;
c) acceptance of the payment mechanisms
specified in the following section;
d) adoption of referral protocols and health
resources sharing arrangements;
e) recognition of the rights of patients; and
f) acceptance of information system requirements
and regular transfer of information.
SECTION 34. Provider Payment Mechanisms.
The following mechanisms for public and private
providers shall be allowed in the Program:
a) Fee-for-service based on mechanisms
established by the Corporation;
b) Capitation of health care professionals and
facilities, or networks of the same including HMOs,
medical cooperatives, and other legally formed
health service groups;
c) A combination of both; and
d) Any or all of the above, subject to a global
budget.
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Each Office shall recommend the appropriate payment
mechanism within its jurisdiction for approval by the
Corporation. Special consideration shall be given to
payment for services rendered by public and private health
care providers serving remote or medically underserved
areas.
SECTION 35. Fee-for-service Payments and
Payments in General. Fee-for-service payments may
be made separately for professional fees and hospital
charges, or both, based on arrangements with health care
providers. This fee shall be reviewed every three (3)
years. Fees paid for professional services rendered by
salaried public providers shall be allowed to be retained by
the health facility in which services are rendered and be
pooled and distributed among health personnel. Charges
paid to public facilities shall be allowed to be retained by
the individual facility in which services were rendered and
for which payment was made. Such revenues shall be
used to defray operating costs other than salaries, to
maintain or upgrade equipment, plant or facility, and to
maintain or improve the quality of service in the public
sector.
SECTION 36. Capitation Payments. Capitation
payments may be paid to public or private providers
according to rates of capitation payments based on annual
capitation rate guidelines to be issued by the Corporation.
SECTION 37. Quality Assurance. Under the
guidelines approved by the Corporation and in
collaboration with their respective Offices, health care
providers shall take part in programs of quality assurance,
utilization review, and technology assessment that have
the following objectives:
a) to ensure that the quality of personal health services
delivered, measured in terms of inputs, process, and
outcomes, are of reasonable quality in the context of the
Philippines over time;
b) to ensure that the health care standards are uniform
within the Office's jurisdiction and eventually throughout
the nation; and
c) to see to it that the acquisition and use of scarce and
expensive medical technologies and equipment are
consistent with actual needs and standards of medical
practice, and that:
1) the performance of medical procedures and the
administration of drugs are appropriate, necessary and
unquestionably consistent with accepted standards of
medical practice and ethics. Drugs for which payments will
be made shall be those included in the Philippine National
Drug Formulary, unless explicit exception is granted by the
Corporation.
2) the performance of medical procedures and the
administration of drugs are appropriate, consistent with
accepted standards of medical practice and ethics, and
respectful of the local culture.
SECTION 38. Safeguards Against Over and Under
Utilization. It is incumbent upon the Corporation to set
up a monitoring mechanism to be operationalized through
a contract with health care providers to ensure that there
are safeguards against:
 SUN TZU NOTES
a) over-utilization of services;
b) unnecessary diagnostic and therapeutic
procedures and intervention;
c) irrational medication and prescriptions;
d) under-utilization of services; and
e) inappropriate referral practices.
The Corporation may deny or reduce the payment
for claims when such claims are attended by false or
incorrect information and when the claimant fails
without justifiable cause to comply with the pertinent
rules and regulations of this Act.
ARTICLE IX
GRIEVANCE AND APPEAL
SECTION 39. Grievance System. A system of
grievance is hereby established, wherein members,
dependents, or health care providers of the Program
who believe they have been aggrieved by any
decision of the implementors of the Program, may
seek redress of the grievance in accordance with the
provisions of this Article.
SECTION 40. Grounds for Grievances. The
following acts shall constitute valid grounds for
grievance action:
a) any violation of the rights of patients;
b) a willful neglect of duties of Program
implementors that results in the loss or non-
enjoyment of benefits by members or their
dependents;
c) unjustifiable delay in actions on claims;
d) delay in the processing of claims that extends
beyond the period agreed upon; and
e) any other act or neglect that tends to
undermine or defeat the purposes of this Act.
SECTION 41. Grievance and Appeal
Procedures. A member, his dependent, or a
health care provider may file a complaint for
grievance based on any of the above grounds, in
accordance with the following procedures:
a) A complaint for grievance must be filed with the
Office which shall rule on the complaint ninety (90)
calendar days from receipt thereof.
b) Appeals from Office decisions must be filed with
the Board within thirty (30) days from receipt of
notice of dismissal or disallowance by the Office.
c) The Offices shall have no jurisdiction over any
issue involving the suspension or revocation of
accreditation, the imposition of fines, or the
imposition of charges on members or their
dependents in case of revocation of their
entitlement.
d) All decisions by the Board as to entitlement to
benefits of members or to payments of health care
providers shall be considered final and executory.
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SECTION 42. Grievance and Appeal Review
Committee. The Board shall create a Grievance and
Appeal Review Committee, composed of three (3) to five
(5) members, hereinafter referred to as the Committee,
which, subject to the procedures enumerated above, shall
receive and recommend appropriate action on complaints
from members and health care providers relative to this
Act and its implementing rules and regulations.
SECTION 43. Hearing Procedures of the
Committee. Upon the filing of the complaint, the
Grievance and Appeal Review Committee, from a
consideration of the allegations thereof, may dismiss the
case outright due to lack of verification, failure to state the
cause of action, or any other valid ground for the dismissal
of the complaint after consultation with the Board; or
require the respondent to file a verified answer within five
(5) days from service of summons.
Should the defendant fail to answer the complaint within
the reglementary five-day period herein provided, the
Committee, motu proprio or upon motion of the
complainant, shall render judgments as may be warranted
by the facts alleged in the complainant and limited to what
is prayed for therein.
After an answer is filed and the issues are joined, the
Committee shall require the parties to submit, within ten
(10) days from receipt of the order, the affidavits of
witnesses and other evidence on the factual issues defined
therein, together with a brief statement of their positions
setting forth the law and the facts relied upon by them. In
the event the Committee finds, upon consideration of the
pleadings, the affidavits and other evidence, and position
statements submitted by the parties, that a judgment may
be rendered thereon without need of a formal hearing, it
may proceed to render judgment not later than ten (10)
days from the submission of the position statements of the
parties.
In cases where the Committee deems it necessary to hold
a hearing to clarify specific factual matters before
rendering judgment, it shall set the case for hearing for
the purpose. At such hearing, witnesses whose affidavits
were previously submitted may be asked clarificatory
questions by the proponent and by the Committee and
may be cross-examined by the adverse party. The order
setting the case of hearing shall specify the witnesses who
will be called to testify, and the matters on which their
examination will deal. The hearing shall be terminated
within fifteen (15) days, and the case decided by the
Committee within fifteen (15) days from such termination.
The decision of the Committee shall become final and
executory fifteen (15) days after notice thereof: provided,
however, that it is appealable to the Board by filing the
appellant's memorandum of appeal within fifteen (15) days
from receipt of the copy of the judgment appealed from.
The appellees shall be given fifteen (15) days from notice
to file the appellee's memorandum after which the Board
shall decide the appeal within thirty (30) days from the
submittal of the said pleadings.
The decision of the Board shall also become final and
executory fifteen (15) days after notice thereof: provided,
however, that it is reviewable by the Supreme Court on
 SUN TZU NOTES
purely questions of law in accordance with the Rules
of Court.
The Committee and the Board, in the exercise of
their quasi-judicial function, as specified in Section
17 hereof, can administer oaths, certify to official
acts and issue subpoena to compel the attendance
and testimony of witnesses, and subpoena duces
tecum or ad testificadum to enjoin the production of
books, papers and other records and to testify
therein on any question arising out of this Act. Any
case of contumacy shall be dealt with in accordance
with the provisions of the Revised Administrative
Code and the Rules of Court. The Board or the
Committee, as the case may be, shall prescribe the
necessary administrative sanctions such as fines,
warnings, suspension or revocation of the right to
participate in the Program.
In all its proceedings, the Committee and the Board
shall not be bound by the technical rules of
evidence: provided, however, that the Rules of
Court shall apply with suppletory effect.
ARTICLE X
PENALTIES
SECTION 44. Penal Provisions. Any violation
of the provisions of this Act, after due notice and
hearing, shall suffer the following penalties:
A fine of not less than Ten thousand pesos (P10,000)
nor more than Fifty thousand pesos (P50,000) in
case the violation is committed by the hospital
management or provider. In addition, its
accreditation shall be suspended or revoked from
three (3) months to the whole term of accreditation:
provided, however, that recidivists may not anymore
be accredited as a participant of the Program;
A fine of not less than Five hundred pesos (P500) nor
more than Five thousand pesos (P5,000) and
imprisonment of not less than six (6) months nor
more than one (1) year in case the violation is
committed by the member.
Where the violations consist of failure or refusal to
deduct contributions from the employee's
compensation or to remit the same to the
Corporation, the penalty shall be a fine of not less
than Five hundred pesos (P500) but not more than
One Thousand pesos (P1,000) multiplied by the total
number of employees employed by the firm and
imprisonment of not less than six (6) months but not
more than one (1) year: provided, further, that in
the case of self-employed members, failure to remit
one's own contribution shall be penalized with a fine
of not less than Five hundred pesos (P500) but not
more than One Thousand pesos (P1,000).
Any employer or any officer authorized to collect
contributions under this Act who, after collecting or
deducting the monthly contributions from his
employees' compensation, fails to remit the said
contributions to the Corporation within thirty (30)
days from the date they become due shall be
presumed to have misappropriated such
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contributions and shall suffer the penalties provided for in
Article 315 of the Revised Penal Code.
Any employer who shall deduct directly or indirectly from
the compensation of the covered employees or otherwise
recover from them his own contribution on behalf of such
employees shall be punished by a fine not exceeding One
thousand pesos (P1,000) multiplied by the total number of
employees employed by the firm, or imprisonment not
exceeding one (1) year, or both fine and imprisonment, at
the discretion of the Court.
If the act or omission penalized by this Act be committed
by an association, partnership, corporation or any other
institution, its managing directors or partners or president
or general manager, or other persons responsible for the
commission of the said act shall be liable for the penalties
provided for in this Act and other laws for the offense.
Any employee of the Corporation who receives or keeps
funds or property belonging, payable or deliverable to the
Corporation, and who shall appropriate the same, or shall
take or misappropriate or shall consent, or through
abandonment or negligence shall permit any other person
to take such property or funds wholly or partially, shall
likewise be liable for misappropriation of funds or property
and shall suffer imprisonment of not less than six (6) years
and not more than twelve (12) years and a fine of not less
than Ten thousand pesos (P10,000.00) nor more than
Twenty thousand pesos (P20,000). Any shortage of the
funds or loss of the property upon audit shall be deemed
prima facie evidence of the offense.
All other violations involving funds of the Corporation shall
be governed by the applicable provisions of the Revised
Penal Code or other laws, taking into consideration the
rules on collection, remittances, and investment of funds
as may be promulgated by the Corporation.
ARTICLE XI
APPROPRIATIONS
SECTION 45. Initial Appropriation. The
unexpended portion of the budget of the Philippine Medical
Care Commission (PMCC) for the year during which this
Act was approved shall be utilized for establishing the
Corporation and initiating its operations, including the
formulation of the rules and regulations necessary for the
implementation of this Act. In addition, initial funding shall
come from any unappropriated but available fund of the
Government.
SECTION 46. Subsequent Appropriations. Starting
1995 and thereafter, twenty-five percent (25%) of the
increment in total revenue collected under Republic Act
No. 7654 shall be appropriated in the General
Appropriations Act solely for the National Health Insurance
Fund.
In addition, starting 1996 and thereafter, twenty-five
percent (25%) of the incremental revenue from the
increase in the documentary stamp taxes under Republic
Act No. 7660 shall likewise be appropriated solely for the
said fund.
SECTION 47. Additional Appropriations. The
Corporation may request Congress to appropriate
 SUN TZU NOTES
supplemental funding to meet targeted milestones of
the Program in accordance with Section 10(d) of this
Act.
ARTICLE XII
TRANSITORY PROVISIONS
SECTION 48. Appointment of Board Members.
Within thirty (30) days from the date of
effectivity of this Act, the President of the Philippines
shall appoint the members of the Board and the
President of the Corporation.
SECTION 49. Implementing Rules and
Regulations. Within thirty (30) days from the
completion of such appointments, the Board shall
convene to formulate the rules and regulations
necessary for the implementation of this Act.
SECTION 50. Promulgation. Within one (1)
year from its initial meeting, the Board shall
promulgate the aforementioned rules and regulations
in at least two (2) national newspapers of general
circulation. But until such time that the Corporation
shall have promulgated said rules and regulations,
the existing rules and regulations of the PMCC shall
be followed. The present Medicare Program shall
continue to be so administered, until the
Corporation's Board deems the new system as ready
for implementation in accordance with the provisions
of this Act.
SECTION 51. Merger. Within sixty (60) days
from the promulgation of the implementing rules and
regulations, all functions and assets of the Philippine
Medical Care Commission shall be merged with those
of the Corporation without need of conveyance,
transfer or assignment. The PMCC shall thereafter
cease to exist.
The liabilities of the PMCC shall be treated in
accordance with existing laws and pertinent rules
and regulations.
To the greatest extent possible and in accordance
with existing laws, all employees of the PMCC shall
be absorbed by the Corporation.
SECTION 52. Transfer of Health Insurance
Funds of the SSS and GSIS . The Health
Insurance Funds being administered by the SSS and
GSIS shall be transferred to the Corporation within
sixty (60) days from the promulgation of the
implementing rules and regulations. The SSS and
GSIS shall, however, continue to perform Medicare
functions under contract with the Corporation until
such time that such functions are assumed by the
Corporation, in accordance with the following
Section.
SECTION 53. Transfer of the Medicare
Functions of the SSS and GSIS . Within five (5)
years from the promulgation of the implementing
rules and regulations, the functions, assets,
equipment, records, operating systems, and
liabilities, if any, of the Medicare operations of the
SSS and GSIS shall be transferred to the
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Corporation; Provided, however, that the SSS and GSIS
shall continue performing its Medicare functions beyond
the stipulated five-year period if such extension will benefit
Program members, as determined by the Corporation.
Personnel of the Medicare departments of the SSS and
GSIS shall be given priority in the hiring of the
Corporation's employees.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 54. Oversight Provision. Congress shall
conduct a regular review of the National Health Insurance
Program which shall entail a systematic evaluation of the
Program's performance, impact or accomplishments with
respect to its objectives or goals. Such review shall be
undertaken by the Committees of the Senate and the
House of Representatives which have legislative
jurisdiction over the Program.
SECTION 55. Information Campaign. There shall
be provided a substantial period of time to undertake an
intensive public information campaign prior to the
implementation of the rules and regulations of this Act.
SECTION 56. Separability Clause. In the event any
provision of this Act or the application of such provision to
any person or circumstances is declared invalid, the
remainder of this Act or the application of said provisions
to other persons or circumstances shall not be affected by
such declaration.
SECTION 57. Repealing Clause. Executive Order
119, Presidential Decree 1519 and other laws currently
applying to the administration of Medicare are hereby
repealed. All other laws, executive orders, administrative
rules and regulations or parts thereof which are
inconsistent with the provisions of this Act also hereby
amended, modified, or repealed accordingly.
SECTION 58. Government Guarantee. The
Government of the Philippines guarantees the financial
viability of the Program.
SECTION 59. Effectivity. This Act shall take effect
fifteen (15) days after its publication in at least three (3)
national newspapers of general circulation.
Republic Act No. 9241 February 10 2004
AN ACT AMENDING REPUBLIC ACT NO. 7875,
OTHERWISE KNOWN AS "AN ACT INSTITUTING A
NATIONAL HEALTH INSURANCE PROGRAM FOR ALL
FILIPINOS AND ESTABLISHING THE PHILIPPINE
HEALTH INSURANCE CORPORATION FOR THE
PURPOSE"
Be it enacted by the Senate and House of Representatives
of the Philippines in Congress assembled:
Section 1. Section 4 of Republic Act No. 7875 is hereby
amended to read as follows:
"SEC. 4. Definition of Terms.-For the purpose of this
Act, the following terms shall be defined as follows:
a) Beneficiary - Any person entitled to health care
benefits under this Act.
 SUN TZU NOTES
b) Benefit Package - Services that the Program
offers to its members.
c) Capitation - A payment mechanism where a
fixed rate, whether per person, family, household
or group, is negotiated with a health care
provider who shall be responsible in delivering or
arranging for the delivery of health services
required by the covered person under the
conditions of a health care provider contract.
d) Contribution - The amount paid by or in behalf
of a member to the Program for coverage, based
on salaries or wages in the case of formal sector
employees, and on household earnings and
assets, in the case of self-employed, or on other
criteria as may be defined by the Corporation in
accordance with the guiding principles set forth
in Article 1 of this Act.
e) Coverage - The entitlement of an individual,
as a member or as a dependent, to the benefits
of the program.
f) Dependent - The legal dependents of a
member are: 1) the legitimate spouse who is not
a member; 2) the unmarried and unemployed
legitimate, legitimated, illegitimate,
acknowledged children as appearing in the birth
certificate; legally adopted or step-children below
twenty-one (21) years of age; 3)children who
are twenty-one (21) years old and above but
suffering from congenital disability, either
physical or mental, or any disability acquired that
renders them totally dependent on the member
of our support; 4) the parents who are sixty (60)
years old or above whose monthly income is
below an amount to be determined by the
Corporation in accordance with the guiding
principles set forth in Article I of this Act.
g) Diagnostic Procedure - Any procedure to
identify a disease or condition through analysis
and examination.
h) Emergency - An unforeseen combination of
circumstances which calls for immediate action
to preserve the life of a person or to preserve
the sight of one or both eyes; the hearing of one
or both ears; or one or two limbs at or above the
ankle or wrist.
i) Employee - Any person who performs services
for an employer in which either or both mental
and physical efforts are used and who receives
compensation for such services, where there is
an employer-employee relationship.
j) Employer - A natural or juridical person who
employs the services of an employee.
k) Enrollment - The process to be determined by
the Corporation in order to enlist individuals as
members or dependents covered by the
Program.
l) Fee for Service - A reasonable and equitable
health care payment system under which
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physicians and other health care providers receive a
payment that does not exceed their billed charge for
each unit of service provided.
m) Global Budget - An approach to the purchase of
medical services by which health care provider
negotiations concerning the costs of providing a
specific package of medical benefits is based solely on
a predetermined and fixed budget.34urchase of
medical services by which health care provider
negotiations concerning the costs of providing a
specific package of medical benefits is based solely on
a predetermined and fixed budget.
n) Government Service Insurance System - The
Government Service Insurance System created under
Commonwealth Act No. 186, as amended.
o) Health Care Provider - Refers to:
(1) a health care institution , which is duly licensed
and accredited devoted primarily to the maintenance
and operation of facilities for health promotion,
prevention, diagnosis, injury, disability, or deformity,
drug addiction or in need of obstetrical or other
medical and nursing care. It shall also be construed as
any institution, building, or place where there are
installed beds, cribs, or bassinets for twenty-four hour
use or longer by patients in the treatment of diseases,
injuries, deformities, or abnormal physical and mental
states, maternity cases or sanitarial care; or
infirmaries, nurseries, dispensaries, rehabilitation
centers and such other similar names by which they
may be designated; or
(2) a health care professional, who is any doctor of
medicine, nurse, midwife, dentist, or other health care
professional or practitioner duly licensed to practice in
the Philippines and accredited by the Corporation; or
(3) a health maintenance organization, which is entity
that provides, offers, or arranges for coverage of
designated health services needed by plan members
for a fixed prepaid premium; or
(4) a community-based health organization, which is
an association of indigenous members of the
community organized for the purpose of improving the
health status of that community through preventive,
promotive and curative health services.
p) Health Insurance Identification (ID) Card - The
document issued by the Corporation to members and
dependents upon their enrollment to serve as the
instrument for proper identification, eligibility
verification, and utilization recording.
q) Indigent - A person who has no visible means of
income, or whose income is insufficient for the
subsistence of his family, as identified by the Local
Health Insurance Office and based on specific criteria
set by the Corporation in accordance with the guiding
principles set forth in Article I of this Act.
r) Inpatient Education Package - A set of informational
services made available to an individual who is
confined in a hospital to afford him with knowledge
 SUN TZU NOTES
about his illness and its treatment, and of the
means available, particularly lifestyle changes, to
prevent the recurrence or aggravation of such
illness and to promote his health in general.
s) Member - Any person whose premiums have
been regularly paid to the National Health
Insurance Program. He may be a paying
member, or a pensioner/retiree member.
t) Means Test - A protocol administered at the
barangay level to determine the ability of
individuals or households to pay varying levels of
contributions to the Program, ranging from the
indigent in the community whose contributions
should be totally subsidized by the government,
to those who can afford to subsidize part but not
all the required contributions for the Program.
u) Medicare - The health insurance program
currently being implemented by the Philippine
Medical Care Commission. It consists of:
(1) Program I, which covers members of the SSS
and GSIS including their legal dependents; and
(2) Program II, which is intended for those not
covered under Program I.
v) National Health Insurance Program - The
compulsory health insurance program of the
government as established in this Act, which
shall provide universal health insurance coverage
and ensure affordable, acceptable, available and
accessible health care services for all citizens of
the Philippines.
w) Pensioner - An SSS or GSIS member who
receives pensions therefrom.
x) Personal Health Services - Health Services in
which benefits accrue to the individual person.
These are categorized into inpatient and
outpatient services.
y) Philippine Medical Care Commission - The
Philippine Medical Care Commission created
under Republic Act No. 6111, as amended.
z) Philippine National Drug Formulary - The
essential drugs list for the Philippines which is
prepared by the National Drug Committee of the
Department of Health in Consultation with
experts and specialists from organized profession
medical societies, medical academe and the
pharmaceutical industry, and which is updated
every year.
aa) Portability - The enablement of a member to
avail of Program benefits in an area outside the
jurisdiction of his Local Health Insurance Office.
bb) Prescription Drug - A drug which has been
approved by the Bureau of Food and Drug and
which can be dispensed only pursuant to a
prescription order from a physician who is duly
licensed to do so.
cc) Public Health Services - Services that
strengthen preventive and promotive health care
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through improving conditions in partnership with the
community at large. These include control of
communicable and non-communicable diseases, health
promotion, public information and education, water
and sanitation, environmental protection, and health-
related data collection, surveillance, and outcome
monitoring.
dd) Quality Assurance - A formal set of activities to
review and ensure the quality of services provided.
Quality assurance includes quality assessment and
corrective actions to remedy any deficiencies identified
in the quality of direct patient, administrative, and
support services.
ee) Residence - The place where the member actually
lives.
ff) Retiree - A member of the Program who has
reached the age of retirement or who was retired on
account of disability.
gg) Self-employed - A person who works for himself
and is therefore both employee and employer at the
same time.
hh) Social Security System - The Social Security
System created under Republic Act No. 1161, as
amended.
ii) Treatment Procedure - Any method used to remove
the symptoms and cause of a disease.
jj) Utilization Review - A formal review of a patient
utilization or of the appropriateness of health care
services, on a prospective, concurrent or retrospective
basis.
kk) Rehabilitation Center - Refers to a facility, which
undertakes rehabilitation of drug dependents. It
includes institutions, agencies and the like which have
for their purpose, the development of skills, or which
provides counseling, or which seeks to inculcate, social
and moral values to clientele who have a drug problem
with the pain of weaning them from drugs and making
them drug-free, adapted to their families and peers,
and readjusted into the community as law-abiding,
useful and productive citizens.
ll) Home Care and Medical Rehabilitation Services -
Refer to skilled nursing care, which members get in
their homes/clinics for the treatment of an illness or
injury that severely affects their activities or daily
living. Home care and medical rehabilitation services
include hospice or palliative care for people who are
terminally ill but does not include custodial and non-
skilled personal care."
Section 2. Section 11 of the same Act shall now read as
follows:
"SEC. 11. Excluded Personal Health Services.- The
benefits granted under this Act shall not cover
expenses for the services enumerated hereunder
except when the Corporation, after actuarial studies,
recommends their inclusion subject to the approval of
the Board:

(a) non-prescription drugs and devices;
(b) alcohol abuse or dependency treatment;
(c) cosmetic surgery;
(d) optometric services;
(e) fifth and subsequent normal obstetrical
deliveries; and
(f) cost-ineffective procedures, which shall be
defined by the Corporation.
Provided, That, such actuarial studies must be
done within a period of three (3) years, and then
periodically reviewed, to determine the financial
sustainability of including the foregoing personal
health services in the benefit package provided
for under Section 10 of this Act."
Section 3. Section 18 of the Law shall be amended
to read as follows:
"SEC. 18. The Board of Directors.
a) Composition - The Corporation shall be
governed by a Board of Directors hereinafter
referred to as the Board, composed of the
following members:
The Secretary of Health;
The Secretary of Labor and Employment or his
representative;
The Secretary of the Interior and Local
Government or his Representative;
The Secretary of Social Welfare
Development or his Representative;
The President of the Corporation;
A representative of the labor sector;
A representative of employers;
The SSS Administrator or his representative;
The GSIS General Manager or his representative;
The Vice chairperson for the basic sector of the
National Anti-Poverty Commission or his
representative;
A representative of Filipino overseas workers;
A representative of the self-employed sector;
and
A representative of health care providers to be
endorsed by the national associations of health
care institutions and medical health
professionals.
The Secretary of Health shall be the ex officio
Chairperson while the President of the President
of the Corporation shall be the Vice Chairperson
of the Board.
b) Appointment and Tenure - The President of
the Philippines shall appoint the Members of the
Board upon the recommendation of the
Chairman of the Board and in consultation with
SUN TZU NOTES
the sectors concerned. Members of the Boards shall
have a term of four (4) years each, renewable for a
maximum of two (2) years, except for members whose
terms shall be co-terminous with their respective
positions in government. Any vacancy in the Board
shall be filled in the manner in which the original
appointment was made and the appointee shall serve
only the unexpired term of his predecessor.
c) Meetings and Quorum. - The Board shall hold
regular meetings at least once a month. Special
meetings may be convened at the call of the
Chairperson or by a majority of the members of the
Board. The presence of a majority of all the members
shall constitute a quorum. In the absence of the
Chairperson and Vice Chairperson, a temporary
presiding officer shall be designated by the majority of
the quorum.
d) Allowances and Per Diems - The members of the
Board shall receive a per diem for every meeting
actually attended subject to the pertinent budgetary
laws, rules and regulations on compensation, honoraria
and allowances."
Section 4. Section 29 of the Law shall now read as
follows:
"SEC. 29. Payment of Indigent Contributions.-
Contributions for indigent members shall be subsidized
partially by the local government unit where the
member resides. The Corporation shall provide
counterpart financing equal to the LGU's subsidy for
indigents: Provided, That in the case of the fourth, fifth
and sixth class municipalities, the National
and Government shall provide up to ninety percent (90%)
of the subsidy for indigents until such time that they
shall have been upgraded to first, second or third class
municipalities. The share of the LGUs shall be
progressively increased until such time that its share
becomes equal to that of the National Government."
Section 5. Section 32 of the same Act shall now read as
follows:
"SEC. 32. Accreditation Eligibility - All health care
providers, as enumerated in Section 4(o) hereof and
operating for at least three (3) years may apply for
accreditation: Provided, That a health care provider
which has not operated for at least three (3) years
may likewise apply and qualify for accreditation if it
complies with all the other accreditation of and further
meets any of the following conditions:
a) Its managing health care professional has had a
working experience in another accredited health care
institution for at least three (3) years;
b) It operates as a tertiary facility or its equivalent;
c) It operates in a local government unit where the
accredited health care provider cannot adequately or
fully service its population; and
d) Other conditions as may be determined by the
Corporation."
Section 6. The third paragraph of Section 44 (penal
Provisions) of the same Act shall amend to read as follows:
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 SUN TZU NOTES
"Where the violations consist of failure or refusal
to deduct contributions from the employee's
compensation or to remit the same to the
Corporation, the penalty shall be a fine of not
less than Five hundred pesos (P500) but not
more than One thousand pesos (P1,000)
multiplied by the total number of employees
employed by the firm and imprisonment of not
less than six (6) months but not more than one
(1) year."
Section 7. Section 54 of the Law shall be amended
to read as follows:
"SEC. 54. Oversight Provision.- Congress shall
conduct regular review of the National Health
Insurance Program, which shall entail a
systematic evaluation of the Program's
performance, impact or accomplishments with
respect to its objectives or goals. Such review
shall be undertaken by the Committees of the
Senate and the House of Representatives, which
have legislative jurisdiction over the Program.
The National Economic and Development
Authority, in coordination with the National
Statistics Office and the National Institutes of
Health of the University of the Philippines shall
undertake studies to validate the
accomplishments of the Program. The Budget
required to undertake such study shall come
from the income of the PhilHealth."
Section 8. Separability Clause. - If any part or
provision of this Act shall be held unconstitutional or
invalid, other provisions, which are not affected
thereby, shall continue to be in full force and effect.
Section 9. Repealing Clause. - All laws,
presidential decrees, executive orders, rules and
regulations or parts thereof which are inconsistent
with the provisions of this Act are hereby repealed,
amended or modified accordingly.
Section 10. Effectivity. - This Act shall take effect
fifteen (15) days after its publication in at least (3)
national newspapers of general circulation.
BWCS OCCUPATIONAL SAFETY & HEALTH
STANDARDS (ARTS. 162-165)
ART. 162. SAFETY AND HEALTH STANDARDS
The Secretary of Labor and Employment shall, by
appropriate orders, set and enforce mandatory
occupational safety and health standards to eliminate
or reduce occupational safety and health hazards in
all workplaces and institute new, and update
existing, programs to ensure safe and healthful
working conditions in all places of employment.
ART. 163. RESEARCH
It shall be the responsibility of the Department of
Labor and Employment to conduct continuing studies
and research to develop innovative methods,
techniques and approaches for dealing with
occupational safety and health problems; to discover
latent diseases by establishing causal connections
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between diseases and work in environmental conditions;
and to develop medical criteria which will assure insofar as
practicable that no employee will suffer impairment or
diminution in health, functional capacity, or life expectancy
as a result of his work and working conditions.
ART. 164. TRAINING PROGRAMS
The Department of Labor and Employment shall develop
and implement training programs to increase the number
and competence of personnel in the field of occupational
safety and industrial health.
ART. 165. ADMINISTRATION OF SAFETY AND
HEALTH LAWS
(a) The Department of Labor and Employment shall be
solely responsible for the administration and enforcement
of occupational safety and health laws, regulations and
standards in all establishments and workplaces wherever
they may be located; however, chartered cities may be
allowed to conduct industrial safety inspections of
establishments within their respective jurisdictions where
they have adequate facilities and competent personnel for
the purpose as determined by the Department of Labor
and Employment and subject to national standards
established by the latter.
(b) The Secretary of Labor and Employment may, through
appropriate regulations, collect reasonable fees for the
inspection of steam boilers, pressure vessels and pipings
and electrical installations, the test and approval for safe
use of materials, equipment and other safety devices and
the approval of plans for such materials, equipment and
devices. The fee so collected shall be deposited in the
national treasury to the credit of the occupational safety
and health fund and shall be expended exclusively for the
administration and enforcement of safety and other labor
laws administered by the Department of Labor and
Employment.
XV. MIGRANT WORKERS ACT & OVERSEAS FILIPINO ACT OF
1995 & RECRUITMENT AND PLACEMENT
Migrant Workers and Overseas Filipinos Act of 1995
Section 2. Declaration of Policies.
(a) In the pursuit of an independent foreign policy and
while considering national sovereignty, territorial integrity,
national interest and the right to self- determination
paramount in its relations with other states, the State
shall, at all times, uphold the dignity of its citizens whether
in country or overseas, in general, and Filipino migrant
workers, in particular.
(b) 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. Towards this end, the State shall provide adequate and
timely social, economic and legal services to Filipino
migrant workers.
(c) While recognizing the significant contribution of Filipino
migrant workers to the national economy through their
foreign exchange remittances, the State does not promote
overseas employment as a means to sustain economic
 SUN TZU NOTES
growth an achieve national development. The
existence of the overseas employment program rests
solely on the assurance that the dignity and
fundamental human rights and freedoms of the
Filipino citizen shall not, at any time, be
compromised or violated. The State, therefore, shall
continuously create local employment opportunities
and promote the equitable distribution of wealth and
the benefits of development.
(d) The State affirms the fundamental equality
before the law of women and men and the significant
role of women in nation-building. Recognizing the
contribution of overseas migrant women workers and
their particular vulnerabilities, the State shall apply
gender sensitive criteria in the formulation and
implementation of policies and programs affecting
migrant workers and the composition of bodies
tasked for the welfare of migrant workers.
(e) Free access to the courts and quasi-judicial
bodies and adequate legal assistance shall not be
denied to any person by reason of poverty. In this
regard, it is imperative that an effective mechanism
be instituted to ensure that the rights and interest of
distressed overseas Filipinos, in general, and Filipino
migrant workers, in particular, documented or
undocumented, are adequately protected and
safeguarded.
(f) The right of Filipino migrant workers and all
overseas Filipinos to participate in the democratic
decision-making processes of the State and to be
represented in institutions relevant to overseas
employment is recognized and guaranteed.
(g) The State recognizes that the ultimate protection
to all migrant workers is the possession of skills.
Pursuant to this and as soon as practicable, the
government shall deploy and/or allow the
deployment only of skilled Filipino workers.
(h) Non-governmental organizations, duly recognized
as legitimate, are partners of the State in the
protection of Filipino migrant workers and in the
promotion of their welfare.
The State shall cooperate with them in a spirit of
trust and mutual respect.
(i) Government fees and other administrative costs
of recruitment, introduction, placement and
assistance to migrant workers shall be rendered free
without prejudice to the provision of Section 36
hereof.
Nonetheless, the deployment of Filipino overseas
workers, whether land- based or sea- based, by local
service contractors and manning agencies employing
them shall be encouraged. Appropriate incentives
may be extended to them.
Section 3. Definitions. - For purposes of this Act:
(a) Migrant worker refers to a person who is to be
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engaged, is engaged or has been engaged in a
remunerated activity in a state of which he or she is not a
legal resident; to be used interchangeably with overseas
Filipino worker.
(b) Gender-sensitivity shall mean cognizance of the
inequalities and inequities prevalent in society between
women and men and a commitment to address issues with
concern for the respective interests of the sexes.
(c) Overseas Filipinos refers to dependents of migrant
workers and other Filipino nationals abroad who are in
distress as mentioned in Sections 24 and 26 of this Act.
I. DEPLOYMENT
Section 4. Deployment of Migrant Workers. - The
State shall deploy overseas Filipino workers only in
countries where the rights of Filipino migrant workers are
protected. The government recognizes any of the following
as a guarantee on the part of the receiving country for the
protection and the rights of overseas Filipino workers:
(a) It has existing labor and social laws protecting the
rights of migrant workers;
(b) It is a signatory to multilateral conventions,
declarations or resolutions relating to the protection of
migrant workers;
(c) It has concluded a bilateral agreement or arrangement
with the government protecting the rights of overseas
Filipino workers; and
(d) It is taking positive, concrete measures to protect the
rights of migrant workers.
Section 5. Termination or Ban on Deployment. -
Notwithstanding the provisions of Section 4 hereof, the
government, in pursuit of the national interest or when
public welfare so requires, may, at any time, terminate or
impose a ban on the deployment of migrant workers.
II. ILLEGAL RECRUITMENT
Section 6. Definition. - For purposes of this Act, illegal
recruitment shall mean any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring, or procuring
workers and includes referring, contract services,
promising or advertising for employment abroad, whether
for profit or not, when undertaken by a non-licensee or
non-holder of authority contemplated under Article 13(f) of
Presidential Decree No. 442, as amended, otherwise
known as the Labor Code of the Philippines: Provided, That
any such non-licensee or non-holder who, in any manner,
offers or promises for a fee employment abroad to two or
more persons shall be deemed so engaged. It shall
likewise include the following acts, whether committed by
any person, whether a non-licensee, non-holder, licensee
or holder of authority:
(a) To charge or accept directly or indirectly any amount
greater than that specified in the schedule of allowable
fees prescribed by the Secretary of Labor and
 SUN TZU NOTES
Employment, or to make a worker pay any amount
greater than that actually received by him as a loan
or advance;
(b) To furnish or publish any false notice or
information or document in relation to recruitment or
employment;
(c) To give any false notice, testimony, information
or document or commit any act of misrepresentation
for the purpose of securing a license or authority
under the Labor Code;
(d) To induce or attempt to induce a worker already
employed to quit his employment in order to offer
him another unless the transfer is designed to
liberate a worker from oppressive terms and
conditions of employment;
(e) To influence or attempt to influence any person
or entity not to employ any worker who has not
applied for employment through his agency;
(f) To engage in the recruitment or placement of
workers in jobs harmful to public health or morality
or to the dignity of the Republic of the Philippines;
(g) To obstruct or attempt to obstruct inspection by
the Secretary of Labor and Employment or by his
duly authorized representative;
(h) To fail to submit reports on the status of
employment, placement vacancies, remittance of
foreign exchange earnings, separation from jobs,
departures and such other matters or information as
may be required by the Secretary of Labor and
Employment;
(i) To substitute or alter to the prejudice of the
worker, employment contracts approved and verified
by the Department of Labor and Employment from
the time of actual signing thereof by the parties up
to and including the period of the expiration of the
same without the approval of the Department of
Labor and Employment;
(j) For an officer or agent of a recruitment or
placement agency to become an officer or member
of the Board of any corporation engaged in travel
agency or to be engaged directly or indirectly in the
management of a travel agency;
(k) To withhold or deny travel documents from
applicant workers before departure for monetary or
financial considerations other than those authorized
under the Labor Code and its implementing rules and
regulations;
(l) Failure to actually deploy without valid reason as
determined by the Department of Labor and
Employment ; and
(m) Failure to reimburse expenses incurred by the
worker in connection with his documentation and
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processing for purposes of deployment, in cases where the
deployment does not actually take place without the
worker's fault. Illegal recruitment when committed by a
syndicate or in large scale shall be considered an offense
involving economic sabotage. Illegal recruitment is deemed
committed by a syndicate if carried out by a group of three
(3) or more persons conspiring or confederating with one
another. It is deemed committed in large scale if
committed against three (3) or more persons individually
or as a group.
The persons criminally liable for the above offenses are the
principals, accomplices and accessories. In case of juridical
persons, the officers having control, management or
direction of their business shall be liable.
Section 7. Penalties. -
(a) Any person found guilty of illegal recruitment shall
suffer the penalty of imprisonment of not less than six (6)
years and one (1) day but not more than twelve (12) years
and a fine of not less than Two hundred thousand pesos
(P200,000.00) nor more than Five hundred thousand
pesos (P500,000.00).
(b) The penalty of life imprisonment and a fine of not less
than Five hundred thousand pesos (P500,000.00) nor
more than One million pesos (P1,000,000.00) shall be
imposed if illegal recruitment constitutes economic
sabotage as defined herein. Provided, however, That the
maximum penalty shall be imposed if the person illegally
recruited is less than eighteen (18) years of age or
committed by a non-licensee or non- holder of authority.
Section 8. Prohibition on Officials and Employees. - It
shall be unlawful for any official or employee of the
Department of Labor and Employment, the Philippine
Overseas Employment Administration (POEA), or the
OverseasWorkers Welfare Administration (OWWA), or the
Department of Foreign Affairs, or other government
agencies involved in the implementation of this Act, or
their relatives within the fourth civil degree of
consanguinity or affinity, to engage, directly or indirectly in
the business of recruiting migrant workers as defined in
this Act. The penalties provided in the immediate
preceding paragraph shall be imposed upon them.
Section 9. Venue. - A criminal action arising from illegal
recruitment as defined herein shall be filed with the
Regional Trial Court of the province or city where the
offense was committed or where the offended party
actually resides at the time of the commission of the
offense: Provided, That the court where the criminal action
is first filed shall acquire jurisdiction to the exclusion of
other courts: Provided, however, That the aforestated
provisions shall also apply to those criminal actions that
have already been filed in court at the time of the
effectivity of this Act.
Section 10. Money Claims. - Notwithstanding any
provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have
the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after the filing of the
 SUN TZU NOTES
complaint, the claims arising out of an employer-
employee relationship or by virtue of any law or
contract involving Filipino workers for overseas
deployment including claims for actual, moral,
exemplary and other forms of damages.
The liability of the principal/employer and the
recruitment/placement agency for any and all claims
under this section shall be joint and several. This
provision shall be incorporated in the contract for
overseas employment and shall be a condition
precedent for its approval. The performance bond to
be filed by the recruitment/placement agency,
asprovided by law, shall be answerable for all money
claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a
juridical being, the corporate officers and directors
and partners as the case may be, shall themselves
be jointly and solidarily liable with the corporation or
partnership for the aforesaid claims and damages.
Such liabilities shall continue during the entire period
or duration of the employment contract and shall not
be affected by any substitution, amendment or
modification made locally or in a foreign country of
the said contract.
Any compromise/amicable settlement or voluntary
agreement on money claims inclusive of damages
under this section shall be paid within four (4)
months from the approval of the settlement by the
appropriate authority.
In case of termination of overseas employment
without just, valid or authorized cause as defined by
law or contract, the worker shall be entitled to the
full reimbursement of his placement fee with interest
at twelve percent (12%) per annum, plus his salaries
for the unexpired portion of his employment contract
or for three (3) months for every year of the
unexpired term, whichever is less. Noncompliance
with the mandatory periods for resolutions of cases
provided under this section shall subject the
responsible officials to any or all of the following
penalties:
(a) The salary of any such official who fails to render
his decision or resolution within the prescribed period
shall be, or caused to be, withheld until the said
official complies therewith;
(b) Suspension for not more than ninety (90) days;
or
(c) Dismissal from the service with disqualification to
hold any appointive public office for five (5) years.
Provided, however, That the penalties herein
provided shall be without prejudice to any liability
which any such official may have incurred under
other existing laws or rules and regulations as a
consequence of violating the provisions of this
paragraph.
Section 11. Mandatory Periods for Resolution of
Illegal Recruitment Cases. - The preliminary
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investigations of cases under this Act shall be terminated
within a period of thirty (30) calendar days from the date
of their filing. Where the preliminary investigation is
conducted by a prosecution officer and a prima facie case
is established, the corresponding information shall be filed
in court within twenty-four (24) hours from the
termination of the investigation. If the preliminary
investigation is conducted by a judge and a prima facie
case is found to exist, the corresponding information shall
be filed by the proper prosecution officer within forty-eight
(48) hours from the date of receipt of the records of the
case.
Section 12. Prescriptive Periods. - Illegal recruitment
cases under this Act shall prescribe in five (5) years:
Provided, however, That illegal recruitment cases involving
economic sabotage as defined herein shall prescribe in
twenty (20) years.
Section 13. Free Legal Assistance; Preferential
Entitlement Under the Witness Protection Program. -
A mechanism for free legal assistance for victims of illegal
recruitment shall be established within the Department of
Labor and Employment including its regional offices. Such
mechanism must include coordination and cooperation with
the Department of Justice, the Integrated Bar of the
Philippines, and other non- governmental organizations
and volunteer groups.
The provisions of Republic Act No. 6981 to the contrary
notwithstanding, any person who is a victim of illegal
recruitment shall be entitled to the Witness Protection
Program provided thereunder.
III. SERVICES
Section 14. Travel Advisory/Information
Dissemination. - To give utmost priority to the
establishment of programs and services to prevent illegal
recruitment, fraud and exploitation or abuse of Filipino
migrant workers, all embassies and consular offices,
through the Philippine Overseas Employment
Administration (POEA), shall issue travel advisories or
disseminate information on labor and employment
conditions, migration realities and other facts; and
adherence of particular countries to international standards
on human and workers' rights which will adequately
prepare individuals into making informed and intelligent
decisions about overseas employment. Such advisory or
information shall be published in a newspaper of general
circulation at least three (3) times in every quarter.
Section 15. Repatriation of Workers; Emergency
Repatriation Fund. - The repatriation of the worker and
the transport of his personal belongings shall be the
primary responsibility of the agency which recruited or
deployed the worker overseas. All costs attendant to
repatriation shall be borne by or charged to the agency
concerned and/or its principal. Likewise, the repatriation of
remains and transport of the personal belongings of a
deceased worker and all costs attendant thereto shall be
borne by the principal and/or the local agency. However, in
cases where the termination of employment in due solely
to the fault of the worker, the principal/employer or
 SUN TZU NOTES
agency shall not in any manner be responsible for
the repatriation of the former and/or his belongings.
The Overseas Workers Welfare Administration
(OWWA), in coordination with appropriate
international agencies, shall undertake the
repatriation of workers in cases of war, epidemic,
disaster or calamities, natural or man-made, and
other similar events without prejudice to
reimbursement by the responsible principal or
agency. However, in cases where the principal or
recruitment agency cannot be identified, all costs
attendant to repatriation shall be borne by the
OWWA.
For this purpose, there is hereby created and
established an emergency repatriation fund under
the administration, control and supervision of the
OWWA, initially to consist of One hundred million
pesos (P100,000,000.00), which shall be taken from
the existing fund controlled and administered by the
OWWA. Thereafter, such fund shall be provided for in
the General Appropriations Act from year to year:
Provided, That the amount appropriated shall in no
case be less than One hundred million pesos
(P100,000,000.00), inclusive of outstanding
balances.
Section 16. Mandatory Repatriation of
Underage Migrant Workers. - Upon discovery or
being informed of the presence of migrant workers
whose actual ages fall below the minimum age
requirement for overseas deployment, the
responsible officers in the foreign service shall
without delay repatriate said workers and advise the
Department of Foreign Affairs through the fastest
means of communication available of such discovery
and other relevant information.
Section 17. Establishment of Replacement and
Monitoring Center. - A re- placement and
monitoring center is hereby created in the
Department of Labor and Employment for returning
Filipino migrant workers which shall provide a
mechanism for their reintegration into the Philippine
society, serve as a promotion house for their local
employment, and tap their skills and potentials for
national development.
The Department of Labor and Employment, the
Overseas Workers Welfare Administration, and the
Philippine Overseas Employment Administration
shall, within ninety (90) days from the effectivity of
this Act, formulate a program that would motivate
migrant workers to plan for productive options such
as entry into highly technical jobs or undertakings,
livelihood and entrepreneurial development, better
wage employment, and investment of savings.
For this purpose, the Technical Education and Skills
Development Authority (TESDA), the Technology
Livelihood Resource Center (TLRC), and other
government agencies involved in training and
livelihood development shall give priority to
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returnees who had been employed as domestic helpers
and entertainers.
Section 18. Functions of the Re-placement and
Monitoring Center. - The Center shall provide the
following services:
(a) Develop livelihood programs and projects for returning
Filipino migrant workers in coordination with the private
sector;
(b) Coordinate with appropriate private and government
agencies in the promotion, development, re-placement and
the full utilization of their potentials;
(c) Institute, in cooperation with other government
agencies concerned, a computer-based information system
on skilled Filipino migrant workers which shall be
accessible to all local recruitment agencies and employers,
both public and private;
(d) Provide a periodic study and assessment of job
opportunities for returning Filipino migrant workers; and
(e) Develop and implement other appropriate programs to
promote the welfare of returning Filipino migrant workers.
Section 19. Establishment of a Migrant Workers and
other Overseas Filipinos Resource Center. - Within the
premises and under the administrative jurisdiction of the
Philippine Embassy in countries where there are large
concentrations of Filipino migrant workers, there shall be
established a Migrant Workers and Other Overseas
Filipinos
Resource Center with the following services:
(a) Counselling and legal services;
(b) Welfare assistance including the procurement of
medical and hospitalization services;
(c) Information, advisory and programs to promote social
integration such as post-arrival orientation, settlement and
community networking services and activities for social
interaction;
(d) Institute a scheme of registration of undocumented
workers to bring them within the purview of this Act. For
this purpose, the Center is enjoined to compel existing
undocumented workers to registered with it within six (6)
months from the effectivity of this Act, under pain of
having his/her passport cancelled;
(e) Human resource development, such as training and
skills upgrading;
(f) Gender sensitive program and activities to assist
particular needs of women migrant workers;
(g) Orientation program for returning worker and other
migrants; and
(h) Monitoring of daily situations, circumstances and
activities affecting migrant workers and other overseas
 SUN TZU NOTES
Filipinos.
The establishment and operations of the Center shall
be a joint undertaking of the various government
agencies. The Center shall be open for twenty-four
(24) hours daily including Saturdays, Sunday and
holidays, and shall be staffed by Foreign Service
personnel, service attaches or officers who represent
other Philippine government agencies abroad and, if
available, individual volunteers and bona fide non-
government organizations from the host countries.
In countries categorized as highly problematic by the
Department of Foreign Affairs and the Department of
Labor and Employment and where there is a
concentration of Filipino migrant workers, the
government must provide a lawyer and a social
worker for the Center. The Labor Attache shall
coordinate the operation of the Center and shall keep
the Chief of Mission informed and updated on all
matters affecting it.
The Center shall have a counterpart 24-hour
information and assistance center at the Department
of Foreign Affairs to ensure a continuous network
and coordinative mechanism at the home office.
Section 20. Establishment of a Shared
Government Information System for Migration.
- An inter-agency committee composed of the
Department of Foreign Affairs and its attached
agency, the Commission on Filipinos Overseas, the
Department of Labor and Employment, the Philippine
Overseas Employment Administration, the Overseas
Workers Welfare Administration, the Department of
Tourism, the Department of Justice, the Bureau of
Immigration, the National Bureau of Investigation,
and the National Statistics Office shall be established
to implement a shared government information
system for migration. The inter- agency committee
shall initially make available to itself the information
contained in existing data bases/files. The second
phase shall involve linkaging of computer facilities in
order to allow free flow data changes and sharing
among concerned agencies.
The inter-agency committee shall convene to identify
existing data bases which shall be declassified and
shared among member agencies. These shared data
bases shall initially include, but not be limited to, the
following information:
(a) Masterlists of Filipino migrant workers/overseas
Filipinos classified according to occupation/job
category, civil status, by country/state of destination
including visa classification;
(b) Inventory of pending legal cases involving
Filipino migrant workers and other Filipino nationals,
including those serving prison terms;
(c) Masterlist of departing/arriving Filipinos;
(d) Statistical profile on Filipino migrant
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workers/overseas Filipinos/tourists;
(e) Blacklisted foreigners/undesirable aliens;
(f) Basic data on legal systems, immigration policies,
marriage laws and civil and criminal codes in receiving
countries particularly those with large numbers of Filipinos;
(g) List of labor and other human rights instruments where
receiving countries are signatories;
(h) A tracking system of past and present gender
disaggregated cases involving male and female migrant
workers; and
(i) Listing of overseas posts which may render assistance
to overseas Filipinos, in general, and migrant workers, in
particular.
Section 21. Migrant Workers Loan Guarantee Fund. -
In order to further prevent unscrupulous illegal recruiters
from taking advantage of workers seeking employment
abroad, the OWWA, in coordination with government
financial institutions, shall institute financing schemes that
will expand the grant of pre- departure loan and family
assistance loan. For this purpose, a Migrant Workers Loan
Guarantee Fund is hereby created and the revolving
amount of One hundred million pesos (P100,000,000.00)
from the OWWA is
set aside as a guarantee fund in favor of participating
government financial institutions.
Section 22. Rights and Enforcement Mechanism
Under International and Regional Human Rights
Systems. - The Department of Foreign Affairs is mandated
to undertake the necessary initiative such as promotions,
acceptance or adherence of countries receiving Filipino
workers to multilateral convention, declaration or
resolutions pertaining to the protection of migrant workers'
rights. The Department of Foreign Affairs is also mandated
to make an assessment of rights and avenues of redress
under international and regional human rights systems
that are available to Filipino migrant workers who are
victims of abuse and violation and, as far as practicable
and through the Legal Assistant for Migrant Workers Affairs
created under this Act, pursue the same on behalf of the
victim if it is legally impossible to file individual complaints.
If a complaints machinery is available under international
or regional systems, the Department of Foreign Affairs
shall fully apprise the Filipino migrant workers of the
existence and effectiveness of such legal options.
IV. GOVERNMENT AGENCIES
Section 23. Role of Government Agencies. - The
following government agencies shall perform the following
to promote the welfare and protect the rights of migrant
workers and, as far as applicable, all overseas Filipinos:
(a) Department of Foreign Affairs - The Department,
through its home office or foreign posts, shall take priority
action or make representation with the foreign authority
concerned to protect the rights of migrant workers and
other overseas Filipinos and extend immediate assistance
 SUN TZU NOTES
including the repatriation of distressed or
beleaguered migrant workers and other overseas
Filipinos;
(b) Department of Labor and Employment - The
Department of Labor and Employment shall see to it
that labor and social welfare laws in the foreign
countries are fairly applied to migrant workers and
whenever applicable, to other overseas Filipinos
including the grant of legal assistance and the
referral to proper medical centers or hospitals:
(b.1) Philippine Overseas Employment Administration
- Subject to deregulation and phase-out as provided
under Sections 29 and 30 herein, the Administration
shall regulate private sector participation in the
recruitment and overseas placement of workers by
setting up a licensing and registration system. It
shall also formulate and implement, in coordination
with appropriate entities concerned, when necessary,
a system for promoting and monitoring the overseas
employment of Filipino workers taking into
consideration their welfare and the domestic
manpower requirements.
(b.2) Overseas Workers Welfare Administration - The
Welfare officer or in his absence, the coordinating
officer shall provide the Filipino migrant worker and
his family all the assistance they may need in the
enforcement of contractual obligations by agencies
or entities and/or by their principals. In the
performance of this function, he shall make
representation and may call on the agencies or
entities concerned to conferences or conciliation
meetings for the purpose of settling the complaints
or problems brought to his attention.
V. THE LEGAL ASSISTANT FOR MIGRANT
WORKERS AFFAIRS
Section 24. Legal Assistant for Migrant Workers
Affairs. - There is hereby created the position of
Legal Assistant for Migrant Workers Affairs under the
Department of Foreign Affairs who shall be primarily
responsible for the provision and overall coordination
of all legal assistance services to be provided to
Filipino migrant workers as well as overseas Filipinos
in distress. He shall have the rank, salary and
privileges equal to that of an undersecretary of said
Department. The said Legal Assistant for Migrant
Workers Affairs, shall be appointed by the President
and must be of proven competence in the field of law
with at least ten (10) years of experience as a legal
practitioner and must not have been a candidate to
an elective office in the last local or national
elections.
Among the functions and responsibilities of the
aforesaid Legal Assistant are:
(a) To issue the guidelines, procedures and criteria
for the provision of legal assistance services to
Filipino migrant workers;
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(b) To establish close linkages with the Department of
Labor and Employment, the POEA, the OWWA and other
government agencies concerned, as well as with non-
governmental organizations assisting migrant workers, to
ensure effective coordination and cooperation in the
provision of legal assistance to migrant workers;
(c) To tap the assistance of reputable law firms and the
Integrated Bar of the Philippines and other bar associations
to complement the government's efforts to provide legal
assistance to our migrant workers;
(d) To administer the legal assistance fund for migrant
workers established under Section 25 thereof and to
authorize disbursements therefrom in accordance with the
purposes for which the fund was set up; and
(e) To keep and maintain the information system as
provided in Section 20.
The Legal Assistant for Migrant Workers Affairs shall have
authority to hire private lawyers, domestic or foreign, in
order to assist him in the effective discharge of the above
functions.
Section 25. Legal Assistance Fund. - There is hereby
established a legal assistance fund for migrant workers,
hereinafter referred to as the Legal Assistance Fund, in the
amount of One hundred million pesos (P100,000,000.00)
to be constituted from the following sources:
Fifty million pesos (P50,000,000.00) from the Contingency
Fund of the President;
Thirty million pesos (P30,000,000.00) from the Presidential
Social Fund; and
Twenty million pesos (P20,000,000.00) from the Welfare
Fund for Overseas Workers established under Letter of
Instruction No. 537, as amended by Presidential Decrees
Nos.
1694 and 1809.
Any balances of existing funds which have been set aside
by the government specifically as legal assistance or
defense fund to help migrant workers shall, upon
effectivity of this Act, be turned over to, and form part of,
the Fund created under this Act.
Section 26. Uses of the Legal Assistance Fund. - The
Legal Assistance Fund created under the preceding section
shall be used exclusively to provide legal services to
migrant workers and overseas Filipinos in distress in
accordance with the guidelines, criteria and procedures
promulgated in accordance with Section 24(a) hereof. The
expenditures to be charged against the Fund shall include
the fees for the foreign lawyers to be hired by the Legal
Assistant for Migrant Workers Affairs to represent migrant
workers facing charges abroad, bail bonds to secure the
temporary release of workers under detention, court fees
and charges and other litigation expenses.
VI. COUNTRY-TEAM APPROACH
 SUN TZU NOTES
Section 27. Priority Concerns of Philippine
Foreign Service Posts. - The country- team
approach, as enunciated under Executive Order No.
74, series of 1993, shall be the mode under which
Philippine embassies or their personnel will operate
in the protection of the Filipino migrant workers as
well as in the promotion of their welfare. The
protection of the Filipino migrant workers and the
promotion of their welfare, in particular, and the
protection of the dignity and fundamental rights and
freedoms of the Filipino citizen abroad, in general,
shall be the highest priority concerns of the
Secretary of Foreign Affairs and the Philippine
Foreign Service Posts.
Section 28. Country-Team Approach. - Under the
country-team approach, all officers, representatives
and personnel of the Philippine government posted
abroad regardless of their mother agencies shall, on
a per country basis, act as one country-team with a
mission under the leadership of the ambassador. In
this regard the ambassador may recommend to the
Secretary of the Department of Foreign Affairs the
recall of officers, representatives and personnel of
the Philippine government posted abroad for acts
inimical to the national interest such as, but not
limited to, failure to provide the necessary services
to protect the rights of overseas Filipinos.
Upon receipt of the recommendation of the
ambassador, the Secretary of the Department of
Foreign Affairs shall, in the case of officers,
representatives and personnel of other departments,
endorse such recommendation to the department
secretary concerned for appropriate action. Pending
investigation by an appropriate body in the
Philippines, the person recommended for recall may
be placed under preventive suspension by the
ambassador.
In host countries where there are Philippine
consulates, such consulates shall also constitute part
of the country-team under the leadership of the
ambassador.
In the implementation of the country-team
approach, visiting Philippine delegations shall be
provided full support and information.
VII. DEREGULATION AND PHASE-OUT
Section 29. Comprehensive Deregulation Plan
onRecruitment Activities. - Pursuant to a
progressive policy of deregulation whereby the
migration of workers becomes strictly a matter
between the worker and his foreign employer, the
DOLE, within one (1) year from the effectivity of this
Act, is hereby mandated to formulate a five-year
comprehensive deregulation plan on recruitment
activities taking into account labor market trends,
economic conditions of the country and emerging
circumstances which may affect the welfare of
migrant workers.
Section 30. Gradual Phase-out of Regulatory
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Functions. - Within a period of five (5) years from the
effectivity of this Act, the DOLE shall phase-out the
regulatory functions of the POEA pursuant to the objectives
of deregulation.
VIII. PROFESSIONAL AND OTHER HIGHLY-SKILLED
FILIPINOS ABROAD
Section 31. Incentives to Professionals and Other
Highly-Skilled Filipinos Abroad. - Pursuant to the
objective of encouraging professionals and other highly-
skilled Filipinos abroad especially in the field of science and
technology to participate in, and contribute to national
development, the government shall provide proper and
adequate incentives and programs so as to secure their
services in priority development areas of the public and
private sectors.
IX. MISCELLANEOUS PROVISIONS
Section 32. POEA and OWWA Board; Additional
Memberships. - Notwithstanding any
provision of law to the contrary, the respective Boards of
the POEA and the OWWA shall, in addition to their present
composition, have three (3) members each who shall come
from the women, sea-based and land-based sectors
respectively, to be appointed by the President in the same
manner as the other members.
Section 33. Report to Congress. - In order to inform the
Philippine Congress on the implementation of the policy
enunciated in Section 4 hereof, the Department of Foreign
Affairs and the Department of Labor and Employment shall
submit to the said body a semi- annual report of Philippine
foreign posts located in countries hosting Filipino migrant
workers. The report shall include, but shall not be limited
to, the following information:
(a) Masterlist of Filipino migrant workers, and inventory of
pending legal cases involving them and other Filipino
nationals including those serving prison terms;
(b) Working conditions of Filipino migrant workers;
(c) Problems encountered by the migrant workers,
specifically violations of their rights;
(d) Initiatives/actions taken by the Philippine foreign posts
to address the problems of
Filipino migrant workers;
(e) Changes in the laws and policies of host countries; and
(f) Status of negotiations on bilateral labor agreements
between the Philippines and the host country.
Any officer of the government who fails to report as stated
in the preceding section shall be subject to administrative
penalty.
Section 34. Representation in Congress. - Pursuant to
Section 5(2), Article VI of the Constitution and in line with
the objective of empowering overseas Filipinos to
participate in the policy making process to address Filipino
 SUN TZU NOTES
migrant concerns, two (2) sectoral representatives
for migrant workers in the House of Representatives
shall be appointed by the President from the ranks of
migrant workers: Provided, That at least one (1) of
the two
(2) sectoral representatives shall come from the
women migrant workers sector: Provided, further,
That all nominees must have at least two (2) years
experience as a migrant worker.
Section 35. Exemption from Travel Tax and
Airport Fee. - All laws to the contrary
notwithstanding, the migrant worker shall be exempt
from the payment of travel tax and airport fee upon
proper showing of proof of entitlement by the POEA.
Section 36. Non-increase of Fees; Abolition of
Repatriation Bond. - Upon approval of this Act, all
fees being charged by any government office on
migrant workers shall remain at their present levels
and the repatriation bond shall be abolished.
Section 37. The Congressional Migrant Workers
Scholarship Fund. - There is hereby created a
Congressional Migrant Workers Scholarship Fund
which shall benefit deserving migrant workers and/or
their immediate descendants below twenty-one (21)
years of age who intend to pursue courses or
training primarily in the field of science and
technology.
The initial seed fund of Two hundred million pesos
(P200,000,000.00) shall be constituted from the
following sources:
(a) Fifty million pesos (P50,000,000.00) from the
unexpended Countrywide Development Fund for
1995 in equal sharing by all Members of Congress;
and
(b) The remaining One hundred fifty million pesos
(P150,000,000.00) shall be funded from the
proceeds of Lotto draws.
The Congressional Migrant Workers Scholarship Fund
as herein created shall be administered by the DOLE
in coordination with the Department of Science and
Technology (DOST). To carry out the objectives of
this section, the DOLE and the DOST shall formulate
the necessary rules and regulations.
Section 38. Appropriation and Other Sources of
Funding. - The amount necessary to carry out the
provisions of this Act shall be provided for in the
General Appropriations Act of the year following its
enactment into law and thereafter.
Section 39. Migrant Workers Day. - The day of
signing by the President of this Act shall be
designated as the Migrant Workers Day and shall
henceforth be commemorated as such annually.
Section 40. Implementing Rules and
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Regulations. - The departments and agencies charged
with carrying out the provisions of this Act shall, within
ninety (90) days after the effectivity of this Act, formulate
the necessary rules and regulations for its effective
implementation.
RECRUITMENT AND PLACEMENT; MEANING
ART. 13. Definitions.
(b) "Recruitment and placement" refers to any act of
canvassing, enlisting, contracting, transporting, utilizing,
hiring or procuring workers, and includes referrals,
contract services, promising or advertising for
employment, locally or abroad, whether for profit or not:
Provided, That any person or entity which, in any manner,
offers or promises for a fee, employment to two or more
persons shall be deemed engaged in recruitment and
placement.
ILLEGAL RECRUITMENT; MEANING; LARGE SCALE
AND SYNDICATE (RA 8042)
II. ILLEGAL RECRUITMENT
Section 6. Definition. - For purposes of this Act, illegal
recruitment shall mean any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring, or procuring
workers and includes referring, contract services,
promising or advertising for employment abroad, whether
for profit or not, when undertaken by a non-licensee or
non-holder of authority contemplated under Article 13(f) of
Presidential Decree No. 442, as amended, otherwise
known as the Labor Code of the Philippines: Provided, That
any such non-licensee or non-holder who, in any manner,
offers or promises for a fee employment abroad to two or
more persons shall be deemed so engaged. It shall
likewise include the following acts, whether committed by
any person, whether a non-licensee, non-holder, licensee
or holder of authority:
(a) To charge or accept directly or indirectly any amount
greater than that specified in the schedule of allowable
fees prescribed by the Secretary of Labor and
Employment, or to make a worker pay any amount greater
than that actually received by him as a loan or advance;
(b) To furnish or publish any false notice or information or
document in relation to recruitment or employment;
(c) To give any false notice, testimony, information or
document or commit any act of misrepresentation for the
purpose of securing a license or authority under the Labor
Code;
(d) To induce or attempt to induce a worker already
employed to quit his employment in order to offer him
another unless the transfer is designed to liberate a worker
from oppressive terms and conditions of employment;
(e) To influence or attempt to influence any person or
entity not to employ any worker who has not applied for
employment through his agency;
(f) To engage in the recruitment or placement of workers
 SUN TZU NOTES
in jobs harmful to public health or morality or to the
dignity of the Republic of the Philippines;
(g) To obstruct or attempt to obstruct inspection by
the Secretary of Labor and Employment or by his
duly authorized representative;
(h) To fail to submit reports on the status of
employment, placement vacancies, remittance of
foreign exchange earnings, separation from jobs,
departures and such other matters or information as
may be required by the Secretary of Labor and
Employment;
(i) To substitute or alter to the prejudice of the
worker, employment contracts approved and verified
by the Department of Labor and Employment from
the time of actual signing thereof by the parties up
to and including the period of the expiration of the
same without the approval of the Department of
Labor and Employment;
(j) For an officer or agent of a recruitment or
placement agency to become an officer or member
of the Board of any corporation engaged in travel
agency or to be engaged directly or indirectly in the
management of a travel agency;
(k) To withhold or deny travel documents from
applicant workers before departure for monetary or
financial considerations other than those authorized
under the Labor Code and its implementing rules and
regulations;
(l) Failure to actually deploy without valid reason as
determined by the Department of Labor and
Employment ; and
(m) Failure to reimburse expenses incurred by the
worker in connection with his documentation and
processing for purposes of deployment, in cases
where the deployment does not actually take place
without the worker's fault. Illegal recruitment when
committed by a syndicate or in large scale shall be
considered an offense involving economic sabotage.
Illegal recruitment is deemed committed by a
syndicate if carried out by a group of three (3) or
more persons conspiring or confederating with one
another. It is deemed committed in large scale if
committed against three (3) or more persons
individually or as a group.
The persons criminally liable for the above offenses
are the principals, accomplices and accessories. In
case of juridical persons, the officers having control,
management or direction of their business shall be
liable.
BAN ON DIRECT HIRING; TRAVEL AGENCIES
ART. 18. Ban on direct-hiring. - No employer may
hire a Filipino worker for overseas employment
except through the Boards and entities authorized by
the Secretary of Labor. Direct-hiring by members of
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the diplomatic corps, international organizations and such
other employers as may be allowed by the Secretary of
Labor is exempted from this provision.
ART. 26. Travel agencies prohibited to recruit. -
Travel agencies and sales agencies of airline companies
are prohibited from engaging in the business of
recruitment and placement of workers for overseas
employment whether for profit or not.
DEFINITION OF TERMS
Name hire shall refer to a worker who is able to
secure an overseas employment opportunity with an
employer without the assistance or participation of any
agency. (IRR RULE II, PART I, BK I)
Placement fee shall refer to the amount charged by a
private employment agency from a worker for its
recruitment and placement services, as prescribed by
the Secretary. (IRR RULE II, PART I, BK 1)
Migrant worker refers to a person who is to be
engaged, is engaged or has been engaged in a
remunerated activity in a state of which he or she is
not a legal resident; to be used interchangeably with
overseas Filipino worker. A person to be engaged in a
remunerated activity refers to an applicant worker
who has been promised or assured employment
overseas and acting on such promise or assurance
sustains damage and/or injury. (SEC. 2 OF IRR OF RA
8042)
Gender-sensitivity shall mean cognizance of the
inequalities and inequities prevalent in society between
women and men and a commitment to address issues
with concern for the respective interests of the sexes.
(SEC. 2 OF IRR OF RA 8042)
Overseas Filipinos are migrant workers, other Filipino
nationals and their dependents abroad. (Sec. 2 of IRR
OF RA 8042)
Overseas Filipinos in Distress Overseas Filipinos shall
be deemed in distress in cases where they have valid
medical, psychological or legal assistance problems
requiring treatment, hospitalization, counseling, legal
representation as specified in Secs. 24 and 26 of RA
8042 or any other kind of intervention with the
authorities in the country where they are found. (Sec.
2 of IRR of RA 8042)
SUPPLEMENTAL NOTES
See FOZ on page 350