FACULTY OF CIVIL LAW (1734) LABOR LAW AND SOCIAL LEGISLATION 2022 GOLDEN NOTES FACULTY OF CIVIL LAW UNIVERSITY OF SANTO TOMAS MANILA The UST GOLDEN NOTES is the annual student-edited bar review material of the University of Santo Tomas, Faculty of Civil Law. Communications regarding the Notes should be addressed to the Academics Committee of the Team: Bar-Ops. Address: Academics Committee UST Bar Operations Faculty of Civil Law University of Santo Tomas España, Manila 1008 Tel. No: (02) 8731-4027 (02) 8406-1611 loc. 8578 Academics Committee Faculty of Civil Law University of Santo Tomas España, Manila 1008 All rights reserved by the Academics Committee of the Faculty of Civil Law of the Pontifical and Royal University of Santo Tomas, the Catholic University of the Philippines. 2022 Edition. No portion of this material may be copied or reproduced in books, pamphlets, outlines or notes, whether printed, mimeographed, typewritten, copied in different electronic devises or in any other form, for distribution or sale, without a written permission. A copy of this material without the corresponding code either proceeds from an illegal source or is in possession of one who has no authority to dispose the same. Released in the Philippines, 2022. Faculty of Civil Law (1734) ACADEMIC YEAR 2021-2022 CIVIL LAW STUDENT COUNCIL NATHAN RAPHAEL D.L. AGUSTIN STEPHEN FLOYD A. GOPEZ NICOLO B. BONGOLAN PATRICIA INGRID M. SEE JULIENNE CELINE G. OGAYON IVAN ARNIE C. QUIAMCO KAREN DARYL L. BRITO PRESIDENT VICE PRESIDENT INTERNAL VICE PRESIDENT EXTERNAL SECRETARY TREASURER PUBLIC RELATIONS OFFICER CHIEF-OF-STAFF UST BAR-OPS SARAH ANGELA D. EVA JUSTINE RENEE GERVACIO MA. ANDREA D. CABATU JAN YSABEL U. DE LEON PAULINNE STEPHANY G. SANTIAGO KAREN DARYL L. BRITO RALPH DOMINIC V. MARTINEZ JEDIDIAH R. PADUA SABINA MARIA H. MABUTAS JOSEPHINE GRACE W. ANG REBECCA JOY M. MALITAO JOHN FREDERICK A. NOJARA CHAIRPERSON VICE-CHAIRPERSON SECRETARY HEAD, PUBLIC RELATIONS OFFICER HEAD, FINANCE COMMITTEE HEAD, HOTEL ACCOMMODATIONS COMMITTEE HEAD, LOGISTICS COMMITTEE SENIOR MEMBER SENIOR MEMBER SENIOR MEMBER SENIOR MEMBER SENIOR MEMBER ATTY. AL CONRAD B. ESPALDON ADVISER Faculty of Civil Law (1734) ACADEMICS COMMITTEE 2022 FRANCINE BLAISE M. LOJA JOANNA NICOLE A. PAZ MARC GABRIEL A. ABELLA KIARA LOUISE T. BALIWAG DANIELLE B. BARANDA MA. CARMINA A. DIETA DAINIELE RENEE R. FAJILAGUTAN GEORJHIA CZARINAH Q. MALALUAN MARIA CRISANTA M. PALOMA MIKAELA CECILLE S. SILVERIO JERICHO SIMON H. DU SECRETARY GENERAL SECRETARY GENERAL EXECUTIVE COMMITTEE for LEGAL ETHICS EXECUTIVE COMMITTEE for CRIMINAL LAW EXECUTIVE COMMITTEE for LABOR LAW AND SOCIAL LEGISLATION EXECUTIVE COMMITTEE for CIVIL LAW EXECUTIVE COMMITTEE for REMEDIAL LAW EXECUTIVE COMMITTEE for COMMERCIAL LAW EXECUTIVE COMMITTEE for POLITICAL LAW EXECUTIVE COMMITTEE for TAXATION LAW COVER DESIGN ARTIST LABOR LAW COMMITTEE 2022 PATRICIA MAE H. CABAÑA LABOR LAW SUBJECT HEAD MONIQUE E. RENS ANGELICA ROSCEA S. QUIAMBAO LYN JEEN I. BINUA ASST. HEAD, LABOR STANDARDS ASST. HEAD, SOCIAL LEGISLATION ASST. HEAD, LABOR RELATIONS MEMBERS ARIANA RUBY E. ALCALA LANCE BERNADETTE F. BASA NORIEL C. BERNABE JANIELLA KIM JAZZY B. BESIÑO DANIELLA K. DE PERALTA KAREN LOUISE R. FLORECE JENELYN D. GALVEZ JEFFREY ISAIAJ G. LABUDAHON CHELSEA KATE M. LAVILLA FATIMA JOYCE C. LAXAMANA GEORJHIA CZARINAH Q. MALALUAN MA. JERMAINE A. MARTINEZ PRECIOUS JOY D. PACIONELA SHALMAE A. PUMARADA ERIDEEN E. RONQUILLO ANNA NERISSA C. SABINO SOFIA PATRICIA L. SALCEDO PAULINNE STEPHANY G. SANTIAGO VANESSA A. SIENA ASTRID A. SOLIS ATTY. ARNOLD E. CACHO ATTY. REYNA FE C. ITCHON-FERNANDEZ ATTY. JACQUELINE O. LOPEZ-KAW ADVISERS Faculty of Civil Law (1734) FACULTY OF CIVIL LAW UNIVERSITY OF SANTO TOMAS ACADEMIC OFFICIALS ATTY. NILO T. DIVINA DEAN REV. FR. ISIDRO C. ABAÑO, O.P. REGENT ATTY. ARTHUR B. CAPILI FACULTY SECRETARY ATTY. ELGIN MICHAEL C. PEREZ LEGAL COUNSEL UST CHIEF JUSTICE ROBERTO CONCEPCION LEGAL AID CLINIC JUDGE PHILIP A. AGUINALDO SWDB COORDINATOR LENY G. GADIANA, R.G.C. GUIDANCE COUNSELOR Faculty of Civil Law (1734) OUR DEEPEST APPRECIATION TO OUR MENTORS AND INSPIRATION Atty. Arnold E. Cacho Atty. Ian Jerny E. De Leon Labor Arbiter Benedict G. Kato Atty. Jacqueline O. Lopez-Kaw Atty. Roland L. Marquez Atty. Alwyn Faye B. Mendoza Dean Salvador A. Poquiz Atty. Cesar E. Santamaria, Jr. Comm. Leonard Vinz Ochoa Ignacio Atty. Irvin Joseph Fabella For being our guideposts in understanding the intricate sphere of Labor Law and Social Legislation. – Academics Committee 2022 DISCLAIMER THE RISK OF USE OF THIS BAR REVIEW MATERIAL SHALL BE BORNE BY THE USER This page is intentionally left blank. TABLE OF CONTENTS I. GENERAL PRINCIPLES ............................................................................................................................................................. 1 A. BASIC POLICY ON LABOR ............................................................................................................................................ 1 B. CONSTRUCTION IN FAVOR OF LABOR..................................................................................................................... 2 C. BURDEN OF PROOF AND QUANTUM OF EVIDENCE IN LABOR CASES ............................................................ 3 D. LEGAL BASIS UNDER 1987 CONSTITUTION, CIVIL CODE, AND LABOR CODE .............................................. 4 II. RECRUITMENT AND PLACEMENT OF WORKERS ......................................................................................................... 9 A. RECRUITMENT AND PLACEMENT ............................................................................................................................ 9 1. ILLEGAL RECRUITMENT AND OTHER PROHIBITED ACTIVITIES ........................................................ 9 a. ELEMENTS OF ILLEGAL RECRUITMENT...................................................................................... 11 b. TYPES OF ILLEGAL RECRUITMENT .............................................................................................. 12 c. ILLEGAL RECRUITMENT vs. ESTAFA............................................................................................. 12 2. LIABILITY OF LOCAL RECRUITMENT AGENCY AND FOREIGN EMPLOYER .................................... 13 a. SOLIDARY LIABILITY ........................................................................................................................ 14 b. THEORY OF IMPUTED KNOWLEDGE ............................................................................................ 14 3. ENTITIES PROHIBITED FROM RECRUITING ........................................................................................... 14 4. CANCELLATION OF LICENSE OR AUTHORITY........................................................................................ 16 5. TERMINATION OF CONTRACT OF MIGRANT WORKER WITHOUT JUST OR VALID CAUSE ....... 17 6. BAN ON DIRECT HIRING .............................................................................................................................. 18 B. EMPLOYMENT OF NON-RESIDENT ALIENS ........................................................................................................ 19 III. LABOR STANDARDS ........................................................................................................................................................... 24 1. EMPLOYER-EMPLOYEE RELATIONSHIP .................................................................................................. 24 2. TEST TO DETERMINE EXISTENCE ............................................................................................................. 26 3. EMPLOYEE vs. INDEPENDENT CONTRACTOR ........................................................................................ 29 A. CONDITIONS OF EMPLOYMENT ............................................................................................................................. 31 1. COVERED EMPLOYEES/WORKERS ........................................................................................................... 31 2. HOURS OF WORK ........................................................................................................................................... 34 a. NORMAL HOURS OF WORK, HOURS WORKED ........................................................................... 34 b. MEAL PERIODS ................................................................................................................................... 40 c. NIGHT SHIFT DIFFERENTIAL ......................................................................................................... 41 d. OVERTIME WORK .............................................................................................................................. 42 e. COMPRESSED WORK WEEK, FLEXIBLE WORK ARRRANGEMENT, ALTERNATIVE WORK ARRANGEMENTS, TELECOMMUTING PROGRAM .......................................................................... 47 3. REST PERIODS ................................................................................................................................................ 50 4. HOLIDAY ........................................................................................................................................................... 51 5. SERVICE CHARGES ......................................................................................................................................... 58 6. 13th MONTH PAY ............................................................................................................................................ 59 B. WAGES........................................................................................................................................................................... 65 1. PAYMENT OF WAGES .................................................................................................................................... 66 2. PROHIBITIONS REGARDING WAGES ........................................................................................................ 68 3. FACILITIES vs. SUPPLEMENTS .................................................................................................................... 71 4. MINIMUM WAGE ............................................................................................................................................ 73 5. WAGE DISTORTION ....................................................................................................................................... 75 6. NON-DIMINUTION OF BENEFITS ............................................................................................................... 77 C. LEAVES .......................................................................................................................................................................... 80 1. SERVICE INCENTIVE LEAVE (SIL) ............................................................................................................. 80 2. EXPANDED MATERNITY LEAVE .................................................................................................................82 3. PATERNITY LEAVE .........................................................................................................................................86 4. PARENTAL LEAVE FOR SOLO PARENTS ...................................................................................................88 5. LEAVE BENEFITS FOR WOMEN WORKERS ..............................................................................................89 D. SPECIAL GROUPS OF EMPLOYEES ..........................................................................................................................92 1. WOMEN .............................................................................................................................................................92 a. DISCRIMINATION ...............................................................................................................................93 b. STIPULATION AGAINST MARRIAGE ..............................................................................................94 c. PROHIBITED ACTS ..............................................................................................................................95 2. MINORS (R.A. No. 7610, as amended by R.A. No. 9231) ........................................................................96 a. CHILD LABOR vs. WORKING CHILD................................................................................................96 b. ALLOWED WORKING HOURS AND INDUSTRIES OF A WORKING CHILD ............................96 c. PROHIBITED ACTS ..............................................................................................................................99 3. KASAMBAHAY (R.A. No. 10361) ................................................................................................................ 101 4. HOMEWORKERS .......................................................................................................................................... 109 5. NIGHT WORKERS ......................................................................................................................................... 111 6. PERSONS WITH DISABILITIES ................................................................................................................. 113 a. DISCRIMINATION ............................................................................................................................ 114 b. INCENTIVES FOR EMPLOYERS .................................................................................................... 115 E. SEXUAL HARRASSMENT IN THE WORK ENVIRONMENT .............................................................................. 116 1. ANTI-SEXUAL HARASSMENT ACT (R.A. No. 7877).............................................................................. 116 2. SAFE SPACES ACT (R.A. No. 11313) ........................................................................................................ 118 IV. SOCIAL WELFARE LEGISLATION ................................................................................................................................. 122 A. SOCIAL SECURITY ACT OF 2018 (R.A. No. 11199) ........................................................................................... 122 1. COVERAGE AND EXCLUSIONS .................................................................................................................. 122 2. DEPENDENTS AND BENEFICIARIES ....................................................................................................... 126 3. BENEFITS ....................................................................................................................................................... 129 B. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) LAW (R.A. No. 8291) ............................................ 137 1. COVERAGE AND EXCLUSIONS .................................................................................................................. 138 2. DEPENDENTS AND BENEFICIARIES ....................................................................................................... 139 3. BENEFITS ....................................................................................................................................................... 139 C. LIMITED PORTABILITY LAW ................................................................................................................................ 146 D. DISABILITY AND DEATH BENEFITS ................................................................................................................... 148 1. UNDER THE LABOR CODE ......................................................................................................................... 148 2. UNDER THE POEA STANDARD EMPLOYMENT CONTRACT (POEA-SEC) ...................................... 154 V. LABOR RELATIONS ............................................................................................................................................................ 167 A. RIGHT TO SELF-ORGANIZATION ......................................................................................................................... 168 1. WHO MAY JOIN, FORM, OR ASSIST LABOR ORGANIZATIONS OR WORKERS’ ASSOCIATIONS 168 2. RESTRICTIONS AS TO MANAGERIAL EMPLOYEES, SUPERVISORY EMPLOYEES, CONFIDENTIAL EMPLOYEES, EMPLOYEE-MEMBERS OF COOPERATIVES, AND GOVERNMENT EMPLOYEES ..... 169 3. DETERMINATION OF APPROPRIATE BARGAINING UNIT (ABU) & EFFECT OF INCLUSION OF EMPLOYEES OUTSIDE OF THE ABU ............................................................................................................ 173 4. NON-INTERFERENCE WITH WORKERS’ RIGHT TO SELF-ORGANIZATION .................................. 177 B. LEGITIMATE LABOR ORGANIZATIONS .............................................................................................................. 178 1. REGISTRATION WITH THE DOLE ............................................................................................................ 178 2. CANCELLATION OF REGISTRATION ....................................................................................................... 179 3. AFFILIATION/DISAFFILIATION FROM NATIONAL UNION OR FEDERATION .............................. 179 4. RIGHTS OF LEGITIMATE LABOR ORGANIZATIONS ............................................................................ 183 5. RIGHTS AND CONDITIONS OF MEMBERSHIP IN LEGITIMATE LABOR ORGANIZATIONS ........ 183 6. CHECK OFF, ASSESSMENTS, UNION DUES, AND AGENCY FEES ....................................................... 185 7. UNION SECURITY CLAUSE ......................................................................................................................... 188 C. BARGAINING REPRESENTATIVE .......................................................................................................................... 188 1. MODES TO ACQUIRE STATUS AS SOLE AND EXCLUSIVE BARGAINING AGENT .......................... 189 a. SEBA CERTIFICATION ..................................................................................................................... 189 b. CERTIFICATION/CONSENT ELECTION ...................................................................................... 190 c. BARS TO THE HOLDING OF CERTIFICATION/CONSENT ELECTION .................................. 194 d. FAILURE OF ELECTION, RUN-OFF ELECTION, RE-RUN ELECTION .................................... 198 e. EMPLOYER AS A MERE BYSTANDER RULE ............................................................................... 199 D. COLLECTIVE BARGAINING .................................................................................................................................... 200 1. DUTY TO BARGAIN COLLECTIVELY, BARGAINING IN BAD FAITH.................................................. 200 2. COLLECTIVE BARGAINING AGREEMENT (CBA), MANDATORY PROVISIONS .............................. 201 3. SIGNING, POSTING, REGISTRATION ........................................................................................................ 203 4. TERM OF THE CBA, FREEDOM PERIOD .................................................................................................. 204 E. UNFAIR LABOR PRACTICES ................................................................................................................................... 205 1. NATURE, ASPECTS ....................................................................................................................................... 205 2. ULP BY EMPLOYERS .................................................................................................................................... 206 3. ULP BY LABOR ORGANIZATIONS ............................................................................................................. 212 F. PEACEFUL CONCERTED ACTIVITIES ................................................................................................................... 214 1. STRIKES .......................................................................................................................................................... 215 a. GROUNDS FOR STRIKE ................................................................................................................... 216 b. MANDATORY PROCEDURAL REQUIREMENTS ........................................................................ 217 c. LEGAL STRIKE vs. ILLEGAL STRIKE ............................................................................................. 219 d. PROHIBITED ACTS DURING A STRIKE ....................................................................................... 221 e. LIABILITY OF UNION OFFICERS AND MEMBERS FOR ILLEGAL STRIKE AND ILLEGAL ACTS DURING STRIKE ......................................................................................................................... 222 2. PICKETING ..................................................................................................................................................... 226 3. LOCKOUTS...................................................................................................................................................... 228 a. GROUNDS FOR LOCKOUT............................................................................................................... 228 b. MANDATORY PROCEDURAL REQUIREMENTS ........................................................................ 228 4. ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY ........................................................... 230 5. INJUNCTIONS ................................................................................................................................................ 233 VI. TERMINATION OF EMPLOYMENT ............................................................................................................................... 236 A. SECURITY OF TENURE ............................................................................................................................................ 236 1. CATEGORIES OF EMPLOYMENT AS TO TENURE ................................................................................. 237 a. REGULAR EMPLOYMENT ............................................................................................................... 237 b. CASUAL EMPLOYMENT .................................................................................................................. 241 c. PROBATIONARY EMPLOYMENT .................................................................................................. 242 d. PROJECT EMPLOYMENT ................................................................................................................ 250 e. SEASONAL EMPLOYMENT ............................................................................................................. 253 f. FIXED-TERM EMPLOYMENT.......................................................................................................... 254 g. WORK POOL EMPLOYEES .............................................................................................................. 256 2. LEGITIMATE SUBCONTRACTING vs. LABOR-ONLY CONTRACTING ............................................... 256 a. ELEMENTS ......................................................................................................................................... 256 b. TRILATERAL RELATIONSHIP ....................................................................................................... 258 c. SOLIDARY LIABILITY ...................................................................................................................... 259 B. TERMINATION BY EMPLOYER.............................................................................................................................. 261 1. SUBSTANTIVE DUE PROCESS ................................................................................................................... 261 a. JUST CAUSES ..................................................................................................................................... 263 b. AUTHORIZED CAUSES .................................................................................................................... 277 2. PROCEDURAL DUE PROCESS .................................................................................................................... 287 a. TWO-NOTICE RULE ......................................................................................................................... 287 3. ILLEGAL DISMISSAL, RELIEFS THEREFROM ........................................................................................ 294 a. REINSTATEMENT ............................................................................................................................ 296 b. BACKWAGES ..................................................................................................................................... 299 c. SEPARATION PAY, DOCTRINE OF STRAINED RELATIONS ................................................... 301 d. DAMAGES .......................................................................................................................................... 304 e. ATTORNEY’S FEES ........................................................................................................................... 304 f. LIABILITIES OF CORPORATE OFFICERS ..................................................................................... 305 g. BURDEN OF PROOF ......................................................................................................................... 305 C. TERMINATION BY EMPLOYEE .............................................................................................................................. 306 1. RESIGNATION vs. CONSTRUCTIVE DISMISSAL .................................................................................... 306 2. ABANDONMENT ........................................................................................................................................... 313 D. PREVENTIVE SUSPENSION.................................................................................................................................... 314 E. FLOATING STATUS................................................................................................................................................... 315 F. RETIREMENT............................................................................................................................................................. 316 VII. MANAGEMENT PREROGATIVE ................................................................................................................................... 321 A. RIGHT TO DISCIPLINE ............................................................................................................................................ 321 B. RIGHT TO TRANSFER OF EMPLOYEES ............................................................................................................... 322 C. PRODUCTIVITY STANDARDS ................................................................................................................................ 323 D. BONUS ......................................................................................................................................................................... 323 E. CHANGE OF WORKING HOURS ............................................................................................................................. 324 F. BONA FIDE OCCUPATIONAL QUALIFICATIONS ............................................................................................... 325 G. POST-EMPLOYMENT RESTRICTIONS ................................................................................................................. 326 H. CLEARANCE PROCEDURES ................................................................................................................................... 327 I. LIMITATIONS ON MANAGEMENT PREROGATIVE, POLICE POWER OF THE STATE ............................... 328 VIII. JURISDICTION AND RELIEFS ...................................................................................................................................... 330 A. MANDATORY CONCILIATION-MEDIATION, SENA .......................................................................................... 330 B. LABOR ARBITER ....................................................................................................................................................... 332 C. NATIONAL LABOR RELATIONS COMMISSION (NLRC) ................................................................................... 336 D. JUDICIAL REVIEW OF LABOR RULINGS ............................................................................................................. 345 E. BUREAU OF LABOR RELATIONS .......................................................................................................................... 347 F. NATIONAL CONCILIATION AND MEDIATION BOARD .................................................................................... 349 G. POEA ............................................................................................................................................................................ 353 H. DOLE REGIONAL DIRECTORS ............................................................................................................................... 354 I. DOLE SECRETARY ..................................................................................................................................................... 355 J. GRIEVANCE MACHINERY ........................................................................................................................................ 359 K. VOLUNTARY ARBITRATOR ................................................................................................................................... 360 L. PRESCRIPTION OF ACTIONS ................................................................................................................................. 366 General Principles BFOQ BLR CB CBA CE DOLE Ee Er IRR LA LC LLO LOA NCC NCMB NLRC NSD OFW OT PCE POEA - RAB RD RH RTWPB - RW RWD SEBA SEnA SIL SOLE ULP UT VA VR WD WRD - LEGEND Bona Fide Occupational Qualification Bureau of Labor Relations Collective Bargaining Collective Bargaining Agreement Certification Election Department of Labor and Employment Employee Employer Implementing Rules and Regulations Labor Arbiter Labor Code Legitimate Labor Organization Leave of Absence New Civil Code National Conciliation and Mediation Board National Labor Relations Commission Night Shift Differential Overseas Filipino Worker Overtime Petition for Certification Election Philippine Overseas Employment Administration Regional Arbitration Branch Regional Director Regular Holiday Regional Tripartite Wages and Productivity Boards Regular Wage Regular Working Day Sole and Exclusive Bargaining Agent Single Entry Approach Service Incentive Leave Secretary of Labor and Employment Unfair Labor Practice Undertime Voluntary Arbitrator Voluntary Recognition Wage Distortion Weekly Rest Day I. GENERAL PRINCIPLES A. BASIC POLICY ON LABOR Labor It is the exertion by human beings of physical or mental efforts, or both, towards the production of goods and services. (Poquiz, 2012) The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. (Sec. 18, Art. II, 1987 Constitution) Labor Law The law that governs the rights and duties of the employer (Er) and employees (Ee) as to: 1. 2. The terms and conditions of employment; and Labor disputes arising from collective bargaining or other concerted activities respecting such terms and conditions. Labor Legislation It consists of statutes, regulations, and jurisprudence governing the relations between capital and labor, by providing for certain employment standards and a legal framework for negotiating, adjusting, and administering those standards and other incidents of employment. (Azucena, 2016) Classification of Labor Laws 1. 1 Labor Standards – The minimum requirements prescribed by existing laws, rules and regulations as to the terms and conditions of employment relating to wages, hours of work, cost-of-living allowance, and other monetary and welfare benefits, including occupational, safety and health standards. UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation 2. (Maternity Children’s Hospital v. Secretary of Labor, G.R. No. 78909, 30 June 1989) 1. 2. e.g., 13th month pay 3. 4. 5. 6. Labor Relations – Defines and regulates the status, rights and duties, and the institutional mechanisms that govern the individual and collective interactions of Ers, Ees, or their representatives. Constitution; Labor Code and other related special legislation (including their respective IRR); Contracts; Collective Bargaining Agreements (CBAs); Company practices; and Company policies. B. CONSTRUCTION IN FAVOR OF LABOR e.g., Collective Bargaining Negotiations All doubts in the implementation and interpretation of the provisions of the Labor Code, including its implementing rules and regulations, shall be resolved in favor of labor. (Art. 4, Labor Code) Social Legislation It refers to all laws passed by the State to promote public welfare. Social legislation involves laws that provide specific type of protection or benefits to society or segments thereof in furtherance of social justice. It includes statutes intended to enhance the welfare of the people even where there is no Er-Ee relationship. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. (Art. 1702, New Civil Code) In case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail. (Art. 10, NCC) e.g., GSIS Law, SSS Law, PhilHealth, Agrarian Laws Labor Legislation vs. Social Legislation Labor Legislation Directly affects employment Protection to Labor Social Legislation Governs effects of employment (e.g., wages) (e.g., compensation for injuries) Refers to labor statutes like Labor Relations Law and Labor Standards Law Refers to Social Security Laws Focuses on the rights of the worker in the workplace Focuses on the particular part of the society or segment thereof. When the conflicting interests of labor and capital are weighed on the scales of social justice, the heavier influence of the latter must be counterbalanced by the sympathy and compassion the law must accord the underprivileged worker. This is in line with the express mandate of the Labor Code and the principle that those with less in life should have more in law. (Eastern Shipping Lines v. POEA, G.R. No. 76633, 18 Oct. 1998) It is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing, should be resolved in the former’s favor. The policy is to extend the doctrine to a greater number of Ees who can avail themselves of the benefits under the law, which is in consonance with the policy of the State to give maximum aid and protection to labor. NOTE: All labor laws are social legislation, but not all social legislation is labor law. Social legislation as a concept is broader while labor laws are narrower. (Duka, 2016) Sources of Labor Laws UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 2 General Principles (Lepanto Consolidated Mining Co. v. Moreno Dumapis, et. al., G.R. No. 163210, 13 Aug. 2008) that maybe applied to him in the light of the many disadvantages that weigh heavily on him like an albatross on his neck. We need to protect labor because there is no doubt that the Er stands on higher footing than the Ee. First of all, there is greater supply than demand for labor. Secondly, the need for employment by labor comes from vital and even desperate necessity. Consequently, the law must protect labor; at least to the extent of raising him to equal footing in bargaining relations with capital and to shield him from abuses brought about by the necessity for survival. (Daniel Sanchez et. al. v. Harry Lyons Construction, Inc., et. al., G.R. No. L-2779, 18 Oct. 1950) Labor law determinations are not only secundum rationem (according to reason) but also secundum caritatem (according to charity). (Zenaida Paz v. Northern Tobacco Redrying Co., Inc., G.R. No. 199554, 18 Feb. 2015) It is disregarding rigid rules and giving due weight to all equities of the case. (Gandara Mill Supply and Milagros Sy v. NLRC and Silvestre Germano, G.R. No. 126703, 29 Dec. 1998) The law must protect labor, at least to the extent of raising him to equal footing in bargaining relations with capital and to shield him from abuses brought about by the necessity for survival. (Azucena, 2016) Q: Several employees of Novo Jeans filed a case of illegal dismissal against Novo Jeans. However, Novo Jeans argued that they were able to present the First Notice of Termination of Employment sent to employees, asking them to explain their sudden absence from work without proper authorization. In contrast, the employees alleged that there were only sample letters of the Notices, and there was no evidence to prove that the Notices were sent to them at their last known addresses. They insist that if doubt exists between the evidence presented by the Er and the evidence presented by the employees, the doubt must be resolved in favor of the employees, consistent with the Labor Code's policy to afford protection to labor. Are the employees correct? C. BURDEN OF PROOF AND QUANTUM OF EVIDENCE IN LABOR CASES Burden of Proof In determining the Ee’s entitlement to monetary claims, the burden of proof is shifted from the Er or the Ee, depending on the monetary claim sought. (Minsola v. New City Builders, Inc., G.R. No. 207613, 31 Jan. 2018) In an illegal dismissal case, the Ee has the burden of proof to first show that he was indeed dismissed from employment. Before the Er must bear the burden of proving that the dismissal was legal, the employee must first establish by substantial evidence the fact of his dismissal from service. (Reyes v. Global Beer Below Zero, Inc., G.R. No. 222816, 04 Oct. 2017) A: YES. Under the law, where both parties in a labor case have not presented substantial evidence to prove their allegations, evidence will be considered in equipoise. In such a case, the scales of justice are tilted in favor of labor. (Charlie Hubilla et al. v. HSY Marketing Ltd., Co., et al. G.R. No. 207354, 10 Jan. 2008) Compassionate Justice Quantum of Evidence The social justice policy mandates a compassionate attitude towards the working class in its relation to management. In calling for protection to labor, the Constitution does not condone wrongdoing by the Ee. However, it urges a moderation of the sanctions Q: What is the quantum of evidence required in labor cases? (2012 BAR) 3 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation A: In labor cases, as in other administrative and quasi-judicial proceedings, the quantum of proof necessary is substantial evidence, or such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. (Valencia v. Classique Vinyl Products Corporation, G.R. No. 206390, 30 Jan. 2017) D. LEGAL BASIS UNDER 1987 CONSTITUTION, CIVIL CODE, AND LABOR CODE a. 1987 CONSTITUTION I. Limitation to Protection of Labor 1. Recognition of management rights - The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play. (St. Luke’s Medical Center Ees Ass’n v. NLRC, G.R. No. 162053, 07 Mar. 2007) 2. Principle of non-oppression - Neither capital nor labor shall act oppressively against the other, or impair the interest or convenience of the public. (Art. 1701, NCC) The protection to labor clause in the Constitution is not designed to oppress or destroy capital. (Capili v. NLRC, G.R. No. 117378, 26 Mar. 1997) The law, in protecting the rights of the Ees, authorizes neither oppression nor self-destruction of the Er. (Pacific Mills Inc. v. Alonzo, G.R. No. 78090, 26 July 1991) 1. Sec. 9 – The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all. 2. Sec. 10 – The State shall promote social justice in all phases of national development. 3. Sec. 14 - The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men. Law: R.A. 9710 – Magna Carta of Women It should be made clear that when the law tilts the scale of justice in favor of labor, it is a recognition of the inherent economic inequality between labor and management. The intent is to balance the scale of justice; to put the two parties on relatively equal positions. There may be cases where the circumstances warrant favoring labor over the interests of management, but never should the scale be so tilted if the result is an injustice to the Er. Justitia nemini neganda est. (Justice is to be denied to none.) (Philippine Geothermal, Inc. v. NLRC and Alvarez, G.R. No. 106370, 08 Sept. 1994) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Article II – Declaration of Principles and State Policies 4. Sec. 18 – The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. 5. Sec. 20 – The State recognizes the indispensable role of the private sector, encourages private enterprise and provides incentives to needed investments. II. 4 Article III – Bill of Rights 1. Sec. 1 - No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws. 2. Sec. 4 – No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances. General Principles 3. disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. Sec. 8 – The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth. Law: E.O. No. 180 series of 1987 providing guidelines for the exercise of the right to organize of government employees, creating a Public Sector Labor Management Council and for other purposes. 3. 4. Sec. 10 – No law impairing the obligation of contracts shall be passed. 5. Sec. 16 – All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-judicial or administrative bodies. 6. 1. 2. Law: R.A. 7277 – Magna Carta for Disabled Person Sec. 18(2) – No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall have been duly convicted. III. Sec. 13 – The State shall establish a special agency for disabled persons for their rehabilitation, self-development and selfreliance and their integration into the mainstream of society. 4. Article XIII – Social Justice and Human Rights Sec. 2 – The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance. Sec. 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 them to realize their full potential in the service of the nation. Law: R.A. 9710 – Magna Carta of Women Q: Are the constitutional provisions on labor self-executing? Sec. 3 – The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. A: The constitutional mandates of protection to labor and security of tenure may be deemed as selfexecuting in the sense that these are automatically acknowledged and observed without need for any enabling legislation. However, to declare that the constitutional provisions are enough to guarantee the full exercise of the rights embodied therein, and the realization of ideals therein expressed, would be impractical, if not unrealistic. The espousal of such view presents the dangerous tendency of being overbroad and exaggerated. (Agabon v. NLRC, G.R. No. 158693, 17 Nov. 2004) The State shall promote the principle of shared responsibility between workers and Ers and the preferential use of voluntary modes in settling 5 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation Basic Rights of Workers Guaranteed by the Constitution 1. 2. 3. 4. 5. 6. 7. 8. 9. Management rights are subject to limitations provided by: 1. 2. Security of tenure; Living wage; Share in the fruits of production; Just and humane working conditions; Self-organization; Collective bargaining; Collective negotiations; Engage in peaceful concerted activities, including the right to strike; and Participate in policy and decision-making processes. (Sec. 3, Art. XIII, 1987 Constitution) 3. Law; Contract, whether individual or collective; and General principles of fair play and justice. Balancing of Rights between Labor and Capital It should not be deduced that the basic policy is in favor of labor to prejudice capital. The basic policy is to balance or to coordinate the rights and interests of both workers and employers. (Azucena, 2016) Rights of Management Arts. 3 and 4 of the LC explicitly recognize shared responsibility of the employers and workers and the right of enterprise to reasonable returns on investment and to expansion and growth. (Ibid.) It should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which are entitled to respect and enforcement in the interest of simple fair play. (Sosito v. Aguinaldo Development Corporation, G.R. No. 48926, 24 Dec. 1987) In employment bargaining, there is no doubt that the Er stands on higher footing than the Ee. The law must protect labor, at least, to the extent of raising him to equal footing in bargaining relations with capital and to shield him from abuses brought about by the necessity for survival. (Sanchez, et al v. Harry Lyons Construction Inc., et al, G.R. No. L-2799, 19 Oct. 1950) The Secretary of Labor is duly mandated to equally protect and respect not only the laborer, but also the management. Fundamental Management Rights (S-P-I-T) 1. 2. 3. 4. Yet, the Constitution has not overlooked the rights of capital. The State is mandated to regulate the relations between workers and employers. Right to Select employees; Right to Prescribe rules; Right to reasonable return on Investments; and Right to Transfer or discharge employees. While labor is entitled to a just share in the fruits of production, the enterprise has the right not only to reasonable returns on investments, but also to expansion and growth. Management has the right to regulate all aspects of employment which include, among others, work assignment, working methods, and place and manner of work. (Marsman & Co., Inc. v. Rodil Sta. Rita, G.R. No. 194765, 23 Apr. 2018) b. NEW CIVIL CODE Restrictions to Management Rights Management rights are never absolute. Under the Constitution, the right to own and operate economic enterprises is subject to the duty of the State to promote distributive justice and to intervene when the common good so demands. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 6 1. Art. 19 – Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. This is known as the Principle of Abuse of Rights. 2. Art. 1700 – The relations between capital and labor are not merely contractual. They are so General Principles 3. charter of human rights and a bill of obligations for every working man. impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lock outs, closed-shop, wages, working conditions, hours of labor, and similar subject. Art. 1701 – Neither capital nor labor shall act oppressively against the other, or impair the interest or convenience of the public. This is known as the Principle of Non-Oppression. Date of Effectivity P.D. 442 was signed into law on 01 May 1974 and took effect on 01 Nov. 1974, six (6) months after its promulgation. Declaration of Basic Policy The State shall: 4. 5. 6. Art. 1702 – In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. Art. 1703 – No contract which practically amounts to involuntary servitude, under any guise whatsoever, shall be valid. 4. 5. Art. 1704 – In collective bargaining, the labor union or members of the board or committee signing the contract shall be liable for nonfulfillment thereof. 7. Art. 1708 – The laborer’s wages shall not be subject to execution or attachment, except for debts incurred for food, shelter, clothing, and medical attendance. 8. Art. 1709 – The employer shall neither seize nor retain any tool or other articles belonging to the laborer. 9. 1. 2. 3. Afford full protection to labor; Promote full employment; Ensure equal work opportunities regardless of sex, race, or creed; Regulate the relations between workers and employers; and Assure the rights of workers to selforganization, collective bargaining, security of tenure, and just and humane conditions of work. (Art. 3, LC) Rule-Making Power Granted by the Labor Code The Department of Labor and Employment (DOLE) through the Secretary of Labor and Employment (SOLE) and other Government agencies charged with the administration and enforcement of the LC or any of its parts shall promulgate the necessary IRRs. (Art. 5, LC) Limitations to the Rule-Making Power Granted by the Labor Code Art. 1710 – Dismissal of laborers shall be subject to the supervision of the Government, under special laws. 1. 2. c. LABOR CODE 3. Presidential Decree (PD) No. 442, otherwise known as the Labor Code of the Philippines, is a decree instituting a Labor Code, thereby revising and consolidating labor and social laws to afford protection to labor, promote employment and human resources development, and ensure industrial peace based on social justice. It is a It must be issued under the authority of law; It must not be contrary to law and the Constitution; and It must not go beyond the law itself. A rule or regulation promulgated by an administrative body to implement a law in excess of its rule-making power is void. (Azucena, 2016) An administrative interpretation which takes away a benefit granted in the law is ultra vires, that is, 7 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation beyond one’s power. (CBTC Employees Union v. Clave, G.R. No. 49582, 07 Jan. 1986) It is the Public Sector Labor-Management Council, not the DOLE, which shall hear the dispute. (Sec. 15, EO No. 180, 01 June 1987) Applicability of Labor Code Applicability without Er-Ee Relationship GR: All rights and benefits granted to workers under the LC shall apply alike to all workers, whether agricultural or non-agricultural. (Art. 6, LC) The LC may apply even if the parties are not Ers and Ees of each other. It is not correct to say that employment relationship is a pre-condition to the applicability of the Code (e.g., illegal recruitment, misuse of POEA license). (Azucena, 2016) XPNs: 1. Government employees; 2. Employees of government-owned and controlled corporations created by special or original charter; 3. Foreign governments; 4. International agencies; Likewise, in legitimate independent jobcontracting arrangements under Art. 106 of the LC, in case of non-payment of the wages of the agency employees and other monetary benefits under the Service Contract, said monetary claims shall be the joint and solidary liability of the principal and the job contractor. So too, in security of tenure cases where the agency employees are claiming that they are regular employees already of the principal where they occupy core positions and performing functions which are necessary and desirable in the usual business or trade of the principal who likewise gets to exercise control and supervision over them. (Cacho, 2022) NOTE: International organizations and intergovernmental bodies are not covered by the Philippine Labor Laws. The remedy of the aggrieved employee is to file a complaint before the Department of Foreign Affairs (DFA). (Duka, 2016) 5. Corporate officers / intra-corporate disputes which fall under PD 902-A and now falls under the jurisdiction of the regular courts pursuant to the Securities Regulation Code; 6. Local water district except where the NLRC’s jurisdiction is invoked; and 7. As may otherwise be provided by the LC. Extra-Territorial Application of LC Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. For the State assures the basic rights of all workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. (PNB v. Cabansag, G.R. No. 157010, 21 June 2005) Test to Determine the Applicability of the LC to GOCC; Original Charter or Manner of Creation Test When a GOCC is created by a special charter, it is subject to the provisions of the Civil Service Law, while those incorporated under the general Corporation Law are subject to the provisions of the Labor Code. (PNOC-EDC v. Legardo, G.R. No. 58494, 05 July 1989) Labor Dispute between Government Ees UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 8 Recruitment and Placement of Workers evidence that where a fee is collected in consideration of a promise or offer of employment to two (2) or more prospective workers, the individual or entity dealing with them shall be deemed to be engaged in the act of recruitment and placement. The words "shall be deemed" create that presumption. (People v. Panis, G.R. L-58674-77, 11 July 1990) II. RECRUITMENT AND PLACEMENT OF WORKERS A. RECRUITMENT AND PLACEMENT 1. ILLEGAL RECRUITMENT AND OTHER PROHIBITED ACTIVITIES Governing Laws 1. 2. Labor Code; and Migrant Workers and Overseas Filipinos Act of 1995. (R.A. No. 8042, as amended by R.A. No. 10022) Illegal Recruitment Any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by non-licensee or non-holder of authority. (Sec. 6, R.A. No. 8042, as amended by R.A. No. 10022) Recruitment and Placement 1. Any act of Canvassing, Enlisting, Transporting, Contracting, Hiring, Utilizing, or Procuring workers; (C-E-T-C-H-U-P) and 2. Includes Contract services, Referrals, Advertising or Promising for employment, locally or abroad, whether for profit or not. (C-R-A-P) (Art. 13(b), LC) Any recruitment activities, including the prohibited practices enumerated under Art. 34 of the Labor Code, to be undertaken by non-licensed or nonholders of authority, shall be deemed illegal and punishable. (Art. 38(a), LC) Persons Deemed Engaged in Recruitment and Placement Illegal Recruitment as Economic Sabotage Illegal recruitment, when committed by a syndicate or in large scale, shall be considered an offense involving economic sabotage. (Art. 38(b), LC) 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. (Art. 13(b), LC) It is deemed to be committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme. (Ibid.) The definition of "recruitment and placement" under Art. 13(b) of the Labor Code includes 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. (People v. Racho, G.R. No. 227505, 02 Oct. 2017) It is deemed committed in large scale if committed against three (3) or more persons individually or as a group. (Ibid.) Prohibited Acts in Recruitment and Placement NOTE: Regardless of the number of persons dealt with, recruitment and placement are still constituted. The proviso merely lays down a rule of 1. 9 Overcharging – To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable fees UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation 8. False Notice – To furnish or publish any false notice or information or document in relation to recruitment or employment. Contract Substitution – To substitute or alter to the prejudice of the worker, employment contracts prescribed by the Department from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the DOLE. 9. Misrepresentation to Secure License – 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 LC, or for the purpose of documenting hired workers with the POEA, which include the act of reprocessing workers through a job order that pertains to nonexistent work, work different from the actual overseas work, or work with a different Er whether registered or not with the POEA. Involvement in Travel Agency – 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 insurance or to be engaged directly or indirectly in the management of a travel agency or insurance agency. 10. Withholding of Documents – To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations, or for any other reasons, other than those authorized under the LC and its IRR. prescribed by the SOLE, or to make a worker pay or acknowledge any amount greater than that actually received by him as a loan or advance. 2. 3. 4. 5. 11. Failure to Deploy – To fail to actually deploy a contracted worker without valid reason as determined by the DOLE. Inducing Worker to Quit – To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another, unless the transfer is designed to liberate the worker from oppressive terms and conditions of employment. 12. Failure to Reimburse – To fail to reimburse expenses incurred by the worker in connection with his/her documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker’s fault. Inducement Not to Employ – To influence or attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency or who has formed, joined or supported, or has contacted or is supported by any union or workers' organization. 6. Recruitment for Harmful Jobs – 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. 7. Failure to submit reports - 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 SOLE. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 13. Non-Filipino Manager – To allow a nonFilipino citizen to head or manage a recruitment agency; 14. Imposition of Excessive Interest – To grant a loan to an OFW with interest exceeding 8% per annum, which will be used for payment of legal and allowable placement fees and make the migrant worker issue, either personally or through a guarantor or accommodation party, postdated checks in relation to the said loan. 15. Specifying a Loan Entity – To impose a compulsory and exclusive arrangement whereby an OFW is required to avail of a loan only from specifically designated institutions, entities, or persons. 10 Recruitment and Placement of Workers in Egypt, and subsequently at the Makati Medical Center. The medical certificate was issued describing his disability as "permanent in nature." He demanded payment for his claim for total disability, as provided for in the contract of employment, but his claim was denied. Can the second contract of employment be enforced against Philimare despite the absence of NSB verification or approval? 16. Non-Renegotiation of Loan – To refuse to condone or renegotiate a loan incurred by an OFW after his employment contract has been prematurely terminated through no fault of his or her own; 17. Specifying a Medical Entity – To impose a compulsory and exclusive arrangement whereby an OFW is required to undergo health examinations only from specifically designated medical clinics, institutions, entities or persons, except in the case of a worker whose medical examination cost is shouldered by the principal; A: YES. The supplementary contract of employment was entered into between petitioner and private respondent to modify the original contract of employment. The reason why the law requires that the POEA should approve and verify a contract under Art. 34(i) of the Labor Code is to ensure that the employee shall not be placed in a disadvantageous position and that the same are within the minimum standards of the terms and conditions of such employment contract set by the POEA. 18. Specifying a Training Entity – To impose a compulsory and exclusive arrangement whereby an OFW is required to undergo training, seminar, instruction or schooling of any kind only from specifically designated institutions, entities or persons, except for recommendatory trainings mandated by principals where the latter shoulder the cost of such trainings; However, there is no prohibition against stipulating in a contract more benefits to the employee than those required by law. Thus, in this case wherein a “supplementary contract” was entered into affording greater benefits to the employee than the previous one, and although the same was not submitted for the approval of the POEA, the same should still be considered to be valid and enforceable. (Seagull Maritime Corp. v. Balatongan, G.R. No. 82252, Feb. 28, 1989) 19. Violation of Suspension – For a suspended recruitment/manning agency to engage in any kind of recruitment activity including the processing of pending workers' applications; and 20. Collection of Insurance Premium – For a recruitment/manning agency or a foreign principal/ Er to pass on the OFW or deduct from his or her salary the payment of the cost of insurance fees, premium or other insurance related charges, as provided under the compulsory worker's insurance coverage. (Sec. 6, R.A. No. 8042, as amended by R.A. No. 10022) a. ELEMENTS OF ILLEGAL RECRUITMENT Q: A crew agreement was entered into by Nerry Balatongan and Philimare Shipping and Equipment Supply for the employment of the former as a seaman on board the vessel "Santa Cruz” which was approved by the National Seaman's Board (NSB). While on board vessel, the parties entered into a supplementary contract of employment providing for accident and death benefits. Balatongan met an accident 11 1. The offender undertakes any of the activities within the meaning of “recruitment and placement” under Art. 13(b) of the LC, or any of the prohibited practices enumerated under Art. 34 of the LC; and 2. The offender has no valid license or authority required by law to enable him to lawfully engage in recruitment and placement of workers. (People v Chua, G.R. No. 187052, 13 Sept. 2012) UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation 3. 4. If committed by a syndicate - carried out by a group of three or more persons conspiring and/or confederating with one another; or c. ILLEGAL RECRUITMENT vs. ESTAFA ILLEGAL RECRUITMENT Malum prohibitum It is not required that it be shown that the recruiter wrongfully represented himself as a licensed recruiter. If committed by large scale - if committed against three or more persons individually or as a group. b. TYPES OF ILLEGAL RECRUITMENT 1. Simple – It is committed where a licensee/nonlicensee or holder/non-holder of authority undertakes either any recruitment activities defined under Art. 13(b), or any prohibited practices enumerated under Sec. 6 of R.A. No. 8042, as amended by R.A. No. 10022. NOTE: It is enough that the victims were deceived as they relied on the misrepresentation and scheme that caused them to entrust their money in exchange of what they later discovered was a vain hope of obtaining employment abroad. Prescription of action: Five (5) years. (Sec. 12, R.A. No. 8042, as amended by R.A. No. 10022) Where the illegal recruitment is proved, but the elements of large scale and syndicate are absent, the accused can be only convicted of simple illegal recruitment. (People v. Sagun, G.R. No. 119076, 25 Mar. 2002) 2. Syndicated – committed by a syndicate if carried out by a group of three (3) or more persons in conspiracy or confederation with one another; b. Large Scale or qualified – committed against three (3) or more persons individually or as a group despite the lack of necessary license from POEA. (People v. Alzona, G.R. No. 132029, 30 July 2004) Accused defrauded another by abuse of confidence or by means of deceit. NOTE: It is essential that the false statement or fraudulent representation constitutes the very cause or the only motive which induces the complainant to part with the thing of value. A: YES. Illegal recruitment and estafa cases may be filed simultaneously or separately. The filing of charges for illegal recruitment does not bar the filing of estafa, and vice versa. Bugo’s acquittal in the illegal recruitment case does not prove that she is not guilty of estafa. Prescription of action: 20 years. (Sec. 12, R.A. No. 8042, as amended by R.A. No. 10022) Illegal recruitment and estafa are entirely different offenses and neither one necessarily includes or is necessarily included in the other. A person who is convicted of illegal recruitment may, in addition, be convicted of estafa under Art. 315, par. 2(a) of the Revised Penal Code (RPC). In the same manner, a person acquitted of illegal recruitment may be held liable for estafa. Double jeopardy will not set in NOTE: “Illegal recruitment in large scale” pertains to the number of victims, while “syndicated illegal recruitment” pertains to the number of recruiters. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Malum in se Q: Bugo, by means of false pretenses and fraudulent representation, convinced Dado to give the amount of P120,000.00 for processing the latter’s papers so that he can be deployed to Japan. Dado later on found out that Bugo had misappropriated, misapplied and converted the money for her own personal use and benefit. Can Dado file the cases of illegal recruitment and estafa simultaneously? Illegal Recruitment as Economic Sabotage – It is economic sabotage when complex illegal recruitment is committed. a. ESTAFA 12 Recruitment and Placement of Workers and deployed for overseas employment. (Royal Crown Internationale v. NLRC, G.R. No. 78085, 16 Oct. 1989) because illegal recruitment is malum prohibitum, in which there is no necessity to prove criminal intent, whereas estafa is malum in se, in the prosecution of which, proof of criminal intent is necessary. (Sy v. People, G.R. No. 183879, 14 Apr. 2010) XPN: Where the workers themselves insisted for the recruitment agency to send them back to their foreign Er despite their knowledge of its inability to pay their wages, the agency is absolved from liability. (Feagle Construction Corp. v. Gayda, G.R. No. 82310, 18 June 1990) Q: Toston was charged with illegal recruitment and estafa. Records reveal that Mary Ann dealt with Toston in the latter's capacity as an employee of Steadfast. The records reveal that Mary Ann was found to be medically unfit for overseas deployment, contrary to the representations made to Mary Ann by Gutierrez. However, the prosecution did not present proof that Toston knew about the result of Mary Ann's medical examination or that he was privy to Gutierrez' concealment of this fact from Mary Ann. Will the charges prosper? Q: Santosa Datuman was deployed to Bahrain after paying the required placement fee. However, her employer took her passport and instead of working as a saleslady, she was forced to work as a domestic helper contrary to the agreed salary approved by POEA. She worked without compensation for two years because of her employers’ continued failure and refusal to pay her salary despite demand. When she finally returned to the Philippines, she filed a complaint against the local agency that recruited her. Should the suit prosper? A: YES. Under Sec. 1 (f), Rule II, Book II of the 1991 POEA Rules and Regulations, the local agency shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the contract, including but not limited to payment of wages, health and disability compensation and repatriation. Private employment agencies are held jointly and severally liable with the foreign-based employer for any violation of the recruitment agreement or contract of employment, to assure the aggrieved worker of immediate and sufficient payment of what is due him. This is in line with the policy of the state to protect and alleviate the plight of the working class. (Datuman v. First Cosmopolitan Manpower, G.R. No. 156029, 14 Nov. 2008) A: NO, with respect to both charges. As to the charge of illegal recruitment, Toston did not personally represent himself as a licensee or holder of authority but only as an employee. As to estafa, the element of fraud by abuse of confidence or deceit with respect to Toston is negated by the fact that, at the time of the act complained of, Toston was an employee of a validly licensed recruitment agency. (Toston y Hular v. People, G.R. No. 23204, 3 Mar. 2021) 2. LIABILITY OF LOCAL RECRUITMENT AGENCY AND FOREIGN EMPLOYER Liability of the Local Recruitment Agency GR: A Local Recruitment Agency shall be jointly and solidarily liable with its principal or foreign-based Er for any violation of the recruitment agreement and violation of contracts of employment. (Sec. 10(a)(2), Rule V, Book I, IRR) Liability if the Recruitment or Placement Agency is a Juridical Being In applying for a license to operate a private employment agency for overseas recruitment and placement, an applicant is required to submit a verified undertaking. In that document, the agency assumed all responsibilities for the proper use of its license and the proper implementation of the employment contracts with the workers it recruited If the recruitment/placement agency is a juridical being, the corporate officers, directors or partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the claims and damages. (Becmen Service 13 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation the assistance of a Taiwanese broker, Edmund Wang, President of Jet Crown International Co., Ltd. After her 12-month contract expired on Feb. 1, 1998, Montehermozo continued working for her Taiwanese employer for two more years, after which she returned to the Philippines on Feb. 4, 2000. Exporter and Promotion v. Cuaresma, G.R. Nos. 182978-79, 07 Apr. 2009) Liability of the Foreign Employer A foreign corporation which, through unlicensed agents, recruits workers in the country, may be sued in and found liable by Philippine courts; e.g., direct hiring by a foreign firm without participation of POEA. (Azucena, 2016) a. SOLIDARY LIABILITY Shortly after her return she filed a complaint before the NLRC against Sunace, one Perez, the Taiwanese broker, and the employer-foreign principal alleging that she was jailed for three months and that she was underpaid. Should Sunace be held liable for the underpayment for the additional two years that she worked for her Taiwanese employer under the theory of imputed knowledge? Liability of the Private Employment Agency and the Principal or Foreign-based Employer They are jointly and solidarily liable for any violation of the recruitment agreement and the contracts of employment. A: NO. The Theory of Imputed Knowledge ascribes the knowledge of the agent, Sunace, to the principal Taiwanese Er, not the other way around. The knowledge of the principal-foreign Er cannot, therefore, be imputed to its agent Sunace. There being no substantial proof that Sunace knew of and consented to be bound under the two-year employment contract extension, it cannot be said to be privy thereto. As such, it and its owner cannot be held solidarily liable for and of Montehermozo’s claims arising from the two-year employment extension. (Sunace v. NLRC, G.R. No. 161757, 25 Jan. 2006) This joint and solidary liability imposed by law against recruitment agencies and foreign employers is meant to assure the aggrieved worker of immediate and sufficient payment of what is due him. (Becmen Service Exporter and Promotion v. Cuaresma, G.R. Nos. 182978-79, 07 Apr. 2009) b. THEORY OF IMPUTED KNOWLEDGE A rule in insurance law that any information material to the transaction, either possessed by the agent at the time of the transaction or acquired by him before its completion, is deemed to be the knowledge of the principal, at least so far as the transaction is concerned, even though in fact, the knowledge is not communicated to the principal at all. (Leonor v. Filipinas Compania, 48 O.G. 243, 10 Jan. 1950; Rovels Enterprises, Inc. v. Ocampo, G.R. No. 136821, 17 Oct. 2002) 3. ENTITIES PROHIBITED FROM RECRUITING Persons and Entities DISQUALIFIED to Engage in the Business of Recruitment and Placement of Workers The Theory of Imputed Knowledge teaches that the knowledge of the agent is knowledge of the principal. (Sunace International Management Services, Inc. v. NLRC, et al., G.R. No. 161757, 25 Jan. 2006) Q: Sunace International Management Services (Sunace), deployed to Taiwan Montehermozo as a domestic helper under a 12-month contract effective Feb. 1, 1997. The deployment was with UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 14 1. Travel agencies and sales agencies of airline companies; (Art. 26, LC) 2. Officers or members of the board of any corporation or members in a partnership engaged in the business of a travel agency; 3. Corporations and partnerships, when any of its officers, members of the board or partners, is also an officer, member of the board, or Recruitment and Placement of Workers partner of a corporation or partnership engaged in the business of a travel agency; 4. 5. 6. Purpose for Prohibiting Travel Agencies This is because travel agencies are under the supervisory powers of the Department of Tourism, not the DOLE. Otherwise, confusion may arise to the detriment and disadvantage of an overseas applicant-worker or may lead to exploitation of the applicant-worker who will be at the economic mercy of the travel agency or sales agencies of airline company from the time his papers are processed to the time he departs. Persons, partnerships or corporations which have derogatory records, such as but not limited to those: a. Certified to have derogatory record or information by the NBI or by the AntiIllegal Recruitment Branch of the POEA; b. Against whom probable cause or prima facie finding of guilt for illegal recruitment or other related cases exists; c. Convicted for illegal recruitment or other related cases and/or crimes involving moral turpitude; and d. Agencies whose licenses have been previously revoked or cancelled by the POEA for violation of R.A. No. 8042, as amended by R.A. No. 10022, P.D. 442 as amended, and their IRRs. It cannot be discounted that travel agencies can facilitate with the airlines the issuance of the worker's plane ticket. Moreover, illegal recruitment activities can be traced to travel agencies that facilitate papers of job-seekers for overseas. They could do a dirty job of legalizing the travel on tourist-visas with the assurance that the same could be converted into work-visas in the country of employment. Q: WTTA is a well-known travel agency and an authorized sales agent of PAL. Since majority of its passengers are overseas workers, WTTA applied for a license for recruitment and placement activities. Any official or employee of the DOLE, POEA, OWWA, DFA, and other government agencies directly involved in the implementation of R.A. No. 8042, as amended by R.A. No. 10022 and/or any of his/her relatives within the 4th civil degree of consanguinity or affinity; and It stated in its application that its purpose is not for profit but to help Filipinos find employment abroad. Should the application be approved? (2006 BAR) A: NO. The application should be disapproved, because it is prohibited by Art. 26 of the LC, which provides that 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. Persons or partners, officers, and directors of corporations whose licenses have been previously cancelled or revoked for violation of recruitment laws. (Sec. 2, Rule I, 2002 Rules and Regulations on the Recruitment and Employment of Land-Based Workers) Prohibition on Travel Agencies and Sales Agencies of Airline Companies to Recruit Rule I, Part II POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Workers also disqualifies any entity having a common director or owner of travel agencies and sales agencies of airlines, including any business entity, from the recruitment and placement of Filipino workers overseas, whether they derive profit or not. They are prohibited from engaging in the business of recruitment and placement of workers for overseas employment, whether for profit or not, due to conflict of interest. 15 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation Grounds for Revocation of License 4. CANCELLATION OF LICENSE OR AUTHORITY 1. Two Kinds of Illegal Recruiter 1. 2. May be a licensee – performs any of the prohibited practices enumerated under Sec. 6 of R.A. 8042, as amended by R.A. No. 10022. 2. 3. May be a non-licensee – any person, corporation, or entity: a. b. 4. Which has not been issued a valid license or authority to engage in recruitment and placement by the SOLE; or Whose license or authority has been suspended, revoked, or cancelled by the POEA or the SOLE. Grounds for Suspension or Cancellation of License 1. Commission of prohibited acts under Art. 34 of LC; 2. Publishing job announcements POEA’s approval; 3. Charging a fee which may be in excess of the authorized amount before a worker is employed; 4. Deploying workers through POEA; and 5. Recruitment in places outside its authorized area. (Sec. 4, Rule II, Book IV, POEA Rules) Jurisdiction The SOLE and the POEA Administrator are vested with power to suspend or cancel any license or authority to recruit employees for overseas employment. (Art. 35, LC) The SOLE has the power under Art. 35 of the LC to apply the penalties of suspension and cancellation of license and authority. The SOLE also has the authority, under Art. 36 of the LC, not only to restrict and regulate the recruitment and placement activities of all agencies, but also to promulgate rules and regulations to carry out the objectives and implement the provisions governing said activities. without without processing Q: Concerned Filipino contract workers in the Middle East reported to the DFA that XYZ, a private recruitment and placement agency, is covertly transporting extremists to terrorist training camps abroad. Upon being alerted by the DFA, the DOLE issued orders cancelling the licenses of XYZ, and imposing an immediate travel ban on its recruits for the Middle East. XYZ appealed to the Office of the President to reverse and set aside the DOLE orders, citing damages from loss of employment of its recruits, and violations of due process including lack of notice and hearing by the DOLE. Pursuant to this rule-making power, the SOLE authorized the POEA to conduct the necessary proceedings for the suspension or cancellation of license or authority of any agency or entity for certain enumerated offenses. (Trans Action Overseas Corporation v. Secretary of Labor, G.R. No. 109583, 05 Sept. 1997) Thus, the Court concludes that the power to suspend or cancel any license or authority to recruit employees for overseas employment is concurrently vested with the POEA and the SOLE. (Ibid.) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Incurring an accumulated three (3) counts of suspension by an agency based on final and executory orders within the period of validity of its license; Violations of the conditions of license; Engaging in acts of misrepresentation for the purpose of securing a license or renewal; and Engaging in the recruitment or placement of workers to jobs harmful to the public health or morality or to the dignity of the country. (Sec. 3, Rule I, Book VI, Rules and Regulations Governing Overseas Employment) 16 Recruitment and Placement of Workers Pacific, Inc. v. Doza, et. al, G.R. No. 175558, 08 Feb. 2012) The DOLE in its answer claimed the existence of an emergency in the Middle East which required prompt measures to protect the life and limb of OFWs from a clear and present danger posed by the ongoing war against terrorism. Should the DOLE orders be upheld or set aside? (2004 BAR) However, Sec. 7 of RA 10022 amended Sec. 10 of the Migrant Workers Act, and once again reiterated the provision as above quoted. Nonetheless, the Court in the en banc case of Sameer Overseas Placement Agency, Inc. v. Joy C. Cabiles still declared such as unconstitutional despite its replication. (G.R. No. 170139, 05 Aug. 2014) A: The DOLE order cancelling the licenses of XYZ shall be set aside. A report that an agency is covertly transporting extremists is not a valid ground for cancellation of a Certificate of Registration (Art. 247, LC). There is also failure of due process as no hearing was conducted prior to the cancellation. (Art. 245, LC) Q: Serrano, a seafarer, was hired by Gallant Maritime and Marlow Navigation Co. for 12 months as Chief Officer. On the date of his departure, he was constrained to accept a downgraded employment contract for the position of Second Officer, upon the assurance that he would be made Chief Officer after a month. It was not done; hence, he refused to stay on as Second Officer and was repatriated to the Phils. He had served only 2 months & 7 days of his contract, leaving an unexpired portion of 9 months & 23 days. The DOLE order imposing the travel ban should be upheld because it is a valid exercise of police power to protect the national interest (Sec. 3, Art. XIII, 1987 Constitution) and on the rule making authority of the SOLE. (Art. 5, LC; Phil. Ass’n. of Service Exporters v. Drilon, G.R. No. 81958, 30 June 1988) 5. TERMINATION OF CONTRACT OF MIGRANT WORKER WITHOUT JUST OR VALID CAUSE Serrano filed with the LA a Complaint against Gallant Maritime and Marlow for constructive dismissal and for payment of his money claims. The LA rendered a favorable decision to Serrano awarding him $8,770.00, representing his salary for 3 months of the unexpired portion of his contract of employment applying RA 8042, Sec 10, par. 5: Relief of a Worker When Terminated Without Valid Cause 1. Full reimbursement of his placement fee with 12% interest per annum; and 2. Salaries for the unexpired portion of his employment contract. (R.A. No. 8042, as amended by R.A. No. 10022) Money Claims. - In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of 12% per annum, plus his salaries for the unexpired portion of his employment contract or for 3 months for every year of the unexpired term, whichever is less. NOTE: The three-month option is declared unconstitutional for violating the equal protection clause and the substantive due process rule in the Constitution. (Serrano v. Gallant Maritime Services Inc. and Marlow Navigation Company, Inc., G.R. No. 167614, 24 Mar. 2009) This shall be given retroactive effect, because an unconstitutional clause in the law confers no rights, imposes no duties, and affords no protection. The unconstitutional provision is inoperative, as if it were not passed into law at all. (Skippers United Is the subject clause constitutional? A: NO. The subject clause contains a “suspect classification” in that, in the computation of the monetary benefits of fixed-term Ees who are 17 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation illegally discharged, it imposes a three-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixedterm employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage. The clause is a violation of the right of Serrano to equal protection and right to substantive due process, for it deprives him of property, consisting of monetary benefits, without any existing valid governmental purpose. Furthermore, there is an implied stipulation in contracts between the placement agency and the overseas worker that in case the overseas worker is adjudged as entitled to reimbursement of his or her placement fees, the amount shall be subject to a 12% interest per annum. This implied stipulation has the effect of removing awards for reimbursement of placement fees from Circular No. 799’s coverage. However, if judgment did not become final and executory before 01 July 2013 and there was no stipulation in the contract providing for a different interest rate, other money claims under Sec. 10 of R.A. No. 8042 shall be subject to the six percent (6%) interest per annum in accordance with Circular No. 799. (Sameer Overseas Placement Agency v. Cabiles, G.R. No. 170139, 05 Aug. 2014) Thus, Serrano is entitled to his salaries for the entire unexpired period of nine months and 23 days of his employment contract, pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042. (Serrano v. Gallant Maritime Services & Marlow Navigation Co., Inc., G.R. No. 167614, 24 Mar. 2009) Q: Joy was deployed to work for Taiwan Wacoal, Co. Ltd. on 26 June 1997 for 1 year. She alleged that Sameer Overseas Agency required her to pay a placement fee of P70,000.00. On 14 July 1997, Mr. Huwang of Wacoal informed Joy, without prior notice, that she was terminated and was given a salary from 26 June to 14 July 1997 only. 6. BAN ON DIRECT HIRING Direct Hiring It occurs when an employer hires a Filipino worker for overseas employment without going through the POEA or entities authorized by the SOLE. Ban on Direct Hiring Joy filed a complaint for illegal dismissal with the NLRC. She asked for the return of her placement fee, the withheld amount for repatriation costs, payment of her salary for 23 months as well as moral and exemplary damages. GR: An employer may only hire Filipino workers for overseas employment through POEA or entities authorized by DOLE. (Art. 18, LC) XPNs: Direct hiring by: The NLRC ruled that Joy was illegally dismissed and awarded her three months’ worth of salary, the reimbursement of the cost of her repatriation, and attorney’s fees. Should Joy be awarded three months’ worth of salary and reimbursement of the cost of her repatriation? A: NO. Joy is entitled to her salary for the unexpired portion of her contract, in accordance with Sec. 10 of R.A. No. 8042. Since she started working on 26 June 1997 and was terminated from employment on 14 July 1997, Joy is entitled to her salary from 15 July 1997 to 25 June 1998. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 18 1. International organizations (e.g., World Bank) 2. Name Hires – individual workers who were able to secure contracts for overseas employment on their own efforts and representations without the assistance or participation of any agency. Their hiring, nonetheless, must be processed through the POEA. 3. Members of the diplomatic organizations (e.g., those employed by an embassy) Recruitment and Placement of Workers 4. Other Employers as may be allowed by DOLE such as workers hired by a relative/family member who is a permanent resident of the host country. Purposes of the Prohibition on Direct Hiring 1. 2. 3. To ensure the best possible terms and conditions of employment for the worker; To assure the foreign employer that he hires only qualified Filipino workers; and To ensure full regulation of employment to avoid exploitation. 2. Officers and staff of international organizations of which the Philippine government is a member, and their legitimate spouses desiring to work in the Philippines; 3. Owners and representatives of foreign principals whose companies are accredited by the POEA, who come to the Philippines for a limited period and solely for the purpose of interviewing Filipino applicants for employment abroad; 4. Foreign nationals who come to the Philippines to teach, present and/or conduct research studies in universities and colleges as visiting, exchange or adjunct professors under formal agreements between the universities and colleges in the Philippines and foreign universities or colleges; or between the Philippine government and foreign government, provided that the exemption is on a reciprocal basis; 5. Permanent resident foreign nationals and probationary or temporary resident visa holders under Sec. 13(a-f) of the Philippine Immigration Act of 1940 and Sec. 3 of the Alien Social Integration Act of 1995 (R.A. 9717); 6. Refugees and stateless persons recognized by the DOJ; and 7. All foreign nationals granted exemption by law. (Sec. 2, D.O. 186-17) B. EMPLOYMENT OF NON-RESIDENT ALIENS An employment permit may be issued to: 1. 2. A non-resident alien; or The applicant employer, after a determination of the non-availability of a person in the Philippines who is competent and able and willing at the time of application to perform the services for which the alien is desired. NOTE: For an enterprise registered in preferred areas of investments, said permit may be issued upon recommendation of the Government agency charged with the supervision of said registered enterprise. (Art. 40, LC) Persons Required to Obtain Alien Employment Permit Persons Excluded from Coverage The following are excluded from securing an Alien Employment Permit: GR: All foreign nationals who intend to engage in gainful employment in the Philippine shall apply for Alien Employment Permit (AEP). 1. Members of the governing board with voting rights only and do not intervene in the management of the corporation or in the day to day operation of the enterprise; 2. President and treasurer, who are part- owner of the company; XPN: The following categories of foreign nationals are exempt from securing an employment permit: 1. All members of the diplomatic service and foreign government officials accredited by and with reciprocity arrangement with the Philippines; 19 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation 3. Those providing consultancy services who do not have employers in the Philippines; 4. Intra-corporate transferee who is a manager, executive or specialist; 5. Contractual service supplier who is a manager, executive or specialist and an employee of a foreign service supplier which has no commercial presence in the Philippines; and 6. Representative of the Foreign Principal/Employer assigned in the Office of Licensed Manning Agency (OLMA) in accordance with the POEA law, rules and regulations. (Sec. 3, D.O. 186-17) NOTE: All foreign nationals excluded from securing AEP shall secure a Certificate of Exclusion from the Regional Office. (Sec. 4, D.O. 186-17) 2. In the case of foreign nationals to be assigned in related companies, applications may be filed in the Regional Office or Field Office having jurisdiction over any of the applicant's intended places of work. 3. Additional position of the foreign national in the same company or subsequent assignment in related companies during the validity or renewal of the AEP will be subject for publication requirement. A change of position or employer shall require an application for new AEP. 4. At any given time, only one AEP shall be issued to a foreign national. (Sec. 5, D.O. 186-17) Documentary Requirements A duly accomplished application form with the following complete documentary requirements must be submitted: Validity of AEP GR: The AEP shall be valid for the position and the company for which it was issued for a period of one (1) year. XPN: The employment contract, or other modes of engagement provide otherwise, which in no case shall exceed three (3) years. (Sec. 10, D.O. 186-17) 1. Photocopy of Passport with valid visa, except for temporary visitor's visa in case of renewal or Certificate of Recognition for Refugees or Stateless Persons; 2. Original copy of notarized appointment or contract of Employment enumerating the duties and responsibilities, annual salary, and other benefits of the foreign national; 3. Photocopy of Mayor's Permit to operate business, in case of locators in economic zones, Certification from the PEZA or the Ecozone Authority that the company is located and operating within the ecozone, while in case of a construction company, photocopy of license from PCAB or DO 174-17 Registration should be submitted in lieu of Mayor's Permit; and 4. Business Name Registration and Application Form with DTI or SEC Registration and GIS; 5. If the position title of the foreign national is included in the list of regulated professions, a Special Temporary Permit (STP) from the PRC; and Renewal of AEP An application for renewal of AEP shall be filed not earlier than 60 days before its expiration. In case the foreign national needs to leave the country or in other similar circumstances that will hinder the filing of renewal within this prescribed period, the application may be filed earlier. (Sec. 11, D.O. 18617) Procedure in the Processing of Applications for AEP 1. All applications for AEP shall be filed and processed at the DOLE Regional Office or Field Office having jurisdiction over the intended place of work. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 20 Recruitment and Placement of Workers 6. System (PEIS), the PRC Registry of Professionals, and the Technical Education and Skills Development Authority (TESDA) registry of certified workers to establish availability or non availability of able and qualified Filipino worker. If the employer is covered by the Anti-Dummy Law, an Authority to Employ Foreign National (ATEFN) from the DOJ or from the DENR in case of mining. Processing Periods 1. 2. Grounds for Denial of Application for New or Renewal of AEP Applications for new AEP - within three (3) working days after publication and payment of required fees and fines, if there are any. An application for AEP or the renewal thereof may be denied by the RD based on any of the following grounds: Applications for renewal of AEP – within one (1) day after receipt. (Sec. 8, D.O. 18617) 1. Misrepresentation of facts in the application including fraudulent misrepresentation (i.e., false statement that has a negative effect in the evaluation of the application made knowingly, or without belief in its truth, or recklessly whether it is true or false); 2. Submission of falsified documents; 3. Conviction to a criminal offense or a fugitive from justice in the country or abroad; 4. Grave misconduct in dealing with or ill treatment of workers; 5. Availability of a Filipino who is competent, able and willing to do the job intended for or being performed by the foreign national based on data in the PEIS, PRC Registry of Professional and TESDA Registry of Certified Workers; 6. Worked without valid AEP for more than a year; or 7. Application for renewal with an expired visa or with a temporary visitor's visa. (Sec. 12, D.O. 186-17) Publication Requirement The DOLE Regional Office shall publish in a newspaper of general circulation all applications for new AEPs, change or additional position in the same company or subsequent assignment in related companies within two (2) working days from receipt of application. The same shall be published in the DOLE website and posted in the PESO. Such publication and posting shall be for a period of 30 days and shall contain the name, position, employer and address, a brief description of the functions to be performed by the foreign national, qualifications, monthly salary range and other benefits, if there are any. It shall also indicate in the same notice of publication that any person in the Philippines who is competent, able and willing at the time of application to perform the services for which the foreign national is desired may file an objection at the DOLE Regional Office. (Sec. 7, D.O. 186-17) Objection NOTE: The Regional Director shall issue an Order denying the application for new or renewal of AEP which shall have the effect of forfeiture of the fees paid by the applicant. Any objection or information against the employment of the foreign national relative to labor market test must be filed with the Regional Office within 30 days after publication. The DOLE Regional Office shall refer to the DOLE's Philjobnet and PESO Employment Information 21 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation application for a period of five (5) years after due process. (Sec. 15, D.O. 186-17) Grounds for Cancellation or Revocation of AEP 1. 2. 3. 4. 5. 6. 7. Non-compliance with any of the requirements or conditions for which the AEP was issued; Misrepresentation of facts in the application including fraudulent misrepresentation (i.e., false statement that has a negative effect in the evaluation of the application made knowingly, or without belief in its truth, or recklessly whether it is true or false); Submission of falsified or tampered documents; Meritorious objection or information against the employment of the foreign national; Foreign national has been convicted of a criminal offense or a fugitive from justice; Employer terminated the employment of foreign national; and Grave misconduct in dealing with or ill treatment of workers. (Sec. 13, D.O. 186-17) Appeal The aggrieved foreign national or his authorized representative may file an appeal with the SOLE within ten (10) days after receipt of the copy of denial/ cancellation/ revocation order. The decision of the SOLE shall be final and executory unless a motion for reconsideration is filed within ten (10) days after receipt of the decision. No second motion for reconsideration shall be allowed. (Sec. 16, D.O. 186-17) Q: The DOLE issued an alien employment permit for Earl Cone, a U.S. citizen, as sports consultant and assistant coach for GMC. Later, the Board of Special Inquiry of the Commission on Immigration and Deportation approved Cone’s application for a change of admission status from temporary visitor to pre-arranged employee. A month later, GMC requested that it be allowed to employ Cone as full-fledged coach. The DOLE Regional Director granted the request. The Basketball Association of the Phils. appealed the issuance of said permit to the SOLE who cancelled Cone’s employment permit because GMC failed to show that there is no person in the Philippines who is competent and willing to do the services nor that the hiring of Cone would redound to the national interest. Is the act of the SOLE valid? Q: What is the effect of denial, cancellation, or revocation of AEP? A: A foreign national whose AEP has been denied or cancelled is disqualified to reapply within a period of ten (10) years in case the grounds for denial or cancellation is any of the following: a. b. Conviction of criminal offense or fugitive from justice in the country or abroad; or Grave misconduct in dealing with or ill treatment of workers. A foreign national whose AEP has been denied or cancelled due to misrepresentation of facts or submission of falsified documents with the intent to deceive, conceal or omit to state material facts and, by reason of such omission or concealment, the Department was prompted to approve/issue the AEP that would not otherwise have been approved/issued, shall be disqualified to reapply within a period of five (5) years. (Sec. 14, D.O. 18617) A: YES. GMC’s claim that hiring a foreign coach is an Er’s prerogative has no legal basis. Under Art. 40 of the LC, an Er seeking employment of an alien must first obtain an employment permit from the DOLE. GMC’s right to choose who to employ is limited by the statutory requirement of an employment permit. (GMC v. Torres, G.R. No. 93666, 22 Apr. 1991) Employer’s or foreign national's representatives, and/or agents acting in behalf of the applicant found to have filed fraudulent application for AEP for three (3) counts shall be barred from filing UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Prohibition Against Transfer of Employment After the issuance of an employment permit, the alien shall not transfer to another job or change his 22 Recruitment and Placement of Workers employer without prior approval of the SOLE. (Art. 41(a), LC) Any non-resident alien who shall take up employment in violation of the provisions of the Code and its IRR shall be punished. (Art. 41(b), LC) Alien workers shall be subject to deportation after service of his sentence. (Ibid.) 23 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards Existence of an Employment Relationship III. LABOR STANDARDS Employment relationship is determined by law and not by contract. (Insular Life Assurance Co. Ltd. v. NLRC, G.R. No. 119930, 12 Mar. 1998) 1. EMPLOYER-EMPLOYEE RELATIONSHIP NOTE: Taxi or jeepney drivers under the “boundary” system are Ees of the taxi or jeepney owners/operators; also the passenger bus drivers and conductors. (Jardin v. NLRC and Goodman Taxi, G.R. No. 119268, Feb. 23, 2000) Employer is any person, natural or juridical, domestic or foreign, who carries on in the Philippines any trade, business, industry, undertaking or activity of any kind and uses the services of another person, who is under his orders as regards the employment, except the Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or controlled by the Government. Employer-Employee Relation as a Question of Law (Stipulation that No Er-Ee Relationship Exists) The existence of an employer-employees relation is a question of law and being such, it cannot be made the subject of agreement. (Tabas v. California Manufacturing Co., Inc., G.R. No. 80680, 26 Jan. 1989) The employer may be a natural or juridical person. It may be a single proprietor, a partnership or a corporation. Employer includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer. (Art. 219(e), LC) It is axiomatic that the existence of an Er-Ee relationship cannot be negated by expressly repudiating it in the management contract and providing therein that the Ee is an independent contractor when the terms of the agreement clearly show otherwise. For, the employment status of a person is defined and prescribed by law and not by what the parties say it should be. In determining the status of the management contract, the FourFold Test on employment has to be applied. (Insular Life Assurance Co. Ltd. v. NLRC, G.R. No. 119930, 12 Mar. 1998) Employee is 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. (R.A. No. 8282, Social Security Law) Only a natural person can qualify as an employee. Natural persons may include Filipino citizens and foreigners. Employer-Employee Relation as a Question of Fact The existence of an employer-employee relationship depends upon the facts of each case. (Social Security System v. CA, G.R. No. 100388, 14 Dec. 2000) Employee includes any person in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless the Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment. (Art. 219(f), LC) Q: Romel is working as a pianist in the restaurant of a hotel for almost 7 years. During his employment, he was given a time for his performance fixed at 7-10pm for 3-6x a week; the manager requires him to conform with the venue’s motif and is subjected to the rules and regulations of the employees of the hotel. His NOTE: A self-employed person shall be both an employee and employer at the same time. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 24 Labor Law and Social Legislation for illegal dismissal and payment of money claims should be directed against ASIA. Nevertheless, Baron filed a Third Party Complaint against ASIA. salary was given every night. His services were terminated as a cost-cutting measure. He filed for illegal dismissal. As a defense, the hotel management alleged that there can be no illegal dismissal as Er-Ee relationship is absent. Is the defense of the hotel tenable? Is there an Er-Ee relationship between the Baron, on one hand, and the ASIA security guards, on the other hand? Explain briefly. (1999 BAR) A: NO. Romel is an employee of the hotel. The issue of whether or not an employer-employee relationship existed between petitioner and respondent is essentially a question of fact. The factors that determine the issue include who has the power to select the employee, who pays the employee’s wages, who has the power to dismiss the employee, and who exercises control of the methods and results by which the work of the employee is accomplished. (Legend Hotel v. Realuyo, G.R. No. 153511, 18 July 2012) A: YES. As a general rule, the security guards of a private security guard agency are the Ees of the latter and not of the establishment that has entered into a contract with the private security guard agency for security services. But under the facts in the question, Baron Hotel appears to have hired the security guards, paid their wages, had the power to promote, suspend or dismiss the security guards and the power of control over them. In other words, the security guards were under orders of Baron Hotel as regard to their employment. Because of the above-mentioned circumstances, Baron Hotel is the Er of the security guards. Q: ASIA executed a 1-year contract with the Baron Hotel for the former to provide the latter with 20 security guards to safeguard the persons and belongings of hotel guests, among others. The security guards filled up Baron application form and submitted the executed forms directly to the Security Department of Baron. The pay slips of the security guards bore Baron's logo and showed that Baron deducted the amounts for SSS premiums, medicare contributions and withholding taxes from the wages of the security guards. The assignments of security guards, who should be on duty or on call, promotions, suspensions, dismissals and award citations for meritorious services were all done upon approval by Baron's chief security officer. After the expiration of the contract with ASIA, Baron did not renew the same and instead executed another contract for security services with another agency. ASIA placed the affected security guards on "floating status" on "no work no pay" basis. Q: Assuming that ASIA is the Er, is the act of ASIA in placing the security guards on "floating status" lawful? Why? A: YES. It is lawful for a private security guard agency to place its security guard on a "floating status" if it has no assignment to give to said security guards. But if the security guards are placed on a "floating status" for more than six (6) months, the security guards may consider themselves as having been dismissed. Q: What property right is conferred upon an employee once there is an employer-employee relationship? Discuss briefly. (2006 BAR) A: Once an employer-employee relationship is established, such employment is treated, under our constitutional framework, as a property right. When a person has no property, his job may possibly be his only possession or means of livelihood and those of his dependents. When a person loses his job, his dependents suffer as well. The worker should, therefore, be protected and insulated against any arbitrary deprivation of his job. (Philips Having been displaced from work, the ASIA security guards filed a case against Baron for illegal dismissal, OT pay, minimum wage differentials, vacation leave and sick leave benefits, and 13th month pay. Baron denied liability alleging that ASIA is the Er of the security guards and therefore, their complaint 25 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards escaping the conclusion that one is an Ee of the insurance company. (Insular Assurance Co., Ltd., v. NLRC, G.R. No. 119930, 12 Mar. 1998) Semiconductors, Inc. v. Fadriquela, G.R. No. 141717, 14 Apr. 2004) 2. TEST TO DETERMINE EXISTENCE The control test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right. (Zanotte Shoes v. NLRC, G.R. No. 100665, 13 Feb. 1995) Four-Fold Test Factors determining the existence of an employeremployee relationship: 1. Selection and engagement of the employee; 2. Payment of wages; 3. Power of dismissal; and 4. Power of control, or the Control Test. (Azucena, 2016) Kinds of Control Exercised by an Er Not every form of control will have the effect of establishing an Er-Ee relationship. Thus, a line should be drawn between: It is the so-called “control test” that is the most important element. Absent the power to control the Ee with respect to the means and methods by which his work was to be accomplished, there is no Er-Ee relationship between the parties. (Continental Marble Corp., et.al v. NLRC, G.R. No. 43825, 09 May 1988) Control Test The control test assumes primacy in the overall consideration. There is an Er-Ee relationship when the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to achieve that end. (Television and Production Exponents, Inc. v. Servaña, G.R. No. 167648, 28 Jan. 2008) Rules that merely serve as guidelines, which aims ONLY to promote the result. In such case, no Er-Ee relationship exists. b. Rules that fix the methodology and bind or restrict the party hired to the use of such means or methods. These addresses both the result AND the means employed to achieve it and hence, Er-Ee relationship exists. (Insular Life Assurance Co. v. NLRC, G.R. 84484, 15 Nov. 1989) The main determinant therefore is whether the rules set by the employer are meant to control not just the results but also the means and methods. (Orozco v. CA, G.R. 155207, 13 Aug. 2008) NOTE: However, in certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a relationship where several positions have been held by the worker. The better approach is to adopt the two-tiered test. (Francisco v. NLRC, G.R. No. 170087, 31 Aug. 2006) The power of control refers to the existence of power and not necessarily to the actual exercise thereof. It is not essential for the employer to actually supervise the performance of duties of the Ee; it is enough that the employer has the right to wield that power. (Republic v. Asiapro Cooperative, G.R. No. 172,101, 23 Nov. 2007) Q: Genesis entered into a Career’s Agent Agreement with EmoLife Insurance Company, a domestic corporation engaged in insurance business. The Agreement provides that the agent is an independent contractor and nothing therein shall be construed or interpreted as creating an Er-Ee relationship. It further provides that the agent must comply with three requirements: (1) compliance with the Exclusivity of service, control of assignments and removal of agents under private respondents’ unit, collection of premiums, furnishing of company facilities and materials as well as capital described as Unit Development Fund are but hallmarks of the management system where there can be no UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES a. 26 Labor Law and Social Legislation regulations and requirements of the company; (2) maintenance of a level of knowledge of the company's products that is satisfactory to the company; and (3) compliance with a quota of new businesses. However, EmoLife insurance company terminated Genesis’ services. Genesis filed an illegal dismissal complaint alleging therein that an Er-Ee relationship exists and that he was illegally dismissed. Is he an employee of the Insurance Company? Economic Dependence (Two-Tiered Test) This two-tiered test provides us with a framework of analysis, which would take into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate in this case where there is no written agreement or terms of reference to base the relationship on and due to the complexity of the relationship based on the various positions and responsibilities given to the worker over the period of the latter’s employment. (Francisco v. NLRC, G.R. No. 170087, 31 Aug. 2006) A: NO. Genesis is not an Ee of EmoLife Insurance Company. Generally, the determinative element is the control exercised over the one rendering the service. The concept of “control” in LC has to be compared and distinguished with “control” that must necessarily exist in a principal-agent relationship. The Er controls the Ee both in the results and in the means and manner of achieving this result. The principal in an agency relationship, e.g., insurance agent, on the other hand, also has the prerogative to exercise control over the agent in undertaking the assigned task based on the parameters outlined in the pertinent laws. Elements In the present case, the Agreement fully serves as grant of authority to Genesis as EmoLife’s insurance agent. This agreement is supplemented by the company’s agency practices and usages, duly accepted by the agent in carrying out the agency. Foremost among these are the directives that the principal may impose on the agent to achieve the assigned tasks, to the extent that they do not involve the means and manner of undertaking these tasks. 1. The putative Er’s power to control the Ee with respect to the means and methods by which the work is to be accomplished (Fourfold Test); and 2. The underlying economic realities of the activity or relationship. (Economic Reality Test). Proper Standard for Economic Dependence The proper standard is whether the worker is dependent on the alleged Er for his continued employment in that line of business. The determination of the nature of the relationship between Er and Ee depends upon the circumstances of the whole economic activity, such as: The law likewise obligates the agent to render an account; in this sense, the principal may impose on the agent specific instructions on how an account shall be made, particularly on the matter of expenses and reimbursements. To these extents, control can be imposed through rules and regulations without intruding into the labor law concept of control for purposes of employment. (Gregorio Tongko v. ManuLife Insurance Company, G.R. No. 167622, 29 June 2010) 1. 2. 3. 4. 5. 6. 27 The extent to which the services performed are an integral part of the Er’s business; The extent of the worker’s investment in equipment and facilities; The nature and degree of control exercised by the Er; The worker’s opportunity for profit and loss; The amount of initiative, skill, judgment, or foresight required for the success of the claimed independent enterprise; The permanency and duration of the relationship between the worker and Er; and UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards The degree of dependency of the worker upon the Er for his continued employment in that line of business. Piece-rate, boundary, and pakyaw are merely methods of pay computation and do not prove whether the payee is an Ee or not. (Azucena, 2016) Evidence of Employment: ID, Voucher, SSS Registration, Memorandum Q: Africa, et al. are engaged as garbage truck drivers to collect garbage from different cities and transport the same to the designated dumping site. They filed separate cases against Expedition for illegal dismissal for having been prevented from entering the premises of Expedition without cause or due process. They claimed that they were regular employees; were required to work a minimum of 12 hours a day, seven days a week, even on holidays, and were not paid the minimum wage, holiday or premium pay, overtime pay, SIL pay and 13th month pay. 7. No particular form of evidence is required to prove the existence of such relationship. Any competent and relevant evidence to prove the relationship may be admitted. (Domasig vs. NLRC, G.R. No. 118101, 16 Sept. 1996) Absence of Name in the Payroll In Opulencia Ice Plant v. NLRC (G.R. No. 98368, 15 Dec. 1993), the Supreme Court disagreed with the employer’s argument that the absence of the complainant’s name in the payroll disapproved his being an employee. Expedition denied that respondents were its employees claiming that respondents were not part of the company’s payroll but were being paid on a per-trip basis. They claimed that respondents were not under their direct control and supervision as they worked on their own. Are the respondents employees of Expedition? It held that, “if only documentary evidence would be required to show that relationship, no scheming employer would ever be brought before the bar of justice, as no employer would wish to come out with any trace of illegality he has authored considering that it should take much weightier proof to invalidate a written instrument.” A: YES. Applying the four-fold test, Africa, et al. were engaged/hired by Expedition as garbage truck drivers. It is undeniable that they receive compensation from Expedition for the services that they rendered to the latter. The fact that they were paid on a per trip basis is irrelevant because this was merely the method of computing the proper compensation due to them. Also, Expedition’s power to dismiss was apparent when work was withheld from the respondent. Finally, Expedition has the power of control over respondents in the performance of their work. (Expedition Construction Corp., et. al v. Africa, G.R. No. 228671, 14 Dec. 2017) Thus, since the Er-Ee relationship in this case was sufficiently proven by testimonial evidence, the absence of time sheet, time record or payroll became inconsequential. (Azucena, 2016) Mode of Compensation: Not Determinative of ErEe Relationship The presence or absence of Er-Ee relationship is not determined by the basis of the Ee’s compensation. The compensation, whether called wage, salary, commission or other name, may be computed on the basis of time spent on the job or it may be based on the quality and/or quantity of the work done. It may further be dependent on skills possessed, seniority earned, or performance and initiative shown by the Ee. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Boundary-Hulog System Under the boundary-hulog scheme, a dual juridical relationship was created: that of Er-Ee and vendorvendee. The boundary system is a scheme by an owner/operator engaged in transporting passengers as a common carrier to primarily govern the compensation of the driver, that is, the latter’s daily earnings are remitted to the owner/operator 28 Labor Law and Social Legislation less the excess of the boundary which represents the driver’s compensation. Under this system, the owner/operator exercises control and supervision over the driver. (Villamaria v. CA and Bustamante, G.R. No. 165881, 19 Apr. 2006) Labor Union and Unregistered Association as Er The mere fact that the respondent is a labor union does not mean that it cannot be considered an Er of the persons who work for it. Much less should it be exempted from the very labor laws which it espouses as labor organization. (Bautista v. Inciong, G.R. No. L-52824, 16 Mar. 1988) The boundary-hulog contract between the jeepney owner and the jeepney driver does not negate the Er-Ee relationship between them. (Azucena, 2016) Application of the four-fold test and the twotiered test Q: To ensure road safety and address the risktaking behavior of bus drivers, the LTFRB issued Memorandum Circular 2012-001 requiring all Public Utility Bus (PUB) operators to secure Labor Standards Compliance Certificates under pain of revocation of their existing certificates of public convenience or denial of an application for a new certificate. The DOLE likewise issued Department Order (D.O.) No. 118-12 elaborating on the part-fixed-part-performance-based compensation system referred to in the said memorandum circular. Petitioners assail the constitutionality of the department order and memorandum circular, arguing that these issuances violate petitioners' rights to nonimpairment of obligation of contracts, due process of law, and equal protection of the laws. Respondents counter that the department order and memorandum circular are valid issuances promulgated by the DOLE and the LTFRB in the exercise of their quasi-legislative powers. Are the department order and memorandum circular constitutional? Present Philippine law recognizes a two-tiered test. The first tier of the test is the Four-fold Test. The second tier is the Economics of the Relationship Test. But the latter test is used if and only if there is going to be harshness in the results because of the strict application of the four-fold test. (Francisco v. NLRC, G.R. No. 170087, 31 Aug. 2006) Art. 295 Presupposes Employment Relationship Art. 295 applies where the existence of Er-Ee relationship is not the issue of the dispute. If the issue is whether or not the claimant is an employee, the tests of employment relationship shall be resorted to. Art. 295 limits itself to differentiating four kinds of employment arrangement: regular, project, seasonal, and casual. The article presupposes that employment relationship exists between the parties. (Azucena, 2016) A: YES. D.O. 118-12 and M.C. 2012-001 are in the nature of social legislations to enhance the economic status of bus drivers and conductors, and to promote the general welfare of the riding public. D.O. 118-12 was issued to grant bus drivers and conductors minimum wages and social welfare benefits. Further, petitioners repeatedly admitted that in paying their bus drivers and conductors, they employ the boundary system or commission basis, payment schemes which cause drivers to drive recklessly. Not only does D.O. 118-12 aim to uplift the economic status of bus drivers and conductors; it also promotes road and traffic safety. (Provincial Bus Operators Association of the Philippines v. DOLE and LTFRB, G.R. No. 202275, 17 July 2018) 3. EMPLOYEE vs. INDEPENDENT CONTRACTOR Independent Contractor Those who undertake “job-contracting.” They exercise independent employment, contracting to do a piece of work according to their own methods and without being subject to control of their Er except as to the result of their work. (Villuga v. NLRC, G.R. No. 75038, 23 Aug. 1993) NOTE: Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary Ees. (Sonza v. ABS-CBN, G.R. No. 138051, 10 June 2004) 29 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards Employee vs. Independent Contractor Indirect or Statutory Employer is one who enters into a contract with an independent contractor for the performance of any work, task, job, or project not directly related to the employer’s business. (Baguio v. NLRC, G.R. Nos. 79004-08, 04 Oct 1991) As to their Existence NOTE: No Er-Ee relationship exists between the owner of the project and the Ees of the independent contractor. (Ibid.) Existence of an Er-Ee relationship is determined by law. The principal employer is considered only an indirect employer. (PCI Automation Center, Inc. v. NLRC, G.R. No. 115920, 29 Jan. 1996) Er exercises the right to control not only the end achieved, but also the manner and means used to achieve that end. Major Laws Applicable to Work Relationship 2. Existence of an Independent Contractorship is determined by the contract. As to the Exercise of Control What is contracted is the performance and completion of a designated job, and not just the supplying of people to do the job. 1. INDEPENDENT CONTRACTOR EMPLOYEE Only the result of their work is subject to the Er’s control. As to Wages Between the Principal and Contractor – The Civil Code and pertinent Commercial Laws Between Contractor and his Employees – the Labor Code and Special Labor Laws. Wages should comply with the minimum wage established by law. NOTE: Between the principal and the contractor’s Ees, no Er-Ee relationship exists; the contractor, being himself a businessman, is the Er. But the contractor may in turn become a contractee if he contracts with a contractor. Payment given to an independent contractor is compensation that is agreed upon in the contract. As to Payment of Contributions Er is required to pay for Ee’s contributions, such as Pag-IBIG, PhilHealth, SSS. Er-Ee relationship may be declared to exist between the principal and the contractor’s workers where the contracting arrangement is not legitimate. The independent contractor pays for his own contribution. As to Termination Ee may be terminated only due to reasons stated in the LC. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 30 Other valid grouds may be indicated in the contract. Labor Law and Social Legislation Managerial Employees A. CONDITIONS OF EMPLOYMENT A managerial employee is one who is vested with powers or prerogatives to lay down or execute management policies and or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees, or to effectively recommend such managerial actions. All employees not falling within this definition are considered rank and file employees. (PMTI-ULGWF v. Ferrer-Calleja, G.R. No. 85915, 17 Jan. 1990) 1. COVERED EMPLOYEES/WORKERS GR: Title I, Book III of the Labor Code deals with hours of work, weekly rest periods, holidays, service incentive leaves and service charges. It covers all employees in all establishments, whether for profit or not. (Art. 82, LC) XPNs: (GF-MOM-WPD) 1. Government employees; 2. Field personnel; 3. Managerial employees; 4. Officers and members of the managerial staff; 5. Members of the family of the Er who are dependent on him for support; 6. Workers paid by results; (Secs. 1 and 2, Rule I, Book III, IRR) 7. Persons in the personal service of another; and 8. Domestic helpers. The aforementioned employees are not entitled to overtime pay, premium pay for rest days and holidays, night shift differential pay, holiday pay, service incentive leave and service charges. (Poquiz, 2012) 1. Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof. 2. They customarily and regularly direct the work of two or more employees therein. 3. They have the authority to hire or fire employees of lower rank; or their suggestions and recommendations as to hiring and firing and as to the promotion or any other change of status of other employees, are given particular weight. (Sec. 2(b), Rule I, Book III, IRR) They are employed as such by virtue of their special training or expertise, experience or knowledge and for positions which require the exercise of independent judgment and discretion. They are not subject to the rigid observance of regular office hours, as the true worth of their services do not depend so much on the time they spend in office, but more on the results of their accomplishments. For these types of workers, it is not feasible to provide fixed hourly rate of pay or maximum hours of labor. (UPSU v. Laguesma, G.R. No. 122226, 25 Mar. 1998) Government Employees The terms and conditions of their employment are governed by the Civil Service Law. In case of government-owned or controlled corporations with original charters, terms and conditions of employment may be governed by such legislated charters. Officers or Members of Managerial Staff Government-owned or controlled corporations without original charters and created under the Corporation Code are governed by the Labor Code. (Poquiz, 2012) 31 1. Their primary duty consists of the performance of work directly related to management policies of their Er; 2. They customarily and regularly exercise discretion and independent judgment; UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards 3. They regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or execute, under general supervision, special assignments and tasks; and Test of Supervisory or Managerial Status It depends on whether a person possesses authority that is not merely routinary or clerical in nature but one that requires use of independent judgement. MANAGERIAL EMPLOYEES Book III, Art. 82 Labor Standards Book V. Art. 219 (M) Labor Relations Definition 4. They do not devote more than 20% of their hours worked in a work week to activities which are not directly and closely related to the performance of the work described above. (Sec. 2 (c), Rule I, Book III, IRR) Refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to the other officers or members of the managerial staff. Officers and members of a managerial staff (such as project engineers) are considered managerial employees for they customarily and regularly exercise discretion and independent judgment, that is, their powers are not subject to evaluation, review and final action by the department heads and other higher executives of the company. (Franklin Baker Co. of the Philippines v. Trajano, G.R. No. 75039, 28 Jan. 1988) Vested with the powers or prerogative to lay down and execute management policies, and/or to hire, transfer, suspend, layoff, recall, discharge, assign, or discipline employees. Application Used only for purposes of Book III (i.e., working conditions, rest periods, and benefits) Used only for purposes of Book V (i.e., forming, joining and assisting of unions, certification election, and, collective bargaining) Inclusion of Supervisors Supervisors are members of the managerial staff. In effect, supervisor is a manager for purposes of Book III. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 32 Supervisors are not managerial employees under Book V. (Azucena, 2016) Labor Law and Social Legislation Domestic Servants/Persons in The Personal Service of Another regularly performs his duties but also with the fact that the employee’s performance is unsupervised by the Er. In order to conclude whether an employee is a field Ee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the Er. In so doing, an inquiry must be made as to whether or not the Ee’s time and performance are constantly supervised by the Er. (Autobus Transport Systems Inc. v. Antonio Bautista, G.R. No. 156367, 16 May 2005) These are those who: a. Perform such services in the Er's home which are usually necessary or desirable for the maintenance and enjoyment thereof; or b. Minister to the personal comfort, convenience, or safety of the Er as well as the members of his Er's household. (Sec. 2(d), Rule I, Book III, IRR) e.g., Outside sales personnel, agents on commission basis, or insurance field agents (San Miguel Brewery v. Democratic Labor Union, G.R. No. L-18353, 31 July 1963); meter readers, medical representatives. (Duka, 2016) NOTE: They are not covered by this Title because terms and conditions of employment are governed by the provisions of R.A. No. 10361, otherwise known as the Batas Kasambahay Law. Rule in case of Drivers/Bus Conductors A laundrywoman in staff houses of a company or within the premises of the business of the employer, not actually serving the family of the employer, is a regular employee. She is not included in the definition of domestic servants. (Apex Mining Co. Inc. v. NLRC, G.R. No. 94951, 22 Apr. 1991) It is of judicial notice that along the routes that are plied by these bus companies, there are its inspectors assigned at strategic places who board the bus and inspect the passengers, the punched tickets, and the conductor's reports. There is also the mandatory once-a-week car barn or shop day, where the bus is regularly checked as to its mechanical, electrical, and hydraulic aspects, whether or not there are problems thereon as reported by the driver and/or conductor. They too, must be at specific places at specified times, as they generally observe prompt departure and arrival from their point of origin to their point of destination. In each and every depot, there is always the dispatcher whose function is precisely to see to it that the bus and its crew leave the premises at specific times and arrive at the estimated proper time. He cannot be considered field personnel. (Autobus Transport System, Inc. v. Bautista, G.R No. 156367, 16 May 2005) Field Personnel Field personnel employees who: 1. 2. refers to non-agricultural Regularly perform their duties away from the principal place of business or branch office of the Er; and Whose actual hours of work in the field cannot be determined with reasonable certainty. (Sec. 27, Rule II, Book III, IRR) They are exempted from the coverage due to the nature of their functions which requires performance of service away from the principal place of business. Hence, they are free from the personal supervision of the Er and the latter cannot determine with reasonable certainty the actual number of hours of work expended for the Er's interest. Members of the Family They are exempted from the coverage, for the support given by the Er may exceed the benefit for which an employee is entitled under appropriate labor provisions. To cover them under Art. 82 may create labor problems that would eventually breakup the family, which is the evil sought to be prevented. (Poquiz, 2012) The definition of a "field personnel" is not merely concerned with the location where the employee 33 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards Workers Paid by Results 2. HOURS OF WORK There are two categories of employees paid by results: a. NORMAL HOURS OF WORK, HOURS WORKED GR: The normal hours of work of any employee shall not exceed eight (8) hours a day. (Art. 83, LC) (1) Those whose time and performance are supervised by the Er. NOTE: There is no hard limit on the maximum hours of work that may be rendered by an employee. However, work rendered beyond the eight-hour limit would not be considered normal. It would be overtime, and thus subject to additional pay to entitled employees. NOTE: Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to this category especially if he performs his work in the company premises. (2) Those whose time and performance are unsupervised. XPNs: 1. Health personnel – include resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. (Art. 83, LC); and NOTE: Here, the Er control is over the result of the work. Workers on “pakyao” and “takay” basis belong to this group. (Lambo v. NLRC, G.R. No. 111042, 26 Oct. 1999) Payment of this type of worker is determined by the results of the work performed or the number of units produced, not the number of hours used in the completion of the job or the time spent in production. (Poquiz, 2012) 2. Tailors and similar workers hired in the tailoring establishment, although paid weekly wages on piece-work basis, are employees and not independent contractors, and accordingly, as regular employees paid on piece-rate basis, they are not entitled to overtime pay, holiday pay, premium pay for holiday/rest day and service incentive leave pay. (Villaga v. NLRC, G.R. No. 75038, 23 Aug. 1993) NOTE: Department Orders providing for maximum hours of work for bus drivers, movie workers, sea farers, where there is a compressed work week arrangement in place, and children employees are also subjected to a maximum number of work hours per day. An employee who is engaged on a task or contract basis, purely commission basis, or those paid by results, is not automatically excluded by that fact alone. To be excluded, the employee must also fall under the classification of field personnel. Rationale of the 8-Hour Labor 1. 2. 3. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Compressed workweek – an alternative arrangement whereby the normal workweek is reduced to less than six (6) days but the total number of normal work hours per week shall remain at 48 hours. The normal workday is increased to more than eight (8) hours without corresponding overtime premium. (D.A. No. 02-04) 34 To safeguard the health and welfare of the laborer; To minimize unemployment by utilizing different shifts; (Manila Terminal Co., Inc. v. CIR, G.R. No. L-4148, 16 July 1952) and To afford the employees adequate time to lead richer and more fruitful, meaningful lives and Labor Law and Social Legislation to be able to participate intelligently in public concerns. Illustration: If the worker starts to work 8 am today, the work day is from 8 am today up to 8 am tomorrow. (Azucena, 2016) Normal hours of work may be shortened or compressed. Neither does it follow that a person who does not observe normal hours of work cannot be deemed an employee. Part-Time Work It is not prohibited to have normal hours of work of less than eight hours a day. What the law regulates is work hours exceeding eight – it prescribes the maximum but not the minimum. In Cosmopolitan Funeral Homes, Inc. v. Maalat (G.R. No. 86693, 2 July 1990), the Er similarly denied the existence of an Er-Ee relationship, as the claimant according to it, was a "supervisor on commission basis" who did not observe normal hours of work. The Supreme Court declared that there was an ErEe relationship, noting that "the supervisor, although compensated on a commission basis, [is] exempt from the observance of normal hours of work for his compensation is measured by the number of sales he makes." (Lazaro v. SSS, G.R. No. 138254, 30 July 2004) NOTE: Under Art. 124, as amended by RA 6727, wage proportionate to part-time work is recognized. The wage and benefits of a part-time worker are in proportion to the number of hours worked. E.g., If an Ee earns P300.00 for an eighthour work, he shall then get P150.00 for work done in four (4) hours. Broken Hours The eight-hour work requirement does not, however, preclude the Er in the exercise of its management prerogatives to reduce the number of working hours, provided that there is no diminution of existing benefits. (Poquiz, 2012) Minimum normal eight (8) working hours fixed by law need not be continuous to constitute the legal working day. It may mean broken hours of say, four (4) hours in the morning and four (4) hours in the evening or variation thereof provided the total of eight (8) hours is accomplished within the work day. (Chan, 2017) The right to fix the work schedules of the Ee rests principally on their Er. (Sime Darby Pilipinas, Inc. v. NLRC, G.R. 119205, 15 Apr. 1998) Hours Worked Working time is one during which an employee is actually working. It may include an instance when an employee is not actually working but he is required to be present in the Er’s premises. Thus, the fact that he is required to be present although not actually doing any work, is still deemed working time. (Poquiz, 2012) Management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, layoff of workers and discipline, dismissal, and recall of workers. (Manila Jockey Club Employees Labor Union v. MJCI, G.R. No. 167760, 07 Mar. 2007) When Hours Worked are Compensable 1. Work Day 2. 3. Work day is the 24-hour period which commences from the time the employee regularly starts to work. 4. 35 Ee is required to be on duty or to be at a prescribed workplace; Ee is suffered or permitted to work; Rest periods of short duration during working hours which shall not be more than 20 minutes; and Meal periods of less than 20 minutes. (Sec. 7, Rule I, Book III, IRR) UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards NOTE: Travel time, when beneficial to the Er, is compensable. (Rada v. NLRC, G.R. No. 96078, 09 Jan. 1992) RULES ON HOURS WORKED A. WAITING TIME It shall be considered as working time if: Principles in Determining Hours Worked 1. All hours which the Ee is required to give to his Er regardless of whether or not such hours are spent in productive labor or involve physical or mental exertion. 2. Rest period is excluded from hours worked, even if Ee does not leave his workplace, it being enough that: a. b. c. 3. NOTE: An employee who is not required to leave word at his home or with company officials where he may be reached is not working while on call. (Sec. 5(b), Rule I, Book III, IRR) He stops working; May rest completely; or May leave his workplace, to go elsewhere, whether within or outside the premises of the workplace. The controlling factor is whether waiting time spent in idleness is so spent predominantly for the Er’s benefit or for the Ee’s. All time spent for work is considered hours worked if: a. b. c. d. 4. 1. Waiting is an integral part of this work; 2. The Ee is required or engaged by the Er to wait; or 3. When Ee is required to remain on call in the Er’s premises or so close thereto that he cannot use the time effectively and gainfully for his own purpose. (Sec. 5, Rule I, Book III, IRR) The work performed was necessary; If it benefited the Er; or The Ee could not abandon his work at the end of his normal working hours because he had no replacement; Provided, the work was with the knowledge of his Er or immediate supervisor. Engaged to Wait vs. Waiting to be Engaged In engaged to wait, waiting is an integral part of the job; the time spent waiting is compensable, while in waiting to be engaged, idle time is not working time; it is not compensable. B. PRELIMINARY ACTIVITIES The time during which an Ee is inactive by reason of interruptions in his work beyond his control shall be considered working time: a. b. AND POSTLIMINARY Preliminary (before work) and postliminary (after actual work) activities deemed performed during working hours and compensable: If the imminence of the resumption of the work requires the Ees presence at the place of work; or If the interval is too brief to be utilized effectively and gainfully in the Ees own interest. (Sec. 4, Rule I, Book III, IRR) 1. Where such activities are controlled by the Er or required by the Er; and 2. Pursued necessarily and primarily for the Er's benefit. (31 Am. Jur. 882-883) Ees are the entitled to portal pay for time spent on incidental activities before or after the regular working period. (CCHI, Labor Law Course, 318) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 36 Labor Law and Social Legislation e.g., Travel from job site to job site during the work day, must be counted as working hours. Travel from main workplace (5pm) to jobsite A (6pm) to jobsite B (7pm) to jobsite C (8pm) to main workplace (9pm) is compensable. Thirty-minute assembly time - long practiced and institutionalized by mutual consent of the parties under the collective bargaining agreement cannot be considered waiting time of the employees if they are not subject to the absolute control of the company during this period. (Arica v. NLRC, G.R. No. 78210, 28 Feb. 1989) The 30-minute assembly time is compensable, given the following reasons: NOT 1. non- The assembly complicated; is routinary and 2. The employees’ houses are situated on the same area as the workplace; and 3. The employees were not subjected to disciplinary action should they fail to report in the assembly time. But, if instead of travelling back to the main workplace, employee decides to go home from jobsite C, travel time from 8pm is no longer compensable, because it would already fall under the category of work to home travel. 3. GR: 1. Travel that requires an overnight stay on the part of the Ee when it cuts across the Ees workday is clearly working time. 2. Therefore, the 30-minute assembly time was not primarily intended for the interest of the Er, but ultimately for the employees to indicate their availability or unavailability for work during workdays. (Ibid.) The time is not only hours worked on regular workdays but also during corresponding working hours on nonworking days. Outside of these regular working hours, travel away from home is not considered working time. XPN: During meal period or when Ee is permitted to sleep in adequate facilities furnished by the Er. C. TRAVEL TIME 1. Travel away from home Travel from home to work D. SLEEPING TIME GR: Normal travel from home to work is not working time. A worker sleeping may be working. Whether sleeping time allowed an employee will be considered as part of his working time will depend upon the express or implied agreement of the parties. In the absence of an agreement, it will depend upon the nature of the service and its relation to the working time. XPNs: a. Emergency call outside his regular working hours where he is required to travel to his regular place of business or some other work site; b. Done through a conveyance provided by the Er; c. Done under the supervision and control of the Er; and d. Done under vexing and dangerous circumstance. 2. The rule is that sleeping time may be considered: a) Working time if: i. it is subject to serious interruption; or ii. takes place under conditions substantially less desirable than would be likely to exist at the employee’s home. Travel that is all in a day’s work – time spent in travel as part of the Ees principal activity. 37 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards are unable to continue because of emergencies such as typhoons, flood, earthquake and transportation strike shall also mean to include brownout or power outage because the key element of the provision is that employees who have reported for work are unable to continue working because of the incident. Hence, employees who were prevented to continue their work due to brownout should also be remunerated. (Supreme Steel Corporation v. Nagkakaisang Manggagawa ng Supreme Independent Union, G.R. 185556, 28 March 2011) b) Not working time if there is an opportunity for comparatively uninterrupted sleep under fairly desirable conditions. (Azucena, 2010) E. POWER INTERRUPTIONS 1. Brownouts of short duration but not exceeding 20 minutes shall be treated as worked or compensable hours whether used productively by the employees or not; (DOLE P.I. 36, 22 May 1978) 2. Brownouts running for more than 20 minutes may not be treated as hours worked provided that any of the following conditions are present: i. ii. Time spent during which an employee is inactive by reason of interruptions beyond his control is working time, such as twenty-minute electric power failure or machine breakdowns. The pay for this non-productive time is known as idle-time pay. Where the work is broken or is not continuous, the idle time that an employee may spend for rest is not counted as working time. (NDC v. CIR, G.R. No. L53961, 30 June 1987) The employees can leave their workplace or go elsewhere whether within or without the work premises; or The employees can use the time effectively for their own interest. (Durabuilt Recapping Plant v. NLRC, G.R. No. 76746, 27 July 1987) F. LECTURES, PROGRAMS TRAINING Attendance at lectures, meetings, training programs and similar activities need not be counted as working time if the following criteria are met: NOTE: In each case, the Er may extend the working hours of his employees outside the regular schedules to compensate for the loss of productive man-hours without being liable for overtime pay. (Chan, 2017) 1. 2. 3. Industrial enterprises with one or two workshifts may adopt any of the workshifts prescribed for enterprises with three workshifts to prevent serious loss or damage to materials, machineries, or equipment that may result in case of power interruption. (DOLE P.I. 36, 22 May 1978) Attendance is outside of the employee's regular working hours; Attendance is in fact voluntary; The employee does not perform any productive work during such attendance. (Sec. 6, Rule I, Book III, IRR) G. ATTENDANCE ACTIVITIES 1. The days when work was not required and no work could be done because of shutdown due to electrical power interruptions, lack of raw materials and repair of machines, are not deemed hours worked. (Durabit Recapping Plant Company v. NLRC, G.R. No. L-76746, 27 July 1987) When a CBA contains a reporting time-off provision wherein employees who have reported for work but UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES MEETINGS, 38 IN LABOR RELATIONS CBA Negotiations - compensable if: a. There is an agreement for the compensability in the parties’ ground rules; b. There is an established policy allowing compensability; and c. When it is done during regular work hours with the agreement of the Er. Labor Law and Social Legislation Health Personnel Covered by the 40-Hour Workweek 2. Grievance Meeting GR: Time spent in adjusting grievance between Er and Ees during the time Ees are required by the Er to be on the premises is compensable. XPN: When a bona fide union is involved and there is a CBA, policy, practice to contrary. 1. Those in cities and municipalities with a population of at least one (1) million; or 2. Those in hospitals and clinics with a bed capacity of at least 100. 3. Strikes NOTE: Art. 83(2) of the LC does not require hospitals to pay the Ees a full weekly salary with paid two days off. (San Juan de Dios Ees Assoc.-AFW et al. v. NLRC, G.R. No. 126383, 28 Nov. 1997) GR: Not compensable. XPN: If there is an agreement to allow “strike duration pay” provided under the company policy, practice or CBA. Resident physicians to be on duty beyond the 40-hour workweek limitation 4. Hearing, Arbitration, Conciliation GR: The customary practice of requiring resident physicians beyond the 40 hours of work per week is not permissible and violates the limitation under Art. 83. Not compensable because it is hardly fair for an Ee or laborer to fight or litigate against his Er and eventually consider it as hours worked. (JP Heilbronn Co. v. National Labor Union, G.R. No. L5121, 30 Jan. 1953) XPN: If there is a training agreement between the resident physician and the hospital and the training program is duly accredited or approved by appropriate government agency. H. SEMESTRAL BREAK OF TEACHERS Semestral break of teachers are considered as compensable hours worked for it is a form of an interruption beyond their control. (University of Pangasinan Faculty Union v. University of Pangasinan, G.R. Nos. 64821-23, 29, Jan. 1993) Work Hours of Seaman Seamen are required to stay on board their vessels by the very nature of their duties, and it is for this reason that, in addition to their regular compensation, they are given free living quarters and subsistence allowances when required to be on board. NOTE: Payment compensation is given only to regular full-time teachers. (Duka, 2016) Hours of Work of Health Personnel It could not have been the purpose of the law to require their Ers to pay them overtime even when they are not actually working; otherwise, every sailor on board a vessel would be entitled to overtime for sixteen hours each day, even if he had spent all those hours resting or sleeping in his bunk, after his regular tour of duty. GR: Eight (8) hours for five (5) days (40-hour workweek), exclusive of time for meals. XPN: Where the exigencies of the service require that such personnel work for six (6) days or 48 hours, they shall be entitled to an additional compensation of at least 30% of their regular wage for work on the 6th day. (Art. 83, LC) The correct criterion in determining whether or not sailors are entitled to overtime pay is not, therefore, whether they were on board and cannot leave ship beyond the regular eight working hours a day, but 39 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards would suffer a reduction in pay if their work hours are unilaterally reduced by the Er. (Linton Commercial Co., Inc. v. Heller, G.R. No. 163147, 10 Oct. 2007) whether they actually rendered service in excess of said number of hours. A laborer need not leave the premises of the factory, shop or boat in order that his period of rest shall not be counted, it being enough that he "cease to work", may rest completely and leave or may leave at his will the spot where he actually stays while working, to go somewhere else, whether within or outside the premises of said factory, shop or boat. If these requisites are complied with, the period of such rest shall not be counted. (Luzon Stevedoring Co. v. Luzon Marine Department Union, G.R. No. L-9265, 29 April 1975) b. MEAL PERIODS Duration Every Er shall give his Ees not less than 60 minutes or one (1) hour time-off for regular meals. (Art. 85, LC) As a general rule, employees are entitled to at least one hour time-off for regular meals which can be taken inside or outside company premises. Maximum Hours of Work Non-Compensability of the Meal Period Certain workers may not be required to work beyond a certain number of work hours a day. 1. Public Utility Bus drivers and conductors – 12 hours per 24-hour period. (D.O. 118- 12) 2. Movie and television industry worker/ talent – shall not exceed eight (8) hours in a day. For a full one-hour undisturbed lunch break, the employees can freely and effectively use this hour not only for eating, but also for their rest and comfort which are conducive to more efficiency and better performance in their work. Since the employees are no longer required to work during this one-hour lunch break, there is no more need for them to be compensated for this period. (Sime Darby Pilipinas, Inc. v. NLRC, G.R. No. 119205, 15 Apr. 1998) If required to work beyond eight (8) hours, the maximum actual hours of work shall not exceed 12 hours in any 24-hour period; Compensable Meal Period If aged 60 years old and above – shall not exceed eight (8) hours per day; It is compensable where the lunch period or meal time: 1. Is predominantly spent for the Er’s benefit; or 2. When it is less than 60 minutes. The hours of work of children in the industry must be in accordance with R.A. No. 9231 and its IRR. (D.O. 65-04) 3. NOTE: Where during a meal period, the laborers are required to stand by for emergency work, or where the meal hour is not one of complete rest, such is considered overtime. (Pan American World Airways System v. Pan American Employees Association, G.R. No. L-16275, 23 Feb. 1961) Rest periods or coffee breaks running from five (5) to 20 minutes shall be considered as compensable working time. (Sec. 7, Rule I, Book III, IRR) Seafarers onboard ships engaged in domestic shipping – 14 hours per 24-hour period or 77 hours per seven (7) days. (D.O. 129- 13) Q: Can the number of hours of work be reduced by an Er? A: YES. However, financial losses must be shown before a company can validly opt to reduce the work hours of its employees because the employees UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 40 Labor Law and Social Legislation Compensability overtime work of Meal Periods during Meal periods provided during overtime work are compensable; since the one (1)-hour meal period (non-compensable) is not given during OT work because the latter is usually for a short period and to deduct from the same would reduce to nothing the Ees’ OT work. Thus, the one-hour break for meals during OT should be treated as compensable. Where Meal Periods are Compensable or Not Compensable 1. b. Ees voluntarily Agree in writing and are willing to waive OT pay for the shortened meal period; c. No Diminution in the salary and other fringe benefits of the Ees which are existing before the effectivity of the shortened meal period; d. Value of the Benefits derived by the Ees from the proposed work arrangements is equal to or commensurate with the compensation due them for the shortened meal period as well as the OT pay for 30 min. as determined by the Ees concerned; e. Overtime pay will become due and demandable after the new time schedule; and f. Arrangement is of Temporary duration. Shortened: Compensable – At the instance of Er, when: (N-O-P-E) a. Work is Non-manual in nature or does not involve strenuous physical exertion; b. Establishment regularly Operates less than 16 hours a day; c. Work is necessary to prevent serious loss of Perishable goods; and d. Actual or impending Emergency or there is urgent work to be performed on machineries and equipment to avoid serious loss which the Er would otherwise suffer. (Sec. 7, Rule I, Book III, IRR) NOTE: The implementing rules allow the mealtime to be less than 60 minutes, under specified cases but in no case shorter than 20 minutes. (Sec. 7, Rule 1, Book III, IRR) If the so called “mealtime” is less than 20 minutes, it becomes only a rest period and is considered working time. (Azucena, 2016) c. NIGHT SHIFT DIFFERENTIAL NOTE: The meal hour was not one of complete rest but a work hour because for its duration, the laborers had to be on ready call. (Pan American World Airways System v. Pan American Employees Association, G.R. No. L-16275, 23 Feb. 1961) 2. Every employee shall be paid a night shift differential of not less than t10%) of his regular wage for each hour of work performed between 10:00 PM and 6:00 AM. (Art. 86, LC) GR: All employees are entitled to Night Shift Differential (NSD). Not Compensable – Ee requested for the shorter meal time so that he can leave work earlier than the previously established schedule. XPNs: (Go-Re-Do-Ma-Fi) 1. Those of the Government and any of its political subdivisions, including GOCCs; Requisites: (S-A-D-B-O-T) a. Work of the Ees does not involve Strenuous physical exertion and they are provided with adequate coffee breaks in the morning and afternoon; 2. 41 Those of Retail and service establishments regularly employing not more than five (5) workers; UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards 3. Domestic helpers and persons in the personal service of another; 4. Managerial employees as defined in Book Three of the Labor Code; and 5. Field personnel and other employees whose time and performance are unsupervised by the Er including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof. (Sec 1, Rule II, IRR, LC) Burden of Proof of Payment The burden of proving that payment of NSD has been made rests upon the party who will suffer if no evidence at all is presented by either party. (National Semiconductor (HK) Distribution, Ltd. v. NLRC and Santos, G.R. No. 123520, 26 June 1998) Night Differential in Overtime Pay If work done between 10PM and 6AM is overtime work, then the ten percent (10%) NSD should be based on the overtime rate. When the tour of duty of an employee falls at night time, the receipt of overtime pay will not preclude the right to night differential pay. The latter is payment for work done during the night and the other is payment for the excess of the regular eighthour work. (NARIC v. NARIC Workers Union, G.R. No. L-12075, 29 May 1959) Where the night-time work of an employee overlaps with overtime work, the receipt of overtime pay does not preclude the receipt of night differential pay. The latter is night pay; the former is payment beyond eight-hour work. (Poquiz, 2012) Purpose d. OVERTIME WORK The philosophy behind the provision is to give premium to night work when an employee is supposed to be sleeping. Working at night is violative of the law of nature for it is the period for rest and sleep. An employee who works at night has less stamina and vigor; thus, he can easily contract a disease. Overtime work is the service rendered in excess of and in addition to eight hours on ordinary working days. (Caltex Regular Employees at Manila Office v. Caltex Philippines, G.R. No. 111359, 15 Aug. 1995) NOTE: It is not enough that the hours worked fall on disagreeable or inconvenient hours. The hours worked must be in excess of eight (8) hours worked during the prescribe daily work period, or the forty (40) hours worked during the regular work week Monday thru Friday. Work done at night places has a greater burden on the worker. It is more strenuous and onerous than work done during the day; therefore, it deserves greater or extra compensation. (Shell Co. v. NLU, G.R. No. L-1309, 26 July 1948) Overtime pay is the additional compensation of at least 25% on the regular wage for the service or work rendered or performed in excess of eight (8) hours a day by employees or laborers in employment covered by the Eight-hour Labor Law. (Art. 87, LC) Non-Waivability GR: Waiver of NSD is against public policy. (Mercury Drug Co., Inc. v. Dayao, et al., G.R. No. L-30452, 30 Sept. 1982) XPN: Waiver is allowed if it will result in higher or better benefits to Ees. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Overtime pay is based on regular base pay excluding money received by employee in different concepts such as Christmas bonus and other fringe benefits. 42 Labor Law and Social Legislation contract. (Pesala v. NLRC, G.R. No. 105963, 22 Aug. 1996) It is computed by multiplying the overtime hourly rate by the number of hours in excess of eight. (Azucena, 2016) Overtime Pay vs. Premium Pay NOTE: Express instruction from the Er to the Ee to render OT work is not required for the Ee to be entitled to OT pay; it is sufficient that the Ee is permitted or suffered to work. (Azucena, 2016) However, written authority after office hours during rest days and holidays are required for entitlement to compensation. Rationale for Overtime Pay Ee is made to work longer than what is commensurate with his agreed compensation for the statutory fixed or voluntarily agreed hours of labor he is supposed to do. (PNB v. PEMA and CIR, G.R. No. L-30279, 30 July 1982) OVERTIME PAY PREMIUM PAY Additional compensation for work performed beyond eight (8) hours on ordinary days (within the worker’s 24-hour workday). Additional compensation for work performed within eight (8) hours on days when normally he should not be working (on nonworking days, such as rest days and special days). But additional compensation for work rendered in excess of eight (8) hours during these days is also considered OT pay. Overtime Pay Rates The reason the law requires additional compensation for work beyond the normal working day is to encourage Ers to dispense with such work, thus providing employees an opportunity to satisfy their mental, moral, and spiritual needs. They may have more hours to devote to reading, amusement, and other recreational activities necessary for their well-being. Moreover, they could share longer hours in the company of their family, attending to spiritual or religious needs. Law on overtime will surely ease unemployment problem, for Ers will be constrained to employ additional employees to work in other shifts necessary for the operation of the business. (Shell Co. v. NLU, G.R. No. L-1309, 26 July 1948) OVERTIME During a regular working day PAY RATES Additional compensation 25% of the regular wage of Rate of the first eight (8) hours worked on plus at least 30% of the regular wage (RW): During a holiday or rest day Condition for Entitlement to Overtime Pay Entitlement to overtime pay must first be supported by sufficient proof that said overtime work was actually performed before an employee may avail of said benefit. (Cagampan v. NLRC, G.R. Nos. 85122-24, 22 March 1991) A. If done on a special holiday OR rest day: 30% of 130% of RW B. If done on a special holiday AND rest day: 30% of 150% of RW C. If done on a regular holiday: 30% of 200% of RW Basis of Computation of Overtime Pay An employee is entitled to overtime pay for work rendered in excess of eight hours, despite the fact that his employment contract specifies a 12-hour workday at a fixed monthly salary rate that is above the legal minimum rate. The provisions of the pertinent labor laws prevail over the terms of the Regular wage which includes the cash wage only, without deduction on account of the facilities provided by the Er. (Art. 90, LC) 43 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards Prima Facie Evidence of Overtime Pay presumption that either they do not have them, or if they do, their presentation is prejudicial to their cause. (Reggie Orbista Zonio v. 1st Quantum Leap Security Agency, Inc. and Romulo Q. Par, G.R. No. 224944, 05 May 2021) Q: Respondent security agency did not pay Zonio for overtime work, work rendered on holidays and rest days, as well as 13th month pay, service incentive leave, and night shift differential. Zonio, along with some of his colleagues, received a memorandum suspending them for sleeping while on duty. Zonio filed a complaint against respondents for illegal suspension and nonpayment of overtime pay, holiday and rest day premiums pay, and night shift differentials pay. To support his allegations. Zonio submitted in evidence photocopies of the entries in the logbook, signed by incoming and outgoing security guards and were not countersigned by their supervisor or any authorized representative. His claim was denied because the evidence Zonio adduced raises serious doubt as to whether he actually rendered work on a given date and time. Waiver of Overtime Pay GR: The right to overtime pay cannot be waived. The right is intended for the benefit of the laborers and employees. Any stipulation in the contract that the laborer shall work beyond eight hours without additional compensation for the extra hours is contrary to law and null and void. (Azucena, 2016) The right of the laborer to overtime compensation cannot be waived expressly or impliedly. Where the contract of employment requires work for more than eight hours at a specified wage per day, without providing for a fixed hourly rate or that the daily wages include overtime pay, said wages cannot be considered as including overtime compensation required under the Eight-hour Labor Law. (Manila Terminal Co. v. CIR, G.R. No. L-9265, 29 Apr. 1957) Did Zonio sufficiently prove his entitlement to monetary claims? A: YES. Admittedly, the logbook is only a personal record of Zonio and other security guards. It is not verified or countersigned by respondents. Anyway, the fact that the entries are not verified or countersigned will not militate against Zonio. The entries in the logbook are prima facie evidence of Zonio's claim. Prima facie evidence is such evidence as, in the judgment of the law, is sufficient to establish a given fact, or the group, or chain of facts constituting the party's claim or defense, and which if not rebutted or contradicted, will remain sufficient. Evidence which, if unexplained or uncontradicted, is sufficient to sustain a judgment in favor of the issue it supports, but which may be contradicted by other evidence. Respondents dispute the veracity of the entries in the logbook, yet, they did not proffer evidence to rebut them, or show that they paid Zonio for the services he rendered on the dates and the hours indicated in the logbook. The best evidence for respondents would have been the payrolls, vouchers, payslips, daily time records, and the like, which are in their custody and absolute control. However, respondents did not present any of these. This failure gives rise to the UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES XPNs: (BP-CW) 1. When the alleged waiver of overtime pay is in consideration of Benefits and Privileges which may be more than what will accrue to them in overtime pay, the waiver may be permitted. (Azucena, 2016) 2. Compressed Workweek (CWW) arrangement. Q: Socorro is a clerk-typist in Hospicio de San Jose, a charitable institution dependent for its existence on contributions and donations from well-wishers. She renders work 11 hours a day but has not been given OT pay since her place of work is a charitable institution. Is Socorro entitled to overtime pay? Explain briefly. (2002 BAR) A: YES. Socorro is entitled to OT pay. She does not fall under any of the exceptions to the coverage of Art. 82, under the provisions of hours of work. The LC is equally applicable to non-profit institutions. A 44 Labor Law and Social Legislation by the Er is valid. (Engineering Equipment v. Minister of Labor, G.R. No. L-64967, 23 Sept. 1985) covered employee who works beyond eight (8) hours is entitled to OT compensation. Q: Danilo Flores applied for the position of driver in the motor-pool of Gold Company, a multinational corporation. Danilo was informed that he would frequently be working overtime as he would have to drive for the company's executives even beyond the ordinary 8-hour work day. He was provided with a contract of employment wherein he would be paid a monthly rate equivalent to 35 times his daily wage, regular sick and vacation leaves, 5 dayleave with pay every month and time off with pay when the company's executives using the cars do not need Danilo's service for more than eight hours a day, in lieu of overtime. Are the above provisions of the contract of employment in conformity with, or violative of, the law? Overtime Rate Subject to Stipulation GR: The premium for work performed on the employee’s rest days or on special days or regular holidays are included as part of the regular rate of the employee in the computation of OT pay for any OT work rendered on said days, especially if the Er pays only the minimum OT rates prescribed by law. XPN: Ees and Er may stipulate in their collective agreement the payment of OT rates higher than those provided by law and exclude the premium rates in the computation of OT pay. Such agreement may be considered valid only if the stipulated OT pay rates will yield to the Ees not less than the minimum prescribed by law. A: Except for the provision that Danilo shall have time off with pay when the company's executives using the cars do not need Danilo's service for more than eight hours a day, in lieu of OT, the provisions of the contract of employment of Danilo are not violative of any labor law because they instead improve upon the present provisions of pertinent labor laws. Overtime Pay in a Compressed Workweek Scheme Any work performed beyond 12 hours a day or 48 hours a week shall be subject to OT premium. (D.A. 02-04) Overtime Pay Integrated in Basic Salary Q: The employment contract requires work for more than 8 hours a day with a fixed wage inclusive of OT pay. Is that valid? Built-in Overtime Pay or Composite/Package Pay It is not per se illegal, but there should have been express agreement to that effect. Such arrangement, if there be any, must appear in the manner required by law on how overtime compensation must be determined. (Damasco v. NLRC, et al., G.R. No. 115755, 04 Dec. 2000) A: It depends. 1. 2. When the contract of employment requires work for more than eight hours at specific wages per day, without providing for a fixed hourly rate or that the daily wages include OT pay, said wages cannot be considered as including OT compensation. (Manila Terminal Co. v. CIR, et al., G.R. No. L-4148, 16 July 1952) Requisites for a Valid Built-in Overtime Pay (Base pay with Integrated Overtime Pay): (A-M) In cases of built-in OT pay in GovernmentApproved Contracts. When the OT pay was already provided in the written contract with a built-in OT pay and signed by the director of the bureau of employment services and enforced by the Er. Non-payment of OT pay 45 1. A clear written Agreement knowingly and freely entered into by the employee; 2. The Mathematical result shows that the agreed legal wage rate and the overtime pay, computed separately are equal or higher than UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards the separate amounts legally due. (Azucena, 2016) Overload Work Distinguished and Overtime Work Where a teacher is engaged to undertake actual additional teaching work after completing his regular teaching load, such additional work is referred to as overload. When the overload is performed within eight hours normal working day, such overload pay is considered part of the basic pay for the purpose of computing 13th month pay. "Overload work" is sometimes misunderstood as synonymous to "overtime work." The two terms are not the same. Overtime work is work rendered in excess of the normal working hours of eight in a day. On the other hand, since overload work may be performed either within or outside eight hours in a day, overload work may or may not be overtime work. (DOLE's Explanatory Bulletin on Inclusion of Teacher's Overload in Computing 13th Month Pay) 3. When the work is necessary to prevent loss or damage to Perishable goods; 4. When overtime work is necessary to avail of Favorable weather or environmental conditions where performance or quality of work is dependent thereon; or 5. When the Completion or continuation of work started before the 8th hour is necessary to prevent serious obstruction or prejudice to the business or operations of the Er. NOTE: The employee may still refuse to render overtime even if compelled, although not without disciplinary consequence for his refusal that could constitute insubordination, a potential ground for termination of employment. Q: Is the foregoing enumeration exclusive? Emergency Overtime Work A: YES. In cases not falling within any of these enumerated in this Section, no employee may be made to work beyond eight (8) hours a day against his will. (Sec. 10, Rule I, Book III, IRR) GR: The employee may not be compelled to work more than eight hours a day. Q: Is mandatory servitude? XPN: Compulsory Overtime. (Wa-D-U-P-Fa-C) A: NO. The employee may still refuse to render overtime even if compelled, although not without disciplinary consequence for his refusal that could constitute insubordination, a potential ground for termination of employment. 1. When the country is at War or when any other national or local emergency has been declared by Congress or the Chief Executive; 2. When overtime work is necessary to prevent loss of life or property, or in case of imminent Danger to public safety due to actual or impending emergency in the locality caused by serious accident, fire, floods, typhoons, earthquake, epidemic or other disaster or calamities; 2. When there is Urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the Er or some other causes of similar nature; UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES overtime involuntary Petitioner’s attempt to brush aside his refusal to render overtime work as inconsequential when Graphics, Inc.’s order for him to do so is justified by Graphics, Inc.’s contractual commitments to its clients. Such an order is legal under Art. 89 of the Labor Code and the petitioner’s unexplained refusal to obey is insubordination that merits dismissal from service. (Billy Realda v. New Age Graphics Inc., G.R. No. 192190, 25 Apr. 2012) Q: LKG Garments Inc. makes baby clothes for export. As part of its measures to meet its orders, LKG requires its employees to work beyond eight (8) hours everyday, from Monday 46 Labor Law and Social Legislation to Saturday. It pays its employees an additional 35% of their regular hourly wage for work rendered in excess of eight (8) hours per day. Because of additional orders, LKG now requires two (2) shifts of workers with both shifts working beyond eight (8) hours but only up to a maximum of four (4) hours. Carding is an employee who used to render up to six (6) hours of overtime work before the change in schedule. He complains that the change adversely affected him because now he can only earn up to a maximum of four (4) hours’ worth of overtime pay. Does Carding have a cause of action against the company? (2015 BAR) In firms using substances, or operating in conditions that are hazardous to health, a Certification is needed from an accredited safety organization or the firm’s safety committee that work beyond 8 hours is within the limit or levels of exposure set by DOLE’s occupational safety and health standards. 3. The DOLE Regional Office is duly Notified. (Ibid.) Valid Compressed Work Week The validity of the reduction of working hours can be upheld when the arrangement is: A: NO. A change in work schedule is a management prerogative of LKG. Thus, Carding has no cause of action against LKG if, as a result of its change to two (2) shifts, he now can only expect a maximum of four (4) hours overtime work. Besides, Art. 87 of the Labor Code does not guarantee Carding a certain number of hours of overtime work. In Manila Jockey Employees’ Union v. Manila Jockey Club (G.R. No 167760, 07 Mar. 2007), the Supreme Court held that the basis of overtime claim is an employee’s having been “permitted to work.” Otherwise, as in this case, such is not demandable. 1. 2. 3. 4. 5. Temporary; It is a more humane solution instead of a retrenchment of personnel; There is notice and consultations with the workers and supervisors; A consensus is reached on how to deal with deteriorating economic conditions; and It is sufficiently proven that the company was suffering from losses. NOTE: Under the Bureau of Working Conditions’ bulletin, a reduction of the number of regular working days (RWD) is valid where the arrangement is resorted to by the Er to prevent serious losses due to causes beyond his control, such as when there is a substantial slump in the demand for his goods or services or when there is a lack of raw materials. (Linton Commercial v. Hellera, G.R. No. 163147, 10 Oct. 2007) e. COMPRESSED WORK WEEK, FLEXIBLE WORK ARRRANGEMENT, ALTERNATIVE WORK ARRANGEMENTS, TELECOMMUTING PROGRAM Compressed Work Week It is a scheme where the normal workweek is reduced to less than six (6) days but the total number of 48 work-hours per week shall remain. Conditions where a "compressed workweek" schedule may be legally authorized as an exception to the "8-hour a day" requirement under the LC (2005 BAR) The normal workday is increased to more than eight hours, but not to exceed 12 hours, without corresponding overtime premium. The concept can be adjusted accordingly depending on the normal workweek of the company. (D.A. No. 02-04) 1. 2. Requisites: (S-C-N) 1. 2. 3. The Scheme is expressly and voluntarily supported by majority of the Ees. 4. 47 The Ee voluntarily agrees to it; There is no diminution in their weekly or monthly take home pay or fringe benefits; The benefits are more than or at least commensurate or equal to what is due to the Ees without the compressed work week; OT pay will be due and demandable when they are required to work on those days which UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards 5. 6. should have ceased to be working days because of the compressed work week schedule; No strenuous physical exertion or that they are given adequate rest periods; and It must be for a temporary duration as determined by the DOLE. Administration of Flexible Work Arrangements The parties in the flexible work schemes shall be primarily responsible for its administration. In case of differences of interpretation, D.A. 02-09 provides the following guidelines: Flexible Work Arrangements 1. Flexible Work Arrangements are alternative schedules or arrangements other than the standard and traditional workweeks. The differences shall be treated as grievances under the applicable grievance mechanism of the company. 2. If there is no grievance mechanism or if this mechanism is inadequate, the grievance shall be referred to the Regional Office which has jurisdiction over the workplace for appropriate conciliation. Flexible Work Arrangements are recommended over the outright closure of the business or the termination of the services of its Ees. (D.A. 02-09) Types of Flexible Work Arrangements (FWAs) Notice Requirement 1. Compressed Workweek - as discussed above; 2. Reduction of Workdays - refers to one where the normal workdays per week are reduced but should not last for more than six months; Prior to its implementation, the Er shall notify the DOLE through the Regional Office which has jurisdiction over the workplace, of the adoption of a FWA. The notice shall be in the Report Form attached to D.A. 02-09. 3. Rotation of Workers - refers to one where the Ees are rotated or alternately provided work within the workweek; 4. Forced Leave - refers to one where the Ees are required to go on leave for several days or weeks utilizing their leave credits, if there are any; 5. Broken-time schedule - refers to one where the work schedule is not continuous but the work-hours within the day or week remain; and 6. Flexi-holidays schedule - refers to one where the Ees agree to avail the holidays at some other days provided there is no diminution of existing benefits as a result of such arrangement. Alternative Work Arrangements D.A. 17-B-20 was issued in order to to assist Ers to resume their business operations while preserving the employment of their workers under the enhanced community quarantine, general community quarantine or other quarantine arrangements. Alternative Work Schemes mentioned in D.A. 17-B-20 Under these FWAs, the Ers and the Ees are encouraged to explore alternative schemes under any agreement and company policy or practice in order to cushion and mitigate the effect of the loss of income of the employees. (D.A. 02-09) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 48 1. Transfer - Ees are transferred to another branch or outlet of the same Er. 2. Assignment - Ees are assigned to another function or position in the same or other branch or outlet of the same Er. 3. Job rotation - Ees are alternately required to work within the workweek. Labor Law and Social Legislation 4. Reduction of workdays - Normal workdays per week are reduced. 5. Partial closure - Some units or departments of the establishment are continued while other units or departments are closed. 6. Other work arrangements, including adjustment of wage and wage-related benefits of the Ees. Telecommuting Agreement The Er and Ees shall adhere to and be guided by the mutually agreed policy or telecommuting agreement, which stipulates for the following provisions, including but not limited to: 1. 2. Eligibility; Applicable code of conduct and performance evaluation and assessment; 3. Appropriate alternative workplace/s; 4. Use and cost of equipment; 5. Work days and/or hours; 6. Conditions of employment, compensation, and benefits particularly those unique to telecommuting Ees; 7. Non-diminution of benefits; 8. Occupational safety and health; 9. Observance of data privacy policy; 10. Dispute settlement; and 11. Termination or change of work arrangement. Wages and Wage-Related Benefits Employers and employees may agree voluntarily to temporarily adjust employees’ wage and wagerelated benefits as provided for in existing employment contract, company policy or CBA. The adjustments in wages and/or wage-related benefits shall not exceed six (6) months or the period agreed upon in the CBA, if any. After such period, employers and employees shall review their agreement and may renew the same. (Sec. 5, D.A. 17-20) Termination of Telecommuting Arrangement Reporting Requirement The Er or Ees may terminate or change the telecommuting work arrangement, in accordance with the telecommuting policy or agreement, without prejudice to employment relationship and working conditions of the Ee, at no cost to the latter. Ers shall report the adopted alternative working schemes and other work arrangements including the adjustment of wage and wage-related benefits of the employees, if any, and submit a duly certified copy of all agreements to the DOLE Regional Office having jurisdiction over their principal place of business. (Sec. 6, D.A. 17-B-20) Fair Treatment The Er shall ensure that telecommuting Ees are given the same treatment as that of comparable Ees working at the Er's premises. All telecommuting Ees shall be covered by the same set of applicable rules and existing CBA, if any. They shall also: Telecommuting Program An Er in the private sector may offer a telecommuting program to its Es on a voluntary basis or as a result of collective bargaining, if any, and upon such terms and conditions as they may mutually agree upon. (Sec. 3, D.O. 202-19) NOTE: Such terms and conditions shall not be less than the minimum labor standards set by law, and shall include compensable work hours, minimum number of work hours, overtime, rest days, entitlement to leave benefits, social welfare benefits, and security of tenure. 49 1. Receive a rate of pay, including overtime and night shift differential, and other similar monetary benefits not lower than those provided in applicable laws, and/or CBA; 2. Have the right to rest days, regular holidays, and special nonworking days; 3. Have the same or equivalent workload and performance standards as those of comparable UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards workers at the Er's premises; provided that the parties may mutually agree to different performance standards that may be more appropriate given the location of the Ee is not at the premises of the Er; 4. 5. 6. Notice and Monitoring The Er shall notify the DOLE on the adoption of a telecommuting work arrangement, by accomplishing the DOLE prescribed report form and submitting the same in print or digital copy, to the nearest DOLE Field or Provincial Office having jurisdiction over the area where the principal office is located. Without additional cost, have the same access to training and career development opportunities as those of comparable workers at the Er's premises, and be subject to the same appraisal policies covering these workers, including the qualification provided on the preceding item; If the Er has branches or operational units outside the region of its principal office, each branch or operational unit shall also submit its respective report to the nearest DOLE Field or Provincial Office having jurisdiction over the branch or operational unit. (Sec. 7, D.O. 202-19) Without additional cost, receive appropriate training on the technical equipment at their disposal, and the characteristics and conditions of telecommuting; and 3. REST PERIODS Have the same collective rights as the workers at the Er's premises, including access to safety and health services when necessary, and shall not be barred from communicating with worker's representatives. (Sec. 4, D.O. 202-19) Right to Weekly Rest Day (WRD) Every Er shall give his Ees a rest period of not less than 24 consecutive hours after every six (6) consecutive normal work-days. (Sec. 3, Rule III, Book III, IRR) The Er shall also ensure that measures are taken to prevent the telecommuting Ee from being isolated from the rest of the working community in the company by giving the telecommuting Ee the opportunity to meet with colleagues on a regular basis and allowing access to the regular workplace and company information. Rest day not necessarily Sunday or Holiday All establishments and enterprises may operate or open for business on Sundays and holidays provided that the Ees are given the weekly rest day and the benefits provided under the law. (Sec. 2, Rule III, Book III, IRR) Data Protection Scope of WRD To ensure the protection of data used and processed by the telecommuting Ee for professional purposes, the Er shall be responsible for strictly taking the appropriate measures, which are not limited to: 1. 2. 3. It shall apply to all Ers whether operating for profit or not, including public utilities operated by private persons. (Sec. 1, Rule III, Book III, IRR) Disabling of hardware, Universal Serial Bus (USB) access, and External cloud-based storage can be taken by the Er. Person who determines the WRD GR: Er shall determine and schedule the WRD of his Ee. For this purpose, the provisions of the Data Privacy Act of 2012 shall have suppletory effect. (Sec. 5, D.O. 202-19) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES XPNs: 1. Collective Bargaining Agreement; 2. Rules and regulations as the SOLE may provide; and 50 Labor Law and Social Legislation 3. ordinarily be expected to resort to other measures; Preference of Ee based on religious grounds – Ee shall make known his preference in writing at least seven (7) days before the desired effectivity of the initial rest day so preferred. (Sec. 4(1), Rule III, Book III, IRR) 4. NOTE: Instead of ordinary loss, it must be serious. There must be loss and not just damage. XPNs to XPN no. 3: Er may schedule the WRD of his choice for at least two (2) days in a month if the preference of the Ee will inevitably result in: a. b. To prevent loss or damage to perishable goods; Serious prejudice to the operations of the undertaking; and The Er cannot normally be expected to resort to other remedial measures. (Sec. 4(2), Rule III, Book III, IRR) The Er is mandated to respect the choice of its employee as to their rest day based on religion. 5. Where the nature of the work requires continuous operations and the stoppage of work may result in irreparable injury or loss to the Er; and 6. Under other circumstances analogous or similar to the foregoing as determined by the SOLE. (Art. 92, LC) Q: Is the list exclusive? Right of the Ee to Know the Schedule of their WRDs A: YES. No Ee shall be required against his will to work on his scheduled rest day except under circumstances provided in this Section. Where an Ee volunteers to work on his rest day under other circumstances, he shall express such desire in writing, subject to the rule regarding additional compensation. Er shall make known the rest period by means of: 1. 2. 3. Written notice; Posted conspicuously in the workplace; and At least one week before it becomes effective. (Sec. 5, Rule III, Book III, IRR) Employee volunteers to work on his rest day under other circumstances Emergency Rest Day Work GR: The Ee cannot be compelled by the Er to work on his rest day. He may be allowed to do so, provided he shall express it in writing subject to additional compensation. (Sec. 6(2), Rule III, Book III, IRR) XPNs: 1. 2. 3. 4. HOLIDAY In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic or other disaster or calamity to prevent loss of life and property, or imminent danger to public safety; Holiday Pay Holiday Pay is a one-day pay given by law to an employee even if he does not work on a regular holiday. (Azucena, 2016) In cases of urgent work to be performed on the machinery, equipment, or installation, to avoid serious loss which the Er would otherwise suffer; The payment of the regular daily wage for any unworked regular holiday. (Handbook on Workers’ Statutory Monetary Benefits, Bureau of Working Conditions, 2016) In the event of abnormal pressure of work due to special circumstances, where the Er cannot 51 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards Service Establishments It is a premium given to Ees pursuant to the law even if he has not been suffered to work on a regular holiday. It is limited to the 12 regular holidays, also called legal holidays listed by law. The Ee should not have been absent without pay on the working day proceeding the regular holiday. They are engaged in the sale of services to individuals for their own or household use. (e.g., TV repair shop). Exemption of Retail/Service Establishments Persons entitled to Holiday Pay GR: All Ees are entitled. (Sec. 1, Rule IV, Book III, IRR) XPNs: 1. Government Ees and any of its political subdivisions, including GOCCs (with original charter); 2. Retail and service establishments regularly employing less than ten (10) workers; 3. Domestic helpers and persons in the personal service of another; MINIMUM WAGE HOLIDAY PAY/SIL Applies to establishments employing not more than ten employees (110 employees). Applies to establishments employing less than ten employees (1-9 employees). Has to be obtained by applying for it with the Regional Wage Board. Granted by the LC. May be availed of without the need of a prior application for exemption. Purpose of Holiday Pay 4. Ee engaged on task or contract basis or purely commission basis; 5. Members of the family of the Er who are dependent on him for support; 6. Managerial Ees and other members of the managerial staff; 7. Field personnel and other Ees whose time and performance are unsupervised by the Er; and 8. Ees paid Fixed amount for performing work irrespective of the time consumed in the performance thereof. (Ibid.) To secure the payment of undiminished monthly income undisturbed by any work interruption. In other words, although the worker is forced to take a rest, he earns what he should earn, that is, his holiday pay. (JRC v. NLRC, G.R. No. 65482, 01 Dec. 1987) Holiday pay is primarily aimed at benefiting the daily-paid workers whose income is circumscribed by the principle of "no-work, no pay." Prior to the enactment of the Labor Code, daily paid workers were not paid for unworked regular holidays. On the other hand, monthly-paid employees do not suffer any reductions in pay for not working during such holidays. The law on holiday pay is thus conceived to be the countervailing measure to partially offset the disadvantages inherent in the daily compensation system of employment. (Poquiz, 2012) Retail Establishments They are engaged in the sale of goods to end users for personal or household use. (e.g., Grocery) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 52 Labor Law and Social Legislation Legal Holiday NOTE: RH falling within temporary or periodic shutdown and temporary cessation of work are compensable. However, if the temporary or periodic shutdown and cessation of work is due to business reverses, the Er may not pay the Ees during such period. It is a day designated or set apart by the legislature, for a purpose within the meaning of the term "holiday" to commemorate an important event. Regular Holidays (RH) Muslim Holidays (MH) GR: They are compensable whether worked or unworked subject to certain conditions. They are also called legal holidays. 1. Amun Jadid (New Year) – falls on the first day of the first lunar month of Muharram; XPN: A legal holiday falling on a Sunday creates no legal obligation for the Er to pay extra, aside from the usual holiday pay, to its monthly-paid employees. (Wellington Investment and Manufacturing Corporation v. Trajano et al., G.R. No. 114698, 03 July 1995) HOLIDAY 2. Maulid-un-Nabi (Birthday of the Prophet Muhammad) falls on the 12th day of the third lunar month of Rabi-ul-Awwal; and 3. Lailatul Isra Wal Mi'raj (Nocturnal Journey and Ascension of the Prophet Muhammad) – falls on the 27th day of the seventh lunar month of Rajab. (Art. 169, P.D. 1083) DATE REGULAR HOLIDAYS 1. New Year’s Day 2. Araw ng Kagitingan 3. Maundy Thursday Movable date 4. Good Friday Movable date 5. Labor Day 6. Independence Day 7. National Heroes Day 8. Eid’l Fitr Movable date 9. Eid’l Adha Movable date 10. Bonifacio Day November 30 11. Christmas Day December 25 12. Rizal Day December 30 NOTE: Muslim holidays shall be officially observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North Cotabato, Sultan Kudarat, Sulu, Tawi-Tawi, Zamboanga del Norte and Zamboanga del Sur, and in the Cities of Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such other Muslim provinces and cities as may hereafter be created. Upon proclamation by the President of the Philippines, Muslim holidays may also be officially observed in other provinces and cities. January 1 Monday nearest April 9 May 1 June 12 Last Monday of August Determination of Eid’l Fitr and/or Eid’l Adha The proclamation declaring a national holiday for the observance of Eid’l Fitr and/or Eid’l Adha shall be issued: 1. SPECIAL (NON-WORKING) HOLIDAYS 1. Ninoy Aquino Day 2. All Saints Day 3. Feast of Immaculate Conception of Mary (R.A. No. 10966) December 8 Last day of the year December 31 4. August 21 After the approximate date of the Islamic holiday has been determined in accordance with the: November 1 a. b. c. Islamic Calendar (Hijra); or Lunar Calendar; or Upon astronomical calculations, Whichever is possible or convenient. 5. Other holidays declared by law and ordinance 53 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards 2. The Office of Muslim Affairs shall inform the Office of the President on which day the holiday shall fall. (Proclamation 295, Series of 2011 by President Benigno Aquino III) Regular Holiday vs. Special Holiday REGULAR HOLIDAY SPECIAL HOLIDAY If unworked Compensable, subject to certain conditions A Christian Ee working within the Muslim area cannot be compelled to work during Muslim holiday Not compensable If worked All workers, Muslims and Christians, working within the Muslim area are entitled to holiday pay on Muslim holidays. (SMC v. CA, G.R. No. 146775, 30 Jan. 2002) Muslim Ee working outside the Muslim area cannot be compelled to work during the observance of the MH Rate is 200% of the regular rate Additional 30% premium pay of 100% RW Limited to the 12 holidays provided in the Labor Code Not exclusive; law or ordinance may provide for other special holidays Formula to Compute Wage on Holidays (M.C. No. 01, Series of 2004) GR: Muslim Ees shall be excused from work during MH without diminution of salary or wages. 1. XPN: Those who are permitted or suffered to work on MH are entitled to at least 100% basic pay + 100% as premium of their basic pay. (SMC v. CA, G.R. No. 146775, 30 Jan. 2002) Rule as to payment of regular Muslim holidays There is no distinction between Muslims and non– Muslims as regards payment of benefits for Muslim holidays. Muslims throughout the Philippines are also entitled to holiday pay on Christian holidays declared by law as regular holidays. Wages and other emoluments granted by law are determined on the basis of the criteria laid down by laws and certainly not on the basis of the worker's faith or religion. The law on holiday pay knows no religion. (SMC v. C.A., G.R. No. 146775, 30 Jan. 2002) Regular Holiday a. If it is employee’s regular workday i. Unworked – 100% ii. Worked 1. First Eight hours – 200% 2. Excess of Eight hours – plus 30% of hourly rate on said day. b. If it is employee’s rest day i. Unworked – 100% ii. Worked 1. First Eight hours – plus 30% of 200% 2. Excess of Eight hours –plus 30% of hourly rate on said day Regular Holiday Unworked 100% Regular Workday Worked First 8 hrs Excess of 8 hrs 200% plus 30% of hourly rate on said day Unworked Rest Day UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 54 100% Labor Law and Social Legislation Worked First 8 hrs First 8 hrs plus 30% of 200% 2. Unworked None plus 30% of hourly rate on said day Rest Day plus 50% of the daily rate of 100% For declared Special Holidays, such as Special Non-Working Day, Special Public Holiday, Special National Holiday in addition to the 3 nationwide special non-working days: a. a. b. ii. Worked 1. First Eight hours – plus 30% of daily wage rate of 100% 2. Excess of Eight hours – plus 30% of hourly rate on said day The Ee should not have been absent without pay on the working day immediately preceding the RH. Monthly Paid vs. Daily Paid Employees i. First Eight hours – plus 50% of the daily rate of 100% ii. Excess of Eight hours - plus 30% of hourly rate on said day MONTHLY PAID EEs One whose wage or salary is being paid every day of the month, including rest days, Sundays, regular or special days, although he does not regularly work on these days. Special Holiday Unworked GR: No Pay. XPN: favorable 1. company policy 2. practice 3. CBA Not excluded from benefit of holiday pay. granting payment of wages on special days even if unworked Worked First 8 hrs Excess of 8 hrs plus 30% of daily wage rate of 100% For work performed, an employee is entitled only to his basic rate. No premium pay is required since work performed on said days is considered work on ordinary working days. Important condition that should be met in order to avail/receive the Single Holiday Pay If it is employee’s rest day and worked: Regular Workday plus 30% of hourly rate on said day 3. For those declared as special working holidays, the following rules shall apply: If it is employee’s regular workday: i. Unworked – no pay unless there is a favorable company policy, practice or CBA granting payment of wages on special days even if unworked. b. Worked First 8 hrs First 8 hrs DAILY PAID EEs One whose wage or salary is being paid only on those days he actually worked, except in cases of regular or special days, although he does not regularly work on these days. (In Re: United South Dock handlers, Inc., Opinion of the Bureau of Working Conditions, 23 Nov. 1987) plus 30% of hourly rate on said day 55 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards The amount of holiday pay of a part-timer is to be determined on a case-to-case basis. The basis is any of the following, whichever yields the highest amount: HOLIDAY PAY OF CERTAIN EMPLOYEES Private School Teachers (Faculty Members of Colleges and Universities) 1. RH during semestral vacations – not entitled to holiday pay. RH during Christmas vacation – entitled to holiday pay. 1. 2. Christmas breaks do not represent a break in the academic calendar. It is something that falls within the semester; while a semestral break is a break in the middle of the academic calendar. 3. 2. 4. Hourly-Paid Teachers 1. No pay on regular holidays including Christmas and semestral vacations; but, The regular wage per day; The basic wage on the working day preceding the regular holiday if the employee is present or on leave with pay on the last working day immediately prior to the regular holiday; The average of his basic wages for the last seven working days for employees who are paid by results; or The basic wage on the particular holiday, if worked. (DOLE Explanatory Bulletin on PartTime Employment, 02 Jan. 1996) Piece-Rate Workers A piece-rate employee is entitled to holiday pay. 2. With pay on special public holidays and other no-class days when classes are called off or shortened on account of floods, typhoons, rallies and the like, whether extension days be ordered or not. (Jose Rizal College v. NLRC, G.R. No. 65482, 01 Dec. 1987) Where a covered employee is paid by results or output, his holiday pay shall not be less than his average daily earnings for the last seven actual work days immediately preceding the regular holiday. Provided, Holiday pay shall not be less than the statutory minimum wage rate. (Sec. 8, Rule IV, Book III, IRR) In case of extensions, said faculty teachers shall likewise be paid their hourly rates should they teach during said extensions. (ibid.) Seasonal Workers In the event extensions are called for, they are also entitled to their pay for the extended days. Seasonal workers may not be paid the required Holiday pay during off-season where they are not at work. (Sec. 8, Rule IV, Book III, IRR) Field Personnel The employment relationship is deemed to be suspended during the off-season for seasonal workers. Field personnel are not entitled to holiday pay. The law requires that the actual hours of work in the field be reasonably ascertained. Field Personnel’s actual hours of work in the field cannot be determined with reasonable certainty. (Union of Filipro Employees v. Vivar, Jr., et al., G.R. No. 79255, 20 Jan. 1992) Workers having No Regular Work Days They shall be entitled to holiday pay. (Sec. 8, Rule IV, Book III, IRR) Q: Are the school faculty who according to their contracts are paid per lecture hour entitled to unworked holiday pay? Part-Time Worker If the work is partial, the pay should also be partial. (Azucena, 2016) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 56 Labor Law and Social Legislation A: 1. If during RH – NO. Art. 94 of the LC is silent with respect to faculty members paid by the hour who because of their teaching contracts are obliged to work and consent to be paid only for work actually done (except when an emergency or a fortuitous event or a national need calls for the declaration of special holidays). (Jose Rizal College v. NLRC, G.R. No. 65482, 01 Dec. 1987) 2. Double Holiday Pay When two RHs fall on the same day, the following rates apply: If during special public holidays – YES. The law and the IRR governing holiday pay are silent as to payment on special public holidays. Be it noted that when a special public holiday is declared, the faculty member paid by the hour is deprived of expected income, and it does not matter that the school calendar is extended in view of the days or hours lost, for their income that could be earned from other sources is lost during the extended days. WEDNESDAY MAUNDY THURSDAY & ARAW NG KAGITINGAN RATE Present Unworked 200% LOA w/pay Unworked 200% LOA w/ pay Worked Authorized absence Worked Authorized absence Worked and day is Rest Day 300% (at least) 300% (at least) 390% (+30% of each 3 100%) Concept of Successive Regular Holidays Similarly, when classes are called off or shortened on account of typhoons, floods, rallies, and the like, these faculty members must likewise be paid, whether or not extensions are ordered. (Ibid.) Rule when Two Regular Holidays fall on the same day (Double Holiday Pay) If two regular holidays fall on the same day (such as Maundy Thursday or Good Friday falling on Araw ng Kagitingan [April 9]), the employees should be paid 400% of the basic wage for both holidays, provided he worked on that day or was on leave of absence with pay or was on authorized absence on the day prior to the regular holiday. WEDNESDAY MAUNDY THURS GOOD FRIDAY Worked LOA w/pay LOA w/o pay RH RH ENTITLED TO HOLIDAY PAY Yes. Both RH RH Yes. Both RH RH No. Both RH Yes. Only to holiday pay on Friday. LOA w/o pay Worked Conditions for an Employee to be Entitled to Two (2) Successive Holiday Pays On the day immediately preceding the first RH, he must be: Holiday pay is a statutory benefit demandable under the law. Since a worker is entitled to the enjoyment of 10 paid regular holidays (Art. 94, LC), the fact that two holidays fall on the same date should not operate to reduce to nine the ten-holiday pay benefits a worker is entitled to receive. (Asian Transmission Corp v. CA, G.R. No 144664, 25 Mar. 2004) 57 1. Present (worked); or, 2. On LOA with pay. (Sec. 10, Rule IV, Book III, IRR) UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards establishment, as when a yearly inventory or when the repair or cleaning of machineries and equipment is undertaken, the regular holidays falling within the period shall be compensated. If the above stated conditions are not met He must work on the first RH to be entitled to holiday pay on the second RH. (ibid.) CONCEPT OF ABSENCES: Effects of absences on holiday pay; successive regular holiday 1. 2. 2. All covered employees shall be entitled to holiday pay when they are on leave of absence with pay on the workday immediately preceding the regular holiday. Employees who are on leave of absence without pay on the day immediately preceding a regular holiday may not be paid the required holiday pay if they do not work on such regular holiday. The regular holiday during the cessation of operation of an enterprise due to business reverses as authorized by the SOLE may not be paid by the Er. (Sec. 7, Rule IV, Book III) Deferment of Holiday Pay (for year 2020) In various labor advisories issued by the DOLE in 2020, namely, Advisories 13A, 15, 20, 22, 25, 27, and 29, the DOLE authorized the deferment, not exemption, of the payment of holiday pay on account of the national emergency arising from the COVID-19 situation. Ers shall grant the same percentage of the holiday pay as the benefit granted by competent authority in the form of employee’s compensation or social security payment, whichever is higher, if the employees are not reporting for work while on such leave benefits. In Advisory 31, the DOLE has ordered the Ers who chose to defer holiday payment to make payment of those holiday pay on or before 31 Dec. 2020. 5. SERVICE CHARGES 3. 4. Where the day immediately preceding the holiday is a non-work day in the establishment or the scheduled rest day of the employee, he/she shall not be deemed to be on leave of absence on that day, in which case he/she shall be entitled to the holiday pay if he/she worked on the day immediately preceding the nonwork day or rest day. These are charges collected by hotels, restaurants and similar establishments distributed completely and equally among the covered workers except managerial employees. (Art. 96, LC as amended by Sec. 1, R.A. No. 11360) Covered Employees Where there are two (2) successive regular holidays, like Maundy Thursday and Good Friday, an employee may not be paid for both holidays if he/she absents himself/herself from work on the day immediately preceding the first holiday, unless he/she works on the first holiday, in which case he/she is entitled to his/her holiday pay on the second holiday. (Handbook on Workers’ Statutory Monetary Benefits, Bureau of Working Conditions, 2016) GR: All Ees are covered, regardless of their position, designation, and employment status, irrespective of the method by which their wages are paid. NOTE: Applies only to hotels, restaurants and similar establishment collecting service charges. XPN: Managerial Ees (Sec. 2, Rule IV, Book III, IRR) Distribution Previously, all service charges collected by covered Ers are required to be distributed at the rate of 85% for all covered employees and 15% for management. Effects of Business Closure on Holiday Pay 1. In case of temporary or periodic shutdown and temporary cessation of work of an UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 58 Labor Law and Social Legislation R.A. No. 11360 amended Art. 96 of the LC wherein the former provides that all service charges collected by hotels, restaurants and similar establishments shall be distributed completely and equally among the covered workers except managerial employees. 6. 13th MONTH PAY 13th Month Pay or its Equivalent It is a form of monetary benefit equivalent to the monthly basic compensation received by an employee, computed pro-rata according to the number of months within a year that the employee has rendered service to the Er. (DOLE’s BWC issues Q & A on 13th month pay) Frequency of Distribution The period is not less than once every two weeks or twice a month at intervals not exceeding 16 days. (Sec. 4, Rule VI, Book III, R.A. No. 11360, IRR) The term “and its equivalent” Jurisprudence has interpreted the term “its equivalent” to approximate the legal requirement in all respects. If the grant is at variance with the law, it is regarded as a contractual obligation distinct from the legal obligation. Service Charge vs. Tips SERVICE CHARGE TIPS Collected by the management from the customers. Voluntary payments made by the customers to the Ees for excellent service. The grant must reflect the same intent as the law, namely, magnanimity. If the bonus is provided in graduated amounts depending on the length of service of employees, its purpose is to give bigger awards to long-service employees, which is a purpose not found in the law. Hence the provision is meant to be in addition to the legal requirement. (United CNC Textile Workers Union vs. Valenzuela, G.R. No. 70763, 30 Apr. 1987; Universal Corn Products vs. NLRC, G.R. No. L-60337, 21 Aug. 1987) Tips Tips are handled similarly as service charges. Pooled tips should be monitored, accounted, and distributed in the same manner as the service charges. A waiter must drop in a tip box the tips he received. Otherwise, he commits “tip pocketing”, a serious offense of dishonesty that may cost him his job. Formula and Computation of 13th Month Pay Total basic salary earned during the year = 13th month pay 12 Rule if Service Charge Is Abolished If it is abolished, the share of the covered Ees shall be considered integrated in their wages on the basis of the average monthly share of each Ees for the past 12 months immediately preceding the abolition. (Sec. 5, Rule V, Book III, IRR) Illustration: Using the basic wage in the National Capital Region at P502.00 (from January 1, 2018 to November 21, 2018) and P537.00 (from November 22, 2018 to December 31, 2018) per day and a six-day workweek or an equivalent Monthly Basic Salary of P12,466.33 and P13,290.75, respectively, to wit: NOTE: Service charges form part of the award in illegal dismissal cases. Compliance with Minimum Wage January February Service charges paid to the covered Ees shall not be considered in determining the Er’s compliance with the increased minimum wage. (Art. 96, LC as amended by Sec. 1, R.A. No. 11360) March 59 no absence no absence 1 day leave w/pay P12,466.33 P12,466.33 P12,466.33 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards April no absence 5 days leave w/o May pay 2 days leave June w/pay July no absence 2days leave August w/pay September no absence October on leave w/o pay November on leave w/o pay December no absence Total basic salary earned for the year Time of payment of 13th month pay P12,466.33 Under PD 851, all Ers are required to pay all their rank-and-file employees, a 13th month pay not later than Dec. 24 of every year. P12,466.33 P12,466.33 Absence of CBA provision not a bar in giving 13th month pay P12,466.33 P12,466.33 no salary no salary P13,290.75 The absence of an express provision in the CBA obligating the Er to pay the members of a union 13th month pay is immaterial. Notwithstanding therefore the absence of any contractual agreement, the payment of a 13th month pay, being a statutory grant, is mandatory and is deemed incorporated in the CBA. P122,977.72 P122,977.72/12 months = P10,248.14 is the proportionate 13th month pay. Nature of 13th Month Pay (2020 Handbook on Worker’s Statutory Monetary Benefits) Such is in the nature of additional income granted to employees who are not receiving the same. (Agabon v. NLRC, G.R. No. 158693, 17 Nov. 2004) Basic Salary It is based on wage but not part of wage. (Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor Union-NLU, G.R. No. 188949, 26 July 2010) Includes all remunerations or earnings paid by the Er to an employee for services rendered including cost-of-living allowances. Minimum Period of Service Required It does not include all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary such as: 1. 2. 3. 4. 5. 6. It is imposed as a ‘minimum service requirement’ that the employee should have worked for at least one (1) month during a calendar year. (No. X[A], DOLE Handbook on Workers Statutory Monetary Benefits) Cash equivalent of unused vacation and sick leave credits; Overtime pay; Premium pay; Night Shift Differential; Holiday pay; and Commissions Persons Covered by PD 851 1. GR: All rank-and-file Ees are covered by PD 851 regardless of the amount of basic salary that they receive in a month, if their Ers are not otherwise exempted from paying the 13th month pay. Such Ees are entitled to the 13th month pay regardless of said designation of employment status, and irrespective of the method by which their wages are paid. XPN: If it is an integral part of the basic salary. (Philippine Duplicators, Inc. v. NLRC, G.R. No. 110068, 15 Feb. 1995) These salary-related benefits should be included in the computation of the 13th moth pay if by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Employees 60 Labor Law and Social Legislation Provided, that they have worked for at least one month, during a calendar year. (Revised Guidelines on the Implementation of the 13th Month Pay Law) iv. Fixed amount for performing a specific work irrespective of the time consumed in the performance thereof. XPNs: a. Government Ees; b. Ees paid purely on commission basis; c. Ees already receiving 13th month pay; d. Managers; and e. Seafarers XPN: Where the workers are paid on a piece-rate basis, in which case, the Er shall be covered by the Revised Guidelines insofar as the workers are concerned. NOTE: Piece-Rate Workers refer to those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated without regard to the time spent in producing the same. NOTE: Managerial employees may receive 13th month pay if they are granted under an employment contract or a company policy or practice. (Chan, 2019) 2. d. Employers GR: All Ers are covered by PD 581. XPNs: a. The Government and any of its political subdivisions, including GOCCs; XPN to this XPN: Corporations operating essentially as private subsidiaries of the Government. b. c. Ers already paying their Ees 13th month pay or more in a calendar year in its equivalent at the time of the issuance of the Revised Guidelines; Distressed Ers: i. Currently incurring substantial losses; or ii. In the case of non-profit institutions and organizations, where their income, whether from donations, contributions, grants and other earnings from any source, has consistently declined by more than 40% of their normal income for the last two (2) years, subject to the provision of Sec. 7 of P.D. 851. Domestic workers or kasambahays Previously, not covered by 13th month pay law are Ers of household helpers and persons in the personal service of another in relation to such workers. However, R.A. No. 10361 is now explicit in its commandment that a domestic worker or kasambahay is entitled to 13th month pay as provided by law. (Sec. 25, Art. IV, R.A. No. 10361, otherwise known as the “Domestic Workers Act”) Ers of those who are paid on purely basis of: i. Commission; NOTE: Bus drivers and conductors who are paid a fixed or guaranteed minimum wage, in case their commission be less than the statutory minimum, are entitled to a 13thmonth pay equivalent to one-twelfth of their total earnings during the calendar year. (Philippine Agricultural Commercial and Industrial Workers Union v. NLRC, G.R. No. 107994, 14 Aug. 1995) Options of covered Ers ii. Boundary; or iii. Task; and 61 1. Pay 1/2 of the 13th month pay required before the opening of the regular school year and the other half on or before the 24th day of December of every year. 2. In any establishment where a union has been recognized or certified as the CB agent of the UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards 3. 4. Ee, the periodicity or frequency of payment of the 13th month pay may be the subject of agreement. Other types of employment entitled to month pay 1. 2. 3. 4. Q: Concepcion Textile Co. included the OT pay, night-shift differential pay, and the like in the computation of its Ees’ 13th month pay. Subsequently, with the promulgation of the decision of the SC in the case of SMC v. Inciong (G.R. No. L-49774, 24 Feb. 1981) holding that these other monetary claims should not be included in the computation of the 13th Month Pay, Concepcion Textile Co. sought to recover under the principle of solutio indebiti the overpayment of the Ees’ 13th month pay, by debiting against future 13th month payments whatever excess amounts it had previously made. 13th Part-time Employee; (Item 5[b], Revised Guidelines of PD 851) Extras; Casual Employee; and Seasonal Employee. (BWC Opinion, 19 Dec. 1987) Q: What would be your advice to your client, a manufacturing company, who asks for your legal opinion on whether or not the 13th Month Pay Law covers a casual Ee who is paid a daily wage? (1998 BAR) a. A: I will advise the manufacturing company to pay the casual Ee 13th Month Pay if such casual Ee has worked for at least one month in a calendar year. The law on 13th Month Pay provides that Ees are entitled to the benefit of said law regardless of their designation or employment status. A: 1. Equivalent forms of the 13th month pay Christmas Bonus; Midyear Bonus; Profit Sharing Scheme; and Other Cash bonuses amounting to not less than 1/12 of its basic salary NOTE: It must always be in the form of a legal tender. 2. Things Not Proper Substitutes For 13th Month Pay 1. 2. Free rice; Electricity; UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Is the Company's action tenable? b. With respect to the payment of the 13th month pay after the SMC ruling, what arrangement, if any, must the Company make in order to exclude from the 13th month pay all earnings and remunerations other than the basic pay? (1994 BAR) NOTE: Ees are entitled to the 13th month pay benefits regardless of their designation and irrespective of the method by which their wages are paid. (Jackson Building-Condominium Corp. v. NLRC, G.R. No. 112546, 14 Mar. 1996) 1. 2. 3. 4. Cash and stock dividends; and Cost-of-living Allowance. (Sec. 3, P.D. 85) 62 NO. The Company's action is not tenable. The principle of solutio indebiti which is a civil law concept is not applicable in labor law. (Davao Fruits Corp. v. NLRC, et al., G.R. No. 85073, 24 Aug. 1993) After the 1981 SMC ruling, the Supreme Court decided the case of Philippine Duplicators Inc. v. NLRC, G.R. No. 110068, Nov. 15, 1995. Accordingly, management may undertake to exclude sick leave, vacation leave, maternity leave, premium pay for regular holiday, night differential pay and cost of living allowance. The company should include sales commissions based on the settled rule. (Songco v. NLRC, G.R. No. L-50999, 23 Mar. 1990) Labor Law and Social Legislation pay). (Sec. 6, DOLE Revised Guidelines on 13th Month Pay) Adjudicated Claims Non-payment of the 13th month pay provided by P.D. 851 and the rules of NLRC shall be treated as money claims cases. 5. NOTE: Difference of opinion on how to compute the 13th month pay is non-strikeable and a strike held on that ground is illegal. (Isalama Machine Works Corp. v. NLRC, G.R. No. 10016, 02 Mar. 1995) NOTE: In the consolidated cases of Boie Takeda Chemicals, Inc. v. Dionisio de la Serna, (G.R. No. 92174, 10 Dec. 1993), and Philippine Fuji Xerox Corporation v. Cresenciano Trajano and Philippine Fuji Xerox Employees Union, (G.R. No. 102552 10 Dec. 1993), the Supreme Court ruled that commissions, while included in the generic term wage, are not part of "basic salary/wage" and therefore, should not be included in computing the 13th month pay. Thus: The following Ees may or may not be entitled to 13th month pay 1. Ee paid by results - Entitled to 13th month pay. NOTE: Ees paid a fixed or guaranteed wage plus commission are also entitled to the mandated 13thmonth pay, based on their total earnings during the calendar year, i.e., on both their fixed or guaranteed wage and commission. 2. Those with Multiple Ers - Government Ees working part time in a private enterprise, including private educational institutions, as well as Ees working in two or more private firms, whether full or part time basis, are entitled to the required 13th month pay from all their private Ers regardless of their total earnings from each or all their Ers. (Revised Guidelines on the Implementation of 13th Month Pay Law) 3. Private School Teachers, including faculty members of universities and colleges Entitled regardless of the number of months they teach or are paid within a year, if they have rendered service for at least one (1) month within a year. 4. Employees who are paid a fixed or guaranteed wage plus commission are also entitled to the 13th-month pay, based on their earnings during the calendar year (i.e., on both their fixed or guaranteed wage and commission). In remunerative schemes consisting of a fixed or guaranteed wage plus commission, the fixed or guaranteed wage is patently the "basic salary" for this is what the employee receives for a standard work period. Commissions are given for extra efforts exerted in consummating sales or other related transactions. They are, as such, additional pay, which this Court has made clear do not form part of the "basic salary." (Boie-Takeda Chemicals Inc v. Dela Serna, 10 Dec. 1993) (Handbook on Workers’ Statutory Monetary Benefits, Bureau of Working Conditions, 2016) Application of Pro-Ration of 13th Month Pay GR: Pro-ration of 13th month pay applies only in cases of resignation or separation from work; computation should be based on length of service and not on the actual wage earned by the worker. (Honda Phils. v. Samahan ng Manggagawa sa Honda, G.R. No. 145561, 15 June 2005) Resigned or Separated Ees – If resigned or separated from work before the time of payment of 13th month pay, entitled to monetary benefits in proportion to the length of time he started working during the calendar year up to the time of resignation or termination of service (Pro-rated 13th month XPN: Ees who are paid a guaranteed minimum wage or commissions earned are entitled to 13th Month Pay based on total earnings. (Philippine Agricultural Commercial and Industrial Workers Union v. NLRC, G.R. No. 107994, 14 Aug. 1995) 63 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards Agreements, the grant of 14th, 15th and 16th month bonuses has become more than just an act of generosity on the part of ETPI, but a contractual obligation it has undertaken. (ETPI v. ETEU, G.R. No. 185665, 08 Feb. 2012) 14th Month Pay Not Legally Demandable GR: The granting of 14th month pay is a management prerogative and is not legally demandable. It is basically a bonus and is gratuitous in nature. (Kamaya Point Hotel v. NLRC, G.R. No. 75289, 31 Aug. 1989) Commission in relation to 13th month pay XPN: A bonus, however, becomes a demandable or enforceable obligation when it is made part of the wage or salary or compensation of the employee. If it is additional compensation which the Er promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or if a certain level of productivity is achieved, it cannot be considered part of the wage. XPN to the XPN: Where it is not payable to all but only to some employees and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the wage. (Metro Transit Organization, Inc. v. NLRC, G.R. No. 116008, 11 July 1995) Q: ETPI (company) entered into a collective bargaining agreement with ETEU (union). A side agreement of the said CBA provided that company confirms that the 14th, 15th and 16th month bonuses (other than 13th month pay) are granted. The company then planned to defer the payment of the 14th, 15th and 16th month bonuses due continuing deterioration of company’s financial position. The union opposed and filed a preventive mediation complaint before the NCMB. May the company validly postpone the payment of said bonuses? The salesman’s commissions, comprising a predetermined percent of the selling price of the goods sold by each salesman, were properly included in the term basic salary for purposes of computing their 13th month pay. These commissions are not overtime payments, nor profit-sharing payments nor any other fringe benefit. Thus, the salesmen's commissions, comprising a pre-determined percent of the selling price of the goods sold by each salesman, were properly included in the term "basic salary" for purposes of computing their 13th -month pay. (Philippine Duplicators, Inc. v. NLRC, G.R. No. 110068, 15 Feb. 1995) b. The so-called commission received by medical representatives of BoieTakeda Chemicals or by the rank-and-file Ees of Phil. Fuji Xerox were excluded from the term basic salary because these were paid as productivity bonuses. Such bonuses closely resemble profit sharing, payments and have no clear, direct, necessary relation to the amount of work actually done by each individual Ee. (Boie-Takeda Chemicals, Inc. v. Dela Serna, G.R. No. 92174, 10 Dec. 1993) Productivity Bonus v. Sales Commissions A productivity bonus is something extra for which no specific additional services are rendered by any particular employee and hence not legally demandable, absent a contractual undertaking to pay it. A: NO. A reading of the provision reveals that the same provides for the giving of 14th, 15th and 16th month bonuses without qualification. There were no conditions specified in the CBA Side Agreements for the grant of the benefits contrary to the claim of ETPI that the same is justified only when there are profits earned by the company. In fine, the payment of these bonuses was not related to the profitability of business operations. Verily, by virtue of its incorporation in the CBA Side UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES a. Sales commissions, on the other hand, such as those paid in Duplicators, are intimately related to or directly proportional to the extent or energy of an employee's endeavors. Commissions are paid upon the specific results achieved by a salesmanemployee. It is a percentage of the sales closed by a salesman and operates as an integral part of such 64 Labor Law and Social Legislation raising of livestock or poultry, the culture of fish and other aquatic products in farms or ponds, and any activities performed by a farmer or on a farm as an incident to or in conjunction with such farming operations, but does not include the manufacturing and/or processing of sugar, coconut, abaca, tobacco, pineapple, aquatic or other farm products. (Art. 97 (d), LC) salesman's basic pay. (Philippine Duplicators, Inc. v. NLRC, G.R, 110068, 15 Feb. 1995) B. WAGES It is the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, payable by an Er to an Ee under a written or unwritten contract of employment: 1. 2. Wage vs. Salary The term "wages" as distinguished from "salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated times, and measured by the day, week, month, or season, while "salary" denotes a higher degree of employment, or a superior grade of services, and implies a position of office: by contrast, the term “wages" indicates considerable pay for a lower and less responsible character of employment, while "salary" is suggestive of a larger and more important service. (Gaa v. Court pf Appeals, G.R. No. L-44169, 03 Dec. 1985) For work done or to be done, or for services rendered or to be rendered; and Includes fair and reasonable value of board, lodging, or other facilities customarily furnished by the Er to the Ee as determined by SOLE. “Fair and reasonable value” shall not include any profit to the Er or to any person affiliated with the Er. (Art. 97(f), LC) “No Work, No Pay” Principle (Fair Day’s Wage for a Fair Day’s Labor) Twin Attributes of Wages 1. Cash wage takes the form of ready money paid by the Er for services rendered by the employee. 2. Facilities are articles or services customarily given for the benefit of the employee and are voluntarily accepted by him. GR: If there is no work performed by the employee, without the fault of the Er, there can be no wage or pay. Burden of economic loss suffered by employee shall not be shifted to the Er. XPNs: When the laborer was able, willing and ready to work but was: 1. 2. 3. 4. 5. NOTE: The term "wages" also covers all benefits of the employee under the CBA such as severance pay, educational allowance, accrued vacation leave earned but not enjoyed, as well as workmen's compensation awards and unpaid salaries for services rendered. (PNB v. Cruz, G.R. No. 80593, 18 Dec. 1989) Prevented by management; Illegally locked out; Illegally suspended; Illegally dismissed; and Illegally prevented from working. (Aklan Electric Coop. v. NLRC, G.R. No. 129246, 10 Jan. 2000) “Equal Pay for Equal Work” Principle Agricultural Work refers to all farming activities in all its branches and includes among others, the cultivation and tillage of the soil, production, cultivation, growing and harvesting of any agricultural or horticultural commodities, dairying, Persons who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be paid similar salaries. 65 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards Employees holding the same position and rank are presumed to be performing equal work. The rule equal pay for equal work applies whether the employee is hired locally or abroad. (International School Alliance of Educators v. Quisumbing, G.R. No. 128845, 01 June 2000) No Er shall pay the wages of an employee by means of: 1. 2. 3. 4. 5. 6. 7. Application of Title GR: The Title on Wages of the Labor Code applies to all employees. NOTE: This prohibition applies even when expressly requested by the employee. XPNs: 1. Farm tenancy or leasehold; 2. Household or domestic helpers, including family drivers and persons working in the personal service of another; 3. Home workers engaged in needlework or in any cottage industry duly registered in accordance with law; (Art. 98, LC) 4. Workers in any duly registered cooperatives when so recommended by the Bureau of Cooperative Development and upon approval of the SOLE; XPNs: Payment of wages by check or money order shall be allowed if: 1. 2. 3. 4. NOTE: Workers of a registered barangay micro business enterprise are only exempted from the Minimum Wage Law, not from the Title on Wages of the Labor Code. (R.A. No. 9178) Barangay Micro Business Enterprise refers to any business entity or enterprise engaged in the production, processing or manufacturing of products or commodities, including agroprocessing, trading and services, whose total assets including those arising from loans but exclusive of the land on which the particular business entity's office, plant and equipment are situated, shall not be more than P3,000,000. (R.A. No. 9178) 1. PAYMENT OF WAGES Forms of Payment GR: As a general rule, wages shall be paid in legal tender. (Sec. 1, Rule VIII, Book III, IRR of LC) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Promissory notes; Vouchers; Coupons; Tokens; Tickets; Chits; or Any object other than legal tender. 66 It is customary on the date of the effectivity of the Code; Necessary because of special circumstances as specified in the regulation issued by the SOLE; Stipulated in the CBA; (Art. 102, LC) or Where the following conditions are met: a. There is a bank or other facility for encashment within a radius of one (1) kilometer from the workplace; b. The Er or any of his agents or representatives does not receive any pecuniary benefit directly or indirectly from the arrangement; c. The employees are given reasonable time during banking hours to withdraw their wages from the bank which time shall be considered as compensable hours worked if done during working hours; and d. The payment by check is with the written consent of the employees concerned if there is no collective agreement authorizing the payment of wages by bank checks. (Sec. 2, Rule VIII, Book III, IRR of LC) Labor Law and Social Legislation NOTE: No Er shall pay his employees in any bar, night or day club, drinking establishment, massage clinic, dance hall, or other similar places or in places where games are played with stakes of money or things representing money except in the case of persons employed in said places. (Sec. 4, Rule VIII, Book III, IRR of LC) Time of Payment GR: Wages shall be paid: 1. At least once every two (2) weeks; or, 2. Twice a month at intervals not exceeding 16 days. XPNs: 1. On account of force majeure or circumstances beyond the Er’s control, payment shall be made immediately after such force majeure or circumstances have ceased; 2. Requisites of Payment Through Banks 1. 2. 3. If engaged to perform a task which cannot be completed in two (2) weeks shall be subject to the following conditions, in the absence of a CBA or arbitration award: a. b. That payments are made at intervals not exceeding 16 days, in proportion to the amount of work completed; That final settlement is made upon completion of the work. (Art. 103, LC) NOTE: Payment shall be made within the period of payment of wages fixed by the Labor Code. Requisites of Payment Through Automated Teller Machine (ATM) Place of Payment 1. GR: At or near the place of undertaking. (Art. 104, LC) 2. XPN: Payment in a place other than the workplace shall be permissible only under the following circumstances: 1. 3. When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible; 4. 5. 6. 2. When the Er provides free transportation to the employees back and forth; and, 7. 3. Shall be made upon written permission of the majority of the employees or workers concerned; With 25 or more employees; and, Located within one (1) kilometer radius to a commercial, savings or rural bank. (Sec. 7, R.A. No. 6727) Under any other analogous circumstances; Provided, that the time spent by the employees in collecting their wages shall be considered as compensable hours worked. 67 The ATM system of payment is with the written consent of the employees concerned; The employees are given reasonable time to withdraw their wages from the bank facility which time, if done during working hours, shall be considered compensable hours worked; The system shall allow workers to receive their wages within the period or frequency and in the amount prescribed under the Labor Code, as amended; There is a bank or ATM facility within a radius of one (1) kilometer to the place of work; Upon request of the concerned Ees, the Er shall issue a record of payment of wages, benefits and deductions for a particular period; There shall be an additional expense and no diminution of benefits and privileges as a result of the ATM system of payment; and The Er shall assume responsibility in case the wage protection provisions of law and regulations are not complied with under the arrangement. (DOLE Labor Advisory, Series of 1996) UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards Direct Payment of Wages 2. PROHIBITIONS REGARDING WAGES GR: Wages shall be paid directly to the workers to whom they are due. (Art. 105, LC) a. Non-Interference in Disposal of Wages Er shall not limit or interfere with the freedom of any employee to dispose of his wages. He shall not force, compel or oblige his Ees to purchase merchandise, commodities or other property from any other person, or otherwise make use of any store services of such Er or any other person. (Art. 112, LC) XPNs: 1. Payment through another person may be made in cases of force majeure which renders the payment impossible, provided that such person is under written authority given by the worker for the purpose; 2. Where the Er is authorized in writing by the employee to pay his wages to a member of his family; 3. 4. Civil Code Provisions on Non-Interference in Disposal of Wages Art. 1705. The laborer's wages shall be paid in legal currency. Where payment to another person of any part of the employee's wages is authorized by existing law, including payments for the insurance premiums of the employee and union dues where the right to check-off has been recognized by the Er in accordance with a collective agreement or authorized in writing by the individual employees concerned; (Sec. 5, Rule VIII, Book III, IRR of LC; Art. 105, LC) or Art. 1706. Withholding of the wages, except for a debt due, shall not be made by the employer. Art. 1707. The laborer's wages shall be a lien on the goods manufactured or the work done. Art. 1708. The laborer's wages shall not be subject to execution or attachment, except for debts incurred for food, shelter, clothing and medical attendance. In case of death of the employee, the Er may pay the wages to the heirs without the necessity of intestate proceedings. When the heirs are of age, they shall: a. b. Art. 1709. The employer shall neither seize nor retain any tool or other articles belonging to the laborer. Execute an affidavit attesting to their relationship to the deceased and the fact that they are his heirs to the exclusion of all other persons; b. Wage Deduction GR: No Er, in his own behalf or on behalf of any person, shall make any deduction from the wages of his employees. (Art. 113, LC) In case any of the heirs is a minor, such affidavit shall be executed in his behalf by his natural guardian or next of kin; XPNs: a. Where the worker is insured with his consent by the Er; and, c. Upon presentation of the affidavit to the Er, he shall make payment to the heirs as representative of the SOLE. (Sec. 6, Rule VIII, Book III, IRR of LC) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES b. 68 For union dues, in cases where the right of the worker or his union to check off has been recognized by the Er or authorized in writing by the individual worker concerned. (Art. 113, LC) Labor Law and Social Legislation NOTE: Art. 241(o) of the LC provides that special assessments may be validly checkedoff provided that there is an individual written authorization duly signed by every employee. c. against wage deduction for absences or tardiness incurred by the employee. Check-off In cases where the Er is authorized by law or regulations issued by the SOLE: i. ii. iii. iv. v. vi. vii. viii. ix. x. Check-off is a system by which union dues and other assessments are deducted from the employee's wage by the Er upon authorization from the worker or by mandate of the law. (Poquiz, 2012) Deductions for value of meals and facilities freely agreed upon; (Azucena, 2016) In case where the employee is indebted to the Er where such indebtedness has become due and demandable; (Art. 1706) In court awards, wages may be subject of execution or attachment, but only for debts incurred for food, shelter, clothing, and medical attendance; (Art. 1703) Taxes withheld pursuant to the Tax Code; Salary deduction of a member of a legally established cooperative; (Sec. 59, R.A. No. 6938) Deductions for SSS, PhilHealth and PagIBIG premiums; Deductions for loss or damage; (Art. 114, LC) Deductions made with the written authorization of the Ee for payment to a third person; (Sec. 13, Rule VIII, Book III, IRR of LC) Deductions as disciplinary measures for habitual tardiness; (Opinion dated 10 Mar. 1975 of the Labor Secretary) Agency fees. (Art. 259(e), LC) Duration of Check-Off The Ees' check-off authorization even if declared irrevocable, is good only as the employees remain members of the union concerned, because as such members they were obliged to pay the corresponding dues and assessments to their union. The moment they are separated from and left the union and joined another labor organization, they were no longer obliged to pay said dues and assessments. There would be no longer any reason or occasion for the company to continue making deductions. (Phil. Federation of Petroleum Workers v. CIR, G.R. No. L-26346, 27 Feb. 1971) Compulsory Check-Off Check-off may be enforced with the consent of the Er or by authority in writing by the employees. When the union and the Er agree, the attitude of the Ees is immaterial. When the Ees duly authorize the check-off, the Er's consent is unnecessary and its recognition of the right is obligatory. (A.L. Ammen Trans. Co. v. BITEMAA, 91 Phil 649) The law prohibits the Er from making deductions from the wages of an employee. The evil sought to be prevented is to forestall the commission of unwarranted practices of Ers by making unnecessary deductions without employee's knowledge or authorization. (Galvadores v. Trajano, G.R. No. 70067, 15 Sept. 1986) Deductions for Absences and (Principle of No-Work No-Pay) Agency Fees It is an amount equivalent to the union dues, which a non-union member pays to the union because he benefits from the CBA negotiated by the union. (See discussion on agency fees under Legitimate Labor Organizations – page 187) Tardiness Deductions for unpaid absences are allowed. An Er will not be liable for violation of the prohibition 69 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards deductions from the salaries is authorized by law, or regulations issued by the SOLE. Further, the posting of cash bonds should be proven as a recognized practice in the jewelry manufacturing business, or alternatively, the petitioners should seek for the determination by the SOLE through the issuance of appropriate rules and regulations that the policy the former seeks to implement is necessary or desirable in the conduct of business. Deduction to Ensure Employment The employment contract provides for 25% deduction from employee's salary representing the Er's share in procuring job placement for him. The provision in the contract was contested, but the Er argued that the employee was already estopped in complaining about the deduction. The Supreme Court declared the employment contract illegal and iniquitous; thus, null and void. (Commando Security Agency v. NLRC, G.R. No. 95844, 20 July 1992) d. Prohibition on withholding of wages Reduction of Workdays; Effect on Wages It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker. (Art. 116, LC) In situations where the Er has to reduce the number of regular working days to prevent serious losses, such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw materials, the Er may deduct the wages corresponding to the days taken off from the workweek, consistent with the principle of “no work, no pay.” This is without prejudice to an agreement or company policy which provides otherwise. (Handbook on Workers’ Statutory Monetary Benefits, 2016) Although management prerogative refers to the right to regulate all aspects of employment, it cannot be understood to include the right to temporarily withhold salary/wages without the consent of the Er. To sanction such an interpretation would be contrary to Art. 166 of the Labor Code. (SHS Perforated Materials, Inc. v. Diaz, G.R. No. 185814, 13 Oct. 2010) As an exception, Ers usually withhold the release of the last salary and benefits of terminated or resigning employees prior to or pending their compliance with certain clearance procedure. c. Prohibition against Deposit Requirement GR: While deductions from the employees’ wages may be made for cash bonds or deposits, the Er, however, is not allowed to unilaterally impose upon its employees the giving of cash bonds or deposits. Clearance procedure are instituted to ensure that the properties, real or personal, belonging to the Er but are in the possession of the separated employee, are returned to the Er before the employee’s departure. (Milan v. NLRC and Solid Mills, Inc., G.R. No. 202961, 04 Feb. 2015) XPN: If the Er proved and established that it falls under any of the following: a. b. That it is engaged in such trades, occupations or business were the practice of making deductions or requiring deposits is a recognized one; or Other Prohibitions That the cash bond or deposit is necessary or desirable as determined by the DOLE Secretary in appropriate rules and regulations. In the case of Nina Jewelry v. Montecillo (G.R. No. 188169, 28 Nov. 2011), the court ruled that the petitioners should first establish that the making of UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 70 1. Inducing a worker to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without his consent. (Art. 116, LC) 2. To make deductions from wages for the benefit of the Er or his representative as consideration of a promise of Employment or retention in employment; (Art. 117, LC) Labor Law and Social Legislation 3. 4. Refusal by Er to pay or reduce wages or benefits in discrimination of any Ee who has filed any complaint or instituted any proceedings under the code or has testified or about to testify; (Art. 118, LC) or 3. FACILITIES vs. SUPPLEMENTS FACILITIES SUPPLEMENT As to their Nature Extra remuneration or Items of expense benefits As to their Inclusion to Wage Forms part of the wage Independent of wage As to their Deductibility Deductible from the Not wage deductible wage To whose Benefit For the benefit of the Granted for the worker and his family convenience of the Er Unlawful for any person to make any statement, report, or record filed or kept pursuant to the Code knowing such statement, report or record to be false in any material aspect. (Art. 119, LC) Deposit for Loss or Damage GR: Er shall not require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the Er. (Art. 114, LC) Facilities as Part of Wages “Facilities” shall include articles or services for the benefit of the employee or his family but shall not include tools of the trade or articles or service primarily for the benefit of the Er or necessary to the conduct of the Er’s business. (Sec. 5, Rule VII-A, Book III, IRR) XPN: Er is engaged in such trade or business where the practice of making deductions or requiring deposits is a recognized one or is necessary or desirable as determined by the SOLE in appropriate rules and regulations. Facilities are items of expense necessary for the laborer's and his family's existence and subsistence so that by express provision of law, they form part of the wage and when furnished by the Er are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same. (Our Haus Realty Development Corp. v. Parian, G.R. No. 204651, 06 Aug. 2014) Requisites for Payment of Loss and Damage 1. It is clearly shown that the employee is responsible for the loss or damage; 2. The employee is given reasonable opportunity to show cause why deduction should not be made; 3. The total amount of such deductions is fair and reasonable and shall not exceed the actual loss or damage; and 4. The deduction from the wages of the employee does not exceed 20% of his wages in a week. (Sec. 11, Rule VIII, Book III, IRR of LC) E.g., Rice ration, housing, recreational facilities, medical treatment to dependents, school facilities, cost of light, water, fuel, meals or snacks (Atok Big Wedge Mutual Benefit Assn. v. Atok Big Wedge Mining Co., G.R. No. L-7349, 19 July 1955; Mayon Hotel v. Adana, G.R. No. 157634, 16 May 2005) Facilities Exclude Profit The value of facilities should not be more than the actual cost to the Er of the board, lodging, or other facilities customarily furnished by him to his Ees. The "fair and reasonable value" does not include any profit to the Er or to any persons affiliated with the Er. 71 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards Significance of Determination of Facilities Beneficial to Er or Ee Voluntary Acceptance of Facilities Acceptance of facilities is voluntary, for to compel the Ee to accept such facilities against his will would be violative of the fundamental right of Ee to the free disposal of his wage guaranteed under Art. 112. (Mabeza v. NLRC, G.R. No. 118506, 18 Apr. 1997) It is significant to determine when articles or services are beneficial to an employee because those articles or services which are advantageous to the employee cannot be charged against the cash wage of an employee. Articles or tools of the trade that are primarily for the benefit of the Er or necessary to the conduct of his business cannot be deducted from the Er's wages because they are not considered as facilities. Requirements Facilities 1. for Deducting Values Supplements Not Part of Wages “Supplements” are extra remunerations or benefits given to or received by laborers over and above their ordinary earnings or wages. for Since they are not considered as part of wages, their value cannot be deducted from the cash wage of an Ee. Proof must be shown that such facilities are customarily furnished by the trade; E.g., Vacation leave pay, overtime pay in excess of the legal rate, profit-sharing benefits, sick pension, retirement and death benefits, family allowances, Christmas bonus, war-risk or cost-of-living bonuses or other bonuses other than those paid as reward for extra output or time spent on the jobs. (Atok Big Wedge Mining Co. v. Atok Big Wedge Mutual Benefit Assoc., G.R. No. L-7349, 19 July 1955) NOTE: It is important to determine when facilities are customarily furnished or not, for the fair and reasonable value of facilities not customarily furnished cannot be charged against the cash wage. For example, a messenger who slept in the office cannot be charged by the Er for housing allowance because the office is not a regular sleeping quarter. On the other hand, housing quarters are common in a mining industry; hence, the latter can charge its Ees for housing quarter. (Mabeza v. NLRC, G.R. No. 118506, 18 Apr. 1997) 2. 3. Criterion in Determining Whether an Item is a Supplement or Facility The criterion is not so much with the kind of the benefit or item (food, lodging, bonus or sick leave) given, but its purpose. (State Marine v. Cebu Seamen’s Assn., G.R. No. L-12444, 28 Feb. 1963) The provision of deductible facilities must be voluntarily accepted in writing by the employee; and, If it is primarily for the Ee’s gain, then the benefit is a facility; if its provision is mainly for the Er’s advantage, then it is a supplement. Again, this is to ensure that Ees are protected in circumstances where the Er designates a benefit as deductible from the wages even though it clearly works to the Er’s greater convenience or advantage. The facilities must be charged at fair and reasonable value. (ibid.) NOTE: Where the facilities are given free of charge by the Er and there is no prior agreement to deduct the cost of said facilities from the wages of the Ees, the Er cannot subsequently charge the cost of the facilities or otherwise avail of the order. (Sec. 2(g), Rule IV, DO 126-13) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Under the purpose test, substantial consideration must be given to the nature of the Er’s business in relation to the character or type of work performed by the Ees involved. (Our Haus Realty Development Corp. v. Parian, G.R. No. 204651, 06 Aug. 2014) 72 Labor Law and Social Legislation salary and have long accepted the arrangement. Is the company's position legally correct? (2013 BAR) Tips Not Part of Wages; Element of Compulsion in Tipping Wage is the remuneration directly paid by the Er to an Ee. On the other hand, tips are paid directly to an Ee by the customer; hence, they fall short of the definition provided in Art. 97. A: NO. The following requisites were not complied with: 1. Although a tip denotes a voluntary act, it lacks the essential element of a gift, that is, the free bestowing of a gratuity without consideration. Despite its apparent voluntariness, there is an element of compulsion in tipping. (Ace Navigation Co., Inc. v. C.A., G.R. No. 140364. 15 Aug. 2000) 2. 3. Status of Food and Lodging, or the Electricity and Water Consumed by a Hotel Worker Proof that such facilities are customarily furnished by the trade; The provision of deductible facilities is voluntarily accepted by the Ee; and, The facilities are charged at the fair and reasonable value. Mere availment is not sufficient to allow deduction from Ee’s wages. (Mayon Hotel & Restaurant v. Adarna, G.R. No. 157634, 16 May 2005) Gratuity These are supplements. Considering, therefore, that hotel workers are required to work different shifts and are expected to be available at various odd hours, their ready availability is a necessary matter in the operations of a small hotel. It is something given freely or without recompense; a gift; something voluntarily given in return for a favor or services. Gratuity pay is not intended to pay a worker for actual services rendered. It is a money benefit given to the workers whose purpose is to reward them in return for a satisfactory work and efficient service to the company. Furthermore, granting that meals and lodging were provided and indeed constituted facilities, such facilities could not be deducted without the Er complying first with certain legal requirements. (Mabeza v. NLRC, G.R. No. 118506, 18 Apr. 1997) While it may be enforced once it forms part of a contractual undertaking, the grant of such benefit is not mandatory so as to be considered a part of labor standard law unlike salary, cost-of-livingallowances, holiday pay, leave benefits, etc., which are covered by the Labor Code. (Azucena, 2016) Q: Gamma Company pays its regular Ees P350.00 a day and houses them in a dormitory inside its factory compound in Manila. Gamma Company also provides them with three full meals a day. In the course of a routine inspection, a DOLE Inspector noted that the workers' pay is below the prescribed minimum wage of P426.00 plus P30.00 allowance, and thus required Gamma Company to pay wage differentials. 4. MINIMUM WAGE Regional Minimum Wage Regional minimum wage refers to the lowest basic wage rates than an employer can pay his works, as fixed by the Regional Tripartite Wages and Productivity Boards (RTWBPs), and which shall not be lower than the applicable statutory minimum wage rates. (Sec. 4 (k), Rule 1, NWPC Guidelines No. 01, Series of 2007, 19 June 2007) Gamma Company denies any liability, explaining that after the market value of the company-provided board and lodging are added to the Ees' P350 cash daily wage, the Ees' effective daily rate would be way above the minimum pay required by law. The company counsel further points out that the Ees are aware that their food and lodging form part of their 73 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards Statutory Minimum Wage Minimum Wage Non-Negotiable; Non- Waivable Statutory minimum wage is the lowest wage rate fixed by law that an Er can pay his workers. (IRR, R. A. No. 6727) Compensation which is less than such minimum rate is considered an underpayment that violates the law. (Azucena, 2016) The minimum wage fixed by law is mandatory; thus, it is non-waivable and non-negotiable. The enactment is compulsory in nature in order to ensure decent living conditions. (PAM Co. v. PAMEAFFW, G.R. No. L-35254, 29 Jan. 1973) Purpose XPNs to the Coverage of Minimum Wage The purpose of minimum wage law is “to set barrier below which wages may not fall, in order to develop competition on a high level of efficient rather than competition on a low level of wages.” 1. Household or domestic helpers, including family drivers and persons in the personal service of another; NOTE: Household or domestic workers are only exempt from the minimum wage prescribed by wage orders. RA 10361 otherwise known as “Batas Kasambahay” prescribes the minimum wage for household or domestic helpers. The minimum must be fair and just. The "minimum wage" can by no means imply only the actual minimum. Some margin or leeway must be provided, over and above the minimum, to take care of contingencies, such as increase of prices of commodities and increase in wants, and to provide means for a desirable improvement in his mode of living. (Atok Big Wedge Mining Co., Inc. v. Atok Big Wedge Mutual Benefit Association, G.R. No. L-5276, 03 Mar. 1953) 2. Homeworkers 3. Workers employed in any establishment duly registered with the National Cottage Industries and Development Authority provided that such workers perform the work in their respective homes; 4. Workers in any duly registered cooperative when so recommended by the Bureau of Cooperative Development and upon approval of the SOLE. (Sec. 3, Rule VII, Book III, IRR); Non-Applicability of Estoppel 5. The acceptance of by an Ee of the wages paid him without objections does not give rise to estoppel precluding him from suing for the difference between the amount received and the amount he should have received pursuant to a valid minimum wage law. Ees of retail and service establishments regularly employing not more than ten Ees; (Sec. 4, R.A. No. 6727) 6. Workers in a duly registered cooperative when so recommended by the Bureau of Cooperative Development and upon approval of the SOLE; (Sec. 2, Rule VII, Book III, IRR) 7. Workers of a barangay micro business enterprise. (R.A. No. 7138) Ability to Pay Immaterial The Er cannot exempt himself from liability to pay minimum wages because of poor financial condition of the company, the payment of minimum wages not being dependent on the Er’s ability to pay. (Azucena, 2016) In other words, the law gives the Ee the right to be paid at least the minimum wage. Such legal right cannot be waived or given away even if he does not complain at the time he receives a wage below the minimum. (Azucena, 2016) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 74 engaged in needle-work; Labor Law and Social Legislation NOTE: Retail and service establishments must file an application for exemption with the duly appropriate Regional Board. Elements of Wage Distortion 1. Additional Exemptions 2. The NWPC Guidelines on Exemption from wage orders adds categories of exemptible enterprises such as distressed establishments, new business enterprises, and establishments adversely affected by natural calamities. 3. 4. Wage Orders issued by the wage boards under Arts. 99 and 122 may provide for other exemptions from the Minimum Wage Law. (Azucena, 2016) An existing hierarchy of positions with corresponding salary rates; A significant change or increase in the salary rate of a lower pay class without a corresponding increase in the salary rate of a higher one; The elimination of the distinction between the two (2) groups or classes; and The WD exists in the same region of the country. (Alliance Trade Unions v. NLRC, G.R. No. 140689, 17 Feb. 2004) In mandating an adjustment, the law did not require that there be an elimination or total abrogation of quantitative wage or salary differences; a severe contraction is enough. (Metrobank v. NLRC, G.R. No. 102636, 10 Sept. 1993) 5. WAGE DISTORTION Concept Wage distortion does not arise when a wage order gives Ees in one branch of a bank higher compensation than that given to their counterparts in other regions occupying the same pay scale who are not covered by said wage order. In short, the implementation of wage orders in one region but not in others does not in itself necessarily result in wage distortion. (Prubankers Association v. Prudential Bank & Trust Company, G.R. No. 131247, 25 Jan. 1999) A situation where an increase in prescribed wage 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. (Art. 124, LC) It is the disappearance or virtual disappearance of pay differentials between lower and higher positions in an enterprise because of compliance with a wage order. (P.I. Manufacturing v. P.I. Manufacturing Supervisors and Foreman, G.R. No. 167217, 04 Feb. 2008) Wage distortion is applied to voluntary and unilateral increases by the Er in fixing hiring rates which is inherently a business judgment prerogative, then the hands of the Er would be completely tied even in cases where an increase in wage of a particular group is justified due to a reevaluation of the high productivity of a particular group, or as in the present case, the need to increase the competitiveness of Bankard’s hiring rate. An Er would be discouraged from adjusting the salary rates of a particular group of Ees for fear that it would result to a demand by all Ees for a similar increase, especially if the financial conditions of the business cannot address an across-the-board increase. (Bankard Employees Union-Workers Alliance Trade Unions v. NLRC, G.R. No. 140689, 17 Feb. 2004) NOTE: Wage distortion presupposes an increase in the compensation of the lower pay class in an office hierarchy without a corresponding raise for high level Ees in the same region of the country, resulting in the elimination or severe diminution of the distinction between the two groups or classes. (Prubankers Association v. Prudential Bank & Trust Company, G.R. No. 131247, 25 Jan. 1999) 75 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards Q: Bankard, Inc. approved a New Salary Scale which increased the hiring rates of new employees. The Bankard Employees Union pressed the company for the increase in the salary of its old, regular employees. The company refused to do so. Causes Wage distortions have often been the result of: 1. 2. 3. Government decreed increases in minimum wages; Merger of two companies (with differing classifications of Ees and different wage rates) where the surviving company absorbs all the Ees of the dissolved corporation; or Wage distortion arose because the effectivity dates of wage increases given to each of the two classes of Ees (rank-and-file and supervisory) had not been synchronized in their respective CBAs. (Metro Transit Org., Inc. v. NLRC, G.R. No. 116008, 11 July 1995) The union filed a Notice of Strike on the ground of discrimination for it claimed that a wage distortion exists and the company refused to negotiate to correct the distortions. Is there a wage distortion brought about by the New Salary Scale? A: NO. The union cannot legally obligate Bankard to correct the alleged “wage distortion” as the increase in the wages and salaries of the newly -hired was not due to a prescribed law or wage order. If the compulsory mandate under Art. 124 to correct wage distortion is applied to voluntary and unilateral increases by the employer in fixing hiring rates which is inherently a business judgment prerogative, then the hands of the employer would be completely tied even in cases where an increase in wages of a particular group is justified due to a reevaluation of the high productivity of a particular group or the need to increase the competitiveness of Bankard’s hiring rate. Where a significant change occurs at the lowest level of positions in terms of basic wage without a corresponding change in the other level in the hierarchy of positions, negating as a result thereof the distinction between one level of position from the next higher level, and resulting in a parity between the lowest level and the next higher level or rank, between new entrants and old hires, there exists a wage distortion. (Prubankers Association v. Prudential Bank & Trust Company, G.R. No. 131247, 25 Jan. 1999) An employer would be discouraged from adjusting the salary rates of a particular group of employees for fear that it would result to a demand by all employees for a similar increase, especially if the financial conditions of the business cannot address an across-the-board increase. (Bankard Employees Union- Workers Alliance Trade Unions v. NLRC, G.R. No. 140689, 17 Feb. 2004) Cases NOT Representative of Wage Distortion 1. 2. 3. 4. 5. 6. Where the hierarchy of positions based on skills, length of service and other logical bases of differentiation was preserved; (Ibid.) A disparity in wages between Ees holding similar positions but in different regions; Where the disparity was simply due to the fact that the Ees had been hired on different dates and were thus receiving different salaries; (Manila Mandarin Employees Union v. NLRC, G.R. No. 108556, 19 Nov. 1996) That an Ee was initially hired at a position level carrying a hiring rate higher than the rates of others; That an Ee failed to meet the cut-off date in the grant of yearly CBA increase; or That the Ee had been promoted while the others were not. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Negotiated Wage Increases to Correct Wage Distortion; Its Interest and Validity The law recognizes the validity of negotiated wage increases to correct wage distortion. The legislative intent is to encourage the parties to solve the problem of wage distortion through voluntary negotiations or arbitration, rather than strikes, lockouts, or other concerted activities of the employees or the management. 76 Labor Law and Social Legislation Unilateral grant of wage increase on the part of an employer is recognized as a means of correcting wage distortions including wage adjustments under a collective bargaining agreement. Recognition and validation of wage increases given by employers after unilaterally or as a result of collective bargaining negotiations for the purpose of correcting wage distortions are in keeping with the public policy of encouraging employers to grant wage and allowance increases to their employees which are higher than the minimum rates of increases prescribed by statute or administrative regulation. (Associated Labor Unions - TUCP vs. NLRC, et al., G.R. No. 109328, 16 Aug. 1994) The dispute will be resolved within 10 days from the time the dispute was referred to voluntary arbitration. The pendency of the dispute arising from a wage distortion shall not in any way delay the applicability of any wage increase prescribed pursuant to the provisions of law or Wage order. (Sec. 7, Chapter III, IRR of R.A. No. 6727) NOTE: Correction of wage distortion may be done by re-establishing a substantial or significant gap (not precisely the same amount) between the wage rates of the differing classes of Ees. (Azucena, 2016) To compel employers simply to add on legislated increases in salaries or allowances without regard to what is already being paid would be to penalize employers who grant their workers more than the statutory prescribed minimum rates of increases. Clearly, this would be counter-productive so far as securing the interest of labor is concerned. (Metro Bank & Trust Co. Employees Union v. NLRC, G.R. No. 102636, 10 Sept. 1993) Non-Strikeablity of Wage Distortion Wage Distortion is non-strikeable. The legislative intent that solution of the problem of wage distortions shall be sought by voluntary negotiation or arbitration, and not by strikes, lockouts or other concerted activities of the Ees or management, is made clear in R.A. No. 6727 issued on July 7, 1989. (Ilaw at Buklod ng Manggagawa v. NLRC, G.R. No. 91980, 27 June 1991) Settlement of Wage Distortion The application of wage increases brought about by Wage Orders issued by the Board may result in distortions in the wage structure within the establishment. The employer and the workers are mandated by law to resolve such wage distortion problems in the following manner: ORGANIZED ESTABLISHMENT (with union) UNORGANIZED ESTABLISHMENT (without union) The Er and the union shall negotiate to correct distortion. The Er and the workers shall endeavor to correct the distortion. Any dispute shall be resolved through a grievance procedure under the CBA. If it remains unresolved, it shall be dealt with through voluntary arbitration. The NLRC shall conduct continuous hearings and decide the dispute within 20 days from the time the same was referred. 6. NON-DIMINUTION OF BENEFITS GR: Nothing in the Labor Code shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of the promulgation of the Code. (Art. 100, LC) Benefits being given to Ees cannot be taken back or reduced unilaterally by the Er because the benefit has become part of the employment contract, whether written or unwritten. XPNs: 1. Correction of error; 2. Contingent benefit or conditional bonus; 3. Wage order compliance; 4. Benefits on reimbursement basis; 5. Reclassification of position; 6. Negotiated benefits; and Any dispute shall be settled through the NCMB. If it remains unresolved within 10 days it shall be referred to the NLRC. 77 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards carried out within less than a year would certainly not qualify as such.” NOTE: Benefits initiated through negotiation between Er and Ees, such as those contained in a CBA are not within the prohibition of Art. 100 because, as products of bilateral contract, they can only be eliminated or diminished bilaterally. (Azucena, 2016) 7. Purpose of Non-Diminution of Benefits The philosophy behind the law is to prohibit employers from reducing benefits already enjoyed by Ees. A contrary rule will corrupt the employer's mind to abuse and exploit Ees, prostituting the social justice and protection to labor clauses enshrined in the fundamental charter. Productivity incentives NOTE: If the error is not corrected in a reasonable time, it ripens into a company policy and Ees can demand it as a matter of right. Thus, a change of method of payment of wages from monthly to daily will not be allowed if it would result in reduction of pay. However, if the method introduced would augment the worker's pay it will be valid. Reclassification of position of Ees pursuant to reorganization, without affecting their compensation is not covered by the proscription. (Opinion of the SOLE, 07 Oct. 1975) Applicability of the Rule on Non-Diminution of Benefits It is applicable if it is shown that: 1. 2. 3. 4. Grant of benefit is based on a policy or has ripened into a practice over a long period; Practice is consistent and deliberate; Practice is not due to an error in the construction or application of a doubtful or difficult question of law; and It is done unilaterally by the employer. An agreement reducing certain labor standards benefits such as overtime and premium pay violates Art. 100. Provisions of existing laws are deemed part of a contract. (Republic Planters Bank v. NLRC, G.R. No. 117460, 06 Jan. 1997) However, if there is an impelling reasonable justification of the diminution or reduction because of an emergency or exigency, or business losses, such diminution or reduction would be valid, provided, it is duly approved by the SOLE or his duly authorized representative pursuant to Art. 233. (Poquiz, 2012) The Non-Diminution Rule, however, applies only if the benefit is based on an express policy, a written contract, or has ripened into a practice. To be considered a practice, it must be consistently and deliberately made by the employer over a long period of time. (Wesleyan University-Philippines v. Wesleyan University-Faculty and Staff Assn., G.R. No. 181806, 12 Mar. 2014) Bonus NOTE: With regard to the length of time, the Supreme Court held that jurisprudence has not laid down any rule requiring a specific minimum number of years. (Sevilla Trading Co. v. Semana, G.R. No. 152456, 28 Apr. 2004) Refers to the payment in excess of regular or guaranteed wages. It is granted to an Ee for his tangible contribution to the success of the employer’s business, without which the employer may not realize bigger profits. The contribution may be in the form of an Ee’s commitment to the job, his industry and loyalty. (Metro Transit Org., Inc. v. NLRC, G.R. No. 116008, 11 July 1995) However, in Supreme Steel Corp. v. NMS-IND-APL (G.R. No. 185556, 28 Mar. 2011), the Court held that, “While it is true that jurisprudence has not laid down any rule requiring a specific minimum number of years in order for a practice to be considered as a voluntary act of the employer, under existing jurisprudence on this matter, an act UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES GR: The payment of bonus is a management function, not a demandable and enforceable obligation, which cannot be enforced upon the 78 Labor Law and Social Legislation Any allowance/wage granted under the collective bargaining agreement cannot be credited to similar form of benefit that may thereafter be ordained by the government through legislation. Such portion of the contract is the "stoplock" gate or known in its technical term as the "non-chargeability" clause. (Marcopper Mining Corp. v. NLRC, G.R. No. 103525, 29 Mar. 1996) employer who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the Ee’s basic salaries or wages. (Philippine National Construction Corporation v. NLRC, G.R. No. 128345, 18 May 1999) XPN: Bonuses can be demanded as a matter of right if: 1. 2. 3. 4. This doctrine was resounded in this manner: the CBA provides, "It is hereby agreed that these salary increases shall be exclusive of any wage increase that may be provided by the law as a result of any economic change." Given without any condition; hence, part of the wage or salary; (Atok Big Wedge Mining Co., Inc. v. Atok Big Wedge Mutual Benefit Assn., G.R. No. L-5276, 03 Mar. 1953) Grant thereof is a result of an agreement such as the CBA; (Grey v. Insular Lumber, GR No. L535, 28 Sept. 1953) Given on account of company policy or practice; (Claparols v. CIR, G.R. No. L-30822, 31 July 1975) or Grant is mandated by law. The Supreme Court ruled that the above provision in the CBA is clear that the salary increases shall not include any wage increase that may be provided by law as a result of economic change. The CBA needs no interpretation as it is not ambiguous. Thus, the wage increase granted by the petitioner to its Ees under the CBA cannot be considered as creditable benefit. (Mindanao Steel Corp. v. Minsteel Free Workers Organization, G.R. No. 130693, 04 Mar. 2004; UKCEU-PTGWO v. Kimberly Clark Phils, G.R. No. 162957, 06 Mar. 2006) Bonus Treated as Not Part of Wages Bonus is not considered part of wages if it is paid only upon realization of profits or amount of production or output. (Atok Big Wedge Mining Co., Inc. v. Atok Big Wedge Mutual Benefit Assn., G.R. No. L-5276, 03 Mar. 1953) Benefit Acquired Through Company Practice Where the bonus is not payable to all but only to some Ees and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the wage. (Poquiz, 2012) An Ee can demand as a matter of right benefits granted by the employer for a considerable and long period of time, as the same may ripen into a company practice. If it is a past error that is being corrected, no vested right may be said arisen nor any diminution of benefit under Art. 100 of the Labor Code may be said to have resulted by virtue of the correction. (Globe Mackay v. NLRC, G.R. No. 74156, 29 June 1988) Stoplock Gate or Non-chargeability Clause Having entered into an agreement with its Ees, an employer may not be allowed to renege on its obligation under a collective bargaining agreement should, at the same time, the law grants the Ees the same or better terms and conditions of employment. Ee benefits derived from law are exclusive of benefits arrived at through negotiation and agreement unless otherwise provided by the agreement itself or by law. (Meycauayan College v. Hon. Drilon G.R. No. 81144, 07 May 1990) Instances of Violation of the Rule on NonDiminution of Benefits Withdrawal of the following would amount to diminution of Ee’s existing benefits: 1. 79 Enjoyment of the privilege of commutation of sick leave benefits into cash equivalent as a company practice; (Davao Integrated Port UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards 2. 3. days with pay. Leave pay means an Ee gets paid despite absence from work. (Azucena, 2016) Stevedoring Services v. Abarquez, G.R. No. 102132, 19 Mar. 1993) Grant of resignation benefits to a Branch Manager on the basis of company practice of applying expired CBA concluded by the supervisory union; (Republic Planters Bank, v. NLRC, G.R. No. 79488, 30 Sept. 1988) and Giving of special bonus as the company's long and regular practice. (Meralco v. Quisumbing, G.R. No. 127598, 27 Jan. 1999) XPNs: 1. Government Ees, whether employed by the National Government or and any of its political subdivisions, including those employed in GOCCs with original charters or created under special laws; C. LEAVES 2. Domestic helpers and persons in the personal service of another; 3. Managerial Ees, if they meet all of the following conditions: 1. SERVICE INCENTIVE LEAVE (SIL) a. Their primary duty is to manage the establishment in which they are employed or of a department or subdivision thereof; b. They customarily and regularly direct the work of two or more Ees therein; and c. They have the authority to hire or fire other Ees of lower rank; or their suggestions and recommendations as to hiring, firing, and promotion, or any other change of status of other Ees are given particular weight. It is a five-day leave with pay for every Ee who has rendered at least one year of service whether continuous or broken. (Art. 95, LC) Purpose of the law The stipulation in the contract for the allowance of a vacation to Ees is merely a recognition by management and labor that a short interval of complete rest and relaxation from daily routine with the benefit of full pay is essential to the mental and physical well-being of the workmen. (Bencio v. Joseph Bouder, Inc., 24 So. 2d 398; A.L.R. 2d 352; Sunripe Coconut Products v. NLU, 97 Phil. 691) 4. “At least 1 year of service” Service for not less than 12 months, whether continuous or broken, reckoned from the date the Ee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contract is less than 12 months, in which case said period shall be considered as one year. (Sec. 3, Rule V, Book III, IRR) a. b. c. Right to SIL GR: Every Ee who has rendered at least one (1) year of service shall be entitled to a yearly SIL of five (5) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Field personnel and those whose time and performance is unsupervised by the Er, including those who are engaged on: 80 Task or contract basis; Purely commission basis; or Those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof; 5. Those who are already enjoying this benefit; 6. Those enjoying vacation leave with pay of at least five (5) days; and Labor Law and Social Legislation 7. commission basis is only with respect to field personnel. Ees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of SIL, unless, they fall under the classification of field personnel. (Serrano v. Severino Santos, G.R. No. 187698, 09 Aug. 2010) Those employed in establishments regularly employing less than 10 Ees. (Sec. 1, Rule V, Book III, IRR) NOTE: Ees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless they fall under the classification of field personnel. Entitlement of Ees With Minimum Wage To SIL If required to be at specific places at specific times, Ees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the Ee; as such they are entitled to SIL. (Autobus Transport Systems v. Bautista, G.R. No. 156367, 16 May 2005) Salaries Above Ees with salaries above minimum wage are entitled to service incentive leave. The difference between the minimum wage and the actual salary received by the Ees cannot be deemed as their 13th month pay and SIL pay as such difference is not equivalent to or of the same import as the said benefits contemplated by law. (JPL Marketing Promotions v. CA, G.R. No. 151966, 08 July 2005) Teachers of Private Schools on Contract Basis are Entitled to Service Incentive Leave Excluded Er; Burden of Proof The Cebu Institute of Technology teaching personnel cannot be deemed as field personnel which refers to “non-agricultural Ees who regularly perform their duties away from the principal place of business or branch office of the Er and whose actual hours of work in the field cannot be determined with reasonable certainty.” (Par. 3, Art. 82, LC); (CIT v. Ople, G.R. No. 70203, 18 Dec. 1987) One of those excluded from the obligation to grant SIL are “establishments regularly employing less than ten workers.” When an Er claims that it falls within the exception, it is the Er’s duty, not of the Ees, to prove that there are less than ten Ees in the company. If it fails to discharge its task, the Er must be deemed to be covered by the rule, notwithstanding the Ees’ failure to allege the exact number of Ees in the corporation. (Murillo, et al. v. Sun Valley Realty, Inc., G.R. No. 67272, 30 June 1988) Part-time Workers are Entitled to the Full Benefit of the Yearly 5-Day Service Incentive Leave A part-time worker is entitled to service incentive leave whether the service within 12 months is continuous or broken or where the working days in the employment contract as a matter of practice or policy is less than 12 months. The availment and commutation of the same can be proportionate to the daily work rendered and the regular daily salary. (DOLE’s Explanatory Bulletin on Part-time Employment, 02 Jan. 1996) Entitlement of Terminated Ees to SIL Entitlement of Piece-Rate Workers To SIL Piece-rate workers are entitled to the full benefit of the yearly five-day service incentive leave. Under P.D. 851 or the SIL Law, the exclusion from its coverage of workers who are paid on a purely 81 1. Illegally dismissed Ees – Entitled to SIL until actual reinstatement. (Integrated Contractor and Plumbing Works, Inc. v. NLRC, G.R. No. 152427, 09 Aug. 2005) 2. Legally dismissed Ees – The Ee who had not been paid SIL from the outset of employment is entitled only to such pay after a year from commencement of service until termination of employment or contract. (JPL Marketing Promotions v. CA, G.R. No. 151966, 08 July 2005) UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards Commutability of SIL to monetary equivalent Who are covered It is commutable if not used or exhausted at the end of the year. (Sec. 5, Rule V, IRR) It is aimed primarily at encouraging workers to work continuously and with dedication to the company. Under the new law, maternity leave applies to all qualified female workers in the: 1. 2. 3. XPN: R.A. No. 10361 grants SIL to domestic workers. Their SIL need not be converted to cash or carried over to succeeding years. (Art. 139, LC) Public sector; Private sector; and Informal economy; NOTE: Informal economy refers to the selfemployed, occasionally or personally hired, subcontracted, paid and unpaid family workers in household, incorporated, and unincorporated enterprises, including home workers, micro-entrepreneurs and producers, and operators of sari-sari store (Sec. 3, R.A. No. 11210); Basis for cash conversion The basis shall be the salary rate at the date of commutation. The availment and commutation of the SIL may be on a pro-rata basis. 4. 5. Prescription of SIL Applying Art. 306 of the Labor Code in light of the peculiarity of SIL, the three (3)-year prescriptive period commences, not at the end of the year when the Ee becomes entitled to the commutation of his SIL, but from the time when the Er refuses to pay its monetary equivalent after demand of commutation or upon termination of the Ees’ services, as the case may be. (Autobus Transport Systems v. Bautista, G.R. No. 156367, 16 May 2005) Voluntary contributors to the SSS; and National athletes. Benefits under the EMLL The benefits under the new law are as follows: 1. Paid leave benefit granted to a qualified female worker in the public sector, for the duration of: a. 2. EXPANDED MATERNITY LEAVE R.A. NO. 11210 Date of Effectivity The Expanded Maternity Leave Law (EMLL) was signed into law on February 20, 2019 and took effect on March 11, 2019. b. Applicability 2. The expanded maternity leave applies to all qualified female workers regardless of civil status, employment status, and the legitimacy of her child. (Sec. 3, R.A. No. 11210) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 105 days with full pay for live childbirth, regardless of the mode of delivery, and an additional 15 days paid leave if the female worker qualifies as a solo parent under R.A. No. 8972 or the “Solo Parents’ Welfare Act of 2000”; OR 60 days with full pay for miscarriage and emergency termination of pregnancy. Paid leave benefit granted to a qualified female worker in the private sector covered by the SSS, including those in the informal economy, for the duration of: a. Same as those provided under 1(a) or 1(b); b. Employed female workers shall receive full pay which consists of: 82 Labor Law and Social Legislation Manner of Enjoyment of the Benefit i. SSS maternity benefit computed based on their average monthly salary credit; and ii. Salary differential to be paid by the employer, if any. 3. Enjoyment of maternity leave cannot be deferred but should be availed of either before or after the actual period of delivery in a continuous and uninterrupted manner, not exceeding 105 days, as the case may be. An “option” to extend for an additional 30 days without pay in case of live childbirth, provided that: a. The employer shall be given due notice; b. The same must be in writing; c. It must be given at least 45 days before the end of the female worker’s maternity leave; d. No prior notice is necessary in the event of a medical emergency, a subsequent notice to the employer shall suffice. 4. Paid maternity leave, allowances, and benefits granted to female national athletes; 5. Health care services for pre-natal, delivery, postpartum, and pregnancy-related conditions granted to female workers, particularly those who are neither voluntary nor regular members of the SSS, as governed by the existing rules and regulations of the PhilHealth. The maternity leave can be credited as combinations of prenatal and postnatal leave as long as it does not exceed 105 days and provided that compulsory postnatal leave shall not be less than 60 days. Frequency of the Grant Maternity leave shall be granted to a qualified female worker in every instance of pregnancy, miscarriage, or ETP, regardless of frequency. (Sec. 4, Rule IV, IRR of R.A. No. 11210) Grant of Maternity Leave Termination of Employment. Benefits after Maternity leave with full pay shall also be granted even if the childbirth, miscarriage, or emergency termination of pregnancy occurs not more than fifteen (15) calendar days after the termination of an Ee’s service, as her right thereto has already accrued. However, such period is not applicable when the employment of the pregnant woman worker has been terminated without just cause. (Sec. 5, Rule IV, IRR of R.A. No. 11210) Miscarriage and Emergency Termination of Pregnancy "Miscarriage" refers to pregnancy loss before the 20th week of gestation. [Sec. 1(k), Rule II, IRR of R.A. No. 11210] Maternity Leave of a Female Worker with Pending Administrative Case "Emergency termination of pregnancy" (ETP) refers to pregnancy loss on or after the 20th week of gestation, including stillbirth. (Sec. 1(c), Rule II, IRR of R.A. No. 11210) The maternity leave benefits granted under RA 11210 and its IRR shall be enjoyed by a female worker in the public sector and in the private sector even if she has a pending administrative case. (Sec. 6, Rule IV, IRR of R.A. No. 11210) Q: Is the option of the 30-day extension without pay available to all qualified female workers? Maternity Leave for Female Workers in the Public Sector A: NO. The 30-day extension without pay is only available in cases of live childbirth. Hence, if a female worker suffers miscarriage or ETP, she is not entitled to such extension. Eligibility: Any pregnant female worker in the government service, regardless of employment status and length of service 83 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards A: YES. Female contract of service and job order workers in the government are classified as female workers in the informal economy. They can claim maternity leave benefits from the SSS if they have remitted to the SSS at least three (3) monthly contributions in the 12-month period immediately preceding the semester of her childbirth, miscarriage, or ETP. (Sec. 1, Rule VII, IRR of R.A. No. 11210) Conditions: 1. 2. She shall give prior notice to the head of agency of her pregnancy and her availment of maternity leave at least 30 days in advance, whenever possible, specifying the effective date of the leave. She shall use the prescribed civil service form in the filing of the maternity leave application, supported by a medical certificate. Consecutive childbirths Manner of payment: The female worker shall be entitled to full pay during maternity leave which shall be paid by the agency. She shall have the option to receive full pay either through lump sum payment or regular payment of salary through agency payroll. A clearance from money, property and work-related accountabilities shall be secured by the female Ee. and multiple In case of overlapping maternity benefit claims, e.g., one miscarriage followed by a live childbirth, the female member shall be granted maternity benefits for the two contingencies in a consecutive manner. She shall be paid only one maternity benefit, regardless of the number of offspring per childbirth or delivery. NOTE: In cases of live childbirth, the female worker in the public sector has the option to use her earned sick leave credits for extended leave with pay. In case the sick leave credits are exhausted, the vacation leave credits may be used. (Sec. 4, Rule V, IRR of R.A. No. 11210) Maternity Leave for Female Workers in the Private Sector Conditions: 1. She must have at least three (3) monthly contributions in the twelve-month period immediately preceding the semester of childbirth, miscarriage, or ETP. 2. She 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. Female teachers in the teaching profession may also avail of maternity leave even during long vacations, i.e., summer and Christmas vacations, in which case both the maternity leave benefits and the proportional vacation pay shall be granted. (Sec. 3, Rule V, IRR of R.A. No. 11210) Q: Can local elected and appointed officials, like barangay officials, avail of the extended maternity leave? NOTE: The failure of the pregnant female worker to notify the employer shall not bar her from receiving the maternity benefits, subject to guidelines to be prescribed by the SSS. A: YES. The coverage of R.A. No. 11210 includes female workers in the public sector, including the Local Government Units (LGUs). Their entitlement to maternity leave benefits is also granted under the Local Government Code of 1991 and its IRR, and CSC-DBM Joint Circular No. 1, s. 2004 (Leave Benefits of Barangay Officials). Manner of payment: Full payment of the benefit shall be advanced by the employer within 30 days from the filing of the maternity leave application. The SSS shall immediately reimburse the employer the maternity benefits advanced to the employed female member, only to the extent of 100% of her average daily salary credit (ADSC) for 105 days, 120 days or 60 days, as the case may be. Q: Can contract of service and job order workers in government avail of maternity leave under R.A. No. 11210? UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES pregnancies 84 Labor Law and Social Legislation Liability of the Employer NOTE: Average daily salary credit (ADSC) is 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 contingency by one hundred eighty (180). (Sec. 1 (vi.), SSS Circular No. 2019-009) The employer shall pay to the SSS damages equivalent to the benefits which she would otherwise have been entitled to any of the following instances: Salary differential a. GR: Employers from the private sector shall pay for the difference between the full salary and the actual cash benefits received from the SSS. b. XPNs: 1. Those operating distressed establishments; 2. Those retail/service establishments and other enterprises employing not more than ten (10) workers; 3. Those considered as micro-business enterprises and engaged in the production, processing, or manufacturing of products or commodities including agro-processing, trading, and services, whose total assets are not more than three million pesos; and 4. Those who are already providing similar or more than the benefits herein provided under an existing CBA or company policy. Maternity Leave for Female Workers in the Informal Economy Condition: She must have remitted to the SSS at least three (3) monthly contributions in the 12month period immediately preceding the semester of her childbirth, miscarriage, or ETP. Manner of payment: The SSS shall directly pay the maternity benefit. NOTE: In the case of self-employed female members, including OFWs and voluntary SSS members, the SSS shall directly pay the maternity benefit. NOTE: The payment of daily SSS maternity benefits shall be a bar to recovery of sickness benefits provided under R.A. No. 11199, for the same period which daily maternity benefits have been received. Consecutive Childbirths a. b. Pregnancies and Failure of the employer to remit to the SSS the required contributions for the female worker; or Failure of the employer to transmit to SSS the female worker’s notification on the fact of pregnancy and probable date of childbirth. (Sec. 8, Rule VI, IRR of R.A. No. 11210) Allocation of Maternity Leave Credits In case of live childbirth, a qualified female worker entitled to maternity leave benefits may, at her option, allocate up to seven (7) days of said benefits to the child’s father, whether or not the same is married to the female worker. Multiple In case of the overlapping of two (2) maternity benefit claims, the female member shall be granted maternity benefits for the two contingencies in a consecutive manner. However, the amount of benefit corresponding to the period where there is an overlap shall be deducted from the current maternity benefit claim. The female member shall be paid only one maternity benefit, regardless of the number of offspring per childbirth or delivery. In case of death, absence, or incapacity of the child’s father, the female worker may allocate to an alternate caregiver, who may be any of the following upon the election of the mother taking into account the best interests of the child: a. 85 A relative within the fourth degree of consanguinity; or UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards b. newly-born child. The current partner, regardless of sexual orientation or gender identity of the female worker sharing the same household. Non-commutation of benefits The option to allocate maternity leave credits shall not be applicable in case the female worker suffers miscarriage or ETP. (Sec. 1, Rule VIII, IRR of R.A. No. 11210) In the event that the paternity leave benefit is not availed of, said leave shall not be convertible to cash. (Sec. 7, IRR of R.A. No. 8187) Concept of paternity leave benefits NOTE: The allocated benefit granted to the child's father under this law is over and above that which is provided under R.A. No. 8187, or the "Paternity Leave Act of 1996." Every married male Ee in the private and public sectors shall be entitled to a paternity leave of seven days with full pay for the first four (4) deliveries of the legitimate spouse with whom he is cohabiting. Differences between Maternity Leave under the SSS and the Expanded Maternity Leave Law MATERNITY LEAVE (Sec. 14-A of R.A. No. 8282) EXPANDED MATERNITY LEAVE LAW (R.A. No, 11210) 60 days for normal delivery; 78 days for caesarean delivery Minimum of 105 days for live childbirth, regardless of mode of delivery 60 days for miscarriage or ETP Child must legitimate be Regardless of the civil status or legitimacy of the child Limited to childbirths 4 Daily maternity benefit equivalent to 100% of her ADSC NOTE: If the spouses are not physically living together because of the workstation or occupation, the male Ee is still entitled to the paternity leave benefit. (Handbook on Workers’ Statutory Monetary Benefits, Bureau of Working Conditions, 2020) Conditions for Entitlement to Paternity Leave 1. 2. 3. Regardless of frequency of pregnancy Full pay which consists of basic salary and allowances as may be provided under existing guidelines 4. NOTE: In case of miscarriage, prior application for leave shall not be required. (Sec. 4, IRR of R.A. No. 8187) 3. PATERNITY LEAVE R.A. NO. 8187 Paternity leave Crediting of Existing Benefits It refers to the benefits granted to a married male Ee allowing him not to report for work for seven (7) days but continue to earn compensation on the condition that his spouse has delivered a child or suffered a miscarriage for purposes of enabling him to effectively lend support to his wife in her period of recovery and/or in the nursing of the UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES He is a married male Ee at the time of the delivery of his child; He is cohabiting with his spouse at the time she gives birth or suffers a miscarriage; He has applied for paternity leave within a reasonable period of time from the expected date of delivery by his pregnant spouse, or within such period as may be provided by company rules or by collective bargaining agreement; and His wife has given birth or suffered a miscarriage. (Sec. 3, IRR of R.A. No. 8187) 1. 86 If the existing paternity leave benefit under the collective bargaining agreement, contract, or company policy is greater than seven (7) calendar days as provided for in R.A. No. 8187, the greater benefit shall prevail. Labor Law and Social Legislation 2. A: Under R.A. No. 8187 or the Paternity Leave Act of 1996, Roger can claim paternity leave of seven (7) days with full pay if he is lawfully married to Tammy and cohabiting with her at the time of the miscarriage. If the existing paternity leave benefit is less than that provided in R.A. No. 8187, the Er shall adjust the existing benefit to cover the difference. (Sec. 9, IRR of R.A. No. 8187) NOTE: Where a company policy, contract, or collective bargaining agreement provides for an emergency or contingency leave without specific provisions on paternity leave, the Er shall grant to the Ee seven (7) calendar days of paternity leave. (Handbook on Workers’ Statutory Monetary Benefits, Bureau of Working Conditions, 2020) Q: Mans Weto had been an Ee of Nopolt Assurance Company for the last ten (10) years. His wife of six (6) years died last year. They had four (4) children. He then fell in love with Jovy, his co-Ee, and they got married. In October this year, Weto's new wife is expected to give birth to her first child. He has accordingly filed his application for paternity leave, conformably with the provisions of the Paternity Leave Law which took effect in 1996. The allocated benefit granted to the child's father under the 105-Day Expanded Maternity Leave Law is over and above that which is provided under R.A. No. 8187, or the "Paternity Leave Act of 1996." The HRD manager of the assurance firm denied his application, on the ground that Weto had already used up his entitlement under the law. Weto argued that he has a new wife who will be giving birth for the first time, therefore, his entitlement to paternity leave benefits would begin to run anew. Whose contention is correct, Weto or the HRD manager? (2005 BAR) Availment of the Paternity Leave may be After the Delivery Paternity leave may be availed after the delivery without prejudice to an Er’s policy of allowing the Ee to avail of the benefit before or during the delivery, provided that the total number of days shall not be more than seven (7) days for each covered delivery. (Handbook on Workers’ Statutory Monetary Benefits, 2020) A: The contention of Weto is correct. The law provides that every married male is entitled to a paternity leave of seven (7) days for the first four (4) deliveries of the legitimate spouse with whom he is cohabiting with. The fact that Jovy is his second wife and that Weto had four children with his first wife is beside the point. The important fact is that this is the first child of Jovy with Weto. The law did not distinguish and we should therefore not distinguish. Q: Because of the stress in caring for her four (4) growing children, Tammy suffered a miscarriage late in her pregnancy and had to undergo an operation. In the course of the operation, her obstetrician further discovered a suspicious-looking mass that required the subsequent removal of her uterus (hysterectomy). After surgery, her physician advised Tammy to be on full bed rest for six (6) weeks. Meanwhile, the biopsy of the sample tissue taken from the mass in Tammy's uterus showed a beginning malignancy that required an immediate series of chemotherapy once a week for four (4) weeks. The paternity leave was intended to enable the husband to effectively lend support to his wife in her period of recovery and/or in the nursing of the newly born child. (Sec. 3, RA. No. 8187) To deny Weto this benefit would be to defeat the rationale for the law. Moreover, the case of Weto is a gray area and the doubt should be resolved in his favor. What can Roger, Tammy's second husband and the father of her two (2) younger children, claim as benefits under the circumstances? (2013 BAR) 87 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards 2. 4. PARENTAL LEAVE FOR SOLO PARENTS R.A. No. 8972 Parent left solo or alone with the responsibility of parenthood due to: a. b. Parental Leave Leave benefits granted to a solo parent to enable him/her to perform parental duties and responsibilities where physical presence is required. (Sec. 3(d), R.A. No. 8972) NOTE: The law applies to the spouses of prisoners, whether or not final judgment has been rendered, provided they are in detention for a minimum period of one year. Parental leave of not more than seven (7) working days every year shall be granted to any solo parent Ee who has rendered service of at least one (1) year. It should be noted that this is in addition to the legally mandated leaves, namely, the SIL, the SSS sick leave, the SSS maternity leave and the paternity leave. (Sec. 8, R.A. No. 8972; Azucena, Vol. 1, 2016, p. 300) c. Physical and/or mental incapacity of spouse as certified by a public medical practitioner; d. Legal separation or de facto separation from spouse for at least one year year as long as he/she is entrusted with the custody of the children; e. Nullity or annulment of marriage as decreed by a court or by a church as long as he/she is entrusted with the custody of the children; f. Abandonment of spouse for at least one year; Conditions for entitlement of parental leave A solo parent Ee shall be entitled to the parental leave under the following conditions: 1. He/She has rendered at least one (1) year of service, whether continuous or broken; 2. He/She has notified his/her Er of the availment thereof within a reasonable period of time; 3. He/She has presented a Solo Parent Identification Card to his/her Er which may be obtained from the DSWD office of the city or municipality where he/she resides. (Sec. 19, Art. V, IRR of R.A. No. 8972) 3. 4. Any individual who falls under any of the ff. categories: Having others care for them or Give them up to a welfare institution; Any other person who solely provides: a. b. A woman who gives birth as a result of rape and other crimes against chastity even without a final conviction of the offender; Provided, that the mother keeps and raises the child; UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Unmarried mother/father who has preferred to keep and rear his or her child/children instead of: a. b. Persons considered a solo parent entitled to parental leave 1. Death of spouse; Detention or service of sentence of spouse for a criminal conviction for at least one year; Parental care; and Support to a child or children. Provided, that he/she is a duly licensed foster parent by the DSWD or duly appointed legal guardian by the court; and 88 Labor Law and Social Legislation 5. In the case of Ees in the government service, flexible working hours will be subject to the discretion of the head of the agency. In no case shall the weekly working hours be reduced in the event the agency adopts the flexible working hours schedule format (flexi-time). In the adoption of flexi-time, the core working hours shall be prescribed taking into consideration the needs of the service. (Sec. 16, Art. V, IRR, of R.A. No. 8972) Any family member who assumes the responsibility of head of family as a result of the: a. b. c. d. Death, Abandonment, Disappearance or Prolonged absence of the parents or solo parent. Provided, that such abandonment, disappearance, or absence lasts for at least one (1) year. (Sec. 3(a), R.A. No. 8972) Crediting of Existing Leave If there is an existing or similar benefit under a company policy, or a collective bargaining agreement or a collective negotiation agreement, the same shall be credited as such. If the same is greater than the seven (7) days provided for in R.A. No. 8972, the greater benefit shall prevail. (Sec. 21, Art. V, IRR of R.A. No. 8972) Non-Conversion of Parental Leave In the event that the parental leave is not availed of, said leave shall not be convertible to cash unless specifically agreed upon previously. However, if said leave were denied an Ee as a result of noncompliance with the provisions of these Rules by an Er, the aforementioned leave may be used a basis for the computation of damages. (Sec. 20, Art. V, IRR of R.A. No. 8972) 5. LEAVE BENEFITS FOR WOMEN WORKERS LEAVE BENEFITS FOR WOMEN WORKERS UNDER R.A. NO. 9710 Termination of the Benefit A woman Ee having rendered continuous aggregate employment service of at least six (6) months for the last 12 months shall be entitled to a special leave benefit (SLB) of two (2) months with full pay based on her gross monthly compensation following surgery caused by gynecological disorders. (Sec. 18, R.A. No. 9710) A change in the status or circumstance of the parent claiming benefits under this Act, such that he/she is no longer left alone with the responsibility of parenthood, shall terminate his/her eligibility for these benefits. (Sec. 3, R.A. No. 8972) Protection against Work Discrimination Conditions for Entitlement No Er shall discriminate against any solo parent Ee with respect to terms and conditions of employment on account of his/her being a solo parent. (Sec. 7, R.A. No. 8972) Any female Ee in the public and private sector regardless of age and civil status shall be entitled to a special leave of two (2) months with full pay based on her gross monthly compensation subject to existing laws, rules and regulations due to surgery caused by gynecological disorders under such terms and conditions: 1. She has rendered at least six (6) months continuous aggregate employment service for the last 12 months prior to surgery; 2. She has filed an application for special leave; Flexible Work Schedule The Er shall provide for a flexible work schedule for solo parents: Provided, that the same shall not affect individual and company productivity: Provided, further, that any Er may request exemption from the above requirements from the DOLE on certain meritorious grounds. 89 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards 3. work and sought to resume her duties and functions. However, the HRET directed PangaVega to consume her 2-month special leave. Is Panga-Vega required to consume the entire 2month special leave? She has undergone surgery due to gynecological disorders as certified by a competent physician. (Sec. 2, D.O. 112-A-12) Gynecological Disorders A: NO. She is not required to consume the entire two-month special leave, as the rules on maternity leave can apply suppletorily. Similar to the special leave benefit under RA No. 9710, a maternity leave under the Omnibus Rules on Leave seeks to protect the health and welfare of women, specifically of working mothers, as its primary purpose is to afford them some measures of financial aid, and to grant them a period of rest and recuperation in connection with their pregnancies. Nothing in RA No. 9710 and the CSC Guidelines bar this more humane interpretation of the provision on special leave benefit. (HRET v. Panga-Vega, G.R. No. 228236, 27 Jan. 2021) Refer to disorders that would require surgical procedures such as, but not limited to, dilatation and curettage and those involving female reproductive organs such as the vagina, cervix, uterus, fallopian tubes, ovaries, breast, adnexa and pelvic floor, as certified by a competent physician. For purposes of the Act and these Rules and Regulations, gynecological surgeries shall also include hysterectomy, ovariectomy, and mastectomy. (Sec. 7(M), IRR of R.A. No. 9710) Gross monthly compensation Refers to the monthly basic pay plus mandatory allowances fixed by the regional wage boards. SLB vs. SSS Sickness Benefit Frequency of Availment The former is granted in accordance with RA 9710 while the latter is granted in accordance with the SSS law or RA 1161 as amended by RA 8282. (Sec. 7, D.O. 112-A-12) A female Ee can avail of the special leave benefit for every instance of surgery due to gynecological disorder for a maximum total period of two (2) months per year. (Sec. 6, D.O. 112-A-12) SLB vs. Existing Statutory Leaves NOTE: Special leave benefit (SLB) and SSS maternity benefit are mutually exclusive, as such a female Ee may avail the special leave benefit in case she undergoes surgery caused by gynecological disorder even on maternity leave. However, where the woman Ee undergone surgery due to gynecological disorder during her maternity leave, she is entitled only to the difference between the SLB and the maternity benefit. (Sec. 9, D.O. 112-A12) The SLB cannot be taken from statutory leaves. (i.e., five-day SIL, Leave for Victims of VAWC, Parental Leave for Solo Parents) The benefit is in addition to the leave benefits granted by existing laws. (Sec. 8, D.O. 112-A-12) NOTE: If there are existing or similar benefits under a company policy or CBA providing similar or equal benefit to what is mandated by law, the same shall be considered as compliance unless the company policy, practice or CBA provides otherwise. (Sec. 10, DO 112-A-12) The worker is not required to consume the entire period of special leave Q: Atty. Panga-Vega, Secretary of the House of Representatives Electoral Tribunal, applied for the special leave benefit under RA9710 as she was under going to undergo hysterectomy. A month later, after the procedure, she presented a medical certificate that she was already fit to UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Mode of Payment The SLB is a leave privilege. The woman Ee shall not report for work for the duration of the leave but she will still receive her salary covering said period. The Er, in its discretion, may allow said Ee to receive her 90 Labor Law and Social Legislation LEAVE BENEFITS FOR WOMEN WORKERS UNDER R.A. NO. 9262 pay for the period covered by the approved leave before or during the surgery. The computation of her pay shall be based on her prevailing salary at the time of the surgery. (Sec. 11, D.O. 112-A-12) 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, harassment or arbitrary deprivation of liberty. (Sec. 3 (a), R.A. No. 9262) Non-Commutation of the Benefit The SLB shall be non-cumulative and nonconvertible to cash unless otherwise provided by a CBA. (Sec. 12, D.O. 112-A-12) Crediting of Existing or Similar Benefits The existing or similar benefits under a company policy or CBA shall be considered as compliance, unless the company policy, practice, or CBA provides otherwise. In case the company policy, practice or CBA provides lesser benefits, the company shall grant the difference. (Sec. 10, D.O. 112-A-12) Leave Entitlement It allows the victim of violence, which may be physical, sexual, or psychological, to apply for the issuance of a protection order. If such victim is an Ee, she is entitled to a paid leave of up to ten days in addition to other paid leaves under the Labor Code, other laws and company policies. Q: Because of the stress in caring for her four (4) growing children, Tammy suffered a miscarriage late in her pregnancy and had to undergo an operation. In the course of the operation, her obstetrician further discovered a suspicious-looking mass that required the subsequent removal of her uterus (hysterectomy). After surgery, her physician advised Tammy to be on full bed rest for six (6) weeks. Meanwhile, the biopsy of the sample tissue taken from the mass in Tammy's uterus showed a beginning malignancy that required an immediate series of chemotherapy once a week for four (4) weeks. What benefits can Tammy claim under existing social legislation? (2013 BAR) The Ee has to submit a certification from the Punong Barangay or Kagawad, prosecutor, or clerk of court that an action under RA 9262 has been filed and is pending. For government Ees, in addition to the certification, the Ee concerned must file an application for leave citing R.A. No. 9262 as basis. NOTE: Ee can file for an extended leave from her Er if the ten-day leave is not enough and when the necessity arises as specified in the protection order issued by the barangay or court. A: Assuming she is employed, Tammy is entitled to a special leave benefit of two months with full pay (Gynecological Leave) pursuant to R.A. No. 9710 or the Magna Carta of Women. She can also claim Sickness Leave Benefit in accordance with the SSS Law. Penalties for Violation Any Er 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 Er who shall prejudice any person for assisting a co-Ee who is a victim under this Act shall likewise be liable for discrimination. 91 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards Noncumulative/ Non-Conversion to Cash 4. R.A. No. 6955 or “An Act to Declare Unlawful the Practice of Matching Filipino Women for Marriage to Foreign Nationals on Mail Order Basis” – which bans the “mail-order-bride” practice for a fee and the export of female labor to countries that cannot guarantee protection to the rights of women workers. 5. R.A. No. 7192 or “Women in Development and Nation Building Act” – affords women equal opportunities with men to act and to enter into contracts, and for appointment, admission, training, graduation, and commissioning in all military or similar schools. 6. R.A. No. 7322 or “An Act Increasing Maternity Benefits in Favor of Women Workers in the Private Sector” 7. R.A. No. 7877 or “Anti-Sexual Harassment Act” 8. R.A. No. 8042 or the “Migrant Workers and Overseas Filipinos Act of 1995” – which prescribes as a matter of policy, the deployment of migrant workers, with emphasis on women, only in countries where their rights are secure. (Philippine Telegraph and Telephone Co. v. NLRC, G.R. No. 118978, 23 May 1997) 9. R.A. No. 9710 or “the Magna Carta of Women” The availment of the ten-day leave shall be at the option of the woman Ee, which shall cover the days that she has to attend to medical and legal concerns. Leaves not availed of are noncumulative and not convertible to cash. Q: Can an Ee apply for the 10-day leave from her Er just because of a black eye or any manifestation of abuse? A: NO. The ten-day leave under the VAWC may only be availed of if the victim has applied for any protection order with the intention to file a case against the assailant. D. SPECIAL GROUPS OF EMPLOYEES 1. WOMEN Laws protecting women Workers 1. The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men. (Sec. 14, Art. II, 1987 Constitution) 2. The State shall protect working women by providing safe and healthful working conditions, taking into account their maternal functions, and such facilities and opportunities that will enhance their welfare and enable them to realize their full potential in the service of the nation. (Sec. 14, Art. XIII, 1987 Constitution) 3. 10. R.A. No. 9262 or the “Anti-Violence against Women and Children” State Policy on Non-Discrimination Against Women The State condemns discrimination against women in all its forms and pursues by all appropriate means and without delay the policy of eliminating discrimination against women in keeping with the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) and other international instruments consistent with Philippine law. The State shall accord women the rights, protection, and opportunities available to R.A. No. 6725 or “An Act Strengthening the Prohibition on Discrimination against Women with Respect to Terms and Conditions of Employment” – which explicitly prohibits discrimination against women with respect to terms and conditions of employment, promotion, and training opportunities. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 92 Labor Law and Social Legislation 2. every member of society. (Sec. 2, R.A. No. 9710 or the Magna Carta of Women) The State shall take steps to review and, when necessary, amend and/or repeal existing laws that are discriminatory to women within three (3) years from the effectivity of this Act. (Sec. 12, R.A. No. 9710) Standard of Reasonable Test Under the standard reasonable test, the Er has the burden of proof to prove the existence of a reasonable business necessity that would justify an employment policy. (Star Paper Corp. v. Simbol, G.R. No. 164774, 12 Apr. 2006) a. DISCRIMINATION 1. 2. Discrimination with respect to the terms and conditions of employment solely on account of sex. a. Discrimination in pay – Payment of a lesser compensation including wage, salary or other forms of remuneration and fringe benefits, to a female Ee as against a male Ee; b. Discrimination in employment opportunity – favoring a male Ee over a female Ee with respect to promotion, assignment, transfer, training opportunities, study and scholarship grants solely on account of their sexes (Art. 134, LC); Dismissing, discriminating or otherwise prejudice a woman Ee by reason of her being married. (Art. 134, LC) Expanded Breastfeeding Promotion Act (R.A. No. 10028) Sec. 12. Lactation Periods. - Nursing Ees shall be granted break intervals in addition to the regular time-off for meals to breastfeed or express milk. These intervals, which shall include the time it takes an Ee to get to and from the workplace lactation station, shall be counted as compensable hours worked. The Department of Labor and Employment (DOLE) may adjust the same: Provided, That such intervals shall not be less than a total of 40 minutes for every eight (8)-hour working period. c. Discrimination in hiring – favoring a male applicant with respect to hiring where the particular job can equally be handled by a woman; Q: Can an individual, the sole proprietor of a business enterprise, be said to have violated the Anti-Sexual Harassment Act of 1995 if he clearly discriminates against women in the adoption of policy standards for employment and promotions in the enterprise? Explain. (2003 BAR) d. Discrimination in dismissal – favoring a male Ee over a female Ee with respect to dismissal of personnel or the application of the “last in, first out principle” or other retrenchment policy of the Er. (Poquiz, 2012) A: When an Er discriminates against women in the adoption of policy standards for employment and promotion in his enterprise, he is not guilty of Sexual Harassment. Instead, the Er is guilty of discrimination against women Ees which is declared to be unlawful by the Labor Code. Stipulating, whether as a condition for employment or continuation of employment: For an Er to commit Sexual Harassment, he—as a person of authority, influence or moral ascendancy—should have demanded, requested or otherwise required a sexual favor from his Ee whether the demand, request or requirement for submission is accepted by the object of said act. a. b. That a woman Ee shall not get married; or That upon marriage, such woman Ee shall be deemed resigned or separated. (Art. 134, LC) 93 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards competitors, employed Tecson as a medical representative. Tecson married Bettsy, a Branch coordinator in one of Glaxo’s competitors. Tecson was then transferred to another area but he did not accept such transfer. Is the policy of Glaxo valid and reasonable so as to constitute the act of Tecson as willful disobedience? b. STIPULATION AGAINST MARRIAGE It shall be unlawful for the Er to: 1. Require as a condition of employment or continuation of employment that a woman Ee shall not get married; 2. Stipulate expressly or tacitly that upon getting married, a woman Ee shall be deemed resigned or separated; or 3. Actually dismiss, discharge, discriminate or otherwise prejudice a woman Ee merely by reason of her marriage. (Art. 134, LC) A: YES. The prohibition against personal or marital relationships with Ees of competitor companies upon Glaxo’s Ees is reasonable under the circumstances because relationships of that nature might compromise the interest of the company. Glaxo does not impose an absolute prohibition against relationships between its Ees and those of competitor companies. Its Ees are free to cultivate relationships with and marry persons of their own choosing. What the company merely seeks to avoid is a conflict of interest between the Ee and the company that may arise out of such relationships. Furthermore, the prohibition forms part of the employment contract and Tecson was aware of such restrictions when he entered into a relationship with Bettsy. (Duncan Assoc. Of Detailman-PTGWO v. Glaxo Wellcome Phil. Inc., G.R. No. 162994, 17 Sept. 2004) No-Spouse Employment Policy It is a policy banning spouses from working in the same company. Generally, spouses are allowed to work in the same company, provided it is not in the same department, where there is direct supervision or control. In case spouses are in the same department, one of them may be reassigned to another department. NOTE: The XPN of Bonafide Occupational Qualification occurs when the Er can prove that reasonable demands of the business require a distinction based on marital status and there is no better or acceptable policy which would better accomplish the business purpose. Q: May a woman worker be dismissed on the ground of dishonesty for having written ‘’single” on the space for civil status on the application sheet, contrary to the fact that she was married? There must be a finding of any BFOQ to justify an Er’s no-spouse employment rule. There must be a compelling business necessity for which no alternative exists other than the discriminating practice. A: Art. 136 (now Art. 134) of the Labor Code explicitly prohibits discrimination merely by reason of marriage of a female Ee. The policy of not accepting or disqualifying from work any woman worker who contracts marriage is afoul of the right against discrimination provided to all women workers by our labor laws and by our Constitution. (PT&T Co. v. NLRC, G.R. No. 118978, 23 May 1997) (See discussion on BFOQ under Management Prerogatives – page 325) Importance of the BFOQ To ensure that the Ee can effectively perform his work; So that the no-spouse employment rule will not impose any danger to business. Q: An international flight stewardess of PAL was discharged from service, on account of her marriage. PAL contends that Art. 134 of the Labor Code applies only to women Ee in ordinary occupations. Is the termination legal? Q: Glaxo, a company which has a policy against Ees having relationships with the Ees of its A: NO. The termination is not legal and the policy of PAL against marriage is patently illegal. Requiring 1. 2. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 94 Labor Law and Social Legislation that prospective flight attendants must be single and that they will be automatically separated from the service once they marry was declared void, it being violative of the clear mandate in Art. 134 of the Labor Code with regard to discrimination against married women. Art. 134 is not intended to apply only to women employed in ordinary occupations, or it should have categorically expressed so. The sweeping intendment of the law be it on special or ordinary occupations. (Zialcita et. al., v. PAL, RO4-3-3398-76, 20 Feb. 1997) Series of absences due to pregnancy and its related ailments not a ground to dismiss Ee The court agreed that in concluding that respondent’s sickness was pregnancy-related and therefore, the petitioner cannot terminate respondent’s services because in doing so, petitioner will be violating Art. 137 (now Art. 135) of the LC. (Del Monte Philippines, Inc. v. Velasco, G.R. No. 153477, 06 Mar. 2007) Q: Can an Er dismiss an Ee on the ground of deliberately concealing her pregnancy and incurring absences without official leave? c. PROHIBITED ACTS It shall be unlawful for any Er to: 1. 2. 3. 4. A: NO. Her absence was justified considering that she had just delivered a child, which can hardly be considered a forbidden act, a dereliction of duty; much less does it imply wrongful intent on the part of the Ee. (Lakpue Drug, Inc. v. Belga, G.R. No. 166379, 20 Oct. 2005) Deny any woman Ee benefits provided by law. Discharge any woman for the purpose of preventing her from enjoying any of the benefits provided by law. Discharge such woman on account of her pregnancy, or while on leave or in confinement due to her pregnancy. Discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant. (Art. 135, LC) Penalty for commission of the prohibited acts mentioned Discharging a woman due to pregnancy The offender would be subject to the penalties provided under Art. 287 of the LC, the general penalty clause under said code. The following are prohibited acts in connection with the pregnancy of a woman Ee: Fine: Not less than P1,000 nor more than P10,000; or 1. 2. 3. 4. 5. 6. To discharge her on account of her pregnancy; or To discharge her while she is on leave due to her pregnancy; or To discharge her while she is confined due to her pregnancy; or To discharge her upon returning to work for fear that she may again be pregnant. (Art. 135, LC) To refuse her admission upon returning to work for fear that she may again be pregnant. (Sec. 13, Rule XII, Book III, Rules to Implement the LC) Expulsion and non-readmission of women faculty/female student due to pregnancy outside of marriage. (Sec. 13(c), R.A. No. 9710) Imprisonment: not less than three (3) months or more than three years, or both, at the discretion of the court. Persons covered under the classification of certain women workers Any woman who is permitted or suffered to work: 1. 2. 3. 4. 95 With or without compensation; In any night club, cocktail lounge, massage clinic, bar or similar establishment; Under the effective control or supervision of the Er for a substantial period of time; and Shall be considered as an Ee of such establishment for purposes of labor and social legislation. (Art. 136, LC) UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards 6. 2. MINORS (R.A. NO. 7610, AS AMENDED BY R.A. NO. 9321) 7. a. CHILD LABOR vs. WORKING CHILD Child Labor Jurisdiction Over Offenses Punishable Under RA R.A. No. 9231 Any work or economic activity performed by a child that subjects him or her to any form of exploitation or is harmful to his or her health and safety or physical, mental or psychosocial development. The Family Courts shall have original jurisdiction over all cases involving offenses punishable under this Act. (Sec. 16-A, R.A. No. 9231) Working Child b. ALLOWED WORKING HOURS AND INDUSTRIES OF A WORKING CHILD Any child engaged as follows: 1. 2. When the child is below 18 years of age in a work or economic activity that is not child labor; or When the child is below 15 years of age: a. In work where he/she is directly under the responsibility of his/her parents or legal guardian and where only members of the child’s family are employed; or b. In public entertainment or information. Rules on Employment of Minor Workers Instances when the state can intervene in behalf of the child 1. 2. Barangay chairman of the place where the violation occurred, where the child is residing or employed; or, At least three concerned, responsible citizens where the violation occurred. (Sec. 8, R.A. No. 9231) 1. No person under 18 years of age is allowed to be employed in an undertaking which is hazardous or deleterious in nature. 2. No Er shall discriminate against any person with respect to terms and conditions of employment on account of his age. (Art. 138, LC) A. Children below fifteen (15) years of age shall not be employed except: 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 1. When such acts are committed against the child by the said parent, guardian, teacher or person having care and custody over the child. (Sec. 2, Art. I, R.A. No. 7610) a. b. Persons Who Can File A Complaint For Unlawful Acts Committed Against Children 1. 2. 3. 4. 5. c. Offended party; Parents or guardians; Ascendants or collateral relatives within the 3rd degree of consanguinity; Officer, social worker or representative of a licensed child-caring institution; Officer or social worker of DSWD; UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES When the child works directly under the sole responsibility of his parents or legal guardian and where only members of the family are employed, subject to the following conditions: 2. 96 Employment does not endanger the child’s safety, health and morals; Employment does not impair the child’s normal development; and Er-parent or legal guardian provides the child with the primary and/or secondary education prescribed by the Department of Education When the child’s employment or participation in public entertainment or Labor Law and Social Legislation 4. information through cinema, theatre, radio or television is essential provided: a. b. c. NOTE: A working child permit is required if a child below 15 years of age: 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 DOLE, the following must be complied with: 1. 2. i. The employment does not involve advertisement or commercials promoting alcoholic beverages, intoxicating drinks, tobacco and its by-products or exhibiting violence; ii. There is a written contract approved by DOLE; iii. The conditions provided in the first instance are met. (Sec. 12, Art. VIII, R.A. No. 7610) 3. 4. 5. 1. 2. 3. Above 18 – No prohibition. Employment Conditions 4. Such conditions must be strictly followed: 5. 1. 2. The total number of hours worked shall be in accordance with Sec. 15 of DO No. 65-04; The employment does not endanger the child’s life, safety, health and morals, nor impair the child’s normal development; 6. 7. 8. 9. Normal Development of the child refers to physical, emotional, mental, and spiritual growth of a child within a safe and nurturing environment where he/she is given adequate nourishment, care and protection and the opportunity to perform tasks appropriate at each stage of development. 3. Will be engaged in public entertainment or information regardless of his/her role in a project. This includes projects which are nonprofit, advocacy materials or political advertisements; or Is a foreign national and will be engaged in public entertainment in the PH; Will be engaged as regular extra or as part of a crowd and is included in the script or storyboard; Has been selected for a project after undergoing auditions, workshops or VTR screenings; or Has been selected as semi-finalist in a singing, dance or talent contest for a television show. A working child permit is NOT required if a child below 15 years of age: B. Above 15 but below 18 – May be employed in any non-hazardous work. C. The Er secures a work permit for the child. (Secs. 8 to 12, Ibid.) Is a spot extra or is cast outright on the day of filming or taping of a project; Will join auditions or VTR screenings; Is part of the audience of a live television show unless the child’s participation is expected; Is picked or chosen as contestant from the audience of a live television show; Is a contestant for a television show but has not yet been selected as a semi-finalist; Is a recipient of gift-giving activities in television; Is a participant in school-related performance; Is a participant in sports activities, trainings or workshops; or Will be featured in a documentary material. (DOLE Circular No. 2-18) Q: A spinster schoolteacher took pity on one of her pupils, a robust and precocious 12-year-old boy whose poor family could barely afford the cost of his schooling. She lives alone at her house near the school after her housemaid left. In the afternoon, she lets the boy do various chores as cleaning, fetching water and all kinds of errands The child is provided with at least the mandatory elementary or secondary education; and 97 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards after school hours. She gives him rice and Php 30.00 before the boy goes home at 7 every night. The school principal learned about it and charged her with violating the law which prohibits the employment of children below 15 years of age. In her defense, the teacher stated that the work performed by her pupil is not hazardous, and she invoked the exception provided in the Department Order of DOLE for the engagement of persons in domestic and household service. Is her defense tenable? (2004 BAR) 15 years of age but below 18 years Not be more than 8 hours a day (8hrs/day) In no case beyond 40 hours a week (40hrs/week) Between 10pm and 6am of the following day (Sec. 15, Chapter 5, Ibid.) 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 20% of the child's income may be used for the collective needs of the family. (Sec. 12-B, R.A. No. 7610) A: NO. Under Art. 137 of the LC on “minimum employable age,” no child below 15 years of age shall be employed except when he works directly under the sole responsibility of his parents or guardian, the provisions of the alleged department order of DOLE to the contrary notwithstanding. A mere department order cannot prevail over the express prohibitory provisions of the LC. Trust Fund to Preserve Part of the Working Child’s Income Regulation of Working Hours of a Child The parent or legal guardian of a working child below 18 years of age shall set up a trust fund for at least 30% of the earnings of the child whose wages and salaries from work and other income amount to at least P200,000.00 annually, for which he/she shall render a semi-annual accounting of the fund to the DOLE. The child shall have full control over the trust fund upon reaching the age of majority. (Sec. 12-C, R.A. No. 7610) It includes: 1. All time during which a child is required to be at a prescribed workplace; and 2. All time during which a child is suffered or permitted to work. Rest periods of short duration during working hours shall be counted as hours worked. (Sec. 3, Chapter 1, Ibid.) Age Bracket Hours of Work Below 15 Not more than 20 hours per week (20hrs/week) Provided, the work shall not be more than 4 hours at any given day (4hrs/day) Duty of The Er Before Engaging A Minor Into Employment Time NOT allowed to work The Er shall first secure a work permit from the DOLE which shall ensure observance of the requirements. (Sec. 12, R.A. No. 7160) Issuance Of Work Certificates/ Permits To Children At Least 15 But Below 18 Years Of Age NOT REQUIRED Between 8pm and 6am of the following day UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES The issuance of a DOLE Certificate to youth aged 15 to below 18 years of age is not required by law. No Er shall deny opportunity to any such youth applying for employment merely on the basis of lack of work permit or certificate of eligibility for 98 Labor Law and Social Legislation employment. Any young person aged 15 to below 18 years of age may present copy of this DOLE advisory to any Er, job provider, government authority, or his/her representative when seeking employment or anytime during employment. (DOLE Department Advisory No. 01-08) c. PROHIBITED ACTS Prohibitions on the Employment of Children in Certain Advertisements Employment of child models in all commercial advertisements promoting the following shall be prohibited: Non-Hazardous Work 1. 2. 3. 4. 5. 6. It is any work or activity in which the Ee is not exposed to any risk which constitutes an imminent danger to his safety and health. Hazardous Workplaces 1. 2. 3. 4. Nature of work exposes the workers to dangerous environmental elements, contaminants or work conditions; Workers are engaged in construction work, logging, firefighting, mining, quarrying, blasting, stevedoring, dock work, deep-sea fishing, and mechanized farming; Workers are engaged in the manufacture or handling of explosives and other pyrotechnic products; or Workers use or are exposed to heavy or power-driven tools. Alcoholic beverage; Intoxicating drinks; Tobacco and its by products; Gambling; or Violence. (Sec. 14, Art. VIII, R.A. No. 7610) Pornography Prohibition Against Worst Forms of Labor Q: You were asked by a paint manufacturing company regarding the possible employment as a mixer of a person aged 17, who shall be directly under the care of the section supervisor. What advice would you give? Explain briefly. (2002 BAR) A: The paint manufacturing company cannot hire a person who is aged 17. Art. 137(c) of the LC provides that a person below 18 years of age shall not be allowed to work in an undertaking which is hazardous or deleterious in nature as determined by the SOLE. Paint manufacturing has been classified by the SOLE as a hazardous work. 1. All forms of slavery (Anti-Trafficking of 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; 2. The use, procuring, offering of a child for prostitution, for the production of pornography or for pornographic performances; 3. The use, procuring, offering or exposing of a child for illegal or illicit activities, including the production and trafficking of dangerous drugs and volatile substances prohibited under existing laws; 4. Work which, by its nature or 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. b. 99 Debases, degrades or demeans the intrinsic worth and dignity of a child as a human being; or Exposes the child to physical, emotional or sexual abuse, or is found to be highly stressful psychologically or may prejudice morals; or UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards c. d. e. f. g. h. i. 5. b) Her work period exceeds the required working hours for children aged 15 years old; c) To require a 15-year-old to work without obtaining the requisite working permit is a form of child labor; d) Iya, who was engaged in a work that is not child labor, is a working child. Is performed underground, underwater or at dangerous heights; or Involves the use of dangerous machinery, equipment and tools such as power-driven or explosive poweractuated tools; or 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 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 Is performed under particularly difficult conditions; or Exposes the child to biological agents such as bacteria, fungi, viruses, protozoans, nematodes and other parasites; or Involves the manufacture or handling of explosives and other pyrotechnic products. (Sec. 12-D, R.A. No. 9231) A: d). Iya, who was engaged in a work that is not child labor, is a working child. (Sec. 12-A) Q: Determine whether the following minors should be prohibited from being hired and from performing their respective duties indicated hereunder: (2006 BAR) a. A: YES. He should be prohibited from being hired and from performing the duties of a miner because such constitutes hazardous work under D.O. No. 04 Series of 1999. Art. 137(c) of LC expressly prohibits the employment of persons below 18 years of age in an undertaking which is hazardous or deleterious in nature as determined by the SOLE. b. An 11-year-old boy who is an accomplished singer and performer in different parts of the country. Employing child models in all commercials or advertisements promoting alcoholic beverages, intoxicating drinks, tobacco and its by-products and violence. (Sec. 14, RA 7610) A: NO. He should not be prohibited from being hired and from performing as a singer. Under Sec. 12(2), Art. VIII of R.A. No. 7610 as amended by R.A. No. 7658, this constitutes an exception to the general prohibition against the employment of children below 15 years of age, provided that the following requirements are strictly complied with: Q: Iya, 15 years old, signed up to model a clothing brand. She worked from 9am to 4 pm on weekdays and 1pm to 6pm on Saturdays for two (2) weeks. She was issued a child working permit under R.A. No. 9231. Which of the following statements is the most accurate? (2012 BAR) 1. 2. a) Working permit for Iya’s employment is not required because the job is not hazardous; 3. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES A 17-year-old boy working as miner at the Walwadi Mining Corporation. 100 The Er shall ensure the protection, health safety and morals of the child; The Er 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 The Er shall formulate and implement, subject to the approval and supervision of Labor Law and Social Legislation competent authorities, a continuing program for training and skill acquisition of the child. Moreover, the child must be directly under the sole responsibility of his parents or guardian and his employment should not in any way interfere with his schooling. c. 3. KASAMBAHAY (R.A. NO. 10361) Persons covered by R.A. No. 10361 otherwise known as “Batas Kasambahay” All kasambahay engaged in domestic work, whether on a live-in or live-out arrangement, such as, but not limited to, the following: A 15-year-old girl working as a library assistant in a girls' high school. A: NO. She should not be prohibited from working as a library assistant because the prohibition in the LC against employment of persons below 18 years of age merely pertains to employment in an undertaking which is hazardous or deleterious in nature as identified in the guidelines issued by the SOLE. Working as a library assistant is not one of undertakings identified to be hazardous under D.O. No 04 Series of 1999. 1. 2. 3. 4. 5. 6. 7. d. A 16-year-old girl working as model promoting alcoholic beverages. A: YES. She should be prohibited from working as a model promoting alcoholic beverages. R.A. No. 7610 categorically prohibits the employment of child models in all commercials or advertisements promoting alcoholic beverages and intoxicating drinks, among other things. e. General househelp; Nursemaid or Yaya; Cook; Gardener; Laundry person; Working children or domestic workers 15 years old and above but below 18 years of age; or Any person who regularly performs domestic work in one household on an occupational basis (live-out arrangement). (Sec. 4(d), R.A. No. 10361) Persons NOT Covered By the Batas Kasambahay 1. 2. 3. 4. A 17-year-old boy working as a dealer in a casino. (2006 BAR) A: YES. He should be prohibited from working as a dealer in casino, because Art. 137(c) of the LC prohibits the employment of persons below 18 years of age in an undertaking which is hazardous or deleterious in nature identified in the guidelines issued by the SOLE. Working as a dealer in a casino is classified as hazardous under D.O. No. 04 Series of 1999 as it exposes children to physical, psychological or sexual abuses. Service providers; Family drivers; Children under foster family arrangement; and Any other person who performs work occasionally or sporadically and not on an occupational and regular basis. (Sec. 2, Rule 1, IRR of R.A. No. 10361) Children under Foster Family Arrangement Children under foster family arrangement refers to children who are living with a family or household of relative/s and are provided access to education and given an allowance incidental to education, i.e., “baon,” transportation, school projects, and school activities; provided, that the foster family and foster care arrangements are in compliance with the procedures and requirements as prescribed by R.A. No. 10165 or otherwise known as the Foster Care Act of 2012. Q: Soledad, a widowed schoolteacher, takes under her wing one of her students, Kiko, 13 years old, who was abandoned by his parents 101 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards and has to do odd jobs in order to study. She allows Kiko to live in her house, provides him with clean clothes, food, and a daily allowance of 200 pesos. In exchange, Kiko does routine housework, consisting of cleaning the house and doing errands for Soledad. 2. They shall not be allowed to work between 10 p.m. to 6 a.m. of the following day; 3. One day, a representative of the DOLE and the DSWD came to Soledad's house and charged her with violating the law that prohibits work by minors. Soledad objects and offers as a defense that she was not requiring Kiko to work as the chores were not hazardous. Further, she did not give him chores regularly but only intermittently as the need may arise. Is Soledad's defense meritorious? (2015 BAR) 4. They shall not be allowed to do hazardous work or likely to be harmful to the health, safety or morals of children, as defined under existing laws and regulations; and They shall not be denied access to education and training. (Sec. 2, Rule VI, IRR of R.A. No. 10361) The consent of the parent/guardian of working children is required in the employment contract. Er’s Household Household refers to the immediate family members or other occupants of the house who are directly and regularly provided services by the kasambahay. (Sec. 4(f), R.A. No. 10361) A: YES, Soledad’s defense is meritorious. Sec. 4 (d) of the Kasambahay Law (R.A. No. 10361) provides that the term “Domestic Worker” shall not include children who are under foster family arrangement, and are provided access to education and given an allowance incidental to education, i.e., “baon”, transportation, school projects and school activities. Modes of Hiring a Kasambahay An Er can hire directly or indirectly through private employment agencies (PEA) registered with the DOLE regional offices. (Sec. 1, Rule II, IRR of R.A. No. 10361) The Er, whether the kasambahay is hired through a PEA or a third party, shall shoulder the expenses for hiring. The kasambahay shall not be charged of any cost of the recruitment, placement, or finder’s fee. (Sec. 2, Rule II, IRR of R.A. No. 10361) Examples of Persons Performing Work Occasionally or Sporadically and Not on an Occupational Basis 1. 2. 3. A janitress doing irregular laundry work for a household during rest day; A construction worker doing casual gardening job for a household; or A hospital nurse or a student doing babysitting job. (Q&A on Batas Kasambahay, DOLE) NOTE: The Er, whether directly hired or through PEA, shall pay the expenses that are directly used for the transfer of the kasambahay from place of origin to the place of work. The Er can be reimbursed of the deployment expenses when the kasambahay unreasonably leaves the Er within six (6) months from the time he/she started work. (Sec. 3, Rule II, IRR of R.A. No. 10361) Employable Age for a Kasambahay 15 years old and above. NOTE: The employment of children 15 years old and above but below 18 years of age may be made under the following conditions: 1. If a kasambahay is hired thru a PEA, the agency is allowed to collect Service Fee from the Er. They shall not be allowed to work for more than eight (8) hours a day, and in no case beyond 40 hours a week; UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Pre-Employment Requirements Prior to the execution of the employment contract, the Er may require the following from the kasambahay: 102 Labor Law and Social Legislation 1. 2. 3. 4. 8. 9. 10. 11. Medical certificate or health certificate issued by a local government health officer; Barangay and police clearance; NBI clearance; and Duly authenticated birth certificate or, if not available, voter’s ID baptismal record, or passport showing the kasambahay’s age. (Sec. 12, R.A. No. 10361) NOTE: If the kasambahay is below 18 years old, the employment contract shall be signed by his/her parent or lawful guardian on his/her behalf. (Sec. 5, Rule II, IRR of R.A. No. 10361) NOTE: All expenses made pursuant to the availment of pre-employment requirements, should be shouldered by the Er. The foregoing requirements are mandatory when the employment of the kasambahay is facilitated through a private employment agency. Registration of the Kasambahay The Er is required to register the kasambahay in the Registry of Domestic Workers in the barangay where the Er resides. For this purpose, the DILG, in coordination with the DOLE, shall formulate a registration system. (Sec. 17, R.A. No. 10361) It is not a requirement for a kasambahay to be trained and certified by TESDA prior to employment. However, the kasambahay is encouraged to undergo competency assessment and be certified by TESDA. Training is not a requirement for competency assessment. (Q&A on Batas Kasambahay, DOLE) NOTE: The registration of the kasambahay is free of charge. Domestic Workers Cannot Acquire Regularity of Employment under RA 10361 Contract between the Er and Kasambahay Should be Written and Should Contain Conditions Set by Law GR: All the indicia of regularity of employment remain absent in the employment of domestic helpers. (Chan, 2017) The Er and the kasambahay shall enter into a written contract of employment in a language or dialect understood by them. XPN: The mere fact that the househelper is working within the premises of the business of the Er and in relation to or in connection with the business, as in staff houses for its guest or even for its officers and Ees, warrants the conclusion that such househelper is and should be considered as a regular Ee. (Remington Industrial Sales Corp. v. Castaneda, G.R. No. 169295-96, 20 Nov. 2006) NOTE: The contract need not be notarized. The Punong Barangay or his/her designated officer may attest to the contract and serve as witness to its execution. Contents of the Employment Contract 1. 2. 3. 4. 5. 6. 7. Agreements on deployment expenses, if any; Loan agreement, if any; Termination of employment; and Any other lawful condition agreed upon by both parties. (Sec. 5, Rule II, IRR of R.A. No. 10361) NOTE: Such case must be based on its factual antecedents. Duties and responsibilities of the kasambahay which include the responsibility to render satisfactory service at all times; Period of employment; Compensation; Authorized deductions; Hours of work and proportionate additional payment; Rest days and allowable leaves; Board, lodging and medical attention; Q: Linda was employed by Sectarian University (SU) to cook for the members of a religious order who teach and live inside the campus. While performing her assigned task, Linda accidentally burned herself. Because of the extent of her injuries, she went on medical leave. Meanwhile, SU engaged a replacement cook. 103 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards 10. Right to terminate employment based on just cause; and 11. Right to exercise religious beliefs and cultural practices. (Sec. 1, Rule IV, IRR of RA 10361) Linda filed a complaint for illegal dismissal, but her Er SU contended that Linda was not a regular Ee but a domestic househelp. Decide. (2014 BAR) A: The Er's argument that Linda was not a regular Ee has no merit. The definition of domestic servant or househelper contemplates one who is employed in the Er’s home to minister exclusively to the personal comfort and enjoyment of the Er’s family. The Supreme Court already held that the mere fact that the househelper is working in relation to or in connection with its business warrants the conclusion that such househelper or domestic servant is and should be considered as a regular Ee. (Apex Mining Co., Inc. v. NLRC, G.R. No. 94951, 22 Apr. 1991) Here, Linda was hired not to minister to the personal comfort and enjoyment of her Er's family but to attend to other Ees who teach and live inside the campus. Basic Necessities of a Kasambahay 1. 2. 3. At least three (3) adequate meals a day, taking into consideration the kasambahay’s religious beliefs and cultural practices; Humane sleeping condition that respects the person’s privacy for live-in arrangement; and Appropriate rest and basic medical assistance, including first-aid medicine, in case of illness and injuries sustained during service without loss of benefits. (Sec. 12, Rule IV, IRR of R.A. No. 10361) NOTE: For the Kasambahay under live-out arrangement, he/she shall be provided space for rest and access to sanitary facility. Mandatory Benefits of a Kasambahay 1. 2. 3. 4. 5. 6. 7. 8. Though not part of the “basic necessities” required to be provided by the Er to the kasambahay, shampoo, soap, toothpaste etc. may be provided gratuitously. Monthly minimum wage; Daily rest period of eight (total) hours; Weekly rest period of 24 (uninterrupted) hours; Five days annual service incentive leave with pay; 13th month pay; SSS benefit; PhilHealth benefit; and Pag-IBIG benefit. Monthly Minimum Wage of a Kasambahay [Current Monthly Minimum Wage for Domestic Workers (Kasambahay) as per National Wages and Productivity Commission website] MONTHLY MINIMUM WAGE IN CITIES AND OTHER 1ST CLASS MUNICIPALITIES MUNICIPALITIES NCR P5,000 CAR P4,000 P3,000 I P4,500 P3,500 II P4,000 III P4,500 P4,000 IV - A P3,500 P3,000 Other Rights and Privileges of a Kasambahay 1. 2. 3. 4. 5. 6. 7. 8. 9. Freedom from Er’s interference in wage disposal; Standard of treatment; Board, lodging, and medical attendance; Right to privacy; Access to outside communication; Access to education and training; Right to be provided a copy of the employment contract; Right to Certificate of Employment; Right to form, join, or assist labor organization; UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 104 Labor Law and Social Legislation Daily Rest Period IV - B P3,500 V P3,000 The kasambahay is entitled to a total daily rest period of at least eight (8) hours. (Sec. 3, R.A. No. 10361) P2,500 VI P4,000 VII P5,000 Prohibition of Work Beyond 16 Hours P4,000 The Er cannot require the kasambahay to work beyond 16 hours at any given workday in return for an equivalent hourly rate. The eight-hour rest period must be observed. VIII P4,500 P4,000 IX P3,500 P3,000 X P4,000 P3,500 NOTE: This provision of special law is inconsistent with Art. 1695 of the Civil Code which prohibits more than ten (10) hours of work of a househelper. Nevertheless, applying the rules on statutory construction, in case of conflict between a general law and special law, the special law prevails. P3,000 24 Consecutive Hours of Rest in A Week P3,000 XI P3,000 P2,000 XII P4,000 CARAGA P3,500 The law provides a mechanism for increasing the minimum wage of the kasambahay. The Regional Tripartite Wages and Productivity Boards (RTWPB) may review, and if proper, determine and adjust the minimum wage. (Sec. 24, R.A. No. 10361) The RTWPB shall coordinate with TESDA on the wage review and adjustment based on the kasambahay’s competency level, in line with the thrust to professionalize the domestic service sector. Kasambahays are also entitled to at least 24 consecutive hours of rest in a week. The Er and the kasambahay shall agree in writing on the schedule of the weekly rest day. The Er shall respect the preferred weekly rest day of the kasambahay on religious grounds. (Sec. 21, Ibid.) Payment of Wages A: NO. However, the kasambahay and the Er may agree to shorten the rest day, provided the Er pays for the hours worked during the shortened rest day. (Q&A on Batas Kasambahay, DOLE) Q: Can the Er shorten the 24-hour rest day period of the kasambahay Wages shall be in cash and be paid at least once a month. (Secs. 3-4, Rule IV, IRR of R.A. No. 10361) NOTE: The Er shall, at all times, provide the kasambahay with a copy of the pay slip every pay day containing the amount paid and all deductions made, if any. The copies of the pay slip shall be kept by the Er for a period of three (3) years. (Sec. 26, R.A. No. 10361) Five-Day Annual SIL The kasambahay can avail the five (5)-day annual SIL after one (1) year of service. NOTE: Any unused portion of the SIL shall not be cumulative or carried over to the succeeding years. Unused leaves shall not be convertible to cash. Payment of wages by means of promissory, voucher, coupon, token, ticket, chit, or anything other than the cash wage is prohibited. (Sec. 3, Rule IV, IRR of R.A. No. 10361) 105 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards Other Agreements that the Er and the Kasambahay Can Enter into Relative to the Latter’s Weekly Rest Day and SIL 1. 2. 3. 4. 5. In Case Kasambahay Avails of Certain Loan Privileges from PAG-IBIG Fund Which Require the Payment of Additional or Upgraded Contributions Offsetting a day of absence with a particular rest day; Waiving a particular rest day in return for an equivalent daily rate of pay; Accumulating rest days not exceeding five (5) days; Adding the accumulated rest days (maximum of 5 days) to the five-day SIL; and Waiving a particular SIL in return for an equivalent daily rate of pay. Said additional or upgraded contributions shall be shouldered solely by the kasambahay. (Sec. 9, Art. IV, IRR of R.A. No. 10361) Er’s Liability in Case the Kasambahay Refuses to Be a Member of SSS, PhilHealth, and PAG-IBIG The Er is still liable under the SSS, PhilHealth, and PAG-IBIG laws in case the kasambahay refuses membership with those agencies, because it is mandatory and non-negotiable. (Q&A on Batas Kasambahay, DOLE) 13th month pay The kasambahay is entitled to 13th month pay after one (1) month of service. Person Liable to Pay the SSS premium, PhilHealth and PAG-IBIG Contributions of the Kasambahay Computation of the 13thmonth Pay In computing the 13th month pay, the total basic wage received in a given calendar year shall be divided by 12. The amount derived shall be paid not later than December 24 or upon separation from employment. (Sec. 8, Rule IV, IRR of R.A. No. 10361) GR: The Er shall pay the SSS premium, and PhilHealth and PAG-IBIG contributions of the kasambahay XPN: If the wage of the kasambahay is P5,000.00 or more, the kasambahay will pay his/her share in the premiums/contributions. (Sec. 9, Rule IV, IRR of R.A. No. 10361) SSS, PhilHealth, and PAG-IBIG The kasambahay is covered by SSS, PhilHealth and Pag-IBIG after one (1) month of service. Provisions Protecting Ers of a Kasambahay Q: Supposing that in exchange for nonmembership, the kasambahay agrees with the Er to receive the premiums and contributions in addition to his/her salary. Is this allowed? 1. 2. 3. A: NO. Under the SSS, PhilHealth, and PAG-IBIG laws, the Er has the obligation to register the kasambahay and deduct and remit the required premiums and contributions. The Er shall incur certain liabilities, including criminal prosecution, if he fails or refuses to comply with his/her obligations. (Q&A on Batas Kasambahay, DOLE) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 4. 5. 106 Prohibition against privileged information; Er may require certain pre-employment documents prior to engagement; Ers are assured of quality services through DOLE-TESDA training, assessment, and certification of kasambahay; Forfeiture of 15-day unpaid salary should the kasambahay leave the residence of the Er without any justifiable reason; and Right to terminate the employment on justifiable grounds. (Q&A on Batas Kasambahay, DOLE) Labor Law and Social Legislation contract of employment to end the employment relationship. (Sec. 32, Ibid.) Grounds for Termination of Contract by the Kasambahay (VIC-VDO) 1. 2. 3. 4. 5. 6. Verbal or emotional abuse of the kasambahay by the Er or any member of the household; Inhuman treatment including physical abuse of the kasambahay by the Er or any member of the household; Commission of a Crime or offense against the kasambahay by the Er or any member of the household; Violation by the Er of the terms and conditions of the employment contract and other standards set forth under the law; Any Disease prejudicial to the health of the kasambahay, the Er, or member/s of the household; and Other causes analogous to the foregoing. (Sec. 33, R.A. No. 10361) Termination of Contract If the Duration of Service Is Not Determined In the Contract The kasambahay or the Er may terminate the contract any time if the duration of service is not determined in the contract. Either the Er or the kasambahay may give notice to end the working relationship five (5) days before the intended date of the termination of service. (Sec. 32, R.A. No. 10361) Effect of Unjust Dismissal by the Er The kasambahay shall receive the following if he/she is unjustly dismissed by the Er: 1. 2. Grounds for Termination of Contract by the Employer (MGFC-VDO) 1. 2. 3. 4. 5. 6. 7. Misconduct or willful disobedience by the kasambahay of the lawful order of the Er in connection with the former’s work; Gross or habitual neglect or inefficiency by the kasambahay in the performance of duties; Fraud or willful breach of the trust reposed by the Er on the kasambahay; Commission of a Crime or offense by the kasambahay against the person of the Er or any immediate member of the Er’s family; Violation by the kasambahay of the terms and conditions of the employment contract and other standards set forth under the law; Any Disease prejudicial to the health of the kasambahay, the Er, or member/s of the household; and Other causes analogous to the foregoing. (Sec. 34, R.A. No. 10361) Outright payment of earned wage; and Indemnity benefit in the form of wage equivalent to 15 days work. (Q&A on Batas Kasambahay, DOLE) Liabilities of a Kasambahay Who Leaves His/Her Er without Justifiable Reason 1. 2. Forfeiture of wage equivalent to 15 days work; and Reimbursement of the deployment expenses, if the employment contract is terminated within 6 months from employment. (Sec. 32, R.A. No. 10361) Q: Can the Er inspect the belongings of the kasambahay before he/she leaves the household in case of termination of employment? A: NO. The Er cannot inspect the belongings of the kasambahay. However, the Er and the kasambahay can agree in their employment contract that an inspection can be made before he/she leaves the household. (Q&A on Batas Kasambahay, DOLE) NOTE: Neither the domestic worker nor the Er may terminate the contract before the expiration of the term except for grounds provided for in Secs. 33 and 34 of the Batas Kasambahay. Q: If there is non-payment or underpayment of wage and other labor-related concerns, where can the kasambahay seek assistance? The domestic worker and the Er may mutually agree upon written notice to pre-terminate the 107 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards 5. A: The kasambahay can go to a Kasambahay Desk Officer situated in their respective barangays or the nearest DOLE field/provincial/ regional office. (Q&A on Batas Kasambahay, DOLE) 6. Replacement of Kasambahay Hired through PEAs 7. Within one (1) month from the day the Kasambahay reported for work, the Er shall be entitled to a qualified replacement at no additional cost of any if the ff. grounds occurred: a. b. c. 8. 9. The kasambahay is found to be suffering from an incurable or contagious disease, or mental illness as certified by a competent or government physician; The kasambahay abandons the job without justifiable cause, voluntarily resigns, commits theft or any other analogous acts prejudicial to the Er or his/her family; or The kasambahay is physically or mentally incapable of discharging the minimum requirements of the job, as specified in the employment contract. (Sec. 4, Rule III, IRR of R.A. No. 10361) Ensure that the kasambahay is not charged or required to pay any recruitment or placement fees; Keep copies of employment contracts and agreements pertaining to recruited kasambahay, which shall be made available during inspections or whenever required by the DOLE or local government officials; Assist the kasambahay in filing his/her complaints or grievances against the Ers; Cooperate with government agencies in rescue operations involving abused or exploited kasambahay; and Assume joint and solidary liability with the Er for payment of wages, wage-related and other benefits, including monthly contribution for SSS, PhilHealth, and Pag-IBIG membership. (Sec. 3, Rule III, IRR of R.A. No. 10361) Unlawful Acts under the Batas Kasambahay 1. 2. 3. 4. NOTE: The Er shall be entitled to a refund of 75% of the deployment expenses or fees paid to the PEA, if the latter failed to provide a qualified replacement after a lapse of one (1) month from receipt of the request for replacement. 5. 6. Employment of children below 15 years of age; Withholding of the kasambahay’s wages; Interference in the disposal of the kasambahay’s wages; Requiring kasambahay to make deposits for loss or damage; Placing the kasambahay under debt bondage; and Charging another household for temporarily performed tasks. (Sec. 1, Rule XII, IRR of R.A. No. 10361) Responsibilities of the PEA under the Law 1. 2. 3. 4. NOTE: Unlawful acts are punishable with an administrative fine ranging from P10,000 to P40,000 to be imposed by the DOLE Regional Offices. Ensure that the kasambahay is qualified as required by the Er; Secure the best terms and conditions of employment for the kasambahay; Ensure that the employment agreement between the kasambahay and the Er stipulates the terms and conditions of employment and all the benefits in accordance with the IRR; Provide a pre-employment orientation briefing to the kasambahay and the Er about their rights and responsibilities in accordance with the IRR; UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Other Remedies for Unlawful Acts The aggrieved party may file the appropriate civil or criminal action before the regular courts. Remedy for Abused or Exploited Kasambahay The law mandates the conduct of immediate rescue of abused or exploited kasambahay by the municipal or city social welfare officer or a social welfare 108 Labor Law and Social Legislation officer from DSWD, in coordination with the concerned barangay officials. (Sec. 1, Rule X, IRR of R.A. No. 10361) 4. HOMEWORKERS Homeworkers The law sets out that crimes or offenses committed under the Revised Penal Code and other criminal laws shall be filed with the regular courts. (Sec. 3, Rule X, IRR of R.A. No. 10361) They are those who perform in or about his own home any processing or fabrication of goods or materials, in whole or in part, which have been furnished directly or indirectly, by an Er and sold thereafter to the latter. Q: Albert, a 40-year-old Er, asked his domestic helper, Inday, to give him a private massage. When Inday refused, Albert showed her Art. 141 of the Labor Code, which says that one of the duties of a domestic helper is to minister to the Er’s personal comfort and convenience. Is Inday’s refusal tenable? (2009 BAR) NOTE: D.O. No. 05-92, DOLE (04 Feb. 1992) amended Rule XIV of the IRR. Industrial Homework It is a system of production under which work for an Er or contractor is carried out by a homeworker at his/her home. Materials may or may not be furnished by the Er or contractor. A: YES. Inday’s refusal to give her Er a “private massage” is in accordance with law because the nature of the work of a domestic worker must be in connection with household chores. Massaging is not a domestic work. It differs from regular factory production principally in that, it is a decentralized form of production where there is ordinarily very little supervision or regulation of methods of work. (Sec. 2(a), DO No. 05-92) Q: NBC has a rest house and recreational facility in the highlands of Tagaytay City for the use of its top executives and corporate clients. The rest house staff includes a caretaker, two cooks and a laundrywoman. All of them are reported to the SSS as domestic or household Ees of the resthouse and recreational facility and not of NBC. Can NBC legally consider the caretaker, cooks and laundrywoman as domestic Ees of the rest house and not of NBC? (2000 BAR) Househelpers vs. Homeworkers (2017 BAR) A: NO, they are not domestic Ees. They are the Ees of NBC because the rest house and recreational facility are business facilities which are for use of NBC’s top executives and clients. (Traders Royal Bank v. NLRC, G.R. No. 127864, 22 Dec. 1999) NOTE: A househelp, a laundrywoman, a driver, houseboy or gardener working in staff houses of a company who attends to the needs of the company’s guests is not a househelper or domestic servant. He is an industrial worker who must be paid the industrial rate. HOUSEHELPERS HOMEWORKERS Ministers to the personal needs and comfort of his Er in the latter’s home Performs in or about his own home any processing or fabrication of goods or materials, in whole or in part, which have been furnished directly or indirectly, by an Er and sold thereafter to the latter. Er of a Homeworker Includes any person, natural or artificial who, for his account or benefit, or on behalf of any person residing outside the country, directly or indirectly, or through an Ee, agent contractor, subcontractor or any other person: 109 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards 1. 2. Payment for Homework 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 Immediately upon receipt of the finished goods and articles, the Er is required to pay the homeworker for the work performed less corresponding homeworkers’ share of SSS, MEDICARE, and ECC premium contributions, which shall be remitted by the contract/subcontractor or Er to the SSS with the Ers’ share. Sells any goods, articles or materials to be processed or fabricated in or abut a home and then rebuys them after such processing or fabrication, either by himself or through some other person. [Sec. 2(d), DO No. 05-92] However, where payment is made to a contractor or subcontractor, the homeworker shall likewise be paid immediately after the goods or articles have been collected from the workers. (Sec. 6, DO No. 0592) Sells any goods, articles or materials to be processed or fabricated in or abut a home and then repurchases them after such processing or fabrication, either by himself or through some other person. (Sec. 2(d), D.O. No. 05-92) Conditions for Payment Of Work Duty of the Er in Case He Contracts With Another in the Performance of His Work The Er may require the homeworker to redo the work which has been improperly executed without having to pay the stipulated rate again. It shall be the duty of the Er to provide in such contract that the Ees or homeworkers of the contractor and the latter’s subcontractor shall be paid in accordance with the LC. (Sec. 11, D.O. No. 0592) An Er, contractor, or subcontractor 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. (Sec. 9, D.O. No. 05-92) Liability of the Er if the Contractor or Subcontractor Fails to Pay the Wages or Earnings of his Ees Prohibitions for Homework The following shall be prohibited as homework: Er shall be jointly and severally liable with the contractor or subcontractor to the workers of the latter to the extent that such work is performed under such contract, in the same manner as if the Ees or homeworkers were directly engaged by the Er. (Sec. 11, D.O. No. 05-92) 1. 2. 3. Explosives, fireworks and similar articles; Drugs and poisons; and Other articles, the processing of which requires exposure to toxic substances. (Sec. 13, D.O. No. 05-92) Right of Industrial Homeworkers to Form Labor Organizations Conditions for Deduction from Homeworker’s Earnings D.O. No. 05-92 (04 Feb. 1992), replacing Rule XIV of the IRR Book III of the LC, authorizes the formation and registration of labor organization of industrial homeworkers. It also makes explicit the Ers duty to pay and remit SSS, PhilHealth and ECC premiums. (Sec. 3, DO No. 05-92) (Secs. 3 and 6, D.O. No. 05-92) GR: The Er, contractor or subcontractor shall not make any deduction from the homeworker’s earnings for the value of materials which have been lost, destroyed, soiled or otherwise damage. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES XPN: Unless the following conditions are met: 1. The homeworker is clearly shown to be responsible for the loss or damage; 110 Labor Law and Social Legislation 2. 3. 4. Persons Covered by the Provisions on Night Work The homeworker is given reasonable opportunity to show cause why deductions should not be made; The amount of such deduction is fair and reasonable and shall not exceed the actual loss or damages; and The deduction is made at such rate that the amount deducted does not exceed 20% of the homeworker’s earnings in a week. (Sec. 8, D.O. No. 05-92) GR: All persons who shall be employed or permitted or suffered to work at night. XPN: Those employed in agriculture, stock raising, fishing, maritime transport and inland navigation, during a period of not less than seven (7) consecutive hours, including the interval from midnight (12am) to five o’clock in the morning (5am), to be determined by the SOLE after consulting the workers’ representatives/ labor organizations and Ers. (Art. 154, LC as added by RA 10151 approved on June 21, 2011) (Art. 154, LC as added by R.A. No. 10151 approved on 21 June 2011) Q: Josie is the confidential secretary of the Chairman of the Board of the bank. She is presently on maternity leave. In an arrangement where the Chairman of the Board can still have access to her services, the bank allows her to work in her residence during her leave. For this purpose, the bank installed a fax machine in her residence, and gave her a cellphone and a beeper. Is Josie a homeworker under the law? Explain. (2000 BAR) Right of the Workers to Health Assessment GR: At their request, workers shall have the right to undergo health assessment without charge and to receive advice on how to reduce or avoid health problems associated with their work: A: NO. She is actually an office worker. She is not an industrial homeworker who accepts work to be fabricated or processed at home for a contractor, which work, when finished, will be returned to or repurchased by said contractor. (Art. 155, LC) 1. 2. 3. 5. NIGHT WORKERS Night Work Night work is at least seven (7) consecutive hours of work between 10:00 PM and 6:00 AM. (Sec. 2, D.O. No. 119-12) Before taking up an assignment as a night worker; At regular intervals during such an assignment; and If they experience health problems during such an assignment which are not caused by factors other than the performance of night work. (Art. 155, LC) NOTE: Findings of such assessments shall not be transmitted to others without the workers’ consent and shall not be used to their detriment. Night Worker XPN: Finding of unfitness for night work. (Art. 155, LC) Any employed person whose work covers the period from ten o’clock in the evening to six o’clock the following morning, provided that the worker performs no less than seven (7) consecutive hours of work. (Sec. 2, D.O. No. 119-12) Worker Found to be Medically Unfit for Night Work Night workers who are certified by competent physician as unfit for night work, due to health reasons, shall be transferred, whenever practicable, to a similar job for which they are fit to work. NOTE: R.A. No. 10151 inserted Chapter V (Arts. 154-161) under Book 3, Title III of the LC. 111 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards to number 1, the length of which shall be determined by the DOLE after consulting the labor organizations and Ers. (Art. 158, LC) If such transfer to a similar job is not practicable, or the workers are unable to render night work for a continuous period of not less than six (6) months upon the certification of a competent public health authority, these workers shall be granted the same company benefits as other workers who are unable to work, or to secure employment during such period. (Sec. 5, D.O. No. 119-12) During the periods referred in Art. 158: 1. A woman worker shall not be dismissed or given notice of dismissal, except for just or authorized causes provided for in the Code that are not connected with pregnancy, childbirth and childcare responsibilities. 2. A woman worker shall not lose the benefits regarding her status, seniority, and access to promotion which may attach to her regular night work position. (Ibid.) Separation from Employment of a Worker Found Medically Unfit for Night Work The provisions of D.O. No. 119-12 allow the application of Art. 298 to a worker who is found unfit for night work if his transfer to another (day time) job is not practicable. Art. 298 authorizes the separation of an Ee suffering from a disease. For an Ee found unfit for night work, the Er’s ultimate recourse, therefore, may be employment termination based on an authorized cause. (Azucena, 2016) Pregnant Women and Nursing Mothers May Be Allowed To Work at Night They are allowed only if a competent physician, other than the company physician, shall certify their fitness to render night work, and specify, in the case of pregnant Ees, the period of the pregnancy that they can safely work. (Ibid.) Temporarily Unfit for Night Work A night worker certified as temporarily unfit for night work for a period of not less than six (6) months shall be given the same protection against dismissal or notice of dismissal as other workers who are prevented from working for health reasons. (Sec. 5, D.O. No. 119-12) Protection of Night Workers The law protects the night workers by requiring: 1. Employability of Women for Night Work Measures shall be taken to ensure that an alternative to night work is available to women workers who would otherwise be called upon to perform such work: 1. 2. 2. 3. Before and after childbirth, for a period of at least 16 weeks, which shall be divided between the time before and after childbirth; For additional periods, in respect of which a medical certificate is produced stating that said additional periods are necessary for the health of the mother or child: Mandatory Facilities 1. a. b. During pregnancy; During a specified time beyond the period, after childbirth is fixed pursuant UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES The provision of certain facilities such as sleeping or lactation quarters and means of transport; Conduct of medical examination to determine fitness for night work; and, Observance of legal process to decide appropriate action where a worker is found unfit for night work. Such process includes transfer of worker to day work, if practicable, and, only as a last recourse separation from employment. 112 Suitable first-aid facilities, including arrangements where such workers, where necessary, can be taken immediately to a place for appropriate treatment. Labor Law and Social Legislation 2. Employment of PWD Safe and healthful working conditions and adequate or reasonable facilities, i.e., sleeping or resting quarters in the establishment, and transportation from the work premises to the nearest point of their residence subject to exceptions and guidelines to be provided by the DOLE. (Art. 156, LC) 1. 2. 6. PERSONS WITH DISABILITIES When their employment is necessary to prevent curtailment of employment opportunities; and When it will not create unfair competition in labor costs or lower working standards. (Art. 79, LC) Employment Period of PWD The Magna Carta for Disabled Persons ensures equal opportunities for disabled persons and prohibits discrimination against them. There is no minimum or maximum duration. It depends on the agreement but it is necessary that there is a specific duration stated. Persons with Disability (PWD) Persons with Disability Can Be a Regular Ee Those whose earning capacity is impaired by: 1. Physical deficiency; 2. Age; 3. Injury; 4. Disease; 5. Mental deficiency; or 6. Illness. Persons with disability can be a regular Ee if work is usually necessary or desirable in the usual business of the employer. (Bernardo v. NLRC, G.R No. 122917, 12 July, 1999) Persons Who Disability Qualified Disabled Ee May Employ Persons with Ers in all industries, provided, the disability is not such as to effectively impede the performance of job operations in the particular occupation for which they are hired. (Sec. 7, R.A. No. 7277) It provides for Equal Opportunity for Employment by stating that no disabled person shall be denied access to opportunities for suitable employment. Not All Workers with a Disability are Considered Disabled Workers A qualified disabled Ee 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. (Sec. 5, R.A. No. 7277) The mere fact that a worker has a disability does not make him a disabled worker because his disability may not impair his efficiency or the quality of his work. If despite his disability he can still efficiently perform his work, he would be considered a qualified disabled worker entitled to the same treatment as qualified able-bodied workers. (Bernardo v. NLRC, G.R No. 122917, 12 July, 1999) A qualified individual with disability is an individual with disability who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires. (Sec. 4 (l), R.A. No. 7277) Rights and Privileges of PWD 1. NOTE: Consideration shall be given to the Er’s judgment as to what functions of job are essential, and if an Er has prepared a written description before advertising or interviewing applicants for the job. (Sec. 4 (l), R.A. No. 7277) 113 Equal opportunity for employment - No PWD shall be denied access to opportunities for suitable employment. Five percent (5%) of all casual emergency and contractual positions in the DSWD, Health, Education, Culture and UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards 2. 3. 4. Sports, and other government agencies, offices or corporations engaged in social development shall be reserved for PWDs (Sec. 5, R.A. No. 7277); training period, he shall be paid 100% of the applicable minimum wage. (Chan, 2017) XPN: Bona Fide Occupational Qualification The following constitutes acts of discrimination: a. DISCRIMINATION Sheltered employment - The Government shall endeavor to provide them work if suitable employment for disabled persons cannot be found through open employment; (Sec. 6, R.A. No. 7277) 1. Limiting, segregating, or classifying a job applicant with disability in such a manner that adversely affects his work opportunities; GR: Using qualification standards, employment tests or other selection criteria that screen out or tend to screen out a PWD; Apprenticeship - PWD may be hired as apprentices or learners if their disability is not such as to effectively impede the performance of job operations in the particular occupations for which they are hired (Art. 81, LC); XPN: Such standards, tests or other selection criteria are shown to be job-related for the position in question and are consistent with business necessity Vocational rehabilitation - To develop the skills and potentials of disabled workers and enable them to compete in the labor market; (Sec. 9, R.A. No. 7277); 2. Utilizing standards, criteria, or methods of administration that: a. 5. Vocational guidance and counselling – The DSWD shall implement measures providing and evaluating vocational guidance and counselling to enable disabled persons to secure, retain and advance in employment. (Sec. 10, R.A. No. 7277); b. 3. Providing less compensation, by reason of his disability, that the amount to which a nondisabled person performing the same work is entitled; 4. Favoring a non-disabled Ee over a qualified Ee with disability with respect to promotion, training opportunities, study and scholarship grants, solely on account of the latter’s disability; Wage Rate (2013 BAR) GR: Handicapped workers are entitled to not less than 75% of the applicable adjusted minimum wage. (Art. 80, LC) XPN: All qualified handicapped workers shall receive the full amount of the minimum wage rate prescribed herein pursuant to R.A. No. 7277. (Wage Order No. NCR-18, Effective 04 Oct. 2013) GR: Dismissing or terminating the services of an Ee with disability by reason of his disability NOTE: Generally, if a PWD is hired as an apprentice or learner, he shall be paid not less than 75% of the applicable minimum wage. XPN: The Er can prove that he impairs the satisfactory performance of the work involved to the prejudice of the business entity; provided, however, that the Er first sought to provide reasonable accommodations for persons with disability; XPN: If the PWD, however is hired as a learner and employed in piece or incentive-rate jobs during the UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Have the effect of discrimination on the basis of disability; or Perpetuate the discrimination of others who are subject to common administrative control. 114 Labor Law and Social Legislation 5. 6. Persons with Disability vs. Differently Abled Failing to select or administer in the most effective manner employment tests which accurately reflect the skills, aptitude or other factor of the applicant or Ee with disability that such test purports to measure, rather than the impaired sensory manual or speaking skills of such applicant or Ee, in any; and Excluding PWD from membership in labor unions or similar organizations. (Sec. 32, R.A. No. 7277) b. INCENTIVES FOR EMPLOYERS PERSONS WITH DISABILITY DIFFERENTLY ABLED Covers only workers. Covers all activities or endeavors. Earning capacity is impaired by age or physical, mental deficiency or injury Refers to all suffering from restriction of different abilities as a result of mental, physical, sensory impairment to perform an activity in the manner or within range considered for human being. Basis: Loss/ impairment of earning capacity. Basis: Range of activity which is normal for a human being. Loss due to injury or physical or mental defect or age. Restriction due to impairment of mental/ physical / sensory defect. Incentives of Er Who Are Employing Disabled Workers 1. Entitled to an additional deduction, from their gross income, equivalent to 25% of the total amount paid as salaries and wages to disabled persons; Provided, however, that such entities present proof as certified by the DOLE that disabled persons are under their employ Provided further, that the disabled Ee is accredited with the DOLE and the Department of Health as to his disability, skills and qualifications. 2. Private entities that improve or modify their physical facilities in order to provide reasonable accommodation for disabled persons shall also be entitled to an additional deduction from their net taxable income, equivalent to 50% of the direct costs of the improvements or modifications. (Sec. 8, R.A. No. 7277) If hired, entitled to 75% of minimum wage. Subject to definite periods of employment. Employable only when necessary to prevent curtailment of employment opportunity. The financial incentive, if any, granted by law to SPQ Garments whose cutters and sewers in its garments-for-export operations are 80% staffed by deaf and deaf-mute workers is additional deduction from its gross income equivalent to 25% of amount paid as salaries to persons with disability (2013 BAR). If qualified, entitled to all terms and conditions as qualified able-bodied person. No restrictions employment. on Must get equal opportunity and no unfair competition. Q: Ana Cruz has a low IQ. She has to be told at least three times before she understands her daily work assignment. However, her work output is at least equal to the output of the least Basis: Magna Carta for Disabled Persons 115 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards individual favorable compensation, terms, conditions, promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or classifying the Ee which in a way would discriminate, deprive or diminish employment opportunities or otherwise adversely affect said Ee (Quid Pro Quo Sexual Harassment); efficient worker in her work section. Is Mr. Cruz a handicapped worker? Explain. (2000 BAR) A: NO. Low IQ does not make the worker “handicapped” in the contemplation of law. Handicap means such physical or mental infirmity that impairs capacity to work. The deficiency may also be due to age or injury. (Article 78, LC) E. SEXUAL HARRASSMENT IN THE WORK ENVIRONMENT b. The above acts would impair the Ees’ rights or privileges under existing labor laws; or c. The above acts would result in an intimidating, hostile, or offensive environment for the Ee. (Hostile Environment Harassment). 1. ANTI-SEXUAL HARASSMENT ACT R.A. No. 7877 2. Requisites 1. Elements: Act is committed in a work, education, or training-related environment; The doer, the harasser, is any person who has authority, influence or moral ascendancy over another; Doer demands or requests, or requires a sexual favor from the victim; It does not matter whether such demand is accepted or not. (RA 7877, Sec. 3) 2. 3. 4. In an education or training environment a. i. Against one who is under the care, custody or supervision of the offender; ii. Against one whose education, training, apprenticeship or tutorship is entrusted to the offender; NOTE: Based on the Congressional deliberations, Anti-Sexual Harassment Law aims to punish the harasser without regard to gender. (Azucena, 2016) b. When sexual favor is made a condition to the giving of a passing grade, or the granting of honors and scholarships, or the payment of a stipend, allowance or other benefits, privileges, or considerations; or c. When sexual advances result in an intimidating, hostile or offensive environment for the student, trainee or apprentice. Kinds 1. 2. Quid Pro Quo (“This for that”) – doer asks for something in exchange for something. Hostile Environment Places where sexual harassment is committed 1. Sexual harassment is employed: In a work-related or employment environment NOTE: While the provision states that there must be a “demand, request or requirement of a sexual favor”, it is not necessary that it be articulated in a categorical manner. It may be discerned, with equal certitude, from the acts of the offender. Elements: a. The sexual favor is made as a condition in the hiring or in the employment, reemployment or continued employment of said individual, or in granting said UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 116 Labor Law and Social Legislation prosecution in the proper courts for unlawful acts of Sexual Harassment. Likewise, it is not essential that the demand, request or requirement be made as a condition for continued employment or for promotion to a higher position. It is enough that the respondent’s acts result in creating an intimidating, hostile or offensive environment for the Ee. (Domingo v. Rayala, G.R. No. 155831, 18 Feb. 2008) The said rules and regulations issued shall include, among others, guidelines on proper decorum in the workplace and educational or training institutions; Beso-beso Fashion In the case of Aquino v. Acosta (A.M. No. CTA-01-1), the Supreme Court absolved Judge Acosta of liability under sexual harassment law in greeting complainant with A kiss on the cheek in a ‘beso-beso’ fashion, where most of the kissing incidents were done on festive and special occasions. The Court held that what respondent judge committed were casual gestures of friendship and camaraderie, nothing more, nothing less, and that there is no indication that respondent was motivated by malice or lewd design. However, the Court admonished Judge Acosta not to commit similar acts against complainant or other female Ees of the CTA, otherwise, his conduct may be construed as tainted with impropriety. 2. Create a committee on decorum and investigation of cases on Sexual Harassment; and c. The Er or head of office, education or training institution shall disseminate, or post a copy of this RA 7877 for the information of all concerned. (Sec. 4, R.A. No. 7877) Extent of Liability of the Employer or Head of Office in a Case of Sexual Harassment Er shall may be solidarily liable for damages arising from the acts of Sexual Harassment committed in the employment, education or training environment, provided that: 1. Duties of the Er or head of office in a workrelated, education or training environment 2. a. b. Prevent or deter the commission of acts of Sexual Harassment; and Provide the procedures for the resolution, settlement or prosecution of acts of Sexual Harassment. (Sec. 4, R.A. No. 7877) An Independent Action for Damages May Be Filed Nothing under this Act shall preclude the victim of work, education or training-related sexual harassment from instituting a separate and independent action for damages and other affirmative relief. (Sec. 6, R.A. No. 7877) Duty of the Er or Head of Office towards these end 1. The Er or head of office, educational or training institution is informed of such acts by the offended party; and No immediate action is taken thereon. (Sec. 5, R.A. No. 7877) Promulgate appropriate rules and regulations in consultation with and jointly approved by the Ee or students or trainees, through their duly designated representatives, prescribing the procedure for the investigation or Sexual Harassment cases and the administrative sanctions therefore. Three-Fold Liability Rule In Sexual Harassment Cases An act of sexual harassment may give rise to civil, criminal, and administrative liability on the part of the offender, each proceeding independently of the others. NOTE: Administrative sanctions taken against the alleged harasser shall not be a bar to 117 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards for probationary employment for 6 months. Being well-built and physically attractive, his supervisor, Mr. Hercules Barak, took special interest to befriend him. Prescription of Action Any action arising from the violation of the provisions of this act shall prescribe in three (3) years. (Sec. 7, R.A. No. 7877) When his probationary period was about to expire, he was surprised when one afternoon after working hours, Mr. Barak followed him to the men’s comfort room. After seeing that no one else was around, Mr. Barak placed his arm over Pedrito’s shoulder and softly said: “You have great potential to become a regular Ee and I think I can give you a favorable recommendation. Can you come over to my condo unit on Saturday evening so we can have a little drink? I’m alone, and I’m sure you want to stay longer with the company.” Q: A Personnel Manager, while interviewing an attractive female applicant for employment, stared directly at her for prolonged periods, albeit in a friendly manner. After the interview, the manager accompanied the applicant to the door, shook her hand and patted her on the shoulder. He also asked the applicant if he could invite her for dinner and dancing at some future time. Did the Personnel Manager, by the above acts, commit Sexual Harassment? Reason. (2000 BAR) Is Mr. Barak liable for Sexual Harassment committed in a work-related or employment environment? (2000 BAR) A: YES. The Personnel Manager is in a position to grant or not to grant a favor (a job) to the applicant. Under the circumstances, inviting the applicant for dinner or dancing creates a situation hostile or unfriendly to the applicant's chances for a job if she turns down the invitation. (Sec. 3(a3), R.A. No. 7877) A: YES. The elements of Sexual Harassment are all present. The act of Mr. Barak was committed in a workplace. Mr. Barak, as supervisor of Pedrito Masculado, has authority, influence and moral ascendancy over Masculado. Q: In the course of an interview, another female applicant inquired from the same Personnel Manager if she had the physical attributes required for the position she applied for. Given the specific circumstances mentioned in the question, like Mr. Barak following Masculado to the comfort room, etc. Mr. Barak was requesting a sexual favor from Masculado for a favorable recommendation regarding the latter's employment. It is not impossible for a male, who is a homosexual, to ask for a sexual favor from another male. The Personnel Manager replied: "You will be more attractive if you will wear micro-mini dresses without the undergarments that ladies normally wear." Did the Personnel Manager, by the above reply, commit an act of sexual harassment? A: YES. The remarks would result in an offensive or hostile environment for the Ee. Moreover, the remarks did not give due regard to the applicant’s feelings and it is a chauvinistic disdain of her honor, justifying the finding of Sexual Harassment. (Villarama v. NLRC, G.R. No. 106341, 02 Sept. 1994) 2. SAFE SPACES ACT R.A. No. 11313 Definition of Terms 1. Q: Pedrito Masculado, a college graduate from the province, tried his luck in the city and landed a job as a utility/maintenance man at the warehouse of a big shopping mall. After working as a casual Ee for 6 months, he signed a contract UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 118 Catcalling - refers to unwanted remarks directed towards a person, commonly done in the form of wolf-whistling and misogynistic, transphobic, homophobic, and sexist slurs; (Sec. 3(a), R.A. No. 11313) Labor Law and Social Legislation 2. communication, or a combination thereof that cause or will likely cause a person to fear for one’s own safety or the safety of others, or to suffer emotional distress. (Sec. 3(h), R.A. No. 11313) Employee - refers to a person, who in exchange for remuneration, agrees to perform specified services for another person, whether natural or juridical, and whether private or public, who exercises fundamental control over the work, regardless of the term or duration of agreement: Provided, That for the purposes of this law, a person who is detailed to an entity under a subcontracting or second agreement shall be considered an employee; (Sec. 3(b), R.A. No. 11313) 3. Employer - refers to a person who exercises control over an employee: Provided, That for the purpose of this Act, the status or conditions of the latter’s employment or engagement shall be disregarded; (Sec. 3(c), R.A. No. 11313) 4. Gender - refers to a set of socially ascribed characteristics, norms, roles, attitudes, values and expectations identifying the social behavior of men and women, and the relations between them; (Sec. 3(d), R.A. No. 11313) 5. Gender-based online sexual harassment refers to an online conduct targeted at a particular person that causes or likely to cause another mental, emotional or psychological distress, and fear of personal safety, sexual harassment acts including unwanted sexual remarks and comments, threats, uploading or sharing of one’s photos without consent, video and audio recordings, cyberstalking and online identity theft; (Sec. 3(e), R.A. No. 11313) 6. Gender identity and/or expression - refers to the personal sense of identity as characterized, among others, by manner of clothing, inclinations, and behavior in relation to masculine or feminine conventions. A person may have a male or female identity with physiological characteristics of the opposite sex in which case this person is considered transgender; (Sec. 3(f), R.A. No. 11313) 7. Stalking - refers to a conduct directed at a person involving the repeated visual or physical proximity, non-consensual 8. Cyberstalking - is a form of stalking that is committed through an electronic medium in which online communication takes place. (Sec. 4(c), IRR of R.A. No. 11313) 9. Homophobic remarks or slurs - are any statements in whatever form or however delivered, which are indicative of fear, hatred or aversion towards persons who are perceived to be or actually identify as lesbian, gay, bisexual, queer, pansexual and such other persons of diverse sexual orientation, gender identity or expression, or towards any person perceived to or actually have experienced same-sex attraction (Sec. 4(i), IRR of R.A. No. 11313) 10. Misogynistic remarks or slurs - are any statements in whatever form or however delivered, that are indicative of the feeling of hating women or the belief that men are inherently better than women. (Sec. 4(i), IRR of R.A. No. 11313) 11. Public spaces - refer to streets and alleys, roads, sidewalks, public parks, buildings, schools, churches, public washrooms, malls, internet shops, restaurants and cafes, transportation terminals, public markets, spaces used as evacuation centers, government offices, common carriers, public utility vehicles (PUVs) as well as private vehicles covered by app-based transport network services, other recreational spaces such as, but not limited to, cinema halls, theaters and spas, bars and clubs, resorts and water parks, hotels and casinos, and all other areas, regardless of ownership, openly accessible or offered to be accessed by the public. Sec. 4(m), IRR of R.A. No. 11313) 12. Sexist remarks or slurs - are statements in whatever form or however delivered, that are 119 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Standards NOTE: GBSH in the workplace may also be committed between peers and by a subordinate to a superior officer. Workplaces include all sites, locations, spaces, where work is being undertaken by an employee within or outside the premises of the usual place of business of the employer. (Sec. 18, IRR of R.A. No. 11313) indicative of prejudice, stereotyping, or discrimination on the basis of sex, typically against women. (Sec. 4(n), IRR of R.A. No. 11313) 13. Transphobic remarks or slurs - are any statements in whatever form or however delivered, that are indicative of fear, hatred or aversion towards persons whose gender identity and/or expression do not conform with their sex assigned at birth. (Sec. 4(i), IRR of R.A. No. 11313) Gender-based Workplace Sexual Harassment in Duties of Employers Employers or other persons of authority, influence or moral ascendancy in a workplace shall have the duty to prevent, deter, or punish the performance of acts of gender-based sexual harassment in the workplace. Towards this end, the employer or person of authority, influence or moral ascendancy shall: the The crime of gender-based sexual harassment (GBSH) in the workplace includes the following: 1. 2. An act or series of acts involving any unwelcome sexual advances, requests or demand for sexual favors or any act of sexual nature, whether done verbally, physically or through the use of technology such as text messaging or electronic mail or through any other forms of information and communication systems, that has or could have a detrimental effect on the conditions of an individual’s employment or education, job performance or opportunities; A conduct of sexual nature and other conductbased on sex affecting the dignity of a person, which is unwelcome, unreasonable, and offensive to the recipient, whether done verbally, physically or through the use of technology such as text messaging or electronic mail or through any other forms of information and communication systems; 1. Disseminate or post in a conspicuous place a copy of this Act to all persons in the workplace; 2. Provide measures to prevent gender-based sexual harassment in the workplace, such as the conduct of anti-sexual harassment seminars; 3. Create an independent internal mechanism or a Committee on Decorum and Investigation (CODI) to investigate and address complaints of gender-based sexual harassment which shall: a. b. c. 3. A conduct that is unwelcome and pervasive and creates an intimidating, hostile or humiliating environment for the recipient: Provided, That the crime of gender-based sexual harassment may also be committed between peers and those committed to a superior officer by a subordinate, or to a teacher by a student, or to a trainer by a trainee. (Sec. 16, R.A. No. 11313) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES d. e. f. 120 Adequately represent the management, the Ees from the supervisory rank, the rank-and-file Ees, and the union, if any; Designate a woman as its head and not less than half of its members should be women; Be composed of members who should be impartial and not connected or related to the alleged perpetrator; Investigate and decide on the complaints within ten (10) days or less upon receipt thereof; Observe due process; Protect the complainant from retaliation; and Labor Law and Social Legislation g. 4. Guarantee confidentiality to the greatest extent possible; 1. Provide and disseminate, in consultation with all persons in the workplace, a code of conduct or workplace policy which shall: 2. a. b. c. Expressly reiterate the prohibition on gender-based sexual harassment; Describe the procedures of the internal mechanism created under Sec. 17(c) of this Act; and Set administrative penalties. (Sec. 17, R.A. No. 11313) Non-implementation of their duties under Sec. 17 of the law, as provided in the penal provisions; or Not taking action on reported acts of gender-based sexual harassment committed in the workplace. (Sec. 19, IRR of R.A. No. 11313) Independent Action for Damages Nothing shall preclude the victim of workrelated GBSH from instituting a separate and independent action for damages and other affirmative relief. (Sec. 23, IRR of R.A. No. 11313) NOTE: In case of non-compliance in the public sector by the employer of their duties herein provided, an Ee may file an administrative complaint with the Civil Service Commission (CSC). In case the employer is a presidential appointee, elective official or official of the AFP, an administrative complaint may be filed with appropriate offices with such jurisdictions, such as the Office of the President or Office of the Ombudsman. (Sec. 19, IRR of R.A. No. 11313) Duties of Ees and Co-workers Ees and co-workers shall have the duty to: 1. Refrain from committing acts of genderbased sexual harassment; 2. Discourage the conduct of gender-based sexual harassment in the workplace; 3. Provide emotional or social support to fellow Ees, co-workers, colleagues or peers who are victims of gender-based sexual harassment; and 4. Report acts of gender-based sexual harassment witnessed in the workplace. (Sec. 18, R.A. No. 11313) Liability of Employers In addition to liabilities for committing acts of gender-based sexual harassment, employers may also be held responsible for: 121 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation people throughout the Philippines which shall promote social justice through savings, and ensure meaningful social security protection to members and their beneficiaries against the hazards of disability, sickness, maternity, old age, death, and other contingencies resulting in loss of income or financial burden. Towards this end, the State shall endeavor to extend social security protection to Filipino workers, local or overseas, and their beneficiaries. (Sec. 2, R.A. No. 11199) IV. SOCIAL WELFARE LEGISLATION Social Legislation Social legislations are laws, rules, and regulations that promote welfare of all sectors of society. Social Legislation includes laws that provide particular kinds of protection or benefits to the society, in furtherance of social justice. Not all social legislations are labor laws. (Duka, 2019) NOTE: The enactment of the SSS law is a legitimate exercise of police power. It affords protection to labor and is in full accord with the constitutional mandate on the promotion of social justice. The funds contributed to the System created by the law are not public funds, but funds belonging to the members which are merely held in trust by the Government. (Roman Catholic Archbishop of Manila v. SSS, G.R. No. L-15045, 20 Jan. 1961) Q: Is there any distinction between labor legislation and social legislation? Explain. (1995 BAR) A: YES. Labor Legislation is limited in scope and deals with the rights and duties of employees and employers. Social Legislation is more encompassing as it includes subjects such as agrarian relations, housing and human settlement, protection of women and children, etc. All labor laws are social legislation, but not all social legislation is labor law. SSS premiums are not taxes The funds contributed to the System belong to the members who will receive benefits, as a matter of right, whenever the hazards provided by the law occur. (CMS Estate, Inc. v. SSS, G.R. No. 26298, 28 Sept. 1984) In other words, labor legislation focuses on the rights of a worker in the workplace; it refers to labor statutes like Labor Relations Law and Labor Standards. On the other hand, social legislation refers to Social Security Laws. Benefits received under SSS law are not part of the estate of a member Social legislation is a broad term and may include not only laws that give social security protection, but also those that help the worker secure housing and basic necessities. The Comprehensive Agrarian Reform Law could also be considered a social legislation. Benefits receivable under the SSS Law are in the nature of a special privilege or an arrangement secured by the law pursuant to the policy of the State to provide social security to the workingman. The benefits are specifically declared not transferable and exempt from tax, legal processes, and liens. (SSS v. Davac, et al., G.R. No. 21642, 30 July 1966) A. SOCIAL SECURITY ACT OF 2018 (R.A. No. 11199) 1. COVERAGE AND EXCLUSIONS COVERAGE Declaration of Policy 1. Compulsory Coverage a. All Ees not over 60 years of age and their Ers; b. Domestic helpers whose income is not It is the policy of the State to establish, develop, promote, and perfect a sound and viable tax-exempt social security system suitable to the needs of the UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 122 Labor Law and Social Legislation plan shall be subject to agreements between the employers and employees concerned; less than P1,000/month and not over 60 years of age and their Ers; The minimum wage of domestic workers is now P1,500 to P2,500 pursuant to Sec. 24 of RA No. 10361 or Batas Kasambahay Law. Per R.A. No. 10361, a domestic worker who has rendered at least one (1) month of service shall be covered by the Social Security System (SSS), the Philippine Health Insurance Corporation (PhilHealth), and the Home Development Mutual Fund or Pag-IBIG, and shall be entitled to all the benefits in accordance with the pertinent provisions provided by law. iv. The private benefit plan which the employer shall continue for his employees shall remain under the employer's management and control unless there is an existing agreement to the contrary; and v. Nothing in the SSS Act shall be construed as a limitation to the right of employers and employees to agree on and adopt benefits which are over and above those provided under the SSS Act. (Sec. 9, R.A. No. 11199; Sec. 2, Rule 13, IRR of R.A. No. 11199) The following rules shall govern the covered employees with private benefit plans: i. ii. c. The benefit already earned by the employees under private benefit plans existing at the time of the approval of the SSS Act shall not be discontinued, reduced or otherwise impaired; 1. 2. 3. He shall pay to the SSS only the contribution required of him; 4. 2. iii. be NOTE: A self-employed person is one whose income is not derived from employment, as well as those mentioned in Sec. 9-A of the law (Sec. 8(s), R.A. No. 11199): Private benefit plans which are existing and in force at the time of compulsory coverage shall be integrated with the plan of the SSS, and if the employer's contribution to his private plan is more than that required of him in the SSS Act: 1. Self–employed persons as may determined by the Commission. He shall continue his contribution to such private plan less his contribution to the SSS so that the employer's total contribution to his benefit plan and to the SSS shall be the same as his contribution to his private benefit plan before the compulsory coverage. 5. d. All self-employed professionals; Partners and single proprietors of business; Actors and actresses, directors, scriptwriters, and news correspondents who do not fall within the definition of the term “Ee”; Professional athletes, coaches, trainers, and jockeys; Individual farmers and fisherman. (Sec. 9-A, R.A. No. 11199) All sea-based and land-based Overseas Filipino Workers (OFWs) not over 60 years of age. NOTE: Land-based OFWs are compulsory members of the SSS and are considered in the same manner as self-employed persons, until a Bilateral Labor Agreement (BLA) shall have been entered into. (Sec. 9-B (c), R.A. No. 11199) Any changes, adjustments, modifications, eliminations or improvements in the benefits to be available under the remaining private 123 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation NOTE: Manning agencies are agents of their principals and are considered as employers of seabased OFWs. (Sec. 9-B (b), R.A. No. 11199) Land-based OFW NOT covered under BLAs Voluntary coverage of land-based overseas Filipinos 2. Voluntary Coverage a. b. c. d. e. Spouses who devote full time to managing the household and family affairs; XPN: They are also engaged in other vocation or employment which is subject to mandatory coverage. (Sec. 9(b), R.A. No. 11199) Q: What is the effect of separation of employee on the obligation to contribute and remit? A: The effects are as follows: An OFW upon the termination of his/her employment overseas (Sec. 9-B (f), R.A. No. 11199); A covered employee who was separated from employment who continues to pay his/her contributions; Self-employed who realizes no income for a certain month; and Filipino permanent migrants, including Filipino immigrants, permanent residents and naturalized citizens of their host countries. (Sec. 9-B (g), R.A. No. 11199) 1. His Er’s obligation to contribute arising from that employment shall cease at the end of the month of separation. 2. The separated employee shall be credited with all contributions paid on his/her behalf and is entitled to the social security benefits in accordance with issued guidelines and the provisions of the Social Security Act of 2018. 3. The separated employee may continue to pay his/her contributions voluntarily to maintain his/her right to full benefit. (Sec. 11, R.A. No. 11199) 4. Any contribution paid in advance by the employer but not due shall be credited or refunded to said employer. (Sec. 22, R.A. No. 11199) 3. By agreement Any foreign government, international organization, or their wholly owned instrumentality employing workers in the Philippines or employing Filipinos outside of the Philippines. The above rule recognizes the “once a member, always a member” principle. XPN: Those already covered by their respective civil service retirement systems. Effect of the interruption of business or professional income Effective Date of SSS Coverage (Rule 15, IRR, R.A. No. 11199) On the first day of Employer operation On the first day of Employee employment Upon registration with Self-employed the SSS Sea-based OFW First day of employment Based on the provisions Land-based OFW of the Agreement and its implementing covered under BLAs arrangement UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Applicable month and year of the first Contribution payment Applicable month and year of the first contribution payment. 1. If the self-employed member realizes no income in any given month, he/she shall not be required to pay his/her contributions for that month. NOTE: No self-employment obligation to pay. 2. 124 income, no A self-employed member may be allowed to continue paying contributions under the same rules and regulations applicable to a separated Labor Law and Social Legislation who immediately attended to Don Luis’ garden and finished the job in three days. (2014 BAR) employee member. 3. No retroactive payment of contributions shall be allowed. (Sec. 22, R.A. No. 11199) a. Is there an employer-employee relationship between Don Luis and Lando? EXCLUSIONS FROM COVERAGE b. Does Don Luis need to register Lando with the Social Security System (SSS)? The following are excluded from compulsory coverage under the SSS Act: A: 1. Services where there is no employeremployee relationship in accordance with existing labor laws, rules, regulations, and jurisprudence; 2. Services performed in the employ of the Philippine Government or instrumentality or agency thereof; 3. Services performed in the employ of a foreign government or international organization, or their wholly-owned instrumentality; and 4. Such other services performed by temporary and other employees which may be excluded by regulation of the Commission. (Sec. 8, (j), R.A. No. 11199) a. YES. There is an employeremployee relationship between Don Luis and Lando. Firstly, Lando, who was looking for work finally rendered personal services for Don Luis. Secondly, Lando could not have been the master of his time, means and methods under the circumstances. b. NO. Don Luis does not need to register Lando with the SSS because he is a purely casual employee, hence outside SSS coverage. Neither should he report Lando for SSS coverage under the Batas Kasambahay Law because, although a gardener, he is an occasional or sporadic employee. Therefore, he is not a kasambahay who is entitled to SSS coverage. (R.A. No. 10361) Q: The owners of FALCON Factory, a company engaged in the assembling of automotive components, decided to have their building renovated. Fifty (50) persons, composed of engineers, architects, and other construction workers, were hired by the company for this purpose. The work was estimated to be completed in 3 years. The workers contended that since the work would be completed after more than 1 year, they should be subject to compulsory coverage under the Social Security Law. Do you agree with their contention? Explain your answer fully. (2002 BAR) NOTE: Employees of bona fide independent contractors shall not be deemed employees of the employer engaging the service of said contractors. Q: A textile company hires 10 carpenters to repair the roof of its factory which was destroyed by typhoon “Bening.” Are the carpenters subject to compulsory coverage under the SSS Law? Why? A: NO. The employment is purely casual and not for the purpose of the occupation or business of the Er. Their engagement is occasioned by the passage of the typhoon; they are not hired on a regular basis. A: NO. Under Sec. 8 (j) of R.A. No. 1161, as amended, employment of purely casual and not for the purpose of the occupation or business of the Er is excepted from compulsory coverage. An employment is purely casual if it is not for the purpose of occupation or business of the Er. Q: Don Luis, a widower, lived alone in a house with a large garden. One day, he noticed that the plants in his garden needed trimming. He remembered that Lando, a 17-year-old out-ofschool youth, had contacted him in church the other day looking for work. He contacted Lando 125 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation In the problem given, Falcon Factory is a company engaged in the assembly of automotive components. The 50 persons (engineers, architects, and construction workers) were hired by Falcon Factory to renovate its building. The work to be performed by these 50 people is not in connection with the purpose of the business of the factory. Hence, the employment of these 50 persons is purely casual. They are, therefore, excepted from the compulsory coverage of the SSS law. legally adopted children of the member, his/her dependent illegitimate children shall be entitled to 100% of the benefits. 2. DEPENDENTS AND BENEFICIARIES NOTE: The dependent parents will be considered as beneficiaries only when there are no primary beneficiaries. The member can also designate any person as secondary beneficiary only when there are no primary or secondary beneficiaries. II. 1. 2. DEPENDENTS The dependents shall be the following: 1. The legal spouse entitled by law to receive support from the member; 2. The legitimate, legitimated or legally adopted, and illegitimate child who is unmarried, not gainfully employed, and has not reached twenty-one (21) years of age, or if over twentyone (21) years of age, he is congenitally or while still a minor has been permanently incapacitated and incapable of self-support, physically or mentally; 3. The parent who is receiving regular support from the member. (Sec. 8(e), R.A. No. 11199) A: NO. The term "parents" in the phrase "dependent parents" ought to be taken in its general sense and cannot be unduly limited to "legitimate parents.” The phrase "dependent parents" should, therefore, include all parents, whether legitimate or illegitimate and whether by nature or by adoption. When the law does not distinguish, one should not distinguish. Plainly, "dependent parents" are parents, whether legitimate or illegitimate, biological or by adoption, who are in need of support or assistance. Primary Beneficiaries The primary beneficiaries of the member are the following: 1. 2. The dependent spouse, until he or she remarries; and The dependent legitimate, legitimated, or legally adopted children and the illegitimate children. The biological parent has the right to the benefits stemming from John’s death as a dependent parent given the adoptive parent’s untimely demise during John’s minority. It is true that the adoption decree severed the relation between John and his biological parent, effectively divesting the latter’s status of a legitimate parent, and consequently, that of being a secondary beneficiary. However, it should be noted NOTE: The dependent illegitimate children shall be entitled to 50% of the share of the legitimate, legitimated, or legally adopted children. In the absence of dependent legitimate, legitimated, or UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Dependent parents; or Any person designated by the member as his/her secondary beneficiary. (Sec. 8(k), R.A. No. 11199) Q: John died in an accident while performing his duties as an electrician on board a vessel. At the time of his demise, he was childless and unmarried, predeceased by his adoptive parent Cornelio during his minority, and survived only by his biological parent Bernardina. Bernardina filed a claim for death benefits, but the SSS rejected her claim because she is no longer considered a primary beneficiary, because she is no longer John’s legitimate parent due to his legal adoption by Cornelio. Is the SSS correct? BENEFICIARIES I. Secondary Beneficiaries 126 Labor Law and Social Legislation the SSS Law, the primary beneficiaries who are entitled to survivor’s pension are those who qualify as such as of the date of retirement of the deceased member. Hence, Elena, who was not then the legitimate spouse of Bonifacio as of the date of his retirement, could not be considered his primary beneficiary. Is Elena entitled to claim survivor’s pension? that parental authority should be deemed to have reverted in favor of the biological parent upon death of the adoptive parent during the adoptee’s minority. Thus, the death benefits under the Employees’ Compensation Program shall accrue solely to the surviving biological parent, John’s sole remaining beneficiary. (Bartolome v. SSS, G.R. No. 192531, 12 Nov. 2014) A: YES. The proviso as of the date of his retirement in Sec. 12-B (d) of RA 8282, which qualifies the term primary beneficiaries, is unconstitutional for it violates the due process and equal protection clauses of the Constitution. The classification of dependent spouses on the basis of whether their respective marriages to the SSS member were contracted prior to or after the latter’s retirement for the purpose of entitlement to survivor’s pension does not rest on real and substantial distinctions. It is too sweeping because the proviso effectively disqualifies the dependent spouses—whose respective marriages to the retired SSS member were contracted after the latter’s retirement—as primary beneficiaries and unfairly lumps all these marriages as sham relationships or were contracted solely for the purpose of acquiring benefits accruing upon the death of the other spouse. Dependent for support The entitlement to benefits as a primary beneficiary requires not only legitimacy but also dependence upon the member Ee. (SSS v. Favila, G.R. No. 170195, 28 Mar. 2011) NOTE: The Court defined a “dependent” as one who derives his/her main support from another. Meaning, relying on, or subject to, someone else for support; not able to exist or sustain oneself, or to perform anything without the will, power, or aid of someone else. It should be noted that the GSIS law likewise defines a “dependent spouse” as the legitimate spouse dependent for support upon the member or pensioner. If a wife is already separated de facto from her husband, she cannot be said to be "dependent for support" upon the husband, absent any showing to the contrary. Conversely, if it is proved that the husband and wife were still living together at the time of his death, it would be safe to presume that she was dependent on the husband for support, unless it is shown that she is capable of providing for herself. (SSS v. Aguas, G.R. No. 165546, 27 Feb. 2006) The proviso runs afoul of the due process clause as it outrightly deprives the surviving spouses, whose respective marriages to the retired SSS members were contracted after the latter’s retirement, of their survivor’s benefits. There is outright confiscation of benefits due such surviving spouses without giving them an opportunity to be heard. (Dycaico v. SSS, G.R. No. 161357, 30 Nov. 2005) NOTE: The reckoning point in determining the beneficiaries of the deceased should be the time of the latter’s death. (SSS v. De Los Santos, G.R. No. 164790, 29 Aug. 2008) Q: Bonifacio and Elena Dycaico lived together as husband and wife without the benefit of marriage. In June 1989, Bonifacio was considered retired and began receiving his monthly pension from the SSS. Bonifacio married Elena on Jan. 6, 1997. He continued to receive the monthly pension until he passed away on June 19, 1997. Elena filed with the SSS an application for survivor’s pension, but it was denied on the ground that under Sec. 12-B(d) of Qualification of Spouse-Beneficiary To ensure a uniform implementation of the Dycaico v. SSS case, the SSS issued the following guidelines: 1. 127 The spouse must have been legally married to the retiree-pensioner at the time of death. UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation 2. a. The spouses were living together as husband and wife without legal impediment to marry each other prior to the retirement of the member; or b. The surviving spouse was reported as beneficiary-spouse in the SSS Forms prior to the retirement of the member; or c. A child was born during the existence of the marriage between the retiree-pensioner and the surviving spouse; or d. Before marriage, a child was born during the time the spouses were living together as husband and wife without legal impediment to marry each other; or e. 3. Antonio’s death benefits with the SSS. Her claim was denied on the ground that she was not a qualified beneficiary of Antonio. She contended that her marriage to Larry Constant was not the subsequent marriage contemplated under SSS Law that would disqualify her as a beneficiary; that the decree of divorce issued by a foreign state involving Filipino citizens has no validity and effect under Philippine law. Is Gloria still qualified as a primary beneficiary of Antonio under the SSS Law? If the marriage was celebrated after the retirement of the member, any of the following circumstances is present: A: NO. Although Gloria was the legal spouse of the deceased, she is still disqualified to be his primary beneficiary under the SSS Law for she fails to fulfill the requirement of dependency upon her deceased husband Antonio. (SSS v. De Los Santos, G.R. No. 164790, 29 Aug. 2008) Q: Rodolfo, an SSS member, was survived by the following: his legal wife Editha, who was now cohabiting with another man; another wife Yolanda, whom Rodolfo married and with whom he had four illegitimate children, who are now over 21 years old; and another common-law wife, Gina, with whom he had two illegitimate minor children. All wives filed a claim before the SSS for death benefits. Who among the claimants are qualified and/or disqualified as beneficiaries? The marriage between the surviving spouse and retiree-pensioner is established to have been contracted not for any fraudulent purpose. In this regard, the SSS Branch concerned shall conduct an appropriate investigation to satisfy this requirement. The spouse must have been dependent for support upon the retiree-pensioner during the existence of marriage. (SSS Office Order No. 2010-02) A: Yolanda is disqualified because the marriage between her and Rodolfo was null and void because of a prior subsisting marriage contracted with Editha. Q: Antonio and Gloria de los Santos, both Filipinos, got married in 1964. In 1983, Gloria left Antonio and went to the United States. In 1986, she filed for divorce against Antonio in California. The divorce was granted. Editha is disqualified, because even if she was the legal wife, she was not qualified to the death benefits since she herself admitted that she was not dependent on her deceased husband for support inasmuch as she was cohabiting with another man. In 1987, Antonio married Cirila de los Santos. For her part, Gloria married Larry Thomas Constant, an American citizen, in the US. In 1999, Antonio died of respiratory failure. Cirila applied for and began receiving his SSS pension benefit. Gina is disqualified, being a common-law wife. Since the wives are disqualified and because the deceased has no legitimate child, it follows that the dependent illegitimate minor children of the deceased shall be entitled to the death benefits as primary beneficiaries. The SSS Law is clear that for On Dec. 21, 1999, Gloria filed a claim for UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 128 Labor Law and Social Legislation a minor child to qualify as a “dependent,” the only requirements are that he/she must be below 21 years of age, not married nor gainfully employed. filed a claim for benefits under the law, it was denied on the ground that her injury is not work-connected. Is the denial legal? Why? Yolanda’s children are disqualified for being over 21 years old. A: NO. It is not necessary for the enjoyment of benefits under the SSS Law that the injury be workconnected. What is important is membership in the SSS and not the causal connection of the work of the Ee to his injury or sickness. In this case, the minor illegitimate children of Gina are the only qualified beneficiaries of Rodolfo. (Signey v. SSS, G.R. No. 173582, 28 Jan. 2008) NOTE: Claims based on work-connected injuries or occupational diseases are covered by the State Insurance Fund. Social Security Law is not a law on succession The Social Security System is not a law on succession. It is not the heirs of the employee but the designated beneficiaries who are to receive the social security benefits. It is only when the beneficiary is the estate, or when there is no designated beneficiary, or if the designation of beneficiary is void, that the Social Security System is required to pay the employee’s heirs. (Ungos, 2013) a. SICKNESS BENEFITS Sickness benefit It is a daily cash allowance paid by the employer to the member who is unable to work due to sickness or injury for each day of compensable confinement or a fraction thereof, or by the SSS, if such person is unemployed or is self-employed (SE), an Overseas Filipino Worker (OFW), or Voluntary Member (VM) who has been previously covered either as employed/SE/OFW and non-working (NW) spouse. (Rule 25, IRR, R.A. No. 11199) 3. BENEFITS Benefits under the SSS Act a. b. c. d. e. f. g. Sickness Benefits Permanent Disability Benefits Maternity Leave Benefits Retirement Benefits Death Benefits Funeral Benefits Unemployment Insurance or Involuntary Separation Benefits Qualifying conditions (U-P-U-N) 1. The member is Unable to work due to sickness or injury and is confined either in a hospital or at home for at least four (4) days. Non-transferability of Benefits 2. Benefits payable are not transferable and no power of attorney or other document executed by those entitled thereto in favor of any agent, attorney or any other person for the collection thereof on their behalf shall be recognized, except when the payees are physically unable to collect personally such benefits. (Sec. 15, R.A. No. 11199) The member has Paid at least three (3) months of contributions within the 12-month period immediately before the semester of sickness or injury. 3. The member has Used all company sick leaves with pay for the current year and has duly notified his employer. 4. The member must Notify the SSS by filing a sickness benefit application if he is separated from employment, a self-employed or voluntary member, including OFW-member. (Sec. 14, R.A. No. 11199) Q: On her way home from work, Mikaela, a machine operator in a sash factory, decided to watch a movie in a movie house. However, she was stabbed by an unknown assailant. When she 129 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation NOTE: No contributions paid retroactively by SE/VM/OFWs shall be used in determining his/her eligibility to sickness benefit wherein the date of payment is within or after the semester of contingency. Rule on Notification of Self-employed Member GR: The unemployed or SE member, land-based OFW, or VM including NW spouse, shall directly notify the SSS of the confinement in the prescribed manner within five (5) calendar days after the start of confinement. Notification Requirement Hospital Confinement Confinement elsewhere, as may be defined by the SSS XPN: When such confinement is in a hospital, notification to the SSS in the prescribed manner shall be within one (1) year from date of discharge. (Sec. 14, R.A. No. 11199) Sickness/injury that occurred while working or within the premises of the employer OFWs are given 35 calendar days in filing sickness benefits. This applies only for confinement elsewhere as defined by the SSS. (Sec. 3, Rule 25, IRR, R.A. No. 11199) Notification by Employee to Employer Not necessary The employee shall notify the employer of the sickness or injury in the prescribed manner within five (5) calendar days after the start of confinement Amount of Benefit The amount of the member’s daily Sickness Benefit allowance is equivalent to 90% of his Average Daily Salary Credit. (ADSC). (Sec. 14, R.A. No. 11199) Not necessary NOTE: The Sickness Benefit is granted up to maximum of 120 days in one (1) calendar year. Limitations on the Grant of Sickness Benefit 1. A member may be granted a maximum sickness benefit of 120 days in one (1) calendar year. 2. The sickness benefit shall be paid for not more than 240 days on account of the same illness or confinement. 3. An unused portion of the allowable 120 days sickness benefit cannot be carried forward nor added to the total number of compensable days allowable in the following year. 4. Compensable confinement shall begin only after all sick leaves of absence with full pay to the credit of employee-member shall have been exhausted, if applicable. (Sec. 14, R. A. No. 11199; Sec. 6, Rule 25, IRR, R. A. No. 11199) Notification by Employer to SSS The employer shall inform the SSS of such confinement in the prescribed manner within one (1) year from date of discharge The employer shall in turn notify the SSS within five (5) calendar days after receipt of notice from employee. The employer shall notify the SSS of such sickness/injury in the prescribed manner within five (5) calendar days after onset of sickness/injury (Sec. 3 and 4, Rule 25, IRR, R.A. No. 11199) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 130 Labor Law and Social Legislation Compensable Confinement 1. 2. Instances when the Er or the unemployed member is not entitled to reimbursement It begins on the 1st day of sickness; and Payment of such allowances shall be promptly made by the Er: a. Every regular payday or on the 15th and last day of each month; and b. In case of direct payment by the SSS - as long as such allowances are due and payable. (Sec. 14, R. A. No. 11199) 1. 2. 3. Requirements for an Er to claim reimbursement of the sickness benefit 1. b. 2. NOTE: Sickness and disability benefits may be availed of simultaneously. 100% of daily benefits shall be reimbursed by SSS if the following requirements are satisfied: a. Where the Er failed to notify the SSS of the confinement; In the case of the unemployed, where he failed to send the notice directly to the SSS except when the confinement is in a hospital; and Where the claim for reimbursement is made after one year from the date of confinement. (Sec. 14, R.A. No. 11199) Requisites Receipt of SSS of satisfactory proof of such payment and legality thereof; and The Er has notified the SSS of the confinement within five (5) calendar days after receipt of the notification from the Ee member. 1. 2. Sickness/injury and disability are not related. Member meets all the qualifying conditions for the grant of sickness and disability benefits. (Sec. 6, Rule 25, IRR of R. A. No. 11199) Q: Because of the stress in caring for her four (4) growing children, Tammy suffered a miscarriage late in her pregnancy and had to undergo an operation. In the course of the operation, her obstetrician further discovered a suspicious-looking mass that required the subsequent removal of her uterus (hysterectomy). After surgery, her physician advised Tammy to be on full bed rest for six (6) weeks. Er shall be reimbursed only for each day of confinement starting from the 10th calendar day immediately preceding the date of notification to the SSS if the notification to the SSS is made beyond five (5) calendar days after receipt of the notification from the Ee member. (Sec. 14, R.A. No. 11199) Reimbursement by SSS Meanwhile, the biopsy of the sample tissue taken from the mass in Tammy's uterus showed a beginning malignancy that required an immediate series of chemotherapy once a week for four (4) weeks. What benefits can Tammy claim under existing social legislation? (2013 BAR) GR: SSS shall reimburse the Er or pay the unemployed member only for confinement within one year immediately preceding the date the claim for benefit or reimbursement is received by the SSS. XPN: Confinement in a hospital, in which case the claim for benefit or reimbursement must be filed within one year from the last day of confinement. (Sec. 14, RA No. 11199) A: Assuming she is employed, Tammy is entitled to a special leave benefit of two months with full pay (Gynecological Leave) pursuant to R.A. No. 9710 or the Magna Carta of Women. She can also claim Sickness Leave benefit in accordance with the SSS Act. 131 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation contributions, payable in accordance with the schedule. (Sec. 13-A, R. A. No. 11199) b. PERMANENT DISABILITY BENEFITS Permanent disability benefit NOTE: The monthly pension benefit for permanent partial disability will be given in lump sum if it is payable in less than 12 months. (Ungos, 2013) It is a cash benefit granted to a member who becomes permanently disabled, either partially or totally. (Sec. 1, Rule 23, IRR, R.A. No. 11199) Types of Disability Benefit Permanent Total Disability 1. 2. The following are deemed permanent total disabilities: 1. 2. 3. 4. 5. Qualifying Conditions Complete loss of sight of both eyes; Loss of two limbs at or above the ankle or wrists; Permanent complete paralysis of two limbs; Brain injury resulting to incurable imbecility or insanity; and Such cases as determined and approved by the SSS. (Sec. 13-A, R.A. No. 11199) 1. 2. 3. Permanent Partial Disability 1. b. c. Monthly pension – available if the permanent partial disability occurs after 36 UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES P1,000 if the member has less than ten Credited Years of Service (CYS); P1,200 if with at least 10 CYS; and P2,400 with at least 20 CYS. 2. If qualified, the member is granted a monthly Disability Pension, plus P5,000 monthly Supplemental Allowance. (Sec. 7, Rule 23, IRR, R. A. No. 11199) 3. Dependent’s Pension (for total disability), which is 10% of the member’s basic monthly pension, or P250, whichever is higher. (Sec. 12A, R.A. No. 11199) The permanent partial disability benefits are as follows: 2. The minimum monthly Disability Pension is: a. NOTE: For the purpose of adjudicating retirement, death and permanent total disability pension benefits, contributions shall be deemed paid for the months during which the member received partial disability pension. Percentage of the lump sum benefit – available if the permanent partial disability occurs before 36 monthly contributions have been paid prior to the semester of disability; The member has paid at least one month contribution before the semester of disability. To qualify for a monthly disability pension, the member must have paid at least 36 monthly contributions prior to the semester of disability. If less than 36 monthly contributions, he is granted a lump sum amount. (Sec. 13-A, R.A. No. 11199) Amount of Benefits If disability occurs after 36 monthly contributions have been paid prior to the semester of disability, the benefit shall be the monthly pension for permanent total disability payable not longer than the period designated in the schedule in Section 3, Rule 23 of the IRR of R.A. No. 11199. The monthly pension benefit shall be given in lump sum if it is payable for less than 12 months. 1. Monthly pension Lump sum NOTE: Only five dependent minor children, beginning from the youngest, are entitled to dependent’s pension. No substitution is allowed. 4. 132 Plus P1,000 additional benefit effective Labor Law and Social Legislation January 2017. (Sec. 12 (c), R.A. No. 11199) 5. 13th month pension, which is payable every December to total disability pensioners; for partial disability pensioners, 13th month pension shall be paid provided that pension duration is at least 12 months. (Sec. 8, Rule 23, IRR, R. A. No. 11199) 2. If employed, she must have notified her Er of her pregnancy and the probable date of her childbirth. 3. She must directly notify the SSS if she is unemployed, a self-employed or voluntary member, non-working spouse, including OFWmember. (Sec. 14-A, R.A. No. 11199) Effect of the Death of a Pensioner with Permanent Total Disability 1. Amount of Benefit The amount of daily allowance is equivalent to 100% of the member’s ADSC for a compensable period of: Primary beneficiaries are entitled to receive monthly pension as of the date of disability. 2. If there are no primary beneficiaries and the pensioner dies within 60 months from the start of his monthly pension – secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the total monthly pensions corresponding to the balance of the five-year guaranteed period excluding the dependents’ pension. (Sec. 13-A, R.A. No. 11199) 1. 2. 3. NOTE: The Maternity Benefit is granted regardless of member’s civil status and frequency of pregnancy. Effect of Retirement or Death of a Pensioner with a Partial Disability Q: A, single, has been an active member of the Social Security System for the past 20 months. She became pregnant out of wedlock and on her 7th month of pregnancy, she was informed that she would have to deliver the baby through caesarean section because of some complications. Can A claim maternity benefits? If yes, how many days can she go on maternity leave? If not, why is she not entitled? (2010 BAR) If the pensioner with partial disability retires or dies, the disability pension shall cease upon his retirement or death. (Sec. 13-A, R.A. No. 11199) c. MATERNITY LEAVE BENEFITS Maternity benefit Maternity Leave Benefit is a daily cash allowance granted to female members who gave birth via normal delivery or caesarean section or suffered miscarriage, regardless of civil status or legitimacy of the child. (Sec. 1, Rule 26, IRR, R.A. No. 11199) A: YES. The Expanded Maternity Leave Act applies to all female workers regardless of civil status, as long as the requirements under the law on notices and payment, among others, have been satisfied. Since there is no indication that A is a solo parent, she is entitled to 100% of her average salary credit for 105 days. Qualifying conditions 1. 105 days for normal or caesarian section delivery; 120 days for solo parents under R.A. No. 8972 or Solo Parents’ Welfare Act; or 60 days for miscarriage or emergency. (R.A. No. 11210 or the Expanded Maternity Leave Law) The member has paid at least three (3) monthly contributions within the 12-month period immediately preceding the semester of her childbirth or miscarriage. NOTE: The suggested answer is updated to conform with prevailing law. 133 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation Q: Luisa is an unwed mother with 3 children from different fathers. In 2004, she became a member of the Social Security System (SSS). That same year, she suffered a miscarriage of a baby out of wedlock from the father of her third child. She wants to claim maternity benefits under the SSS Act. Is she entitled to claim? (2015 BAR) a. A: YES. Provided that Luisa has reported to her employer her pregnancy and date of expected delivery and paid at least 3 monthly contributions during the 12-month period immediately preceding her miscarriage, then she is entitled to maternity benefits under the Expanded Maternity Leave Act, regardless of frequency. As to the fact that she got pregnant outside wedlock, as in her past three pregnancies, this will not bar her claim because the SSS is non-discriminatory. b. Optional Retirement – Has reached 60 years old and separated from employment or has ceased to be self-employed, except: i. An underground mineworker whose date of actual retirement is not earlier than 13 March 1998 but not later than 27 April 2016 – at least 55 years old; ii. An underground or a surface mineworker whose date of actual retirement in not earlier than 27 April 2016 – 50 years old Technical Retirement – At least 65 years old, except: i. An underground mineworker or surface mineworker – At least 60 years old ii. In the case of a racehorse jockey – At least 55 years old. (Sec. 2, Rule 21, IRR of R. A. No. 11199) NOTE: The suggested answer is updated to conform with prevailing law. d. RETIREMENT BENEFITS Retirement benefit Requisites for entitlement to lump sum benefit The Retirement Benefit is a monthly pension or lump sum granted to a member who can no longer work due to old age. (Sec. 1, Rule 21, IRR, of R. A. No. 11199) 1. 2. 3. 4. Types of retirement benefit 1. 2. Monthly Pension– Lifetime cash benefit paid to a retiree who has paid at least 120 monthly contributions to the SSS prior to the semester of retirement. Amount of Benefit Lump Sum Amount – Granted to a retiree who has not paid the required 120 monthly contributions. Qualifying conditions 1. A member must have at least 120 monthly contributions prior to semester of retirement; and 2. Age Requirement: UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES At least 60 years old at the time of retirement; Does not qualify for pension benefits under paragraph a of Sec. 12-B; Must be separated from employment; and Is not continuing payment of contribution to the SSS on his own. (Sec. 5, Rule 21, IRR, R. A. No. 11199) 134 1. If qualified, the member is granted a monthly Retirement Plan Pension. 2. The retiree has the option to receive the first 18th months pension in lump sum, discounted at a preferential rate to be determined by the SSS. This option can be exercised only upon application of the first retirement claim, and the Dependent’s Pension is excluded from the advanced 18 months pension. (Sec. 3, Rule 21, IRR of R. A. No. 11199) Labor Law and Social Legislation 3. 3. The minimum monthly Retirement Pension is: a. b. P1,200 if the member has 120 months contribution or at least ten (10) CYS; or P2,400 if with at least 20 CYS. 4. Plus P1,000 additional benefit effective January 2017. (Sec. 12(c), R. A. No. 11199) 5. Dependent’s Pension (for total disability), which is 10% of the member’s basic monthly pension, or P250, whichever is higher. (Sec. 12A, R. A. No. 11199) If there are no primary and secondary beneficiaries, the lump sum payment in the amount specified in the preceding paragraph shall form part of his/her estate and shall be paid to his/her legal heirs in accordance with the law of succession. (Sec. 8, Rule 21, IRR, R. A. No. 11199) e. DEATH BENEFITS Death Benefit It is a cash benefit either in monthly pension or lump sum paid to the beneficiaries of a deceased member. (Sec. 1, Rule 22, IRR, R. A. No. 11199) NOTE: Only five dependent minor children, beginning from the youngest, are entitled to dependent’s pension. No substitution is allowed. 6. Entitlement to Death Benefits 1. 13th month pension, which is payable every December plus additional benefits. (Sec. 4, Rule 21, IRR, R. A. No. 11199) a. Consequence of the re-employment or resumption to work of a retired pensioner b. The monthly pension of a retired member who resumes employment and is less than 65 years old will be suspended. He and his Er will again be subject to compulsory coverage. (Sec. 13-A, R.A. No. 11199) 2. Death of a Retired Member Upon the death of a retired member: 1. His/her primary beneficiaries, as of the date of his/her retirement, shall be entitled to receive 100% of the monthly pension. 2. Upon death of a member who has paid at least 36 monthly contributions prior to the semester of death: Upon death of a member who has not paid the required 36 monthly contributions prior to the semester of death, the primary or secondary beneficiaries shall receive lump sum benefit, whichever is higher between the equivalent of: a. b. If the retired member has no primary beneficiaries and dies within 60 months from the start of his/her monthly pension, his/her secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the total monthly pension corresponding to the balance of the five-year guaranteed period, excluding the dependent’s pension and additional benefit allowance. Primary beneficiaries shall be entitled to the monthly pension; or If there are no primary beneficiaries, secondary beneficiaries shall be entitled to a lump sum benefit equivalent to 36 times the monthly pension. The monthly pension multiplied by the number of monthly contributions paid to the SSS; or 12 times the monthly pension. (Sec. 13, R.A. No. 11199) Amount of Benefit 135 1. Monthly death pension to the member’s primary beneficiary is granted a monthly death pension. 2. Lump sum amount to secondary beneficiaries in the absence of primary beneficiaries, or to UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation legal heirs in the absence of secondary beneficiaries. 3. Qualifying Conditions Dependent’s Pension (for total disability) is 10% of the member’s basic monthly pension, or P250, whichever is higher. (Sec. 12-A, R.A. No. 11199) NOTE: Only five dependent minor children, beginning from the youngest, are entitled to dependent’s pension. No substitution is allowed. 4. 5. Plus P1,000 additional benefit effective January 2017. (Sec. 12(c), R.A. No. 11199) 1. The EE-member was reported for coverage by his ER. 2. A self-employed member/ OFW / nonworking spouse who had at least one contribution payment. 3. A voluntary member who was previously covered either as employed / self- employed / OFW and has at least one contribution payment. 4. The EE-member was subject to compulsory coverage but was not reported for coverage by ER. The minimum monthly Death Pension is P1,000 if the member had less than ten CYS; P1,200 if with at least ten CYS; and P2,400 with at least 20 CYS. g. UNEMPLOYMENT BENEFITS Unemployment Benefit Cause of Death must be an Occupational Disease Also known as unemployment insurance or involuntary separation benefit, it is a cash benefit granted to covered employees, including kasambahays and OFWs (sea-based or land-based) who are involuntarily separated from employment. (Sec. 14-B, R.A. No. 11199) In order for the beneficiary of an Ee to be entitled to death benefits under the SSS, the cause of death must be a sickness listed as an occupational disease by ECC; or any other illness caused by employment, subject to proof that the risk of contracting the same is increased by the working conditions. (Bañez v. SSS, G.R. No. 189574, 18 July 2014) Qualifying Conditions 1. f. FUNERAL BENEFITS Funeral Benefit A funeral grant equivalent to P12,000.00 shall be paid, in cash or in kind, to help defray the cost of funeral expenses upon the death of a member or retiree. (Sec. 13-B, R.A. No. 11199) NOTE: Starting 01 Aug. 2015, the amount of the funeral grant was increased to a variable amount ranging from a minimum of P20,000 to a maximum of P40,000, depending on the member’s paid contributions and CYS. (Sec. 2, Rule 24, IRR, R. A. No. 11199) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 136 Not over 60 years old at the time of involuntary separation, except; a. In the case of underground mineworker or surface mineworker which must not be over 50 years old; or b. In the case of racehorse jockey, not over 55 years old. 2. Has paid at least 36 monthly contributions, 12 months of which should be in the eighteen (18) month period immediately preceding the unemployment or involuntary separation; 3. Involuntarily separated from employment provided that such separation did not arise from fault or negligence of the employee and Labor Law and Social Legislation which may be attributed to any of, but not limited to, the following: a. b. c. d. e. c. d. Installation of labor-saving devices; Redundancy; Retrenchment to prevent loss; Closure or cessation of operation; or Disease/illness. (Sec. 2, Rule 27, IRR, R. A. No. 11199) 2. Employee or member – Any person, receiving compensation while in the service of an Er, whether by election or appointment, irrespective of status of appointment, including barangay and sanggunian officials. (Sec. 2(d), R.A. No. 8291) 3. Compensation – The basic pay or salary received by an Ee, pursuant to his or her election or appointment, excluding per diems, bonuses, OT pay, honoraria, allowances, and any other emoluments received in addition to the basic pay which are not integrated into the basic pay under existing laws. (Sec. 2(i), R.A. No. 8291) Amount of Benefit The benefit is granted through a one- time payment, and the claim must be filed within a year from the date of involuntary separation. The unemployment insurance or involuntary separation benefit is a monthly cash payment equivalent to 50% of the AMSC for a maximum of two (2) months, subject to the rules and regulations that the Commission may prescribe. (Rule 27, IRR, R. A. No. 11199) Government-owned or controlled corporations (GOCCs) and financial institutions with original charters; or Constitutional Commissions and the Judiciary. (Sec. 2(c), R.A. No. 8291) Reportorial Requirements of the Er Er must report to GSIS the names, employment status, positions, salaries of the Ee and such other matter as determined by the GSIS. (Sec. 6(a), R.A. No. 8291) B. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) LAW (R.A. No. 8291) Purpose for the Enactment of the GSIS Law Penalty in case of Delayed Remittance or NonRemittance of Contributions To provide and administer the following social security benefits for government Ees: 1. 2. 3. 4. 5. The unremitted contributions shall be charged interests as prescribed by the GSIS Board of Trustees but shall not be less than 2% simple interest per month from due date to the date of payment by the employers concerned. (Sec. 7, R.A. No. 8291) Compulsory Life Insurance; Optional Life Insurance; Retirement Benefits; Disability Benefits due to work-related contingencies; and Death Benefits. Q: May a member enjoy the benefits provided for in the Revised GSIS Act simultaneous with similar benefits provided under other laws for the same contingency? Definitions 1. Employer a. National Government; b. Its political subdivisions, agencies, instrumentalities; A: Whenever other laws provide similar benefits for the same contingencies covered by this Act, the member who qualifies to the benefits shall have the option to choose which benefits will be paid to him. However, if the benefits provided by the law chosen branches, 137 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation are less than the benefits provided under this Act, the GSIS shall pay only the difference. (Sec. 55, R.A. No. 8291) 1. An elective official who, at the time of election to public office is below 65 years of age will be more than 65 at the end of his term of office, including the period/s of his re-election to public office thereafter without interruption. 2. Appointive officials who, before reaching the mandatory age of 65, are appointed to government position by the President of the Republic of the Philippines and shall remain in government service at an age beyond 65. 3. Contractual employees, including casuals and other employees with an employeegovernment agency relationship are also compulsorily covered, provided they are receiving fixed monthly compensation and rendering the required number of working hours for the month. (Chan, 2014) 1. COVERAGE AND EXCLUSIONS COVERAGE The GSIS covers all employees irrespective of employment status, who are employed with: 1) The national government, its political subdivisions, branches, agencies or instrumentalities; 2) Government-owned or controlled corporations; 3) Government financial institutions with original charters; 4) Constitutional commissions; and 5) The judiciary. Classification of Members for the Purpose of Benefit Entitlement Coverage of Life Insurance, Retirement and Other Social Security Protection 1. GR: All members of the GSIS shall have life insurance, retirement, and all other social security protections such as disability, survivorship, separation, and unemployment benefits. (Sec. 3, R.A. No. 8291) a. 2. XPNs: The members of the following shall have life insurance only: 1. 2. Active Members Policyholders a. b. c. d. The Judiciary; and The Constitutional Commissions. Compulsory Coverage of Life Insurance 3. GR: All Ees receiving compensation who have not reached the compulsory retirement age, irrespective of employment status. b. XPNs: All members of the AFP and the PNP. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES c. 138 Covered for life insurance only; Can avail of policy loan privilege only; and May also apply for housing loans. Judiciary and Constitutional Commissions Separated Members a. NOTE: An employee who is already beyond the mandatory retirement age of 65 shall be compulsorily covered and be required to pay both the life and retirement premiums under the following situations: Still in the service and are paying integrated premiums; covered for the entire package benefits and privileges being extended by GSIS. Former active members who have been separated from the service; Still covered by the GSIS under the principle of “once a member, always a member”; Entitled to receive future benefits under P.D. 1146 in the event of compensable contingency such as old age (attainment of age 60 years), disability, survivorship and death; and Labor Law and Social Legislation d. 4. illegitimate child, or over the age of majority but incapacitated or incapable of self-support due to mental or physical defect acquired prior to age of majority; and Not entitled to any loan privilege. Retired Members a. b. Former active members who have retired from the service and are already enjoying the corresponding retirement benefits applied for; and Not entitled to any loan privilege, except stock purchase loan. (Sec. 2.2, Rule II, IRR of R.A. No. 8291) 3. BENEFICIARIES 1. Primary beneficiaries a. Legal dependent spouse, until he/she remarries; and b. Dependent children. (Sec. 2(g), R.A. No. 8291) 2. Secondary beneficiaries a. Dependent parents; and b. Legitimate descendants, subject to restrictions on dependent children. (Sec. 2(h), R.A. No. 8291) EXCLUSIONS The following are not considered Members of the GSIS for purposes of this Act: 1) Employees who have separate retirement schemes under special laws and are therefore covered by their respective retirement laws, such as the members of the Judiciary, Constitutional Commissions, and other similarly situated government officials; 2) Contractual employees who employer-employee relationship agencies they serve; Parents dependent upon the member for support. (Sec. 2(f), R.A. No. 8291) 3. BENEFITS have no with the Benefits under the GSIS Act a. b. 3) Uniformed members of the Armed Forces of the Philippines (AFP), the Bureau of Fire Protection, and the Bureau of Jail Management and Penology (BJMP) whose coverage by the GSIS has ceased effective June 24, 1997; and c. d. e. f. g. h. i. 4) Uniformed members of the Philippine National Police (PNP) whose coverage by the GSIS has ceased effective February 1, 1996. (Sec. 2.4, IRR of R. A. No. 8291) Separation benefits; Unemployment or involuntary separation benefits; Retirement benefits; Permanent disability benefits; Temporary disability benefits; Survivorship benefits; Funeral benefits; Life insurance; and Such other benefits and protection as may be extended to them by the GSIS such as loans. a. SEPARATION BENEFITS 2. DEPENDENTS AND BENEFICIARIES Entitlement of a Member to Separation Benefits DEPENDENTS 1. Legitimate spouse dependent for support upon the member or pensioner; 2. Unmarried and not gainfully employed legitimate, legitimated, legally adopted, or A member who has rendered a minimum of three (3) years of creditable service shall be entitled to separation benefits upon resignation or separation under the following terms: 139 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation 1. Conditions for Entitlement to Unemployment Benefits A member with at least three (3) years of service but less than 15 years – Cash payment equivalent to 100% of the average monthly compensation for every year of service the member has paid contributions: 1. 2. a. b. 2. Not less than P12, 000.00; and Payable upon reaching 60 years of age or upon separation, whichever comes later. (Sec. 11(a), R.A. No. 8291) 3. A member with at least 15 years of service and less than 60 years of age at the time of resignation or separation: The recipient must be a permanent Ee at the time of separation; His separation was involuntary due to the abolition of his office or position resulting from reorganization; and He has been paying the contribution for at least one (1) year prior to separation. (Sec. 12, R.A. No. 8291) c. RETIREMENT BENEFITS Reason for Compulsory Retirement a. b. Cash payment equivalent to 18 times the Basic Monthly Pension (BMP), payable at the time of resignation or separation; and An old-age pension benefit equals to the BMP, payable monthly for life upon reaching the age of 60. (Sec. 11(b), R.A. No. 8291) The compulsory retirement of government officials and Ees upon reaching the age of 65 years is founded on public policy which aims to maintain efficiency in the government service and at the same time, give the retiring public servants the opportunity to enjoy during the remainder of their lives the recompense, for their long service and devotion to the government, in the form of a comparatively easier life, freed from the rigors of civil service discipline and the exacting demands that the nature of their work and their relations with their superiors as well as the public would impose upon them. (Beronilla v. GSIS, G.R. No. L21723, 26 Nov.1970) Effects of Separation from Service with regard to Membership A member separated from the service shall continue to be a member and shall be entitled to whatever benefits he/she qualifies for. (Once a member, always a member) NOTE: A member separated for a valid cause shall automatically forfeit his benefits, unless the terms of resignation or separation provide otherwise. In case of forfeiture, the separated employee shall be entitled to receive only one-half (1/2) of the cash surrender value of his insurance. Conditions to be Entitled to Retirement Benefits 1. 2. 3. b. UNEMPLOYMENT BENEFITS A member has rendered at least 15 years of service; He is at least 60 years of age at the time of retirement; and He is not receiving a monthly pension benefit from permanent total disability. (Sec. 13-A, R.A. No. 8291) Unemployment benefits NOTE: Where the employee retires and meets the eligibility requirements, he acquires a vested right to benefits that is protected by the due process clause. Retirees enjoy a protected property interest whenever they acquire a right to immediate payment under pre-existing law. Thus, a pensioner acquires a vested right to benefits that have become due as provided under the terms of the public It will consist of monthly cash payments equivalent to 50% of the average monthly compensation. A member who has rendered at least 15 years of service will be entitled to separation benefits instead of unemployment benefits. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 140 Labor Law and Social Legislation employees’ pension statute. No law can deprive such person of his pension rights without due process of law, that is, without notice and opportunity to be heard. (GSIS v. De Leon, G.R. No. 186560, 17 Nov. 2010) Total Disability Complete incapacity to continue with present employment or engage in any gainful occupation due to the loss or impairment of the normal functions of the physical and/or mental faculties of the member. (Sec. 2(r), R.A. No. 8291) Options of the Retiree with regard to his or her Retirement Benefits Types of Permanent Disability The retiree may get either of the following: 1. Lump sum payment equivalent to 60 months of the BMP payable at the time of retirement and an old-age pension benefit equal to BMP payable for life, starting upon the expiration of the five (5) years covered by the lump sum; or 2. Cash payment equivalent to 18 times his BMP and monthly pension for life payable immediately. (Sec. 13(a), R.A. No. 8291) 1. Permanent Total Disability (PTD) – Accrues or arises when recovery from any loss or impairment of the normal functions of the physical and/or mental faculty of a member which reduces or eliminates his capacity to continue with his current gainful occupation or engage in any other gainful occupation is medically remote. (Sec. 2(q) and (s), R.A. No. 8291) 2. Permanent Partial Disability (PPD) – Accrues or arises upon the irrevocable loss or impairment of certain portion/s of the physical faculties, despite which the member is able to pursue a gainful occupation. (Sec. 2(u), R.A. No. 8291) Rule in case of Extension of Service in order to be Entitled for Retirement Benefits The Supreme Court held that the head of the government agency concerned is vested with discretionary authority to allow or disallow extension of the service of an official or Ee who has reached 65 years old without completing the 15 years of government service. However, this discretion is to be exercised conformably with the provisions of Civil Service Memorandum Circular No. 27, series of 1990 which provides that the extension shall not exceed one (1) year. (Rabor v. CSC, G.R. No. 111812, 31 May 1995) Benefits for PTD 1. A member is entitled to the monthly income benefit for life equivalent to the BMP effective from the date of disability when: a. He is in the service at the time of the disability; or NOTE: If at the time of disability, he was in the service and has paid a total of at least 180 monthly contributions, in addition to the monthly income benefit, he shall receive a cash payment equivalent to 18 times his BMP. (Sec. 16(a), R.A. No. 8291) d. PERMANENT DISABILITY BENEFITS Disability Any loss or impairment of the normal functions of the physical and/or mental faculty of a member, which reduces or eliminates his/her capacity to continue with his/her current gainful occupation or engage in any other gainful occupation. (Sec. 2(q), R.A. No. 8291) b. If separated from service: i. He has paid at least 36 monthly contributions within five (5) years immediately preceding his disability; or 141 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation i. ii. He has paid a total of at least 180 monthly contributions prior his disability. (Sec. 16(a), R.A. No. 8291) 2. NOTE: A member cannot enjoy the monthly income benefit for permanent disability and the old-age retirement simultaneously. 2. 3. 4. 5. 1. 2. If the member does not satisfy the conditions above but has rendered at least three (3) years of service, he shall be advanced the cash payment equivalent to 100% of his average monthly compensation for each year of service he has paid contributions, but not less than P12,000.00, which should have been his separation benefit. (Sec. 16(b), R.A. No. 8291) 3. If the permanent disability was due to the following acts of the subject Ee: a. b. c. d. Complete loss of sight of both eyes; Loss of two (2) limbs at or above the ankle or wrist; Permanent complete paralysis of two (2) limbs; Brain injury resulting in incurable imbecility or insanity; and Such other cases as may be determined by the GSIS. (Sec. 16(d), R.A. No. 8291) Grave misconduct; Notorious negligence; Habitual intoxication; or Willful intention to kill himself or another. (Sec. 15, R.A. No. 8291) e. TEMPORARY DISABILITY BENEFITS Temporary Total Disability (TTD) It accrues or arises when the impaired physical and/or mental faculties can be rehabilitated and/or restored to their normal functions. (Sec. 2(t), R.A. No. 8291) A member is entitled to cash payment in accordance with the schedule of disabilities to be prescribed by GSIS, if he satisfies the given conditions of either (1) or (2) of Sec. 16(a) of R.A. No. 8291. NOTE: A member cannot enjoy TTD benefit and sick leave pay simultaneously. The following Disabilities shall be deemed Permanent and Partial Benefits for Temporary Disability 1. Complete and permanent loss of the use of: a. Any finger b. Any toe c. One arm d. One hand e. One foot f. One leg g. One or both ears h. Hearing of one or both ears UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES In case a member is re-employed; Member recovers from disability as determined by the GSIS; or Fails to present himself for medical examination when required by the GSIS. (Sec. 16(c), R.A. No. 8291) Instances when Recovery is Precluded Benefits for PPD 1. Such other cases as may be determined by the GSIS. (Sec. 17(b), R.A. No. 8291) Suspension of Payment of Benefits The following Disabilities shall be deemed Total and Permanent 1. 2. Sight of one eye 142 Member is entitled to 75% of his current daily compensation for each day or fraction thereof of total disability benefit, to start not earlier than the 4th day but not exceeding 120 days in one calendar year after exhausting all his sick leave credits and collective bargaining agreement (CBA) sick leave benefits, if any. Provided, that: Labor Law and Social Legislation 2. a. He was in the service at time of disability; or b. If separated, he has rendered at least three (3) years of service and has paid at least six (6) monthly contributions in the year preceding his disability. (Sec. 18(a), R.A. No. 8291) b. 2. The survivorship pension plus a cash payment equivalent to 100% of his average monthly compensation for every year of service – Provided, that the deceased was in the service at the time of his death with at least three (3) years of service; or TTD benefits shall in no case be less than P70.00 a day. (Sec. 18(b), R.A. No. 8291) NOTE: An application for disability must be filed with the GSIS within four (4) years from the date of the occurrence of the contingency. 3. A cash payment equivalent to 100% of his average monthly compensation for each year of service he paid contributions, but not less than P12,000.00 – Provided, that the deceased has rendered at least three (3) years of service prior to his death but does not qualify for the benefits under item (1) or (2) of this paragraph. (Sec. 21(a), R.A. No. 8291) f. SURVIVORSHIP BENEFITS Persons Entitled to Survivorship Benefits Upon the death of a member or pensioner, his beneficiaries shall be entitled to survivorship benefits. Such benefit shall consist of: 1. 2. The basic survivorship pension which is 50% of the BMP; and Secondary Beneficiaries The dependent children’s pension not exceeding 50% of the BMP. (Sec. 20, R.A. No. 8291) In the absence of primary beneficiaries, the secondary beneficiaries shall be entitled to: 1. NOTE: The dependent children shall be entitled to the survivorship pension as long as there are dependent children and, thereafter, the surviving spouse shall receive the basic survivorship pension for life or until he or she remarries. 2. Conditions for the Primary Beneficiaries to be Entitled to BMP Upon the death of a member, the primary beneficiaries shall be entitled to: The cash payment equivalent to 100% of his average monthly compensation for each year of service he paid contributions, but not less than P12,000.00 – Provided, That the member is in the service at the time of his death and has at least three (3) years of service; or In the absence of secondary beneficiaries, the benefits under this paragraph shall be paid to his legal heir. (Sec. 21(c), R.A. No. 8291) Payment of Survivorship Pension 1. Survivorship pension – Provided, that the deceased: a. If separated from the service, has rendered at least three (3) years of service at the time of his death and has paid 36 monthly contributions within the five-year period immediately preceding his death; or has paid a total of at least 180 monthly contributions prior to his death. After the end of the guaranteed 30 months, the beneficiaries are still entitled to survivorship benefits. The survivorship pension shall be paid as follows: Was in the service at the time of his death; or 143 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation 1. When the dependent spouse is the only survivor, he/she shall receive the basic survivorship pension for life or until he or she remarries; 2. When only dependent children are the survivors, they shall be entitled to the basic survivorship pension for as long as they are qualified, plus the dependent children’s pension equivalent to 10% of the BMP for every dependent child not exceeding five (5), counted from the youngest and without substitution; or 3. Bella (Gary’s common-law wife) and Jobo (his only son) filed a claim for death benefits with the GSIS, which was denied on the ground that Gary’s death did not arise out of and in the course of employment, and therefore not compensable because the accident occurred in his house and not in the school premises. Is Bella entitled to file a claim for death benefits with the GSIS? Why? (1991 BAR) A: NO. Bella is not entitled to receive survivorship benefits because she is not considered as a beneficiary. Bella is a common-law wife and not a legal dependent spouse. The beneficiaries of a member of the GSIS are entitled to the benefits arising from the death of said member. Death benefits are called survivorship benefits under the GSIS Law. When the survivors are the dependent spouse and the dependent children, the dependent spouse shall receive the basic survivorship pension for life or until he/she remarries, and the dependent children shall receive the dependent children’s pension. (Sec. 21(b), R.A. No. 8291) Q: Is the cause of death of Gary (cardiac arrest due to accidental electrocution in his house) compensable? Why? Benefits that the Beneficiaries are Entitled to upon the Death of the Pensioner 1. Upon the death of an old-age pensioner or a member receiving the monthly income benefit for permanent disability, the qualified beneficiaries shall be entitled to the survivorship pension; and 2. When the pensioner dies within the period covered by the lump sum, the survivorship pension shall be paid only after the expiration of such period. (Sec. 22, R.A. No. 8291) A: YES. To be compensable under the GSIS Law, the death need not be work-connected. In the case presented, although the accident happened in Gary’s house, it is still considered work-connected since Gary only heeded to the memorandum issued by the school principal and complied with the instruction of his superior to work on the model dam project. Q: Odeck, a policeman, was on leave for a month. While resting in their house, he heard two of his neighbors fighting with each other. Odeck rushed to the scene intending to pacify the protagonists. However, he was shot to death by one of the protagonists. Zhop, a housemaid, was Odeck's surviving spouse whom he had abandoned for another woman years back. When she learned of Odeck's death, Zhop filed a claim with the GSIS for death benefits. However, her claim was denied because: (a) when Odeck was killed, he was on leave; and (b) she was not the dependent spouse of Odeck when he died. Q: Gary Leseng was employed as a public school teacher at the Marinduque High School. On April 27, 1997, a memorandum was issued by the school principal designating Gary to prepare the model dam project, which will be the official entry of the school in the search for Outstanding Improvised Secondary Science Equipment for Teachers. Gary complied with his superior's instruction and took home the project to enable him to finish before the deadline. While working on the model dam project, he came to contact with a live wire and was electrocuted. The death certificate showed that he died of cardiac arrest due to accidental electrocution. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Resolve with reasons whether GSIS is correct in denying the claim. (2005 BAR) A: YES. GSIS is correct in denying the claim. Under 144 Labor Law and Social Legislation leave and he died in the performance of a peacekeeping mission. Therefore, his death is compensable. the law, a dependent is one who is a legitimate spouse living with the employee [Art. 173(i), LC]. In the problem given, Zhop had been abandoned by Odeck who was then living already with another woman at the time of his death. Moreover, Odeck was on leave when he was killed. The 24-hour duty rule does not apply when the policeman is on vacation leave. (Employees’ Compensation Commission v. CA, G.R. No. 121545, 14 Nov. 1996) No Presumption of Sham Marriages The present GSIS law does not presume that marriages contracted within three (3) years before retirement or death of a member are sham marriages contracted to avail of survivorship benefits. The law acknowledges that whether the surviving spouse contracted the marriage mainly to receive survivorship benefits is a matter of evidence. It no longer prescribes a sweeping classification that unduly prejudices the legitimate surviving spouse and defeats the purpose for which Congress enacted the social legislation. (Alcantara, Book II; GSIS v. Montesclaros, G.R. No. 146494, 14 July 2004) Taking together jurisprudence and the pertinent guidelines of the ECC with respect to claim for death benefits, namely: (a) That the employee must be at the place where his work requires him to be; (b) That the employee must have been performing his official functions; and (c) That the injury is sustained elsewhere, the employee must have been executing an order for the employer, it is not difficult to understand then why Zhop’s claim was denied by the GSIS. (Tancinco v. GSIS, G.R. No. 132916, 16 Nov. 2001) h. FUNERAL BENEFITS In the present case, Odeck was resting at his house when the incident happened; thus, he was not at a place where his work requires him to be. Although at the time of his death Odeck was performing a police function, it cannot be said that his death occurred elsewhere other than the place where he was supposed to be because he was executing an order for his employer. Funeral Benefits The funeral benefit is in the amount of P18,000. It is intended to defray the expenses incident to the burial and funeral of the deceased member, pensioner, or retiree under R.A. No. 660, R.A. No. 1616, P.D. 1146, and R.A. No. 8291. It is payable to the members of the family of the deceased, in the order which they appear: Q: Luis, a PNP officer, was off duty and resting at home when he heard a scuffle outside his house. He saw two of his neighbors fighting and he rushed out to pacify them. One of the neighbors shot Luis by mistake, which resulted in Luis' death. Marian, Luis' widow, filed a claim with the GSIS seeking death benefits. The GSIS denied the claim on the ground that the death of Luis was not service related as he was off duty when the incident happened. Is the GSIS correct? (2015 BAR) 1. 2. 3. Legitimate spouse; Legitimate child who spent for the funeral services; or Any other person who can show unquestionable proof that he has borne the funeral expenses of the deceased. Payment of Funeral Benefits Funeral benefits will be paid upon the death of: A: NO. The GSIS is not correct. Luis, a policeman, just like a soldier, is covered by the 24-Hour Duty Rule. He is deemed on round-the-clock duty unless on official leave, in which case his death outside performance of official peace-keeping mission will bar death claim. In this case, Luis was not on official 1. 2. 3. 145 An active member; A member who has been separated from the service but is entitled to future separation or retirement benefits; A member who is a pensioner (excluding survivorship pensioners); or UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation 4. A retiree who is at the time of his retirement was of pensionable age, at least 60 years old, who opted to retire under R.A. No. 1616. (An act further amending Sec. 12, C.A. 186, as amended, by prescribing two other modes of retirement and for other purposes). b. c. d. e. f. 2. i. LIFE INSURANCE Classes of Life Insurance Coverage under the GSIS Law Memorial plans; Health; Education; Hospitalization; or Other plans as maybe designed by GSIS Any Er may apply for group insurance coverage for its Ees. (Sec. 26, R.A. No. 8291) Prescriptive Period to Claim the Benefits GR: Four (4) years from the date of contingency. 1. 2. Compulsory Life Insurance; and Optional Life Insurance. XPNs: Life insurance and retirement (Sec. 28, R.A. No. 8291) NOTE: The plans may be endowment or ordinary life. C. LIMITED PORTABILITY LAW R.A. No. 7699 Compulsory Life Insurance Coverage All Ees including the members of the Judiciary and the Constitutional Commissioners, but excluding Members of the AFP, the PNP, BFP and BJMP, shall, under such terms and conditions as may be promulgated by the GSIS, be compulsorily covered with life insurance, which shall automatically take effect as follows: 1. Those employed after the effectivity of this Act, their insurance shall take effect on the date of their employment; 2. For those whose insurance will mature after the effectivity of this Act, their insurance shall be deemed renewed on the day following the maturity or expiry date of their insurance; and 3. Purpose R.A. No. 7699 was enacted to enable those from the private sector who transfer to the government service or from the government service to the private sector to combine their years of service and contributions which have been credited with the SSS or GSIS, as the case may be, to satisfy the required number of years of service for entitlement to the benefits under the applicable laws. (Chan, 2019) Coverage Applies to all worker-members of the GSIS and/or SSS who transfer from the public sector to private sector or vice-versa, or who wish to retain their membership in both Systems. (Sec. 1, Rule 1, IRR) For those without any life insurance as of the effectivity of this Act, their insurance shall take effect following said effectivity. (Sec. 24, R.A. No. 8291) Portability Portability refers to the transfer of funds for the account and benefit of a worker who transfers from one system to the other. (Sec. 2(b), R.A. No. 7699) Optional Life Insurance Coverage 1. A member may at any time apply for himself and/or his dependents an insurance and/or pre-need coverage embracing: a. Limited Portability Rule A covered worker who transfers employment from one sector to another or is employed on both Life; UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 146 Labor Law and Social Legislation qualified for any benefits from the SSS. sectors, shall have creditable services or contributions on both Systems credited to his service or contribution record in each of the Systems and shall be totalized for purposes of oldage, disability, survivorship, and other benefits in either or both Systems. (Sec. 3, R.A. No. 7699) NOTE: For purposes of computation of benefits, totalization shall apply to all cases so that the contributions made by the worker-member in both Systems shall provide maximum benefits which otherwise will not be available. In no case shall the contribution be lost or forfeited. (Sec 3, Rule V, IRR, R.A. N. 7699) All contributions paid by such member personally, and those that were paid by his employers to both Systems shall be considered in the processing of benefits, which he can claim from either or both Systems. (Sec. 4, R.A. No. 7699) Overlapping periods of creditable services in both Systems shall be credited only one for purposes of totalization. (Sec. 7, Rule V, IRR, R.A. 7699) NOTE: This is advantageous to the SSS and GSIS members for purposes of death, disability or retirement benefits. In the event the Ees transfer from the private sector to the public sector, or viceversa, their creditable employment services and contributions are carried over and transferred as well. If after the totalization, the worker-member still does not qualify for any benefit, the member will then get whatever benefits correspond to his/her contributions in either or both Systems. (Sec. 4, Rule V, IRR, R.A. No. 7699) Creditable Services Totalization I. Totalization refers to the process of adding up the periods of creditable services or contributions under each of the Systems, SSS or GSIS, for the purpose of eligibility and computation of benefits. (Sec. 2(e), R.A. No. 7699) 1. 2. All services rendered or contributions paid by a member personally or paid by the employers to either System shall be considered in the computation in the computation of benefits, which may be claimed from either or both Systems. (Sec. 2, Rule V, IRR, R.A. No. 7699) 3. NOTE: The amount of benefits to be paid by one System shall be in proportion to the services rendered/periods of contribution made to that System. (Sec. 2, Rule V, IRR, R.A. No. 7699) Totalization instances: 1. 2. 3. shall apply in the 4. 5. following If a worker is not qualified for any benefits from both System; If a worker in the public sector is not qualified for any benefits in the GSIS; or If a worker in the private sector is not For the public sector, the following shall be considered creditable services: II. 147 All previous services rendered by an official/employee pursuant to an appointment whether permanent, provisional or temporary; All previous services rendered by an official/employee pursuant to a duly approved appointment to a position in the Civil Service with compensation or salary; The period during which an official/employee was on authorized sick leave of absence without exceeding one year; The period during which an official or employee was out of the service as a result of illegal termination of his service as finally decided by the proper authorities; and All previous services with compensation or salary rendered by elective officials. (Sec. 1(f), Rule III, IRR, R.A. No. 7699) For private sector, the periods of contribution shall refer to the periods during which a person renders services for an employer with compensation or salary and during which UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation contributions were paid to SSS. (Sec. 1(g), Rule III, IRR R.A. No. 7699) D. DISABILITY AND DEATH BENEFITS NOTE: A self-employed person shall be considered an employee and employer at the same time. (Sec. 1(g), Rule III, IRR, R. A. No. 7699) 1. UNDER THE LABOR CODE Employees Compensation Program The benefits covered under the law are the following: 1. 2. 3. 4. 5. 6. The State shall promote and develop a tax-exempt Employee’s Compensation Program (ECP) whereby employees and their dependents, in the event of work-connected disability or death, may promptly secure adequate income benefit and medical related benefits. (Art. 172, LC) Old-age benefit; Disability benefit; Survivorship benefit; Sickness benefit; Medicare benefit, provided that the member shall claim said benefit from the System where he was last a member; and Such other benefits common to both System that may be availed of through totalization. (Sec. 1(j), Rule III, IRR, R.A. No. 7699) The basic features of the new program are: 1. 2. 3. 4. 5. 6. The System or Systems responsible for the payment of money benefits due to a covered worker shall release the same within 15 working days from receipt of the claim, subject to the submission of the required documents and availability if the complete employee/employer records in the System. (Sec. 2, Rule IV, IRR, R.A. No. 7699) Integration of benefits; Increase in benefits; Prompt payment of income benefits; Legal services dispensed with; Wider coverage; and A more balanced rehabilitation program. (Poquiz, 2019) State Insurance Fund The State Insurance Fund (SIF) is built up by the contributions of employers based on the salaries of their employees as provided under the Labor Code. (Chan, 2019) Q: Luisito has been working with Lima Land for 20 years. Wanting to work in the public sector, Luisito applied for and was offered a job at Livecor. Before accepting the offer, he wanted to consult you whether the payments that he and Lima Land had made to the Social Security System (SSS) can be transferred or credited to the Government Service Insurance System (GSIS). What would you advise? (2014 BAR) It is exclusively used for payment of the employee’s compensation benefits and no amount thereof is authorized to be used for any other purpose. (Art. 185, LC) Beneficiaries under the Labor Code A: YES. Under RA 7699, otherwise known as the Limited Portability Law, one may combine his years of service in the private sector represented by his contributions to the SSS with his government service and contributions to the GSIS. The contributions shall be totalized for purposes of oldage, disability, survivorship and other benefits in case the covered member does not qualify for such benefits in either or both Systems without totalization. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES I. Primary Beneficiaries 1. 2. 148 The legitimate spouse until he remarries. Legitimate, legitimated, legally adopted or acknowledged natural children, who are unmarried not gainfully employed, not over 21 years of age, or over 21 years of age provided that he is incapacitated and incapable of self-support due to physical Labor Law and Social Legislation 3. or mental defect, which is congenital or acquired during minority. NOTE: A dependent acknowledged natural child shall be considered as a primary beneficiary only when there are no other dependent children who are qualified and eligible for monthly income benefit; provided finally, that if there are two or more acknowledged natural children, they shall be counted from the youngest and without substitution, but not exceeding five (5). (Sec. 1(b), Rule XV, Amended Rules on EC) a. DISABILITY BENEFITS Disability refers to the loss or impairment of a physical or mental function resulting from injury or sickness. (Art. 173 (n), LC) The purpose of the law in providing benefits to the injured or sick employee during temporary disability is to compensate him for what he might have earned during the period while his injury or sickness is being medically treated. (Chan, 2019) II. Secondary beneficiaries 1. 2. The legitimate parents wholly dependent upon the employee for regular support; and Kinds of Disability There are three (3) kinds of disability benefits under the Labor Code: The legitimate descendants and illegitimate children who are unmarried, not gainfully employed, and not over 21 years of age, or over 21 years of age provided that he is incapacitated and incapable of self- support due to physical or mental defect which is congenital or acquired during minority. (Sec. 1(c), Rule XV, Amended Rules on EC) a. b. c. No claim for compensation shall be given due course unless said claim is filed with the System within three (3) years from the time the cause of action accrued. (Sec. 6(a), Rule VII, Amended Rules on EC) a. Temporary Total Disability A total disability is temporary if as a result of the injury or sickness, the employee is unable to perform any gainful occupation for a continuous period not exceeding 120 days, or where the injury or sickness still requires medical attendance beyond 120 days but not exceed 240 days from the onset of disability. (Sec. 2(a), Rule VII, Amended Rules on EC) Reckoning Date of the Three-Year Prescriptive Period Sickness – from the time the Ee lost his earning capacity. NOTE: The three (3) years have to be counted from the time the employee lost his earning capacity, not from the time the illness was discovered. (ECC v. Sanico, G.R. No. 134028, 17 Dec. 1999) 2. Temporary total disability (Art. 197, LC) Permanent total disability (Art. 198, LC) Permanent partial disability (Art. 199, LC) NOTE: The compensation for the disabilities is not mutually exclusive. For instance, recovery of compensation for temporary total disability or permanent partial disability shall not preclude recovery for permanent total disability. (Chan, 2019) Prescriptive Period 1. Death – from the time of death of the covered employee (Sec. 6(a), Rule VII, Amended Rules on Employees’ Compensation) Conditions for Entitlement An employee shall be entitled to an income benefit for temporary total disability if all the following conditions are satisfied: Injury – from the time it was sustained 1. 149 He has been duly reported to the System; UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation 2. 3. He sustains the temporary total disability as a result of the injury or sickness; and The System has been duly notified of the injury or sickness which caused his disability. b. Permanent Total Disability A disability is total and permanent if as a result of the injury or sickness, the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days except when the disability not exceeding 240 days is declared as temporary total disability. (Sec. 2(b), Rule VII, Amended Rules on EC) NOTE: His employer shall be liable for the benefit if such illness or injury occurred before the employee is duly reported for coverage to the System. (Sec. 1, Rule X, Amended Rules on EC) Total disability means disablement of an employee to earn wages in the same kind of work, or work of similar nature that he was trained for or accustomed to perform, or any kind of work which a person of his mentality and attainment could do. (Philippine Transmarine Carriers, Inc. v. NLRC, G.R. No. 123891, 28 Feb. 2001) Period of Entitlement The income benefit equivalent to 90% of his average daily salary credit shall be paid beginning on the first day of such disability. If caused by an injury or sickness, it shall not be paid longer than 120 consecutive days except when such injury or sickness still requires medical attendance beyond 120 days but not to exceed 240 days from onset of disability, in which case, benefit shall be paid. NOTE: In disability compensation, it is not the injury per se which is compensated but the incapacity to work. (Bejerano v. ECC, G.R. No. 84777, 30 Jan. 1992) However, the System may declare the total and permanent status at any time after 120 days of continuous temporary total disability as may be warranted by the degree of actual loss or impairment of physical or mental functions as determined by the System. (Sec. 2(a), Rule X, Amended Rules on EC) Conditions for Entitlement An employee is entitled to an income benefit for permanent total disability if all of the following conditions are satisfied: 1. 2. NOTE: An employee shall submit to the System a monthly medical report on his disability certified by his attending physician, otherwise, his benefit shall be suspended until such time that he complies with his requirement. (Sec. 5, Rule IX, Amended Rules on EC) 3. NOTE: His employer shall be liable for the benefit if such illness or injury occurred before the employee is duly reported for coverage to the System. (Rule XI, Amended Rules on Employees’ Compensation) Effect of Relapse of Illness After the employee has fully recovered from an illness as duly certified to by the attending physician, the period covered by any relapse he suffers, or recurrence of his illness, which results in disability and is determined to be compensable, shall be considered independent of, and separate from, the period covered by the original disability in the computation of his income benefit for temporary total disability. (Sec. 2(b), Rule X, Amended Rules on EC) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES He has been duly reported to the System; He sustains the permanent total disability as a result of the injury or sickness; and The System has been duly notified of the injury or sickness which caused his disability. Total Disabilities Deemed Permanent The following total disabilities shall be considered permanent: 1. 150 Temporary total disability lasting continuously for more than 120 days, except as otherwise provided for temporary Labor Law and Social Legislation 4. total disability; 2. Complete loss of sight of both eyes; 3. Loss of two limbs at or above the ankle or wrist; 4. Permanent complete paralysis of two limbs; 5. Brain injury resulting in imbecility and insanity; and 6. Such cases as determine by the System and approved by the Commission. (Sec. 1, Rule XI, Amended Rules on Employees’ Compensation) Benefit for Dependent Children Each dependent child, not exceeding five (5), counted from the youngest and without substitution, shall be entitled to ten percent of the monthly income benefit of the employee. This rule, however, shall not apply to causes of action which accrued before 1 May 1978. (Sec. 4, Rule XI, Amended Rules on Employees’ Compensation) incurable c. The full month income benefit shall be paid for all compensable months of disability. (Sec. 2(a), Rule XI, Amended Rules on Employees’ Compensation) NOTE: An employee’s disability may not manifest fully at one precise moment in time but rather over a period of time. It is possible that an injury which at first considered as temporary may later become permanent, or who suffers a partial disability becomes total and permanently disabled for the same cause. (GSIS v. CA, G.R. No. 117572, 29 Jan. 1998) After the benefit under the EC shall has ceased as provided under the preceding paragraph, and if the employee is otherwise qualified for benefit for the same disability under another law administered by the System, he shall be paid a benefit in accordance with the provisions of that law. This paragraph applies to contingencies which occurred prior 1 May 1978. (Sec. 2 (b), Rule XI, Amended Rules on Employees’ Compensation) Conditions for Entitlement An employee is entitled to an income benefit for permanent partial disability if all of the following conditions are satisfied: NOTE: Except as otherwise provided for in other laws, decrees, orders or letter of instructions, the monthly income benefit shall be guaranteed for five (5) years and shall be suspended under any of the following conditions: Failure to present himself for examination at least once a year upon notice by the System; 2. Failure to submit a quarterly medical report certified by his attending physician; 3. Complete or full recovery from his permanent disability; or Permanent Partial Disability A disability is partial and permanent if as a result of injury or sickness, the employee suffers a permanent partial loss of the use of any part of his body. (Sec. 2(c), Rule VII, Amended Rules on Employees’ Compensation) Period of Entitlement 1. Upon being gainfully employed. (Sec. 2(c), Rule XI, Amended Rules on Employees’ Compensation) 1. 2. 3. He has been duly reported to the System; He sustains the permanent partial disability as a result of the injury or sickness; and The System has been duly notified of the injury or sickness which caused his disability. NOTE: His employer shall be liable for the benefit if such illness or injury occurred before the employee is duly reported for coverage to the System. For purposes of entitlement to income benefits, a covered employee shall continue to receive benefits 151 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation provided thereunder even if he is gainfully employed and receiving his wages or salary. (Sec. 1, Rule XII, Amended Rules on Employees’ Compensation) 4. Period of Entitlement 6. 5. The monthly income benefit shall be paid beginning on the first month of such disability, but no longer than the designated number of months in the following schedule: (Art. 199, LC) Complete and Permanent Loss of the Use of One thumb One index finger One middle finger One ring finger One little finger One big toe Any toe One hand One arm One foot One leg One ear Both ears Hearing of one ear Hearing of both ears Sight of one eye 7. b. DEATH BENEFITS Number of Months 10 8 6 5 3 6 3 39 50 21 46 10 20 10 50 25 Compensable death refers to death which is the result of a work-related injury or sickness. (Chan, 2019) Conditions for Entitlement The beneficiaries of a deceased employee shall be entitled to an income benefit if all of the following conditions are satisfied: 1. 2. 3. A worker who sustained work-related injuries that resulted to functional loss and/or physical loss of any part of this body shall be granted Temporary Total Disability (TTD) and Permanent Partial Disability (PPD) benefits successively. Any earlier compensation for TTD that may have been paid to an injured worker shall not be deducted from the PPD benefit that may be later granted to him. 2. 3. If the employee has been receiving monthly income benefit for Permanent Total Disability (PTD) at the time of his death, the surviving spouse must show that the marriage has been validly subsisting at the time of his disability. In addition, the cause of death must be a complication or natural consequence of the compensated PTD. (Sec. 1, Art. XIII, Amended Rules on Employees’ Compensation) Loss of a wrist shall be considered a loss of a hand; Loss of an elbow shall be considered a loss of the arm; Loss of an ankle shall be considered a loss of the foot; UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES The employee has been duly reported to the System; He died as a result of an injury or sickness; and The System has been duly notified of his death as well as the injury or sickness which caused his death. NOTE: His employer shall be liable for the benefit if such illness or injury occurred before the employee is duly reported for coverage to the System. NOTE: Under Sec. 2(b), Art. XII, Amended Rules on Employees’ Compensation: 1. Loss of a knee shall be considered a loss of the leg; Loss of more than one joint shall be considered a loss of the whole finger or toe; Loss of only the first joint shall be considered a loss of one-half of the whole finger or toe; and Other permanent partial disabilities shall be determined by the Medical Officer of the System. 152 Labor Law and Social Legislation wives, her basic monthly pension shall be equally redistributed to the remaining wives; and Period of Entitlement I. 1. For Primary Beneficiaries 3. The monthly income benefit shall be paid beginning at the month of death and shall continue to be paid as long as the beneficiaries are entitled thereto. With respect to the surviving legitimate spouse, the qualification is that he/she has not remarried. For dependent children, the qualifications are that they must be: a. b. c. 2. Unmarried; Not gainfully employed; and Over 21 years of age provided he/she is incapable of self-support due to a physical or mental defect which is congenital or acquired during minority. Presumptive Death Under ECC Circular No. 15-01-20, 20 Jan. 2015, the following are the series of events which should be considered in the grant of EC benefits: The monthly income benefit shall be guaranteed for five (5) years which in no case shall be less than P15,000.00. Thereafter, the beneficiaries shall be paid the monthly income benefit for as long as they are entitled thereto. (Sec. 2(A), Art. XIII, Amended Rules on Employees’ Compensation) II. The qualified dependent children not exceeding five (5) beginning with the youngest and without substitution, who are entitled to dependent’s pension, shall be counted from among the collective number of children of the wives of the Muslim and not counted from the children of each wife of the Muslim. (Board Resolution No. 14-0734, 29 July 2014) a. The word “missing” refers to unknown fate or there is no trace of whereabouts of a worker, employee and uniformed personnel while he/she is in the performance of his/her duties during the calamities or fatal events; b. The worker, employee or uniformed personnel was not seen or hear from after the lapse of four years from the occurrence of the incident; c. The disappearance of the worker, employee or uniformed personnel gives rise to presumption of death; and d. The death of the worker, employee or uniformed personnel arises out of and in the course of employment. For Secondary Beneficiaries: The income benefit shall be 60 times the monthly income benefit of a primary beneficiary, which in no case be less than P15,000.00, which shall likewise be paid in monthly pension. (Sec. 2(B), Art. XIII, Amended Rules on EC) NOTE: If the deceased has no beneficiaries at the time of his death, the death benefit shall accrue to the Employees Compensation Fund. (Sec. 2, Art XV, Amended Rules on EC) In relation thereto, the following are the guidelines on the grant of EC death benefits to qualified wives and children beneficiaries of Muslims: 1. The basic monthly pension shall be divided equally among the surviving wives; 2. Upon the death or remarriage of any of the 153 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation Liabilities of the Er When the Seafarer Suffers Work-Related Injury or Illness During the Term of His Contract 2. UNDER THE POEA STANDARD EMPLOYMENT CONTRACT (POEA-SEC) For an occupational disease and the resulting disability or death to be compensable, all of the following conditions must be satisfied: 1. 2. 3. 4. 1. The Er shall continue to pay the seafarer his wages during the time he is on board the ship; The seafarer's work must involve the risks described in Section 32-A of the POEA-SEC; The disease was contracted as a result of the seafarer's exposure to the described risks; The disease was contracted within a period of exposure and under such other factors necessary to contract it; and There was no notorious negligence on the part of the seafarer. (Benedict Romana v. Magsaysay Maritime Corporation, G.R. No. 192442, 02 Aug. 2017) 2. If the injury or illness requires medical and/or dental treatment in a foreign port, the Er shall be liable for the full cost of such medical, serious dental, surgical and hospital treatment as well as board and lodging until the seafarer is declared fit to work or to be repatriated. NOTE: However, if after repatriation, the seafarer still requires medical attention arising from said injury or illness, he shall be so provided at cost to the Er until such time he is declared fit or the degree of his disability has been established by the company-designated physician; a. DISABILITY BENEFITS Elements of a Compensable Injury 1. 2. 3. The seafarer shall also receive sickness allowance from his Er in an amount equivalent to his basic wage computed from the time he signed off until he is declared fit to work or the degree of disability has been assessed by the company-designated physician. (Sec. 20(a) 2010 POEA-SEC) The injury or illness is work-related; and It occurred during the term of the seafarer’s contract. Kinds of Disability 1. 2. Permanent disability is the inability of a worker to perform his job for more than 120 days, regardless of whether or not he loses the use of any part of his body. NOTE: a. The period within which the seafarer shall be entitled to his sickness allowance shall not exceed 120 days. Total disability means the disablement of an employee to earn wages in the same kind of work of similar nature that he was trained for, accustomed to perform, or any kind of work which a person of his mentality and attainments could do. b. 4. The seafarer shall be entitled to reimbursement of the cost of medicines prescribed by the company-designated physician; and A total disability does not require that the employee be completely disabled, or totally paralyzed. What is necessary is that the injury must be such that the employee cannot pursue his or her usual work and earn from it. A total disability is considered permanent if it lasts continuously for more than 120 days. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Payment of the sickness allowance shall be made on a regular basis, but not less than once a month. 5. In case of permanent total or partial disability of the seafarer caused by either injury or illness, the seafarer shall be 154 Labor Law and Social Legislation In Case Treatment of the Seafarer is on an Outpatient Basis as Determined by the Companydesignated Physician report to the office due to his medical condition. Caraan got himself examined, where it was revealed that there is a mass in his left kidney. Upon transfer to the National Kidney and Transplant Institute (NKTI), his left kidney was surgically removed, where it was confirmed that he had renal cell carcinoma. 1. The company shall approve the appropriate mode of transportation and accommodation; Is Caraan entitled to disability benefits? 2. The reasonable cost of actual traveling expenses and/or accommodation shall be paid subject to liquidation and submission of official receipts and/or proof of expenses; and 3. For this purpose: compensated in accordance with the schedule of benefits enumerated in Sec. 32 of the POEA-SEC. A: YES. Under Section 20(B) of the POEA Standard Employment Contract, these are the requirements for compensability: (1) the seafarer must have submitted to a mandatory post-employment medical examination within three working days upon return; (2) the injury must have existed during the term of the seafarer's employment contract; and (3) the injury must be work-related. GR: The seafarer shall submit himself to a postemployment medical examination by a companydesignated physician within three (3) working days upon his return. When he arrived in the Philippines, Caraan was already ill and no longer in good physical condition to go back to Manila for treatment. Immediately, petitioner was subjected to series of laboratory tests to properly diagnose his ailment. XPN: When he is physically incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as compliance. The treatment by the health card-accredited doctors served the equivalent post-employment medical examination to show that petitioner's illness existed during his employment. It is undisputed that Caraan had been with Grieg PH since 2006. Caraan’s illness — renal cell carcinoma — could not have occurred overnight after repatriation. In the case of petitioner, his kidney cancer gradually progressed while he was employed with Grieg PH until it manifested when petitioner complained of pain in urinating and discharging blood in his urine. Hence, at any time during his 8-year employment with Grieg PH, petitioner was already suffering from this illness while at sea. In the course of the treatment, the seafarer shall also report regularly to the company-designated physician specifically on the dates as prescribed by the company-designated physician and agreed to by the seafarer. Failure of the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of the right to claim the above benefits. (Sec. 20-A(3), 2010 POEA-SEC) Q: Caraan’s duties as a motorman on board MV Star Loen involved strenuous physical activities for his 18-hour shift, and exposed him to all kinds of noxious gases, harmful fumes and excessive noise while inside the engine room. Due to his working conditions and dietary provision, he experienced pain while urinating and discharged blood in his urine. Eventually, he was declared unfit to work and medically repatriated to the Philippines. Instead of being fetched by his employer, he just went straight home to Bataan. His wife informed Grieg PH via mobile phone that he could not personally Petitioner had likewise proved that his working conditions aggravated his kidney ailment. As found by the arbitrators, petitioner had sufficiently established that his working conditions on board the vessel increased the risk of contracting the kidney disease. Grieg PH failed to dispute this and did not even offer any controverting evidence. 155 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation (Caraan v. Grieg Philippines, Inc., G.R. No. 252199, 5 May 2021) frequently exposed to harmful chemicals which could have also contributed to Gonzales' leukemia. Q: Gonzales, while on board the general cargo vessel Star Florida, experienced "shortness of breath, pain in his left leg, fatigue, fever and headaches." The following month, his past symptoms returned with the added symptom of black tarry stools. He was initially diagnosed with "pancytopenia suspect aplastic anemia." This caused his further medical attention as Gonzales was repatriated in the Philippines. It is also not disputed that he contracted leukemia only while he was onboard Star Florida since he was certified to be fit for sea duty prior to boarding and his leukemia was not genetic in nature. (Grieg Philippines, Inc. v. Michael John Gonzales, G.R. No. 228296, 26 July 2017) Q: Manansala’s services were engaged by Marlow Navigation Phils., Inc, for him to serve as a fitter on a vessel. Before boarding the vessel, Manansala underwent a Pre-Employment Medical Examination (PEME). In his examination, Manansala was required to disclose information regarding all existing and prior medical conditions. Manansala's examination certificate indicates that he denied having hypertension and diabetes, specifically answering "NO." The company physicians opined that Gonzales' leukemia was not work-related. He sought a second opinion from an independent physician, Dr. Emmanuel Trinidad, who certified that his leukemia was work-related. Gonzales claimed for disability benefits against Grieg Philippines, Inc. but denied the same on the ground that Gonzales was not able to substantially prove the relation between his illness and his former position as an Ordinary Seaman. On 30 May 2010, while on board the vessel, Manansala suffered a stroke. Because of this, Manansala was repatriated on 08 June 2010. He was confined at the De Los Santos Medical Center from 10 June 2010 to 23 June 2010, under the primary care of company-designated physician, Dr. Barrairo. While under Dr. Barrairo's care, he "repeatedly denied that he had any past history of diabetes and hypertension." Can Gonzales claim disability benefits against Grieg Philippines, Inc.? A: YES. Settled is the rule that for illness to be compensable, it is not necessary that the nature of the employment be the sole and only reason for the illness suffered by the seafarer. It is sufficient that there is a reasonable linkage between the disease suffered by the employee and his work to lead a rational mind to conclude that his work may have contributed to the establishment or, at the very least, aggravation of any pre-existing condition he might have had. On 21 Oct. 2010, Manansala filed a Complaint against the respondents for total and permanent disability benefits. Two months after he filed his complaint, Dr. San Luis, issued a medical opinion stating that Manansala must be considered permanently disabled. The same opinion indicated that Manansala admitted to having had a long history of hypertension and diabetes. Gonzales was able to satisfy the conditions under the Sec. 32-A of the 2000 POEA – Standard Employment Contract and establish a reasonable linkage between his job as an Ordinary Seaman and his leukemia. Gonzales provided his functions as an Ordinary Seaman aboard Star Florida. Among others, his tasks included removing rust accumulations and refinishing affected areas of the ship with chemicals and paint to retard the oxidation process. This meant that he was UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Is Manansala entitled to total and permanent disability benefits occasioned by work-related illnesses? A: NO. Manansala is not entitled to total and permanent disability benefits. Sec. 20 (E) of the POEA-SEC bars the compensability of disability 156 Labor Law and Social Legislation arising from pre-existing illness when attended by an employee’s fraudulent misrepresentation. Petitioner knowingly and fraudulently misrepresented himself as not afflicted with hypertension and diabetes during his PENE and after repatriation while being treated by the company-designated physician. (Antonio Manansala v. Marlow Navigation Phils., Inc., G.R. No. 208314, 23 Aug. 2017) When a Seafarer May be Allowed to Pursue and Action for Total or Permanent Disability Benefits 1. The company-designated physician failed to issue a declaration as to his fitness to engage in sea duty or disability even after the lapse of the 120-day period and there is no indication that further medical treatment would address his temporary total disability, hence, justify an extension of the period to 240 days; 2. 240 days had lapsed without any certification issued by the company-designated physician; 3. The company-designated physician declared that he is fit for sea duty within the 120-day or 240-day period, as the case may be, but his physician of choice and the doctor chosen under Sec. 20-B(3) of the POEA-SEC are of a contrary opinion; 4. 7. The company-designated physician declared him totally and permanently disabled but the employer refuses to pay him the corresponding benefits; and 8. The company-designated physician declared him partially and permanently disabled within the 120-day or 240-day period but he remains incapacitated to perform his usual sea duties after the lapse of said periods. (C.F. Sharp Crew Management, Inc. v. Joel Taok, G.R. No. 193679, 18 July 2012) Q: Mabunay was hired by Sharpe Sea as an oiler for a period of nine (9) months. A day after boarding, Mabunay slipped and hit his back on the purifier, while he was cleaning. When he awoke, his back was numb and he had difficulty getting up. Despite the persistent pain in his back, Mabunay continued working for two (2) days, until the Chief Engineer allowed him to have a medical checkup when the ship docked in Nanjing, China. He was declared unfit to work by his attending physician and was eventually repatriated. On 30 Apr. 2009, Mabunay reported to Sharpe Sea's office and was told to report to a companydesignated physician. He was diagnosed with "Cervical Spondylosis; Thoracolumbar Spondylosis; and Mild chronic compression fracture". The doctor recommended that Mabunay undergo a discectomy. On 24 Nov. 2009, Mabunay underwent surgery and was observed that he "tolerated the procedure well." The company-designated physician acknowledged that he is partially permanently disabled but other doctors who he consulted, on his own and jointly with his employer, believed that his disability is not only permanent but total as well; 5. The company-designated physician recognized that he is totally and permanently disabled but there is a dispute on the disability grading; Mabunay filed a complaint against Sharpe Sea, Monte Carlo, and Florem for the payment of his total disability benefits Mabunay sought the opinion of third doctor, who opined that he was unfit to work as a seaman in his present condition. 6. The company-designated physician determined that his medical condition is not compensable or work-related under the POEA-SEC but his doctor-of-choice and the third doctor selected under Sec. 20-B(3) of the POEA-SEC found otherwise and declared him unfit to work; The LA ruled in Mabunay's favor and directed Sharpe Sea to pay him permanent and total disability benefits. It rejected Sharpe Sea's claim that its company-designated physicians assessed Mabunay with a disability rating of Grade 8 since it was not supported by the 157 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation and dizziness. He tried to remove it with his fingers but failed. Solacito was repatriated. Solacito underwent a surgical procedure at St. Luke's Medical Center. The company-designated physician issued a Medical Report finally declaring Solacito fit to work. Solacito filed a complaint for total and permanent disability benefits on the ground that his personal physician issued a Medical Certificate which states that he is physically unfit to go back to work as a seafarer in any capacity because of hearing loss (L) ear, which is a total and permanent disability. The LA and NLRC ruled in favor of Solacito. The CA explained that under the POEA-SEC and prevailing jurisprudence, the medical assessment of the company-designated physicians should be recognized when the seafarer, as in this case, did not submit himself to the assessment of a third doctor. Is the CA correct? records. The NLRC upheld the LA's findings that the records were bereft of evidence to support Sharpe Sea's claim. On 29 Nov. 2011, the NLRC modified its decision by reducing the award of US$60,000.00 it earlier granted to Mabunay, to US$16,795.00, corresponding to a Grade 8 disability rating. The NLRC noted that Sharpe Sea attached a medical report dated 18 Aug. 2009 from Dr. Cruz, which supported its claim that a company-designated physician had diagnosed Mabunay with a Grade 8 disability. Is Mabunay entitled to permanent and total disability benefits? A: YES. With the company-designated physicians' failure to issue either a fit-to-work certification or a final disability rating within the prescribed periods, respondent's disability was rightfully deemed to be total and permanent. A: YES. Section 20(B)(3) of the POEA-SEC requires that, after medical repatriation, the companydesignated physician must assess the seafarer's fitness to work or the degree of his disability. Thereafter, the seafarer may choose his own doctor to dispute the findings of the company-designated physician. If the findings of the company-designated physician and the seafarer's doctor of choice are conflicting, the matter is then referred to a third doctor, whose findings shall be binding on both parties. The seafarer has then the duty to signify his intent to challenge the company-designated physician's assessment and, in turn, the employer must respond by setting into motion the process of choosing the third doctor. A company-designated physician is expected to come up with a definite assessment of a seafarer's fitness or lack of fitness to work or to determine the seafarer's degree of disability within a period of 120 or 240 days from repatriation. Clearly, Dr. Cruz, Dr. Castillo, or any other company-designated physician failed to issue respondent either a fit-towork certification or a final disability rating after his operation and before the lapse of 240 days from his repatriation. Nonetheless, even if this Court accepted petitioners' explanation on the belated submission of the disability rating into evidence, it is worthy to note that Dr. Cruz only issued an interim disability rating. It has been settled in Magsaysay Maritime Corp. that an interim disability grading is merely an initial prognosis and does not provide sufficient basis for an award of disability benefits. (Sharpe Sea Personnel, Inc. v. Macario Mabunay, Jr., G.R. No. 206113, 06 Nov. 2017) Following the disability assessment issued by his personal physician which conflicted with that of the company-designated physicians, it was incumbent on Solacito to refer the findings of his own doctor to his employer who would then have had the obligation to commence the process of the selection of the third doctor. However, he failed to do so. Nonreferral to a third doctor, whose decision shall be considered as final and binding, constitutes a breach of the POEA-SEC and the assessment of the company-designated physician shall prevail. Q: Pacific Ocean Manning, Inc. hired Solacito as an Able Seaman on board M/V Eurocardo Salerno. Solacito alleged that while he was on pirate watch, an insect entered and lodged itself inside his left ear which caused pain, itchiness, UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 158 Labor Law and Social Legislation otherwise provided, is considered as a total and permanent disability. The exception pertains to a situation when the sickness "still requires medical attendance beyond the 120 days but not to exceed 240 days" in which case the temporary total disability period is extended up to a maximum of 240 days. (Pacific Ocean Manning, Inc. v. Solacito, G.R. No. 217431, February 19, 2020, J. Caguioa) Need for Definite Assessment Within 120/240 Days The court summarized the rules regarding the company-designated physician's duty to issue a final medical assessment on the seafarer's disability grading, as follows: 1. The company-designated physician must issue a final medical assessment on the seafarer's disability grading within a period of 120 days from the time the seafarer reported to him; 2. If the company-designated physician fails to give his assessment within the period of 120 days, without any justifiable reason, then the seafarer's disability becomes permanent and total; 3. 4. However, for the company-designated physician to avail of the extended 240-day period, he must first perform some significant act to justify an extension; otherwise, the seafarer's disability shall be conclusively presumed to be permanent and total. (Talaroc v. Arpaphil Corporation, et. al., G.R. No. 223731, 30 Aug. 2017) Third-Doctor Referral If the physician appointed by the seafarer disagrees with the company-designated physician's assessment, the opinion of a third doctor may be agreed jointly between the employer and the seafarer to be the decision final and binding on them. Non-compliance with this procedure would lead to the conclusion that the determination of the company-designated physician would prevail. (Jakerson Gargallo v. Dohle Seafront Crewing, G.R. No. 215551, 17 Aug. 2016) If the company-designated physician fails to give his assessment within the 120 days with a sufficient justification (e.g., seafarer required further medical treatment or seafarer was uncooperative), then the period of diagnosis and treatment shall be extended to 240 days. The employer has the burden to prove that the company-designated physician has sufficient justification to extend the period; and Q: Pastrana is employed by BSS as an Environmental Team Leader on board the vessel Carnival Fascination. While on board the vessel, Pastrana lifted a red bin full of food waste to free up space for other bins. However, he miscalculated the weight of the bin and dropped it midway. After said incident, Pastrana experienced lower back pain which radiated to his right buttock. On December 10, 2012, Pastrana was repatriated to the Philippines for medical treatment. On April 11, 2013, the company-designated physician issued a final assessment which states that he has a Grade 11 disability rating. Pastrana sought the opinion of his personal doctor, who declared him "permanently unfit in any capacity to resume his duties as a Seaman." Pastrana now claims total and permanent disability benefits from BSS. Is Pastrana entitled to total and permanent disability benefits? If the company-designated physician still fails to give his assessment within the extended period of 240 days, then the seafarer's disability becomes permanent and total, regardless of any justification. Case law states that without a valid final and definitive assessment from the companydesignated physician within the 120/240-day period, the law already steps in to consider petitioner's disability as total and permanent. Thus, a temporary total disability becomes total and permanent by operation of law. (Oscar Gamboa v. Maunlad Trans., Inc., G.R. No. 232905, 20 Aug. 2018) NOTE: A temporary total disability lasting continuously for more than 120 days, except as 159 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation Philippines. Esteva returned to the Philippines and reported to his employer. The company-designated physician, Dr. CruzBalbon, issued a Medical Certificate indicating that Esteva was given medications for Pott's disease, a form of tuberculosis of the spine. She prescribed that Esteva take at least one (1) year of treatment. A: YES. In the seafarer’s claim for total and permanent disability benefits, the companydesignated physician is required to issue a final and definitive disability assessment within 120 or 240 days from the date of the seafarer's repatriation. The initial 120 days within which the companydesignated physician must issue a final and definitive disability assessment may be extended for another 120 days for justifiable reasons. However, to avail of the extended 240-day period, the company-designated physician must perform some complete and definite medical assessment to show that the illness still requires medical attendance beyond 120 days, but not to exceed 240 days. The failure of the company-designated physician to do so will render his findings nugatory and transform the disability suffered by the seafarer to one that is permanent and total. In the Medical Certificate, Esteva's suggested disability grading was Grade 8, with 2/3 loss of lifting power. Esteva consulted another doctor, Dr. Reyes-Paguia, who issued another Medical Certificate. Esteva consulted another doctor, Dr. Raymundo, an orthopedic surgeon. The physician issued a Medical Report which showed Esteva to be ambulatory but walking with a limp and his condition will no longer allow him to return as an able-bodied seaman. In this case, the assessment dated April 11, 2013 was issued beyond the mandated 120-day period. While this initial 120-day period may be extended to 240 days, the Court finds no sufficient justification to apply the extended period in this case. The records of the case are bereft of any indication that such extension was needed, or even intended, to provide Pastrana further medical treatment. Such failure of the company-designated physician rendered his opinion on Pastrana's disability irrelevant. The law had already stepped in, and considered Pastrana permanently and totally disabled. (Pastrana v. Bahia Shipping Services, G.R. No. 227419, June 10, 2020, J. Caguioa) Is Esteva entitled to total disability benefits? A: YES. The entitlement of an overseas seafarer to disability benefits is governed by law, the employment contract, and the medical findings. Sec. 20, (3) of the POEA Standard Employment Contract states that “. . . if a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the Employer and the seafarer. The third doctor's decision shall be final and binding on both parties.” As the one contesting the company-designated physician's findings, it is the seafarer's duty to signify the intention to resolve the conflict through the referral to a third doctor. If the seafarer does not contest the findings and fails to refer the assessment to a third doctor, the company can insist on its disability rating even against a contrary opinion by another physician. Securing a third doctor's opinion is the duty of the employee, who must actively or expressly request for it. Q: Smith Bell Manning hired Esteva as a seafarer for nine (9) months. He underwent the prescribed medical examination and was pronounced fit to work. While he was onboard the vessel, Esteva began to suffer severe back pains. He underwent x-ray and was diagnosed with lumbar disc prolapse. According to the Injury/Illness Report, his condition required a specialist treatment and possible operation. Dr. Watson declared Esteva to have a temporary total disability and unfit for work and recommended immediate repatriation. Wilhelmsen Ship Management also wrote a letter requesting that Esteva be examined by the company-designated physician in the UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Here, petitioner failed to signify his intention to resolve the conflicting assessments of the companydesignated physician and his chosen physicians. Instead, he immediately filed the claim for permanent disability benefits. Clearly, petitioner 160 Labor Law and Social Legislation definitive medical assessment within the 240-day extended period transformed the respondent’s disability to permanent and total. failed to comply with the mandatory rule on referral to a third doctor. Be that as it may, respondents also failed to discharge their duty. Petitioner claims that they did not inform him that the company-designated physician has already issued an assessment. Respondents did not dispute his contention that he was never furnished copies of the disability assessment, and that only after filing the Complaint did, he become aware of it. In Island Overseas Transport Corporation v. Beja, this Court clarified that: If the maritime compensation complaint was filed prior to 06 Oct. 2008, the rule on the 120-day period, during which the disability assessment should have been made in accordance with Crystal Shipping, Inc. v. Natividad, that is, the doctrine then prevailing before the promulgation of Vergara on 06 Oct. 2008, stands; if, on the other hand, the complaint was filed from 06 Oct. 2008 onwards, the 240-day rule applies. (Orient Hope Agencies, Inc. v. Michael Jara, G.R. No. 204307, 06 June 2018) Absent a final, definite disability assessment from a company-designated physician, the mandatory rule on a third doctor referral will not apply here. Hence, petitioner cannot be faulted for not referring the assessment to a third doctor at the time he filed his Complaint. There was no medical assessment from a company-designated physician to contest then as it had not been timely disclosed to him. Q: After suffering an Epileptic Seizure with postfit neurological deficit, Atraje was repatriated to the Philippines and was referred to the company-designated doctor for further medical evaluation and treatment. After completing his treatment, Atraje continued to suffer from shoulder and neck pain. Thus, he consulted an independent specialist who declared him permanently unfit to resume his duties as a seaman. Thus, petitioner's failure to refer the assessment to a third doctor is not fatal to his disability claim. Hence, petitioner is entitled to total and permanent disability benefits (Jessie C. Esteva v. Wilhelmsen Smith Bell Manning, et al., G.R. No. 225899, 10 July 2019) Atraje later filed a complaint for permanent and total disability benefits against his employers. The latter argued that since Atraje failed to comply with the third doctor rule, the assessment of the company-designated doctor should prevail. Q: Jara was hired by Orient Hope as an engine cadet on board M/V Orchid Sun. On its way to Oman, M/V Orchid Sun sank off Muscat on 12 July 2007. Jara sustained leg injuries. On 29 May 2008, the company-designated physician suggested that his disability grading is Grade 11. Meanwhile, the Panel of Voluntary Arbitrators noted that while Atraje initiated submitting to examination by a third doctor, there was silence on the part of his employers. Hence, it held that Atraje could not be faulted anymore if the appointment of a third physician was deemed waived in this case. On 06 Mar. 2008, Jara filed a complaint with the Labor Arbiter, insisting that he was entitled to total permanent disability benefits amounting to US$60,000.00. Is Jara entitled to permanent and total disability compensation considering that there was a Grade 11 disability grading given by the company-designated physician? Does non-compliance with the third doctor rule prejudice Atraje’s claim for disability benefits? A: YES. Jara is entitled to permanent and total disability compensation despite the Grade 11 disability grading given by the company-designated physician. The Court finds that the companydesignated physician’s failure to issue a final and A: NO. Under Sec. 20-A(3) of the 2010 POEA-SEC, “If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly 161 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation and consult a doctor of his choice, Sec. 20-A(3) thereof further provides that any disagreement in the findings may be referred to a third doctor jointly agreed upon by the parties, whose findings shall be final and binding between them. The nonobservance of the requirement to have the conflicting assessments determined by a third doctor would mean that the assessment of the company-designated physician prevails. between the Employer and the seafarer. The third doctor’s decision shall be final and binding on both parties.” The assessment refers to the declaration of fitness to work or the degree of disability, as can be gleaned from the first paragraph of Sec. 20-A(3). It presupposes that the company-designated physician came up with a valid, final, and definite assessment on the seafarer’s fitness or unfitness to work before the expiration of the 120- or 240-day period. Considering that Ventura failed to observe the conflict-resolution procedure provided under the 2010 POEA-SEC, the Court is inclined to uphold the opinion of the company-designated physician that Ventura's illnesses were not work-related, hence, not compensable. In this case, the third doctor-referral provision does not apply because there is no definite disability assessment from the company-designated physicians. (Magsaysay Mol Marine, Inc. v. Atraje, G.R. No. 229192, 23 July 2018) Q: Toquero was employed by Crossworld as a fitter for a vessel for seven (7) months. He underwent a pre-employment medical examination and was declared fit for sea duty. While on board the vessel, Toquero was assaulted by his fellow seafarer, Fong. Q. Teodoro Ventura, Jr. was employed by Crewtech Shipmanagement Philippines, Inc. as Chief Cook on board the vessel MV Maria Cristina Rizzo. Ventura complained that he was having a hard time urinating that was accompanied by lower abdominal pain. He was medically repatriated and referred to the company-designated physician who diagnosed Ventura's illnesses to be "Cystitis with Cystolithiases and Benign Prostatic Hyperplasia (BPH)," which he declared to be not workrelated. According to Toquero, he and Fong were instructed by the master of the vessel to check and repair a generator. While repairing, Toquero advised Fong not to remove the flanges which his irked Fong, and recalled their prior altercation and challenged him to a fistfight. He ignored Fong and continued working when suddenly Fong hit the back of his head with a large metal spanner, knocking him unconscious. He was given first aid treatment at the ship clinic, where his vital signs were monitored. Prior to the expiration of the 240-day period reckoned from his repatriation, Ventura claimed that he was verbally informed by the company-designated physician that it would be his last check-up session and that subsequent consultations would be for his own account. Ventura was compelled to seek an independent physician of his choice, Dr. Tan, who declared him to be permanently disabled. Toquero's assessment showed that his physical discomfort was due to trauma and skull defect. His Medical Evaluation Report read that Toquero became incapacitated because of the serious head injury that he incurred on board; he has a large bone defect which may pose further damage to his brain; contusion of the brain tissue also occurred at the site of the skull fracture. At this time, he is no longer allowed to engage in heavy physical activities. The ship's environment is also dangerous to him because of the unsteady state of the vessel when sailing at high seas. Dizziness may set anytime and may Ventura filed a complaint for total permanent disability benefits. Crewtech argued that the failure to observe the procedure for the joint appointment of a third doctor negates the claim for the disability benefits. Is Ventura entitled? A. NO. While the seafarer is not irrevocably bound by the findings of the company-designated physician as he is allowed to seek a second opinion UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 162 Labor Law and Social Legislation result to fall, which irreparable injury. nowhere. He was then bought to a psychiatric clinic where he was diagnosed with Occupational Stress Disorder and recommended his immediate repatriation on the ground of "acute psychosis.” may cause further Because of the impediment, he is permanently unfit to return to work as a seaman in any capacity and considered for total permanent disability. Is Toquero's injury compensable? Upon Cayabyab's arrival in the Philippines, VMC referred him to the company-designated physician, who endorsed him to a psychiatrist at the Philippine General Hospital (PGH). The psychiatrist prescribed him medication for schizophrenia and advised him to return to work. During his follow-up check-up on said date, the psychiatrist declared that Cayabyab had a brief psychotic episode. Subsequently, the company-designated physician issued a Grade 6 Disability Assessment. Cayabyab thus filed a complaint for total and permanent disability benefits. Months after the filing of the complaint, Cayabyab a second opinion from his personal physician, Dr. Elias D. Adamos, who declared him to be suffering from total and permanent disability. A: YES. A disability is compensable under the POEA Standard Employment Contract if two (2) elements are present: 1. 2. The injury or illness must be work-related; and The injury or illness must have existed during the term of the seafarer's employment contract. Hence, a claimant must establish the causal connection between the work and the illness or injury sustained. Here, the two (2) elements of a work-related injury are present. Not only was petitioner's injury workrelated, it was sustained during the term of his employment contract. His injury, therefore, is compensable. The LA awarded Cayabyab total and permanent disability benefits. On the other hand, the NLRC held that VMC is liable to pay Cayabyab only partial disability benefits corresponding to Grade 6 rating under the Amended POEA-SEC. On appeal, the CA upheld the findings of the company-designated physician who classified Cayabyab's mental disorder as a partial disability with a Grade 6 rating. It also held the local agency VMC and its foreign principal SPMC solidarity liable for the payment of Grade 6 disability benefits owing to Cayabyab, based on the parties' CBA. Respondents' argument that the claim is precluded because the injury is due to the willful acts of another seafarer is untenable. The POEA-SEC disqualifies claims caused by the willful or criminal act or intentional breach of duties done by the claimant, not by the assailant. It is highly unjust to preclude a seafarer's disability claim because of the assailant's willful or criminal act or intentional breach of duty. (Toquero v. Crossworld Marine Services, et al., G.R. No. 213482, 26 June 2019) Q: Ventis Maritime Corporation (VMC) hired Cayabyab on behalf of its foreign principal, St. Paul Maritime Corporation (SPMC), to work as a wiper on board one of its vessels. Cayabyab underwent a Pre-Employment Medical Examination (PEME) where he was declared fit for sea duty. In fulfilling his work, Cayabyab claimed he skipped meals to assist other crew members. He also experienced erratic sleeping patterns aggravated by poor nutrition. He began talking to himself and recited bible verses out of Can Cayabyab claim partial disability benefits under the CBA? A: NO. Cayabyab cannot claim partial disability benefits under the alleged CBA. There are three (3) requisites which a seafarer declared to be suffering from a disability, whether permanent or partial, must prove to establish his or her entitlement to superior disability benefits under the CBA. First, the existence of the CBA; second, the 163 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation seafarer's employment contract is covered by the CBA, i.e., the CBA is in effect or had not yet lapsed at the time of the seafarer's employment; and third, that the seafarer complied with the conditions stipulated in the CBA, i.e., prove that the seafarer's injury arise from an accident while on board the vessel. In Case of Work-Related Death of the Seafarer, During the Term of his Contract The Er shall pay his beneficiaries the Philippine currency equivalent to: Cayabyab cannot claim disability benefits under the CBA owing to the following reasons: 1) He failed to prove its existence; 2) He failed to establish that his employment contract is covered by the supposed CBA; and 3) He failed to adduce evidence to show that his disability arose from an accident. 1. The amount of $50,000; and 2. An additional amount of $7,000 to each child under the age of 21 but not exceeding four (4) children, at the exchange rate prevailing during the time of payment. (Sec. 20-B(1), 2010 POEA – SEC) Where Death is Caused by Warlike Activity While Sailing Within a Declared War Zone or War Risk Area The award of compensation and disability benefits cannot rest on speculations, presumptions, and conjectures. While the CBA is a labor contract that must be logically and liberally construed in favor of Filipino seafarers, still the rule is that "justice is in every case for the deserving, to be dispensed with in the light of established facts, the applicable law, and existing jurisprudence. The compensation payable shall be doubled. The employer shall undertake appropriate war zone insurance coverage for this purpose. NOTE: It is understood and agreed that the benefits mentioned above shall be separate and distinct from, and will be in addition to whatever benefits which the seafarer is entitled to under Philippine laws from the SSS, OWWA, ECP, PHIC and Home Development Mutual Fund (Pag-IBIG Fund). (Sec. 200-B(2), 2010 POEA – SEC) Thus, Cayabyab is entitled to disability benefits corresponding to Grabe 6 disability rating under the Amended POEA-SEC, and not the CBA. (Ventis Maritime Corporation, et al. v. Cayabyab, G.R. No. 239257, 21 June 2021) Other Liabilities of the Er When the Seafarer Dies as a Result of Work – Related Injury or Illness During the Term of Employment (O-R-B) b. DEATH BENEFITS GR: The seafarer’s death should occur during the term of his employment. XPN: The seafarer’s death occurring after the termination of his employment due to his medical repatriation on account of a work-related injury or illness. This is based on a liberal construction of the 2000 POEA-SEC as impelled by the plight of the bereaved heirs who stand to be deprived of a just and reasonable compensation for the seafarer’s death, notwithstanding its evident workconnection. (Sec. 20(B), 2010 POEA-SEC) 1. The employer shall pay the deceased’s beneficiary all outstanding Obligations due the seafarer under this Contract. 2. The employer shall transport the Remains and personal effects of the seafarer to the Philippines at employer’s expense except if the death occurred in a port where local government laws or regulations do not permit the transport of such remains. In case death occurs at sea, the disposition of the remains shall be handled or dealt with in accordance with the master’s best judgment. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 164 Labor Law and Social Legislation Is petitioner entitled to death benefits? In all cases, the employer/master shall communicate with the manning agency to advise for disposition of seafarer’s remains. 3. A: YES. Among other basic provisions, the POEASEC stipulates that the beneficiaries of a deceased seafarer may be able to claim death benefits for as long as they are able to establish that (a) the seafarer’s death is work-related, and (b) such death had occurred during the term of his employment contract. The employer shall pay the beneficiaries of the seafarer the Philippine currency equivalent to the amount of $1,000 for Burial expenses at the exchange rate prevailing during the time of payment. While it is true that Brainstem (pontine) Cavernous Malformation is not listed as an occupational disease under Sec. 32-A of the 2000 POEA-SEC, Sec. 20-B(4) of the same explicitly provides that “[t]he liabilities of the employer when the seafarer suffers work-related injury or illness during the term of his contract are as follows: those illnesses not listed in Sec. 32 of this Contract are disputably presumed as work related.” When is There No Compensation and Benefits to be Payable in Respect of an Injury, Incapacity, Disability or Death of a Seafarer No compensation and benefits shall be payable in respect of any injury, incapacity, disability or death of the seafarer when it is the result of his: 1. 2. Willful or criminal act; or Intentional breach of his duties Also, while the general rule is that the seafarer’s death should occur during the term of his employment, the seafarer’s death occurring after the termination of his employment due to his medical repatriation on account of a work-related injury or illness constitutes an exception thereto. Provided, that the employer can prove that such injury, incapacity, disability, or death is directly attributable to the seafarer. Q: Rodolfo L. Racelis was recruited and hired by respondent United Philippine Lines, Inc. (UPL) for its principal, respondent Holland America Lines, Inc. (HAL) to serve as "Demi Chef De Partie" on board the vessel MS Prinsendam. Invalid Side Agreement An agreement that diminishes an employee’s pay and benefits as contained in the POEA-approved contract is void, unless such subsequent agreement is approved by the POEA. (Azucena, 2016) In the course of his last employment contract, Rodolfo experienced severe pain in his ears and high blood pressure causing him to collapse while in the performance of his duties. He consulted a doctor in Argentina and was medically repatriated on for further medical treatment. Period to File OFW Claims The POEA-SEC states in Sec. 28 that claims under the contract shall be filed within 1 year from the date of the seafarer’s return to the point of hire. On the other hand, Art. 291 of the LC provides for 3 years to file money claims arising from employeremployee relations. The LC provision prevails over Sec. 28 of the SEC and the latter is declared “null and void.” (Azucena, 2016) Upon arrival in Manila, he was immediately brought to Medical City, Pasig City, where he was seen by a company-designated physician, Dr. Gerardo Legaspi, and was diagnosed to be suffering from Brainstem (pontine) Cavernous Malformation. He underwent surgery twice for the said ailment but developed complications and died. Rodolfo’s surviving spouse sought to claim death benefits but to no avail. Q: On 28 Feb. 2006, Magsaysay Maritime Corporation (Magsaysay), the local manning agent of Princess Cruise Lines, Limited, hired 165 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Social Welfare Legislation employment contract. It was likewise established that while Bernardine requested medical attention when he started to feel ill and upon his repatriation, his requests were repeatedly ignored. Bernardine De Jesus as an Accommodation Supervisor for the cruise ship Regal Princess. On 09 Mar. 2006, Bernardine boarded Regal Princess and he eventually disembarked 10 months later, or on 16 Jan. 2007, after his contract of employment ended. Bernardine was soon diagnosed with Aortic Aneurysm and on 15 Mar. 2007, he had a coronary angiography. This Court concurs with the Labor Arbiter's observation that it was improbable for Bernardine to have developed and died from a cardio-vascular disease within the two (2) short months following his repatriation. (Magsaysay Maritime Corporation v. Cynthia De Jesus, G.R. No. 203943, 30 Aug. 2017) On 21 Mar. 2007, he underwent a Left Axillofemoral Bypass. He died on 26 Mar. 2007. Cynthia, Bernardine’s widow claimed that her husband suffered chest pains while he was still aboard the Regal Princess. She claimed that he had reported his condition, but he was not provided with medical attention. Furthermore, he had also asked for medical attention upon his repatriation, but his request was once again denied. Is Bernardine’s widow is entitled to death benefits? A: YES. Bernardine's widow is entitled to death benefits. Sec. 20 (A) of the POEA-SEC requires that for a seafarer to be entitled to death benefits, he must have suffered a work-related death during the term of his contract. However, Sec. 32-A of the POEA-SEC acknowledges the possibility of "compensation for the death of the seafarer occurring after the employment contract on account of a work-related illness" if the following conditions are met: 1. 2. 3. 4. The seafarer's work must involve the risks described herein; The disease was contracted as a result of the seafarer's exposure to the described risks; The disease was contracted within a period of exposure and under such other factors necessary to contract it; and There was no notorious negligence on the part of the seafarer. Both labor tribunals found that Bernardine first experienced chest pains while he was still onboard the cruise ship, i.e., during the term of his UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 166 Labor Relations employee's means of livelihood which is a property right. (PAL v. NLRC, G.R. No. 85985, 13 Aug. 1993) Sec. 8, Art. III provides that, “The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law, shall not be abridged.” V. LABOR RELATIONS Labor Relations Refers to the interactions between employer and employees or their representatives and the mechanism by which the standards and other terms and conditions of employment are negotiated, adjusted, and enforced. (Azucena, 2016) Declaration of Policy The State aims to promote: The term denotes all aspects of Er-Ee relationship which involve concerted action on the part of the workers. It is usually associated with all the ramifications of unionism, collective bargaining and negotiations, and concerted activities such as strike, picket, mass leave, etc. (Poquiz, 2018) Constitutional provisions in relation to Labor Relations Sec. 3, Art. XIII guarantees to all workers, among others, their right to: 1. Self-organization 2. Peaceful concerted activities including the right to strike in accordance with law; and 3. Participate in policy-decision making processes affecting their rights and benefits as may be provided by law. The right to participate in policy and decisionmaking process is not absolute A scrutiny of the policy must be made if the same is purely business oriented and concerns the management aspect of the business of the company or if the policy has repercussions on the employee's right to security of tenure. A line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of the employees. In treating the latter, management should see to it that its employees are at least properly informed of its decisions or modes of action especially if the implementation of the provisions may result in the deprivation of an 167 1. Free collective bargaining and negotiations, including voluntary arbitration, mediation, and conciliation, as modes of settling labor or industrial disputes; 2. Free trade unionism; 3. Free and voluntary organization of a strong and united labor movement; 4. Enlightenment of workers concerning their rights and obligations as union members and as employees; 5. Adequate administrative machinery for the expeditious settlement of labor or industrial peace; 6. Stable but dynamic and just industrial peace; 7. Participation of workers in decision and policy making processes affecting their rights, duties, and welfare; and 8. Truly democratic method of regulating the relations between the employers and employees by means of agreements freely entered into through collective bargaining. UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation bargaining representative of the employees. (Azucena, 2013) A. RIGHT TO SELF-ORGANIZATION Right to Self-Organization 1. WHO MAY JOIN, FORM, OR ASSIST LABOR ORGANIZATIONS OR WORKERS’ ASSOCIATIONS Refers to the right of workers and employees to form, join, or assist unions, organizations, or associations for purposes of collective bargaining and/or for mutual aid and protection, including the right to engage in peaceful concerted activities and participate in policy-decision making processes affecting their rights and benefits. Who may unionize for purposes of collective bargaining All persons employed in commercial, industrial, and agricultural enterprises and in religious, charitable, medical, or educational institutions whether operating for profit or not, shall have the right to self-organization and to form, join, or assist labor organizations of their own choosing for purposes of collective bargaining. (Art. 253, LC) Extent of the Right to Self-Organization It includes at least two (2) rights: 1. 2. the employees’ group is not registered with the DOLE. (Azucena, 2013) The right to form, join, or assist labor organizations; and The right to engage in lawful concerted activities. (Art. 257, LC) Who may form a labor organization for purposes of mutual aid and protection 1. All persons employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical, or educational institutions, whether operating for profit or not; Q: Why do workers organize? 2. A: For self-advancement and the desire for: (a) job security; (b) substituting “rule of law” for the arbitrary power by the boss; and (c) sense of participation in the business enterprise. (Azucena, 2016) Ambulant, intermittent, and itinerant workers, self-employed people, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection. (Art. 253, LC) 3. Aliens working in the country with valid permits issued by the DOLE may exercise the right to self-organization and join or assist labor organizations of their own choosing for purposes of collective bargaining: Provided, that said aliens are nationals of a country which grants the same or similar rights to Filipino workers. (Principle of Reciprocity) 4. Employees of government corporations established under the Corporation Code shall have the right to organize and to bargain collectively with their respective employers. All other employees in the civil service shall Purpose of Exercise of Right to Self-Organization 1. 2. Collective bargaining; and Mutual aid and protection. (Art. 257, LC) Collective Bargaining vs. Dealing with Employer COLLECTIVE BARGAINING A right that may be acquired by a labor organization after registering itself with the DOLE and after being recognized or certified by DOLE as the exclusive DEALING WITH EMPLOYER A generic description of interaction between employer and employees concerning grievances, wages, work hours, and other terms and conditions of employment, even if UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 168 Labor Relations c. have the right to form associations for purposes not contrary to law. d. e. f. g. h. Q: Is the formation of workers’ association for mutual aid and protection (instead of a union for purposes of collective bargaining) limited only to ambulant, intermittent and itinerant workers, self-employed people, rural workers, and those without any definite employers? Managerial employees A: NO. The right to self-organization includes the right to form a union, workers' association, and labor management councils. A managerial employee is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign, or discipline employees. (Art. 219(m), LC) More often than not, the right to self-organization connotes unionism. Workers, however, can also form and join a workers' association as well as Labor Management Councils (LMC). Types of Managers The right to form a union or association or to selforganization comprehends two notions, to wit: (a) the liberty or freedom, that is, the absence of restraint which guarantees that the employee may act for himself without being prevented by law; and (b) the power, by virtue of which an employee may, as he pleases, join or refrain from joining an association. (Samahan ng Manggagawa sa Hanjin Shipyard v. BLR, G.R. No. 211145, 14 Oct. 2015) 2. RESTRICTIONS AS TO MANAGERIAL EMPLOYEES, SUPERVISORY EMPLOYEES, CONFIDENTIAL EMPLOYEES, EMPLOYEEMEMBERS OF COOPERATIVES, AND GOVERNMENT EMPLOYEES 1. First Line Managers (supervisors) – direct operation of Ees and not supervise other managers (e.g. foreman) 2. Middle Managers – direct activities of other managers (e.g. plant managers) 3. Top Management – overall management of organization (e.g. SVP, President) (United Pepsi Cola Supervisory Union v. Laguesma G.R. No. 122226, 25 Mar. 1998) Managerial employees are not eligible to join, assist or form any labor organization. (Art. 255, LC) The rationale for the inhibition is that if managerial employees would belong to or be affiliated with a union, the latter might not be assured of their loyalty to the union in view of evident conflict of interests. The union can become companydominated with the presence of managerial employees in the union membership. (Bulleting Publishing Co., Inc. v. Hon. Sanchez, G.R. No. 74425, 07 Oct. 1986) Q: When can an employee join a labor organization? A: Any employee, whether employed for a definite period or not, shall, beginning on his first day of service, be considered as an employee for purposes of membership in any labor union. (Art. 292 (c), LC) Managerial employees cannot be allowed to share in the concessions obtained by the labor union through collective negotiation. Otherwise, they would be exposed to the temptation of colluding with the union during the negotiations to the detriment of the employer. (Azucena, 2016) EMPLOYEES RESTRICTED TO FORM, JOIN, OR ASSIST LABOR ORGANIZATIONS a. b. Confidential employees (in the field of labor relations); Employee-members of a cooperative; Government employees; Employees of international organizations; Foreign workers; and Religious objectors. Managerial employees; Supervisory employees; 169 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation Supervisory employees 3. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. (Art. 219(m), LC) 4. Radio and telegraph operators who have access to confidential information Personnel staff Human Resource Assistants and Personnel Assistants are considered Confidential Employees As a Human Resource Assistant, the scope of one’s work necessarily involves labor relations, recruitment and selection of employees, access to Ees' personal files and compensation package, and human resource management. As regards a Personnel Assistant, one's work includes the recording of minutes for management during CB negotiations, assistance to management during grievance meetings and administrative investigations, and securing legal advice for labor issues from the petitioner’s team of lawyers, and implementation of company programs. Supervisory employees are allowed to organize, but they cannot form, join, or assist a rank-and-file union. (Azucena, 2016) Confidential employees (in the field of labor relations) A confidential employee is one who assists and acts in a confidential capacity to, or has access to confidential matters of, persons who exercise managerial functions in the field of labor relations. (Philips Industrial Development v. NLRC, G.R. No. 88957, 25 June 1992) NOTE: The phrase “in the field of labor relations” is important because it stresses the labor nexus, that is, the confidentiality of the position should relate to labor relations matters. Therefore, in the discharge of their functions, both gain access to vital labor relations information which outrightly disqualifies them from union membership. (San Miguel Foods Inc. v. San Miguel Corporation Supervisors and Exempt Union, G.R. No. 146206, 01 Aug. 2011) Doctrine of Necessary Implication Payroll masters are not confidential employees The Doctrine of Necessary Implication states that what is implied in a statute is as much a part thereof as that which is expressed. A confidential employee is one entrusted with confidence on delicate, or with the custody, handling or care and protection of the employer’s property. Confidential employees, such as accounting personnel, should be excluded from the bargaining unit, as their access to confidential information may become the source of undue advantage. The reason for ineligibility of managerial employees to form, assist, or join a labor union equally applies to confidential employees. While the Labor Code singles out managerial employees as ineligible to join, under the doctrine of necessary implication, confidential employees are similarly disqualified. (NATU - Republic Planters Bank Supervisors Chapter v. Hon. Torres, G.R. No. 93468, 29 Dec. 1994) However, such fact does not apply to the position of Payroll Master and the whole gamut of employees who has access to salary and compensation data. The position of Payroll Master does not involve dealing with confidential labor relations information in the course of the performance of his functions. Since the nature of his work does not pertain to company rules and regulations and confidential labor relations, it follows that he cannot be excluded from the subject bargaining unit. (San Examples of confidential employees who could NOT unionize: 1. 2. Bank cashiers Accounting personnel UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 170 Labor Relations Miguel Foods Inc. v. San Miguel Corporation Supervisors and Exempt Union, G.R. No. 146206, 01 Aug. 2011) negotiate, but not the right to strike. (Azucena, 2016) The right to self-organization of government employees pertains to all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations (GOCCs) with original charters. (E.O. No. 180) Employee-Members of a Cooperative An employee of a cooperative who is also a member and co-owner thereof cannot invoke the right to collective bargaining, for an owner cannot bargain with himself or his co-owners. (San Jose Electric Service Cooperative, Inc. v. Ministry of Labor, G.R. No. 77231, 31 May 1989) Government employees’ right to organize is for a limited purpose NOTE: Even if employee-members of a cooperative cannot form a union, they may, however, form an association for their mutual aid and protection as employees. (Azucena, 2016) The right of government employees to “form, join, or assist employees’ organizations of their own choosing” under E. O. No. 180 is not regarded as existing or available “for purposes of collective bargaining,” but simply “for the furtherance and protection of their interests.” (Arizala v. CA, G.R. No. L-43633-34, 14 Sept. 1990) Q: A, an employee of XYZ Cooperative, owns 500 shares in the cooperative. He has been asked to join the XYZ Cooperative Employees Association. He seeks your advice on whether he can join the association. What advice will you give him? (2010 BAR) Only terms and conditions not fixed by law may be the subject of negotiation by the duly recognized employees’ organization of government employees and the appropriate government authorities. Terms and conditions of employment that are fixed by law are excluded from negotiation. (E.O. No. 180) A: A cannot join XYZ Cooperative Employees Association because owning shares makes him a coowner thereof. An employee-member of a cooperative cannot join a union and bargain collectively with his cooperative for an owner cannot bargain with himself and his co-owners. (Cooperative Rural Bank of Davao City v. Calleja, G.R. No. 143616, 09 May 2001) Matters that are declared to be “not negotiable” are matters “that require appropriation of funds” and “those that involve the exercise of management prerogatives.” Considered negotiable are such matters as schedule of vacation, leaves, etc. (Azucena, 2016) Government Employees NOTE: Employees of government corporations established under the Corporation Code shall have the right to organize and to bargain collectively. (Art. 254, LC) Employees of government corporations established under the Corporation Code shall have the right to organize and to bargain collectively with their respective employers. All other employees in the civil service shall have the right to form associations for purposes not contrary to law. (Art. 254, LC) Q: Royal Savings Bank (RSB), organized and incorporated as a thrift bank entered into a Memorandum of Agreement with Commercial Bank of Manila to rehabilitate and infuse capital into RSB. RSB was renamed ComSavings Bank (CB). In 1987, the GSIS transferred its holdings from Commercial Bank of Manila to Boston Bank. CB was not included in the transfer. Due to Boston Bank’s acquisition of Commercial Bank Government employees have the right to selforganization The highest law of the land guarantees to government employees the right to organize and to 171 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation of Manila, the GSIS took over the control and management of CB. Members of AFP, police officers, policemen, firemen, and jail guards Sometime in 2001, CB changed its name to GSIS Family Bank. On June 6, 2011, President Aquino signed into law R.A. No. 10149, or the GOCC Governance Act of 2011. The law created the Governance Commission for GovernmentOwned or Controlled Corporations (Governance Commission). On 20 Dec. 2013, counsel for the GSIS Union sent GSIS Family Bank a demand letter for the payment of Christmas bonus to its members, as stipulated in their Collective Bargaining Agreement (CBA). The GSIS Family Bank's refused to negotiate a new CBA. Thus, the GSIS Union filed a Complaint before the NCMB. They aimed to compel GSIS Family Bank to abide by the provisions of their existing CBA. E.O. No. 180 excludes members of AFP, police officers, policemen, firemen, and jail guards from unionizing for reasons of security and safety. Can the GSIS Family Bank, a non-chartered government-owned or controlled corporation, enter into a CBA with its employees? Employees of International Organizations High-level Government employees A high-level employee is one whose functions are normally considered policy determining, managerial or one whose duties are highly confidential in nature. They cannot join the organization of rank-and-file government employees. (E.O. No. 180) NOTE: In the public sector, there are only two levels of position: high level and rank-and-file. GR: International organizations are immune from Philippine jurisdiction. (i.e., ICMC, IRRI, ADB) Thus, a certification election cannot be conducted in an international organization which has been granted immunity from local jurisdiction. (ICMC v. Hon. Pura Calleja, G.R. No. 89331, 28 Sept. 1990) A: NO. R.A. No. 10149 directed the Governance Commission to develop a Compensation and Position Classification System, to be submitted for the President's approval, which shall apply to all officers and employees of government-owned or controlled corporations, whether chartered or nonchartered. On March 22, 2016, President Aquino issued Executive Order No. 203, which approved the compensation and classification standards and the Index of Occupational Services Framework developed and submitted by the Governance Commission. XPN: However, the international organization has the discretion to waive its immunity. Without such express waiver, the NLRC or its labor arbiters have no jurisdiction over international organizations, even in cases of alleged illegal dismissal of any of its employees. (Callado v. IRRI, G.R. No. 106483, 22 May 1995) When it comes to collective bargaining agreements and collective negotiation agreements in government-owned or controlled corporations, Executive Order No. 203 unequivocally stated that while it recognized the right of workers to organize, bargain, and negotiate with their employers, "the Governing Boards of all covered [governmentowned or controlled corporations], whether Chartered or Non-chartered, may not negotiate with their officers and employees the economic terms of their [collective bargaining agreements]." (GSIS Family Bank Employees Union v. Secretary Villanueva, G.R. No. 210773, Jan. 23, 2019) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Foreign Workers GR: Foreigners are prohibited from engaging in all forms of trade union activities. XPN: However, an alien working in the country with a valid working permit may exercise the right to self-organization if they are nationals of a country which grants the same or similar right to Filipino workers. 172 Labor Relations Religious objectors; INC members i. Commonality or Mutuality of Interest Members of religious sects cannot be compelled or coerced to join labor unions even when said unions have closed-shop agreements with the employers. Free exercise of religious belief is superior to contract rights. In case of conflict, the latter must yield to the former. (Victoriano v. Elizalde Rope Worker’s Union, G.R. No. L-25246, 12 Sept. 1974) Under this doctrine, the employees sought to be represented by the collective bargaining agent must have community or mutuality of interest in terms of employment and working conditions as evidenced by the type of work they perform. This is characterized by similarity of employment status, same duties, and responsibilities and substantially similar compensation and working conditions. (San Miguel Corp. Employees Union-PTGWO v. Confesor, G.R. No. 111262, 19 Sept. 1996) Religious objectors can form and join their own union Recognition of the tenets of a sect should not infringe on the basic right to self-organization granted by the Constitution to workers, regardless of religious affiliation. (Kapatiran sa Meat and Canning Division v. Hon. Pura Calleja, G.R. No. L82914, 20 June 1988) Factors considered in determining Substantial or Mutuality Interest Doctrine 1. Similarity in the scale and manner of determining earnings; 2. Similarity in employment benefits, hours of work, and other terms and conditions of employment; 3. Similarity in the kinds of work performed; 4. Similarity in the qualifications, skills, and training of Ees; 5. Frequency of contract or interchange among the Ees; 6. Geographical proximity; 7. Continuity and integration of production processes; 8. Common supervision and determination of labor-relations policy; 9. History of CB; 10. Desires of the affected Ees; or 11. Extent of union organization. (Cox, Bok & Gorman, Labor Law, 1977) NOTE: Religious objectors also have the right to vote in a certification election. (Reyes v. Trajano, G.R. No. 84433, 02 June 1992) 3. DETERMINATION OF APPROPRIATE BARGAINING UNIT (ABU) & EFFECT OF INCLUSION OF EMPLOYEES OUTSIDE OF THE ABU a. DETERMINATION OF APPROPRIATE BARGAING UNIT (ABU) The law does not mention any specific mode of determining what constitutes a bargaining unit. The basic test of an asserted bargaining unit’s acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights. (International School v. Quisumbing, G.R. No. 128845, 1 June 2000) NOTE: The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical location can be completely disregarded if the communal or mutual interests of the employees are not sacrificed. (Azucena, 2016) Tests to determine the appropriate bargaining unit 1. 2. 3. 4. the Q: Samahang Tunay, a union of rank-and-file employees, lost in a certification election at Solam Company and has become a minority union. The majority union now has a signed CBA Community or mutuality of interest Will of the employees or “Globe Doctrine” Collective bargaining history Similarity of employment status 173 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation “One-company, One-union” Policy with the company and the agreement contains Maintenance of Membership Clause. It is the policy of the BLR to encourage the formation of an employer unit. In other words, one employer enterprise should constitute only one bargaining unit because the more solid the employees are, the stronger their bargaining capacity. What can Samahang Tunay still do within the company as a union considering that it still has members who continue to profess continued loyalty to it? (2013 BAR) A: As a legitimate labor organization, it can continue to represent its members on non-CBA-related matters. (Art. 248, LC) GR: All the rank-and-file Ees with substantially the same interests and who invoke the right to selforganization are part of a single unit so that they can deal with their Er with just one and potent voice. The Ees’ bargaining power is strengthened thereby. (General Rubber and Footwear Corporation v. BLR, et al., G.R. No. 74262, 29 Oct. 1987) Q: A registered labor union in UP, ONAPUP, filed a petition for certification election among the non-academic employees. The university did not oppose, however, another labor union, the All UP Workers Union assents that it represents both academic and non-academic personnel and seeks to unite all workers in one union. Do employees performing academic functions need to comprise a bargaining unit distinct from that of the non-academic employees? XPNs: 1. Supervisory Ees – allowed to form their own unions apart from the rank-and-file Ees; A: YES. The mutuality of interest test should be taken into consideration. There are two classes of rank-and-file Ees in the university – those who perform academic functions such as the professors and instructors, and those whose function are nonacademic who are the janitors, messengers, clerks etc. Thus, not much reflection is needed to perceive that the mutuality of interest which justifies the formation of a single bargaining unit is lacking between the two classes of Ees. (U.P. v. FerrerCalleja, G.R. No.96189, 14 July 1992) Craft Unit – bargaining unit composed of employees of the company with the same occupation, such as pilots as distinguished from ground personnel; 3. Plant Unit – bargaining unit composed of employees in a particular plant of the company, such as the company’s Cebu plant as distinguished from its Ilocos plant. The main consideration in a plant unit is geographical, while it is occupational in a craft unit. (Alcantara, 2008) NOTE: The policy should yield to the right of Ees to form a union for purposes not contrary to law, selforganization, and to enter into CB negotiations. ii. Will of the employees or “Globe Doctrine” This principle is based on the desires of the employees. In defining the appropriate bargaining unit, the determining factor is the desire of the workers themselves. While the desires of employees with respect to their inclusion in bargaining unit is not controlling, it is a factor which would be taken into consideration in reaching a decision. (Globe Machine & Stamping Co., 3 NLRB 294, 1937) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 2. Two corporations cannot be treated as a single bargaining unit, even if their businesses are related. (Indophil Textile Mill Workers Union v. VA Calica, G.R. No. 96490, 03 Feb. 1992) NOTE: The proliferation of unions in an employer unit is merely discouraged as a matter of policy. However, if there are compelling reasons which would deny a certain class of employees the right to self-organization for purposes of collective bargaining, then it would be allowed. 174 Labor Relations Q: Union filed a petition for certification election among the rank-and-file employees of three security agencies including the Veterans Security. The latter opposed alleging that the three security agencies have separate and distinct corporate personalities. May a single petition for certification election be filed by a labor union in the three corporations instead of filing three separate petitions? In case of two companies with related businesses, not necessarily treated as a single BU It is erroneous to treat two companies as a single bargaining unit when these companies are indubitably distinct entities with separate juridical personalities. Subsidiaries and Spin-off Corporations A: YES. The following are indications that the three agencies do not exist and operate separately and distinctly from each other with different corporate direction and goals: Subsidiaries or corporations formed out of former divisions of a mother company following a reorganization may constitute a separate bargaining unit. 1. NOTE: In determining an appropriate bargaining unit, the test of grouping is mutuality or commonality of interests. Considering the spin-offs, the companies would have their respective and distinctive concerns in terms of the nature of work, wages, hours of work, and other conditions of employment. Interests of employees in the different companies per force differ. (San Miguel Corp. Union v. San Miguel Corp., Magnolia Corp., and San Miguel Foods, Inc., G.R. No. 111262, 19 Sept. 1996) 2. 3. 4. The Four-Factor Analysis 5. The US National Labor Relations Board continues to apply a four-factor analysis in determining whether two or more employers constitute a single employer: 1. 2. 3. 4. 6. Hence, the veil of corporate fiction of the three agencies should be lifted for the purpose of allowing the Ees of the three agencies to form single union. As a single bargaining unit, the Ees need not file three separate PCE. (Philippine Scout Veterans Security and Investigation Agency v. SOLE, G.R. No. 92357, 21 July 1993) Interrelations of operation; Centralized control of labor relations; Common management; and Common ownership (Azucena, 2016) Distinguishing the CBU from the union is important because: 1. 2. 3. Veterans Security failed to rebut the fact that they are managed through the Utilities Management Corporation with all their employees drawing their salaries and wages from the said entity; The agencies have common and interlocking incorporators and officers; They have a single mutual benefit system and followed a single system of compulsory retirement; They could easily transfer security guards of one agency to another and back again by simply filling-up a common pro-forma slip; They always hold joint yearly ceremonies such as the PGA Annual Awards Ceremony; and They continue to be represented by one counsel. Q: Company XYZ has two recognized labor unions, one for its rank-and-file employees and the other for its supervisory employees. Of late, the company instituted a restructuring program by virtue of which A, a rank-and-file employee and officer of rank-and-file employees’ labor union, was promoted to a supervisory position along with four other colleagues, also active In a CE, the voters are the whole bargaining unit, whether union or non-union members; In CBA ratification, the voters are the whole bargaining unit, not just the union members; In strike voting, the voters are the members of the union, not the whole bargaining unit. (Azucena, 2016) 175 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation union members and/or officers. Labor Union KMJ, a rival labor union seeking recognition as the rank-and-file bargaining agent, filed a petition for the cancellation of the registration of rank-and-file Ees labor union on the ground that A and her colleagues have remained to be members of rank-and-file Ees labor union. Is the petition meritorious? Explain. (2010 BAR) appropriate bargaining unit, the same is not decisive or conclusive. Other factors must be considered. The test of grouping is community or mutuality of interests. This is because the basic test of an asserted bargaining unit’s acceptability is whether or not it is fundamentally the combination which will best assure to all Ees the exercise of their CB rights. (Democratic Labor Association v. Cebu Stevedoring Company, Inc., G.R. No. L-10321, 28 Feb. 1958) A: NO. The inclusion as union members of Ees outside the bargaining unit shall not be a ground for the cancellation of the registration of the union. Said Ees are automatically deemed removed from the list of membership of said union. iv. Employment Status Doctrine The determination of the appropriate bargaining unit based on the employment status of the employees is considered as an acceptable mode. (Chan, 2019) There are only three grounds for the cancellation of union registration: (R-E-V) 1. 2. 3. Misrepresentation, false statement, or fraud in connection with the adoption or Ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification; b. EFFECT OF INCLUSION OF EMPLOYEES OUTSIDE OF THE ABU The inclusion as union members of employees outside the bargaining unit shall not be a ground for the cancellation of the registration of the union. Said employees are automatically deemed removed from the list of membership of said union. (Art. 256, LC) Misrepresentation, false statements, or fraud in connection with the Election of officers, minutes of the election of officers, and the list of voters; Under this provision, the inclusion as union members of employees outside the bargaining unit is not a ground for the cancellation of the registration of the union. The employees improperly included are automatically deemed removed from the list of members of said union by operation of law. Therefore, if supervisory employees are included as members of a rank-andfile union, they are deemed automatically removed from the roster of members of the said union and vice versa. (Chan, 2019) Voluntary dissolution by the members. (Art. 247, LC) iii. Collective Bargaining History Doctrine This principle puts premium to the prior collective bargaining history and affinity of the employees in determining the appropriate bargaining unit. However, the existence of a prior collective bargaining history has been held as neither decisive nor conclusive in determination of what constitutes an appropriate bargaining. NOTE: Mixed membership is now deemed a prohibited ground for cancellation of union registration. (Sec. 6, Rule XIV, Book V, IRR) Bargaining history not a decisive factor in the determination of appropriateness of bargaining unit While the existence of a bargaining history is a factor that may be reckoned with in determining the UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 176 Labor Relations Right to Union Membership 4. NON-INTERFERENCE WITH WORKERS’ RIGHT TO SELF-ORGANIZATION 1. Right to Union Membership is not absolute It shall be unlawful for any person to restrain, coerce, discriminate against, or unduly interfere with employees and workers in their exercise of the right to self-organization. Such right shall include the right to form, join, or assist labor organizations for the purpose of collective bargaining through representatives of their own choosing and to engage in lawful concerted activities for the same purpose or for their mutual aid and protection, subject to the provisions of Art. 264 of the Labor Code. (Art. 257, LC) An employee cannot invoke an absolute right to union membership. Though granted by the Constitution, it is subject to regulation by the State. An example of this is it has been mandated by law that no labor organization shall knowingly admit as member or continue in membership, any individual who belongs to a subversive organization or who is engaged directly or indirectly in any subversive activity. 2. Freedom of Choice An employee cannot invoke an absolute right to union membership. The right to self-organization and collective bargaining comprehends at least two broad notions, namely: 1. Liberty or freedom - i.e., the absence of legal restraint, whereby an employee may act for himself without being prevented by law; and 2. Power - whereby an employee may, as he pleases, join or refrain from joining an association. An employee has the right to join or not join a labor union. As such, a member of a labor union may leave and cancel his membership at any time. However, this is not the case where there is a valid union security clause in the CBA such as a closedshop or union-shop arrangement between management and the union. Here, the employee concerned is duty-bound to keep his union membership for the duration of the CBA as a condition for his continued employment. If such membership in the union which is the collective bargaining agent is validly terminated, he may likewise be dismissed from his employment. The only exception to this is when the employee objects to such membership on the ground of religious belief. It is, therefore, the employee who should decide for himself whether or not he should join an association; and should he choose to join, he himself makes up his mind as to which association he would join; and even after he has joined, he still retains the liberty and the power to leave and cancel his membership with said organization at any time. (Victoriano v. Elizalde Rope Worker’s Union, G.R. No. L-25246, 12 Sept. 1974) 3. Right to join a union acquired from first day of employment Any employee, whether employed for a definite period or not shall, beginning on his first day of service, be considered an employee for purposes of membership in any labor union. (Art. 292(c), LC) Object of the Law The right to form, join, or assist a union is specifically protected by the Constitution and such right shall not be abridged. Art. 257 of the Labor Code empathically relates to the policy of the State to promote and emphasize the primacy of free collective bargaining and negotiations, free trade unionism, and free and voluntary organization of a strong and united labor movement. (Chan, 2019) 4. Union members who are not employees do not possess the right to join union If the union members are not employees, no right to organize for purposes of collective bargaining, nor to be certified as bargaining agent can be recognized. The question of whether employer177 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation Two (2) Basic Purposes of a Labor Organization employee relationship exists is a primordial consideration before extending labor benefits under the workmen’s compensation, social security, PhilHealth, termination pay, and labor relations law. Failure to establish this juridical relationship between the union members and the employer affects the legality of the union itself. It means the ineligibility of the union members to present a petition for certification election as well as to vote therein. (Singer Sewing Machine Company v. Drilon, G.R. No. 91307, 24 Jan. 1991) 1. 2. For collective bargaining; and For dealing with the employer. Two (2) Modes of Creating a Labor Organization 1. 2. Independent registration (Art. 240, LC) Chartering of local chapter/chartered local (Art. 241, LC) 1. REGISTRATION WITH THE DOLE A labor organization may be registered or not. If registered, it is considered a “legitimate labor organization” (LLO). However, a labor organization is not “illegitimate” just because it is unregistered. It is still a lawful organization but it has no legal personality to demand collective bargaining with the employer. (Azucena, 2016) B. LEGITIMATE LABOR ORGANIZATIONS Definition of Terms Labor Organization means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment. (Art. 219 (g), LC) NOTE: Registration with the DOLE makes a labor organization legitimate in the sense that it is clothed with legal personality to claim the representational and bargaining rights enumerated in Art. 251 and Art. 267 or to strike and picket under Art. 278. (Azucena, 2013) It is created for mutual aid, interest, cooperation, protection, or other lawful purposes. (Sec. 1, Rule I, Book V, IRR as amended by D.O. No. 40-04) It is the fact of being registered with DOLE that makes a labor organization legitimate. Registration under the corporation law before the Securities and Exchange Commission (SEC) only has the effect of giving it juridical personality to represent itself in regular courts but it does not grant the rights and privileges of a legitimate labor organization. (Phil. Land-Sea-Air Labor Union, Inc. v. CIR, G.R. No. L25711, 29 Oct. 1975) NOTE: Labor Organization is a generic term as it can refer to a “union” or “association of employees,” registered or not. The purposes may also be broad such as “collective bargaining” or “mutual aid” or “cooperation” or other lawful purpose. (Azucena, 2016) Legitimate labor organization means any labor organization duly registered with the DOLE, and includes any branch or local thereof. (Art. 219 (h), LC) Requirements for Registration Any applicant labor organization, association, or group of unions or workers shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration based on the following requirements: Bargaining representative means a legitimate labor organization or any officer or agent of such organization, whether or not employed by the employer. (Art. 219 (j), LC) Company Union refers to any labor organization whose formation, function or administration has been assisted by any act defined as unfair labor practice by the Labor Code. (Art. 219 (i), LC) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 1. 178 P50.00 registration fee; Labor Relations 2. The names of its officers, their addresses, the principal address of the labor organization, the minutes of the organizational meetings, and the list of the workers who participated in such meetings; 3. The names of all its members comprising at least 20% of all the employees in the bargaining unit where it seeks to operate; 4. If the applicant union has been in existence for one or more years, copies of its annual financial reports; and 5. Four (4) copies of the constitution and by-laws of the applicant union, minutes of its adoption or ratification, and the list of the members who participated in it. (Art. 240, LC) 2. CANCELLATION OF REGISTRATION Grounds for Cancellation of Registration (R-E-V) 2. Misrepresentation, false statement, or fraud in connection with the adoption or Ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification; 2. Misrepresentation, false statements, or fraud in connection with the Election of officers, minutes of the election of officers, the list of voters; and 3. Voluntary dissolution. (D.O. 40-F-03) Q: If there are supervisors that are joined with the rank-and-file employees union, would that be a ground for cancellation of registration? Where to Register 1. 1. A: NO. Those who do not properly belong to the union are deemed automatically removed from the union by operation of law. (Art. 256, LC) Independent labor unions, chartered locals, and workers’ associations – it shall be filed with and acted upon by the Regional Office where the applicant principally operates. 3. AFFILIATION/DISAFFILIATION FROM NATIONAL UNION OR FEDERATION Federations, national unions, or workers’ associations operating in more than one region – it shall be filed with the Bureau or the Regional Offices, but shall be processed and acted upon by the Bureau which has national jurisdiction unlike a regional office. A local union may affiliate with or disaffiliate from a federation. This is an exercise of the right of association recognized by the Constitution. Between the chapter and the federation, affiliation or disaffiliation is a contractual relation. Hence, even if disaffiliation is a matter of right, the local must comply with the obligations under the CBL such as manner and period of notice. Classification of Labor Organizations At the National Level 1. National Union/Federation; 2. Industry Union; 3. Trade Union Center; and 4. Company Union. Affiliate An affiliate refers to: At the Enterprise Level 1. Independent Union; and 2. Chapter. 1. An independently registered union that enters into an agreement of affiliation with a federation or national union; or NOTE: A trade union center cannot create a chartered local. (SMCEU-PTGWO v. SMPPEU-PDMP, G.R. No. 171153, 12 Sept. 2007) 2. A chartered local which applies for and is granted an independent registration but does 179 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation not disaffiliate from its mother federation or national union. How local chapter is created A duly registered federation or national union may directly create a local/chapter by issuing a charter certificate indicating the establishment of a local/chapter. 1. The chapter shall acquire legal personality only for purposes of filing a PCE from the date it was issued a charter certificate. 2. The chapter shall be entitled to all other rights and privileges of a LLO only upon the submission of the following documents in addition to its charter certificate: Minutes of the general membership meeting approving the affiliation; 3. The total number of members comprising the labor union and the names of members who approved the affiliation; 4. The certificate of affiliation issued by the federation in favor of the independently registered labor union; and written notice to the Er concerned if the affiliating union is the incumbent bargaining agent. (Sec. 7, Rule III, D.O. 40-03) Reasons for Affiliation 1. Secure support or assistance especially during the formative stage of unionization; Names of the chapter’s officers, their addresses, and the principal office of the chapter; 2. Utilize expertise in preparing pursuing bargaining proposals; and b. Chapter’s constitution and by-laws; and 3. c. Where the chapter’s constitution and by-laws are the same as that of the federation or the national union, this fact shall be indicated accordingly. To marshal mind and manpower in the course of a group action such as a strike. (Azucena, 2016) a. 3. 2. NOTE: The sole essence of affiliation is to increase, by collective action, the common bargaining power of local unions for the effective enhancement and protection of their interests. (Azucena, 2016) The genuineness and due execution of the supporting requirements shall be: a. b. and Independently registered union is required to report affiliation with the Regional Office Certified under oath by the secretary or treasurer of the local/chapter; and A union affiliating with a federation or national union is required to report such affiliation to the Regional Office that issued its certificate of registration. Attested to by its president. (Sec. 2(e), Rule III, Book V, IRR, as amended by D.O. 40-F-03) Reportorial Requirements in Affiliation Disaffiliation of local union from the federation The report of affiliation of independently registered labor unions with a federation or national union shall be accompanied by the following documents: GR: A labor union may disaffiliate from the mother union to form an independent union only during the 60-day freedom period immediately preceding the expiration of the CBA. 1. Resolution of the labor union's board of directors approving the affiliation; UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES XPN: Even before the onset of the freedom period, disaffiliation may still be carried out, but such must 180 Labor Relations Effect of Disaffiliation be effected by the majority of the union members in the bargaining unit. Disaffiliation must be decided by the entire membership through secret balloting in accordance with Art. 250(d). This happens when there is a substantial shift in allegiance on the part of the majority of the members of the union. In such a case, however, the CBA continues to bind the members of the new or disaffiliated and independent union to determine the union which shall administer the CBA. (ANGLO-KMU v. Samahan ng Manggagawang Nagkakaisasa Manila Bay Spinning Mills at J.P. Coats, G.R. No. 118562, 05 July 1996) 1. Union Dues – the obligation of an employee to remit union dues to the mother is coterminous with the affiliation or membership of its local. The dues must now be remitted to the local. 2. Existing CBA – the CBA continues to bind the members of the new or disaffiliated and independent union up to the CBA’s expiration date based on the ‘Substitutionary Doctrine.’ Revocation of Charter A federation may revoke the charter issued to a local/chapter by serving a verified notice of revocation, copy furnished to the Bureau, on the ground of disloyalty or such other grounds as may be specified in the constitution and by-laws of the federation. (Sec. 5, Rule VIII, Book V, IRR) Disaffiliation must be by majority decision Disaffiliation must be decided by the entire membership through secret balloting in accordance with Art. 250 (d). An individual member or any number of members may disaffiliate from the union during the “freedom period” but disaffiliating the union itself from the mother union must be supported by the majority of the members. If done by a minority, even during the freedom period, the act may constitute disloyalty. They may be expelled from the union or may be removed from their employment because of the union security clause. Effect of Revocation: Independently Registered vs. Unregistered Chartered Local Union CHARTERED LOCAL UNION INDEPENDENTLY UNREGISTERED REGISTERED How to Affiliate? Limitation to Disaffiliation To disaffiliate is a right, but to observe the terms of affiliation is an obligation. (Azucena, 2016) By signing contract of affiliation. Disaffiliation should be in accordance with the rules and procedures stated in the Constitution and bylaws of the federation. A local union may disaffiliate with its mother federation, provided that there is no enforceable provision in the federation’s constitution preventing disaffiliation of a local union. (Tropical Hut Employees Union v. Tropical Hut, G.R. Nos. L-43495-99, 20 Jan. 1990) By application with the federation for the issuance of a charter certificate to be submitted to the Bureau of Labor Relations Effect of Disaffiliation to the Union (local) Would not affect its being an LLO and therefore, it would continue to have legal personality and to possess all rights and privileges of LLO. A prohibition to disaffiliate in the Federation’s constitution and by-laws is valid because it is intended for its own protection. 181 Would cease to be an LLO and would no longer have the legal personality and the rights and privileges granted by law to LLO, unless the local chapter is covered by its duly registered CBA. UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation PSEA disaffiliated with PAFLU and hence affiliated with NCW which was supported by its members. May a local union disaffiliate with its mother federation pending the settlement of the status as the sole and exclusive bargaining agent? Effect of Disaffiliation to the CBA An existing CBA would continue to be valid as the labor organization can continue administering the CBA. The CBA would continue to be valid up to its expiration date. A: YES. The pendency of an election protest does not bar the valid disaffiliation of the local union which was supported by the majority of its members. The right of a local union to disaffiliate with the federation in the absence of any stipulation in the Constitution and by-laws of the federation prohibiting disaffiliation is well settled. Local unions remain as the basic unit of association, free to serve their own interest subject to the restraints imposed by the Constitution and by-laws of national federation and are free to renounce such affiliation upon the terms and conditions laid down in the agreement which brought such affiliation to existence. Entitlement to Union Dues after Disaffiliation Labor organization entitled to the union dues and not the federation from which the labor organization disaffiliated. Union dues may no longer be collected as there would no longer be any labor union that is allowed to collect such union dues from the Ees. Effect of Revocation GR: The revocation shall divest the local/chapter of its legal personality upon receipt of the notice by the Bureau. In the case at bar, no prohibition existed under the Constitution and by-laws of the federation. Hence, the union may freely disaffiliate with the federation. (Philippine Skylanders v. NLRC, G.R. No. 127374, G.R. No. 127374, 31 Jan. 2002) XPN: If the local/chapter has acquired independent registration. Effect of Cancellation of Registration of Federation or National Union on locals/chapters Substitutionary Doctrine This doctrine holds that the employees cannot revoke the validly executed collective bargaining contract with their employer by the simple expedient of changing their bargaining agent. The new agent must respect the contract. The employees, through their new bargaining agent, cannot renege on the collective bargaining contract, except to negotiate with the management for the shortening thereof. (Elisco-Elirol Labor Union, G.R. No. L-41955, 29 Dec. 1977) GR: The cancellation shall operate to divest its locals/chapters of their status as legitimate labor organizations. XPN: Locals/chapters are covered by a duly registered CBA. NOTE: In the latter case, locals/chapters shall be allowed to register as independent unions. If they fail to register, they shall lose their legitimate status upon the expiration of the CBA. The Substitutionary Doctrine, however, cannot be invoked to support the contention that a newly certified collective bargaining agent automatically assumes all the personal undertakings—like the nostrike stipulation here—in the collective bargaining agreement made by the deposed union. When EBR bound itself and its officers not to strike, it could not have validly bound all the other rival unions existing Q: PSEA is a local union in Skylander Company which is affiliated with PAFLU. PSEA won the certification election among the rank-and-file employees of the Skylander Company but its rival union PSEA-WATU protested the results. Pending the resolution of such controversy, UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 182 Labor Relations in the bargaining units in question. (Benguet Consolidated Inc v. BCI Employees and Workers Union- Paflu, G.R. No. L-24711, 30 Apr. 1968) a. Political right The member’s right to vote and be voted for, subject to lawful provisions on qualification and disqualifications. 4. RIGHTS OF LEGITIMATE LABOR ORGANIZATIONS b. Right over money matters A legitimate labor organization shall have the right: 1. The member’s right: 1. 2. To act as the representative of its members for the purpose of collective bargaining; (Right of Representation) 3. 2. 3. To be certified as the exclusive representative of all the employees in an appropriate bargaining unit for purposes of collective bargaining; 4. 5. 6. To be furnished by the employer with annual audited financial statements, including the balance sheet and the profit and loss statement; (Right to Information) c. Against excessive fees; Against unauthorized collection of contributions or disbursements; To require adequate records of income and expenses; Of access to financial records; Vote on officer’s compensation; and Vote on proposed special assessment and be deducted a special assessment only with the member’s written authorization. Right to information The member’s right to be informed about the: 4. To own property, real or personal; (Property Rights) 5. To sue and be sued in its registered name; (Property Rights) 6. To undertake all other activities designed to benefit the organization and its members; and (Art. 251, LC) (Property Rights) 1. 2. 3. Organization’s constitution and by-laws; Collective bargaining agreement; and Labor laws. d. Deliberative and decision-making right 7. The member’s right to participate in deliberations on major policy questions and decide them by secret ballot. To collect reasonable membership fees, union dues, assessments, fines, and other contributions. (Art. 292(a), LC) (Right to Collect Union Dues) Q: When, how, and under what conditions does an employee become a union member? A: The answer depends on the union’s constitution and by-laws. The Labor Code gives a labor organization the right to prescribe its own rules for acquisition or retention of membership. Nonetheless, an employee is already qualified for union membership starting on his first day of service. (Azucena, 2016) 5. RIGHTS AND CONDITIONS OF MEMBERSHIP IN LEGITIMATE LABOR ORGANIZATIONS The rights of union members may be summarized as follows: (Pol-M-I-D) a. b. c. d. Political right; Right over Money matters; Right to Information; and Deliberative and decision-making right. 183 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation Membership in the union does not necessarily mean coverage in the CBA Election under the Implementing Rules The incumbent president should create an election committee within 60 days before expiration of the term of incumbent officers. The Rules specify the composition of the election committee as well as its powers and duties. Inclusion or coverage in the CBA depends on the stipulations in the CBA itself. It is the CBA which defines its coverage as agreed by the parties. Qualifying for union membership does not necessarily mean inclusion in the coverage of the CBA. If the officers with expired term do not call an election, the remedy is for at least 30% of the members to file a petition with the DOLE Regional Office. (Sec. 2, Rule XII, Book V, IRR) Membership in the CBU does not mean membership in the union Inclusion or membership in the union depends on the union’s constitution and by-laws. Union Officer must be an Employee No person who is not an employee or worker of the company or establishment where a union operates shall be elected or appointed as an officer of such union. Only an employee may be a union officer. Inclusion in the CBU depends on the determination of its appropriateness. Expulsion of a Union Member Disqualification of Union Officers A member of a union may be expelled but only for a valid cause and by following the procedure outlined in the constitution and by-laws. A member is entitled to due process. Expulsion of a member for arbitrary or impetuous reasons may amount to ULP by the union. The following are disqualified to become union officers: 1. 2. Election of Union Officers 3. Q: What positions should be filled up, when, and how should the election be done? Frustration over incumbent officers of union does not justify disregard of union’s constitution and by-laws A: It depends on the union’s constitution and bylaws or the agreement among the members. In the absence thereof, the Implementing Rules of Book V shall apply. Frustration over the performance of the incumbent officers, as well as their fears of a fraudulent election to be held under the latter’s supervision, could not justify the imposition of their own will on the union. The organizations shall have the right to draw up their own constitution and rules and to elect their representatives in full freedom, free from any interference from public authorities. The union members should respect the constitution and rules they themselves draw up equally so. The CBL is the fundamental law that governs the relationship between and among the members of the union. (UST NOTE: Officers are elected by the members through secret ballot voting. Eligibility of Voters Only union members can take part in the election of union officers. The election takes place at intervals of five (5) years, which is the term of office of the union officers. (Azucena, 2016) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Those convicted of a crime involving moral turpitude; Those who belong to a subversive organization; or Those engaged directly or indirectly in any subversive activity. 184 Labor Relations Faculty Union, et. al. v. Bitonio, Jr., G.R. No. 131235, 16 Nov. 1999) XPN: When such violation affects only one or two members, then only one or two members would be enough to report such violation. Due Process in Impeachment of Union Officers Visitorial power of SOLE to inquire into the financial activities of labor organizations Despite practical difficulties in complying with the procedure laid down in the constitution and bylaws, the impeachment procedure contained therein must be substantially complied with. (Litton Mills Employees Association v. Ferrer-Calleja, G.R. No. 78061, 24 Nov. 1988) SOLE is authorized to inquire into the financial activities of any labor organization to determine compliance or non-compliance with the laws and to aid in the prosecution of any violation thereof. Q: Can a labor organization prescribe rules and regulation with respect to voting? It is initiated on the basis of: 1. 2. A: YES. It may require reasonable period of prior membership (such as six months or a year). It may also condition the exercise of right to vote on the payment of dues since paying dues is a basic obligation of membership. However, this is subject to two (2) qualifications: (a) it must be applied uniformly; and (b) members must be afforded a reasonable opportunity to pay dues, including a grace period during which dues may be paid without any loss of rights. It should be noted however, that it cannot create special classes of nonvoting members. A Complaint under oath; and Supported by 20% of the membership. Dues and assessments which the union may collect Legitimate labor organizations are authorized to collect reasonable amounts of the following: 1. 2. 3. 4. 5. Obtaining Relief with the Union GR: First, redress must be sought with the union itself in accordance with the constitution and bylaws. 6. Membership fees Union dues Assessments Fines Contribution for labor education and research, mutual death and hospitalization benefits, welfare fund, strike fund, and credit and cooperative undertakings (Art. 292(a), LC) Agency fees (Art. 259(e), LC) 6. CHECK OFF, ASSESSMENTS, UNION DUES, AND AGENCY FEES When the intra-union remedy fails, a case can be filed with the Bureau of Labor Relations. Check Off XPN: When the exhaustion of remedies with the union would practically amount to a denial of justice. Then, it cannot be insisted upon as a condition to the right to invoke the aid of the court. A check-off is a method of deducting from the employee’s pay at prescribed periods, any amount due for fees, fines, or assessments. It is a process or device whereby the employer, on agreement with the union recognized as the proper bargaining representative, or on prior authorization from its employees, deducts union dues and assessments from the latter’s wages and remits them directly to the union. 30% Requirement GR: At least 30% of the members are required to report a violation of labor organization procedures. 185 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation Members v. ABS-CBN Corp., G.R. No. 106518, 11 Mar. 1999) Requirements for a Valid Check-Off 1. 2. 3. Authorization by a written resolution of the majority of all the members at a general membership meeting duly called for the purpose; The authorization should specify the: 1. Amount; 2. Purpose; and 3. Beneficiary of the deduction. Secretary’s record of the minutes of said meeting; and XPNs: a. b. c. Individual written authorizations for check-off duly signed by the employees concerned. NOTE: Under Art. 113, one of the lawful deductions from employee’s wage is for “union dues, in cases where the right of the worker or his union to checkoff has been recognized by the employer or authorized in writing by the individual worker concerned.” (Azucena, 2016) For mandatory activities under the LC; For Agency Fees; When non-members of the union avail of the benefits of the CBA: i. ii. Jurisdiction over Check-Off Disputes Being an intra-union dispute, the Regional Director of DOLE has jurisdiction over check off disputes. (Art. 250(p), LC) Non-members may be assessed union dues equivalent to that paid by union members; and Only by board resolution approved by majority of the members in general meeting called for the purpose. Effect of failure to strictly comply with the requirements set by law It shall invalidate the questioned special assessments. Substantial compliance with the requirements is not enough in view of the fact that the special assessment will diminish the compensation of union members. (Palacol v. FerrerCalleja, G.R. No. 85333, 26 Feb. 1990) Assessments Payments used for a special purpose. Especially if required only for a limited time. (Azucena, 2016) Requisites to Collect Special Assessment Union Dues GR: No special assessments, attorney’s fees, negotiation fees, or any other extraordinary fees may be checked-off from any amount due to an employee unless there is: 1. These are regular monthly contributions paid by the members to the union in exchange for the benefits given to them by the CBA and to finance the activities of the union in representing the union. Authorization by a written resolution of the majority of all members at the general membership meeting duly called for that purpose; 2. Secretary’s record of the minutes of the meeting; and 3. Individual written authorization for check-off duly signed by the employee concerned. (Art. 250, LC; ABS-CBN Supervisors Employees Union UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Nature and purpose of union dues Union dues are the lifeblood of the union. All unions are authorized to collect reasonable membership fees, union dues, assessments, fines, and other contributions for labor education and research, mutual death and hospitalization benefits, welfare fund, strike fund, and credit and cooperative undertakings. (Art. 292(a), LC) 186 Labor Relations 2. Agency Fees It is an amount equivalent to union dues, which a non-union member pays to the union because he benefits from the CBA negotiated by the union. Q: A is employed by XYZ Company where XYZ Employees Union (XYZ-EU) is the recognized exclusive bargaining agent. Although A is a member of rival union XYR-MU, he receives the benefits under the CBA that XYZ-EU had negotiated with the company. XYZ-EU assessed A, a fee equivalent to the dues and other fees paid by its members but A insists that he has no obligation to pay said dues and fees because he is not a member of XYZ–EU and he has not issued an authorization to allow the collection. Explain whether his claim is meritorious. (2010 BAR) NOTE: Payment by non-union members of agency fees does not amount to unjust enrichment because the purpose of such dues is to avoid discrimination between union and non-union members. The source of Agency Fee is not contractual but is based from quasi-contract. Requisites for Assessment of Agency Fees 1. 2. 3. The Ee is part of the bargaining unit; He is not a member of the union; and He partook of the benefits of the CBA. A: NO. The fee exacted from A takes the form of an agency fee which is sanctioned by Art. 248 (now 259) (e) of the Labor Code. The collection of agency fees in an amount equivalent to union dues and fees from Ees who are not union members is recognized under the LC. The union may collect such fees even without any written authorization from the nonunion member Ees, if said Ees accept the benefits resulting from the CBA. The legal basis of agency fees is quasi-contractual. (Del Pilar Academy v. Del Pilar Academy Employees Union, G.R. No. 170112, 30 Apr. 2008) NOTE: The individual authorization required under Art. 250(n) shall not apply to non-members of the recognized CB agent with regard to assessment of agency fees. The employee's acceptance of benefits resulting from a collective bargaining agreement justifies the deduction of agency fees from his pay and the union's entitlement thereto. In this aspect, the legal basis of the union's right to agency fees is neither contractual nor statutory, but quasi-contractual deriving from the established principle that nonunion employees may not unjustly enrich themselves by benefiting from employment conditions negotiated by the bargaining union. (Holy Cross of Davao College v. Hon. Joaquin, G.R. No. 110007, 18 Oct. 1996) Union Dues vs. Agency Fees UNION DUES AGENCY FEES From whom collected Collected from union members Limitation on the Amount of Agency Fee The bargaining union cannot capriciously fix the amount of agency fees it may collect from its nonmembers. Article 248(e) of the Labor Code expressly sets forth the limitation in fixing the amount of the agency fees, thus: 1. It should be equivalent to the dues and other fees paid by members of the recognized collective bargaining agent. Collected by the union from non-members belonging to the same bargaining unit who receive the benefits under the CBA. Need for Written Authorization There must be an individual written authorization by individual members. It should be reasonable in amount; and 187 Can be assessed even without the authorization of the employee concerned. UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation 7. UNION SECURITY CLAUSE Dismissal by virtue of stipulation in the CBA Union security is a generic term, which is applied to and comprehends "closed-shop," "union-shop," "maintenance of membership," or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. Moreover, a stipulation in the CBA authorizing the dismissal of employees is of equal import as the statutory provisions on dismissal under the Labor Code, since a CBA is the “law between the company and the union and compliance therewith is mandated by the express policy to give protection to labor.” Kinds of union security clause 1. Union-shop – there is union-shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. 2. Maintenance of membership shop – there is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit, or the agreement is terminated. 3. In terminating the employment of an employee by enforcing the union security clause, the employer needs only to determine and prove that: 1. 2. 3. C. BARGAINING REPRESENTATIVE Closed-shop – an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part. An Organized establishment is an enterprise where there exists a recognized or certified sole and exclusive bargaining agent. An Unorganized establishment, on the other hand, is an enterprise where no union has yet been duly recognized or certified as bargaining representative. Bargaining representative of the Ees for purposes of collective bargaining NOTE: It is a State policy to promote unionism to enable workers to negotiate with management on an even playing field and with more persuasiveness than if they were to individually and separately bargain with the employer. For this reason, the law has allowed stipulations for "union-shop" and "closed-shop" as means of encouraging workers to join and support the union of their choice in the protection of their rights and interest vis- -vis the employer. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES The union security clause is applicable; The union is requesting for the enforcement of the union security provision in the CBA; and There is sufficient evidence to support the decision of the union to expel the employee from the union. The labor organization designated or selected by the majority of the Ees in an appropriate collective bargaining unit shall be the exclusive representative of the Ees in such unit for the purpose of CB. However, an individual Ee or group of Ees shall have the right at any time to present grievances to their Er. (Art. 267, LC) 188 Labor Relations 2. Three (3) methods of determining the exclusive bargaining representative: 3. 1. 2. 3. SEBA Certification Certification Election Consent Election 4. 5. 1. MODES TO ACQUIRE STATUS AS SOLE AND EXCLUSIVE BARGAINING AGENT Where to file the Request a. SEBA CERTIFICATION Any legitimate labor organization may file a Request in the DOLE Regional Office which issued its certificate for registration or certificate of creation of chartered local, as the case may be. This is a new mode of determining SEBA. D.O. No. 40-I-15, s. 2015 issued on 07 Sept. 2015, has expressly repealed the entire set of Rules applicable to Voluntary Recognition in the Implementing Rules on Book V of the Labor Code. (Chan, 2017) Action on the Request Rationale for the Repeal Within one (1) day from the submission of the Request, the DOLE Regional Director should: By allowing the employer to extend “voluntary recognition” to a union, it is no longer the employees but the employer who determines and designates the SEBA when it is supposed to be just a mere “bystander” in such determination and designation process. (Chan, 2017) SEBA Certification Process where a union requests the DOLE Regional Director to recognize and certify the union as the Sole and Exclusive Bargaining Agent (SEBA) of the Barganing Unit (BU) it purports to represent for purposes of collective bargaining with the employer. 1. Determine whether the request is compliant with the documentary requirements and whether the bargaining unit sought to be represented is organized or not; and 2. Request a copy of the payroll for purposes of SEBA certification. If the DOLE Regional Director finds the Request deficient, he should advise the requesting union or local to comply within 10 days from notice. Noncompliance shall be deemed withdrawal of the request. (Sec. 3, D.O. 40-1-15) Scenarios contemplated by the Rules on Request for Sole and Exclusive Bargaining Agent Certification Conditions: 1. The bargaining unit is not unionized; 2. The requesting union is the only union in that bargaining unit; and 3. The CBU majority are members of the union. i. Request certification in UNORGANIZED establishment with ONLY ONE LEGITIMATE UNION. ii. Request for certification in UNORGANIZED establishment with MORE THAN ONE LEGITIMATE LABOR ORGANIZATION Documentary Requirements The Request should indicate: 1. The name and address of the company where it operates; The bargaining unit sought to be represented; The approximate number of the employees in the bargaining unit; and The statement of the existence/nonexistence of other labor organization/CBA. The name and address of the requesting legitimate labor organization; 189 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation iii. same to the Election Officer for the conduct of certification election. (Sec. 3, D.O. No. 40-1-15) Request for certification in ORGANIZED establishment i. Unorganized – Only One Legitimate Union iii. Organized The DOLE Regional Director shall call a conference within five (5) working days for the submission of the following: If the DOLE Regional Director finds that the establishment organized, he should refer the same to the Mediator-Arbiter for the determination of the propriety of conducting a certification election. a. The names of employees in the covered bargaining unit who signify their support for the SEBA certification, provided that said employees comprise at least majority of the number of employees in the covered bargaining unit; and Q: What would happen if the request is denied? A: It may be referred to an election officer for the conduct of a certification election. Q: What if it was granted? b. Certification under oath by the President that all documents submitted are true and correct based on his/her personal knowledge. A: Then the certified union shall enjoy the rights and privileges of an EBA for the BU. If the requesting union or local fails to complete the requirements for the SEBA certification during the conference, the Request should be referred to the Election Officer for the conduct of certification election. b. CERTIFICATION/CONSENT ELECTION Certification Election It is the process of determining through secret ballot the sole and exclusive representative of the Ees in an appropriate bargaining unit, for purposes of CB or negotiation. (Sec. 1(h), Rule I, Book V, IRR) If the DOLE Regional Director finds that the requirements are complete, he shall issue, during the conference, a Certification as SEBA. NOTE: The process is called CE because it serves as the official, reliable, and democratic basis for the BLR to determine and certify the union that shall be the exclusive bargaining representative of the Ees for the purpose of bargaining with the Er. Effect of the Issuance of the Certification as SEBA a. The certified union shall enjoy all the rights and privileges of an exclusive bargaining agent of all the employees in the covered bargaining unit. Nature of Certification Election b. Certification Bar Rule - The issuance of the SEBA Certification as SEBA bars the filing of a petition for election by any labor organization for a period of one (1) year from the date of issuance. A CE is not a litigation but merely an investigation of a non-adversarial fact-finding character in which BLR plays a part of a disinterested investigator seeking merely to ascertain the desire of the Ees as to the matter of their representation. (Airline Pilots Association of the Philippines v. CIR, G.R. No. L-33705, 15 Apr. 1977) ii. Unorganized – More Than One Legitimate Labor Organization Certification proceedings directly involve only two issues: If the DOLE Regional Director finds that the establishment unorganized with more than one legitimate labor organization, he should refer the UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 190 Labor Relations a. In registration of federation or national union, the 20% membership requirement may not be complied with Proper composition and constituency of the bargaining unit; and Veracity of majority membership claims of the competing unions so as to identify the one union that will serve as the bargaining representative of the entire bargaining unit. (Azucena, 2016) b. The registration requirement of submitting the names of all its members comprising at least 20% of all the Ees in the bargaining unit where it seeks to operate is applicable only to registration of independent union. LC merely requires for proof of affiliation of at least ten (10) local chapters and the names and addresses of the companies where they operate. No 20% membership requirement is required for registration of a federation or national union. Purpose of a Certification Election It is a means of determining the worker’s choice of: 1. Whether they want a union to represent them for CB or if they want no union to represent them at all. 2. And if they choose to have a union to represent them, they will choose which among the contending unions will be the sole and exclusive bargaining representative of the Ees in the appropriate bargaining unit. NOTE: Under the LC and the Rules, the power granted to labor organizations to directly create a chapter or local through chartering is given to a federation or national union only, not to a trade union center. (SMCEU v. San Miguel Packaging Products Employees Union, G.R. No. 171153, 12 Sept. 2007) Filing a Petition for Certification Election (PCE) Employer may file a Petition for Certification Election The following may file a PCE: (L-NUF-L-Er) 1. 2. 3. 4. Er may file a petition for certification election when requested to bargain collectively, but it should thereafter not be allowed to have an active role in the CE; it shall merely act as a bystander. Any LLO; A National Union or Federation which has already issued a charter certificate to its local chapter participating in the CE; A Local chapter which has been issued a charter certificate; or An Er only when requested to bargain collectively in a bargaining unit where no registered CBA exists. (Sec. 1, Rule VIII, Book V, IRR) NOTE: If the petition for certification election was filed by the federation which is merely an agent, the petition is deemed to be filed by the chapter, the principal which must be a legitimate labor organization. The chapter cannot merely rely on the legitimate status of the mother union. NOTE: A national union or federation filing a petition in behalf of its local/chapter shall not be required to disclose the names of the local/chapter’s officers and members, but shall attach to the petition the charter certificate it issued to its local/chapter. (Sec. 1, Rule VIII, Book V, IRR as amended by D.O. 40-F-03) Equity of the Incumbent The incumbent bargaining agent shall automatically be one of the choices in the certification election as forced intervenor. (Rule VIII, Sec. 8, DO 40-03) The incumbent bargaining agent will not file a PCE because it will not contest its own status as the bargaining representative. 191 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation such CBA. It does not lose its representative status; it remains the sole bargaining representative until it is replaced by another. Until so replaced, it has the right to retain the recognition by the employer. Alternative Answer: A PCE may be filed outside the freedom period of a current CBA if such CBA is a new CBA that has been prematurely entered into, meaning it was entered into before the expiry date of the old CBA. The filing of the PCE shall be within the freedom period of the old CBA which is outside the freedom period of the new CBA that had been prematurely entered into. No Union as a Choice The right to join a union includes the right to not to join. (Victoriano v. Elizalde Rope Workers Union, G.R. L-25246, 12 Sept. 1974) In view of this, the “no union” choice should always be included in the certification election. If the “no union” option wins, the statutory bar rule shall apply. Thus, there will be no SEBA and no new PCE can be filed within one (1) year from the conduct of certification elections. Where to file the PCE Time to File PCE A petition for certification election shall be filed with the Regional Office which issued the petitioning union’s certificate of registration or certificate of creation of chartered local. It would depend if the Bargaining Unit has a CBA or none. The petition shall be heard and resolved by the MedArbiter. If there is none, the petition may be filed anytime except within the 12 months of a previous election, if any. NOTE: The filing or pendency of any inter/intraunion dispute and other related labor relations dispute is not a prejudicial question to any petition for certification election and shall not be a ground for the dismissal of a petition for certification election or suspension of proceedings of certification election. (Sec. 2, Rule XI of D.O. 40-03) If there is a CBA, the petition may only be filed within the “freedom period” of the representational aspect of the CBA. NOTE: Freedom period refers to the last 60 days immediately preceding the expiration of CBA. (Tanduay Distillery Labor Union v. NLRC, G.R. No. 75037, 30 Apr. 1987) Med-Arbiter’s Action on the Petition Hold a Preliminary Conference: Q: In what instance may a petition for certification election be filed outside the freedom period of a current collective bargaining agreement? (1997 BAR) A: As a general rule, in an establishment where there is a CBA in force and effect, a PCE may be filed only during the freedom period of such CBA, but to have that effect, the CBA should have been filed and registered with the DOLE. (Art. 237, 265, and 268, LC) Thus, a CBA that has not been filed and registered with the DOLE cannot be a bar to a CE and such election can be held outside the freedom period of UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 1. To determine whether the PCE should be processed or dismissed; 2. To determine the BU that will participate in the election and the identity of the contending unions; and 3. To determine the possibility of holding a “consent election.” a. If the unions agree, the PCE will no longer be heard and the unions will instead prepare for the consent election. (There is implied waver of the bars) b. 192 If the unions fail to agree, hearings would be conducted. Labor Relations Conduct of Hearings Filing of 25% Consent Signatures in the Petition for Certification Election After the last hearing, the Med-Arbiter shall issue a formal order denying or granting the petition. Ideally, the signature should be filed together with the petition. However, it may be filed after the petition within a reasonable period of time. Requisites For Certification Election A. In an Unorganized Establishment Effect if the Petition for Certification Election was NOT accompanied by the requisite 25% Consent Signatures An unorganized establishment is a bargaining unit with no recognized or certified bargaining agent. It does not necessarily refer to an entire company. Under the Implementing Rules, absence or failure to submit the written consent of at least 25% of all the Ees in the bargaining unit to support the petition is a ground for denying the said petition. NOTE: It may happen that the rank-and-file unit has a bargaining agent while the supervisory unit still does not have such agent; thus, the former is already an “organized establishment” while the latter remains, in the same company, an unorganized establishment. B. In an Organized Establishment Notwithstanding the provision of the IRR that failure to submit the required 25% consent signatures is a ground for the denial of the petition, the Supreme Court ruled that, it is within the discretion of the Med-Arbiter whether to grant or deny the petition despite absence of the required 25% written consent. (Port Workers Union v. Bienvenido Laguesma, G.R. Nos. 94929-30, 18 Mar. 1992) The Mediator-Arbiter is required to automatically order the conduct of a CE by secret ballot in an organized establishment as soon as the following requisites are met: If the petition, however, is accompanied by the 25% consent signatures, then the holding of the CE becomes mandatory. (California Manufacturing Corp. v. Laguesma, G.R. No. 97020, 8 June 1992) The certification election shall be automatically conducted upon the filing of a PCE by a LLO. 1. A petition questioning the majority status of the incumbent bargaining agent is filed before the DOLE within the 60-day freedom period; Consent signatures of at least 25% of the employees in the bargaining unit may not be submitted simultaneously with the filing of the Petition for Certification Election 2. Such petition is verified; and 3. The petition is supported by the written consent of at least 25% of all the Ees in the bargaining unit. (Art. 268, LC; TUPASWFTU v. Laguesma, G.R. No. 102350, 30 June 1994) The administrative rule requiring the simultaneous submission of the 25% consent signatures upon the filing of PCE should not be strictly applied to frustrate the determination of the legitimate representative of the workers. Accordingly, the Court held that the mere filing of a PCE within the freedom period is sufficient basis for the issuance of an order for the holding of a CE, subject to the submission of the consent signatures within a reasonable period from such filing. (Port Workers Union of the Phils. v. Laguesma, G.R. Nos. 94929-30, 18 Mar. 1992) 193 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation NOTE: In case of failure of elections, a re-run election will be held within six (6) months. Also, when the election held is invalid. Duty of Fair Representation The winning union in the certification election becomes the EBA of all the workers in the BU and shall represent even the members of the minority union. Exception to the Certification Year Bar Rule When there is a failure of election – when the number of votes cast in a certification or consent election is less than the majority of the number of eligible votes and there is no material challenged votes. Consent Election Consent election is an election that is voluntarily agreed upon by the parties with or without the intervention of DOLE for the purpose of determining the EBA. CERTIFICATION ELECTION Ordered by DOLE Failure of election does not bar the holding of another certification or consent election within six (6) months. CONSENT ELECTION Voluntarily agreed upon by the parties with or without the intervention of DOLE NOTE: If an election had been held but No Union won, a PCE may be filed again but only after 12 months. If a union has won, such union and the employer must within 12 months start negotiating a collective agreement. c. BARS TO THE HOLDING OF CERTIFICATION/CONSENT ELECTION Negotiation Bar Rule GR: In the absence of a CBA duly registered in accordance with Art. 237 of the Labor Code, a petition for certification election may be filed at any time. (Sec. 1, Rule VIII, Book V, IRR) Under this rule, no petition for certification election should be entertained while the sole and exclusive bargaining agent and the employer have commenced and sustained negotiations in good faith within the period of one (1) year from the date of a valid certification, consent, run-off, re-run, or from the date of voluntary recognition. Bar Rules No certification election may be held under the following rules: Certification Year Bar Rule Once the CBA negotiation have commenced and while the parties are in the process of negotiating the terms and conditions of the CBA, no challenging union is allowed to file a petition for certification election that would disturb the process and unduly forestall the early conclusion of the agreement. Under this rule, a petition for certification election may not be filed within one (1) year from the date a valid certification, consent, run-off, or re-run election has been conducted within the bargaining unit. This is also called as the 12-month Bar rule. If after the lapse of 12 months and they failed to commence the negotiation, the employees’ wish to have a CBA is defeated. Hence, another union can petition again for a certification election to replace the unproductive bargaining agent. (Azucena, 2016) 1. 2. 3. 4. Certification year bar rule; Negotiations bar rule; Bargaining deadlock bar rule; or Contract bar rule. The same ban applies if “No Union” won in the previous election. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 194 Labor Relations Bargaining Deadlock Bar Rule 2. 3. Under this rule, a petition for certification election may not be entertained when a bargaining deadlock to which an incumbent or certified bargaining agent is a party has been submitted to conciliation or has become the subject of a valid notice of strike or lockout. Contract Bar Rule applied on Extended CBA under Deadlock No petition for certification election may be filed before the onset of the freedom period nor after such period. The old CBA is extended until a new one is signed. NOTE: The employer’s continuing act of evading negotiation with the certified bargaining union is tantamount to a bargaining deadlock. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. Artificial Deadlock A deadlock pre-arranged or preserved by collusion of the employer and the majority union. Signs of Artificial Deadlock include failure of the union to resort to conciliation, failure to charge the Employer ULP, or failure to file a notice of strike despite the deadlock. The Contract Bar Rule does NOT apply in the following cases: 1. Where there is an automatic renewal provision in the CBA but prior to the date when such automatic renewal became effective, the employer seasonably filed a manifestation with the Bureau of Labor Relations of its intention to terminate the said agreement if and when it is established that the bargaining agent does not represent anymore the majority of the workers in the bargaining unit. 2. Where the CBA, despite its due registration, is found in appropriate proceedings that (a) it contains provisions lower than the standards fixed by law; or (b) the documents supporting its registration are falsified, fraudulent, or tainted with misrepresentation. 3. Where the CBA does not foster industrial stability, such as contracts where the identity of the representative is in doubt since the employer extended direct recognition to the union and conducted a CBA therewith less than one (1) year from the time a certification election was conducted where the “no union” vote won. This situation obtains in a case where the company entered into a CBA with the union when its status as exclusive bargaining agent of the employees has not been established yet. Contract Bar Rule Under this rule, a petition for certification election may not be filed when a CBA between the employer and a duly recognized or certified bargaining agent has been registered with the BLR in accordance with the Labor Code. Where the CBA is duly registered, a petition for certification election may be filed within the 60-day freedom period prior to its expiry. The purpose of this rule is to ensure stability in the relationship of the workers and the employer by preventing frequent modifications of any CBA entered into by them in good faith and for the stipulated original period. NOTE: To bar a certification election, it is no longer necessary that the CBA be “certified”; it is enough that it is registered in accordance with Art. 237. (Azucena, 2016) Requisites of Contract Bar 1. It must be signed by the parties; and The effective date and expiration date must be readily discernible on the face of the contract. It must contain substantial terms and conditions of employment sufficient to stabilize the bargaining relationship; 195 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation 4. 7. Where the CBA was registered before or during the last 60 days of a subsisting agreement or during the pendency of a representation case. It is well-settled that the 60-day freedom period based on the original CBA should not be affected by any amendment, extension, or renewal of the CBA for purposes of certification election. Absence of Er-Ee relationship between all the members of the petitioning union and the establishment where the proposed bargaining unit is sought to be represented; (Sec. 14(h), Rule VIII of D.O. 40-F-03) Q: Does the filing of a petition for cancellation of registration of union cause the suspension or dismissal of a PCE? Denial; Other grounds A: NO. An order to hold a certification election is proper despite the pendency of the petition for cancellation of the registration certificate of the respondent union. The rationale for this is that at the time the respondent union filed its petition, it still had the legal personality to perform such act absent an order directing the cancellation. (Association of Court of Appeals Employees v. FerrerCalleja, G.R. No. 94716, 15 Nov. 1991) The Med-Arbiter may either approve or disapprove the PCE. The disapproval or denial of the petition has to be based on the grounds specified by the law: 1. Non-appearance – When petitioner does not appear in two (2) successive conferences called by the Med-Arbiter, despite notice, the petition may be dismissed; 2. Illegitimacy/Unregistered union - When the petitioning union or national union or federation is not listed in DOLE’s list of LLOs or if its registration has been cancelled; 3. When there is a failure on the part of a local chapter, national union or federation to submit a duly issued Charter Certificate upon filing of PCE; (Sec. 14(b), Rule VIII of D.O. 40-F-03) 4. When a PCE is filed before or after the freedom period of a duly registered CBA, provided that the 60-day period based on the original CBA shall not be affected by any amendment, extension or renewal of the CBA; (Sec. 14(c), Rule VIII of D.O. 40-F-03) 5. 6. NOTE: The finality of a decision cancelling the certificate of registration of a LLO would not retroact to the time of its issuance of the certificate. Meaning, despite the fact that a PCE is filed during the pendency of a trial ruling over the legitimacy of a labor union, the filing for said petition was done when it still had legal personality. Additionally, the legitimacy of the legal personality of a LLO cannot be collaterally attacked. It must be done in a separate action. (Legend International Resorts Limited v. Kilusang Manggagawa Ng Legenda, G.R. No. 169754, 23 Feb. 2011) Filing of a petition within one (1) year from the date of recording of voluntary recognition, or within the same period from a valid certification, consent, or run-off election where no appeal on its results is pending; (Sec. 14(d), Rule VIII of D.O. 40-F-03) Illegitimacy – No charter - When the local or chapter, or the national union or federation fails to submit a duly issued charter certificate of the chapter at the time the union files its PCE, it will cause the dismissal of the PCE; 9. Absence of employment relationship Employees’ right to unionize is founded on the existence of Er-Ee relationship. If there is none, there would be no basis; and NOTE: Med-Arbiter can determine Er-Ee relationship. Med-Arbiter has the authority to determine existence of Er-Ee relationship in a PCE. When a duly certified union has commenced and sustained negotiations with the employer in accordance with Art. 250 of LC within the one-year period referred in the preceding number; (Sec. 14(e), Rule VIII of D.O. 40-F-03) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 8. 196 Labor Relations for the dismissal of a petition for certification election or suspension of proceedings of certification election. (Sec. 2, Rule XI of D.O. 40-03) 10. Lack of support (25% signature requirement) - When the union filing a PCE does not have the support of 25% of the bargaining unit manifested through their signatures, the PCE may be denied. Double Majority Rule (certification election) Without this minimum support, the challenge to the incumbent union looks like a nuisance. It must appear that a sizeable portion of the employees desire to have a union. 1. Valid election (First Majority rule) – Majority of eligible voters shall have validly cast their votes. 2. Winning Union (Second Majority rule) – The winner who obtained majority of the valid votes cast shall be declared as the bargaining agent in the bargaining unit. This requirement only applies to organized establishments. In unorganized establishments, it is merely directory. NOTE: The 25% requirement may be relaxed by the Med-Arbiter and order the holding of the certification election precisely for the purpose of ascertaining which of the contending unions shall be the EBA. Q: Liwayway Glass had 600 rank-and-file participated in the certification election ordered by the Med-Arbiter. Five hundred (500) employees voted. The unions obtained the following votes: A-200; B-150; C-50; 90 employees voted “no union”; and 10 were segregated votes. Out of the segregated votes, four (4) were cast by probationary employees and six (6) were cast by dismissed employees whose respective cases are still on appeal. (2014 BAR) Effect of Withdrawal of Signature by the Employees Critical factor to consider is when the withdrawal happened: 1. 2. If it is made before the filing, the withdrawal is presumed voluntary and affects the propriety of the petition. a. If it is made after the filing, the withdrawal is deemed involuntary and does not cause the dismissal of the petition. Should the votes of the probationary and dismissed employees be counted in the total votes cast for the purpose of determining the winning labor union? b. Was there a valid election? Appeal of Grant or Denial of PCE c. It would depend if the establishment is organized or unorganized. d. Suppose the election is declared invalid, which of the contending unions should represent the rank-and-file employees? 1. 2. In case of organized establishment, it is appealable. In case of unorganized establishment, it is not appealable, except if the petition is denied. e. NOTE: The filing or pendency of any inter/intraunion dispute and other related labor relations dispute is not a prejudicial question to any petition for certification election and shall not be a ground 197 Should Union A be declared the winner? Suppose that in the election, the unions obtained the following votes: A-250; B-150; C-50; 40 voted “no union”; and 10 were segregated votes. Should Union A be certified as the bargaining representative? UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation A: a. b. c. A: YES. While there is a prohibition against the mingling of supervisory and rank-and-file employees in one labor organization, the Labor Code does not provide for the effects thereof. Thus, the Court held that after a labor organization has been registered, it may exercise all the rights and privileges of a legitimate labor organization. Any mingling between supervisory and rank-and-file employees in its membership cannot affect its legitimacy for that is not among the grounds for cancellation of its registration, unless such mingling was brought about by misrepresentation, false statement, or fraud under Art. 239 of the Labor Code. (Republic v. Kawashima Textile, G.R. No. 160352, 23 July 2008) YES. Rule IX, Sec. 6 of DOLE D.O. No. 40-03 provides that, “All employees who are members of the appropriate bargaining unit sought to be represented by the petitioner at the time of the issuance of the order granting the conduct of a certification election shall be eligible to vote. An employee who has been dismissed from work but has contested the legality of the dismissal in a forum of appropriate jurisdiction at the time of the issuance of the order for the conduct of a certification election shall be considered a qualified voter, unless his/her dismissal was declared valid in a final judgment at the time of the conduct of the certification election.” d. FAILURE OF ELECTION, RUN-OFF ELECTION, RE-RUN ELECTION YES. To have a valid election, at least majority of all eligible voters in the unit must have cast their votes. In the instant case, 500 out of 600 rank-and-file employees voted. Failure of Election There exists a failure of election in the following instances: NO. The Labor Code provides that the Labor Union receiving majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. Here, the number of valid votes cast is 490; thus, the winning union should receive at least 246 votes. Union A only received 200 votes. d. None of them should represent the rank-andfile employees. e. YES. The Labor Code provides that the Labor Union receiving majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. Here, the number of valid votes cast is 490. Thus, the winning union should receive at least 246 votes; Union A received 250 votes. Where the number of votes cast in a certification or consent election is less than the majority of the number of eligible voters and there is no material challenged votes – In this case, the failure of election shall not bar the filing of a motion for the immediate holding of another certification or consent election within six (6) months from date of declaration of failure of election; and 2. When there is a tie – The next election must be held within a period of ten (10) days from the last election in order to determine or break the tie. Run-off Election Q: May an organization which carries a mixture of rank-and-file and supervisory employees possess any of the rights of a legitimate labor organization, including the right to file a petition for certification election for the purpose of collective bargaining? UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 1. A run-off election refers to an election between the labor union receiving the two highest votes in a certification election or consent election with three or more unions in contention, where such certification election or consent election results in none of the contending unions receiving the majority of the valid votes cast; provided, that the total number of votes for all contending unions, if 198 Labor Relations added is at least 50% of the number of valid votes cast. (Art. 268, LC) Posting of Notice for Run-Off Election The notice should be posted by the Election Officer at least five (5) days before the actual date. (Sec. 1, Rule X, Book V, IRR) Qualification of Voters in the Run-Off Election The same voters list used in the certification election shall be used in the run-off election. Re-Run Election There are three instances of Re-Run: When to be Conducted 1. If conditions that justify the conduct of a run-off election are present and there are no objections or challenges which, if sustained, can materially alter the election results, the Election Officer should motu proprio conduct the run-off election within ten (10) days from the close of the election proceeding between the labor unions receiving the two highest number of votes cast. 2. 3. Failure of certification election declared by the election officer; Tie between two unions; or Tie between a union and no union. In both instances, the “no union” is also a choice. e. EMPLOYER AS A MERE BYSTANDER RULE Requirements for a Run-Off Election Employer as a Bystander (Bystander Rule) A run-off election is proper if five concurrent conditions exist: In all cases, whether the PCE is filed by an Er or an LLO, the Er shall not be considered a party thereto with a concomitant right to oppose a PCE. The only purpose of the proceeding is to determine which organization will represent the employees in bargaining with the employer. The choice of representative is the exclusive concern of the employees. 1. 2. 3. 4. 5. A valid election took place because majority of the CBU members voted; The election presented at least three choices, e.g., Union One, Union Two, and No Union, meaning, there are at least two union “candidates”; Not one of the unions obtained the majority valid votes; The total number of votes for all the unions is at least 50% of the votes cast; and There is no unresolved challenge of voter or election process. (Azucena, 2016) The Er’s participation in such proceedings shall be limited to: 1. 2. NOTE: Thus, if “no union” garnered the majority vote, no run-off elections may be held. Being notified or informed of petitions of such nature; and Submitting the list of Ees during the preelection conference should the MediatorArbiter act favorably on the petition. (Republic v. Kawashima Textile, G.R. No. 160352, 23 July 2008) Choices in a run-off election Employer’s possible recourse The unions receiving the highest and 2nd highest number of the votes cast. (Sec. 2, Rule X, Book V, IRR) If the employer believes that the union has inappropriate membership because it includes rank-and-file with managerial/supervisory employees, the employer’s recourse is not to oppose the PCE, but to file a separate petition to cancel the union’s registration. (Azucena, 2016) “No Union” is not a choice in the Run-off Election. 199 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation However, either party can serve a written notice to terminate or modify the agreement at least 60 days prior the expiration of its fifth year. D. COLLECTIVE BARGAINING NOTE: It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties’ automatic renewal clause. (Art. 264, LC) 1. DUTY TO BARGAIN COLLECTIVELY, BARGAINING IN BAD FAITH Duty to Bargain Collectively The duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of: 1. 2. 3. 4. Jurisdictional Bargaining: 1. Negotiating an agreement with respect to wages, hours of work, and all other terms and conditions of employment; 2. 3. Including proposals for adjusting any grievances or questions arising under such agreement; of Collective Possession of the status of majority representation of the employees’ representative; Proof of majority representation; and A demand to bargain. NOTE: An employer’s duty to recognize and bargain collectively with a union does not arise until the union requests the employer to bargain. Executing a contract incorporating such agreements if requested by either party but such duty does not compel any party to agree to a proposal or to make any concession (Art. 263, LC); and Q: When should bargaining begin and when should it end? A: It begins when the three (3) jurisdictional preconditions are present. The collective bargaining should begin within the 12 months following the determination and certification of the employees’ exclusive bargaining representative. The period is known as certification year. Negotiation over the terms of a new contract or proposed modifications, when an existing agreement is validly opened for negotiations. (Azucena, 2016) When there is no CBA The law encourages expeditious and good-faith negotiations but fixes no time limit for completion of the negotiation. The law dictates no deadline. It depends upon the will and agreement of the negotiating panels. (Azucena, 2016) In the absence of an agreement or other voluntary arrangement providing for a more expeditious manner of Collective Bargaining, it shall be the duty of employer and the representatives of the employees to bargain collectively in accordance with the provisions of the LC. (Art. 262, LC) Bargaining in Bad Faith When there is a CBA When there is a CBA, the duty to bargain collectively, in addition to Art. 263, shall mean that neither party shall terminate nor modify such agreement during its lifetime. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Preconditions 200 1. Boulwarism – It is the tactic of making a "take-it-or-leave-it" offer in a negotiation, with no further concessions or discussion. 2. Blue-Sky Bargaining – It is defined as "unrealistic and unreasonable demands in negotiations by either or both labor and Labor Relations University-Philippines v. WUP Faculty and Staff Association, G.R. No. 181806, 12 Mar. 2014) management, where neither concedes anything and demands the impossible." It actually is not collective bargaining at all. (i.e., making exaggerated or unreasonable proposals) 3. Purpose The goal of collective bargaining is the making of agreements that will stabilize business conditions and fix fair standards of working conditions. (P.I. Manufacturing, Incorporated v. P.I. Manufacturing Supervisors and Foremen Association, G.R. No. 167217, 04 Feb. 2018) Surface Bargaining – It is defined as "going through the motions of negotiating" without any legal intent to reach an agreement. Surface bargaining is also called “shadow boxing” or “apparent bargaining.” Mandatory Provisions of the CBA NOTE: Blue-sky bargaining and Surface bargaining are allowed in the beginning of negotiations. But when during the negotiations, you have not moved a bit in your position and you impose a “take-it-orleave-it” position to the other party, then such amounts to boulwarism which is already bargaining in bad faith. For a matter to be subject to mandatory collective bargaining, it must materially or significantly affect the terms or conditions of employment. Examples of matters considered as mandatory subjects of bargaining: 1. Wages and other types of compensation including merit increases 2. Working hours and working days, including work shifts 3. Vacations and holidays 4. Bonuses 5. Pensions and retirement plants 6. Seniority 7. Transfer 8. Lay-offs 9. Employee workloads 10. Work rules and regulations 11. Rent of company houses 12. Union security arrangements 2. COLLECTIVE BARGAINING AGREEMENT (CBA), MANDATORY PROVISIONS Collective Bargaining Agreement (CBA) Refers to a contract executed upon request of either the employer or the exclusive bargaining representative of the employees – incorporating the agreement reached after negotiations with respect to wages, hours of work, and all other terms and conditions of employment, including proposals for adjusting any grievances or questions under such agreement. CBA should include the mandatory provisions such as grievance procedure, “no strike-no lockout” clause, cooperative scheme, and Labor Management Council (LMC). (Abad, 2015) Nature The CBA is the law between the contracting parties and the Collective Bargaining representative and the employer-company. Compliance with a CBA is mandated by the expressed policy to give protection to labor. (Vicente Almario v. Philippine Airlines, Inc., G.R. No. 170928, 11 Sept. 2007) No duty to agree even on mandatory subjects The law speaks of a duty to bargain but not of an obligation to agree. The law does not compel agreements between employers and employees, and neither party is legally obligated to yield even on a mandatory bargaining subject. (Azucena, 2016) NOTE: Unilateral changes in the implementation of the provisions of the CBA cannot be allowed without the consent of both contracting parties. (Wesleyan 201 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation Services, Inc. v. Confessor, G.R. No. 110854, 13 Feb. 1995) Procedure in Collective Bargaining When a party desires to negotiate an agreement: 1. It shall serve a written notice upon the other party with a statement of proposals; 2. Reply by the other party shall be made within ten (10) calendar days with counter proposals; 3. In case of differences, either party may request for a conference which must be held within 10 calendar days from receipt of request; 4. If not settled, NCMB may intervene and shall exert all efforts to settle disputes amicably, and encourage the parties to submit the dispute to a voluntary arbitrator; and 5. If not resolved, the parties may resort to any other lawful means, either to settle the dispute or submit it to a voluntary arbitrator. The rationale of the such clause is to make it the duty of the parties to keep the status quo and to continue in full effect the terms and conditions of the existing agreement until a new agreement is reached by the parties. (Principle of CBA Continuity) (Art. 264, LC) Q: What is the Lock, Stock, and Barrel Rule? A: When the employer refuses to submit any counter-proposal, the employer had lost its right to bargain the terms and conditions of employment. Consequently, all the terms and conditions of the CBA as proposed by the SEBA are deemed approved and accepted lock, stock, and barrel by the employer. (Kiok Luy v. NLRC G.R. No. L-54334, 22 Jan. 1986) Hold-over Principle NOTE: During the conciliation proceeding in the NCMB, the parties are prohibited from doing any act which may disrupt or impede the early settlement of disputes. (Art. 261(d), LC) It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. Despite the lapse of the formal effectivity of the CBA, the law still considers the same as continuing in force and effect until a new CBA shall have been validly executed. Ratification of the CBA GR: The agreement negotiated by the employees' EBR should be ratified or approved by the majority of all the workers in the bargaining unit. The proper ratifying group is not the majority union but the majority of all the workers in the bargaining unit represented by the negotiation. Q: Does the hold-over principle apply to an imposed CBA / arbitral award? A: YES. The Hold-over Principle applies to an imposed CBA. The law does not provide for any exception nor qualification on which economic provisions of the existing agreement are to retain its force and effect. Likewise, the law does not distinguish between a CBA duly agreed upon by the parties and an imposed CBA. (General Milling Corporation – ILU v. General Milling Corp., G.R. No. 193723, 20 July 2011) XPN: Ratification of the CBA by the employees is not needed when the CBA is a product of an arbitral award by a proper government authority (Art. 278(g) LC) or a voluntary arbitrator. (Art. 275, LC) Q: What is the automatic renewal clause of collective bargaining agreements? (2008 BAR) A: The automatic renewal clause means that although the CBA has expired, it continues to have legal effects as between the parties until a new CBA has been entered. (Pier &Arrastre Stevedoring UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 202 Labor Relations A: In one case, the CBA was not posted for at least five days in two conspicuous places in the establishment before ratification, to enable the workers to clearly inform themselves of its provisions. Moreover, the CBA submitted to the MOLE (now SOLE) did not carry the sworn statement of the union secretary, attested by the union president, that the CBA had been duly posted and ratified, as required by Sec. 1, Rule 9, Book V of the Implementing Rules and Regulations. These requirements being mandatory, non-compliance therewith rendered the said CBA ineffective. (Associated Trade Unions v. Trajano, G.R. No. L75321, 20 Jun. 1988) 3. SIGNING, POSTING, REGISTRATION Registration Within 30 days from execution of CBA, the parties thereto shall submit the agreement to the DOLE Regional Office where the bargaining union is registered or where it principally operates. Multiemployer collective bargaining agreements shall be filed with the Bureau. NOTE: Failure to register the CBA does not make it invalid or unenforceable. Once it is duly entered into and signed by the parties, a CBA becomes effective as between the parties whether or not it has been certified by the BLR. (Liberty Flour Mills Employees Association v. Liberty Flour Mills, G.R. Nos. 58768-70, 29 Dec. 1989) However, its non-registration renders the contract-bar rule inoperative. NOTE: In case of denial by the Regional Office, it is appealable to the Bureau within ten (10) days. In case of denial by the Bureau, it is appealable to the Secretary of Labor and Employment. Requirements for Registration Effectivity of an Arbitral Award The application for CBA registration shall be accompanied by the original and two duplicate copies of the following requirements: CBA arbitral awards granted after six (6) months from the expiration of the last CBA, shall retroact to such time agreed upon by both parties. Absent such an agreement, the award shall retroact to the first day after the six-month period following the expiration of the last day of CBA. 1. 2. 3. 4. Duly accomplished and notarized Application Form; Original and 2 duplicate signed copies of the CBA which must be certified under oath by the representatives of the employer/s and labor union/s concerned; Statement that the CBA was posted in at least two (2) conspicuous places in the establishment/s concerned for at least five (5) days before its ratification; and Statement that the CBA was ratified by the majority of the employees in the bargaining unit of the employer/s concerned. In the absence of a CBA, the Secretary’s determination of the date of retroactivity as part of his discretionary powers over arbitral awards shall control. (Manila Electric Co. v. Quisumbing, G.R. No. 127598, 22 Feb. 2000) Zipper Clause It is a stipulation in a CBA indicating that issues that could have been negotiated upon but not contained in the CBA cannot be raised for negotiation when the CBA is already in effect. All matters not included in the agreement shall be deemed to have been raised and disposed of as if covered. The following documents must be certified under oath by the representative of the employer and the labor union. No other document shall be required in the registration of the CBA. A CBA is not an ordinary contract but one impressed with public interest, only provisions embodied in the CBA should be so interpreted and complied with. Where a proposal raised by a contracting party does not find print in the CBA, it is not a part Q: What is the effect for non-compliance with the requirement of posting? 203 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation immediately preceding the expiration of the five-year term of the CBA; thereof and the proponent has no claim whatsoever to its implementation under the Zipper Clause. (SMTFM-UWP v. NLRC, G.R. No. 113856, 07 Sept. 1998) 2. Either party can serve a written notice to terminate or modify agreement at least 60 days prior to the expiration of the five-year term of the CBA; and 3. A PCE may be filed. Effectivity The effectivity date depends on whether the CBA is the first CBA or a renegotiated CBA. 1. 2. First CBA - Effectivity date depends upon the agreement of the parties. 60–Day aspect) NOTE: The determining point is the date the parties agreed, not the date they signed. The freedom period under Art. 265 & 268 is different from the other 60-day period mentioned in Art. 264. The latter speaks of the right of the parties to propose modifications to the existing CBA, as an exception to the rule that the CBA cannot be modified during its lifetime, within 60 days prior the expiration of its economic/non-economic aspect. This 60-day period does not and cannot refer to the representative status of the incumbent union since the acquisition or loss of representative status is to be resolved through CE. Renegotiated CBA - If within six (6) months from the expiry date of the old CBA, then the new CBA starts to take effect on the date following such expiry date. If beyond six (6) months, the retroaction date will have to be agreed upon by the parties. NOTE: The date is important particularly in relation to wage increase because a long retroaction period will mean sizeable back pay to employees. Economic and Non-Economic Aspect – may last for a maximum period of three (3) years after the execution of the CBA. In case of doubt: - Representation Aspect – may last for five (5) years. It refers to the identity and majority status of the union that negotiated the CBA as the exclusive bargaining representative. 60-Day Aspect) Freedom Period (Representative A labor union may disaffiliate from the mother union to form a local or independent union only during the 60-day freedom period UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES All labor legislation and labor contracts should be construed in favor of the safety and decent living of the laborer. (Art. 1702, Civil Code) All doubts should be resolved in favor of labor. (Art. 4, LC) Q: Is the 10-year suspension of the CBA unconstitutional and contrary to public policy? During the 60-day freedom period: 1. (Non-representative A: As a contract and the governing law between the parties, the general rules of statutory construction apply in the interpretation of its provisions (NUWHRAIN-APL-IUF v. Phil Plaza Holdings, G.R. No. 177524, 23 July 2014) Term/Duration of a CBA 2. Period Q: How should the CBA be interpreted? 4. TERM OF THE CBA, FREEDOM PERIOD 1. Notice A: NO. The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations undertaken in the light of the severe financial situations faced by the employer. It is a 204 Labor Relations valid exercise of the freedom to contract. (Rivera, et al. v. Espiritu, G.R. No. 135547, 23 Jan. 2002) b. ASPECTS ULP has two aspects, namely: 1. Civil; and 2. Criminal. E. UNFAIR LABOR PRACTICES NOTE: Lawmakers intended acts of ULP to be prosecuted in the same manner as criminal offenses because it is an offense against a public right or interest. Definition ULP means any unfair labor practice as expressly defined by the Labor Code. (Art. 219(k), LC) Q: What is the condition precedent before criminal prosecution of ULP may be made? ULP has a technical meaning. It only refers to acts that violate the right of employees to selforganization and the observance of the CBA. Thus, not all unfair acts constitute as unfair labor practice. Without the element of self-organization, an act, no matter how unfair, cannot be considered as unfair labor practice. A: There should be a finality of judgment in a labor case finding that the respondent indeed committed ULP. NOTE: The judgment in the labor case cannot be used as evidence in the criminal case. It should be noted that the evidence required in labor proceedings is only substantial evidence while criminal cases need proof beyond reasonable doubt. Thus, the criminal charge needs to be proven independently from the labor case. Q: Is there an exception where ULP is committed even if the act is not a violation of an employee’s right to self-organization? A: YES. Dismissing or prejudicing an employee for giving testimony (regardless of the subject of the testimony) under Art. 259(f) of the Labor Code. Difference between Civil and Criminal aspect of ULP 1. NATURE, ASPECTS CIVIL ASPECT Persons liable a. NATURE Officers and agents of employer or labor organizations ULPs are not only violations of the civil rights of both labor and management but are also criminal offenses against the State. (Art. 258, LC) 2. Officers and agents who participated or authorized the act Jurisdiction Elements of ULP 1. CRIMINAL ASPECT Labor Arbiter Existence of Er-Ee relationship between the offender and offended party; and Act is expressly defined in the Code as ULP. RTC or MTC, as the case may be. (Concurrent jurisdiction) Prescriptive period One (1) year from accrual of the ULP act NOTE: A showing of prejudice to public interest is not a requisite for ULP charges to prosper. (Standard Chartered Bank Employees Union v. Hon. Confessor, G.R. No. 114974, 16 Jun. 2014) One (1) year from accrual of the ULP act Quantum of proof Substantial evidence 205 Beyond reasonable doubt UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation All ULP acts must be included in a single charge A charge of ULP must include all acts of ULP. Splitting the cause of action is not allowed to prevent harassing the employer with subsequent charges. 2. ULP BY EMPLOYERS f. g. h. i. Interference, restraint, or coercion Yellow dog contract Contracting out of services Company unionism Discrimination for or against membership Discrimination because of testimony Violation of duty to bargain Paid negotiation Gross violation of the CBA Communicate to the employee the purpose of the questioning; 2. Assure the employee that no reprisal would take place; and 3. The questioning must occur in a context free from employer hostility to union organization. Test of Interference The following are the ULP committed by employers: a. b. c. d. e. 1. Whether the employer has engaged in conduct which it may reasonably be said tends to interfere with the free exercise of employees’ rights. Direct evidence of interference is not necessary union Direct evidence is not necessary if there is a reasonable inference that the anti-union conduct of the employer does have an adverse effect on selforganization and collective bargaining. Totality of Conduct Doctrine NOTE: The enumeration of ULP under Art. 259 is not exclusive. Other ULP acts can be found in other provisions of the Labor Code. An employer’s remarks must be evaluated not only based on their implications, but against the background of and in conjunction with collateral circumstances. a. INTERFERENCE, RESTRAINT, OR COERCION To interfere with, restrain, or coerce employees in the exercise of their right to self-organization. (Art. 259(a), LC) Expression of opinion by the employer, though innocent in themselves, was frequently held to be culpable because of the circumstances under which they were uttered. ULP can be committed even if union is not registered Prohibiting organizing activities is ULP An employer who interferes with the formation of a labor union and retaliation against the employees’ exercise of their right to self-organization is guilty of ULP. (Samahan ng mga Manggagawa sa BandolinoLMLC, et. al v. NLRC, G.R. No. 125195, 17 July 1997) It is unlawful to prohibit solicitation of union membership in the company whether it is working or non-working time. Illegal dismissal may be considered as ULP Q: Is persistent interrogation by an employer to elicit information about what happened in union meetings and activities considered as ULP? When there is a showing that the illegal dismissal was dictated by anti-union motives, the same constitutes as ULP. If not, then there is no ULP. The proper remedy would be an action for reinstatement with backwages and damages. A: IT DEPENDS. It may be deemed as coercive. In order not to become coercive, the employer must: UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 206 Labor Relations Later, Kim executed a deed purporting to convey the factory to Yu Guat. When the factory reopened, the members of the union were not readmitted and those who left the union were allowed to work. The union members filed a complaint for ULP against Kim. Decide. Lockout or closure may amount to ULP The lockout or closure must be for the purpose of interfering with an employees’ exercise of their right. An honest closing of one’s plant is not a violation of the law. A: YES. The sale of the factory was simulated, and a device resorted merely to get rid of the employees who were members of the union. (Moncada Bijon Factory v. CIR, G.R. No. L-16037, 29 Apr. 1964) NOTE: Proof of employer’s state of mind is often very difficult unless it is expressed. However, it may be proven by circumstantial evidence. Other examples of interference, restraint, or coercion: 1. Using violence or intimidation to restrain or coerce employees to exercise their right to self-organization. 2. Espionage and surveillance of employees by the employer since it is a form of “pressure.” 3. b. YELLOW DOG CONTRACT To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs. (Art. 259(b), LC) A Yellow Dog Condition is a promise exacted from workers as a condition of employment that they are not to belong to, or attempts to foster, a union during their period of employment. Inducing employees with economic benefits to restrain or coerce them in their exercise of their right to self-organization. Requisites of a Yellow Dog Condition 4. Mass layoff of union members by the company pursuant to a subterfuge or a fake reduction effort when it has been making profits. (Madrigal and Company, Inc. v. Zamora, G.R. No. L-48237, 30 Jun. 1987) 1. 2. 3. In case of sale in bad faith When the sale of a business enterprise was attended with bad faith, labor contracts, despite being in personam, becomes enforceable against the transferee. The transferee is in the position of tortfeasor, having been a party likewise responsible for the damage inflicted on the members of the aggrieved union and therefore cannot justly escape liability. As successor-in-interest of the vendor, he becomes responsible for all the rights and obligations of his predecessor. A representation by the employee that he is not a member of a labor union; A promise by the employee not to join a labor union; and A promise by the employee that, upon, joining a labor union, he will quit his employment. c. CONTRACTING OUT To contract out services or functions being performed by union members when such will interfere with, restrain, or coerce employees in the exercise of their right to self-organization. (Art. 259(c), LC) Q: Is contracting out per se ULP? Q: Kim, owner of the factory, called the workers who are also members of the union to a meeting. He requested them to resign from the union and withdraw their claims filed before the NLRC years before. The requests were rejected. A: NO. Contracting out, itself, is not ULP. It is the ill intention that makes it so when it is motivated by a desire to prevent his employees from organizing and selecting a collective bargaining representative, get rid of union men, or escape his statutory duty to 207 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation not enough reason to pierce the veil of corporate fiction of the corporation. The closure was not motivated by union activities of the employees, but rather by necessity since it can no longer engage in production. (Complex Electronics Employees Association v. NLRC, G.R. No. 121315, 19 July 1999) bargain collectively with his employees’ bargaining representative. If the contracting out is done for a legitimate business reason such as decline in business, inadequacy of equipment, or need to reduce cost, it is a valid exercise of management prerogative. d. COMPANY UNIONISM NOTE: To be considered as valid outsourcing, it must be (1) motivated by good faith; and (2) must not have been resorted to circumvent the law. To initiate, dominate, assist, or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters. (Art. 259(d), LC) Contracting out restricted in the CBA When a CBA is entered into, the terms of the agreement is binding on both parties. The company did not have to agree to such a stipulation. Or it could have reserved the right to effect a dissolution and reassignment. It did not do so. (Shell Oil Workers’ Union v. Shell Company of the Philippines, G.R. No. L-28607, 31 May 1971) Forms of company domination: 1. 2. 3. 4. Runaway shop Refers to business relocation animated by antiunion animus. It is a plant moved to a new location in order to discriminate against employees at the old plant because of their union activities. Initiation of the company union idea by: a. Outright formation by the employer or his representatives; or b. Managerially motivated formation of union. Financial support to the union Employer encouragement and assistance Supervisory assistance e. DISCRIMINATION FOR OR AGAINST UNION MEMBERSHIP Q: Complex Electronics Corporation informed its employees that it was closing down its operations since it was incurring losses and promised to give notice and retrenchment pay. The employees asked for a higher retrenchment pay but the company refused. The machines and equipment were pulled out from the company premises and were transferred to the premises of Ionics Circuit, Inc. 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. (Art. 259(e), LC) Discrimination v. Classification Discrimination is different from classification. For instance, it is common management practice to classify jobs and grant them varying levels of pay or benefits package. These are valid differentiations that recognize differences in job requirements or contributions. They are not necessarily discrimination classifiable as ULP. The union of the employees filed a complaint for ULP against the company alleging that Ionics Circuit is a runaway shop since it has the same President and Board of Directors with Complex Electronics. Is the contention tenable? Test of Discrimination A: NO. The mere fact that one or more corporations are owned or controlled by the same or single stockholder is not sufficient ground for disregarding separate corporate personalities. It is UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Whenever benefits or privileges given to one is not given to the other under similar or identical 208 Labor Relations conditions when directed to discourage union membership. encourage itself, constitute refusal to bargain. (Philippine Marine Radio Officers Association v. CIR, G.R. Nos. L10095 & L-10115, 31 Oct. 1957) or NOTE: Existence of a union security clause is a form of valid discrimination. It is a discrimination favoring unionism. However, when the Er refuses to submit an answer or reply to the written bargaining proposals of the certified bargaining union, ULP is committed. f. DISCRIMINATION BECAUSE OF TESTIMONY NOTE: While the law does not compel the parties to reach an agreement, it contemplates that both parties will approach the negotiation with an open mind and make a reasonable effort to reach a common ground of agreement. They should negotiate in good faith. (Kiok Loy v. NLRC, G.R. No. 54334, 22 Jan. 1986) Dismissing or prejudicing an employee who is about to give or has given testimony under the Labor Code. NOTE: The subject matter of the testimony is anything under the Labor Code. ULP also applies to refusal to testify Acts not deemed refusal to bargain: The article also applies to refusal to testify because it is analogous to giving of testimony. (Mabeza v. NLRC, G.R. No. 118506, 18 Apr. 1997) a. b. g. VIOLATION OF DUTY TO BARGAIN c. It refers to acts that violate the duty to bargain collectively as prescribed by the Code. d. e. Four Forms of ULP in bargaining: f. 1. 2. 3. 4. Failure or refusal to meet and convene; Evading mandatory subjects of bargaining; Bad faith in bargaining; and Gross violation of the CBA. g. h. 1. Failure or refusal to meet and convene i. Occurrence of Refusal to Bargain This occurs when the Er refuses or fails to meet and convene with the majority of his Ees. To bargain in good faith, an Er must not only meet and confer with the union which represents his Ees but must also recognize the union for the purpose of CB. (Azucena, 2010) Adoption of an adamant bargaining position in good faith; Refusal to bargain over demands for commission of ULP; Refusal to bargain during period of illegal strike; There is no request for bargaining; The union seeks recognition for an appropriately large unit; The union seeks to represent some persons who are excluded under the LC; The rank-and-file includes supervisors; The demand for recognition and bargaining is made within the year following a certification election in which the clear choice was no union, and no ad interim significant change has taken place in the unit; or The union makes unlawful bargaining demand. 2. Evading mandatory subjects of bargaining No Duty to Agree even on Mandatory Subjects The law speaks of a duty to bargain but not of an obligation to agree. Effect of Refusal of Management to Give CounterProposals to the Union’s Demands Voluntary Benefits The failure of the Er to submit its counter-proposals to the demands of the bargaining union does not, by Q: In consideration of the impending expiration of the existing collective bargaining agreement, 209 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation Remedies In Case of Deadlock which includes a retirement plan, between Nestle and Union, the latter informed the former of their intent to open a new collective bargaining negotiation for the succeeding years. However, Nestle underscored its position that unilateral grants such as the retirement plan are, by their very nature, not proper subjects of the CBA negotiations. The Union argues that the retirement plan remains to be a CBA item. May the Union demand that an existing voluntary benefit such as the retirement plan be discussed and included in the CBA? The parties, during renegotiation, may: 1. 2. 3. NOTE: This remedy (par. 3) is a remedy of last resort. A: YES. As the benefit was already subject of the existing CBA, the members of Union were only exercising their prerogative to bargain or renegotiate for the improvement of the terms of the Retirement Plan just like they would for all the other economic, as well as non-economic benefits previously enjoyed by them. Precisely, the purpose of collective bargaining is the acquisition or attainment of the best possible covenants or terms relating to economic and non-economic benefits granted by employers and due the employees. The Labor Code has imposed as a mutual obligation of both parties, this duty to bargain collectively. (Union of Filipro Employees v. Nestle Philippines, G.R. No. 158930-31, 03 Mar. 2008) 3. Bad faith in bargaining Surface Bargaining It is the act of “going through the motions of negotiating” without any legal intent to reach an agreement. (Standard Chartered Bank v. Confessor, G.R. No. 114974, 16 Jun. 2004) A concrete example is the withholding of the Er of the audited financial statement requested by the union. Surface Bargaining is a question of intent of the party concerned and usually, such intent can only be inferred from the totality of the challenged party’s conduct both at and away from the bargaining table. Impasse In Bargaining Where the subject of a dispute is a mandatory bargaining subject, either party may bargain to an impasse if he bargains in good faith. Blue Sky Bargaining Where the subject is non-mandatory, a party may not insist on bargaining to the point of impasse. His insistence may be construed as evasion of duty to bargain. It is defined as making exaggerated or unreasonable proposals. It connotes demands from the union which the Er has no capacity to give. Whether or not the union is engaged in blue-sky bargaining is determined by the evidence presented by the union as to its economic demands. Thus, if the union requires exaggerated or unreasonable economic demands, then it is guilty of ULP. (Standard Chartered Bank v. Confessor, G.R. No. 114974, 16 Jun. 2004) Deadlock It is synonymous with impasse or a standstill which presupposes reasonable effort at good faith bargaining but despite noble intentions, does not conclude an agreement between the parties. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Call upon the NCMB to intervene for the purpose of conducting conciliation or preventive mediation; Refer the matter for voluntary arbitration or compulsory arbitration; or Declare a strike or lockout upon compliance with the legal requirements. 210 Labor Relations Boulwarism Life Assurance Co., Ltd., G.R. No. L-25291, 30 Jan. 1971) Boulwarism is a violation of good faith in bargaining. It includes the failure to execute the CBA. NOTE: There is no legal prohibition for an Ee to bargain with his Er. Q: ABC Corporation offered, among other It is a practice wherein one party gives an offer to which no further revisions are intended to be made. It is also known as the “Take-It-or-Leave-It Bargaining.” employees. To receive the benefits, employees had to sign a waiver that said that the new CBA shall only be effective on Jan. 1, 2008. Realizing that the waiver was an unfair labor practice, some members of XYZ union refused to sign. XYZ Union and its members who refused to sign the waivers filed a complaint for unfair labor practices against ABC Corporation. Further, XYZ Union members who did not sign the waiver demanded a wage increase enjoyed by those who signed. The Court found ABC Corp guilty of unfair labor practice but denied the claim for wage increase as there was no provision in the existing CBA pertaining to the said increase. XYZ Union appealed alleging that the wage increase was integrated in the salary of those who signed the waivers and are currently receiving 4. Gross violation of the CBA The allegations in the complaint should show prima facie the concurrence of two things, namely: 1. gross violation of the CBA, as opposed to simple violations of the CBA which are only grievance matters; and 2. the violation pertains to the economic provisions of the CBA. (Silva v. NLRC, G.R. No. 110226, June 1997) h. PAID NEGOTIATION Should the wage increase given to the employees who signed the waiver be awarded to the employees who did not? The act of employer of paying negotiation or attorney’s fees to the union or its officers as part of the settlement of any issue in collective bargaining or any other dispute. A: YES. Generally, the Collective Bargaining Agreement controls the relationship between the parties. Any benefit not included in it is not demandable. However, considering the peculiar circumstances in this case, the requested wage increase should be granted. Accordingly, it is illegal to continue denying the petitioners the wage increase that was granted to employees who signed the waivers. To rule otherwise will perpetuate the discrimination against employees who did not sign. All the consequences of the unfair labor practice must be addressed. The grant of the P32.00/day wage increase is not an additional benefit outside the Collective Bargaining Agreement of 2009. By granting this increase to those who did not sign, the Court is eliminating the discrimination against them, which was a result of respondent's unfair labor practice. (Sonedco Workers Free Labor Union (See discussion on sweetheart contracts under ULP by Labor Organizations – page 214) i. GROSS VIOLATION OF THE CBA It is the flagrant and/or malicious refusal by a party to comply with the economic provisions of the CBA. NOTE: If the violation of the CBA is not gross, it is not ULP but a mere grievance. Individual bargaining considered as ULP When the Er attempts to negotiate with individual workers rather than with the certified bargaining agent, it is considered as ULP. (Insular Life Assurance Co., Ltd., Employees Assoc.-NATU v. Insular 211 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation v. Universal Robina Corporation, G.R. No. 220383, 05 July 2017) b. UNION-INDUCED DISCRIMINATION This pertains to the attempt of the labor organization to cause an employer to grant advantages to: 3. ULP BY LABOR ORGANIZATIONS Persons Criminally Liable in Case of ULP by LO 1. 2. 3. 1. 2. Officers Members of governing board Representatives, agents, members of the labor organization who actually participated, authorized, or ratified the ULP act. 3. 4. ULP Committed by Labor Organizations a. b. c. d. e. f. Arbitrary use of Union Security Clause Restraint or coercion Union-induced discrimination Refusal to bargain Featherbedding or Make-Work Arrangements CBA deal with employer Gross violation of CBA Unions are not entitled to arbitrarily exclude qualified applicants for membership, and a closedshop provision would not justify the employer in discharging, or a union in insisting upon the discharge of an employee whom the union thus refuses to admit to membership, without any reasonable ground therefor. (Salunga v. CIR, G.R. No. L-22456, 27 Sept. 1967) a. RESTRAINT OR COERCION A union member may not be expelled from her union, and consequently from her job, for personal or impetuous reasons or for causes foreign to the closed-shop agreement and in a manner characterized by arbitrariness and whimsicality. (Manila Mandarin Employees Union v. NLRC, G.R. No. 76989, 29 Sept. 1987) Interference by a Labor Organization is not ULP A labor organization can interfere with employees’ right to self-organization as long as it does not amount to restraint or coercion. Interfering in the exercise of right to organize is itself a function of self-organizing. (Azucena, 2016) Not disloyalty to ask help from another union NOTE: Under the first ULP committed by an employer, there is (I-R-C) or Interference, Restraint, or Coercion. However, under the first ULP committed by a labor organization, the word “interference” is left out, leaving only “restraint or coercion.” The omission is deliberate. (Azucena, 2016) The mere act of seeking help from another union cannot constitute disloyalty. It is an act of selfpreservation of workers who, driven to desperation, found shelter in another union who took the cudgels for them. (Rance v. NLRC, G.R. No. L-68147, 30 Jun. 1988) Labor organization cannot coerce members to participate in strike Q: Noya was employed by Slord. The employment was governed by a CBA effective until April 15, 2014. The CBA contained a closedshop agreement. Sometime in 2013, Noya tried to form a new union which was eventually formed and registered on Feb. 20, 2014. NLM – Katipunan, the exclusive bargaining A labor organization violates the law when it restrains or coerces an employee in the exercise of his right to refuse to participate in or recognize a strike. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Members over non-members; Members in good standing over suspended or expelled members; Members of the executive board over more senior employees; or Members of one union over members of another union. 212 Labor Relations It is settled that in cases involving dismissals for just cause but without observance of the twin requirements of notice and hearing, the validity of the dismissal shall be upheld, but the employer shall be ordered to pay nominal damages. (Slord Development Corp v. Noya, G.R. No. 232687, 04 Feb. 2019) representative, on the strength of the testimonies and affidavit signed by the other members that Noya was actively seeking signature to form a new union, terminated the membership of Noya after due proceeding. Thereafter, NLM – Katipunan requested Slord to terminate Noya’s employment. After notifying Noya of the decision of NLM – Katipunan and showing him the documents, Slord terminated the employment of Noya. Could Noya be dismissed on the ground he solicited signature to form a new union? c. REFUSAL TO BARGAIN It is the act of a union in refusing or violating its duty to bargain collectively by entering negotiations with a fixed purpose of not reaching an agreement or signing a contract. A: YES. Case law recognizes that dismissal from employment due to the enforcement of the union security clause in the CBA is another just cause for termination of employment. To validly terminate the employment of an employee through the enforcement of the union-security clause, the following requisites must concur: 1. 2. 3. (See discussion on Blue Sky Bargaining – page 210) NOTE: It is intended to ensure that unions approach the bargaining table with the same attitude of willingness to agree as the law requires of management. The union security clause is applicable; The union is requesting for the enforcement of the union security provision in the CBA; and There is sufficient evidence to support the decision of the union to expel the employee from the union. d. FEATHERBEDDING OR MAKE-WORK ARRANGEMENTS To cause or attempt to cause an Er to pay or deliver or agree to pay or deliver any money or other things for value, in the nature of an exaction, for services which are not performed or not to be performed, including the demand for fee for union negotiations. (Art. 260 (d), LC) All requisites are present. In Tanduay Distillery Labor Union v. NLRC, the Court ruled that the organization by union members of a rival union outside the freedom period, without first terminating their membership in the union and without the knowledge of the officers of the latter union, is considered an act of disloyalty, for which the union members may be sanctioned. This requirement ceases to be binding only during the 60-day freedom period immediately preceding the expiration of the CBA. However, the employer must furnish the employee with two (2) written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second informs the employee of the employer's decision to dismiss him. Slord failed to do so. Featherbedding refers to an employee practice which creates or spreads employment by unnecessarily maintaining or increasing the number of employees used, or the amount of time consumed, to work on a particular job. NOTE: The practices are found to be economically wasteful and without any legitimate employee justification. (Azucena, 2016) e. CBA DEAL WITH EMPLOYER Accepting for or accepting some “fee” from the employer as part of CBA or dispute settlement. 213 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation Sweetheart Contract It is an order to compel the respondent to bargain with the bargaining agent. It can also be an imposition of a collective bargaining contract upon an employer who refuses to bargain with the union of its employees which is known as “Mandated CBA.” It is when a labor organization asks for or accepts negotiations or attorney’s fees from Ers as part of the settlement of any issue in CB or any other dispute. The resulting CBA is considered as a “sweetheart contract,” which is a CBA that does not substantially improve the employees’ wages and benefits and whose benefits are far below than those provided by law. It is an incomplete or inadequate CBA. Disestablishment It is an order directing the employer to withdraw all recognition from the dominated labor union and to disestablish the same. f. GROSS VIOLATION OF THE CBA ULP case is not subject to compromise It is the flagrant and/or malicious refusal by a party to comply with the economic provisions of the CBA. In view of the public interest involved, they are not subject to compromise. (E.G. Gochangco Workers Union v. NLRC, G.R. Nos. L-67158-62, 30 May 1988) NOTE: If the violation of the CBA is not gross, it is not ULP but a mere grievance. Reliefs available in ULP cases 1. 2. 3. 4. F. PEACEFUL CONCERTED ACTIVITIES Cease and Desist Order Affirmative Order Order to Bargain; or Mandated CBA Disestablishment of the Company-Dominated Union Forms of Concerted Activities Cease and Desist Order A prohibitive order requiring a person found to be committing ULP to cease and desist from such ULP and take affirmative action that will effectuate the policies of the law, including, but not limited to reinstatement with or without back pay and including rights of employees prior to dismissal, including seniority. 1. Legal Strike – One called for a valid purpose and conducted through means allowed by law. 2. Illegal Strike – One staged for a purpose not recognized by law, or if for a valid purpose, conducted through means not sanctioned by law. 3. Economic Strike/Bargaining Strike – One staged by workers to force wage or other economic concessions from the employer which he is not required by law to grant. (Consolidated Labor Association of the Phil. v. Marsman, G.R. No. L-17038, 31 July 1964) 4. ULP Strike – One called to protest the employer’s acts of unfair practice enumerated in Art. 259 of the LC, as amended, including gross violation of the CBA and union busting. 5. Slow Down Strike – An industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. Affirmative Order It is an order directing either the reinstatement of the discharged employee without prejudice to their rights or, if new laborers have been hired, the dismissal of the hired laborers to make room for the returning employee. Order to Bargain UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 214 Labor Relations 6. 7. irrespective of the employers for whom they are working. Mass Leaves – An action wherein the Ees simultaneously filed leaves of absence based on various reasons such as, inter alia, vacation and sick leaves. 16. Particular Strike – Directed solely against the strikers’ employer. Wild-Cat Strike – A strike action undertaken by employees without filing the required notice of strike and without the majority approval of the total union membership. 8. Sit Down Strike – A strike during which workers occupy their place of employment and refuse to work or allow others to work until such time that the strike is settled. 9. Overtime Boycott – Involves the act of workers in refusing to render overtime work in violation of the CBA resorted to as it means to coerce the Er to yield to their demands. NOTE: For purposes of determining whether or not a certain activity is “concerted,” it is essential that the activities of the Ee should be collective in nature. Express statutory recognition of the workers’ right to strike and the employer’s right to lockout The right to strike is a constitutional and legal right of the workers in the same manner that the employers have the inherent and statutory right to lockout, all within the context of labor relations and collective bargaining. It is a means of last resort and presupposes that the duty to bargain in good faith has been fulfilled and other voluntary modes of dispute settlement have been tried and exhausted. 10. Boycott of Products – Involves the concerted refusal to patronize an Er’s goods and services and to persuade others to a like refusal. Right to strike or lockout not absolute 11. Walk-out Strike – A form of strike where the employees leave their workplace and establish themselves outside the plant and refuse access to the owners and other employees who want to work. The exercise of these rights is subject to reasonable restrictions pursuant to the police power of the State. It has been held that the right to strike, because of the more serious impact upon the public interest, is more vulnerable to regulation than the right to organize and select representatives for purposes of CB. (NFSW v. Ovejera, et al. G.R. No. L59743, 31 May 1982) 12. Primary Strike – Directed against the employer because of a labor dispute with him. 13. Secondary Strike – Directed against the employer with primary labor dispute connected by-product or employment with the employer of the secondary strikers. 1. STRIKES Strike 14. Sympathy Strike – A strike staged to make common cause with strikers in other establishments, without any dispute between the strikers and their employer. In a sympathy strike, there is no connection of product or employment with the primary labor dispute. This distinguishes a secondary strike and a sympathy strike. It means any temporary stoppage of work by the concerted action of Ees as a result of an industrial or labor dispute. (Sec. 1 (uu), Rule I, Book V, IRR) The right to strike, while constitutionally recognized, is not without legal constrictions. Art. 279(a) of the LC, as amended, provides that no strike or lockout shall be declared after assumption of jurisdiction by the President or the SOLE or after certification or submission of the dispute to compulsory or voluntary arbitration or during the 15. General Strike – Directed against all the employers, participated in by the workmen, 215 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation 4. pendency of cases involving the same grounds for the strike or lockout. The court has consistently ruled that once the Secretary of Labor assumes jurisdiction over a labor dispute, such jurisdiction should not be interfered with by the application of the coercive processes of a strike or lockout. A strike that is undertaken despite the issuance by the Secretary of Labor of an assumption order and/or certification is a prohibited activity and thus illegal. (Solidbank Corporation v. Gamier/Solid Bank Union, G.R. No. 159460, 15 Nov. 2010) 5. 6. 7. Employment relation is deemed to continue although in a state of belligerent suspension; Temporary work stoppage; Work stoppage is done through concerted action; and The striking group is a legitimate labor organization; in case of a bargaining deadlock, it must be the Ees’ sole bargaining representative. Declaration of a Strike NOTE: The fact that the conventional term “strike” was not used by the striking employees to describe their common course of action is inconsequential, since the substance of the situation and not its appearance will be deemed controlling. (Toyota Motor Phils. Corp. Workers Association v. NLRC, G.R. NOS. 158798-99, 19 Oct. 2007) The following may declare a strike or lockout: 1. 2. “Striking Employee” is still an employee During a strike the Er-Ee relationship is not terminated but merely suspended as the work stoppage is not permanent but only temporary. Thus, a striking employee is still an employee. However, the effects of employment are suspended, hence a striking employee, as a rule, is not entitled to his wage during the strike. (Azucena, 2016) Any certified or duly recognized bargaining representative may declare a strike in cases of bargaining deadlocks and ULP. The Er may declare a lockout in the same cases. In the absence of a certified or duly recognized bargaining representative, any LLO in the establishment may declare a strike but only on grounds of ULP. (Sec. 6, Rule XXII, Book V, IRR as amended by D.O. 40-03) A strike conducted by a minority union is patently illegal because no labor dispute which will justify the conduct of a strike may exist between the employer and a minority union. (United Restaurors v. Torres, et al., G.R. No. L-24993, 18 Dec. 1968) a. GROUNDS FOR STRIKE Purpose of a Strike The law recognizes two (2) grounds for the valid exercise of the right to strike or lockout, namely: A strike is a coercive measure resorted to by laborers to enforce their demands. The idea behind a strike is that a company engaged in a profitable business cannot afford to have its production or activities interrupted, much less, paralyzed. (Phil. Can Co. v. CIR, G.R. No. L-3021, 13 July 1950) 1. 2. Collective Bargaining Deadlock (CBD); and/or Unfair Labor Practices (ULP) - Includes flagrant and/or malicious refusal to comply with the economic provisions of the CBA. Elements of a Strike 1. 2. 3. NOTE: If the violation of the CBA is gross, it will amount to unfair labor practice, which is a ground for a valid strike. If the violation is not gross, it will just be a grievance falling under the grievance machinery of the CBA. Existence of established relationship between the strikers and the person or persons against whom the strike is called; Existence of an Er-Ee relationship; Existence of a labor dispute and the utilization by labor of the weapon of concerted refusal to work as a means of persuading, or coercing compliance with the working men’s demands; UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 216 Labor Relations b. MANDATORY PROCEDURAL REQUIREMENTS Those Who May File Notice of Strike The requirements for a valid strike are as follows: a. Filing of Notice of Strike; Only a LLO can legally hold a strike. (Bukluran ng Manggagawa sa Clothman Knitting, etc. v. CA, et al., G.R. No. 158158, 17 Jan. 2005) b. Observance of the cooling-off period: a. c. 30 days for bargaining deadlock, and 15 days for ULP; 1. Notice of strike vote meeting within 24 hours before the intended vote; d. Strike vote; e. Report of the strike vote; and f. Observance of the 7-day waiting period. In establishments with certified bargaining agent 2. Any certified or duly recognized bargaining representative may file a notice or declare a strike in cases of ULP. If the reason for the intended strike is bargaining deadlock, only the bargaining union has the legal right to file a notice of strike. NOTE: The employer may file a notice or declare lockout or request for preventive mediation in the same cases. Filing a Notice of Strike b. It should be filed with the DOLE, specifically the Regional Branch of the NCMB, copy furnished the employer. In establishments with no certified bargaining agent - Any LLO in the establishment may file a notice, request preventive mediation, or declare a strike but only on grounds of ULP. Time to File 1. NOTE: A union, instead of filing a notice of strike, may request NCMB to do preventive mediation, but the union must be the certified or duly recognized bargaining agent. (Insular Hotel Employees UnionNFL v. Waterfront Insular Hotel Davao, G.R. No. 174040-41, 22 Sept. 2010) At least 15 days before the intended strike or lockout if the issues raised are ULP. NOTE: In case of union busting where the existence of the union is threatened because of the dismissal from employment of union officers duly elected in accordance with the union constitution and bylaws, the 15-day cooling-off period shall not apply and the union may act immediately after the strike vote is conducted and the result thereof submitted to the appropriate Regional Branch of the NCMB with due observance with the seven (7) day strike ban. 2. Contents of Notice of Strike 1. 2. 3. 4. 5. 6. 7. At least 30 days before the intended date thereof if the issues involve bargaining deadlock. 8. 217 Name and addresses of Er Union involved Nature of the industry to which the Er belongs Number of union members Workers in the bargaining unit Other relevant dates In case of bargaining deadlocks: Unresolved issues, written proposals of the union, counter-proposals of the Er and proof of request for conference to settle differences In case of ULP: the acts complained of, and the efforts taken to resolve the dispute UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation NOTE: NCMB shall inform the concerned party in case notice does not conform to the requirements. Notice of strike vote meeting to NCMB within 24 hours before the intended vote Observance of the Cooling-off Period The union shall furnish the regional branch of the NCMB the notice of the meeting for the strike vote at least 24 hours before the intended vote. The Cooling-off Period is the period given by the NCMB to mediate and conciliate the parties. It is the span of time allotted by law for the parties to settle their disputes in a peaceful manner before staging a strike or lockout. The principles of improved offer and reduced offer balloting apply during the cooling-off period. Strike Vote A strike must be approved by a majority vote of the members of the union and a lockout must be approved by a majority vote of the members of the Board of Directors of the Corporation or Association or of the partners in a partnership, obtained by a secret ballot in a meeting called for that purpose. NOTE: During the said period, the NCMB-DOLE is directed to exert all efforts at the mediation and conciliation to affect a voluntary settlement during the cooling-off period. The cooling-off period is designed to afford the parties the opportunity to amicably resolve the dispute with the assistance of the NCMB Conciliator/Mediator. Purpose of Strike Vote To ensure that the decision to strike broadly rests with the majority of the union members in general, and not with a mere minority, at the same time, to discourage wildcat strikes, union bossism, and even corruption. (No. 07, Primer on Strike, Picketing and Lockout) Cooling-off Periods Provided by Law a. b. In cases of CBD, the cooling-off period is 30 days; In cases of ULP, the period shall be 15 days. Participation of the NCMB in the taking of strike vote or lockout vote NOTE: In the case of union busting, as defined in Art. 278(c), the cooling-off period need not be observed. The Regional Branch of the NCMB may, at its own initiative or upon request of any affected party, supervise the conduct of the secret balloting. The union / employer must give notice at least 24 hours prior to the conduct of the voting to give the NCMB sufficient time to decide if it will supervise the voting and in the event it does, to prepare. Start of Cooling-off Period The start of the cooling-off period should be reckoned not on the date the union or employer prepared the notice of strike or lockout but from the time the notice of strike or lockout is filed with the NCMB, a copy of said notice having been served on the other party concerned. Effect of the 7-day waiting period if the vote balloting is taken within the cooling-off period The seven (7) – day requirement shall be counted from the day following the expiration of the coolingoff period. (No. 06 Primer on Strike, Picketing and Lockout) The mere filing of the notice with NCMB, without proof of valid service thereof to the other party concerned, shall not trigger the running of the cooling-off period. Q: Is the Strike Vote still necessary in case of union-busting? A: YES. The time requirement of 15 days for the filing of the Notice of Strike shall be dispensed with UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 218 Labor Relations but the strike vote requirement, being mandatory in character, shall “in every case” be complied with. The requirement on the 7-day waiting period or strike ban, together with the requirement on the conduct of strike vote and submission of the result thereof to the NCMB, should still be complied with in case of union-busting. Strike Vote Report The result of the strike vote should be reported to the NCMB at least seven (7) days before the intended strike subject to the cooling-off period. A strike staged without the submission of the result of the strike-vote is illegal. (Samahan ng Manggagawa in Moldex Products, et al. v. NLRC, et al., G.R. No. 119467, 01 Feb. 2000) In case of unionbusting, the law allows the complete disregard of the cooling-off period. Cooling-off and waiting period may be done simultaneously. 7-Day Waiting Period or Strike Ban If the dispute remains unsettled after the lapse of the cooling-off period and the seven-day waiting period, the labor union may strike. The seven (7) – day waiting period is intended to give the DOLE an opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members in addition to the cooling-off period before the actual strike. c. LEGAL STRIKE vs. ILLEGAL STRIKE Legal Strike NOTE: Failure to comply with the aforesaid requirements makes the strike illegal. Consequently, the officers of the union who participated therein are deemed to have lost their employment status. (Bukluran ng Manggagawa sa Clothman Knitting, etc. v. CA, et al., G.R. No. 158158, 17 Jan. 2005) One called for a valid purpose and conducted through means allowed by law. Illegal Strike One staged for a purpose not recognized by law, or if for a valid purpose, conducted through means not sanctioned by law. Waiting period vs. Cooling-off period WAITING PERIOD COOLING-OFF PERIOD Period reckoned from the time the strike vote report is submitted to the NCMB, DOLE. Period counted form the time of the filing of the notice of strike or lockout up to the intended or actual staging thereof. Tests in Determining the Legality of Strike The following must concur: 219 1. Purpose test – The strike must be due to either bargaining deadlock and/or the ULP. 2. Compliance with the procedural and substantive requirements of the law. (See requisites of a valid strike) 3. Means employed test – It states that a strike may be legal at its inception but eventually be declared illegal if the strike is accompanied by violence which is widespread, pervasive, and adopted as a matter of policy and not mere UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation violence which is sporadic and which normally occurs in a strike area. EXAMPLE OF STRIKE 1. 2. 3. 4. REASON FOR ITS ILLEGALITY Sit-down strike – Characterized by a temporary work stoppage of workers who seize or occupy property of the Er or refuse to vacate the premises of the Er. Amounts to a criminal act because of the Ees trespass on the premises of the Er. Wildcat strike – A work stoppage that violates the labor contract and is not authorized by the union membership. It fails to comply with certain requirements of the law, to wit: notice of strike, vote, and report on strike vote. Slowdown – Strike on an installment plan; an activity by which workers, without complete stoppage of work, retard production or their performance of duties and functions to compel management to grant their demands. Ees work on their own terms; while the Ees continue to work and remain in their positions and accept wages paid to them, they, at the same time, select what part of their allotted tasks they care to perform on their own volition or refuse openly or secretly. Sympathetic strike – Work stoppages of workers of one company to make common cause with other strikers or other companies without demands or grievances of their own against the Er. 5. Secondary strike – Work stoppages of workers of one company to exert pressure on their Er so that the latter will in turn bring pressure upon the Er of another company with whom another union has a labor dispute. There is no labor dispute between the workers who are joining the strikers and the latter’s Er. There is no labor dispute involved. 6. General strike (causeoriented strike) – A type of political sympathetic strike and therefore there is neither a bargaining deadlock nor any ULP. (e.g., Welga ng bayan) It is a political rally. 7. Quickie strike – Brief and unannounced temporary work stoppage. Failure to comply with notice requirements and etc. Good Faith Strike is no longer a valid defense A strike may be considered legal when the union believed that the respondent company committed unfair labor acts and the circumstances warranted such belief in good faith although subsequently such allegation of unfair labor practices is found out as not true. (PICEWO-FFW v. People’s Industrial and Commercial Corp., G.R. No. L-37687, 15 Mar. 1982) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 220 Labor Relations can be no wage or pay unless, of course, the laborer was able, willing, and ready to work but was illegally locked out, suspended, dismissed or otherwise illegally prevented from working. However, for this exception to apply, it is required that the strike be legal. (Danilo Escario v. NLRC, G.R. No. 160302, 27 Sept. 2010) However, with the enactment of R.A. No. 6715 which took effect on 21 March 1989, the rule now is that such requirements as the filing of a notice of strike, strike vote, and notice given to the DOLE are mandatory in nature. Thus, even if the union acted in good faith in the belief that the company was committing an unfair labor practice, if no notice of strike and a strike vote were conducted, the said strike is illegal. Claim of good faith is not a valid excuse to dispense with the procedural steps for a lawful strike. (Grand Boulevard Hotel v. Dacanay, G.R. No. 153665, 18 July 2003) d. PROHIBITED ACTS DURING A STRIKE 1. The term “illegal acts” under Art. 279(a) may encompass several acts that violate existing labor or criminal laws, such as: a. It is not enough that the union believed that the employer committed acts of ULP when the circumstances clearly negate even prima facie showing to sustain such belief. (National Union of Workers in Hotels, Restaurants and Allied Industries v. NLRC, et al., G.R. No. 122561, 06 Mar. 1998) Any act of violence, coercion or intimidation, or obstruct the free ingress to or egress from the Er’s premises for lawful purposes or obstruct public thoroughfares. (Art. 279(e), LC) b. Commission of crimes and other unlawful acts in carrying out the strike; and Employees who staged an illegal strike are not entitled to backwages c. Violation of any order, prohibition, or injunction issued by the SOLE or NLRC in connection with the assumption of jurisdiction or certification order under Art. 278(g) of the LC. Contemplating two causes for the dismissal of an Ee — (a) unlawful lockout, and (b) participation in an illegal strike — Art 279(a) authorizes the award of full backwages only when the termination of employment is a consequence of an unlawful lockout. As a general rule, backwages are granted to indemnify a dismissed Ee for his loss of earnings during the whole period that he is out of his job. Considering that an illegally dismissed Ee is not deemed to have left his employment, he is entitled to all the rights and privileges that accrue to him from the employment. That backwages are not granted to Ees participating in an illegal strike simply accords with the reality that they do not render work for the Er during the period of the illegal strike under the principle of a fair day’s wage for a fair day’s labor. 2. No Er shall employ any strike-breaker that shall interfere with any peaceful picketing by Ees during any labor controversy. (Art. 279, LC) 3. No public official or employee, including officers and personnel of the Armed Forces of the Philippines, or armed person, shall bring in, introduce, or escort in any manner, any individual who seeks to replace strikers in entering or leaving the premises of a strike area, or work in place of the strikers. (Art. 279(d), LC) The involvement of the police during strikes, lockouts, or labor disputes in general shall be limited to the maintenance of the peace and order, enforcement of laws and legal orders of duly constituted authorities, and the performance of specific functions as may be provided by law. With respect to backwages, the principle of “fair day’s wage for a fair day’s labor” remains as the basic factor in determining the award thereof. If there is no work performed by the employee, there 221 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation NCMB that their union was not duly registered as a legitimate labor organization and notwithstanding the letter from the federation’s legal counsel informing them that their acts constituted disloyalty to the national federation; and Requisites for Police 1. 2. 3. 4. Should always be in uniform with proper name cloth; Shall observe strict neutrality in dealing with both parties. They shall not bring in, introduce, or escort any individual who seeks to replace the strikers; Shall not be stationed in the picket/confrontation line; and Shall maintain themselves outside a 50-meter radius from the picket/confrontation or in such public thoroughfare for the purpose of insuring free flow of traffic. b. 2. e. LIABILITY OF UNION OFFICERS AND MEMBERS FOR ILLEGAL STRIKE AND ILLEGAL ACTS DURING STRIKE Participation in Lawful Strike Mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. (Art. 279, LC) Union officers have the duty to guide their members to respect the law. If instead of doing so, the officers urged the members to violate the law, their dismissal from the service is just a penalty for their unlawful act. Their responsibility, as main players in an illegal strike, is greater than that of an ordinary union member’s and, therefore, limiting the penalty of dismissal only to the former for their participation in an illegal strike is in order. Union officers – The mere finding or declaration of illegality of the strike will result in the termination of all union officers who knowingly participated in the illegal strike. Unlike ordinary members, it is not required, for purposes of termination, that the officers should commit an illegal act during the strike. However, absent any showing that the Ees are union officers, they cannot be dismissed solely on the illegality of the strike. Further, the fact that they are union officers is not sufficient – it should be proven that they participated. Q: The employees of Arabella’s Bakeshop formed a union called as AB Union and was certified by the DOLE as a legitimate labor organization. On 19 Feb. 2022, members of the union, headed by its president, Arturo Lopez, staged a sit-down strike at Arabella’s Bakeshop allegedly because of Arabella’s Bakeshop officers who are interfering in their union activities and for threatening to terminate union members from employment. To illustrate how the “knowing participation” of union officers may be ascertained, the following were considered in Abaria v. NLRC, G.R. No. 154113, 07 Dec. 2011: a. A Notice of Strike was made to the NCMB on the same day. Due to this, Arabella’s Bakeshop issued a memorandum ordering the preventive suspension of striking union members and to explain within 24 hours from notice their Their persistence in holding picketing activities despite the declaration by the UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Ordinary union members – The mere finding or declaration of illegality of a strike will not result in termination of ordinary union members. For an ordinary union member to suffer termination, it must be shown by clear evidence that he has committed illegal acts during the strike. Reason for the distinction Liability for Participation in Illegal Strike 1. Their filing of notice of strike and conducting a strike vote even though their union has no legal personality to negotiate with their Er for collective bargaining purposes. 222 Labor Relations In cases of union busting, the 15-day cooling-off period shall not apply. The union did not file the requisite Notice of Strike and failed to observe the cooling-off period. To legitimize the strike on 19 Feb. 2022, the union filed a Notice of Strike on the same day. This cannot be considered as compliance with the requirement, as the cooling-off period is mandatory. As to the second strike, it was illegal because prohibited acts were committed by the union members against Art. 279 of the Labor Code. (Bigg’s Inc. v. Jay Boncacas, G.R. No. 200636, 06 Mar. 2019, J. Caguioa) actions. However, said union members failed to comply hence were dismissed. Another strike was staged by the union members on 5 Mar. 2022 to which Arabella’s Bakeshop presented evidence of prohibited acts conducted by the union members such as violent and disruptive acts. They prevented ingress and egress of employees and customers to and from the company’s premises. They also stopped Arabella’s Bakeshop’s vans from making deliveries by throwing stones at the vans which caused injury to the driver as well as damage to vehicles and to the guardhouse. They shouted at customers using megaphones to prevent them from going to the bakeshop. b) Were the union officers and employees validly dismissed? A: YES. The dismissal of union officers was valid, but the dismissal of employees who did not commit prohibited acts during the strike was invalid. For union members, what is required is that they knowingly participated in the commission of illegal acts during the strike for there to be sufficient ground for termination of employment. For union officers, however, it suffices that they knowingly participated in an illegal strike. (Bigg’s Inc. v. Jay Boncacas, G.R. No. 200636, 06 Mar. 2019, J. Caguioa) The strike was later stopped when both parties agreed to compulsory arbitration. The union members argued that their second strike was not illegal because they were dismissed prior thereto. Thus, the commission of any prohibited acts during the second strike cannot be used as a justification for their illegal dismissal on 19 Feb. 2022. They prayed for reinstatement, including the union officers, with payment of backwages. Arabella’s Bakeshop argued that there was a sit-down strike staged by the union members as it was the employees who refused to perform their respective jobs during the first shift of the day. Also, it argued that they are not entitled to backwages because the strike that they conducted was illegal. c) Should backwages be awarded to dismissed employees? A: NO. Backwages are not granted to dismissed employees who participated in an illegal strike even if they are later reinstated. In Escario v. NLRC, the Court held: Conformably with the long-honored principle of a fair day’s wage for a fair day’s labor, employees dismissed for joining an illegal strike are not entitled to backwages for the period of the strike even if they are reinstated by virtue of their being merely members of the striking union who did not commit any illegal act during the strike. (Bigg’s Inc. v. Jay Boncacas, G.R. No. 200636, 06 Mar. 2019, J. Caguioa) a) Were the strikes staged by the union members illegal? A: YES. In a strike grounded on unfair labor practice, the following are the requirements: (1) the strike may be declared by the duly certified bargaining agent or legitimate labor organization; (2) the conduct of the strike vote in accordance with the notice and reportorial requirements to the NCMB and subject to the seven (7) day waiting period; and (3) notice of strike filed with the NCMB and copy furnished to the employer, subject to the 15-day cooling-off period. Liability for Participation in the Commission of Illegal Acts During a Strike 1. 223 The legality or illegality of a strike is immaterial as far as liability for commission of illegal acts during the strike is concerned. If the UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation Rule on reinstatement of striking workers union officer or member commits an illegal act during the strike, be it legal or illegal, his employment can be validly terminated. 2. Striking Ees are entitled to reinstatement, regardless of whether or not the strike was the consequence of the Er’s ULP because while out on strike, the strikers are not considered to have abandoned their employment, but rather have only ceased from their labor. The declaration of a strike is not a renunciation of employment relation. Liability for illegal acts should be determined on an individual basis. For this purpose, the individual identity of the union members who participated in the commission of illegal acts may be proven through affidavits and photographs. Persons not entitled to reinstatement Q: Can the SOLE restrain the employer from imposing sanctions against the union officers who knowingly participated in the illegal strike? 1. 2. A: NO. If the strike is declared illegal, the SOLE cannot restrain or enjoin the employer from imposing the appropriate sanctions against the union officers who knowingly participated in the illegal strike and against any striking employee who committed illegal acts during the strike. Since the strike is illegal, the employer has the right to take disciplinary action against the union officers who participated in it and against any member who committed illegal acts during the strike. (PAL v. SOLE, G.R. No. 88210, 23 Jan. 1991) UNION OFFICER NOTE: Those union members who have joined an illegal strike but have not committed any illegal act shall be reinstated but without backwages. The responsibility for the illegal acts committed during the strike must be on an individual and not on a collective basis. (First City Interlink Transportation Co., Inc. v. Confesor, G.R. No. 106316, 05 May 1997) ORDINARY WORKER Q: X was dismissed for joining an illegal strike but was reinstated because he is only a member of the union who did not commit any illegal act. Is X entitled for backwages for the period of strike? Knowingly participating in illegal strike May be declared to have lost his employment status Cannot be terminated NOTE: The LC protects ordinary, rank-and-file union members who participated in such a strike from losing their jobs, provided that they did not commit illegal acts during the strike A: NO. Conformably with the long-honoured principle of “a fair day’s wage for a fair day’s labor,” Ees dismissed for joining illegal strike are not entitled to backwages for the period of the strike even if they are reinstated by virtue of their being merely members of the striking union who did not commit any illegal act during the strike. (Escario v. NLRC, G.R. 124055, 08 June 2000) Knowingly participating in the commission of illegal acts during strike May be terminated Union officers who knowingly participate in the illegal strike; and Any striker or union who knowingly participates in the commission of illegal acts during the strike. Rule on strikes in hospitals May be terminated It shall be the duty of the striking Ees or locking out Er to provide and maintain an effective skeletal workforce of medical and health personnel for the duration of the strike or lockout. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 224 Labor Relations SOLE may immediately assume jurisdiction within 24 hours from knowledge of the occurrence of such strike or lockout and certify it to the NLRC for compulsory arbitration. committed illegal acts would be tantamount to dismissal without due process of law. (Telefunken Semiconductors Ees Union-FFW v. SOLE, G.R. No. 122743 & 127215, 12 Dec. 1997) Q: More or less 1,400 employees of the company staged a mass walk-out, allegedly without anybody leading them as it was a simultaneous, immediate and unanimous group action and decision, to protest the non-payment of their salaries and wages. The SOLE, who found the strike to be illegal, granted the clearance to terminate the employment of those who were instigators in the illegal strike. Was the decision of the Secretary in granting the clearance correct? Employees who abandoned a legal strike but were refused reinstatement can be awarded backwages Provided the following requisites are present: 1. 2. A: NO. A mere finding of the illegality of a strike should not be automatically followed by wholesale dismissal of the strikers from their employment. While it is true that administrative agencies exercising quasi-judicial functions are free from the rigidities of procedure, it is equally well-settled that avoidance of technicalities of law or procedure in ascertaining objectively the facts in each case should not, however, cause denial of due process. (Bacus v. Ople, G.R. No. L-56856, 23 Oct. 1984) 3. The strike was legal; There was an unconditional offer to return to work as when the strikers manifested their willingness to abide by the CIR back-to-work order and even sought the aid of competent authorities to affect their return; and The strikers were refused reinstatement such as when they have not been re-admitted to their former position. (Philippine Marine Officers' Guild v. Compañia Maritima et al., G.R. Nos. L-20662 and L-20662, 27 Mar. 1971) Separation pay in lieu of reinstatement in strike cases In strike cases, the award of separation pay in lieu of reinstatement is proper only when the strikers did not participate in the commission of illegal acts in the course thereof. Q: Two days after the union struck, the SOLE ordered the striking workers to return to work within 24 hours. But the striking union failed to return to work and instead they continued their pickets. As a result, violence erupted in the picket lines. The service bus ferrying nonstriking workers was stoned causing injuries to its passengers. Threats, defamation, illegal detention, and physical injuries also occurred. The company was directed to accept back all striking workers, except the union officers, shop stewards, and those with pending criminal charges. Was the SOLE correct in not including the union officers, shop stewards, and those with pending criminal charges in the return-towork order? Entitlement of strikers to their backwages or strike duration pay GR: Strikers are not entitled to their backwages or strike duration pay even if such strike was legal. XPNs: 1. Where the strikers voluntarily and unconditionally offered to return to work, but the Er refused to accept the offer – Ees are entitled to backwages from the date their offer was made; 2. A: NO. To exclude union officers, shop stewards, and those with pending criminal charges in the directive to the company to accept back the striking workers without first determining whether they knowingly 225 When there is a return-to-work order and the Ees are discriminated against other Ees, workers are entitled to backwages from the date of discrimination; UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation 3. In case of a ULP strike, in the discretion of the authority deciding the case; and 4. When the Ees were illegally locked out and thus, compelled them to stage a strike. is peaceful but fruitless; the management is adamant. So after 60 days, the strikers abandon their strike and offer to return to work. Is the company bound to re-admit them? Why? A: YES. By going on strike, the Ees are not deemed to have abandoned their work; they are merely utilizing a weapon given to them by law to seek better terms and conditions of employment and to protect their rights. An Er who refuses to re-admit the strikers, excepting those who have forfeited their employment status because of illegal acts committed during the strike, would be discriminating against them for having exercised their right to engage in a concerted action; it commits a ULP. (Cromwell Commercial Employees and Laborers Union v. CIR, et al., G.R. No. L-19778, 30 Sept. 1964) If the strike is illegal, no backwages should be paid. Thus, in Arellano University Employees and Workers Union v. CA, G.R. No. 139940, 19 Sept. 2006, where the strike was declared illegal, petitioner union members who were found not to have participated in the commission of illegal acts during the strike were ordered reinstated to their former positions but without backwages. If reinstatement is no longer possible, they should receive separation pay of one (1) month for every year of service in accordance with existing jurisprudence. With respect to the union officers, their mere participation in the illegal strike warrants their dismissal. 2. PICKETING Liability of Employer for Reinstatement of Strikers 1. Reinstatement (without backwages) of ordinary rank-and-file union members who did not participate in the commission of illegal acts during the conduct of the illegal strike may be ordered. 2. Terminate strikers who committed illegal acts during a strike. They are not entitled to be reinstated. Additionally, they may be held criminally liable therefor. 3. Forfeit reinstatement of strikers who failed to report for work without proper justification and despite the order reinstating them to their job. 4. Pay backwages, reckoned from the Labor Arbiter’s issuance of the reinstatement order up to its reversal by the NLRC, if Er fails to reinstate strikers who were ordered reinstated by the Labor Arbiter. Picketing It is a concerted activity of workers consisting in peacefully marching to and from, before an establishment involved in a labor dispute, generally accompanied by the carrying and display of signs, placards and banners intended to inform the public about the dispute. (Chan, 2017) The Right to Picket as a Means of Communicating the Facts of a Labor Dispute It is a phase of the freedom of speech guaranteed by the Constitution. Picketing, if peacefully carried out, cannot be curtailed even in the absence of Er-Ee relationship. (PAFLU v. Cloribel, G.R. No. L-25878, 28 Mar. 1969) Requisites for Lawful Picketing 1. 2. 3. Q: By reason of a deadlock in collective bargaining, the union, after the lapse of the cooling-off period, declares a strike. The strike UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 4. 226 It should be peacefully carried out; There should be no act of violence, coercion, or intimidation; The ingress to (entrance) or egress from (exit) the company premises should not be obstructed; and Public thoroughfares should not be impeded. Labor Relations Effect of the absence of Employee-Employer Relationship on Picketing 3. If peacefully carried out, picketing cannot be prohibited even in the absence of Ee-Er relationship. (PAFLU v. CFl, G.R. No. L-49580, 17 Jan. 1983) Vandalisms and other acts of a less terroristic nature which causes physical discomfort to the Er’s customers. Right to picket is protected by the Constitution and the law Unlike a strike which is guaranteed under the Constitutional provision on the right of workers to conduct peaceful concerted activities under Sec. 3, Art. XIII thereof, the right to picket is guaranteed under the freedom of speech and of expression and to peaceably assemble to air grievances under Sec. 4, Art. III (Bill of Rights) thereof. Right to Picket not an absolute right While peaceful picketing is entitled to protection as an exercise of free speech, the courts are not without power to confine or localize the sphere of communication or the demonstration to the parties to the labor dispute, including those with related interests, and to insulate establishments or persons with no industrial connection or having interest totally foreign to the context of the dispute. (Liwayway Pub., Inc. v. Permanent Concrete Workers Union, G.R. No. L-25003, 23 Oct. 1981) Effect of the use of foul language during the conduct of the picket In the event the picketers employ discourteous and impolite language in their picket, such may NOT result in, or give rise to libel or action for damages. While workers have the right to peaceful picketing, no person engaged in picketing is allowed to commit any act of violence, coercion, or intimidation or to obstruct the free ingress to or egress from the employer’s premises for lawful purposes, or to obstruct public thoroughfares. (Chan, 2017) When picket considered a strike In distinguishing between a picket and a strike, the totality of the circumstances obtaining in a case should be considered. Strike vs. Picketing Moving Picket The right granted to striking workers is merely a pedestrian right. It does not create the additional rights of squatting or assembly on the portion of Er’s land. Any such squatting or assembly would exceed the scope of the public’s easement and would constitute enjoinable trespass. Untruthful Picketing Such act is tantamount to unlawful picketing which is enjoinable even though the purpose is valid. It is the act of employing false statements, falsehood, defamation, and other misrepresentations. STRIKE PICKETING To withhold or to stop work by concerted action of Ees because of an industrial or labor dispute. The work stoppage may be accompanied by picketing by the striking employees outside of the company compound. To march to and from the employer’s premises, usually accompanied by the display of placards and other signs making known the facts involved in a labor dispute. It is a strike activity separate and different from actual stoppage of work. Other Unlawful Picketing Acts 1. 2. Use of abusive and threatening language towards patrons of the place or business; Use of violence and intimidation; or 227 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation Focuses on stoppage of work. The lockout must be for a lawful purpose and carried out through lawful means. A lockout is unlawful where it is declared in order to defeat organizational and bargaining rights of employees. (Dingsalan v. NLU, G.R. No. L-14183, 28 Nov. 1959) Focuses on publicizing the labor dispute and its incidents to inform the public of what Is happening in the company struck against. Lockout consists of the following: 1. 2. Q: PHIMCO argues that the strike staged by its employees was illegal as they committed the prohibited acts under Art. 279(e) of the LC such as blocking the ingress and egress of the company premises. The employees, on the other hand, submit that the picket was peaceful, and no human barricade blocked the company premises. May a peaceful picketing of employees be held illegal? 3. 4. A: YES. Despite the validity of the purpose of a strike and compliance with the procedural requirements, a strike may still be held illegal where the means employed are illegal. The means become illegal when they come within the prohibitions under Art. 264(e) of the Labor Code. Protected picketing does not extend to blocking ingress to and egress from the company premises, and, the fact that the picket was moving, was peaceful and was not attended by actual violence may not free it from taints of illegality if the picket effectively blocked entry to and exit from the company premises. (PHIMCO Industries, Inc. v. PHIMCO Industries Labor Association, G.R. No. 170830, 11 Aug. 2010) Shutdowns Mass Retrenchment and dismissals initiated by the Er Dismissals without previous written clearance from the Secretary of Labor or his duly authorized representative. (Sec. 3, PD 823, as amended by PD 849) Er’s act of excluding Ees who are union members. (Complex Electronics Employees Association, etc. et. al. v. NLRC, et al., G.R. No. 121315, 19 July 1999) a. GROUNDS FOR LOCKOUT 1. 2. Collective bargaining deadlock; or Unfair Labor Practice act. (D.O. No. 40-03, as amended by D.O. No. 40A-03) NOTE: No strike or lockout may be declared on grounds involving inter-union and intra-union dispute or without first having filed a notice of strike or lockout or without the necessary strike or lockout vote having been obtained and reported to the Board. (Sec. 5, Rule XXII, Book V, IRR) b. MANDATORY PROCEDURAL REQUIREMENTS 3. LOCKOUTS The requirements for a valid lockout are as follows: Lockout It means any temporary refusal of an Er to furnish work as a result of an industrial or labor dispute. (Art. 219 (p), LC) a. Filing of Notice of Lockout by the employer to the NCMB; b. Observance of the cooling-off period: - 30 days for bargaining deadlock, and - 15 days for ULP; Notice of lockout vote meeting within 24 ours before the intended vote; Elements of Lockout c. 1. 2. Temporary refusal to furnish work by the employer; and Occasioned by an industrial or labor dispute. (Chan, 2017) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 228 d. Lockout vote; e. Report of the lockout vote; and Labor Relations f. Upon receipt of the notice, the regional branch of the NCMB shall exert all efforts at mediation and conciliation to enable the parties to settle the dispute amicably. It may, upon agreement of the parties, treat a notice as a preventive mediation case. It shall also encourage the parties to submit the dispute to voluntary arbitration. Observance of the 7-day waiting period. Filing of Notice of Lockout A notice of lockout should be filed with the NCMB, copy furnished the union. In bargaining deadlocks, the notice shall be filed at least 30 days before the intended date thereof. In cases of unfair labor practice, the period of notice shall be 15 days. NOTE: During the proceedings, the parties shall not do any act which may disrupt or impede the early settlement of the dispute. They are obliged, as part of their duty, to bargain collectively in good faith and to participate fully and promptly in the conciliation meetings called by the regional branch of the NCMB. (Sec. 9, Rule XXII, Book V, IRR) The notice shall state, among others: 1. 2. 3. 4. Names and addresses of the employer and the union involved; The nature of the industry to which the employer belongs; The number of union members and of the workers in the bargaining unit; and Such other relevant data as may facilitate the settlement of the dispute, such as a brief statement or enumeration of all pending labor disputes involving the same parties. (Sec. 8, Rule XXII, Book V, IRR) A lockout notice, upon agreement of the parties, may be referred to alternative modes of dispute resolution, including voluntary arbitration. (Ibid.) Notice of Lockout vote The employer shall furnish the regional branch of the NCMB a notice of meeting for the lockout vote at least 24 hours before such meeting. NOTE: In cases of bargaining deadlocks, the notice shall, as far as practicable, further state: 1. 2. 3. 4. Lockout vote A decision to declare a lockout must be approved by a majority of the Board of Directors of the employer, corporation or association or the partners in a partnership obtained by a secret ballot in a meeting called for the purpose. (Sec. 10, Rule XXII, Book V, IRR) The unresolved issues in the bargaining negotiations; The written proposals of the union; The counter-proposals of the employer; and The proof of a request for conference to settle the differences. (Sec. 8, Rule XXII, Book V, IRR) The regional branch of the NCMB may, at its own initiative or upon request of any affected party, supervise the conduct of the secret balloting. In cases of unfair labor practices, the notice shall, as far as practicable, state the acts complained of and the efforts taken to resolve the dispute amicably. (Sec. 8, Rule XXII, Book V, IRR) Report of the Lockout Vote The employer shall furnish the regional branch of the NCMB the results of the voting at least seven (7) days before the intended lockout, subject to the cooling-off period. Observance of the cooling-off period A cooling-off period must be observed, i.e., a time gap is required to cool-off tempers between the filing of notice and the actual execution of lockout. NOTE: If the vote is filed within the cooling-off period, the seven-day waiting period shall be counted from the day the following the expiration of 229 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation the cooling-off period. In effect, the seven days are added to the 15-day of 30-day cooling off period. 4. ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY Observance of the 7-day waiting period When DOLE Secretary may assume or certify a labor dispute The 7-day waiting period/lockout ban reckoned after the submission of the lockout vote report to the NCMB-DOLE should be fully observed in all cases. Art. 278(g) of the Labor Code provides that when in the opinion of the DOLE Secretary, the there exists a labor dispute causing or will likely cause a strike or lockout in an industry indispensable to the national interest, he is empowered to either: Should the dispute remain unsettled after the lapse of the said period, the employer may lock out its workers. The regional branch of the NCMB shall continue mediating and conciliating. (Sec. 11, Rule XXII, Book V, IRR) 1. 2. Lockout amounting to ULP A lockout, actual or threatened, as a means of dissuading the Ees from exercising their rights, is clearly an ULP. However, to hold an Er guilty, the evidence must establish that the purpose was to interfere with the Ees exercise of their rights. The Secretary may act at his own initiative or upon petition by any of the parties. (Azucena, 2016) The assumption of jurisdiction by the Secretary of Labor over labor disputes causing or likely to cause a strike or lockout in an industry indispensable to the national interest is in the nature of a police power measure. It cannot be denied that the private respondent is engaged in an undertaking affected with public interest being one of the largest manufacturers of food products. The compelling consideration of the Secretary's assumption of jurisdiction is the fact that a prolonged strike or lockout is inimical to the national economy and thus, the need to implement some measures to suppress any act which will hinder the company's essential productions is indispensable for the promotion of the common good. Under this situation, the Secretary's certification order for compulsory arbitration which was intended for the immediate formulation of an already delayed CBA was proper. (Union of Filipro Employees v. NLRC, G.R. No. 91025, 19 Dec. 1990) In an unfair labor practice proceeding which arises out of a lockout used as a weapon during a labormanagement dispute, an employer’s legal position is improved if it appears that he did not lock out his employees during the early stages of negotiations, and did not employ the lockout to for acceptance of his terms. (NLRB v. Brown, 13 L ed 839, 29 Mar. 1965). Lockout vs. Shutdown Lockout is different from shutdown in the sense that in a lockout the plant continues to operate; whereas in a shutdown, the plant ceases to operate. (Ungos, 2021) A shutdown is the willful act of the employer himself following a complete lockout as contrasted to the compulsory stoppage of operations as a result of a strike and walkout. It can be truly said that all shutdowns are lockouts but not all lockouts constitute shutdowns. (Sta. Mesa Slipway Engineering v. CIR, G.R. No. L-4521, 18 Aug. 1952) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Assume jurisdiction over the labor dispute and decide it himself; or Certify it to the NLRC for compulsory arbitration, in which case, it will be the NLRC which shall hear and decide it. Requisites for Assumption of Jurisdiction The Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it, or certify the same to the NLRC for compulsory arbitration, provided, that any of the following conditions is present: 230 Labor Relations 1. 2. Both parties have requested the Secretary of Labor and Employment to assume jurisdiction over the labor dispute; or Prior notice is not required for Assumption of Jurisdiction The discretion to assume jurisdiction may be exercised by the SOLE without the necessity of prior notice or hearing given to any of the parties’ disputants. The rationale justifiably rests on his consideration of the exigency of the situation in relation to national interests. After a conference called by the Office of the Secretary of Labor and Employment on the propriety of its issuance, motu proprio or upon a request or petition by either parties to the labor dispute. (Sec. 15, Rule XXII, Book V, IRR) Effect of Assumption Actual Strike or Lockout Not a Condition for the Exercise of the Power The assumption or certification by the DOLE Secretary has the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. Art. 278(g) of the LC does not require the existence of a strike or lockout. All that is required is the existence of a labor dispute likely to cause a strike or lockout. Effect of assumption if a strike or lockout has already taken place What constitutes a National Interest Case The LC vests in the SOLE the discretion to determine what industries are indispensable to the national interest. Accordingly, upon the determination by the SOLE that such industry is indispensable to the national interest, he has authority to assume jurisdiction over the labor dispute. If a strike or lockout has already taken place at the time of assumption or certification: 1. 2. The striking or locked employees shall immediately return to work; and The employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. (Art. 278(g), LC) The following industries/services are deemed indispensable to the national interest: 1. 2. 3. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same. 4. 5. NOTE: Notwithstanding the foregoing, parties to the case may agree at any time to submit the dispute to the Secretary of Labor or his/her duly authorized representative as Voluntary Arbitrator or to a duly accredited Voluntary Arbitrator or to a panel of Voluntary Arbitrators. (As created by D.O. No. 40-G03-10, and amended by D.O. No. 040-H-13) Hospital sector; Electric power industry; Water supply services, to exclude small water supply services such as bottling and refilling stations; Air traffic control; and Such other industries as may be recommended by the National Tripartite Industrial Peace Council (TIPC). (Sec. 16, Rule XXII, Book V, Omnibus Rules Implementing the Labor Code) NOTE: The above enumerated industries are NOT exclusive as other industries may be considered indispensable to the national interest based on the appreciation and discretion of the SOLE or as may be recommended by TIPC. 231 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation for resolution and shall be final and executory ten (10) calendar days after receipt thereof by the parties. (Sec. 18, Rule XXII, Book V, Omnibus Rules Implementing the Labor Code) Extent of the powers of the President during strikes/lockouts 1. 2. May determine the industries which are, in his opinion, indispensable to national interest; and May intervene at any time and assume jurisdiction over any such labor dispute in order to settle or terminate the same. (Art. 278(g), LC) Issues that the SOLE may resolve when he assumes jurisdiction over a labor dispute Power of SOLE is plenary and discretionary. (St. Luke’s Medical Center v. Torres, G.R. No. 99395, 29 June 1993) NOTE: The decision of the President or SOLE is final and executory after receipt thereof by the parties. As the term "assume jurisdiction" connotes, the intent of the law is to give the Labor Secretary full authority to resolve all matters within the dispute that gave rise to or which arose out of the strike or lockout; it includes and extends to all questions and controversies arising from or related to the dispute, including cases over which the labor arbiter has exclusive jurisdiction. (Tabangao Shell Refinery Employees Association v. Pilipinas Shell Petroleum Corp, G.R. No. 170007, 07 Apr. 2015) Different rule on strikes and lockouts in hospitals, clinics, and medical institutions As a general rule, strikes and lockouts in hospitals, clinics, and similar medical institutions should be avoided. In case a strike or lockout is staged, it shall be the duty of the striking union or locking-out employer to provide and maintain an effective skeletal workforce of medical and other health personnel whose movement and services shall be unhampered and unrestricted as are necessary to insure the proper and adequate protection of the life and health of its patients, most especially in emergency cases, for the duration of the strike or lockout. The SOLE may immediately assume, within 24 hours from knowledge of the occurrence of such a strike or lockout, jurisdiction over the same or certify it to the NLRC for compulsory arbitration. Effects of Defiance Non-compliance with the certification order of the Secretary of Labor and Employment shall be considered as an illegal act committed in the course of the strike or lockout and shall authorize the Commission to enforce the same under pain of immediate disciplinary action, including dismissal, or loss of employment status, or payment by the locking-out employer of backwages, damages and other affirmative relief, even criminal prosecution against the liable parties. (Section 4, Rule VIII, 2011 NLRC Rules of Procedure) Decision on the Assumed Labor Dispute Some principles on assumption/certification power of the DOLE Secretary Within five (5) days from the issuance of the assumption or certification order, a preliminary conference or hearing shall immediately be conducted by the Office of the Secretary of Labor and Employment, the NLRC, or the voluntary arbitrator or panel of voluntary arbitrators as the case may be. Prior notice and hearing are NOT required in the issuance of the assumption or certification order. The SOLE may seek the assistance of law enforcement agencies like the Philippine National Police to ensure compliance with the provision thereof as well as with such orders as he may issue to enforce the same. The decision of the Secretary of Labor and Employment, the NLRC, or Voluntary Arbitrator or Panel of Voluntary Arbitrators shall be rendered within 30 calendar days from submission of the case UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 232 Labor Relations Corporation v. NLRC, G.R. No. 99266, 02 Mar. 1999) Assumption or certification orders are immediately executory and are to be strictly complied with even during the pendency of a motion for reconsideration or petition questioning its validity. (St. Scholastica’s College v. Torres, G.R. No. 100158, 02 June 1992) 3. If declared against an industry indispensable to national interest. 4. If staged by employees who are not accorded the right to strike. 5. INJUNCTIONS Injunction Regular courts are prohibited from issuing injunction against strikes or lockouts It is an order or a writ that commands a person to do or not to do a particular act. It may be a positive (mandatory) or a negative (prohibitory) command. The cases cited above involve the issuance of restraining order or injunction by the NLRC pursuant to the exercise of its injunctive power. In contrast, regular courts are absolutely prohibited to grant any injunctive relief in cases of strikes or lockouts. Injunction in picketing, strike or lockout cases GR: Strikes and lockouts that are validly declared enjoy the protection of the law and cannot be enjoined unless illegal acts are committed or threatened to be committed in the course thereof. Injunction in picketing cases GR: Injunction cannot be issued against the conduct of picketing by the workers. Under our constitutional set up, picketing is considered part of the freedom of speech duly guaranteed by the Constitution. A strike cannot be enjoined even if it may appear to be illegal because strike is a weapon that the law grants the employees for their protection and advancement of their interest. (Caltex v. Lucero, G.R. No. L-15338, 28 Apr. 1962) XPNs, wherein picketing may be enjoined by the NLRC: XPNs: In some cases, injunctions issued to enjoin the conduct of the strike itself and not only the commission of illegal acts in the course thereof, were held to be valid. 1. 2. 1. 2. 3. Injunction may be issued not only against the commission of illegal acts during the strike but against the strike itself because the notice of strike filed by the union has been converted into a preventive mediation case. Having been so converted, a strike can no longer be staged based on said notice. Upon such conversion, the legal effect is that there is no more notice of strike to speak of. (San Miguel Corporation v. NLRC, G.R. No. 119293, 10 June 2003) When carried out through illegal means; Such involves the use of violence and other illegal acts; or Such affects the rights of third parties or innocent bystanders and injunction becomes necessary to protect such rights. Q: Company C, a toy manufacturer, decided to ban the use of cell phones in the factory premises. In the pertinent Memorandum, management explained that too much texting and phone-calling by employees disrupted company operations. Two employee-members of Union X were terminated from employment due to violation of the memorandum-policy. NLRC committed grave abuse of discretion when it denied the petition for injunction to restrain the union from declaring a strike based on non-strikeable grounds. (San Miguel The union countered with a prohibitory injunction case (with prayer for the issuance of 233 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Labor Law and Social Legislation party or render ineffectual any decision in favor of such party; a temporary restraining order) filed with the RTC challenging the validity and constitutionality of the cell phone ban. Provided, that no temporary or permanent injunction in any case involving or growing out of a labor dispute as defined in this Code shall be issued except after hearing the testimony of witnesses, with opportunity for cross-examination, in support of the allegations of a complaint made under oath, and testimony in opposition thereto, if offered; and The company filed a motion to dismiss, arguing that the case should be referred to the grievance machinery pursuant to an existing CBA with Union X, and eventually to Voluntary Arbitration. Is the company correct? Explain. (2010 BAR) 4. A: NO. The RTC has jurisdiction to hear and decide the prohibitory injunction case filed by Union X against Company C to enjoin the latter from implementing the memorandum-policy against the use of cell phones in the factory. The issue in this case is the validity and constitutionality of the cellphone ban being implemented by Company C. The issue, therefore, does not involve the interpretation of the memorandum-policy, but its intrinsic validity. (Haliguefla v. PAL, G.R. No. 172013, 02 Oct. 1999) Only after a finding of fact by the Commission, to the effect: a. That prohibited or unlawful acts have been threatened and will be committed and will be continued unless restrained, but no injunction or temporary restraining order shall be issued on account of any threat, prohibited or unlawful act, except against the person or persons, association or organization making the threat or committing the prohibited or unlawful act or authorizing or ratifying the same after actual knowledge thereof; b. That substantial and irreparable injury to complainant’s property will follow; c. That as to each item of relief to be granted, greater injury will be inflicted upon complainant by the denial of relief than will be inflicted upon defendants by the granting of relief; d. That complainant has no adequate remedy at law; and e. That the public officers charged with the duty to protect complainant’s property are unable or unwilling to furnish adequate protection. (Art. 225(e), LC) Labor Injunctions GR: No temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court. (Art. 266, LC) XPNs: 1. Injunction power of the NLRC (Art. 225, LC) 2. Prohibited activities during a strike or lockout (Art. 279, LC) 3. Assumption or certification power of the SOLE in national interest cases (Art. 278(g), LC) Requisites in issuing an Injunction in labor cases 1. There is an actual or threatened commission of any or all prohibited or unlawful acts in any labor dispute; 2. There is a need to enjoin or restrain such acts or to require the performance of a particular act; 3. If not restrained or performed forthwith, may cause grave or irreparable damage to any UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES NOTE: Labor dispute includes any controversy or matters concerning terms or conditions of employment; or the association or representation of persons in negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment, regardless of whether the disputants 234 Labor Relations stand in the proximate relation of Er and Ee. (Art. 219, LC) 235 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment Kinds of Employment VI. TERMINATION OF EMPLOYMENT 1. As to tenure a. Coverage of Termination of Employment Applies to all establishments or undertakings whether for profit or not. (Art. 293, LC) Termination is a broader concept that is used to denote dismissal or lay-off. It may also imply complete severance of employer-employee relationship. b. Temporary/Probationary – one who stays on the job for a defined or pre-agreed period. (Azucena, 2016) On the other hand, dismissal is a form of ending an employer-employee relationship initiated either by the employee or employer. 2. e.g., Just cause or authorized cause dismissal. As to the Labor Code Book VI a. b. c. d. e. f. Lay-off is a termination initiated by the employer without prejudice to reinstatement or recall of an employee who has been temporarily separated brought about by adverse economic conditions. A. SECURITY OF TENURE 3. b. The policy of the State is to assure the right of workers to security of tenure. (Art. XIII, Sec. 3, 1987 Constitution) The guaranty is an act of social justice. Regular Project Seasonal Casual Probationary Fixed-term On the basis of salary component a. No worker shall be dismissed except for a just or authorized cause provided by law and after due process. (Art. 294, LC) Monthly-paid – where the salary covers all the days of the month including the rest days and holidays Daily-paid – salary only covers the day or days worked NOTE: Daily-paid or monthly-paid refers to the inclusiveness of the salary, not the frequency or intervals of payments. Security of Tenure is the right not to be removed from one’s job without valid cause and valid procedure. It extends to regular as well as nonregular employment. (Kiamco v. NLRC, G.R. No. 129449, 29 June 1999) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Permanent – who is appointed to a job for an undefined and indefinite period. – Also called “regular” employee – One who is doing a job which is “necessary or desirable” to the usual business of the employer – May be terminated only because of “just” or an “authorized” cause according to Art. 294 236 Labor Law and Social Legislation between the particular activity performed by the Ee to the usual trade or business of the Er. The test is whether the former is usually necessary or desirable in the usual business or trade of the Er. (De Leon v. NLRC, G.R. No. 70705, 21 Aug. 1989) 1. CATEGORIES OF EMPLOYMENT AS TO TENURE a. REGULAR EMPLOYMENT Those who are hired for activities which are necessary or desirable in the usual business of the employer. (Abad, Jr., 2015) NOTE: The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. (Highway Copra Traders v. NLRC, G.R. No. 108889, 30 July 1988) Types of Regular Employment 1. 2. As to nature of work – An employment shall be deemed to be regular where the Ee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the Er, the provisions of written agreements to the contrary notwithstanding and regardless of the oral agreements of the parties. (Sec. 5(a), Rule I, Book VI, IRR) 2. As to length of service – Any Ee who has rendered at least one (1) year of service, whether such service is continuous or broken, shall be considered a regular Ee with respect to the activity in which he is employed, and his employment shall continue while such activity exists. (Sec. 5(b), Rule I, Book VI, IRR) The status of regular employment attaches to the casual Ee on the day immediately after the end of his first year of service. The law does not provide the qualification that the Ee must first be issued a regular appointment or must first be formally declared as such before he can acquire a regular status. (Aurora Land Projects Corp. v. NLRC, G.R. No. 114733, 02 Jan. 1997) NOTE: Regularization is not a management prerogative; rather, it is the nature of employment that determines it. It is a mandate of the law. (PAL v. Pascua, G.R. No. 143258, 15 Aug. 2003) Repeated rehiring and the continuing need for the employee’s services are sufficient evidence of the necessity and indispensability of his services to the employer’s business or trade. (Baguio Country Club Corporation v. NLRC, G.R. No. 102397, 04 Sept. 1992) What determines regularity or casualness is not the employment contract, written or otherwise, but the nature of the job. (Policy Instruction No. 2) Seafarers are Not Regular Employees The practice of entering employment contracts which would prevent the workers from becoming regular should be struck down as contrary to public policy and morals. (Universal Robina Corp. v. Catapang, G.R. No. 164736, 14 Oct. 2005) Seafarers cannot be considered as regular Ees. The contract which they sign every time they are hired governs their employment. Their employment is terminated when the contract expires. Their employment is fixed for a certain period. (Ravago v. Esso Eastern Maritime Ltd., G.R. No. 158324, 15 Mar. 2005) Tests to Determine Regular Employment 1. Also, the performance of a job for at least a year is sufficient evidence of the job’s necessity if not indispensability to the business. This is the rule even if its performance is not continuous and merely intermittent. The employment is considered regular, but only with respect to such activity and while such activity exists. (Universal Robina Corp. v. Catapang, G.R. No. 164736, 14 Oct. 2005) The primary standard of determining regular employment is the reasonable connection In case of OFWs, Art. 295 of the LC does not apply. 237 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment Q: Various camera operators were engaged by and rendered services directly to GMA Network, Inc. and received compensation for such. They were subsequently dismissed by GMA which led them to file a complaint for “illegal dismissal, non-payment of salary/wages, and regularization,” claiming that they were regular Ees of GMA because as camera operators, they performed functions that were necessary and desirable to its business as a television and broadcasting company. They also claimed that they were illegally dismissed for lack of just or authorized cause. On the other hand, GMA argues that they were not their Ees, and that even if they were, they could not have attained regular status considering their failure to render “at least one year of service” as required by law. Q: L. Natividad Poultry Farms is a business engaged in livestock and poultry production which employed several workers as livestock feed mixers or as maintenance personnel. The workers filed complaints for illegal dismissal against L. Natividad, asserting that they are regular employees, having been continuously employed by L. Natividad for a period ranging from more than one (1) year to 17 years. They stress that L. Natividad provided all the tools, equipment, and materials they used as maintenance personnel and then gave them specific tasks and supervised their work. The CA ruled that petitioners cannot be considered as regular Ees because there was no reasonable connection between the nature of their carpentry and masonry work and respondents' usual business in poultry and livestock production, sale, and distribution. Are the petitioners regular Ees of L. Natividad? a. b. Assuming the existence of an employeremployee relationship, were the camera operators regular Ees of GMA? A: YES. The necessity or desirability of the work performed by an employee can be inferred from the length of time that an employee has been performing this work. If an employee has been employed for at least one (1) year, he or she is considered a regular employee by operation of law. Likewise, if an employee has been on the job for at least one (1) year, even if the performance of the job is intermittent, the repeated and continuous need for the employee's services is sufficient evidence of the indispensability of his or her services to the employer's business. A: a. Thus, even if the Court of Appeals is of the opinion that carpentry and masonry are not necessary or desirable to the business of livestock and poultry production, the nature of their employment could have been characterized as being under the second paragraph of Art. 280. Thus, petitioners' service of more than one (1) year to respondents has made them regular Ees for so long as the activities they were required to do subsist. (Mario Abuda, et al. v. L. Natividad Poultry Farms, G.R. No. 200712, 04 July 2018) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Is there an employer-employee relationship between the camera operators and GMA? YES. To determine the existence of an employer-employee relationship, case law has consistently applied the four-fold test, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee on the means and methods by which the work is accomplished, this being deemed as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. In applying the four-fold test in this case, (a) the camera operators were engaged by and rendered services directly to GMA; (b) they received compensation for their services; (c) they were dismissed by GMA; and (d) they were subject to GMA’s control and supervision on the following grounds: (a) their recordings and shoots were never left to their own discretion and craft; (b) they 238 Labor Law and Social Legislation been determined at the time of the engagement of the employee; or were required to follow the work schedules which GMA provided to them; (c) they were not allowed to leave the work site during tapings, which often lasted for days; (d) they were also required to follow company rules like any other employee; (e) they were provided the equipment they used during tapings; and (f) they were assigned supervisors to monitor their performance and guarantee their compliance with company protocols and standards. b. 2. Contract of Perpetual Employment It deprives management of its prerogative to decide whom to hire, fire, and promote and renders inutile the basic precepts of labor relations. YES. Under Art. 295 of the Labor Code, there are two ways to attain regular employment status: (1) employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, notwithstanding the provisions of written agreement and regardless of the oral agreement of the parties; and (2) any casual employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. It is contrary to public policy and good customs, as it unjustly forbids the Er from terminating the services of an employee despite the existence of a just or valid cause. Since the relation between capital and labor are not merely contractual, impressed as they are with so much public interest that the same should yield to common good. (Philippine Telegraph and Telephone Co. v. NLRC, G.R. No. 118978, 23 May 1997) Mode of compensation is not determinative of regular employment While the Ees mode of compensation was on a “per piece basis”, the status and nature of their employment was that of regular Ees. (Labor Congress of the Phils v. NLRC, G.R. No. 123938, 21 May 1998) Only casual Ees performing work that is neither necessary nor desirable to the usual business and trade of the employer are required to render at least one year of service to attain regular status. Ees who perform functions which are necessary and desirable to the usual business and trade of the employer attain regular status from the time of engagement. Here, the camera operators were never casual Ees because they performed functions that were necessary and desirable to the usual business of GMA; hence, they did not need to render a year’s worth of service to be considered Ees. (Henry Paragele, et al. v. GMA Network, Inc., G.R. No. 235315, 13 July 2020) Q: Moises was employed by La Tondeña at the maintenance section of its Engineering Department paid on a daily basis through petty cash vouchers. His work consisted mainly of painting company building and equipment and other odd jobs relating to maintenance. After a service of more than 1 year, Moises requested that he be included in the payroll of regular workers, instead of being paid through petty cash vouchers. Instead, La Tondeña dismissed Moises and claimed that Moises was contracted on a casual basis specifically to paint certain company buildings and that its completion terminated Moises’ employment. Can Moises be considered as a regular Ee? Temporary Ee becoming Regular Ee An employment may only be said to be ‘temporary’: 1. Where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. Where it has been fixed for a specific undertaking the completion of which has 239 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment NOTE: The repeated rehiring of workers and the continuing need for their services clearly attest to the necessity or desirability of their services in the regular conduct of the business or trade of the company. (Magsalin & Coca-Cola v. N.O.W.M., G.R. No. 148492, 09 May 2003) A: YES. The law demands that the nature and entirety of the activities performed by the Ee be considered. Here, the painting and maintenance work given to Moises manifests a treatment consistent with a maintenance man and not just a painter, for if his job was only to paint a building, there would be no basis for giving him other work assignments in-between painting activities. It is not tenable to argue that the painting and maintenance work of Moises are not necessary in La Tondeña’s business of manufacturing liquors; otherwise, there would be no need for the regular maintenance section of the company’s engineering department. (De Leon v. NLRC, G.R. No. 70705, 21 Aug. 1989) Q: Metromedia Times Corp. entered, for the fifth time, into an agreement with Efren Paguio, appointing him to be an account executive of the firm. He was to solicit advertisements for “The Manila Times.” The written contract between the parties provided that, “You are not an employee of the Metromedia Times Corp. nor does the company have neither any obligations towards anyone you may employ, nor any responsibility for your operating expenses or for any liability you may incur. The only rights and obligations between us are those set forth in this agreement. This agreement cannot be amended or modified in any way except with the duly authorized consent in writing of both parties.” Is Efren Paguio a regular Ee of Metromedia Times Corporation? Q: A total of 43 Ees who are deaf-mutes were hired and re-hired on various periods by Far East Bank and Trust Co. as money sorters and counters through a uniformly worded agreement called “Employment Contract for Handicapped Workers.” The company disclaimed that these Ees were regular Ees and maintained, among others, that they are a special class of workers, who were hired temporarily under a special employment arrangement which was a result of overtures made by some civic and political personalities to the Bank. Should the deaf-mute Ees be considered as regular Ees? A: YES. He performed activities which were necessary and desirable to the business of the Er, and that the same went on for more than a year. He was an account executive in soliciting advertisements, clearly necessary and desirable, for the survival and continued operation of the business of the corporation. A: YES. The renewal of the contracts of the handicapped workers and the hiring of others leads to the conclusion that their tasks were beneficial and necessary to the bank. It also shows that they were qualified to perform the responsibilities of their positions; their disability did not render them unqualified or unfit for the tasks assigned to them. The law, in defining their contractual relationship, does so, not necessarily or exclusively upon the terms of their written or oral contract, but also based on the nature of the work of Efren has been called upon to perform. A stipulation in an agreement can be ignored as and when it is utilized to deprive the Ee of his security of tenure. (Paguio v. NLRC, G.R. No. 147816, 09 May 2003) The Magna Carta for Disabled Persons mandates that a qualified disabled Ee should be given the same terms and conditions of employment as a qualified able-bodied person. The fact that the Ees were qualified disabled persons necessarily removes the employment contracts from the ambit of Art. 80. Since the Magna Carta accords them the rights of qualified able-bodied persons, hence, they are covered by Art. 295 of the LC. (Bernardo v. NLRC, G.R. No. 122917, 12 July 1999) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Q: Super Comfort Hotel employed a regular pool of “extra waiters” who are asked to report for duty when the Hotel’s volume of business is beyond the capacity of the regularly employed waiters to undertake. Pedro has been an “extra waiter” for more than 10 years. He is also called upon to work on weekends, on holidays, and 240 Labor Law and Social Legislation when there are big affairs at the hotel. What is Pedro’s status as an Ee under the LC? (2008 BAR) in which he is employed, and his employment shall continue while such activity exists. A casual Ee is only casual for one (1) year, and it is the passage of time that gives him a regular status. (KASAMMA-CCO v. CA, G.R. No. 159828, 19 Apr. 2006) A: Pedro has acquired the status of a regular Ee. Pedro was engaged to perform activities which are necessary or desirable in the usual business or trade of the Er. Moreover, Pedro has been “extra waiter” for more than ten years. Under the law, any Ee who has rendered service for at least one year, whether such service is continuous or broken, shall be considered a regular Ee with respect to the activity in which he is employed, and his employment shall continue while such activity exists. (Art. 295, LC) The purpose is to give meaning to the constitutional guarantee of security of tenure and right to selforganization. (Mercado v. NLRC, G.R. No. 79868, 05 Sept. 1991) Q: Yakult Phils. is engaged in the manufacture of cultured milk. The workers were hired to cut cogon grass and weeds at the back of the factory building used by Yakult. They were not required to work on fixed schedule, and they worked on any day of the week on their own discretion and convenience. The services of the workers were terminated by Yakult before the expiration of the 1-year period. b. CASUAL EMPLOYMENT Casual employment It is an employment where the Ee is engaged in an activity which is not usually necessary or desirable in the usual business or trade of the Er, provided, such employment is neither Project nor Seasonal. (Art. 295, LC) He performs only an incidental job in relation to the principal activity of the Er. May casual or temporary Ees be dismissed by the Er before the expiration of the 1-year period of employment? A: YES. The usual business or trade of Yakult Phils. is the manufacture of cultured milk. The cutting of the cogon grasses in the premises of its factory is hardly necessary or desirable in the usual business of the Yakult. NOTE: But despite the distinction between regular and casual employment, every Ee shall be entitled to the same rights and privileges and shall be subject to the same duties as may be granted by law to regular Ees during the period of their actual employment. The workers are casual Ees. Nevertheless, they may be considered regular Ees if they have rendered services for at least one (1) year. When, as in this case, they were dismissed from their employment before the expiration of the one (1) year period, they cannot lawfully claim that their dismissal was illegal. (Capule, et al. v. NLRC, G.R. No. 90653, 12 Nov. 1990) An Ee is engaged to perform a job, work or service which is merely incidental to the business of the Er, and such job, work or service is for a definite period made known to the Ee at the time of engagement. (Sec. 5(b), Rule I, Book VI, IRR) Employment is casual when it is irregular, unpredictable, sporadic, and brief in nature, and outside the usual business of the Er. (Caro v. Rilloraza, G.R. No. L-9569, 30 Sept. 1997) Casual Ee becoming a Regular Ee If he has rendered at least one (1) year of service, whether such service is continuous or broken, he is considered as regular Ee with respect to the activity 241 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment employment based on reasonable standards made known to him at the time of engagement. (Tamson’s Enterprises, Inc. v. CA, G.R. No. 192881, 16 Nov. 2011) Casual Ee vs. Project Ee CASUAL EE PROJECT EE Engaged to perform a job, work or service which is incidental to the business of the Er and the definite period of his employment is made known to him at the time of his engagement. Employed for a specific project or undertaking where the completion or termination of which is determined at the time of his engagement. His continued employment after the lapse one year makes him a regular Ee. His work need not be incidental to the business of the Er and his employment may exceed one year without necessarily making him a regular Ee. No termination report required. Job is coterminous with a specific project or phase thereof. It is required that a termination report be submitted at the nearest employment office upon completion of the project or phase. Probationary Employment Employment where the Ee, upon his engagement: 1. 2. 3. NOTE: In all cases involving employees engaged on probationary basis, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. (Sec. 6(d), Book VI, Rule I, IRR) Requisites for a Valid Probationary Employment c. PROBATIONARY EMPLOYMENT 1. There must be a written contract; 2. The contract must spell out that the employee will go through a probationary period of employment for a specified number of months; 3. The contract must specify reasonable standards on the basis of which his performance will be evaluated; There must be an assessment of the performance of the probationary employee in relation to the standards; and 4. Probation is the period during which the Er may determine if the Ee is qualified for possible inclusion in the regular force. (Holiday Inn Manila v. NLRC, G.R. No. 109114, 14 Sept. 1993) 5. It is usually a six (6) month period during which the employer observes the performance and conduct of the Ee. If he passes the agreed standard, he will be retained as a regular Ee. If he fails, his tentative employment ends. The result of the assessment must be communicated to the employee. Rules on Probationary Employment 1. There is probationary employment where the employee upon his engagement is made to undergo a trial period during which the employer determines his fitness to qualify for regular UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Is made to undergo a trial period; During which the Er determines his fitness to qualify for regular employment; and Based on reasonable standards made known to the Ee at the time of engagement. (Sec. 6, Book VI, Rule I, IRR) Er shall make known to the Ee at the time he is hired, the standards by which he will qualify as a regular Ee; NOTE: Where no standards are made known to the employee at that time, he shall be deemed a regular employee. (Sec. 6(d), Rule VIII-A, Book VI, IRR) 242 Labor Law and Social Legislation 2. Probationary employment must have been expressly agreed upon; without such explicit agreement, the employment is considered regular; 3. An Ee allowed to continue work after the probationary period shall be considered a regular Ee; 4. of what he is expected to do or accomplish during the trial period of probation. In this case, Abbott clearly conveyed to Alcaraz her duties and responsibilities as Regulatory Affairs Manager prior to, during the time of her engagement, and the incipient stages of her employment. Hence, Alcaraz was validly terminated from her employment. Nonetheless, despite the existence of a sufficient ground to terminate Alcaraz’s employment and Abbott’s compliance with the Labor Code termination procedure, it is readily apparent that Abbott breached its contractual obligation to Alcaraz when it failed to abide by its own procedure in evaluating the performance of a probationary employee. Since this procedure was not followed, the dismissal was therefore procedurally infirm rendering Abbot liable for nominal damages. (Abbott Laboratories v. Alcaraz, G.R. No. 192571, 23 July 2013) During the probationary period, the Ee enjoys security of tenure; his services can only be terminated for just or authorized causes. Q: Alcaraz signed an employment contract with Abbott for the position of Medical and Regulatory Affairs Manager which stated that she was to be placed on probation for a period of six (6) months. In line with this, she received an email containing Abbott’s organizational chart and a job description of her work. Further, during Alcaraz’s pre-employment orientation, she was briefed on her duties and responsibilities as Regulatory Affairs Manager. Abbot has a procedure which requires that the employee’s performance must be discussed and reviewed with the employee two times. Later on, Alcaraz was terminated for allegedly failing to meet the regularization standards for the said position. Period of Probationary Employment GR: It shall not exceed six (6) months from the date of the commencement of employment. XPNs: 1. Covered by an Apprenticeship or Learnership agreement stipulating a different period (Art. 296, LC); or Alcaraz filed a complaint for illegal dismissal and damages against Abbott and its officers. She claimed that she should have already been considered as a regular and not a probationary employee given Abbott’s failure to inform her of the reasonable standards for her regularization upon her engagement as required under Art. 295 of the Labor Code. 2. When the parties to an employment contract may agree otherwise, such as: a. When the same is established by company policy; or b. When the same is required by the nature of work to be performed by the employee. (Busier v. Leogardo, Jr., G.R. No. L-63316, 31 July 1984) e.g., The probationary period set for professors, instructors and teachers is three (3) consecutive years of satisfactory service pursuant to DOLE Manual of Regulations for Private Schools. Further, she claims that her performance was not discussed with her in line with the procedure of Abbot. Was Alcaraz sufficiently informed of the reasonable standards to qualify her as a regular employee? A: YES. An employer is deemed to have made known the standards that would qualify a probationary employee to be a regular employee when it has exerted reasonable efforts to apprise the employee NOTE: By voluntarily agreeing to such an extension, the Ee waived any benefit attaching to the 243 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment Q: Michelle Miclat was employed on a probationary basis as marketing assistant by Clarion Printing House but during her employment she was not informed of the standards that would qualify her as a regular Ee. 30 days after, Clarion informed Miclat that her employment contract had been terminated without any reason. Miclat was informed that her termination was part of Clarion’s costcutting measures. Is Miclat considered as a regular Ee and hence entitled to its benefits? completion of the period if he still failed to make the grade during the period of extension. (Mariwasa Mfg. Inc. v. Hon. Leogardo, G.R. No. 74246, 26 Jan. 1989) 3. The Er gives the Ee a second chance to pass the standards set. (Mariwasa Manufacturing, Inc. v. Leogardo, Jr., G.R. No. 74246, 26 Jan. 1989) NOTE: Period of probation shall be reckoned from the date the Ee started working. (Sec. 6(b), Book VI, Rule I, IRR) Probationary Ees may be dismissed for cause before end of the probationary period. A: YES. In all cases of probationary employment, the Er shall make known to the Ee the standards under which he will qualify as a regular Ee at the time of his engagement. Where no standards are made known to the Ee at that time, he shall be deemed a regular Ee. In the case at bar, she was deemed to have been hired from day one as a regular Ee. (Clarion Printing House Inc., v. NLRC, G.R. No. 148372, 27 June 2005) After the lapse of the probationary period six (6) months, Ee becomes regular. Purpose of the Probation Period The purpose of the probation period is to afford the Er an opportunity to observe the fitness of a probationary Ee at work. Obligation of the Er to his Probationary Ees There is obligation on the part of Er to inform standards for regularization at the time of engagement. The failure to inform has the effect that upon the expiry of the probationary employment, with or without the period provided for in the contract, the worker is deemed to be regular. Instances when Extension of Probationary Period is Allowed Extension is allowed only when: 1. 2. Nature of the job requires extensive training; or If it is a company policy that the period of probationary employment should be an extended period. Q: Middleby Phils. Corp. hired Alcira as engineering support services supervisor on a probationary basis for six months. Apparently unhappy with Alcira’s performance, Middleby terminated his services. Alcira contends that he was already a regular Ee when his employment was terminated. According to Alcira’s computation, since Art. 13 of the NCC provides that 1 month is composed of 30 days, 6 months totaling 180 days, then his 180th day would fall on Nov. 16, 1996 making him a regular Ee before his termination. Is the contention of the petitioner in the computation of six months correct? NOTE: The extension of period should always be reasonable; Such that, the nature of the work so requires and that it is the amount of time required for an ordinary worker to learn the job. Essence of the Prohibition on Double or Successive Probation The evil sought to be prevented is to discourage scheming Ers from using the system of double or successive probation to circumvent the mandate of the law on regularization and make it easier for them to dismiss their Ees. (Holiday Inn Manila v. NLRC, G.R. No. 109114, 14 Sept. 2003) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES A: NO. The computation of the six (6) month probationary period is reckoned from the date of appointment up to the same calendar date of the 244 Labor Law and Social Legislation Grounds for Employment sixth month following. In short, since the number of days in each month was irrelevant, Alcira was still a probationary Ee when Middleby opted not to “regularize” him on Nov. 20, 1996. (Alcira v. NLRC, G.R. No. 149859, 09 June 2004) 1. 2. 3. NOTE: In Mitsubishi Motors v. Chrysler Phils. Labor Union, G.R. No. 148738, 29 June 2004, the SC ruled in this wise: “Applying Art. 13 of the NCC, the probationary period of 6-months consists of 180 days. This is in conformity with Art. 13(1) of the NCC. The number of months in the probationary period (6 months), should then be multiplied by the number of days within a month (30 days); hence, the period of 180 days. As clearly provided in the last par. of Art. 13, in computing a period, the first day shall be excluded and the last day included. Thus, the 180 days commenced on May 27, 1996, and ended on Nov. 23, 1996. The termination letter dated Nov. 25, 1996 was served on Paras only on Nov. 26, 1996. He was, by then already a regular Ee of the company under Art. 295 of the LC.” 2. Limitations on the Er’s Power to Terminate a Probationary Employment Contract Statutory Construction – The latter case prevails (Mitsubishi Motors); or 1. 2. Instances When a probationary Ee is deemed to be a Regular Ee 4. 2. Just causes Authorized causes; or When he fails to qualify as a regular Ee in accordance with reasonable standards made known by the Er to the Ee at the time of his engagement. (ICMC v. NLRC, G.R. No. 72222, 30 Jan. 1989; Art. 295, LC) While probationary Ees do not enjoy permanent status, they are afforded the security of tenure protection of the Constitution. Consequently, they cannot be removed from their positions unless for cause. Such constitutional protection, however, ends upon the expiration of the period stated in their probationary contract of employment. Thereafter, the parties are free to renew the contract or not. (CSA v. NLRC, G.R. No. 87333, 06 Sept. 1991) Rule more favorable to the Ee – Use the computation which would amount to granting the subject Ee regular employment status (Based on Constitutional and statutory provisions for the liberal interpretation of labor laws). 1. Probationary NOTE: If pre-termination of probationary contract is due to the valid causes, the Er is not liable to pay the monetary value of the unexpired portion of the employment. How to resolve the conflict between the Alcira and Mitsubishi Motors case: 1. Terminating 3. If he is allowed to work after a probationary period. (Art. 295, LC) If no standards, under which he will qualify as a regular Ee, are made known to him at the time of his engagement. (Rule I, Book VI, IRR) The power must be exercised in accordance with the specific requirements of the contract; If a particular time is prescribed, the termination must be within such time and if formal notice is required, then that form must be used; The Er’s dissatisfaction must be real and in good faith, not feigned to circumvent the contract or the law; and There must be no unlawful discrimination in the dismissal. (Manila Hotel Corporation v. NLRC, G.R. No. L-53453, 22 Jan. 1986) NOTE: The probationary Ee is entitled to procedural due process prior to dismissal from service. Q: Ron Cruz was employed as gardener by Manila Hotel on “probation status” effective 245 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment qualified teacher becomes available. (Manual of Regulations for Private Higher Education) Sept. 22, 1976. The appointment signed by Cruz provided for a 6-month probationary period. On Mar. 20, 1977, or a day before the expiration of the probationary period, Cruz was promoted to lead gardener position. On the same day, Cruz’ position was “abolished” by Manila Hotel allegedly due to economic reverses or business recession, and to salvage the enterprise from imminent danger of collapse. Was Cruz illegally dismissed? Full-time Teacher One whose total working day is devoted to school, no other regular remunerative employment, and is paid on a regular monthly basis regardless of the number of teaching hours. In college, the normal teaching load of a full-time instructor shall be 18 hours a week. A: YES. There is no dispute that as a probationary Ee, Cruz had but limited tenure. Although on probationary basis, however, Cruz still enjoys the constitutional protection on security of tenure. During his tenure of employment, therefore, or before his contract expires, Cruz cannot be removed except for cause as provided for by law. Professors and instructors are independent contractors. They are compensated for their services by wages and salaries, rather than share of profits; they cannot substitute others to do their work without the consent of the university and can be laid off if their work is unsatisfactory. All these indicate that the university has control over their work and that they are, therefore, employees and not independent contractors. (Feati University v. Hon. Jose S. Bautista, and Feati University Faculty Club-PAFLU, G.R. No. L-21278, 27 Dec. 1966) What makes Cruz’ dismissal highly suspicious is that it took place at a time when he needs only but a day to be eligible as a regular Ee. That he is competent finds support in his being promoted to a lead gardener in so short span of less than six (6) months. By terminating his employment or abolishing his position with but only one day remaining in his probationary appointment, the hotel deprived Cruz of qualifying as a regular Ee with its concomitant rights and privileges. (Manila Hotel Corp. v. NLRC, G.R. No. L-53453, 22 Jan. 1986) Requirement of Full-Time Academic Personnel or Teacher 1. Possesses at least the minimum academic qualifications prescribed by the Department; 2. 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; 3. Total working day of not more than eight (8) hours a day is devoted to the school; 4. Has no other remunerative occupation elsewhere requiring regular hours of work that will conflict with the working hours in the school; and 5. Not teaching full-time in any other educational institution. All teaching personnel who do not meet the foregoing qualifications are considered part-time. (Sec. 45, Manual of Regulations for Private Higher Education) Period of Probationary Employment of Private School Teachers The probationary employment of academic teaching personnel shall not be more than a period of six (6) consecutive semesters or nine (9) consecutive trimesters of satisfactory service, as the case may be. (Sec. 117, The Manual of Regulations for Private Higher Education) NOTE: An academic teaching personnel, who does not possess the minimum academic qualifications under Secs. 35 and 36 of the Manual of Regulations for Private Higher Education shall be considered as a part-time Ee, and therefore cannot avail of the status and privileges of a probationary employment. A part-time Ee cannot acquire a regular permanent status, and hence, may be terminated when a UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 246 Labor Law and Social Legislation qualify for the positions applied for. They filed a complaint for illegal dismissal against their Er. As the Labor Arbiter, how will you resolve the case? (2006 BAR) The Legal Requisites for Acquisition by a Teacher of Permanent Employment 1. 2. 3. The teacher is a full-time teacher; Must have rendered three (3) consecutive years of service; and Such service must be satisfactory. (Jocelyn Herrera-Manaois v. St. Scholastica’s College, G.R. No. 188914, 11 Dec. 2013) A: As the LA, I will resolve the case in favor of the eight probationary Ees due to the following: Q: Colegio de San Agustin (CSA) hired Gela Jose as a grade school classroom teacher on a probationary basis for SY ‘84 – ‘85. Her contract was renewed for SY’s ‘85-‘86 and ‘86-‘87. On Mar. 24, ‘87, the CSA wrote the Gela that "it would be in the best interest of the students and their families that she seeks employment in another school or business concern for next school year." Notwithstanding the said notice, the CSA still paid Gela her salary for April 15 to May 15, 1987. On April 6, 1987, Gela wrote the CSA and sought reconsideration but she received no reply. Thereafter, she filed a complaint for illegal dismissal. Was Gela illegally dismissed? A: NO. The Faculty Manual of CSA underscores the completion of three (3) years of continuous service at CSA before a probationary teacher acquires tenure. Hence, Gela cannot claim any vested right to a permanent appointment since she had not yet achieved the prerequisite three (3) year period under the Manual of Regulation for Private Schools and the Faculty Manual of CSA. 1. Probationary Ees also enjoy security of tenure. (Biboso v. Victoria Milling, G.R. No. L-44360, 31 Mar. 1977) 2. In all cases involving Ees on probationary status, the Er shall make known to the Ee at the time he is hired, the standards by which he will qualify for the positions applied for. 3. The filing of the complaint for illegal dismissal effectively negates the Er’s theory of abandonment. (Rizada v. NLRC, G.R. No. 96982, 21 Sept. 1999) 4. The order to go home and not to return to work constitutes dismissal from employment. 5. The eight (8) probationary Ees employment were terminated without just cause and without due process. In view of the foregoing, I will order reinstatement to their former positions without loss of seniority rights with full back wages, plus damages and attorney’s fees. Q: Arlene started working as a Casual or Assistant Clinical Instructor for two semesters in HNU's College of Nursing while awaiting the results of her Nursing Board Examination. She alleged that upon her hiring, HNU did not inform her of the standards for the evaluation of her satisfactory completion of her probationary period. In the second semester of S.Y. 19941995, she was hired as a full-time Clinical Instructor until S.Y. 1998-1999, and was assigned at the Medical Ward. During the second semester of S.Y. 1998-1999, she was transferred to the Guidance Center as a Nursing Guidance Instructor handling guidance, education, and graduate school courses. At this time, she was In the instant case where the CSA did not wish to renew the contract of employment for the next school year, Gela has no ground to protest. She was not illegally dismissed. Her contract merely expired. (CSA v. NLRC, G.R No. 87333, 06 Sept. 1991) Q: During their probationary employment, eight employees were berated and insulted by their supervisor. In protest, they walked out. The supervisor shouted at them to go home and never to report back to work. Later, the personnel manager required them to explain why they should not be dismissed from employment for abandonment and failure to 247 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment requirement for the purpose of determining whether or not she is a full-time faculty when she was employed again as a clinical instructor from 2004-2007. elected as Municipal Councilor of Carmen, Bohol. Upon her reelection as Municipal Councilor for the 2001-2004 term, she took a leave of absence from HNU. Arlene rejoined HNU and was given a full-time load for the S.Y. 2004-2005. For S.Y. 2005-2006 and 2006-2007, Arlene signed contracts for term/semesteral, employment. The fixed-term contracts presented as evidence would reveal that the parties intended that their ErEe relationship would last only for a specific period. Even if no written fixed-term contract was presented, judicial notice can be made upon the fact that teachers' employment contracts are for a specific semester or term. For the second requisite of a valid fixed-term contract, Arlene was on equal footing with HNU. She was an honors graduate and has stellar qualifications. Moreover, she is an elected public official and appears to be quite popular, given that she has won as municipal councilor multiple times and even placed number one in terms of votes garnered. These facts would make apparent that Arlene is not a mere run-of-themill employee, and that she certainly has the capability to be on equal footing in dealing with her employer when it came to her employment terms. However, in a notice, HNU informed Arlene that her contract of employment, which would have expired on 31 March 2007, will no longer be renewed. Arlene argued that since she taught at HNU for more than six consecutive regular semesters, she already attained the status of a regular employee pursuant to the Manual of Regulations for Private School Teachers. Thus, she claimed that her employment was illegally terminated. Is Arlene’s contention correct? A: NO. A private school teacher acquires permanent status when the following requisites are met: 1) The teacher serves full-time; 2) he/she must have rendered three consecutive years of service; and 3) such service must have been satisfactory. Thus, petitioner was validly contracted for a fixed term. The expiry of her latest contract on 31 March 2007 effectively ended the employee-employer relationship she had with HNU. No dismissal, whether illegal or not, ever happened. Therefore, she is not entitled to any of the reliefs sought. (Arlene Palgan v. Holy Name University, et.al., G.R. No. 219916, 10 Feb. 2021) While Arlene has rendered three consecutive years of satisfactory service, she was, however, not a fulltime teacher at the College of Nursing of HNU. Only a full-time teaching personnel can acquire regular or permanent status. The three-year or one-year clinical practice experience is a minimum academic requirement to qualify as a faculty member in a College of Nursing, and is therefore, required for one to be considered as a full-time faculty of such. Q: UST has a CBA with the Union. The CBA requires a master’s degree for a professor to be tenured. The CBA, however, also provides that “If he does not finish his degree in five (5) semesters, he shall be separated from service at the end of the fifth semester; however, if he is made to serve the University further, in spite of the lack of a master's degree, he shall be deemed to have attained tenure”. Is the stipulation conferring tenureship despite the lack of master’s degree valid? Arlene failed to meet the required minimum clinical practice experience under the law and the relevant regulations. Since she failed to provide substantial evidence, her work experience cannot be considered as "clinical practice." Being unqualified as a nursing faculty from the start, Arlene cannot possibly be considered a full-time faculty and thus, could not, even after rendering satisfactory service for three years, be entitled to permanency. Therefore, her stint as a clinical instructor from 1994-1997 cannot even be considered as compliance with the clinical practice experience UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES A: NO. When the CBA was executed between the parties in 2006, they had no right to include therein the provision relative to the acquisition of tenure by default, because it is contrary to, and thus violative 248 Labor Law and Social Legislation Teaching and Maintenance Labor Union demanded that the 70% of the TIP be allocated to the salaries of the employees. As basis for their demand, respondents quoted Section 182 (b) of the 2010 Revised Manual, which states that the increase in tuition or other school fees, as well as new fees shall be subject to the condition, among others, that no increase in tuition or other school fees or charges shall be approved unless 70% of the proceeds is allocated for increase in salaries or wages of the members of the faculty and all other employees of the school concerned. Is the contention of the respondents correct? of the 1992 Revised Manual of Regulations for Private Schools that was in effect at the time. As such, said CBA provision is null and void, and can have no effect as between the parties. “A void contract is equivalent to nothing; it produces no civil effect; and it does not create, modify or extinguish a juridical relation.” It cannot be said either that by agreeing to the tenure by default provision in the CBA, UST is deemed to be in estoppel or have waived the application of the requirement under CHED Memorandum Order No. 40-08. Such a waiver is precisely contrary to law. Moreover, a waiver would prejudice the rights of the students and the public, who have a right to expect that UST is acting within the bounds of the law and provides quality education by hiring only qualified teaching personnel. A: NO. The guidelines issued under DECS Order No. 15, series of 1992 on the allocation of the 70% incremental proceeds under R.A. No. 6728 restricted the scope of "other benefits" by limiting its applicability to "wage related benefits," which the law itself does not require. The term "other benefits" should not refer only to other wagerelated benefits. Well settled is the doctrine that in case of conflict, the law prevails over the administrative regulations implementing it. To be valid, a rule or regulation must conform and be consistent with the provisions of the enabling to statute. As such, it cannot amend the law either by abridging or expanding its scope. As the Court held in Escorpizo v. University of Baguio, a school CBA must be read in conjunction with statutory and administrative regulations governing faculty qualifications. Such regulations form part of a valid CBA without need for the parties to make express reference to it. While the contracting parties may establish such stipulations, clauses, terms and conditions, as they may see fit, the right to contract is still subject to the limitation that the agreement must not be contrary to law or public policy. (Son v. UST, G.R. No 211273, 18 Apr. 2018) Section 5(2) of R.A. No. 6728 clearly states that a tuition fee increase is allowed if 70% of the amount subsidized allotted for tuition fee or of the tuition fee increases shall go to the payment of salaries, wages, allowances, and other benefits of teaching and non-teaching personnel. The law does not qualify the term "other benefits" to refer only to "wage-related benefits." Hence, the allocation of a portion of the 70% TIP for the employees' retirement plan, which is clearly intended for the benefit of the employees, fall under the category of "other benefits" as provided under the law. Q: In 2010, Guagua National Colleges (petitioner) implemented a 15% tuition fee increase for the school year 2010-2011. After deducting scholarship expenses and making provisions for dropouts, unpaid accounts, and contingencies, the net tuition fee incremental proceeds (TIP) of petitioner amounted to P4,579,923.00. Pursuant to Section 5(2) of R.A. No. 6728, petitioner allocated 70% of the TIP, or P3,205,946.00, as follows: (1) 13th month pay and cash gift - P 91,709.00; (2) honorarium - P 286,497.00; (3) clothing and family assistance P 191,225.00; (4) SSS, PHIC, and HDMF contribution - P 67,413.00; and (5) Retirement benefit fund contribution - P 2,569,102.00. Respondents Guagua National Colleges Faculty Labor Union and Guagua National Colleges Non- Moreover, on 04 February 2011, then Department of Education Secretary Luistro issued DepEd Order No. 11 s. 2011. It amended Section 182 of the 2010 Revised Manual of Private Schools to conform to the provision of Section 5(2) of Republic Act No. 6728, among others, to include other benefits in the 249 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment Q: Herma Shipyard, Inc., (HERMA) is engaged in the business of shipbuilding and repair. Several of its employees occupy various positions. In support of their employment is a contract of employment denominated as Kasunduang Paglilingkod, which classifies them as a projectbased employee only. The employees were informed at the time of their engagement that their status is only a project employee and their duration of specific project or undertaking. allocation of the allowed tuition fee increase, apart from the payment of salaries, wages, and allowances of members of the faculty and other school employees. Thus, Guagua National Colleges' allocation of a portion of the 70% net tuition fee incremental proceeds for contribution to the retirement plan of its employees is VALID. (Guagua National Colleges v. Guagua National Colleges Faculty Labor Union, G.R. No. 213730, 23 June 2021) d. PROJECT EMPLOYMENT However, under Paragraph 10 of their employment contract, it allows the extension of the employees’ employment until the completion of the specific work. Is the extension agreement under the employment contract violation of the second requisite of project employment that the completion or termination of such project or undertaking be determined at the time of engagement? Project A "project" has reference to a particular job or undertaking that may or may not be within the regular or usual business of the Er. In either case, the project must be distinct, separate, and identifiable from the main business of the Er, and its duration must be determined or determinable. (PAL v. NLRC, G.R. No. 125792, 09 Nov. 1998) A: NO. It is enough that Herma Shipyard gave the approximate or target completion date in the project employment contract. Given the nature of its business and the scope of its projects which take months or even years to finish, Herma Shipyard cannot be expected to give a definite and exact completion date. It can only approximate or estimate the completion date. What is important is that the employees were apprised at the time of their engagement that their employment is coterminous with the specific project and the purpose of the extension is only to complete the same specific project, and not to keep them employed even after the completion thereof. (Herma Shipyard Inc. v. Oliveros et al., G.R. No. 208936, 17 April 2017) Project Employment Project employment is employment that has been fixed for: 1. Specific undertaking – a specific project or undertaking the completion; or 2. Time-bound – termination of which has been determined at the time of engagement of the Ee. (Sec. 5(a), Book VI, Rule I, IRR) The period is not the determining factor, so that even if the period is more than one (1) year, the Ee does not necessarily become regular. NOTE: Where the employment of a project Ee is extended long after the supposed project has been finished, the Ees are removed from the scope of project Ees and considered as regular Ees. Indicators of Project Construction Industry in Either one or more of the following circumstances, among others, may be considered as indicators that an Ee is a project Ee: Repeated hiring on a project-to-project basis is considered necessary and desirable to the business of the Er. The Ee is deemed regular. (Maraguinot v. NLRC, G.R. No. 120969, 22 July 1998) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Employment 1. 250 The duration of the specific/identified undertaking for which the worker is engaged is reasonably determinable; Labor Law and Social Legislation 2. Such duration, as well as the specific work/service to be performed, is defined in an employment agreement, and is made clear to the Ee at the time of hiring; Employees in the Construction Industry Two types of employees in the construction industry: NOTE: Absent any other proof that the project Ees were informed of their status as such, it will be presumed that they are regular Ees. 1. Project Employees - those employed in connection with a particular construction project or phase; and 3. The work/service performed by the Ee is in connection with the particular project/ undertaking for which he is engaged; 2. Non-project Employees - those employed by a construction company without reference to a particular project. 4. The Ee, while not employed and awaiting engagement, is free to offer his services to any other Er; 5. The termination of his employment in the particular project/undertaking is reported to the DOLE Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from work, using the prescribed form on Ee’s terminations, dismissals or suspensions; or 6. An undertaking in the employment contract by the Er to pay completion bonus to the project Ee as practiced by most construction companies. (D.O. 19-93; Hanjin Heavy Industries v. Ibañez, G.R. No. 170181, 26 June 2008) NOTE: In the case of Exodus International Construction Corporation v. Guillermo Biscocho, et al., (G.R. No. 166109, 23 Feb 2011), when one project is completed, employees were automatically transferred to the next project. There was no employment agreement given to the employees which clearly spelled out the duration of their employment, the specific work to be performed and that such is made clear to them at the time of hiring. As such, they are regular employees falling under the classification of non-project employees. Requisites to Acquire Regular Ee Status of Project Ee The following must concur to acquire regular Ee status: 1. There is a continuous rehiring of project Ee’s even after cessation of a project; and 2. The tasks performed by the alleged “project Ee” are vital, necessary, and indispensable to the usual business or trade of the Er. (D.M. Consunji, Inc. v. JAMIN, G.R. No. 192514, 18 April 2012) Requisites in Determining Whether an Ee is a Project Ee 1. 2. 3. 4. 5. Designation of named Ees as “Project Ees”; The project Ee was assigned to carry out a specific project or undertaking; The duration and scope of which were specified at the time the Ee was engaged for that project (Imbuido v. NLRC, G.R. No. 114734, 31 May 2000); The Ee must have been dismissed every after completion of his project or phase; and Report to the DOLE of Ee’s dismissal on account of completion of contract. (D.O. 191993) The length of time during which the Ee was continuously rehired is not controlling, but merely serves as a badge of regular employment. “Day certain” rule It states that a project employment that ends on a certain date does not end on an exact date but upon the completion of the project. 251 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment Q: Diosdado, a carpenter, was hired by Building Industries Corporation (BIC), and assigned to build a small house in Alabang. His contract of employment specifically referred to him as a "project employee," although it did not provide any particular date of completion of the project. Is the completion of the house a valid cause for the termination of Diosdado’s employment? (2009 BAR) years, and that he was dismissed from his employment without any cause. A: YES. The completion of the house should be a valid cause for termination of Diosdado’s employment, although the employment contract may not state a particular date. A: NO. Puente is a project Ee. The contracts of employment of Puente attest to the fact that he was hired for specific projects. His employment was coterminous with the completion of the projects for which he had been hired. Those contracts expressly provided that his tenure of employment depended on the duration of any phase of the project or on the completion of the construction projects. Furthermore, the company regularly submitted to DOLE reports of the termination of services of project workers. Such compliance with the reportorial requirement confirms that Puente was a project Ee. Filsystems on its part averred that Puente was a project Ee in the company’s various projects, and that after the completion of each project, his employment was terminated, and such was reported to the DOLE. Is Roger Puente a regular Ee? However, if it did not specify that the termination of the parties’ employment relationship was to be on a “day certain”—the day when the phase of work would be completed—the Ee can be considered to have been a regular Ee. (Filipinas Pre-Fabricated Building Systems, v. Puente, G.R. No. 153832, 18 March 2005) NOTE: To satisfy due process requirements, under DOLE D.O. No. 19, Series of 1993, the employer is required to report to the relevant DOLE Regional Office the fact of termination of project Ees as a result of the completion of the project or any phase thereof in which one is employed. The mere rehiring of Puente on a project-to-project basis did not confer upon him regular employment status. (Filipinas Pre-Fabricated Building Systems, Inc. v. Puente, G.R. No. 153832, 18 March 2005) In the case of Alcatel v. Relos, while the employee performed tasks that were clearly vital, necessary, and indispensable to the usual business or trade of the company, he was not continuously rehired after the cessation of every project. Entitlement to Separation Pay GR: Project Ees are not entitled to separation pay if their services are terminated as a result of the completion of project. Alcatel did not rehire the employee until after a lapse of 33 months, for the PLDT 1342 project. Alcatel's continuous rehiring of respondent in various capacities was done entirely within the framework of one and the same project – the PLDT 1342 project. This did not make the employee a regular employee of Alcatel as he was not continuously rehired after the cessation of a project. (Alcatel v. Relos, G.R. No. 164315, 03 July 1999) XPN: If the projects they are working on have not yet been completed when their services are terminated; project Ees also enjoy security of tenure during the limited time of their employment. (De Ocampo v. NLRC, G.R. No. 81077, 06 June 1990) Q: Roger Puente was hired by Filsystems, Inc., initially as an installer and eventually promoted to mobile crane operator, and was stationed at the company’s premises. Puente claimed in his complaint for illegal dismissal, that his work was continuous and without interruption for 10 UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 252 Labor Law and Social Legislation merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. (Benares v. Pancho, G.R. No. 151827, 29 April 2005) e. SEASONAL EMPLOYMENT Seasonal employment Employment where the job, work, or service to be performed is seasonal in nature and the employment is for the duration of the season. (Sec. 5(a), Book VI, Rule I, IRR) It is not enough that they perform work or services that are seasonal in nature. They must have also been employed only for the duration of one season. An employment arrangement where an Ee is engaged to work during a particular season on an activity that is usually necessary or desirable in the usual business or trade of the Er. Q: Carlito Codilan and Maximo Docena had been working for the rice mill for 25 years, while Eugenio Go, Teofilo Trangria, and Reynaldo Tulin have been working for 22, 15, and 6 years respectively. NOTE: For Seasonal Ees, their employment legally ends upon completion of the project or the season. The termination of their employment cannot and should not constitute an illegal dismissal. (Mercado v. NLRC, G.R. No. 79869, 05 Sept. 1991) The operations of the rice mill continue to operate and do business throughout the year even if there are only two or three harvest seasons within the year. This seasonal harvesting is the reason why the company considers the workers as seasonal employees. Is the company correct in considering the Ees as seasonal Ees? One-year duration on the job is pertinent in deciding whether a casual Ee has become regular or not, but it is not pertinent to a Seasonal or Project Ee. Passage of time does not make a seasonal worker regular or permanent. (Ibid.) During off-season, the relationship of Er-Ee is not severed; the Seasonal Ee is merely considered on LOA without pay. Seasonal workers who are repeatedly engaged from season to season performing the same tasks are deemed to have acquired regular employment. (Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General Trade, G.R. No. 149440, 28 Jan. 2003) A: NO. The fact is that big rice mills such as the one owned by the company continue to operate and do business throughout the year even if there are only two or three harvest seasons within the year. It is a common practice among farmers and rice dealers to store their palay and to have the same milled as the need arises. Thus, the milling operations are not seasonal. Seasonal Ees as Regular Ees Finally, considering the number of years that they have worked, the lowest being six (6) years, the workers have long attained the status of regular Ees as defined under Art. 295. (Tacloban Sagkahan Rice Mill v. NLRC, G.R. No. 73806, 21 Mar. 1990) Seasonal Ees can be considered regular Ees. The fact that Seasonal Ees do not work continuously for one whole year but only for the duration of the season does not detract from considering them in regular employment. Seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in that period, but merely considered on leave until reemployed. Entitlement to Separation Pay When the business establishment is sold which effectively terminates the employment of the seasonal Ees, the latter would be entitled to separation pay. If the Ee has been performing the job for at least a year, even if the performance is not continuous and 253 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment NOTE: “Month pay” shall be understood, in this regard, as average monthly pay during the season they worked. (Abad, Jr., 2015) Brent Doctrine Art. 295 of the Labor Code does not prohibit an employment contract with a fixed period, provided it is entered into by the parties without any force, duress, or improper pressure being brought to bear upon either party, particularly the employee and absent any other circumstances vitiating consent; or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Such employment for a defined period is allowed even where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer. f. FIXED-TERM EMPLOYMENT Term Employment A contract of employment for a definite period terminates by its own terms at the end of such period. (Brent School v. Zamora, G.R. No. L-48494, 05 Feb. 1990) Term employment is not a circumvention of the law on security of tenure if it follows the requisites laid down by the Brent ruling. (Romares v. NLRC, G.R. No. 122327, 19 Aug. 1998) There can of course be no quarrel with the proposition that where, from the circumstances, it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy, morals, etc. (Brent School, Inc. v. Zamora, G.R. No. L-48494, 5 Feb. 1990) The defined period must be a genuine condition of the job and not merely to avoid regular status of the Ee. (Azucena, 2016) Decisive Determinant in Term Employment It is the day certain agreed upon by the parties for the commencement and the termination of their employment relation. Overseas Seafarers are Contractuals The employment of overseas seafarers is governed by the POEA Standard Employment Contract for Filipino Seamen. Their employment is governed by the contracts they sign every time they are rehired, and their employment is terminated when the contract expires. It is an accepted maritime industry practice that employment of seafarers is for a fixed period only. Fixed Term Employment It is an employment where a fixed period of employment was agreed upon: 1. Knowingly and voluntarily by the parties; and 2. Without any force, duress or improper pressure being brought to bear upon the Ee and business of Er. (Philips Semiconductor v. Fadriquela, G.R. No. 141717, 14 Apr. 2004) Fixed-Term Employment Employment vs. Domestic Seafarers are Not Contractual Seamen employed in domestic shipping are entitled to security of tenure, can become permanent employees, and can be terminated only for just or authorized causes. Project Both employments are time bound or for a certain period – as agreed upon at the time of engagement. However, in project employment, the employee is tasked to do specific undertaking, which is not present in fixed-term employment. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Domestic seafarers are covered by the Labor Code, including its Book VI. Q: Darrell was hired as an athletic director in Amorita School for a period of five years. As 254 Labor Law and Social Legislation usually necessary and desirable to the usual business of the Er, or not. such, he oversees the work of coaches and related staff involved in intercollegiate or interscholastic athletic programs. However, he was not rehired upon the expiration of said period. Darrell questions his termination alleging that he was a regular Ee and could not be dismissed without valid cause. a. Q: Dean Jose and other Ees are holding administrative positions as dean, department heads, and institute secretaries. In the implementation of the Reorganization, Retrenchment and Restructuring program effective Jan. 1, 1984, Dean Jose and other Ees were retired but subsequently rehired. Their appointment to their administrative positions as dean, department heads, and institute secretaries had been extended by the company from time to time until the expiration of their last appointment on May 31, 1988. Were Dean Jose and other Ees illegally dismissed? Is he a regular Ee? b. Will Darrell automatically become a regular Ee if he is rehired by the school for another definite period of employment? A: a. NO. Darrell was not a regular Ee but an Ee under a fixed-term contract. While it can be said that the services he rendered were usually necessary and desirable to the business of the school, it cannot also be denied that his employment was for a fixed term of five years. The decisive determinant in fixed-term employment should not be the activities that the employee is called upon to perform, but the day certain agreed upon by the parties for the commencement and termination of their employment relation. (Brent School Inc. v. Zamora, G.R. No. 48494, 05 Feb. 1990) A: NO. Petitioners were dismissed by reason of the expiration of their contracts of employment. Petitioners' appointments as dean, department heads, and institute secretaries were for fixed terms of definite periods as shown by their respective contracts of employment, which all expired on the same date, May 31, 1988. The validity of employment for a fixed period has been acknowledged and affirmed by the SC. (Blancaflor v. NLRC, G.R. No. 101013, 02 Feb. 1993) Q: Lina has been working as a steward with a Miami, U.S.A.-based Loyal Cruise Lines for the past 15 years. She was recruited by a local manning agency, Macapagal Shipping, and was made to sign a 10-month employment contract every time she left for Miami. Macapagal Shipping paid for Lina’s round-trip travel expenses from Manila to Miami. Because of a food poisoning incident which happened during her last cruise assignment, Lina was not rehired. Lina claims she has been illegally terminated and seeks separation pay. If you were the Labor Arbiter handling the case, how would you decide? (2014 BAR) b. NO. The decisive determinant in term employment is the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be that which must necessarily come, although it may not be known when and not whether the work is usually necessary and desirable to the business of the Er. Q: Does the “Reasonable Connection Rule” apply in fixed term employment for a fixed-term Ee to be eventually classified as a regular Ee? A: NO. It should be apparent that this settled and familiar notion of a period, in the context of a contract of employment, takes no account at all the nature of the duties of the Ee; it has absolutely no relevance to the character of his duties as being A: I will dismiss Lina's complaint. Lina is a contractual employee, and the length of her employment is determined by the contracts she entered. Here, her employment was terminated at the expiration of the contract. (Millares, et al. v. NLRC G.R. No. 110524, 29 July 2002) 255 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment g. WORK POOL EMPLOYEES 2. LEGITIMATE SUBCONTRACTING vs. LABORONLY CONTRACTING Work Pool a. ELEMENTS A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided that the worker shall be available when called to report for a project. (Tomas Lao Construction, et. al. v. NLRC, G.R. No. 116781, 05 Sept. 1997) Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of "coddling labor at the expense of capital" and at the same time, enables the workers to attain the status of regular employees. (Ibid.) NOTE: An employee in the work pool is not necessarily a regular employee; he may also be a project employee. Work Pool in the Construction Industry Members of a work pool from which a construction company draws its project employees, if considered employee of the construction company while in the work pool, are non-project employees or employees for an indefinite period. LEGITIMATE SUBCONTRACTING LABOR-ONLY CONTRACTING 1. The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; 1. The contractor or subcontractor does not have substantial capital or investment to perform the job, work or service under its own account and responsibility; and 2. The contractor or subcontractor has substantial capital or investment; and If they are employed in a particular project, the completion of the project or any phase thereof will not mean severance of employer-employee relationship. (Policy Instruction No. 20) 3. The Service Agreement ensures compliance with all the rights and benefits for all the employees of the contractor or subcontractor under the labor laws. (Sec. 8, D.O. No. 174, s. 2017) 2. The employees recruited, supplied, or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal. (Sasan v. NLRC, G.R. No. 176240, 17 Oct. 2008) Legitimate Subcontracting - The agreement between the principal and the contractor or subcontractor assures the contractual employees' entitlement to all labor and occupational safety and health standards, free exercise of the right to selforganization, security of tenure, and social welfare UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 256 Labor Law and Social Legislation considered only an indirect employer. (PCI Automation Center, Inc. v. NLRC, G.R. No. 115920, 29 Jan. 1996) benefits. (Petron Corporation v. ARMZ Caberte et. al, G.R. No. 182255, 15 June 2015) Substantial Capital - Refers to paid-up capital stocks/shares of at least P5 Million in the case of corporations, partnerships, and cooperatives. P5 Million net worth in the case of a single proprietorship. (Sec. 3(L), DOLE D.O. No. 174 s. 2017) What is contracted is the performance and completion of a designated job, and not just the supplying of people to do the job. Major Laws Applicable to Work Relationship The law does not require both substantial capital and investments, it is sufficient that either of the two is complied with. (Neri v. NLRC, G.R. Nos. 9700809, 23 July 1993) 1. 2. Burden of proof to prove that he/it has substantial capital or investment rests on the contractor himself. (Guarin v. NLRC, G.R. No. 86010, 03 Oct. 1989) Between the Principal and Contractor – The Civil Code and pertinent Commercial Laws Between Contractor and his Employees – the Labor Code and Special Labor Laws. NOTE: Between the principal and the contractor’s employees, no employer-employee relationship exists; the contractor, being himself a businessman, is the employer. But the contractor may in turn become a contractee if he contracts with a contractor. NOTE: In legitimate Job Contracting, the principal is jointly and severally liable with the contractor for the payment of unpaid wages. (Arts. 106, 107 & 10, LC) Employer-employee relationship may be declared to exist between the principal and the contractor’s workers where the contracting arrangement is not legitimate. Independent Contractor Those who undertake “job-contracting.” They exercise independent employment, contracting to do a piece of work according to their own methods and without being subject to control of their employer except as to the result of their work. (Villuga v. NLRC, G.R. No. 75038, 23 Aug. 1993) Labor-only contracting Labor-only contracting (LOC) refers to an arrangement where the contractor, who does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, supplies workers to an employer and the workers recruited are performing activities which are directly related to the principal business of such employer. (Art. 106, LC) NOTE: Independent contractors often present themselves to possess unique skills, expertise, or talent to distinguish them from ordinary employees. (Sonza v. ABS-CBN, G.R. No. 138051, 10 June 2004) Indirect or Statutory Employer - One who enters a contract with an independent contractor for the performance of any work, task, job, or project not directly related to the employer’s business. (Baguio v. NLRC, G.R. Nos. 79004-08, 04 Oct. 1991) It is a prohibited act, an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work or service for a principal. NOTE: In labor-only contracting, there is really no contracting and no contractor. There is only a representative to gather and supply people to the principal. (Azucena, 2016) NOTE: No Er-Ee relationship exists between the owner of the project and the employees of the independent contractor. (Baguio v. NLRC, G.R. Nos. 79004-08, 04 Oct. 1991) The principal employer is 257 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment There are three parties involved in these arrangements: A finding that a contractor is a “labor-only” contractor is equivalent to declaring that there is an Er-Ee relationship between the principal and the employees of the “labor-only” contractor. (San Miguel Corp. v. MAERC Integrated Systems, G.R. No. 144672, 10 July 2003) NOTE: A finding that a contractor is a labor-only contractor, as opposed to permissible job contracting, is equivalent to declaring that there is an employer-employee relationship between the principal and the employees of the supposed contractor, and the labor-only contractor is considered as a mere agent of the principal, the real employer. (Allied Banking Corporation v. Reynold Calumpang, G.R. No. 219435, 17 Jan. 2018) 1. Principal (Contractee) – It refers to any employer, whether a person or entity, including government agencies and government-owned and controlled corporations, who/which puts out or farms out a job, service, or work to a contractor. 2. Contractor or subcontractor – It refers to any person or entity, including a cooperative, engaged in a legitimate contracting or subcontracting agreement providing either services, workers or combination of services to a principal under a Service Agreement; 3. Contractual workers – Includes one employed by a contractor to perform or complete a job, work or service pursuant to a Service Agreement with a principal. Confirming Elements To have labor-only contracting, the essential element of supplying workers to another is not enough. To it must be added either one of two confirming elements: Job Contracting vs. Labor-only Contracting 1. 2. Lack of substantial capital or investment and performance of activities directly related or usually necessary or desirable to the principal’s main business; or JOB CONTRACTING The Er/principal is merely an indirect employer, by operation of law, of his contractor’s employees. The contractor does not exercise control over the performance of the employees. (Azucena, 2016) NOTE: If the essential element is absent, there can be no LOC. And even if the essential element is present, but confirming element one or two is absent, there is still no LOC. (Azucena, 2016) The law creates an ErEe relationship for a limited purpose. b. TRILATERAL RELATIONSHIP 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. (Azucena, 2016) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 258 LABOR-ONLY CONTRACTING The Er/principal is treated as direct employer of the contractor’s employees in all instances. (Contractor = agent of the employer) The statute creates an Er-Ee relationship for a comprehensive purpose. Labor Law and Social Legislation The principal becomes solidarily liable. The liability, however, does not extend to the payment of backwages or separation pay of employees who are illegally dismissed. 174. s. 2016 does not contemplate to cover contractual relationship such as in contract of sale or purchase, contract of lease, contract of carriage, contract growing/growership agreement, toll manufacturing, contract of management, operation and maintenance, and such other contracts governed by the Civil Code and special laws. The principal becomes solidarily liable with the contractor not only for unpaid wages but also for all the rightful claims of the employees under the Labor Code and ancillary laws. Allowed by law Prohibited by law Presence of substantial capital or investment. Absence of substantial capital or investment. Contractor or Subcontractor to Furnish a 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 the condition that the bond will answer for the wages due the employees should the contractor or subcontractor fail to pay the same. (Art. 107, LC) DOLE D.O. No. 174 s. 2017 Issued by the Secretary of Labor and Employment implementing and interpreting Arts. 106 to 109 of the LC. Effective 16 March 2017. NOTE: Where the employer fails to require the posting of the bond, he must be liable for whatever the contractor may have incurred to his employees, without prejudice to its right of reimbursement from the contractor for whatever amount paid. (Baguio v. NLRC, G.R. Nos. 79004-08, 04 Oct. 1991) Non-applicability of D.O. No. 174 s. 2017 D.O. 174, Series of 2017 is not applicable to trilateral relationship which characterizes contracting or subcontracting arrangement. Including: Extent of Employer’s Contracting Liability in Invalid 1. BPO/KPO - It does not contemplate to cover information-technology enabled services involving an entire or specific business process such as Business Process Outsourcing (BPO) or Knowledge Process Outsourcing (KPO). (DOLE D.O. No. 01, s. 2017) Where the contracting is found to be labor-only contracting, the liability is immediately and directly imposed upon the principal. The principal shoulders all the obligations of an employer, not just the payment of wages. The liability becomes direct and total as that of a directly hiring employer. 2. Construction Industry - Licensing and exercise of regulatory powers over the construction industry is lodged with the Philippine Constructors Accreditation Board (PCAB) of the Construction Industry Authority of the Philippines (CIAP). c. SOLIDARY LIABILITY 3. 4. Extent of Principal’s Liability in Legitimate Contracting 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. Private Security Agency - Except for the registration requirement as provided in DO No. 174, s. 2017, contracting or subcontracting arrangement in the private security industry shall be governed by DO No. 150, s. 2016. The principal shall be solidarily liable with the contractor in the event of any violation of any provisions of the Labor Code, including the failure to pay wages. (D.O. No. 18-02 s. 2002) Other Contractual Relationships - DO No. 259 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment the principal has already handed over to the contractor the amount covering the wages, or the pay increase mandated by a wage order. (Rosewood Processing, Inc. v. NLRC, G.R. Nos. 116476-84, 21 May 1998) For Wages and Money Claims If the contractor or subcontractor fails to pay the wages of his employees in accordance with the Code, the employer shall be jointly and severally liable with the 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. (Art. 107, LC) Q: Petrotech, a subcontractor of Liquigaz, engaged the services of Independent Testing Consultants (ITC) to conduct non-destructive testing on Liquigaz's piping systems. ITC conducted the agreed tests. It later billed Petrotech. However, despite demand, Petrotech refused to pay. ITC filed a Complaint for collection of a sum of money with damages against Petrotech, Liquigaz, and Noell Whessoe plus legal interest. NOTE: Where no Er-Ee relationship exists between the parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional Trial Court that has jurisdiction. It joined Noell Whessoe as a defendant, alleging that it was Liquigaz's contractor that subcontracted Petrotech. Liquigaz contended that ITC had no cause of action against it since there were no contractual relations between them and that any contract that ITC had was with its subcontractors. Noell Whessoe, on the other hand, denied that it was Liquigaz's contractor and that its basic role was merely to supervise the construction of its gas plants. It argued that any privity of contract was only with Petrotech. For Other Violations The court has interpreted the liability of the principal under Art. 109 as a qualified or limited liability. Liability 1. 2. For failure to pay the minimum wage or the service incentive leave or other benefits – The principal is equally liable with the contractor as if the principal were the direct employer. Thus, it asserted that Petrotech alone should be liable to ITC. Noell Whessoe submitted documents showing that Liquigaz engaged Whessoe Projects Limited (Whessoe UK), a limited company organized under the laws of the United Kingdom, for the construction of its storage facilities. Whessoe UK, in turn, engaged Noell Whessoe, a separate and distinct entity, to be the construction manager for the Mariveles Terminal Expansion Project. The documents further stated that Whessoe UK had already paid in full its contractual obligations to Petrotech. With punitive character – Such as an award for backwages and separation pay because of an illegal dismissal of the contractor’s employee, the liability should be solely that of the contractor, in the absence of proof that the principal conspired with the contractor in the commission of the illegal dismissal. NOTE: The contractor’s liability for underpaid wages and unpaid overtime work could be enforced against the surety bond posted by the contractor as required by the principal. The law’s aim in imposing indirect liability upon the principal is to assure payment of monetary obligations to the workers. This aim is accomplished through the principal’s requiring the posting of a bond. After satisfying from the bond the unpaid wages and overtime pay, the contractor cannot recover from the principal if UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Can Noell Whessoe, Inc. be held solidarily liable with respondents Liquigaz Philippines Corporation and Petrotech Systems, Inc. for unpaid fees to respondent Independent Testing Consultants, Inc.? 260 Labor Law and Social Legislation A: NO. There was insufficient evidence proving that Whessoe UK and Noel Whessoe were two (2) separate and distinct entities. Noel Whessoe failed to prove that for the Mariveles Terminal Expansion Project, it was a separate and distinct entity from Whessoe UK. Therefore, it cannot set up the defense of privity of contract (Art. 1729) to escape liability. Under Art. 1729, ITC had a cause of action against Liquigaz and Noel Whessoe, even if its contract was only with Petrotech. However, Art. 1729, while serving as an exception to the general rule on the privity of contracts, likewise provides for an exception to this exception. 1. SUBSTANTIVE DUE PROCESS JUST CAUSE A just cause dismissal implies that the employee has committed, or is guilty of, some violation against the employer, that is, the employee has committed some serious misconduct, is guilty of fraud against the employer or he has neglected his duties such as abandonment. Thus, the employee himself initiated the dismissal process. Payment of separation pay, as a rule, is not required in just cause dismissal. However, where the employee is dismissed for causes other than serious misconduct or those reflecting on his moral character, separation pay may be allowed as a measure of social justice. (Poquiz, 2012) The contractor is solidarily liable with the owner and subcontractor for any liabilities against a supplier despite the absence of contract between the contractor and the supplier, except when the subcontractor has already been fully paid for its services. Here, there was uncontroverted evidence that PETROTECH had already been paid for its services. Since Whessoe UK and Noel Whessoe should be considered the same entity for the purposes of the Mariveles Terminal Expansion Project, Whessoe UK's full payment to Petrotech would serve as a valid defense against Noel Whessoe's solidary liability. Thus, Noel Whessoe still cannot be held solidarily liable with Liquigaz and Petrotech for any remaining receivables from Independent Testing Consultants. Any remaining obligations to it should be solidarily borne by the owner, Liquigaz, and the subcontractor, Petrotech. (Noelle Whessoe, Inc. v. Independent Testing Consultants, Inc., G.R. No. 199851, 07 Nov. 2018) 2-Fold Requirement for Lawful Dismissal 2. Authorized cause dismissal is a form of terminating Er-Ee relationship with a liability on the part of the employer to pay separation pay as mandated by law. It does not necessarily imply delinquency or culpability on the part of the employee. Instead, the dismissal process is initiated by the employer's exercise of his management prerogative such as installation of laborsaving devices, closure of business, or implementing a retrenchment program. (Jaka Food v. Pacot, G.R. No. 151378, 28 Mar. 2005) The existence of any of the just or authorized causes enumerated in Arts. 282 and 283 of the Labor Code does not automatically result in the dismissal of the employee. The employer must decide whether it would dismiss the employee, impose a lighter penalty, or perhaps even condone the offense committed by an erring employee. In deciding, the employer may take into consideration the employee's past offenses. (Santos v. Integrated Pharmaceutical, Inc., G.R. No. 204620, 11 July 2016) B. TERMINATION BY EMPLOYER 1. AUTHORIZED CAUSE Substantive – legality or illegality of the act of dismissal (just and authorized causes) Procedural – legality or illegality of the manner of dismissal (due process; notice and hearing) Q: Aldovino and her co-applicants applied for work at Gold and Green Manpower, a local manning agency. Eventually, they were hired as sewers for Dipper Semi-Conductor, a Taiwan261 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment effected merely because respondents no longer wanted their services. This is not an authorized or just cause for dismissal under the Labor Code. Employment contracts cannot be terminated on a whim. Furthermore, petitioners were not accorded due process. A valid dismissal must comply with substantive and procedural due process: there must be a valid cause and a valid procedure. The employer must comply with the two (2)-notice requirement, while the employee must be given an opportunity to be heard. Here, petitioners were only verbally dismissed, without any notice given or having been informed of any just cause for their dismissal. based company. Their respective employment contracts provided an eight (8)-hour working day, a fixed monthly salary, and entitlement to overtime pay, among others. Once Aldovino and her co-workers arrived in Taiwan, Gold and Green Manpower took all their travel documents, including their passports. They were then made to sign another contract that provides that they would be paid on a piece-rate basis instead of a fixed monthly salary. Because they were paid on a piece-rate basis, they received less than the fixed monthly salary stipulated in their original contract. When Aldovino and her co-workers inquired, Dipper Semi-Conductor refused to disclose the schedule of payment on a piece-rate basis. With their right to substantive and procedural due process denied, petitioners were illegally dismissed from service. (Julita M. Aldovino et al., v. Gold and Green Manpower et al. G.R. No. 200811, 19 June 2019) Aldovino and her co-workers filed a Complaint against their employers, Dipper SemiConductor and Sage International before a local court in Taiwan. The parties met before the Bureau of Labor Affairs for a dialogue. There, Dipper Semi-Conductor ordered Aldovino and her co-workers to return to the Philippines as it was no longer interested in their services. All of them returned to the Philippines. Q: Joy was deployed to work for Taiwan Wacoal, Co. Ltd. on June 26, 1997 for one year. Sameer Overseas Placement Agency claims that on July 14, 1997, Mr. Huwang from Wacoal informed Joy, without prior notice, that she was terminated and that she should prepare for immediate repatriation. Hence, Joy filed a complaint with the NLRC claiming that she was illegally dismissed. They eventually filed before the Labor Arbiter a case for illegal termination, underpayment of salaries, human trafficking, illegal signing of papers, and other money claims. Respondents argued that petitioners were not illegally dismissed and that they voluntarily returned to the Philippines. Were petitioners illegally dismissed? The NLRC declared that Joy was illegally dismissed, ruling that Sameer Overseas Placement Agency failed to prove that there were just causes for termination. Sameer Overseas Placement Agency counters that there was just cause for termination because there was a finding of Wacoal of Joy’s inefficiency, negligence in her duties, and failure to comply with the work requirements of her foreign employer. Therefore, it claims that Joy’s dismissal was valid. Was Joy illegally dismissed? A: YES. Under the Labor Code, employers may only terminate employment for a just or authorized cause and after complying with procedural due process requirements. Arts. 297 and 300 of the Labor Code enumerate the causes of employment termination either by employers or by employees. In illegal dismissal cases, the burden of proof that employees were validly dismissed rests on the employers. Failure to discharge this burden means that the dismissal is illegal. A: YES. Security of tenure for labor is guaranteed by our Constitution. With respect to the rights of overseas Filipino workers, we follow the principle of lex loci contractus. By our laws, overseas Filipino workers may only be terminated for a just or authorized cause and after compliance with procedural due process requirements. Joy’s A review of the records here shows that the termination of petitioners' employment was UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 262 Labor Law and Social Legislation 5. dismissal less than one year from hiring and her repatriation on the same day show not only failure on the part of Sameer Overseas Placement Agency to comply with the requirement of the existence of just cause for termination – they patently show that the employers did not comply with the due process requirement. The abruptness of the termination negated any finding that she was properly notified and given the opportunity to be heard. Her constitutional right to due process of law was violated. (Sameer Overseas Placement Agency v. Joy Cabiles, G.R. No. 170139, 05 Aug. 2014) 1. SERIOUS MISCONDUCT AND WILLFUL DISOBEDIENCE Serious Misconduct It is an improper or wrong conduct; the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. To be serious within the meaning and intendment of the law, the misconduct must be of such grave and aggravated character and not merely trivial or unimportant. (Villamor Golf Club v. Pehid, G.R. No. 166152, 04 Oct. 2005) a. JUST CAUSES It is a termination initiated by the employee. This is an exercise of management prerogative; however, it must not be exercised with abuse of discretion. Elements: 1. It must be serious or of such a grave and aggravated character; 2. Must relate to the performance of the Ees’ duties; and 3. Ee has become unfit to continue working for the Er. (Philippine Aeolus Automotive United Corp. v. NLRC, G.R. No. 124617, 28 Apr. 2000) While the law provides for a just cause to dismiss an employee, the employer still has the discretion whether it would exercise its right to terminate the employment or not. (Santos v. Integrated Pharmaceutical, Inc., G.R. No. 204620, 11 July 2016) Basis As a measure of self-protection against acts inimical to its interest, a company has the right to dismiss its erring employees. An employer cannot be compelled to continue employing an employee guilty of acts inimical to the employer's interest, justifying loss of confidence in him. (Yabut v. Meralco, G.R. No. 190436, 16 Jan. 2012) Examples: 1. Sexual harassment; 2. Fighting within the company premises; 3. Uttering obscene, insulting, or offensive words against a superior; 4. Falsification of time records; or 5. Gross immorality. Just Causes for Termination 1. 2. 3. 4. Other causes analogous to the foregoing. (Art. 297, LC) Q: Delos Reyes was a university professor and the president of the university’s Faculty and Employees Union, a duly registered labor union. An administrative complaint for grave misconduct was filed against him for using expletives at Paula Mae, a minor student at the university, when the latter was holding the doorknob on her way out of the faculty room, while he held the doorknob on the other side. When Paula Mae stepped aside, Delos Reyes allegedly exclaimed the words “anak ng puta” and walked on without any remorse, causing emotional trauma to Paula Mae. Serious misconduct or willful disobedience by the Ee of the lawful orders of his Er or representative in connection with his work; Gross and habitual neglect by the Ee of his duties; Fraud or willful breach by the Ee of the trust reposed in him by his Er or duly organized representative; Commission of a crime or offense by the Ee against the person of his Er or any immediate member of his family or his duly authorized representative; or 263 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment In this case, petitioner’s dismissal, which was brought about by his personal acts, does not constitute unfair labor practice as provided under the Labor Code. Dismissing him was not meant to violate the right of the university employees to self-organize. Neither was it meant to interfere with the Union's activities. Finally, petitioner cannot raise the defense that he was the Union's president; this does not make him immune from liability for his acts of misconduct. (Adamson University Faculty and Employees Union, et al. v. Adamson University, G.R. No. 227070, 09 Mar. 2020) Delos Reyes denied the accusations against him and filed a counter-complaint against Paula Mae for maligning and tarnishing his established reputation in the university. A hearing was held and later, Delos Reyes was issued a Notice of Dismissal. a. Was Delos Reyes validly dismissed? b. Did his dismissal constitute unfair labor practice? A: a. YES. A teacher exclaiming, "Anak ng puta" after having encountered a student is an unquestionable act of misconduct. However, whether it is serious misconduct that warrants the teacher's dismissal will depend on the context of the phrase's use. Q: Escando, upset at his transfer to the washer section, repeatedly uttered “Gago ka” and threatened bodily harm to his superior Mr. Andres. Is the utterance of the obscene words and threats of bodily harm gross and willful misconduct? While uttering an expletive out loud in the spur of the moment is not grave misconduct per se, the refusal to acknowledge this mistake and the attempt to cause further damage and distress to a minor student cannot be mere errors of judgment. Petitioner's subsequent acts are willful, which negate professionalism in his behavior. They contradict a professor's responsibility of giving primacy to the students' interests and respecting the institution in which he teaches. In the interest of self-preservation, petitioner refused to answer for his own mistake; instead, he played the victim and sought to find fault in a student who had no ill motive against him. Indeed, had he been modest enough to own up to his first blunder, petitioner's case would have gone an entirely different way. b. A: YES. The repeated utterances by Escando of obscene, insulting, or offensive words against a superior were not only destructive of the morals of his co-Ees and a violation of the company rules and regulations, but also constitute gross misconduct, which is one of the grounds provided by law to terminate the services of an Ee. (Autobus Workers Union v. NLRC, G.R. No. 117453, 26 June 1998) Q: Samson made insulting and obscene utterances towards the General Manager saying, “Si EDT bullshit yan, sabihin mo kay EDT yan” among others during the Christmas party. Are the utterances towards the General Manager gross misconduct? A: The alleged misconduct of Samson when viewed in its context is not of such serious and grave character as to warrant his dismissal. Samson made the utterances and obscene gestures at an informal Christmas gathering and it is to be expected during this kind of gatherings, where tongues are often loosened by liquor of other alcoholic beverages, that Ees freely express their grievances and gripes against their Ers. Ees should be allowed wider latitude to freely express their sentiments during these kinds of occasions, which are beyond the NO. In Great Pacific Life Employees Union v. Great Pacific Life Assurance Corporation, the Court discussed that if the unfair treatment does not relate to or affect the workers' right to self-organize, it cannot be deemed unfair labor practice. A dismissal of a union officer is not necessarily discriminatory, especially when that officer committed an act of misconduct. In fact, union officers are held to higher standards. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 264 Labor Law and Social Legislation relationship, Jose continued to have special feelings for Erica. One afternoon, Jose chanced upon Erica riding in the car of Paolo, a coemployee and Erica's ardent suitor; the two were on their way back to the office from a sales call on Silver Drug, a major drug retailer. In a fit of extreme jealousy, Jose rammed Paolo's car, causing severe injuries to Paolo and Erica. Jose's flare up also caused heavy damage to the two company-owned cars they were driving. As lawyer for Magna, advise the company on whether just and valid grounds exist to dismiss Jose. (2013 BAR) disciplinary authority of the Er. (Samson v. NLRC, G.R. No. 121035, 12 Apr. 2000) Q: Cheryll Leus was a non-teaching personnel employed in St. Scholastica’s College Westgrove (SSCW). Cheryll and her boyfriend conceived a child out of wedlock. SSCW dismissed her on the ground that her pregnancy out of wedlock constitutes disgraceful and immoral conduct and ran counter to the moral principles that SSCW stands for and teaches its students. Does pregnancy out of wedlock (without a legal impediment to marry) constitute immoral conduct as a ground for dismissal contemplated by law? A: Jose can be dismissed for serious misconduct, violation of company rules and regulations, and commission of a crime against the employer’s representatives. For misconduct to be serious and therefore a valid ground for dismissal, it must be of grave and aggravated character and not merely trivial or unimportant and connected with the work of the employee. A: NO. It is an immoral conduct if such does not conform to what society generally views as respectable or moral. Substantial evidence must be presented to prove that such conduct is considered immoral. The two-step process to determine whether the conduct is immoral: 1. 2. Q: Assuming this time that Magna dismissed Jose from employment for cause and you are the lawyer of Jose, how would you argue the position that Jose's dismissal was illegal? (2013 BAR) Consideration of the totality of the circumstances surrounding it; and Assessment of said circumstances based on the prevailing norms of conduct. Pre-marital sexual relations between two consenting adults who have no impediment to marry each other, and, consequently, conceiving a child out of wedlock, does not amount to a disgraceful or immoral conduct. (Leus v. SSCW, G.R. No. 187226, 28 Jan. 2015) A: The offense committed by Jose did not relate to the performance of his duties. For misconduct or improper behavior to be a just cause for dismissal, it: a. b. A teacher engaging in an extra-marital affair with another married person is a serious misconduct, if not an immoral act. But a teacher falling in love with her pupil and, subsequently, contracting a lawful marriage with him, though there is a disparity in their ages and academic level cannot be considered as a defiance of contemporary social mores. (ChuaQua v. Clave. G.R. No. 49549, 30 Aug. 1990) c. Must be serious; Must relate to the performance of the employee’s duties; and Must show that the employee has become unfit to continue working for the employer. Based on the forgoing guidelines, it can be concluded that Paolo was not guilty of serious misconduct. He was not performing official work at the time of the incident. (Lagrosas v. Bristol Myers Squibb, G.R. No. 168637/170684, 12 Sept. 2008) Additionally, there was no compliance with the rudimentary requirements of due process. Q: Jose and Erica, former sweethearts, both worked as sales representatives for Magna, a multinational firm engaged in the manufacture and sale of pharmaceutical products. Although the couple had already broken off their 265 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment unimportant matters. Disobedience to be considered willful must be resorted to without regard to its consequences. (DOLE Manual; BLTB Co. v. CA, G.R. No. L-38482, 18 June 1976; Family Planning Org. of the Phil. Inc. v. NLRC, G.R. No. 75907, 23 Mar. 1992) Q: Rivera, a bus conductor of Genesis, was dismissed on account of a discrepancy in the amount he declared on bus ticket receipts. He reported and remitted the amount of P198.00 instead of the admittedly correct amount of P394.00 worth of bus ticket receipts. He averred that it was an honest mistake, which he was unable to correct because the bus encountered mechanical problems. Requisites Contending that this termination was arbitrary and not based on just causes for terminating employment, he filed a complaint for illegal dismissal. Genesis claimed that Rivera's misdeclaration of the amount in the bus ticket receipts and failure to remit the correct amount clearly violated Genesis' policies and amounted to serious misconduct, fraud, and willful breach of trust; thereby justifying his dismissal. Was Rivera terminated with just cause? A: NO. Absent any other supporting evidence, the error in a single ticket issued by petitioner can hardly be used to justify the inference that he has committed serious misconduct or has acted in a manner that runs afoul of his employer's trust. Terminating his employment on these unfounded reasons is manifestly unjust. The social justice suppositions underlying labor laws require that the statutory grounds justifying termination of employment should not be read to justify the view that bus conductors should, in all cases, be free from any kind of error. Not every improper act should be taken to justify the termination of employment. (Rivera v. Genesis Transport Service Inc., and Moises, G.R. No. 215568, 03 Aug. 2015) 1. The Ees assailed conduct must have been willful or intentional, the willfulness being characterized by a wrongful and perverse attitude; and 2. The disobeyed orders, regulations, or instructions of the Er must be: a. Reasonable and lawful; b. Sufficiently known to the Ee; and c. In connection with the duties which the Ee has been engaged to discharge. (Cosep v. NLRC, G.R. No. 124966, June 16, 1998; Realda v. New Age Graphics, G.R. No. 192190, 25 Apr. 2012) Valid Transfer GR: Management has the right to transfer or reassign an employee. The right of the employer to transfer the employees in the interest of the efficient and economic operation of its business cannot be seriously challenged. XPN: Where the transfer is vitiated by improper motive and is merely a disguised attempt to remove or punish the employee sought to be transferred. (Associated Labor Unions v. NLRC, G.R. Nos. 7691617, 31 Mar. 1983) Willful Disobedience Invalid Transfer There is willful disobedience when there is wanton disregard to follow orders of the employer. The right to transfer personnel should not be used as a subterfuge by the employer to rid himself of an undesirable worker. Nor when the real reason is to penalize an employee for his union activities and thereby defeat his right to self-organization. (Pocketbell Philippines, Inc. v. NLRC, et al., G.R. No. 106843, 20 Jan. 1995) Willful is characterized by a wrongful perverse mental attitude rendering the employee’s act inconsistent with the proper subordination (Lakpue Drug Inc. v. Belga, G.R. No. 166379, 20 Oct. 2005) The employee’s disobedience must relate to substantial matters, not merely to trivial or UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 266 Labor Law and Social Legislation disobedience thereof is not a reason to dismiss the worker. In case of a constructive dismissal, the employer has the burden of proving that the transfer and demotion of an employee are for valid and legitimate grounds such as genuine business necessity. Particularly, for a transfer not to be considered a constructive dismissal, the employer must be able to show that such transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges, and other benefits. Failure of the employer to overcome this burden of proof, the employee's demotion shall no doubt be tantamount to unlawful constructive dismissal. (SIMIFRU v. Baya, G.R. No. 188269, 17 Apr. 2017) NOTE: The reasonableness and lawfulness of a rule, order, or instruction depend on the circumstances availing in each case. Reasonableness pertains to the kind or character of directives and commands and to the manner through which they are made. (Escobin et al. v. NLRC et al., G.R. No. 118159, 15 Apr. 1998) Q: Is refusal to a promotion by an Ee an act of insubordination or willful disobedience? A. NO. There is no law that compels an Ee to accept a promotion because a promotion is a gift or reward, which a person has the right to refuse. The exercise of the Ee of the right to refuse a promotion cannot be considered in law as insubordination or willful disobedience. (PT&T Corp. v. CA, G.R. No. 152057, 29 Sept. 2003) Disobeying an Order to Transfer The requisites for willful disobedience must be observed before dismissing an employee who disobeys an order transferring him from one job or one location to another. (Azucena, 2016) Q: Escobin’s group were security guards based in Basilan. They were placed in floating status and were asked to report for reassignment in Metro Manila by PISI. Upon failure to report or respond to such directives, they were ordered dismissed from employment by PISI for willful disobedience. Did the failure to report to Manila amount to willful disobedience? NOTE: The refusal to obey a valid transfer order constitutes willful disobedience of a lawful order of an employer. Employees may object to, negotiate, and seek redress against employers for rules or orders that they regard as unjust or illegal. However, until and unless these rules or orders are declared illegal or improper by competent authority, the employees ignore or disobey them at their peril. But transfer should not result to demotion of rank, which is tantamount to constructive dismissal. (Manila Pavilion Hotel v. Henry Delada. G.R. No. 189947, 25 Jan. 2012) A: NO. The reasonableness of the rule pertains to the kind or character of directives and commands and to the manner through which they are made. In this case, the order to report to the Manila office fails to meet this standard. The order to report to Manila was inconvenient, unreasonable, and prejudicial to Escobin’s group since they are heads of families residing in Basilan and they were not given transportation money or assurance of availability of work in Manila. (Escobin v. NLRC, G.R. No. 118159, 15 Apr. 1998) Disobedience of an Inconvenient Transfer GR: Inconvenience to the employee does not necessarily invalidate a transfer order. NOTE: The transfer from one city to another within the country is valid if there is no bad faith on the part of the employer. (Homeowners Savings and Loan Association, Inc. v. NLRC, et al., G.R. No. 97067, 26 Sept. 1996) Q: ICT Marketing Services, Inc. hired respondent Mariphil as its Customer Service Representative (CSR) and assigned her to its Capital One account. Later, Mariphil became a regular employee. Later on, Mariphil wrote to ICT’s Vice President complaining about XPN: Inconvenience caused by unreasonableness of the transfer order makes the order itself invalid, and 267 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment Degree of Negligence as a Just Cause for Termination supposed irregularities in the handling of funds entrusted to ICT by Washington Mutual. However, no action appears to have been taken on her complaint. Mariphil was then transferred to the Bank of America account where she was required to attend a training seminar for six days. On the third day of training, Mariphil was unable to attend. GR: Gross and habitual negligence. When she reported for training the next day, Mariphil was informed that she could not be certified to handle calls for Bank of America due to her failure to complete the training. From then on, she was placed on "floating status" and was not given any work assignment. After a month, the HR Manager tendered her resignation from work, effective upon receipt of the letter. Hence, Mariphil filed a complaint for constructive dismissal against ICT. Did ICT constructively dismissed Mariphil? Gross neglect has been defined as the want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. (NBS v. Court of Appeals. G.R. No. 146741, 27 Feb. 2002) b. Habitual neglect implies repeated failure to perform one’s duties over a period of time, depending upon the circumstance. (JGB and Associates v. NLRC, G.R. No. 10939, 07 Mar. 1996) XPN: An employee who was grossly negligent in the performance of his duty, though such negligence committed was not habitual, may be dismissed especially if the grossly negligent act resulted in substantial damage to the company. (LBC Express v. Mateo. G.R. No. 168215, 09 June 2009) A: YES. In causing respondent's transfer, petitioner clearly acted in bad faith and with discrimination, insensibility, and disdain; the transfer was effected as a form of punishment for her raising a valid grievance related to her work. Furthermore, said transfer was obviously unreasonable, not to mention contrary to experience, logic, and good business sense. This being the case, the transfer amounted to constructive dismissal. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. (ICT Marketing Services, Inc. v. Mariphil L. Sales. G.R. No. 202090, 09 Sept. 2015) Q: Antiola, as assorter of baby infant dress for Judy Phils., erroneously assorted and packaged 2,680 dozens of infant wears. Antiola was dismissed from employment for this infraction. Does the single act of misassortment constitute gross negligence? A: NO. Such neglect must not only be gross but also habitual in character. Hence, the penalty of dismissal is quite severe considering that Antiola committed the infraction for the first time. (Judy Phils. v. NLRC, G.R. No. 111934, 29 Apr. 1998) 2. GROSS AND HABITUAL NEGLIGENCE Q: Dolora and Merlinda are employees of Rustan’s Makati, assigned as Inventory Specialists at the Cosmetics, Perfumeries & Toiletries (CP & T) stockroom of Rustan’s Department Store. When there was shortage in the inventory of the CP&T merchandise, Rustan’s sent Notices to Explain to Dolora and Merlinda in reference to a report provided concerning the variance in the inventory of concerned beauty cosmetics merchandise. Accordingly, Dolora and Merlinda were It implies a want or absence of or failure to exercise diligence that an ordinary prudent man would use in his own affairs. Significantly, in order to constitute a just cause for the employees’ dismissal, the neglect of duties must not only be gross but also habitual. Thus, the single or isolated act of negligence does not constitute a just cause for the dismissal of the employee. (National Bookstore v. CA, G.R. No. 146741. 27 Feb 2002) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES a. 268 Labor Law and Social Legislation without exerting any effort to avoid them. (Eastern Overseas Employment Center Inc. v. Bea, G.R. 143023, 29 Nov. 2005) required "to explain why they should not be held accountable for the losses of petitioner due to the aforementioned shortage and why no appropriate action should be taken against them." Dolora and Merlinda were initially served with notices of suspension, followed by their termination from employment, allegedly for gross and habitual neglect of duty. Is there just cause for the dismissal of Dolora and Merlinda? “Unsatisfactory Rating” can be a just cause for dismissal only if it amounts to gross and habitual neglect of duties. (Azucena, 2016) Requisites of Poor Performance as a Ground for Termination A: YES. In any case, while the rule is that a single or isolated act of negligence is not sufficient to constitute a just cause for the dismissal of the employee, the same, however, is not absolute. An infraction, even if not habitual, may warrant a dismissal under appropriate circumstances. In this case, the Court finds, under the circumstances pertaining herein, that it was just and reasonable for petitioner to dismiss respondents even, assuming, that it was the first time that they committed the infraction. The Court considers two important factors. First is the quantity and the substantial amount or value of the merchandise lost, amounting to P509,044.00. Second, respondents' position is necessarily one of trust and confidence. Petitioner cannot legally be compelled to continue with the employment of respondents who are entrusted with the care, custody, and safekeeping of high-end cosmetic products, but who just committed gross negligence which resulted to missing assigned products amounting to an enormous amount of around half a million pesos. Clearly, respondents' continued tenure is patently inimical to the petitioner's business interest. (Rustan’s Commercial Corporation v. Dolora F. Raysag and Merlinda S. Entrina, G.R. No. 219664, 12 May 2021) 1. 2. 3. Employer must prove that it has set standards of performance expected of the employee; These standards must be reasonable and in connection with the employee’s work; and There must be proof that the employee failed to meet the standards despite the given reasonable opportunity to meet the same. Inefficiency as a Just Cause for Dismissal Failure to observe prescribed standards of work or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the allotted reasonable period, or by producing unsatisfactory results. (Buiser v. Leogardo, G.R. No. L-63316, 31 July 1984) This ground is considered analogous to those enumerated under Art. 297. (Skippers United Pacific v. Magud, G.R. No. 166363, 15 Aug. 2006) Q: Gamido was a quality control inspector of VH Manufacturing. Gamido was allegedly caught by the company Pres. Dy Juanco of sleeping and was dismissed from employment. Did Gamido’s act of sleeping on the job constitute a valid cause of dismissal? Failure in Performance Evaluations A: NO. Sleeping on the job as a valid ground for dismissal only applies to security guards whose duty necessitates them to be always awake and watchful. Gamido’s single act of sleeping further shows that the alleged negligence or neglect of duty was neither gross nor habitual. (VH Manufacturing v. NLRC, G.R. No. 130957, 19 Jan. 2000) As a general concept, “poor performance” is equivalent to inefficiency and incompetence in the performance of official duties. The fact that an Ee’s performance is found to be poor or unsatisfactory does not necessarily mean that the Ee is grossly and habitually negligent of his duties. Gross negligence implies a want or absence of or failure to exercise slight care of diligence or the entire absence or care. He evinces a thoughtless disregard of consequences 269 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment requirement. (New Puerto Commercial v. Lopez, G.R. NO. 169999, 26 July 2010) Some Forms of Neglect of Duty 1. 2. Habitual tardiness and absenteeism Abandonment: a. Failure to report for work or absence without justifiable reason; and b. Clear intention to sever Er-Ee relationship manifested by some overt acts. (Labor et. al v. NLRC, G.R. No. 110388, 14 Sept. 1995) Q: Mejila, a barber at Windfield Barber Shop, had an altercation with a fellow barber, which resulted in his subsequent turning over the duplicate keys of the shop to the cashier, took away all his belongings therefrom, and worked at different barbershop. Mejila then filed an illegal dismissal case but did not seek reinstatement as a relief. Did Mejila commit abandonment? Abandonment as a Just Cause for Termination A: YES. Mejila’s acts such as surrendering the shop’s keys, not reporting to the shop anymore without any justifiable reason, his employment in another barber shop, and the filing of a complaint for illegal dismissal without praying for reinstatement clearly show that there was a concurrence of the intention to abandon and some overt acts from which it may be inferred that the Ee concerned has no more interest in working. (Jo v. NLRC, G.R. No. 121605, 02 Feb. 2000) It means deliberate and unjustified refusal of an employee to resume his employment. Requirements Abandonment for a Valid Finding of Two (2) factors must be present: 1. The failure to report for work, or absence without valid or justifiable reason; and 2. A clear intention to sever Er-Ee relationship, with the 2nd element as the more determinative factor, being manifested by some overt acts. (Sta. Catalina College v. NLRC, G.R. No. 144483, 19 Nov. 2003) Q: The Ees averred that they were underpaid and filed a complaint for money claims against the Er before the LA. As a result of their complaint, they were relieved from their posts and were not given new assignments despite the lapse of six months. On the other hand, the Er maintains that the Ees were not dismissed but were merely transferred to a new post and voluntarily abandoned their jobs when they failed to report for duty in the new location. Upon termination, the Ee moved to file a joint complaint for illegal dismissal. Is there a valid indication of abandonment from work? How to Prove Abandonment Abandonment is proven when the Er must show that the Ee deliberately and unjustifiably refused to resume his employment without any intention of returning. There must be a concurrence of the intention to abandon and some overt acts from which an Ee may be deduced as having no more intention to work. The law, however, does not enumerate what specific overt acts can be considered as strong evidence of the intention to sever the Ee-Er relationship. (Sta. Catalina College v. NLRC, G.R. No. 144483, 19 Nov. 2003) A: NO. For abandonment of work to fall under Art. 297 of the LC, as amended, as gross and habitual neglect of duties there must be the occurrence of two elements: first, there should be a failure of the Ee to report for works without a valid or justifiable reason and second, there should be a showing that the Ee intended to sever the Er-Ee relationship, the second element being the more determinative factor as manifested by overt acts. NOTE: In case of abandonment, the ER is still required under the law to notify the employee of his termination. There is still a need to observe the twonotice rule and opportunity to be heard UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 270 Labor Law and Social Legislation The Er cannot simply conclude knowledge that an Ee is ipso facto notified of a transfer when there is no evidence to indicate that the Ee had knowledge of the transfer order. Hence, the failure of an Ee to report for work at the new location cannot be taken against him as an element of abandonment. In addition to these tests for valid transfer, there should be proper and effective notice to the Ee concerned. It is the Er’s burden to show that the Ee was duly notified of the transfer. Verily, an Er cannot reasonably expect an Ee to report for work in a new location without first informing said Ee of the transfer. (Alert Security and Investigation Agency, Inc. et al v. Saidali Pasawilan, et al., G.R. No. 182397, 14 Sept. 2011) Mere failure to report to work is insufficient to support a charge of abandonment. The employer must adduce clear evidence of the employee's "deliberate, unjustified refusal to resume employment,'' which is manifested through the employee's overt acts. (Demex v. Leron, G.R. No. 204288, 08 Nov. 2017) Q: Leron was hired as a weaver by Demex. He is paid on a piece-rate basis and is contracted through job orders. He worked from Monday to Saturday, but there were times when he was required to work on Sundays. Leron received his wages at the end of every week but he never received standard benefits such as 13th month pay, service incentive leave, rest day pay, holiday pay, and overtime pay. Later, Leron was dismissed, thus, he filed a complaint for illegal dismissal. Demex justifies Leron’s dismissal on the ground of abandonment, arguing that Leron’s unauthorized absences, noncompliance with the return-to-work notices, and alleged act of crumpling the first return-towork notice are indicators of his intention to sever his employment. Was there a valid dismissal? 3. FRAUD OR WILLFUL BREACH OF TRUST Gross Negligence vs. Habitual Neglect The former connotes want of care in the performance of one’s duties while the latter implies repeated failure to perform one’s duties over a period of time, depending upon the circumstances. (Azucena, 2016) Fraud Fraud, in its general sense, is deemed to comprise anything calculated to deceive, including all acts, omissions, and concealment involving a breach of legal or equitable duty, trust, or confidences justly reposed, resulting in damage to another, or by which an undue and unconscientious advantage is taken of another. Deceit is a species of fraud. (Galvez v. CA, G.R. No. 187919, 25 Apr. 2012) Willful Breach of Trust A breach is willful if it is done intentionally, knowingly, and purposely without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, and inadvertently. (Austria v. NLRC, G.R. No. 124382, 06 Aug. 1999) But loss of trust or confidence can be based on gross negligence. (School of the Holy Spirit of Quezon City v. Taguiam, G.R. No. 165565, 14 July 2008) A: NO. The dismissal was invalid because Demex’s evidence does not clearly establish a case of abandonment. It failed to prove the second element of abandonment. Abandonment of work has been construed as a “clear and deliberate intent to discontinue one's employment without any intention of returning back." To justify the dismissal of an employee on this ground, two (2) elements must concur, namely: "(a) the failure to report for work or absence without valid or justifiable reason; and (b) a clear intention to sever the employeremployee relationship." Requisites of Fraud or Willful Breach of Trust 1. 2. 3. 271 There must be an act, omission, or concealment; The act, omission, or concealment involves a breach of legal duty, trust, or confidence justly reposed; It must be committed against the employer or his/her representative; and UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment 4. To this class belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. (Mabeza v. NLRC, G.R. No. 118506, 18 Apr. 1997) It must be in connection with the employee’s work. Loss of Confidence There is loss of confidence when the employer has reasonable ground or has basis to believe that the employee is responsible for the misconduct and the nature of his participation renders him unworthy of the trust and confidence demanded by his position. Proof beyond reasonable doubt it not required. (Jerusalem v. Keppel Monte Bank, G.R. No. 169564, 06 Apr. 2011) 2. A breach is willful if it is done intentionally, knowingly, and purposely without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, or inadvertently. (Dela Cruz v. NLRC, G.R. No. 119536, 17 Feb. 1997) Loss of Trust and Confidence as a Just Cause for Termination: 1. It applies only to cases involving: a. Ees occupying positions of trust and confidence (confidential and managerial Ee’s) – To this class belong managerial Ees, i.e., those vested with the powers or prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline Ees or effectively recommend such managerial actions. Position of trust and confidence is one where a person is entrusted with confidence on delicate matters, or with the custody, handling, or care and protection of the employer’s property. (Pandoy v. NLRC, G.R. No. 67664, 20 May 1992) and/or funds. (Gonzales v. NLRC, G.R. No. 131653, 26 Mar. 2001) The act constituting the breach must be “workrelated” such as would show the Ee concerned to be unfit to continue working for the Er. (Gonzales v. NLRC, G.R. No. 131653, 26 Mar. 2001) 4. It must be substantial and founded on clearly established facts sufficient to warrant the Ee’s separation from employment. (Sulpicio Lines Inc. v. Gulde, G.R. No. 149930, 22 Feb. 2002) 5. Fraud must be committed against the Er or his representatives, e.g.: Falsification of timecards Theft of company property Unauthorized use of company vehicle NOTE: The treatment of rank-and-file personnel and managerial Ees in so far as the application of the doctrine of loss of trust and confidence is concerned is different. As regards managerial Ees, such as Caoile, mere existence of a basis for believing that such Ee has breached the trust of his Er would suffice for his dismissal. (Caoile v. NLRC, G.R. No. 115491, 24 Nov. 1998) Ees routinely charged with the care and custody of the Er’s money or property – UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 3. a. b. c. NOTE: The mere existence of a basis for the loss of trust and confidence justifies the dismissal of the managerial Ee because when an Ee accepts a promotion to a managerial position or to an office requiring full trust and confidence, such Ee gives up some of the rigid guaranties available to ordinary workers. (Cecilia T. Manese v. Jollibee Foods Corporation, G.R. No. 1704 54, 11 Oct. 2012) b. The loss of trust and confidence must be based on willful breach. 272 Labor Law and Social Legislation Guidelines for the Doctrine of Loss of Confidence to Apply her from the service. (Celiz v. Cord Chemicals, Inc., G.R. No. 200352, 20 July 2016) 1. Loss of confidence should not be simulated (reasonable basis for loss of trust and confidence); 2. Not used for subterfuge for causes which are improper and/or illegal or unjustified; An employee’s attitude problem is a valid ground for termination. It is a situation analogous to loss of trust and confidence that must be duly proved by the employer, still there must be substantial evidence. (Azucena, Vol. II, 2016, p. 851) (Heavylift Manila v. CA, G.R. No. 154410, 20 Oct. 2005) 3. Not arbitrarily asserted in the face of overwhelming evidence to the contrary; 4. Must be genuine, not a mere afterthought to justify earlier action taken in bad faith; and 5. The Ee involved holds a position of trust and confidence. (Ramos v. Court of Appeals, G.R. No. 145405, 29 Jun. 2004) Q: Mac was employed as a part-time teacher and comptroller of Elysen College. A committee was created to formulate a new "ranking system for non-academic employees for school year 20202021. He then directed to arrange a salary adjustment schedule for the new ranking system to the committee organized. Later, he obtained his employee ranking slip which showed his evaluation score and the change of his rank "from office head to middle manager-level IV', this was prepared however without prior approval from the Human Resource Department. On July 25, 2020, Elysen College notified Mac of its decision to terminate his services for serious misconduct and loss of trust and confidence. Q: Mary June CELIZ worked as Chief of Sales concurrent with her position as Senior Operations Manager with CORD, INC. Celiz then asked that she be allowed to resign. However, upon clearance, the Accounting Department said that CELIZ need to account the unliquidated advances amounting to P713,471.00. She liquidated her advances, but her accounting fell short of P445,272.93. Upon her failure to account her advances, CORD, INC. dismissed CELIZ for serious breach of trust and confidence. CELIZ filed for illegal dismissal. Is the dismissal of CELIZ due to breach of trust and confidence valid? Upon receipt of the termination letter that reads "For this reason, you are advised to explain or show cause why your employment with Elysen College will not be terminated for Serious Misconduct due to intentional misclassification/miscomputation of your salary and some employees named hereunder, thereby causing prejudice not only to the school but also to said employees as well", Mac immediately filed before Executive Labor Arbiter. Was Mac illegally dismissed? A: YES. The dismissal of CELIZ due to breach of trust and confidence was valid. In cases of dismissal for breach of trust and confidence, proof beyond reasonable doubt of an employee's misconduct is not required. It is sufficient that the employer had reasonable ground to believe that the employee is responsible for the misconduct, which renders him unworthy of the trust and confidence demanded by his position. The Court, upon review of the records of the case, found that contrary to CELIZ’s contention, there was substantial evidence showing that the subject cash advances were properly attributed to CELIZ and that she failed to liquidate the same. In short, there was just cause to dismiss A: NO. Mac was validly dismissed based on loss of trust and confidence. Mac was not an ordinary rankand-file employee. His position of responsibility on delicate financial matters entailed a substantial amount of trust from respondent. The preparation of the payroll is a sensitive matter requiring attention to detail. The alleged misconduct for loss of trust and confidence is sufficient to warrant the dismissal of fiduciary rank-and-file employees. 273 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment violation. Hence, Lamadrid instituted a complaint for illegal dismissal. Was Lamadrid illegally dismissed? However, "mere existence of a basis for believing that [the] employee has breached the trust [and confidence] of [the] employer" is sufficient for managerial employees. A: YES. Lamadrid's position as a Senior Purser is imbued with trust and confidence. Employees can be terminated only for just or authorized cause. Article 297 [282] of the Labor Code enumerates the just causes for dismissal, among others, fraud, or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative. A formal hearing only becomes mandatory in termination cases when so required under company rules or when the employee requests for it. "To be heard" does not mean verbal argumentation alone because one may be heard just as effectively through written explanations, submissions or pleadings. In this case, respondent complied with all the requirements of procedural due process in terminating petitioner's employment, it furnished a show cause memo stating the specific grounds for dismissal and required him to answer the charges by submitting a written explanation. (Yolando Bravo v. Urios College Now Father Saturnino Urios University, G.R. No. 198066, 07 June 2017) Lamadrid's infraction was clearly a case of misconduct considering that it is a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. It evidently eroded Cathay's trust and confidence in her. However, while the weight of evidence points to Lamadrid's infraction of company policy, it should also be considered that this is Lamadrid's first infraction in her 17 years of service in the airline which involved a mere bottle of water. Concededly, the company laid down the penalties for violation of its policies; however, the evaluation of an employee's infraction should be dealt with fairness and reason. Simply put, all surrounding circumstances must be considered, and the penalty must be commensurate to the violation committed by an employee. Termination of the services of an employee should be the employer's last resort especially when other disciplinary actions may be imposed, considering the employee's long years of service in the company, devoting time, effort, and invaluable service in line with the employer's goals and mission, as in Lamadrid's case. Q: Salvacion A. Lamadrid was a cabin crew of Cathay Pacific, serving the airlines for about 17 years. On May 19, 2007, Donald Lal (Lal), Airport Services Officer of Cathay in Sydney Airport, received a report from Customer Officer Mary Greiss (Mary) that some crew members of Cathay flight CX 139, including Lamadrid, were caught in possession of goods after alighting from the aircraft. Mary handed to Lal a plastic bag containing a 1.5 liter Evian water bottle and a pile of magazines confiscated from Lamadrid as well as the photocopy of the latter's passport. Cathay Pacific asked Lamadrid to explain. Lamadrid denied the allegations against her. She claimed that the Hello magazine which was confiscated from her was not Cathay's property. She clarified that she brought and declared the bottle of Evian water as her own. She denied having committed serious misconduct, and demanded that the items taken from her be preserved following a fair and transparent investigation. Cathay then informed Lamadrid of the termination of her services effective immediately for committing serious misconduct by removing company property without authorization. According to Cathay, it could no longer repose its trust and confidence on petitioner considering the seriousness of her UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES During Lamadrid's span of employment, she did not commit any infraction or was ever sanctioned except in the incident subject of the present controversy. To impose a penalty as grave as dismissal for a first offense and considering the value of the property allegedly taken would be too harsh under the circumstances. Therefore, Lamadrid was illegally dismissed from service. (Lamadrid v. Cathay Pacific Airways Limited, G.R. No. 200658, 23 June 2021) 274 Labor Law and Social Legislation 4. COMMISSION OF A CRIME OR OFFENSE 5. ANALOGOUS CAUSES This refers to an offense committed by the Ee against the person of his Er or any immediate member of his family or his duly authorized representative and thus, conviction of a crime involving moral turpitude is not analogous thereto as the element of relation to his work or to his Er is lacking. For an act to be included in analogous cases of just causes of termination, it must be due to the voluntary and/or willful act or omission of the Ee. (Nadura v. Benguet Consolidated, G.R. No. L-17780, 24 Aug. 1962) Requisites 1. Requisites 1. There must be an act or omission punishable/prohibited by law; and 2. The act or omission was committed by the employee against the person of the employer, any immediate member of his/her family, or his/her duly authorized representative. (Sec. 5.2 [f], D.O. No. 147-15) - 2. There must be an act or omission like those specified just causes; and The act or omission was voluntary and/or willful on the part of the employees. (Sec. 5.2 [g], D.O. No. 147-15) E.g.: 1. Violation of company rules and regulations; 2. Immorality, Drunkenness or Fighting inside the premise; 3. Gross inefficiency; 4. Illegally diverting Er’s products; 5. Failure to heed an order not to join an illegal picket; 6. Violation of safety rules and code of discipline; 7. Theft of company property; 8. Theft of property owned by co-employee; 9. Failure to attain work quota; 10. Attitude problem. (Chan, 2019) An Er’s family shall refer to the spouse, ascendants, descendants or legitimate, natural, or adopted brothers or sisters of the ER or his relative by affinity in the same degrees, and those by consanguinity within the fourth civil degree. (Starlite Plastic Industrial Corp v. NLRC, G.R. No. 78491 March 16, 1989 To fall within the ambit of “analogous cases” the act or omission must have an element like those found in the specific Just cause enumerated under Art. 297. (International Rice Research Institute v. NLRC, G.R. No. 97239, 12 May 1993) NOTE: A criminal case need not be filed. Commission of acts constituting a crime itself is sufficient. (National Labor Union, Inc. v. Standard Vacuum Oil Company. G.R. No. L-48170, 10 Oct. 1941) Conviction not a Condition Sine Qua Non Qualification under D.O. 147-15 The conviction of an employee in a criminal case is not indispensable to warrant his dismissal by his employer. (Starlite Plastic Industrial Corporation v. NLRC. G.R. No. 78491, 16 Mar. 1989) D.O. No. 147-15 amends the IRR of Book IV. The last sentence in Sec. 5.2 (g) states, “No act or omission shall be considered as analogous cause unless expressly specified in the company rules and regulations or policies.” Ratio: The quantum of evidence needed is merely substantial evidence to terminate an employee under these grounds. NOTE: However, nowhere does the Labor Code require analogous acts or omissions to be “expressly specified in company rules and regulations or policies.” Moreover, the requirement appears unreasonable, if not impossible. To demand 275 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment Totality of Infractions Doctrine an express specification of all analogous cases is to demand anticipation of all things similar. But these cannot all be preconceived or predefined. (Azucena, 2016) The totality of infractions or the number of violations committed during the period of employment shall be considered in determining the penalty to be imposed upon an erring employee. The offenses committed by an employee should not be taken singly and separately. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct and ability separate and independent of each other. While it may be true that an employee was penalized for his previous infractions, this does not and should not mean that his employment record would be wiped clean of his infractions. After all, the record of an employee is a relevant consideration in determining the penalty that should be meted out since an employee's past misconduct and present behavior must be taken together in determining the proper imposable penalty. (Cebu People’s Multi-Purpose Cooperative v. Carbonilla, G.R. No. 212070, 27 Jan. 2016) Past offenses Previous offenses may be so used as a valid justification for dismissal from work ONLY if the infractions are related to the subsequent offense upon which the basis the termination of employment is decreed. (Stellar Industrial Service Inc. v. NLRC, G.R. No. 117418. 24 Jan. 1996) Doctrine of Incompatibility Where the Ee has done something that is contrary or incompatible with the faithful performance of his duties, his Er has a just cause for terminating his employment. (Manila Chauffeur’s League v. Bachrach Motor Co., G.R. No. L-47071, 29 June 1940) Doctrine of Commensurate Proportionality Rule Penalty/ Q: Mapili works as a bus conductor for Philippine Rabbit Bus Lines, Inc. While on duty en route from Manila to Pangasinan, a PRBLI field inspector caught Mapili extending a free ride to a co-employee’s wife. Noting that this was already the third time that Mapili committed the said violation, the company terminated his employment. Is Mapili illegally dismissed? In this regard, it is a hornbook doctrine that infractions committed by an employee should merit only the corresponding penalty demanded by the circumstance. The penalty must be commensurate with the act, conduct or omission imputed to the employee and must be imposed in connection with the disciplinary authority of the employer. (Sagales v. Rustans Commercial Corporation, G.R. No. 166554, 27 Nov. 2008) A: NO. It is apparent that the bus conductor is aware that the infraction he committed constituted a grave offense, but he persisted in committing the same out of gratitude to the passenger. Hence, there was a deliberate intent on the part of the petitioner to commit the violation. An employee’s propensity to commit repetitious infractions evinces wrongful intent, making him undeserving of the compassion accorded by law to labor; thus, dismissal of said employee would be justified. (Jerry Mapili v. Philippine Rabbit Bus Lines, Inc., G.R. No. 172506, 27 July 2011) Factors that can be considered: 1. 2. 3. 4. 5. 6. 7. 8. Length of service Gravity of the offense Nature of the position Nature of the business First offense rule Totality of infractions Principle of charity, understanding Principle of equity compassion UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES and Q: Neren is employed as head of the Front Desk Department in La Luz Beach Resort by GRRI. Sometime in 2013, Neren was found guilty of violating company policies, i.e., abuse of 276 Labor Law and Social Legislation misconduct and present behavior must be taken together in determining the proper imposable penalty. In this case, there had been several violations from Neren. It is also worth mentioning that GRRI had already previously warned Neren that the penalty for her next infraction would be elevated to dismissal. Thus, the dismissal of petitioner, based on the principle of totality of infractions, is justified. (Villanueva v. Ganco Resort and Recreation, Inc., G.R. No. 227175, 08 Jan. 2020, J. Caguioa) authority, when she rejected walk-in guests without management approval, and threat to person in authority, when she threatened the manager, with physical harm. She was meted the penalty of suspension subject to the agreement that any further violation which would warrant suspension would be elevated to immediate dismissal. GRRI implemented a reorganization and transferred five of its employees, including Neren, to another department without diminution in rank and benefits. However, Neren repeatedly refused to sign the Notice to Transfer and remained at the reception area. She was preventively suspended for her refusal to sign the Notice of Transfer. Guidelines to Termination Determine the Validity Of Validity of termination per se is determined by compliance with two-notice rule, hearing (opportunity to be heard), and the presence of a just or authorized cause. After her suspension, she failed to report back to work for 4 days without notice of leave. When she returned, she was terminated on the ground the ground of gross and habitual neglect. The LA and NLRC held that while the totality of infractions may justify an employee's dismissal, past infractions for which an employee has already been penalized, as in this case, can no longer be cited as bases for the present offense and cannot be collectively taken to justify an employee's termination. Are the LA and NLRC correct? b. AUTHORIZED CAUSES Authorized causes are initiated by the employer’s exercise of management prerogative, who shall be liable to pay separation pay as mandated by law. It does not usually require delinquency or culpability on the part of the employee. Authorized causes of termination by the Er: 1. 2. 3. 4. A: NO. While there may be no basis to dismiss her on the ground of gross and habitual neglect, petitioner is still guilty of having committed a violation. It is here that totality of infractions may be considered to determine the imposable sanction for her current infraction. The totality of infractions or the number of violations committed during the period of employment shall be considered in determining the penalty to be imposed upon an erring employee. The offenses committed by petitioner should not be taken singly and separately. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct and ability separate and independent of each other. After all, the record of an employee is a relevant consideration in determining the penalty that should be meted out since an employee's past 5. Installation of labor-saving devices Redundancy Retrenchment Closing or cessation of operation of the establishment or undertaking Disease 1. INSTALLATION OF LABOR-SAVING DEVICES (AUTOMATION) Automation is a management prerogative of replacing manpower with machine power in order to effect more economy and greater efficiency in method of production. 277 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment 2. 3. Requisites for a Valid Automation 1. 2. 3. 4. Written notice to the employee and to the DOLE at least one (1) month before the intended date of termination; Payment of separation pay of at least one (1) month for every year of service; Good faith in the discharge of employees; and, Reasonable criteria to be used in implementing automation. 4. Decline in volume of business; Closure of a particular product line of an economic activity previously engaged by the employer; and Phasing out of service activity priorly undertaken by the business. (Chan, 2019) Requisites of Redundancy 1. Robotics is the switch from ‘men’ employment to ‘mechanical’ employment. 2. The purpose for such installation must be valid such as: to save on cost, enhance efficiency, and other justifiable economic reasons. (Chan, 2019) 3. 4. Reduction of the number of workers in a company’s factory made necessary by the introduction of machinery in the manufacture of its products is justified. There can be no question as to the right of the manufacturer to use new labor-saving devices with a view to affect more economy and efficiency in its method of production. (Sheet Metal Workers’ Union v. CIR. G.R. No. L-2028; 28 Apr. 1949) 5. There must be superfluous positions or services of employees; The positions or services are in excess of what is reasonably demanded by the actual requirements of the enterprise to operate in an economical and efficient manner; There must be good faith in abolishing redundant positions; There must be fair and reasonable criteria in selecting the employees to be terminated; and There must be an adequate proof of redundancy such as but not limited to the new staffing patter, feasibility studies/ proposal, on the viability of the newly created positions, job description and the approval by the management of the restructuring. Procedure 2. REDUNDANCY 1. It is the superfluity in the performance of a particular work. It exists where the services of an Ee are in excess of what is reasonably demanded by the actual requirements of the enterprise. 2. Redundancy in an Er’s personnel does not necessarily or even ordinarily refer to duplication of work. The characterization of services as no longer necessary or sustainable and therefore properly terminable, was an exercise of business judgment on the part of the Er. The Er has no legal obligation to keep in its payroll more Ees that are necessary for the operation of its business. (Wiltshire File Co., Inc. v. NLRC, G.R. No. 82249, 07 Feb. 1991) 3. 4. Q: Matiere SAS hired Acosta as Technical Assistant. Under the Employment Agreement Acosta was tasked to: (1) Prepare reports regarding Woodfields Consultants, Inc. (WCI) consultants; (2) Be the intermediary between NOTE: A position is redundant when it is superfluous. Superfluity is the outcome of some factors: 1. Over-hiring of workers; UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Written notice served on both the Ees and the DOLE at least one (1) month prior to separation from work; Payment of separation pay equivalent to at least one (1) month pay or at least one (1) month pay for every year of service, whichever is higher; Good faith in abolishing redundant position; and Fair and reasonable criteria in ascertaining what positions are to be declared redundant: a. Less preferred status, e.g., temporary Ee b. Efficiency c. Seniority (DAP v. Court of Appeals, G.R. No. 165811, 14 Dec. 2005) 278 Labor Law and Social Legislation the third and fourth requisites are wanting. To establish good faith, the company must provide substantial proof that the services of the employees are in excess of what is required of the company, and that fair and reasonable criteria were used to determine the redundant positions. Here, Matiere SAS' only basis for declaring Acosta's position redundant was that his function, which was to monitor the delivery of supplies, became unnecessary upon completion of the shipments. the operators in WCI and the management; (3) Attend coordination meetings; (4) Evaluate billings; (5) Follow the SIT and prepare reports; and (7) Site visits. Later, Matiere SAS sent a letter to Acosta informing him that his employment contract will end on July 31, 2013 due to the cessation of the company’s delivery operations and the diminution of activities and that it cannot find any reinstatement at the office. He also received a calculation of his separation pay. On June 26, 2013, Matiere SAS informed DOLE that it would have to terminate five (5) of its workers which includes Acosta. Matiere SAS also filed an Establishment Employment Report, citing redundancy and the completion of delivery of supplies as its reasons for dismissing its employees. However, upon scrutiny, the Employment Agreement itself contradicts Matiere SAS' allegation. Under Acosta's job description listed in his tasks as a technical assistant, there was no mention of monitoring shipments. If his work pertains mainly to the delivery of supplies, it should have been specifically stated in his job description. There was no basis for respondents to consider his position irrelevant when the shipments had been completed. Acosta filed a complaint to NLRC for illegal dismissal alleging that the declaration of redundancy of his position was not based on fair and reasonable criteria pointing out that he, the most senior engineer, was dismissed while the other engineers remained. Was Acosta validly dismissed on the ground of redundancy? Matiere SAS also failed to show that they used fair and reasonable criteria in determining what positions should be declared redundant. Although Acosta was among the five (5) employees dismissed, he cannot be similarly situated with the other employees since his duty is not limited to the monitoring of deliveries. Accordingly, this Court declares petitioner to have been illegally dismissed. (Manuel Acosta v. Matiere SAS and Philippe Gouvary, G.R. No. 232870, 03 June 2019) A: NO. Redundancy is recognized as one (1) of the authorized causes for dismissing an employee under the Labor Code as provided under Art. 298. For the implementation of a redundancy program to be valid, the employer must comply with the following requisites: (1) written notice served on both the employees and the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. Redundancy in Bad Faith The employee was terminated on the ground of redundancy. But it was found out that the employer had been hiring new employees while it was firing the old ones, negating the claim of redundancy. (General Milling Corp., v. V.L. Viajar, G.R. No. 181738, 30 Jan. 2013) Q: Pantoja was assigned at SCA Corporation’s Paper Mill No. 4, the section that manufactures the company’s industrial paper products. In a Notice of Transfer, SCA informed Pantoja of its reorganization plan and offered him a position at Paper Mill No. 5 under the same terms and conditions of employment in anticipation of the Matiere SAS complied with the first and second requisites; notifying both Acosta and DOLE at least a month prior planned redundancy and providing Acosta computation of his separation pay. However, 279 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment consequences for the livelihood of the Ee is or otherwise laid-off. (Poquiz, 2018) eventual closure and permanent shutdown of PM No. 4 due to financial difficulties brought about by the low volume of sales and orders. However, Pantoja rejected the offer of transfer. A notice of termination of employment was sent to Pantoja as his position was declared redundant by the closure of PM No. 4. SCA informed the DOLE of its reorganization and partial closure. Petitioner filed a complaint for illegal dismissal assailing his termination as without any valid cause. Was the petitioner illegally dismissed? NOTE: The kind of losses contemplated under the Labor Code is actual or anticipated/impending losses. There is NO prohibition for the ER to embark on retrenchment program if he could perceive that its economy will go down the drain. (Poquiz, 2018) Proof of actual losses or possible imminent losses is the most singular distinctive requisite of retrenchment, which the installation of labor-saving device and redundancy do not have. (Chan, 2019) A: NO. Exercising its management prerogative and sound business judgment, SCA decided to cut down on operational costs by shutting down one of its paper mills. The abolishment of PM No. 4 was a business judgment arrived at in the face of the low demand for the production of industrial paper at the time. Despite an apparent reason to implement a retrenchment program as a cost-cutting measure, SCA, however, did not out rightly dismiss the workers affected by the closure of PM No. 4 but gave them an option to be transferred to posts of equal rank and pay. SCA did not proceed directly to retrench. This is an indication of good faith on SCA’s part as it exhausted other possible measures other than retrenchment. (Dannie Pantoja v. SCA Hygiene Products Corporation, G.R. No. 163554, 23 Apr. 2010) Preventive Retrenchment is Allowed “To prevent losses” justifies retrenchment. Such phrase means that retrenchment or termination of the services of some employees is authorized to be undertaken by the employer sometime before the losses anticipated are sustained or realized. It is not the intention of the lawmaker to compel the employer to stay his hand and keep all his employees until sometime after losses shall have been materialized. (Lopez Sugar Corporation v. Federation of Free Workers, et al., G.R. Nos. 75700-01 Aug. 1990) Standards of Preventive Retrenchment NOTE: The losses which the company may suffer or is suffering may be proved by financial statements audited by independent auditor. (Asian Alcohol Corporation v. NLRC, G.R. No. 131108, 25 Mar. 1999) 1. The losses expected should be substantial and not merely de minimis in extent; The substantial loss apprehended must be reasonably imminent; 3. RETRENCHMENT 2. It is the reduction of personnel usually due to poor financial returns as to cut down on costs of operations in terms of salaries and wages to prevent bankruptcy of the company. (Poquiz, 2018) It must be reasonably necessary and likely to effectively prevent the expected losses; and, 3. Alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proven by sufficient and convincing evidence. (Lopez Sugar Corporation v. Federation of Free Workers, et al., G.R. Nos. 75700-01 Aug. 1990) Cutting of expenses includes the reduction of personnel; it is a management prerogative, a means to protect and preserve the Er’s viability and ensure his survival. To be an authorized cause it must be effected in good faith and for the retrenchment, which is after all a drastic recourse with serious UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 280 Labor Law and Social Legislation Employees Organization v. NLRC, G.R. No. 106256, 28 Dec. 1994) Causes of Retrenchment 1. 2. 3. 4. Lack of Work Business Recession Fire Conservatorship LIFO Rule Mandatory GR: In cases of installation of labor-saving devices, redundancy and retrenchment, the LIFO rule shall apply. Requisites of a Valid Retrenchment 1. 2. 3. 4. 5. 6. XPN: When an employee volunteers to be separated from employment. (DOLE D.O. No. 147-15, Series of 2015) Written notice served on both the Ee and the DOLE at least one (1) month prior to the intended date of retrenchment; Payment of separation pay equivalent to at least one month pay or at least one-half (1/2) month pay for every year of service, whichever is higher; Good faith in effecting retrenchment; Proof of expected or actual losses; To show that the employer first instituted cost reduction measures in other measures in other areas of production before undertaking retrenchment as a last resort; and The Er used fair and reasonable criteria in ascertaining who would be retained among the Ees, such as status, efficiency, seniority, physical fitness, age, and financial hardship of certain workers. (FASAP v. PAL, G.R. No. 178083, 02 Oct. 2009) Criteria In Retrenched Selecting Employees To Q: Due to mounting losses, the former owners of Asian Alcohol Corporation sold its stake in the company to Prior Holdings. Upon taking control of the company, Prior Holdings, to prevent losses, implemented a reorganization plan and other cost-saving measures including the retrenchment of 117 Ees some of which are members of the union and the majority held by non-union members. Some retrenched workers filed a complaint for illegal dismissal alleging that the retrenchment was a subterfuge for union busting activities. Was the retrenchment made by Asian Alcohol valid and justified? A: YES. Even though the bulk of the losses were suffered under the old management and continued only under the new management, ultimately the new management of Prior Holdings will absorb such losses. The law gives the new management every right to undertake measures to save the company from bankruptcy. (Asian Alcohol Corp. v. NLRC, G.R. No. 131108, 25 Mar. 1999) Be There must be fair and reasonable criteria to be used in selecting Ees to be dismissed such as: 1. 2. 3. Less preferred status; Efficiency rating; Seniority (Phil. Tuberculosis Society, Inc. v. National Labor Union, G.R. No. 115414, 25 Aug. 1998) Retrenchment vs Redundancy RETRENCHMENT Involves losses, closures, or cessation of operations of establishment or undertaking due to serious business losses or financial reverses. “Last In First Out” (L-I-F-O) Rule It applies to termination of employment in the same line of work. What is contemplated in the LIFO rule is that when there are two or more Ees occupying the same position in the company affected by the retrenchment program, the last one employed will necessarily be the first one to go. (Maya Farms 281 REDUNDANCY Does not involve losses or the closing or cessation of operations of the establishment. UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment 2. In preventive retrenchment, retrenchment may be undertaken by the employer before losses are sustained. 3. Separation pay equivalent to at least onehalf (½) month pay for every year of service; and, Cessation of business is bona fide in character. 2. Total Closure due to economic reverses or losses Evidence to Prove Losses Requirements: 1. Written notice to the EE and to the DOLE at least one (1) month before the intended date of termination. 2. Cessation of business is due to serious economic reverses or losses. Alleged losses if already realized and the expected imminent losses must be proved by sufficient and convincing evidence. Evidence presented in NLRC Proceedings must have modicum of admissibility. Financial Statements audited by independent external auditors, and for GOCCs, financial statements audited by the Commission on Audit. (Chan, 2019) Requisites 4. CLOSURE OF BUSINESS b. a. It must be done in good faith and not for the purpose of circumventing pertinent labor laws. c. d. e. A change of business ownership does not create an obligation on the part of the new owner to absorb the employees of the previous owner, unless expressly assumed. Labor contracts being in personam, are generally not enforceable against a transferee. (Fernando v. Angat Labor Union, G.R. No. L-17896, 30 May 1962) Test for the validity of closure or cessation of establishment or undertaking To be a valid ground for termination the following must be present: Closure contemplated is a unilateral and voluntary act on the part of the Er to close the business establishment. 1. Two (2) Kinds of Closure: 1. 2. 3. Partial Closure – although grounded on economic losses, partial closure is a form of retrenchment. There must be a decision to close or cease operation of the enterprise by the management; The decision was made in good faith; and, There is no other option available to the employer except to close or cease operations. (Sec. 5.4 .(d), D.O. No. 147, Series of 2015) Payment of separation pay in case of closure Requirements: 1. Written notice to the EE and to the DOLE at least one (1) month before the intended date of termination; UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Written notice served on both the Ees and the DOLE at least one (1) month prior to the intended date of closure; Payment of separation pay equivalent to at least one month pay or at least one-half (1/2) month pay for every year of service, whichever is higher, except when closure is due to serious business losses; Good faith; No circumvention of the law; and, No other option available to the Er. Payment of separation pay is required only where closure is neither due to serious business losses nor due to an act of Government. (North Davao Mining 282 Labor Law and Social Legislation operations. Art. 298 of the LC governs the grant of separation benefits "in case of closures or cessation of operation" of business establishments "not due to serious business losses or financial reverses." Where, the closure then is due to serious business losses, the LC does not impose any obligation upon the Er to pay separation benefits. (Galaxie Steel Workers Union v. NLRC, G.R. No. 165757, 17 Oct. 2006) Corp v. NLRC, G.R. No. 112546, 13 Mar. 1996, and NFL v. NLRC, G.R. No. 127718, 02 Mar. 2000) Basis for computation: latest salary rate, unless reduced by the employer to circumvent the law, in which case, it shall be based on the rate before its deduction. (Sec. 10, Book IV, Rule I, IRR) There is no obligation to pay separation pay 1. 2. When the closure of the business is due to serious business loss; and Obligation of a Transferee to absorb the Ees of the Old Corporation Where closure of business is by compulsion of law because closure of business is not attributed to Er’s will. (e.g., the land where the building is situated was declared covered by the Comprehensive Agrarian Reform Law) GR: There is no law requiring a bona fide purchaser of assets of an on-going concern to absorb in its employ the Ee’s of the transferor. XPNs: 1. When the transaction between the parties is colored or clothed with bad faith. (Sundowner Dev’t Corp. v. Drilon, G.R. No. 82341, 06 Dec. 1989) Q: Galaxie Steel Corp. decided to close down because of serious business loses. It filed a written notice with the DOLE informing its intended closure and the termination of employment. It posted the notice of closure on the corporate bulletin board. Does the written notice posted by Galaxie on the bulletin board sufficiently comply with the notice requirement under Art. 298 of the LC? b. Are Galaxie Ees entitled to separation pay? 2. Where the transferee was found to be merely an alter ego of the different merging firms. (Filipinas Port Services, Inc. v. NLRC, G.R. No. 97237, 16 Aug. 1991) 3. Where the transferee voluntarily agrees to do so. (Marina Port Services, Inc. v. Iniego, G.R. No. 77853, 22 Jan. 1990) a. A: a. NO. In order to meet the purpose, service of the written notice must be made individually upon each Ee of the company. Merger of Corporations The merger of a corporation does not operate to dismiss the employees of the corporation absorbed by the surviving corporation. This is in keeping with the nature and effects of a merger as provided under law and the constitutional policy protecting the rights of labor. The employment of the absorbed employees subsists. Necessarily, these absorbed employees are not entitled to separation pay. (The Philippine Geothermal, Inc. Employees Union v. Unocal Philippines, Inc. [now known as Chevron Geothermal Philippines Holdings, Inc.] G.R. No. 190187, 28 Sept. 2016) However, the Supreme Court held that where the dismissal is for an authorized cause, noncompliance with statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. Still, the Er should indemnify the Ee, in the form of nominal damages, for the violation of his right to statutory due process. (Galaxie Steel Workers Union v. NLRC, G.R. No. 165757, 17 Oct. 2006) b. NO. Galaxie had been experiencing serious financial losses at the time it closed business 283 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment employees. (Dutch Movers Inc., et al. v. Lequin, et al., G.R. No. 210032, 25 Apr. 2017) Piercing the Veil of Corporate Fiction Q: The Dutch Movers, Inc., (DMI), informed their employees that it would cease its hauling operation for no reason and it did not file any notice of business closure before the DOLE. Their employees filed an illegal dismissal case against DMI. Thus, employees prayed that officers named in DMI’s Article of Incorporation be impleaded and be held solidarily liable with DMI in paying the judgment awards. Q: Crisologo was employed by petitioner NEC System Integrated Construction Phils., Inc. (NESIC) as Manager of Communication Facilities. A cost-cutting measure was implemented, specifically terminating all project and contractual employees and withheld some of the employees’ benefits. Notwithstanding with the cost cutting measures NESIC still incurred financial losses an announced retrenchment which causes respondent’s dismissal. He however voluntarily sign quitclaim and receipt of separation pay. Upon learning that NESIC employed other person to fill the vacancy in the company respondent filed a case for illegal dismissal. Will the case prosper? However, spouses Smith, officers named in the AOI, merely lent their names to spouses LEE, alleged owner, to assist them in incorporating DMI and after such undertaking; spouses SMITH transferred their rights in DMI in favor of spouses LEE. Now, spouses LEE contends that DMI had a separate and distinct personality from the officers comprising it. Hence, they cannot be held personally liable for the judgment awards. Is the contention of spouses LEE tenable? A: NO. Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. A: NO. As a general rule, a corporation has a separate and distinct personality from its stockholders, and from other corporations it may be connected with. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. (NEC System Integrated Construction Phils., Inc. v. Crisologo, G.R. No. 201535, 05 Oct. 2015) However, such personality may be disregarded, or the veil of corporate fiction may be pierced attaching personal liability against responsible person if the corporation’s personality, is used to defeat public convenience, justify wrong, protect fraud or defend crime, or is used as a device to defeat the labor laws. Here, petitioners should be held personally liable for having controlled DMI and actively participated in its management, and for having used it to evade legal obligations to respondents. While it is true that one’s control does not by itself result in the disregard of corporate fiction; however, considering the irregularity in the incorporation of DMI, then there is sufficient basis to hold that such corporation was used for an illegal purpose, including evasion of legal duties to its UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 284 Labor Law and Social Legislation Closure vs. Retrenchment 5. DISEASE CLOSURE RETRENCHMENT It is the reversal of fortune of the Er whereby there is a complete cessation of business operations to prevent further financial drain upon an Er who cannot pay anymore his Ees since business has already stopped. Is the reduction of personnel for the purpose of cutting down on costs of operations in terms of salaries and wages resorted to by an Er because of losses in operation of a business occasioned by lack of work and considerable reduction in the volume of business. One of the prerogatives of management is the decision to close the entire establishment or to close or abolish a department or section thereof for economic reasons, such as to minimize expenses and reduce capitalization. Does not obligate the Er for the payment of separation package if there is closure of business due to serious losses. Disease as a Ground for Dismissal When the Ee suffers from a disease, and: 1. 2. His continued employment is prohibited by law or prejudicial to his health or to the health of his co-Ees; and (Sec. 8, Book VI, Rule I, IRR) With a certification by competent public health authority that the disease is incurable within six (6) months despite due medication and treatment. (Solis v. NLRC, G.R. No. 116175, 28 Oct. 1996) NOTE: The requirement for a medical certification cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the Er of the gravity or extent of the Ee’s illness and thus defeat the public policy on the protection of labor. (Manly Express v. Payong, G.R. No. 167462, 25 Oct. 2005) In the case of retrenchment, however, for the closure of a business or a department due to serious business losses to be regarded as an authorized cause for terminating Ees, it must be proven that the losses incurred are substantial and actual or reasonably imminent; that the same increased through a period of time; and that the condition of the company is not likely to improve in the near future. Procedure in terminating an Ee’s employment on the ground of disease 1. LC provides for the payment of separation package in case of retrenchment to prevent losses. The Er shall not terminate his employment unless: a. There is a certification by a competent public health authority; and, b. That the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. NOTE: In terminating employment on the ground of disease, the employer must comply with the twinnotice rule. In Sy v. CA and Manly Express, Inc. v. Payong, Jr., promulgated in 2003 and 2005, respectively, the Court finally pronounced the rule that the employer must furnish the employee two written notices in terminations due to disease, namely: 285 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment a. b. Entitlement to reinstatement The notice to apprise the employee of the ground for which his dismissal is sought; and The notice informing the employee of his dismissal, to be issued after the employee has been given reasonable opportunity to answer and to be heard on his defense. (Sy v. CA and Manly Express, Inc. v. Payong, Jr., G.R. No. 167462, 25 Oct. 2005) An Ee suffering from a disease is entitled to a reinstatement, provided he presents a certification by a competent public health authority that he is fit to return to work. (Cebu Royal Plant v. Deputy Minister, G.R. No. L-58639, 12 Aug. 1987) Medical Certificate as mandatory requirement These rulings reinforce the State policy of protecting the workers from being terminated without cause and without affording them the opportunity to explain their side of the controversy. (Deoferio v. Intel Technology, G.R. No. 202996, 18 June 2014) 2. The requirements of a medical certificate are mandatory. Only where there is a prior certification from a competent public authority that the disease afflicting the Ee sought to be dismissed is of such nature or at such stage that it cannot be cured within six (6) months even with proper medical treatment that the latter could be validly terminated from his job. (Tan v. NLRC, G.R. No. 116807, 14 Apr. 1997) If the disease or ailment can be cured within the period, the Er shall not terminate the Ee’s employment but shall ask the Ee to take a leave. The Er shall reinstate such Ee to his former position immediately upon the restoration of his normal health. (Sec. 8, Book VI, Rule I, IRR) Q: Anna Ferrer has been working as a bookkeeper at Great Foods, Inc., which operates a chain of high-end restaurants throughout the country, since 1970 when it was still a small eatery at Binondo. In the early part of the year 2003, Anna, who was already 50 years old, reported for work after a week-long vacation in her province. It was the height of the SARS scare, and management learned that the first confirmed SARS death case in the Phils, a “balikbayan” nurse from Canada, is a townmate of Anna. HIV-positive Status and AIDS, not a Ground for Termination Discrimination in any form from pre-employment to post-employment, including hiring, promotion, or assignment, based on the actual, perceived or suspected HIV status of an individual is prohibited. Termination from work on the sole basis of actual, perceived, or suspected HIV status is deemed unlawful. (Sec. 35, R.A. No. 8504) Immediately, a memorandum was issued by management terminating the services of Anna on the ground that she is a probable carrier of SARS virus and that her continued employment is prejudicial to the health of her co-Ees. Is the action taken by the Er justified? (2004 BAR) Disability, not a Ground for Termination GR: Dismissing or terminating the services of a disabled employee by reason of his disability is not a valid ground. A: The Er’s act of terminating the employment of Anna is not justified. There is no showing that said Ee is sick with SARS, or that she associated or had contact with the deceased nurse. They are merely town mates. Furthermore, there is no certification by a competent public health authority that the disease is of such a nature or such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. (IRR, Book VI, XPN: 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. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 286 Labor Law and Social Legislation to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. (King of Kings Transport Inc. v. Mamac, G.R. No. 166208, 29 June 2007) Rule 1, Sec. 8) Other authorized causes 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Total and permanent disability of Ee Valid application of union security clause Expiration of period in term of employment Completion of project in project employment Failure in probation Relocation of business to a distant place Defiance of return-to work-order Commission of Illegal acts in strike Violation of contractual agreement Retirement b. 2. PROCEDURAL DUE PROCESS 2. Hearing (opportunity to be heard) – The worker may answer the allegations against him in the notice of dismissal within a reasonable period from receipt of the notice of dismissal with the ample opportunity to be heard. 3. Judgement/Decision to Dismiss – It should be in writing and should clearly state all the reasons for dismissal. a. TWO-NOTICE RULE The Two-Notice Rule requires that: 1. There must be a notice stating the ground for termination and requiring the employee to explain his side; and There must be a notice for the termination itself. 2. Under the Perez Doctrine, the two-notice-and-ahearing rule was not imposed because hearing may now be dispensed. The Supreme Court held that what is important is that the parties are given the opportunity to be heard unless they request in writing for a hearing. What is required is that the complainant is given the opportunity to be heard. (Perez v. Philippine Telegram and Telephone Company, G.R. 152048, 07 Apr. 2009) Procedural Requirements of Dismissal for Just Causes 1. Notice (Two-notice rule) – the employer is required to furnish an employee who is to be dismissed with two (2) written notices before such termination: a. Post-notice – The notice informing the employee of the employer’s decision to dismiss him which notice must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge, and ample opportunity to be heard and defend himself. Pre-notice – the notice to apprise the employee of the particular acts or omissions for which dismissal is sought and is considered as the proper charge; Where the employer had a valid reason to dismiss the employee but failed to comply with the procedural due process requirement, the dismissal may be upheld but the employer will be penalized to pay an indemnity to the employee. (Wenphil Corp. v. NLRC, G.R. No. 80587, 08 Feb. 1989) NOTE: The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity The above-cited doctrine was reinstated in the case of Agabon v. NLRC. In cases involving dismissals for cause but without observance of the twin requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for 287 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment NOTE: It is not necessary for the affiants to appear and testify and be cross-examined by the counsel for the adverse party. It is sufficient that the documents submitted by the parties have a bearing on the issue at hand and support the positions taken by them. (C.F. Sharp & Co., Inc. v. Zialcita, G.R. No. 157619, 17 July 2006) just cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed in Wenphil. (Agabon v. NLRC, G.R. No. 158693, 17 Nov. 2004) NOTE: The burden of proving that the termination was for a valid or authorized cause shall rest on the Er. (Art. 292(b), LC) The essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of. (PLDT v. Bolso, G.R. No. 159701, 17 Aug. 2007) Indemnity in the Form of Nominal Damages An employer is liable to pay indemnity in the form of nominal damages to an employee who has been dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of due process. The burden of proof in termination cases The violation of the petitioners' right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, considering the relevant circumstances. (Agabon v. NLRC, G.R. No. 158693, 17 Nov. 2004) The burden of proof rest upon the Er to show that the dismissal of the Ee is for a just cause, and failure to do so would necessarily mean that the dismissal is not justified, consonant with the constitutional guarantee of security of tenure. Due process refers to the process to be followed; burden of proof refers to the amount of proof to be adduced. In money claims, the burden of proof as to the amount to be paid the Ees rests upon the Er since he is in custody of documents that would be able to prove the amount due, such as the payroll. Q: The illegal dismissal case was referred to the LA. Is a formal hearing or trial required to satisfy the requirement of due process? A: NO. Trial-type hearings are not required in labor cases, and these may be decided on verified position papers, with supporting documents and their affidavits. The holding of a formal hearing or trial is discretionary with the labor arbiter and is something that the parties cannot demand as a matter of right. It is entirely within his authority to decide a labor case before him, based on the position papers and supporting documents of the parties, without a trial or formal hearing. Degree of proof required In illegal dismissal cases, the Er is burdened to prove just cause for terminating the employment of its Ee with clear and convincing evidence to give flesh and blood to the guaranty of security of tenure granted by the Constitution to Ees under the LC. (Duty Free Phils. Services, Inc. v. Tria, G.R. No. 174809, 27 June 2012) The requirements of due process are satisfied when the parties are given the opportunity to submit position papers wherein, they are supposed to attach all the documents that would prove their claim in case it be decided that no hearing should be conducted or was necessary. (Shoppes Manila, Inc. v. NLRC, G.R. No. 147125, 14 Jan. 2004) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Guidelines in determining whether the penalty imposed on Ee is proper 1. 2. 3. 4. 288 Gravity of the offense Position occupied by the Ee Degree of damage to the Er Previous infractions of the same offense Labor Law and Social Legislation Length of service (ALU-TUCP v. NLRC, G.R. No. 120450, 10 Feb. 1999); (PAL v. PALEA, G.R. No. L-24626, 28 June 1974) The Er, however, should be held liable for noncompliance with the procedural requirements of due process in the form of damages. Q: Felizardo was dismissed from Republic Flour Mills-Selecta Ice Cream Corporation for dishonesty and theft of company property for bringing out a pair of boots, 1 piece aluminum container and 15 pieces of hamburger patties. Is the penalty of dismissal commensurate with the offense committed? Q: Integrated Pharma, engaged the services of Rowena as "Clinician," tasked with the duty of promoting and selling Integrated Pharma's products. 5. Rowena received a memorandum from her immediate supervisor stating the charges against her relative to her failure to remit her collections and to return the CareSens POP demonstration unit to the office, at a specified time, habitual tardiness, and her act of deliberately misdeclaring or overstating her actual travelling expense. In the same memorandum, she was required to submit a written explanation within 24 hours. A: There is no question that the Er has the inherent right to discipline its Ees which includes the right to dismiss. However, this right is subject to the police power of the State. As such, the Court finds that the penalty imposed upon Felizardo was not commensurate with the offense committed considering the value of the articles he pilfered and the fact that he had no previous derogatory record during his two (2) years of employment in the company. Rowena, however, refused to accept said memorandum. Subsequently, Rowena received through registered mail another memorandum, but already denominated as Termination of Employment. Rowena thus filed a complaint for illegal dismissal. Is the dismissal valid despite Rowena not being accorded due process? Moreover, Felizardo was not a managerial or confidential Ee in whom greater trust is reposed by management and from whom greater fidelity to duty is correspondingly expected. (ALU-TUCP v. NLRC, G.R. No. 120450, 10 Feb. 1999) A: YES. If the dismissal is based on a just cause under Art. 297 of the Labor Code, as in this case, the employer must give the employee two written notices and conduct a hearing. The first written notice is intended to apprise the employee of the particular acts or omissions for which the employer seeks her dismissal; while the second is intended to inform the employee of the employer's decision to terminate him. Hearing is not an indispensable part of due process Sec. 2(d), Rule I of the IRR of Book VI of the LC provides that the so-called standards of due process outlined therein shall be observed “substantially,” not strictly. This is a recognition that while a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due process. (Perez v. PT&T, G.R. No. 152048, 29 Apr. 2009) In the present case, Integrated Pharma presented two first written notices charging Rowena with various offenses. Both notices, however, fell short of the requirements of the law. Integrated Pharma did not afford Rowena ample opportunity to intelligently respond to the accusations hurled against her as she was not given a reasonable period of at least five days to prepare for her defense. Liability for Nominal Damages When Due Process is Not Observed It was held that when dismissal is for just or authorized cause, but due process was not observed, the dismissal should be upheld. (Agabon v. NLRC, G.R. No. 158693, 17 Nov. 2004) Failure to comply strictly with the requirements-of procedural due process for dismissing an employee 289 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment will not render such dismissal ineffectual if it is based on a just or an authorized cause. The employer, however, must be held liable for nominal damages for non-compliance with the requirements of procedural due process. (Santos v. Integrated Pharmaceutical, Inc., G.R. No. 204620, 11 July 2016) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 290 Labor Law and Social Legislation Procedural Due Process under Art. 297-299 of the LC as applied in the Agabon Case Art. 297 Art. 298 Art. 299 The Er must give the Ee a notice specifying the grounds for which dismissal is sought a hearing or an The Er must give the Ee and the DOLE Er may terminate the services opportunity to be heard and after written notices 30 days prior to the of his Ee. hearing or opportunity to be effectivity of his separation. heard, a notice of the decision to dismiss. Worker is an inactive party in the cause for termination. The requirement under Art. 292 (b) of notice and hearing applies only in Art. 297 because the Er is accusing the worker that the latter committed an act or omission constituting a cause for termination of his employment. POSSIBLE SITUATIONS a. b. a. b. a. b. a. b. With Just or Authorized Cause With Due Process Without Just or Authorized Cause With Due Process Without Just or Authorized Cause Without Due Process With Just or Authorized Cause Without Due Process Only notice with DOLEand notice to worker is required. No need for a hearing because due process is found in LC (Art. 298) not in Constitution according to Agabon. There is no hearing requirement in diseases but there is notice requirement to worker, but no notice to DOLE. NOTE: in Art. 292 (b) in relation to Art. 298, if the closure of business will result in a mass layoff and serious labor dispute, the SOLE can enjoin the Er as regards mass termination EFFECT OF TERMINATION LIABILITY OF EMPLOYER NO Liability VALID NOTE: Separation Pay if for Authorized Cause. Reinstatement + Full Backwages INVALID NOTE: If Reinstatement not possible Separation Pay Reinstatement + Full Backwages — INVALID NOTE: If Reinstatement not possible — Separation Pay Liable for noncompliance with procedural requirements VALID NOTE: Separation Pay if for Authorized Cause 291 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment NOTE: The Agabon ruling was modified by JAKA Food Processing v. Pacot, (G.R. No. 151378, 28 Mar. 2005), where it was held that: 1. If based on just cause (Art. 297, LC), but the Er failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the Ee; and 2. If based on authorized causes (Art. 298, LC), but the Er failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by Er’s exercise of his management prerogative. 4. As to the amount of nominal damages awarded: 1. 2. 3. 1. In the determination of the amount of nominal damages which is addressed to the sound discretion of the court, several factors are taken into account: b. The number of employees to be awarded; c. Whether there was a bona fide attempt to comply with the notice requirements as opposed to giving no notice at all. (Industrial Timber Corporation v. Ababon, G.R. No. 164518, 30 March 2006) An employer who terminates an employee for a valid cause but does so through invalid procedure is liable to pay the latter nominal damages. (Abbot Laboratories v. Alcaraz, G.R. No. 192571, 23 July 2013) Written Notice to DOLE 30 days prior to the intended day of termination. 2. Written notice to Ee concerned 30 days prior the intended date of termination. 3. Payment of separation pay – Serious business losses do not excuse the Er from complying with the clearance or report required in Art. 298 of the LC and its IRR before terminating the employment of its workers. In the absence of justifying circumstances, the failure of the Er to observe the procedural requirements under Art. 298 of the LC taints their actuations with bad faith if the lay-off was temporary but then serious business losses prevented the reinstatement of respondents, the Er’s should have complied with the requirements of written notice. When Notice is Not Needed The capacity of the employers to satisfy the awards, taken into account their prevailing financial status as borne by the records; UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES e. Purpose: To enable it to ascertain the veracity of the cause of termination. In Jaka, where the dismissal of the employees was based on an authorized cause under Article 283, but without the required notice under the same rule, we fixed the amount at P50,000.00. The authorized cause invoked, whether it was a retrenchment or a closure or cessation of operation of the establishment due to serious business losses or financial reverses or otherwise; The employer’s grant of other termination benefits in favor of the employees; and Procedural Requirements of Dismissal for Authorized Causes In Agabon, the nominal damages awarded to the employees for a dismissal based on a just cause without the notice requirement was P30,000.00; a. d. When an employee: 1. Consented to his retrenchment; or, 2. Voluntarily applied for retrenchment. 292 Labor Law and Social Legislation Rules on separation pay with regard to each cause of termination The employee, thereby, acknowledged the existence of a valid cause for termination of his employment. (Santos v. Pepsi Cola, et al., G.R. No. 141947, 05 July 2001) CAUSE OF TERMINATION Separation Pay Separation pay refers to the amount due to the Ee who has been terminated from service for causes authorized by law such as the installation of laborsaving losses or the closing or cessation of operation of the establishment or undertaking. Automation Redundancy Purpose for providing separation pay Separation pay is intended to provide the Ee with the wherewithal during the period he is looking for another employment. (Gabuay v. Oversea Paper Supply, G.R. No. 148837, 13 Aug. 2004) Retrenchment Closures or cessation of operation not due to serious business losses/ financial reverses Instances when Ee is entitled to separation pay 1. When the termination of employment is due to causes authorized by law; (Art. 298, LC) 2. When the severance of employment is caused by a disease, particularly when the Ee is found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health and of his co-Ees; (Art. 299, LC) 3. 4. 5. Disease SEPARATION PAY Equivalent to at least one (1) month pay or at least one (1) month pay for every year of service, whichever is higher Equivalent to at least one (1) month pay or at least one (1) month pay for every year of service, whichever is higher Equivalent to one (1) month pay or at least onehalf (½) month pay for every year or service Equivalent to at least one (1) month pay or at least one (1) month pay for every year of service. (If due to severe financial losses, no separation pay.) Equivalent to at least one (1) month pay or at least one-half (½) month pay for every year of service, whichever is higher NOTE: A fraction of at least six (6) months shall be considered one (1) whole year. When the termination from service has been declared illegal, but his reinstatement to his former position is no longer feasible for some valid reason; (Gabuay v. Oversea Paper Supply, G.R. No. 148837, 13 Aug. 2004) There is no separation pay when the closure is due to an act of the Government. Time of Payment and/or Release of Final Pay In case of pre-termination of employment contract in job-contracting arrangement; or (D.O 18-02, Rules Implementing Art. 106 – 109, LC); and To effectively harmonize the management prerogative of the employer and the right of an employee, the Final Pay shall be released within 30 days from the date of separation or termination of employment, unless there is a more favorable company policy, individual or collective agreement thereto. (D.A. 06-20)) Where separation pay is awarded as a measure of social or compassionate justice. (PLDT v. NLRC, G.R. No. L-80609, 23 Aug. 1988) 293 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment Q: DAP Corp. ceased its operation due to the termination of its distribution agreement with Int’l Distributors Corp. which resulted in its need to cease its business operations and to terminate the employment of its Ees. Marcial et al. filed a complaint for illegal dismissal and for failure to give the Ees written notices regarding the termination of their employment. Issuance of Certificate of Employment The employer shall issue a certificate of employment within three (3) days from the time of the request by the employee. (Ibid.) Enforcement Mechanism Any issue or claim dispute arising our or relating to the payment of final pay, or issuance of certificate of employment, shall be filed before the nearest DOLE Regional/Provincial/Field Office, which has jurisdiction over the workplace, for conciliation and subject to DOLE’s existing enforcement mechanism. (Ibid.) On the other hand, DAP claims that their Ees knew of the termination therefore the written notices were no longer required. Are written notices dispensed with when the Ees have actual knowledge of the redundancy? A: The Ees’ actual knowledge of the termination of a company’s distributorship agreement with another company is not sufficient to replace the formal and written notice required by law. In the written notice, the Ees are informed of the specific date of the termination, at least a month prior to the date of effectivity, to give them sufficient time to make necessary arrangements. Acceptance of Separation Pay is Not a Bar to Question the Illegality of Dismissal A dismissed employee who has accepted his separation pay is not necessarily estopped from assailing the illegality of his dismissal. In fact, he filed the complaint for illegal dismissal with prayer for reinstatement a month after his separation from service — a fact which strongly indicates that he never waived his right to reinstatement. (Solis v. NLRC. G.R. No. 116175, 28 Oct. 1996) In this case, notwithstanding the Ees knowledge of the cancellation of the distributorship agreement, they remained uncertain about the status of their employment when DAP failed to formally inform them about the redundancy. (DAP Corp. v. CA, G.R. No. 165811, 14 Dec. 2005) Purpose of the two notices served to the Ee and the DOLE 1 month prior to termination 1. 2. To give the Ees some time to prepare for the eventual loss of their jobs and their corresponding income, look for other employment and ease the impact of the loss of their jobs; and 3. ILLEGAL DISMISSAL, RELIEFS THEREFROM Remedies of Ee in case of Illegal Dismissal In case where the worker is illegally terminated, his remedies are: To give the DOLE the opportunity to ascertain the veracity of the alleged cause of termination. (Phil. Telegraph & Telephone Corp. v. NLRC, G.R. No. 147002, 15 Aug. 2005) a. NOTE: Notice to both the Ees concerned and the DOLE are mandatory and must be written and given at least one (1) month before the intended date of retrenchment – and the fact that the Ees were already on temporary lay-off at the time notice should have been given to them is not an excuse to forego the one (1) month written notice. (Sebuguero v. NLRC, G.R. No.115394, 27 Sept. 1995) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES b. c. d. e. 294 Reinstatement without loss of seniority rights – Actual reinstatement or payroll reinstatement; Full backwages – Full backwages means no deduction; Separation pay in lieu of reinstatement; Damages, including Attorney’s fees; and 6% legal interest on monetary award. Labor Law and Social Legislation Q: Does the offer to reinstate the illegally dismissed Ee affect the liability of the erring Er? Q: Remoticado was absent for fourteen (14) days without an official leave. He then informs Nielo, HR officer, that he was resigning due to personal reasons. After receiving his final pay, he protested that he was entitled to separation pay computed at two (2) months for his services for two (2) years. Nielo averred that he could not be entitled to separation pay considering that he voluntarily resigned. Remoticado then filed a complaint for illegal dismissal claiming that he was told to stop reporting for work due to a "debt at the canteen" and thereafter was prevented from the company’s premises. Was there an illegal dismissal? A: NO. Sincere or not, the offer of reinstatement could not correct the earlier illegal dismissal of the Ee. The Er incurred liability under the LC from the moment an Ee was illegally dismissed, and the liability did not abate as a result of the Er’s repentance. (Ranara v. NLRC, 14 Aug. 1992) Q: PAL dismissed strike leader Capt. Gaston, as a result of which, the Union resolved to undertake the grounding of all PAL planes and the filing of applications for “protest retirement” of members who had completed 5 years of continuous service, and “protest resignation” for those who had rendered less than 5 years of service in the company. PAL acknowledged receipt of said letters and among the pilots whose “protest resignation or retirement” was accepted by PAL were Enriquez and Ecarma. A: NO. There can be no illegal termination when there was no termination. Before the employer must bear the burden of proving that the dismissal was legal, the employee must first establish by substantial evidence the fact of his dismissal from service. If there is no dismissal, then there can be no question as to the legality or illegality thereof. Petitioner insists on his version of events, that is, that on Dec. 23, 2010, he was told to stop reporting for work on account of his supposed indebtedness at the canteen. This bare insistence, however, is all that petitioner has. He failed to present convincing evidence. (Remoticado v. Typical Construction Trading Corp., and Alignay, G.R. No. 206529, 23 Apr. 2018) Before their readmission, PAL required Enriquez and Ecarma to accept 2 conditions, namely: that they sign conformity to PAL’s letter of acceptance of their retirement and or resignation, and that they submit an application for employment as new Ees without protest or reservation. As a result of this, their seniority rights were lost. Are the pilots entitled to the restoration of their seniority rights? A: NO. An Ee has no inherent right to seniority. He only has such rights as may be based on a contract, statute, or an administrative regulation relative thereto. Seniority rights which are acquired by an Ee through long-time employment are contractual and not constitutional. The discharge of an Ee thereby terminating such rights would not violate the Constitution. Q: On July 1986, Arriola was employed as a correspondent assigned in Olongapo City and Zambales under Pilipino Star Ngayon, Inc. (Pilipino Star). Sometime in November 2002, after his column was removed from publication, Arriola never returned for work. Three years later, Arriola filed an illegal dismissal complaint against Pilipino Star stating that he was “arbitrarily dismissed.” When the pilots tendered their respective retirement or resignation and PAL immediately accepted them, both parties mutually terminated the contractual employment relationship between them thereby curtailing whatever seniority rights and privileges the pilots had earned through the years. (Enriquez v. PAL, et al., G.R. No. L-51382, 29 Dec. 1986) Arguing that he was a regular employee, Arriola contended that his rights to security of tenure and due process were violated. On the other hand, Pilipino Star claims that he was never dismissed, in fact, they tried calling and sending him messages to report for work but to no avail until such time that they discovered that Arriola transferred to a rival newspaper publisher. The 295 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment Labor Arbiter dismissed the case stating that there was no illegal dismissal for Arriola was the one who abandoned his work. Is the Labor Arbiter correct in dismissing the complaint? work, would nevertheless be included in the payroll and entitled to receive salary and other benefits as if she were in fact working. (Azucena, 2016) A: YES. Pilipino Star Ngayon, Inc. did not illegally dismiss Ariolla. The removal of Arriola’s column from Pilipino Star’s newspaper is not tantamount to a termination of his employment as his job is not dependent on the existence of the column. Moreover, a newspaper publisher has the management prerogative to determine what columns to print in its newspaper. Furthermore, it took him three years to file the complaint of illegal dismissal which is a clear intention to sever his employment with Pilipino Star Ngayon, Inc. (Arriola v. Pilipino Star Ngayon, Inc, and/or Belmonte, G.R. No. 175689, 13 Aug. 2014) NOTE: Employer is given the option to reinstate either actually or in payroll. An employer can reinstate an employee in payroll when actual reinstatement is no longer possible in instances wherein: 1. The Er believes that there was a valid cause for dismissal; or 2. Er does not want to see anymore an unwanted face in the company premise because it may demoralize employees. NOTE: An order of reinstatement by the LA is not the same as actual reinstatement of a dismissed or separated Ee, however it is immediately executory even pending appeal. Thus, until the Er continuously fails to implement the reinstatement aspect of the decision of the LA, their obligation to the illegally dismissed Ee, insofar as accrued backwages and other benefits are concerned, continues to accumulate. It is only when the illegally dismissed Ee receives the separation pay (in case of strained relations) that it could be claimed with certainty that the Er-Ee relationship has formally ceased thereby precluding the possibility of reinstatement. (Triad Security & Allied Services, Inc. et al v. Ortega, G.R. No. 160871, 06 Feb. 2006) a. REINSTATEMENT Reinstatement It is the restoration of the Ee to the state from which he has been unjustly removed or separated without loss of seniority rights and other privileges. The person reinstated assumes the position he had occupied prior to his dismissal, and is, ordinarily, entitled only to the last salary in that position. (Azucena, 2016) Reinstatement presupposes that the previous position from which one had been removed still exists, or that there is an unfilled position which is substantially equivalent or of similar nature as the one previously occupied by the employee. Q: Is an illegally dismissed Ee entitled to reinstatement as a matter of right? Forms of reinstatement A: GR: YES. 1. 2. Actual or physical – The Ee should be reinstated to his position which he occupies prior to his illegal dismissal under the same terms and conditions prevailing prior to his dismissal or separation or, if no longer available, to a substantially equivalent position. XPNs: Proceeds from an illegal dismissal wherein reinstatement is ordered but cannot be carried out as in the following cases: 1. 2. Payroll – The Ee is merely reinstated in the payroll. The Ee although not admitted back to UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 296 Reinstatement cannot be effected in view of the long passage of time or because of the realities of the situation; It would be inimical to the Ers’ interest; Labor Law and Social Legislation 3. 4. 5. 6. 7. 8. in the workplace of an unwanted. Ee. (Maranao Hotel v. NLRC, G.R. No. 110027, 16 Nov. 1994) When reinstatement is no longer feasible; When it will not serve the best interest of the parties involved; Company will be prejudiced by reinstatement; When it will not serve a prudent purpose; When there is resultant strained relation (applies to both confidential and managerial Ees only); or When the position has been abolished. (Applies to managerial, supervisory and rank-and-file Ees) Order of Reinstatement An order for reinstatement entitles an Ee to receive his accrued backwages from the moment the reinstatement order was issued up to the date when the same was reversed by a higher court without fear of refunding what he had received. (Pfizer v. Velasco, G.R. No. 177467, 09 Mar. 2011) NOTE: In such cases, it would be more prudent to order payment of separation pay instead of reinstatement. (Quijano v. Mercury Drug Corporation, G.R. No. 126561, 08 July 1998) Q: Is there any violation of the “No work, No pay” in payroll reinstatement? A: Generally, YES. However, since it is the mandate of the law, although it is harsh, there is no violation under the dictum of dura lex sed lex. (Poquiz, 2018) Art. 229 Art. 294 May be availed of as soon as the LA renders a judgment declaring that the dismissal of the Ee is illegal and ordering said reinstatement. It may be availed of even pending appeal Presupposes that the judgment has already become final and executory. Consequently, there is nothing left to be done except the execution thereof. NOTE: An award or order for reinstatement is selfexecutory. It does not require the issuance of a writ of execution. (Pioneer Texturizing Corp. v. NLRC, G.R. No. 118651, 06 Oct. 1997) The option in Art. 229 of the Labor Code is exclusively granted to the Er. The event that gives rise for its exercise is not the reinstatement decree of a LA but the writ for its execution commanding the Er to reinstate the Ee, while the final act which compels the employer to exercise the option is the service upon it of the writ of execution when, instead of admitting the employee back to his work, the employer chooses to reinstate the employee in the payroll only. Reinstatement Pending Appeal A dismissed Ee whose case was favorably decided by the LA is entitled to receive wages pending appeal upon reinstatement, which is immediately executory. Unless there is a restraining order, it is ministerial upon the LA to implement the order of reinstatement and it is mandatory on the Er to comply therewith. This option is based on practical considerations. The Er may insist that the dismissal of the Ee was for a just and valid cause and the latter's presence within its premises is intolerable by any standard; or such presence would be inimical to its interest or would demoralize the co-employees. NOTE: After the LA’s decision is reversed by a higher tribunal, the Ee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the Er. Two-Fold Test Thus, while payroll reinstatement would in fact be unacceptable because it sanctions the payment of salaries to one not rendering service, it may still be the lesser evil compared to the intolerable presence 1. 297 There must be actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment 2. not affect the statutory finality of the NLRC decision. Since the NLRC decision which upheld the dismissal became final, the Er was correct in stopping the payroll reinstatement of the Ee. (Bago v. NLRC, G.R. No. 170001, 04 Apr. 2007) The delay must not be due to the Er’s unjustified act or omission. If the delay is due to the Er’s unjustified refusal, the Er may still be required to pay the salaries notwithstanding the reversal of the LA’s decision. (Garcia v. PAL, G.R. No. 164856, 29 Aug. 2009) Q: What happens if there is an Order of Reinstatement but the position is no longer available? Q: May the Court order the reinstatement of a dismissed employee even if the prayer of the complaint did not include such relief? A: The Ee should be given a substantially equivalent position. If no substantially equivalent position is available, reinstatement should not be ordered because that would in effect compel the Er to do the impossible. In such a situation, the Ee should merely be given a separation pay consisting of one (1) month salary for every year of service. (Grolier Int’l Inc. v. ELA, G.R. No. 83523, 31 Aug. 1989) A: YES. So long as there is a finding that the Ee was illegally dismissed, the court can order the reinstatement of an Ee even if the complaint does not include a prayer for reinstatement, unless of course the Ee has waived his right to reinstatement. By law, an Ee who is unjustly dismissed is entitled to reinstatement among others. The mere fact that the complaint did not pray for reinstatement will not prejudice the Ee, because technicalities of law and procedure are frowned upon in labor proceedings. (Pheschem Industrial Corp. v. Moldez, G.R. No. 116158, 09 May 2005) Q: Eteliano Reyes, Jr. was employed by Asian Terminals, Inc. (ATI) as Supervisor III/Foreman on Board who shall be responsible in ensuring that shift vessel operations are carried in accordance with ATI standards. He first went to Bay 30, but he had to leave the All Purpose Personnel (APP) tasked to finish the lashing operations as he needed to supervise the loading operations at Bay 38. NOTE: Reinstatement ordered by LA is selfexecutory as provided under Art. 229 while the one by the NLRC is not because it awaits the issuance of a writ of execution under Art. 230. (Azucena, 2016) With a twist of fate, an accident occurred at Bay 30 wherein a lashing bar fell on the pier apron hitting Manuel Quiban a vessel security guard. As expected, ATI directed Reyes to explain why he should not be penalized for negligence. In his response, Reyes clarified that while completing the lashing operations at Bay 30, "EC Planner" directed him to transfer to Bay 38 to supervise the commencement of loading operations. Pursuant to said instruction, Reyes left the four (4) APPs to complete lashing operations at Bay 30 and proceeded to Bay 38 where a loading operation was about to start and the crane was already positioned. Q: A complaining Ee obtained a favorable decision in an illegal dismissal case. The LA ordered her immediate reinstatement. The Er opted payroll reinstatement pending appeal. The NLRC ruled that the dismissal was valid. The Er stopped the payroll reinstatement. The Ee elevated the case to the CA, and eventually to the SC. The SC upheld the dismissal. Is the Ee entitled to continued payroll reinstatement after the NLRC decision? A: NO. The Ee is not entitled to continued payroll reinstatement. The decision of the NLRC on appeals from decisions of the LA shall become final and executory after ten (10) calendar days from receipt thereof by the parties. That the CA may take cognizance of and resolve a petition for certiorari for the nullification of the decisions of the NLRC on jurisdictional and due process considerations does UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES In a Notice to Explain with Preventive Suspension, the ATI informed Reyes that his failure to ensure that the safeguards for works on board the vessel were faithfully observed constitutes probable violation under Section 2.2 298 Labor Law and Social Legislation of the CTOP (neglect of work, incompetence, inefficiency, negligence, failure to perform duties and/or responsibilities, or failure to observe standard operating procedures, in any case resulting in injury or death) and may merit the penalty of dismissal. Is Reyes, Jr. illegally dismissed? NOTE: Entitlement to backwages of the illegally dismissed Ee flows from law. Even if he does not ask for it, it may be given. The failure to claim backwages in the complaint for illegal dismissal is a mere procedural lapse which cannot defeat a right granted under substantive law. (St. Michael’s Institute v. Santos, G.R. No. 145280, 04 Dec. 2001) A: NO. Indeed, as pointed out by the CA, ATI failed to present clear, accurate, positive, and convincing evidence that there is just cause to terminate Reyes' employment. First, Reyes merely followed the rules in the performance of his job. In fact, his transfer to Bay 38 was by instructions of the EC Planner. Second, his transfer to Bay 38 was necessary because a quay crane has already been prepositioned and loading operation was about to commence. Q: What is the basis of awarding backwages to an illegally dismissed employee? A: The payment of backwages is generally granted on the ground of equity. It is a form of relief that restores the income that was lost by reason of the unlawful dismissal; the grant thereof is intended to restore the earnings that would have accrued to the dismissed Ee during the period of dismissal until it is determined that the termination of employment is for a just cause. It is not private compensation or damages but is awarded in furtherance and effectuation of the public objective of the LC. Nor is it a redress of a private right but rather in the nature of a command to the Er to make public reparation for dismissing an Ee either due to the former’s unlawful act or bad faith. (Tomas Claudio Memorial College Inc., v. CA, G.R. No. 152568, 16 Feb. 2004) Reinstatement cannot be barred especially when the employee has not indicated an aversion to returning to work or does not occupy a position of trust and confidence or has no say in the operation of the employer's business. Here, aside from the fact that this issue was only raised for the first time, there is also no compelling evidence presented to support the conclusion that the parties' relationship has gone so sour to render reinstatement impracticable. Also, Reyes has not demonstrated unwillingness to be reinstated and the existence of a confidential relationship between him, as a supervisory employee, and ATI, has not been established. For lack of evidence on record, it appears that his position was not a sensitive position as would require complete trust and confidence, and where personal ill will would foreclose his reinstatement. (Asian Terminals, Inc. v. Reyes, Jr., G.R. No. 240507, 28 Apr. 2021) Q: What is the period covered by the payment of backwages? A: The backwages shall, from the time that wages are unlawfully withheld until the time of actual reinstatement or, if reinstatement is no longer feasible, until the finality of judgment awarding backwages, cover the period from the date of dismissal of the Ee up to the date of: 1. Actual reinstatement, or if reinstatement is no longer feasible; 2. Finality of judgment awarding backwages. (Buhain v. CA, G.R. No. 143709, 02 July 2002) b. BACKWAGES Backwages Backwages refers to the relief given to an Ee to compensate him for the lost earnings during the period of his dismissal. It presupposes illegal termination. (Azucena, 2016) The backwages to be awarded should not be diminished or reduced by earnings elsewhere during the period of his illegal dismissal. The reason is that the Ee while litigating the illegality of his dismissal must earn a living to support himself and his family. (Bustamante v. NLRC, G.R. No. 111651, 15 299 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment certiorari under Rule 65 with the CA. In a Decision, the CA affirmed the NLRC but with modification that the backwages should be computed from the date of illegal dismissal until the finality of the decision of the CA, and separation pay computed from the date of employment until finality of the CA Decision. Condis moved for reconsideration but this was denied in the CA's Resolution. March 1996; Buenviaje v. CA, G.R. No. 147806, 12 Nov. 2002) Full backwages The LC points to "full backwages" as meaning exactly that, i.e., without deducting from backwages, the earnings derived elsewhere by the concerned Ee during the period of his illegal dismissal. (Buenviaje v. CA, G.R. No. 147806, 12 Nov. 2002) Is Condis liable for the backwages and separation pay of Rogel computed until the finality of the decision awarding separation pay? NOTE: The award of backwages is computed based on a 30-day month. Period covered by full backwages A: YES. Condis does not question the propriety of the award of separation pay in lieu of reinstatement by the NLRC during the Execution Proceedings. The finality of the decision cuts-off the employment relationship. Therefore, backwages should be counted until the finality of the NLRC decision awarding separation pay. When there is a supervening event that renders reinstatement impossible, backwages is computed from the time of dismissal until the finality of the decision ordering separation pay. The award of separation pay in lieu of reinstatement, which Condis does not question, was made after the finality of the Decision in the Illegal Dismissal Case. Condis cannot therefore evade its liability to Rogel for backwages and separation pay computed until the finality of this Decision which affirms the order granting separation pay. From the date of illegal dismissal to the employee’s date of actual reinstatement. Q: The judgment on the Illegal Dismissal Case became final and executory on 30 Mar. 2012. In said case, the Court affirmed the CA decision in favor of respondent therein Rogel Zaragoza which had affirmed the NLRC's and LA's findings that Condis had illegally dismissed Rogel, and ordered his reinstatement and payment of his backwages. Rogel moved for the issuance of an alias writ of execution against Condis for his reinstatement, and the payment of full backwages, accrued salaries and allowances as of 3 Dec. 2012, less what was already released to him by the LA pending appeal. Condis opposed the motion and argued that its execution of the Asset Purchase Agreement with Emperador Distillers, Inc. was a supervening event that made it impossible to reinstate Rogel to his former position. The LA ruled in favor of Rogel and directed Condis to pay backwages/reinstatement salaries, including allowances, from December 3, 2007, the date of Rogel's illegal dismissal, up to August 3, 2013, the date of the LA resolution. Further, Condis invokes Olympia Housing, however, for it to apply, the employer must prove the closure of its business in full and complete compliance with all statutory requirements prior to the date of the finality of the award of backwages and separation pay. Here, Condis failed to show that in 2007 it had closed its business and that it had complied with all the statutory requirements for the closure. All it alleged was the execution of the Asset Purchase Agreement and the termination of the Service Agreement with EDI — but this does not mean, nor was it argued to mean, that Condis had closed its business. (Consolidated Distillers of the Far East, Inc. v. Zaragoza, G.R. No. 229302, 20 June 2018, J. Caguioa) The NLRC ruled that the reinstatement was indeed rendered impossible because of the Asset Purchase Agreement, but that backwages should be computed only until the finality of the Court's Resolution in the Illegal Dismissal Case on 30 Mar 2012. Rogel filed a petition for UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES 300 Labor Law and Social Legislation tendered because of the parties' failure to agree on the figures. Q: ALECO was suffering from financial distress with its current payables of Php3.1 billion. Thus, efforts were undertaken to rehabilitate the struggling electric cooperative. ALECO was pushing for Private Sector Participation as its appropriate rehabilitation strategy, while ALEO was insisting on the Cooperative-to-Cooperative (C2C) rehabilitation scheme. ALEO sought preventive mediation before the NCMB for unfair labor practices. The parties, however, failed to settle their differences which constrained ALEO to file a notice of strike. It conducted a strike vote. Subsequently, in a referendum to determine the appropriate rehabilitation measure to be undertaken by ALECO, the PSP was eventually chosen. Still, ALEO went on strike. Nonetheless, with the PSP adopted, Notices of Retrenchment were served on all ALECO's employees. As the labor dispute continued without any of the parties yielding, ALECO formally requested the Secretary of Labor to assume jurisdiction over the controversy. The Secretary of Labor assumed jurisdiction and correspondingly issued a Return-to-Work Order of even date. The Secretary of Labor upheld the validity of the retrenchment of ALECO's employees and ordered ALECO to pay them back wages and other benefits computed from 10 Jan. 2014 until the finality of the said Resolution. In other words, to date, the affected employees are still not paid their wages and benefits for the period they were supposed to be reinstated. In consideration of the foregoing, the award of back wages is proper, not as a penalty for noncompliance with the Assumption Order as argued by ALEO, but as satisfaction of ALECO's obligation towards the employees covered by the Assumption Order. On said date, the obligation of the employer to readmit the striking employees and/or pay them their respective salaries and benefits arose. However, there is no proof that the affected employees were in fact paid by ALECO their corresponding salaries and benefits. Because of ALECO's failure to perform this obligation, and to give the affected employees what has become due to them as of January 10, 2014, back wages should be awarded. In illegal dismissal cases, back wages refer to the employee's supposed earnings had he/she not been illegally dismissed. As applied in this case, back wages correspond to the amount ought to have been received by the affected employees if only they had been reinstated following the Assumption Order. (Albay Electronic Cooperative, Inc. v. Aleco Labor Employees Organization, G.R. No. 241437, 14 Sept. 2020, J. Caguioa) Was the Secretary of Labor correct in awarding back wages? c. SEPARATION PAY, DOCTRINE OF STRAINED RELATIONS A: YES. ALECO claims that it complied with the Assumption Order when it admitted the striking employees to its premises on 14 Jan. 2014. It alleges that no less that the RD of DOLE Region V witnessed the re-admission of these employees, and that this is further evidenced by the attendance sheets signed by the returning employees and the photographs taken on 14 Jan. 2014. However, as pointed out by ALEO, and admitted by ALECO, no actual work was given to the returning employees. Instead, they were merely "confined in a room for over three weeks." Although ALECO claimed that it tendered the salaries of the employees who reported back for work, ALECO also admitted that the employees refused to receive the amounts it supposedly Separation Pay in lieu of Reinstatement GR: Separation pay is not a usual consequence of illegal dismissal because if there is a finding of illegal dismissal, the employee shall be entitled to reinstatement and backwages. XPNs: Separation pay takes the place reinstatement in the following instances: 1. 301 of When Ee’s previous position or its substantial equivalent position is not anymore existing, i.e., occupied by another UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment 2. employee or the business is already closed; and When there is an application of the doctrine of strained relations. more than just the illegal dismissal case that has been filed by the employee; and NOTE: There must be independent evidence showing that the relations have been strained. Instances when Separation Pay must be Paid 3. 1. 2. 3. 4. Termination due to authorized causes; Separation pay in lieu of reinstatement; By way of financial assistance; and In case of termination, when it is mandated to be paid under a CBA or explicit company policy. Q: Does the strained relations rule always bar reinstatement in all cases? A: NO. The rule should be applied on a case-to-case basis, based on each case’s peculiar conditions and not universally. Otherwise, reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. That is human nature. (Anscor Transport v. NLRC, G.R. No. 85894, 28 Sept. 1990) Doctrine of Strained Relations It is when the Er can no longer trust the Ee and vice versa or there were imputations of bad faith to each other; reinstatement could not effectively serve as a remedy. This rule applies only to positions which require trust and confidence. (Globe Mackay v. NLRC, G.R. No. 82511, 03 Mar. 1992) Besides, no strained relations should arise from a valid and legal act of asserting one's right; otherwise, an Ee who shall assert his right could be easily separated from the service, by merely paying his separation pay on the pretext that his relationship with his Er had already become strained. (Globe Mackay Cable & Wire Corp. v. NLRC, supra.) NOTE: Under the circumstances where the employment relationship has become so strained to preclude a harmonious working relationship and that all hopes at reconciliation are naught after reinstatement, it would be more beneficial to accord the Ee backwages and separation pay. Q: Delfin and Luisito are licensed drivers of public utility jeepneys owned by Moises Capili. When Capili assumed ownership and operation of the jeepneys, the drivers were required to sign individual contracts of lease of the jeepneys. The drivers gathered the impression that signing the contract was a condition precedent before they could continue driving. The drivers stopped plying their assigned routes and a week later filed with the LA a complaint for illegal dismissal praying not for reinstatement but for separation pay. Are the respondents entitled to separation pay? The following must be proven before the Doctrine of Strained Relations can be applied 1. The Ee concerned occupies a position where he enjoys the trust and confidence of his Er; and 2. That it is likely if the Ee is reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the Ee concerned. (Ibid.) The position must involve a position of trust and confidence. Requisites of the Doctrine of Strained Relations 1. It must be alleged and proved by the employer; 2. The evidence that should sustain the application of strained relations should be UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES A: NO. When the drivers voluntarily chose not to return to work anymore, they must be considered as having resigned from their employment. The common denominator of those instances where payment of separation pay is warranted is that the 302 Labor Law and Social Legislation were no longer in its employ at the time it closed its Balintawak plant. Likewise, it claims exemption from awarding separation pay to the second batch, because the closure of its plant was due to "serious business losses," as defined in Art. 298 of the LC. employee was dismissed by the Er. (Capili v. NLRC, G.R. 117378, 26 Mar. 1997) Q: Romeo has been an Ee of AAA Company from 1993 to 1999 but was unable to report to work due to some illness. Romeo claimed that he was offered by AAA of Php 15,000 separation pay, on the contrary AAA claimed Romeo was never terminated and even told the latter that Romeo could go back to work anytime but Romeo clearly manifested that he was no longer interested in returning to work and instead asked for separation pay. Is Romeo terminated or considered resigned? Is Romeo entitled to separation pay? Both labor agencies held that the two groups were entitled to separation pay equivalent to ½month salary for every year of service, provided that the employee worked at least 1 month in a given year. Is the separation pay granted to an illegally dismissed Ee the same as that provided under Art. 298 of the LC in case of retrenchment to prevent losses? A: NO. The separation pay awarded to Ees due to illegal dismissal is different from the amount of separation pay provided for in Art. 298 of the LC. Proceeding from the above, Phil. Tobacco is liable for illegal dismissal and should be responsible for the reinstatement of the first group and the payment of their backwages. However, since reinstatement is no longer possible as Phil. Tobacco have already closed its Balintawak plant, members of the said group should instead be awarded normal separation pay (in lieu of reinstatement) equivalent to at least one (1) month pay, or one month pay for every year of service, whichever is higher. A: NO. Romeo is considered resigned. Romeo’s various pleadings support his intention of not returning to work on the ground that his health is failing. Moreover, Romeo did not ask for reinstatement and rejected AAA Company’s offer for him to return to work. This is tantamount to resignation. Resignation is defined as the voluntary act of an Ee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and he has no other choice but to disassociate himself from his employment. Romeo is not entitled to separation pay. There is no provision in the LC which grants separation pay to voluntarily resigning Ees. In fact, the rule is that an Ee who voluntarily resigns from employment is not entitled to separation pay, except when it is stipulated in the employment contract or CBA, or it is sanctioned by established Er practice or policy. Hence, Romeo is not entitled to separation pay in the absence of a Labor provision and a stipulation in his employment contract or CBA. (Villaruel v. Yeo Han Guan, G.R. No. 169191, 01 June 2011) It must be stressed that the separation pay being awarded to the first group is due to illegal dismissal; hence, it is different from the amount of separation pay provided for in Art. 298 in case of retrenchment to prevent losses or in case of closure or cessation of the Er’s business, in either of which the separation pay is equivalent to at least one (1) month or onehalf (1/2) month pay for every year of service, whichever is higher. (Phil. Tobacco Flue-Curing & Redrying Corp. v. NLRC, G.R. No. 127395, 10 Dec. 1998) Q: Two groups of seasonal workers claimed separation benefits after the closure of Phil. Tobacco processing plant in Balintawak and the transfer of its tobacco operations to Candon, Ilocos Sur. Phil. Tobacco refused to grant separation pay to the workers belonging to the first batch, because they had not been given work during the preceding year and, hence, Q: Does separation pay apply in cases of legal dismissal? A: YES. Separation pay is warranted when the cause for termination is not attributable to the employee's fault, such as those provided in Arts. 298 and 299 of the Labor Code, as well as in cases of illegal 303 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment dismissal where reinstatement is no longer feasible. On the other hand, an employee dismissed for any of the just causes enumerated under Art. 297 of the same Code, being causes attributable to the employee's fault, is not, as a general rule, entitled to separation pay. As an exception, case law allows the grant of separation pay or financial assistance to a legally-dismissed employee as a measure of social justice or on grounds of equity. (Claudia’s Kitchen, Inc. v. Tanguin, G.R. No. 221096, June 28, 2017) The Court, in the case of Deoferio v. Intel Technology Phil. (G.R. No. 202996, 18 June 2014), added the following to the factors mentioned above: d. DAMAGES NOTE: Actual damages cannot be awarded because that is already represented by the backwages payable to the employee. That is the actual damages he suffered. Moral damages may be awarded to compensate one for diverse injuries such as mental anguish, besmirched reputation, wounded feelings, and social humiliation. It is however not enough that such injuries have arisen; it is essential that they have sprung from a wrongful act or omission of the defendant which was the proximate cause thereof e.g., breach of contract. (Suario v. BPI, G.R. No. 50459, 25 Apr. 1989) A: If there is unlawful withholding of wages and benefits, then there is going to be an award of ten percent (10%) of the monetary award by way of Attorney’s Fees. Since the employee was illegally dismissed, and by virtue of the illegal dismissal, he was deprived of wages and benefits that he should have gotten if he was not illegally dismissed. The award of ten percent (10%) becomes automatic in illegal dismissal cases. The authorized cause invoked; The number of employees to be awarded; The capacity of the employers to satisfy the awards, taken into account their prevailing financial status as borne by the records; The employer’s grant of other termination benefits in favor of the employees; and Whether there was a bona fide attempt to comply with the notice requirements as opposed to giving no notice at all. (Industrial Timber Corp. et al. v. Ababan, et al., G.R. No. 164518, March 30, 2006) UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES The flexibility and leeway that the employer allowed the sick employee in performing his duties while attending to his medical needs. Q: What is the condition before attorney’s fees can be awarded? In the determination of the amount of nominal damages which is addressed to the sound discretion of the court, several factors are taken into account: 5. 2. In employment termination cases, attorney’s fees are not recoverable where there is no sufficient showing of bad faith on the part of private respondent (employer) there must always be a factual basis for the award of attorney’s fee. (Pepsi Cola Products, et al. v. E.V. Santos, G.R. No. 165968, 14 Apr. 2008) Exemplary damages may be awarded only if the dismissal was shown to have been effected in a wanton, oppressive or malevolent manner. (Cocoland Development Corp. v. NLRC and Mago, G.R. No. 98458, 17 July 1996) 4. The employer’s financial, medical, and/or moral assistance to the sick employee; and e. ATTORNEY’S FEES NOTE: There should be proof of bad faith on the part of the employer for moral damages to be awarded. 1. 2. 3. 1. Therefore, there is no need to prove bad faith in so far as attorney’s fees is concerned. NOTE: Attorney’s fees is dependent on the question of whether or not there is unlawful withholding of wages and benefits. And that is, precisely because, there is a finding of illegal dismissal. (Art. 111, LC) It 304 Labor Law and Social Legislation corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation. (Sarona v. NLRC, G.R. No. 185280, 18 Jan. 2012) is not dependent on bad faith, but is automatic when there is a finding of illegal dismissal. f. LIABILITIES OF CORPORATE OFFICERS It is basic that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related. (Asionics Phil., et al. v. NLRC, G.R. No. 124950, 19 May 1998) NOTE: For the piercing-the-veil doctrine to apply, it is of no consequence if the entity is single proprietorship. It is the act of hiding behind the personalities of juridical entities that the equitable piercing doctrine was formulated to address and prevent. (Ibid.) The mere fact that the officer is part of the family corporation does not mean that all its acts are imputed to him directly and personally, in the absence of a showing that he acted without or in excess of his authority or was motivated by personal ill-will against the employee. (Sweet Lines, Inc. v. NLRC, G.R. No. 79975, 16 Mar. 1989) In labor cases, particularly, corporate directors and officers are solidarily liable with the corporation for the termination of employment of corporate employees done with malice or in bad faith. (Uichico, et al. v. NLRC, et al., G.R. No. 121434, 02 June 1997) g. BURDEN OF PROOF GR: Officers of a corporation are not personally liable for their official acts unless it is shown that they have exceeded their authority. In constructive dismissal cases, it is the employee who bears the burden of proof since it is the employee who is alleging that he is being placed under circumstances that is unbearable to him. It is incumbent upon the employee to prove those circumstances that proves that there is constructive dismissal. XPN: Where the incorporators and directors belong to a single family, the corporation and its members can be considered as one in order to avoid its being used as an instrument to commit injustice, or to further an end subversive of justice. The shield of corporate fiction shall be pierced when it is deliberately and maliciously designed to evade financial obligations to employees. (Pabalan v. NLRC, G.R. No. 898799, 20 Apr. 1990) Officers, then, become personally liable. In actual illegal dismissal cases, the employer has the burden to really prove that there is just or authorized cause or the employee is validly terminated. NOTE: In actual illegal dismissal cases, there is really termination done by the employer. Therefore, the burden of proof is on the employer to show that the termination is legal and valid. Doctrine of Piercing the Corporate Veil Applies Only in Three Basic Areas: 1. Defeat public convenience as when the corporate fiction is used as a vehicle for the evasion of an existing obligation; 2. Fraud cases or when the corporate entity is used to justify a wrong, protect fraud, or defend a crime; or 3. Alter ego cases, where a corporation is merely a farce since it is a mere alter ego or business conduit of a person, or where the In constructive dismissal, it is often referred to as dismissal in disguise because there is really no actual dismissal. It is the employee who has no other choice due to circumstances that push her to relinquish her employment. Therefore, the burden of proof is not with the employer but with the employee. The basic rule is that whoever alleges something must prove it. 305 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment In this case, factual circumstances necessitate the application of the doctrine of piercing the veil of corporate fiction as there is evidence establishing the scheme employed by Aciee, Inc. to avoid their legal obligations. It was shown that Aciee, Inc. and Gecher Corp. are using their respective distinct corporate personalities in bad faith to frustrate and render impossible the execution of the judgment award in favor of Marion. Bad faith on the part of the corporations was demonstrated when motor vehicles registered under the name of Aciee, Inc. were suddenly transferred to Gecher Corp. while its appeal remained pending. (Eduardo Gilbert Dinoyo, et al. v. Undaloc Construction Company, Inc., et. al. G.R. No. 249638, 23 June 2021) Indeed, in illegal dismissal cases, the burden of proof is on the employer in proving the validity of dismissal. However, the fact of dismissal, if disputed, must be duly proven by the complainant. The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were burdened to prove their allegation that respondents dismissed them from their employment. It must be stressed that the evidence to prove this fact must be clear, positive, and convincing. The rule that the employer bears the burden of proof in illegal dismissal cases finds no application here because the respondents deny having dismissed the petitioners. (Italkarat 18, Inc. v. Gerasmio, G.R. No. 221411, 28 Sept. 2020) Q: Marion filed a complaint for illegal dismissal against Aciee, Inc. and were awarded a total of P4 million in backwages, money claims, moral and exemplary damages, and attorney's fees. Marion filed a motion to treat Gecher Corporation one and the same with Aciee, Inc. because the said corporations are using their respective distinct corporate personalities in bad faith to frustrate and render impossible the execution of the judgment award in favor of Marion. Aciee, Inc. allegedly transferred the motor vehicles registered under the name of the former, to Gecher Corp while its appeal remained pending. The RTC has observed a pattern adopted by the officers of Aciee, Inc. of creating run-away companies every time their companies are embroiled in labor cases to deliberately circumvent the law, and evade their obligations to their employees. Can the veil of corporate fiction be pierced? C. TERMINATION BY EMPLOYEE Two Types of Resignation 1. 2. 1. RESIGNATION vs. CONSTRUCTIVE DISMISSAL CONSTRUCTIVE DISMISSAL As to Definition It occurs when there is cessation of work It is the voluntary act of because continued an employee who finds employment is himself in a situation rendered impossible, where he believes that unreasonable, or personal reasons unlikely as when there cannot be sacrificed in is a demotion in rank or favor of the exigency of diminution in pay or the service, then he has when a clear no other choice but to discrimination, disassociate himself insensibility, or disdain from his employment. by an Er becomes (Intertrod Maritime, unbearable to the Ee Inc. v. NLRC, G.R. No. leaving the latter with 81087, 19 June 1991) no other option but to quit (The University of RESIGNATION A: YES. In the case of Guillermo v. Uson, the Court stressed that the veil of corporate fiction can be pierced, and responsible corporate directors and officers or even a separate but related corporation, may be impleaded and held answerable solidarily in a labor case, even after final judgment and on execution, so long as it is established that such persons have deliberately used the corporate vehicle to unjustly evade the judgment obligation, or have resorted to fraud, bad faith or malice in doing so. UNIVERSITY OF SANTO TOMAS 2022 GOLDEN NOTES Voluntary Resignation; and Involuntary Resignation or Constructive Dismissal. 306 Labor Law and Social Legislation Immaculate Conception v. NLRC, G.R. No. 181146, 26 Jan. 2011) As to Voluntariness Involuntary or forced Voluntary resignation As to Entitlement to Separation Pay Not entitled to separation pay unless Entitled to either it is a company practice reinstatement or or provided in the CBA. separation pay and (Hanford Philippines backwages Inc. v. Shirley Joseph, G.R. No. 158251, March 31, 2005) As to Burden of Proof Burden of proving Burden of proving voluntariness is on the constructive dismissal employer. is on the employee. Commission of a crime or offense by the employer or his representative against the person of the employee or any of the immediate members of his family; and d. Other causes analogous to any of the foregoing. Resignation is withdrawable even if the employee has called it irrevocable. (Custodio v. Ministry of Labor and Employment, G.R. No. 643174, 19 July 1990) But after it is accepted or approved by the employer, its withdrawal needs the employer’s consent. (Azucena, 2016) With written notice - An employee may terminate without just cause the employeremployee relationship by serving a written notice on the employer at least one (1) month in advance. (Art. 300 [a], LC) Intention to Resign An employee may be deemed to have resigned from his position, and such resignation may be accepted and made effective by the management, although the employee did not mention the word “resign” and/or “resignation.” (Azucena, 2016) Q: ANZ Global Services and Operations Manila, Inc. (respondent) hired John Roger Nino S. Vergara (petitioner) as Risk Manager. On 05 Aug. 2016 petitioner handed his resignation letter dated 05 Aug. 2016 to Line Manager, Kristine Gorospe. Petitioner learned that there would be a restructuring in the company where the displaced workers would receive a lump sum severance payment. Petitioner's position was included in the positions to be affected by the restructuring program. The employer has no control over resignations and so, the notification requirement was devised in order to ensure that no disruption of work would be involved by reason of the resignation. (Intertrod Maritime, Inc. v. NLRC, G.R. No. 81087, supra.) Without written notice – An employee may put an end to the relationship without serving any notice on the employer for any of the following just causes. (Art. 300(b), LC): a. c. Withdrawal of Resignation NOTE: The employer upon whom no such notice was served may hold the employee liable for damages. 2. Inhuman and unbearable treatment accorded the employee by the employer or his representative; NOTE: If resignation is not voluntary, the same can be deemed to be a constructive dismissal. Resignation 1. b. On 01 Sept. 2016, petitioner checked if the Resignation Acceptance Form (RAF) had already been accomplished. He learned that it has not yet been signed by Gorospe. Petitioner sent an email to Roscoe Pineda (Pineda), Head of Risk Serious insult by the employer or his representative on the honor and person of the employee; 307 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Termination of Employment on 05 September 2016 is informative. If the ELA constituted as respondent's acceptance of petitioner's resignation, as respondent insists, then why would Pineda, in his email, suggest to petitioner to talk to Hutton to see if retraction was still possible? This, and all the other circumstances considered, only shows that 05 Sept. 2016, there was still no acceptance on the part of respondent of petitioner's resignation. (G