Labor Law 1 Reviewer 3A Cadiz

ATENEO LAW SCHOOL
3-A
L.T.J.F.
LABOR LAW I
[ATTY. CADIZ]
1st Semester S.Y. 2013-2014
LABOR LAW REVIEWER

I. GENERAL PROVISIONS
Constitutional Provisions
State Policies
Promotion of a just social order and free
the people from poverty, promote full
employment and an improved quality of
life for all
State values the dignity of every human
person and guarantees full respect of
human rights
State recognizes the vital role of the
youth in nation building and shall protect
their well-being
State recognizes the role of women in
nation-building and shall ensure their
equality before the law
State affirms labor as a primary social
economic force and shall protect the
rights of workers
State recognizes the indispensable role of
the private sector, encourages private
enterprise and provides incentives to
needed investments
Bill of Rights
Guarantee of due process and equal
protection of the law
No law shall be passed abridging the
freedom of speech, right to peaceably to
assemble and petition the government for
redress of grievances
Right to information on matters of public
concern
Right to form unions, associations and
societies for purposes not contrary to law
Non-impairment of contracts
Right to a speedy disposition of cases
before all judicial, quasi-judicial and
administrative bodies
No involuntary servitude in any form shall
exist except as a punishment for a crime
whereof the party shall have been duly
convicted
Social Justice
Congress shall prioritize the enactment of
measures that protect and enhance the

right of all people to human dignity,
reduce social, political and economic
inequalities, by diffusing wealth and
political power for the common good.
State shall regulate the acquisition,
ownership, use and disposition of
property and its increments
Commitment to create economic
opportunities based on freedom of
initiative and self-reliance
State shall afford:
o Full protection of labor, local and
overseas, organized and unorganized
o Promote full employment and equality
of employment opportunities for all
Guarantee the rights of workers to:
o self-organization
o collective bargaining and negotiations
o peaceful concerted activities
o security of tenure
o humane working conditions
o living wage
o participate in policy-making decisions
State shall promote:
o shared responsibility between
employers and workers
o preferential use of voluntary modes in
settling disputes and shall enforce
their mutual compliance to foster
industrial peace
Regulation of worker-employer relations
end recognizing:
o right of labor to its just share in the
fruits of production
o right of enterprises to reasonable
returns on investments and growth
Establishment of an agency for disabled
persons for their rehabilitation, selfdevelopment and self-reliance
Protection of working women; taking into
account their maternal functions
Civil Code Provisions

Abuse of Right Doctrine Every person
must, in the exercise of his rights and in
the performance of his duties, act with
justice, give everyone his due and
Sources: Labor and Social Legislation Reviewer, Ateneo Central Bar Operations 2007
Azucena, Cesario, Everyone's Labor Code (2012 ed.). Abad, Antonio, Compendium on Labor Law (2011 ed.).
Azucena, Cesario, Labor Code with Comments and Cases, Vol. 1 (2010 ed.)
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observe honesty and good faith
Relation between capital and labor are
not merely contractual but is impressed
with public interest
Labor contracts must yield to the
common good
In case of doubt, all labor legislation and
contracts shall be construed in favor of
the safety and decent living for the
laborer
II. RECRUITMENT AND PLACEMENT
State Policies (Art. 12 Labor Code)
Promote and maintain a state of full
employment through improved manpower
training
Protect every citizen by securing the best
possible terms and conditions of
employment
Facilitate a free choice of available
employment
Facilitate and regulate the movement of
workers
Regulate the employment of aliens
Strengthen the network of public
employment offices
Insure careful selection of Filipino
workers for overseas employment in
order to protect the name of the
Philippines abroad
RA 8042 Migrant Workers Act
Establishes a higher standard of
protection of migrant workers, their
families and of OFW's in distress
Declares the policy that the State does
not promote overseas employment as a
means to sustain economic growth.
State shall continuously create local
employment opportunities
RA 10022 Amendments to RA 8042
Extended the protection of the law to all
OFW's whether documented/ regular or
undocumented/ irregular
Expanded definition of OFW who is to
be engaged, is engaged or has been
engaged in a remunerated activity in a
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state of which he or she is not a citizen or
on board a vessel navigating the foreign
seas other than a government ship or on
an installation located offshore or on the
high seas
Recruitment and Placement
Any act of:
o canvassing
o enlisting
o contracting
o transporting
o utilizing
o hiring
o procuring workers
Includes:
o referrals
o contact services
o promising or advertising for
employment locally or abroad,
whether for profit or not
Any person or entity which offers or
promises employment for a fee to two or
more persons shall be deemed engaged
in recruitment
The number of persons dealt with is NOT
the determinative factor in considering
whether or not an act constitutes as
recruitment the number of persons
merely laws down a rule of evidence
(presumptions)
Name Hires and Direct Hires
Direct Hiring is when a foreign employer
engages the services of the Filipino
agency directly or without going through
a legitimate employment agency
General Rule: Direct hiring is prohibited
Exception: When done by members of
the diplomatic corps, international
organizations and other employers
allowed by the DOLE
Name Hiring is when an individual worker
is able to secure contracts for overseas
employment on their own efforts without
the assistance of any agency
Name Hiring is not a prohibited practice
thus it is another exception to Art. 18
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(Ban on Direct Hiring), however, their
employment must be processed and
registered with the POEA
POEA and NLRC
Employer-employee relation cases are
under the jurisdiction of the NLRC
POEA jurisdiction:
o Cases which are administrative in
character
o Violations of rules relating to licensing
and registration of recruitment
agencies
o Disciplinary action cases, which are
administrative in character, involving
employers, principals, contracting
partners and OFW's.
POEA Minimum Employment Conditions
1. Guaranteed wages based on (whichever
is highest):
Prescribed minimum wage in host
country
Minimum wage standard set in a
bilateral agreement or international
convention
Minimum wage in the Philippines
2. Free food and accommodation or
offsetting benefit
3. Free transportation to and from work site,
or offsetting benefit
4. Just/authorized causes for termination of
contract
5. Stipulations of the labor contract should
not contradict Philippine law, public policy
and morals
OWWA
Functions: Provide to OFW's:
Social and welfare services
Legal assistance
Insurance coverage
Placement assistance
Remittance services
Repatriation
Repatriation
General Rule: All costs shall be borne by or
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charged to the agency and/or its principal
Exception: If termination is due to the sole fault
of the employee, the principal or agency shall
not be responsible for the repatriation
Automatic repatriation of underage or
minor workers
Responsibility of repatriation falls on the
agency/principal but it may be
undertaken by the OWWA without
prejudice to reimbursement by the
principal/agency concerned
Repatriation bond is abolished
Recruitment Regulations
Travel agencies and sales agencies of
airline companies are prohibited from
engaging in the business of recruitment
and placement of workers, whether for
profit or not
Only Filipino Citizens or juridical entities
at least 75% of voting capital stock is
Filipino-owned shall be allowed in the
recruitment of workers
License or authority is non-transferable.
Any transfer is subject to prior approval
of DOLE
All applicants for license or authority shall
post bonds to ensure compliance with
recruitment procedures
Direct hiring of Filipino workers is
prohibited except through entities
authorized by the DOLE
Exception on the ban on direct hiring:
hiring by diplomatic corps, international
organizations and other employers
allowed by DOLE
Illegal Recruitment
Act of recruitment (under Art. 13(b)),
including the prohibited acts under Art.
34 undertaken by a non-license or nonholder of authority (Labor Code)
RA 8042 expanded the offenders liable
for illegal recruitment. It holds even
licensed persons or holders of authority,
who committed the prohibited acts, liable
for the crime.
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Illegal recruitment is malum prohibita:
intent is not an element
Active and conscious participation of the
accused must be shown for him to be
held liable as a principal
Syndicated Illegal Recruitment:
o If carried out by a group of 3 or more
persons conspiring in carrying out the
offense
o Considered as economic sabotage
Large Scale Illegal Recruitment:
o If committed against 3 or more
persons individually or as a group
o Considered as economic sabotage
Prohibited Acts
a) To charge or accept any amount greater
than the allowable fees prescribed by
Secretary of Labor
b) Publish false information or notice or
document inn relation to recruitment
c) Give any false information, testimony,
document or do any act of
misrepresentation for purposes of
securing a license or authority
d) To induce/ attempt to induce a worker
already employed to quit his employment
in order to offer him another, EXCEPT
when the transfer is designed to liberate
the worker from the oppressive
conditions of his work
e) To influence/ attempt to influence any
person not to employ any worker who
has not applied through his agency
f) Recruitment of workers in jobs harmful to
public health, morality or to the dignity of
the Republic
g) Obstruct inspection by the Secretary of
Labor
h) Failure to file reports in the status of
employment, placement, vacancies or
other matters and information as may be
required by the Secretary of Labor
i) Substitute or alter employment contracts
without the approval of the Secretary of
Labor (but the alteration must be
prejudicial to the employee)
j) To be an officer or member of the Board
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of any travel agency corporation or be
directly or indirectly engaged in the
management of a travel agency
k) To withhold or deny travel documents
from applicant workers for monetary
considerations other than what is
authorized by the Code
l) Failure to actually deploy a contracted
worker without valid reason
m) Failure to reimburse expenses incurred by
worker in connection with his
deployment, in cases where deployment
does not take place without the worker's
fault.
n) To allow a non-Filipino citizen to head or
manage a licensed recruitment agency
Prohibitions A-K from the labor code
Prohibitions L-M from RA 8042
Prohibition N from RA 10022
Prescriptive Periods
Case
Period
Illegal Recruitment
5 years
Economic Sabotage
20 years
Claims arising from employeremployee relationship
3 years
Case Doctrines
Sunace v. NLRC Theory of Imputed Knowledge
Knowledge of the agent is knowledge to
the principal, thus binding to the latter
However, knowledge to the principal is
NOT knowledge to the agent
EDI Staff Builders v. NLRC Presumed Identity
Approach
What law governs the relationship of the
employer and employee local or foreign
laws?
The party invoking the application of a
foreign law has the burden of proving the
same
If foreign law is not pleaded or proved it
is presumed that Philippine law is the
same as the foreign law, thus Philippine
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law is applied
South Eastern Shipping v. Navarra
For benefit claims to prosper, seafarer's
death or injury must occur during the
period of his contract or employment
Burden of proof lies on the party
asserting that the disease/injury occurred
during the course of the employment or it
increased the risk of the injury
Catan v. NLRC
Liability of the principal and agent over
the employee is dependent on the term
of the employment contract and NOT on
the agency contract between the agent
and principal.
Employment contract is not coterminous
with the agency contract
Even if the agency contract is terminated,
the solidary liability over the employee
still subsists since the employment or
recruitment contract has not expired yet.
III. SPECIAL WORKERS
Apprenticeship
Practical training supplemented by
theoretical instruction
Occupations which requires more than 3
months of practical training with
theoretical instruction
Only employers in highly technical
industries may employ apprentices
Maximum apprenticeship period 6
months
Wage not less than 75% of applicable
minimum wage
Apprenticeship program needs prior
approval from DOLE, otherwise
apprentice is deemed a regular employee
Tax deduction:
o Additional deduction of of value of
training expenses
o Program must be approved by DOLE
o Deduction shall not exceed 10% of
direct labor wage
o Apprentice must be paid the minimum
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wage
Q: May apprentices be hired without
compensation?
A: Yes, if the apprenticeship is required by the
school, training program curriculum or as a
requisite for graduation or board examination
subject to the approval of the Secretary of Labor
Learners
Trainees in semi-skilled and other
industrial occupations which are not
apprenticeable
Learners may only be employed when no
experienced workers are available
Maximum period of learnership 3
months
Wages not less than 75% of applicable
minimum wage
Employer is committed to hire the learner
as a regular employee after the training
period
Apprentice
Learner
Highly skilled or
technical industry
Semi-skilled or
industrial occupation
Max term of 6 months
Max term of 3 months
75% of minimum wage 75% of minimum wage

Apprentice program is
approved by DOLE
No prior approval by
DOLE is required
Employer is NOT
committed to hire
apprentice at end of
training period
Employer is committed
to hire learner at end
of training period
Handicapped Workers
Those whose earning capacity is impaired
by age or physical or mental deficiency or
injury
Entitled to be wages not less than 75% of
the legal minimum wage
May be hired as apprentices or learners if
their handicap does not impede the
performance of job operations
May even acquire the status of a regular
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employee
RA 7277 Magna Carta for Disabled Persons
Forms of discrimination on employment
1. Limiting, classifying or segregating a
disabled job applicant in a manner that
adversely affects his work opportunities
2. Using standards and tests that screen out
a disabled person unless such tests are
job-related and consistent with business
necessity
3. Using standards that:
1. have the effect of discrimination on
the basis of disability
2. perpetuate the discrimination of
others who are subject to common
administrative control
4. Providing less compensation and benefits
by reason of his disability
5. Deprivation of training opportunities and
promotion solely on account of disability
6. Transferring a disabled employee to a job
he cannot perform be reason of his
disability
7. Dismissing a disabled employee by
reason of his disability unless the
employer proves that the work is
impaired to the prejudice of the business:
Provided that the employer first sought to
provide reasonable accommodations for
disabled persons
8. Failing to administer employment tests
which accurately reflect the skills of the
disabled applicant
9. Excluding disabled persons from
membership in labor unions
IV. EMPLOYER-EMPLOYEE RELATIONSHIP
Jurisprudential Tests
Economic Reality Test (Francisco v. NLRC)
1. Extent to which the services performed
are an integral part of the employer's
business
2. Extent of worker's investment in
equipment and facilities
3. Nature and degree of employer's control
4. Worker's opportunity for profit and loss
5. Amount of initiative, skill and judgment
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required for the success of the
independent enterprise
6. Permanency and duration of the
relationship of worker and employer
7. Degree of dependency of worker upon
employer for his continued employment
Four-Fold Test (Manila Water v. Pena)
1. Selection and engagement of employees
2. Payment of wages
3. Power of dismissal
4. Power of control over:
as to the result of the work to be
done -AND as to the means to accomplish it
Control Test
Most important test in the 4-fold test
Where employer has a right to control the
conduct of the employee in relation to his
work
Power of control refers to the existence of
such right/power and not the actual
exercise thereof (Republic v. Asiapro)
Existence of right/power of control is
sufficient proof of EER. Such right/power
need not to be actually exercised.
If the worker (TV commentator) had a
free hand on what to say or discuss in his
shows, the TV Network is deemed to have
no control over the performance of the
commentators work (Sonza v. ABS-CBN)
Management Prerogative
Work reassignment as a response to an
unfavorable business climate is a
legitimate exercise of management
prerogative (Pantoja v. SCA Hygiene)
There is no obligation on the part of the
employer to reinstate an employee when:
o The employee himself resigned
o There is a need to protect the
unbiased image of the company
(Ymbong v. ABS-CBN Corp)
The transfer or reassignment of an
employee is a legitimate exercise of
management prerogative provided:
o There is no demotion in rank
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There is no diminution of salary
The action is not motivated by bad
faith, or is not a demotion without
valid cause (Herida v. F&C Pawnshop)
In the absence of proof that the act of
the employer is ill-motivated, it is
presumed that the employer acted in
good faith (San Miguel Corp v. NLRC)
But management prerogative cannot be
used as an excuse to abandon or violate
the CBA (San Miguel Corp v. NLRC)
A job evaluation conducted for the
purpose of evaluating the positions of the
employees, absent the intent to adjust
the salaries, is a valid exercise of
management prerogative (SCA
Employees Association v. SCA Corp)
o
o
V. SPECIAL CLASS OF WORKERS

Women
Maternity Leave Benefits (Art. 131 Labor Code)
Woman employee must have rendered an
aggregate service of at least 6 months for
the last 12 months
At least 2 weeks prior to the expected
date of delivery
Another 4 weeks after normal delivery
or abortion with full pay
Employer may require the production of a
medical certificate
General Rule: If employee falls ill due to
the pregnancy, abortion, delivery or
miscarriage, maternity leave shall be
extended without pay
Exception: If employee has unused
leave credits, such extended leave may
be off-set or charged to it
Maternity leave shall be paid only for the
first 4 deliveries.
Maternity Leave (SSS Law)
Must be a female SSS member
Has paid at least 3 monthly contributions
in the 12-month period immediately
preceding the semester of her childbirth
Shall be paid a daily maternity benefit
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(100% of average daily salary) for:
o 60 days for normal delivery
o 78 days for caesarian delivery, subject
to certain conditions
Maternity leave shall be paid only for the
first 4 deliveries
Legitimacy of the marriage (whether or
not the woman is married) is immaterial
in order to avail of the benefit
NOTE: Since there is compulsory membership of
every employee with the SSS, the provisions of
the SSS Law essentially set aside Arts. 133(a)
and (b) of the Labor Code. However, if the
employee is proved to be a non-member, the
SSS Law cannot and will not apply since
membership is a pre-requisite.
Paternity Leave (R.A. 8187)
7 calendar days with full pay
Must be in relation to the childbirth of his
legitimate wife with whom he is
cohabiting
May be availed of 4 times (entitlement is
for the first 4 deliveries or miscarriage)
Battered Woman Leave - VAWC (R.A. 9262)
Victims of physical, psychological or
sexual violence
Paid leave of up to 10 days
Victim must apply for a Baranggay
Protection Order to avail of the reliefs
provided by R.A. 9262
Victim must apply for a certificate from
the clerk of court that a case under R.A.
9262 is pending in court to avail of the
paid leaves
The Protection Order may extend the
leave period depending on its necessity
Special Leave for Women (R.A. 9710)
Special leave benefit of 2 months with full
pay after a surgery caused by
gynecological disorders
Parental Leave for Solo Parents (R.A. 8972)
An addition to the leave privileges under
existing laws
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LABOR LAW I
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Leave of not more than 7 working days

every year
Granted to any solo parent employee who
has rendered service of at least 1 year
Summary
Leave
Statute
Days
Maternity
SSS Law
60 days (normal)
78 days (caesarian)
Paternity
R.A. 8187
7 calendar days
VAWC
R.A. 9262
10 days (extendable)
Special
R.A. 9710
60 days (2 months)
Solo Parents R.A. 8972
7 days annually
Minors
General Rule: No child below 15 years of age
shall be employed
Exception: When the child works under the sole
responsibility of his parents or guardian AND his
employment doesn't interfere with his schooling.
Any person between 15 and 18 years old
may be employed for such number of
hours and periods of the day as
determined by the Secretary of Labor
No person below 18 years of age may be
employed in an undertaking which is
hazardous or deleterious in nature
Homeworkers
One who performs in or about his home
any processing of goods or materials
which have been furnished directly or
indirectly, by an employer and thereafter
to be returned to the latter
Employer must remit SSS, Philhealth and
ECC Premiums for the homeworker
For homeworker's organization, the
organization shall acquire legal
personality and acquire all the rights and
privileges granted by law upon
registration with the DOLE
In case the homeworker is employed
through a contractor and such contractor
or subcontractor fails to pay the wages of
the homeworker, the employer shall be

jointly and severally liable with the
contractor or subcontractor
Employer of a homeworker any person, natural
or juridical, who for his account, or on behalf of
any person residing outside the country or
through any other person:
1. Delivers any goods or materials to be
processed in or about a home and
thereafter be returned or to be
distributed in accordance with his
directions
2. Sells any goods to be processed in or
about the home and then rebuys them
after such processing
Prohibitions
No homework shall be performed on:
1. Explosives, fireworks and the like
2. Drugs and poisons
3. Other articles, the processing of which
requires exposure to toxic substances
Kasambahay Law
Rights and Privileges
Employer shall provide 3 adequate meals
a day, human sleeping arrangements and
medical assistance
The withholding of the basic necessities
as a form of disciplinary action shall be
prohibited
Right to privacy of domestic workers shall
be guaranteed at all times and shall
extend to all forms of communications
and personal effects
In case of emergencies, access to outside
communication shall be granted even
during work time. Should domestic
worker make use of the employer's
telephone, cost shall be borne by the
domestic worker
Employer shall afford the worker the
opportunity to finish basic education and
may allow access to alternative learning
systems
All communication and information
pertaining to the employer shall not be
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disclosed by the domestic worker during
and after employment
Such privileged information shall be
inadmissible in evidence except when the
suit involves the employer or any
member of the household in a crime
against persons, property, personal
liberty and security and chastity
Pre-Employment
Prior to the execution of the employment
contract, the employer may require:
o Medical certificate
o Barangay and police clearance
o NBI Clearance
o Birth certificate, voter's ID or passport
(for purposes of identifying the
worker's age)
Prohibited practices
o Charging recruitment or agent's fees
to the domestic worker
o Requiring deposits from which
deductions may be made for losses
and damages
o Debt Bondage
Minimum employment age of domestic
workers: 15 years old
Employer shall register all domestic
workers in the Registry of Domestic
Workers in their respective baranggays
Employment
Domestic worker is entitled to an
aggregate daily rest of 8 hours per day
Worker is entitled to at least 24
consecutive hours of rest in a week
Permissible arrangements:
o Offsetting a day of absence with a
particular rest day
o Waiving a rest day for a paid day
o Accumulating rest days not exceeding
5 days
o Other similar arrangements
Work outside the household (for the
benefit of another household) shall entitle
the worker to additional payment of not
less than the minimum wage and any
liability incurred shall be borne by the
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original employer
Domestic worker is entitled to 13th month
pay
If worker leaves without any justifiable
reason, any unpaid salary for a period of
not exceeding 15 days shall be forfeited
Service Incentive Leaves:
o Granted to worker who has rendered
at least 1 year of service
o Paid leaves of 5 days
o Unused leaves shall NOT be
convertible to cash
o Unused leaves shall not be cumulative
or carried over to the succeeding
years
Entitlement to SSS, PhilHealth and
PagIBIG:
o Domestic worker has rendered at
least 1 month of service
o General Rule: Premium payments
shall be shouldered by employer
o Exception: Domestic worker
shoulders the proportionate share in
premium payments if the worker is
receiving a wage of Php5,000 or more
per month
Post-Employment
Termination of Service
o Grounds stated by the law are NOT
exclusive (allows analogous causes)
o If unjustly dismissed, worker is
entitled to compensation already
earned plus wages equivalent to 15
days of work by way of indemnity
o If worker leaves without any
justifiable reason, any unpaid salary
for a period of not exceeding 15 days
shall be forfeited
o Employer may recover from the
domestic worker costs incurred
related to deployment expenses
provided, the service has been
terminated within 6 months from time
of employment
Termination Initiated by Worker
o Verbal or emotional abuse
o Inhumane treatment and physical
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abuse
Commission of a crime against the
domestic worker
o Violation of the employment contract
or the standards set by law
o Any disease prejudicial to the health
of the worker, the employer or
members of the household
o Other analogous causes
Termination Initiated by Employer
o Misconduct or willful disobedience of
the lawful order of the employer in
relation with the worker's duties
o Gross or habitual neglect or
inefficiency in the performance of
duties
o Commission of a crime against the
person of the employer or any
immediate member of the employer's
family (NOTE: the provision does not
cover crimes against the property of
the employer)
o Violation of the employment contract
or the standards set by law
o Any disease prejudicial to the health
of the worker, the employer or
members of the household
o Other analogous causes
Upon severance of the employment
relationship, the employer shall issue a
certificate of employment indicating the
nature, duration of service and work
performance
Employment certification is issued within
5 days from request of domestic worker
o
Settlement of Disputes
All labor-related disputes shall be
elevated to the DOLE Regional Office
DOLE Regional Office shall act both as
conciliator and arbitrator (All conciliation
and mediation efforts shall be exhausted
first before a decision is rendered)
Ordinary crimes committed under the
RPC or special laws shall be filed with the
regular courts
Case Doctrines
LABOR LAW I
[ATTY. CADIZ]
Apex Mining v NLRC A house helper is

employed in the employer's home to minister
exclusively to the personal comfort and
enjoyment of the employer's family.
Barcenas v NLRC Activities done which are
essential and important to the operation and
functions of the temple are not deemed activities
of a household helper
Duncan v Glaxo The policy of prohibiting
employees from having personal relationships
with employees of competitor companies in
order to protect trade secrets is a valid exercise
of management prerogatives
PTT v NLRC A company policy prohibiting the
employment of married women, without valid or
justifiable reasons, is a blatant form of
discrimination
Star Paper Inc v Simbol The failure to prove a
legitimate business concern in prohibiting
employees from marrying their co-employees
cannot prejudice the worker's right against
discrimination based upon stereotypes of
married persons working together in one
company
VI. WORKING CONDITIONS AND REST
PERIODS
Coverage
General Rule: This shall apply to employees in
all establishments whether for profit or not
Exceptions:
Government employees
Managerial employees
Field personnel
Members of the family of the employer
who are dependent on him for support
Domestic helpers
Persons in the personal service of another
Workers paid by results
Definitions
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LABOR LAW I
[ATTY. CADIZ]
1. Overtime Work work performed beyond 8

hours a day
2. Compressed Work Week each workday is
extended beyond the 8-hour limit but the total
weekly work hours does not exceed the
statutory limit (48 Hours)
3. Night Work work done at night for a period
of not less than 7 hours (Art. 154 as amended
by R.A. 10151)
4. Night Worker any employed person whose
work covers the period from 10PM to 6AM
provided the period is no less than 7 consecutive
hours of work (I.R.R. of R.A. 10151)
5. Night Shift Differential work done
between 10PM and 6AM
6. Weekly Rest Day a rest period of not less
than 24 consecutive hours after every 6
consecutive normal work days
7. Holiday Pay A full day's wage paid for each
of the 11 regular holidays set by law
8. Premium Pay Additional compensation
(30% of regular wage) for work performed on
the employee's rest day or holidays
9. Service Incentive Leave Paid leaves for
employees who have rendered service for at
least 1 year. Equivalent to 5 days per year.
10. Service Charges Charges (additional
income) collected by restaurants, hotels and
similar establishments. Art. 96 of the Labor Code
mandates that employees have a share of 85%
on such service charges.
11. 13th Month Pay One twelfth (1/12) of
the basic salary of an employee within a
calendar year
12. Special/ Non-working Holiday
Employee is not required to work but at the
same time, employer is not obliged to give any
premiums or regular pay. Follows the no workno pay rule.
Compensation, Rates and Premiums
Compensation
Premium
Night Shift
Differential
10% of regular wage for each hour

worked between 10PM and 6AM
Overtime Work
25% of regular wage for ordinary

work days
30% for holidays or rest days
Work done on
30% of regular wage
rest day or
holiday*
Work done on a 50% of regular wage (both holiday
holiday AND rest and rest day must fall on the same
day
day)
*Holidays in this chart refer to Special Non-Working
Holidays. Premium for Regular/Legal Holidays is 200%
NOTES:
Premiums are computed on an hourly
rate unless a valid contract states
otherwise
The law entitles the employee to two
possible premiums for work done on a
rest day or holiday 30% for the 1st 8
hours and another 30% for overtime.
Thus if an employee works during a rest
day AND renders overtime, the total
premium is 60%
Emergency Rest Day Work (Art. 92)
In case of actual or impending
emergencies caused by calamities
When there is urgent work to be
performed on machines and equipment to
avoid serious loss or damage
Abnormal pressure of work where the
employer cannot ordinarily be expected
to resort to other measures
To prevent loss or damage to perishable
goods
When nature of work requires continuous
operations and stoppage may result in
irreparable injury or loss
Under any other analogous circumstances
Emergency Overtime Work (Art. 89)
When country is at war or when any
other national emergency is declared
When it is necessary to prevent loss of
life or property or in case of imminent
danger to public safety
When there is urgent work to be
performed on machines and equipment to
avoid serious loss or damage
To prevent loss or damage to perishable
goods
When continuation or completion of the
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work started before the 8th hour is
necessary to prevent serious prejudice to
the business operations
NOTES:
The exceptions are instances when
overtime work becomes obligatory.
However, the employee is still entitled to
the additional compensation (premium
pay) mandated by law.
Emergency overtime work (Art. 89) is
exclusive as to its applicable situations.
Emergency rest day work (Art. 92) is NOT
exclusive since it is applicable to any
analogous circumstances.
Service Incentive Leaves (SIL)
5 days of paid leave each year
Available to employees who have
rendered at least 1 year of service
Unused SIL credits at the end of the year
should be converted into cash (I.R.R.)
The required 1 year period may be
continuous or broken.
For less than 1 year of service, SIL may
not be granted nor pro-rated.
NOTE: Under the Kasambahay Law, the SIL is
NOT convertible to cash.
Holidays and Employees
Regular/Legal Holidays
1. New Year's Day
2. Maundy Thursday
3. Good Friday
4. Eidul Fitr
5. Araw ng Kagitingan (Bataan Day)
6. Labor Day
7. Independence Day
8. National Heroes Day
9. Bonifacio Day
10. Christmas Day
11. Rizal Day
12. Eidul Adha
Special Holidays
1. Ninoy Aquino Day
2. All Saints Day
3. Last Day of the Year
LABOR LAW I
[ATTY. CADIZ]
Implementing Rules on Holiday Pay

General Rule: Employees who are absent on
the day immediately preceding a regular
holiday may NOT be paid the holiday pay
Exceptions:
1. If he has worked on such holiday
2. If the day immediately preceding the
holiday is a nonworking day in the
establishment
3. If the day immediately preceding the
holiday is the scheduled rest day of the
employee (leave of absence with pay)
provided he has worked on the day
immediately preceding such rest day or
nonworking day
Monthly-paid Employees
They are included in the benefits of
holiday pay
It cannot be presumed that holiday pay is
already included in the monthly wages
If all nonworking days are paid:
o Divisor of monthly salary to obtain
daily rate is 365
o 365 all days in the year are paid
If only the worked days are paid
(assuming it is from Monday to Friday)
o Divisor to be used is 251
o 251 Saturdays, Sundays and the 10
legal holidays are subtracted already
o 249 if there are 12 legal holidays
Hourly-paid Employees (Teachers)
When a special holiday is declared (nonworking) the teacher is deprived of
expected income
Hourly-paid teacher is entitled to their
regular rate on days declared as nonworking holidays or for some reason
classes are suspended or shortened.
Hourly-paid teacher is NOT entitled to
their regular rate for regular holidays,
whether the same be during the regular
semester or during semestral vacations
In case of extended work, they are paid
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their regular rates no premium.
Field Personnel
Not entitled to holiday pay (Art. 82
specifically excludes them)
whose actual hours of work xxx cannot
be determined with reasonable certainty
- ability to ascertain that the field
personnel actually performed work
Whether or not the employer is still able
to exercise supervision and control over
the field personnel
If control is still exercised, then such
employee is NOT a field personnel
Piece-rate Workers
2 kinds of piece-rate workers:
o Who are paid rates (standards) as
prescribed by the DOLE
o Who are paid rates as prescribed by
employer and NOT approved by DOLE
1st kind NOT entitled to overtime pay
and premium rates
2nd kind entitled to overtime pay and
premium pay (it is the difference between
the legal rate and the employee's rate)
Common benefits to both kinds of piecerate workers:
o Statutory Minimum Daily Rate
o Service Incentive Leave
o Night shift differential
o Holiday pay
o Meal and rest periods
o 13th Month pay
o Other benefits granted by law or CBA
NOTE: Default rule is that a piece-rate worker is
entitled to overtime and premium pay. It is
presumed that the employer is not following the
standards prescribed by DOLE. Employer has
burden of proving that there is adherence to the
DOLE Standards (Labor Congress v. NLRC)
Double Holiday Rules
2 Successive Regular Holidays General
Rule: an employee may not be paid for
both holidays if he absents himself on the
day immediately preceding the first
LABOR LAW I
[ATTY. CADIZ]
holiday. Exception: If the employee
works on the 1st holiday, then he is
entitled to holiday pay on the 2nd holiday
2 Regular Holidays on the Same Day an
employee is entitled to 200% of his basic
wage provided he worked on the
immediately preceding day.
If he worked on such day, he is entitled
to 300% of his basic wage
Summary
Benefit
Regular
Hourly
Piecerate A
Piecerate B
Overtime
Premium
N.S.D.
Holiday
S.I.L.
13th MP
Contractual
Piece Rate A - Following the DOLE Standard

Piece Rate B - Following the employer's standard
Holiday refers only to LEGAL HOLIDAY
Case Doctrines
Bisig ng Manggagawa v. Phil Refining Co
Absent any contrary agreement, the regular
base pay excludes bonus pay and fringe
benefits
Cebu Institute v Ople
Proceeds of schools must be allocated
accordingly: 60% to teachers salaries
and 40% administrative expenses.
The 60% is the minimum amount thus a
bigger allocation may be agreed upon
The current rule in allocation is 70%
salaries and 30% administrative expense
Benefits and holiday pay are chargeable
to the 70% allocation
Chartered Bank EA v Ople
When monthly paid employees work on a
holiday, they are given an additional
100% base pay on top of a premium pay
of 50%
If their monthly pay already includes their
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salaries for holidays, they should be paid
only premium pay but NOT both premium
and base pay
Framanlis Farms v Minister of Labor Nonmonetary benefits (free food or electricity) are
not proper substitutes for the 13th month pay.
Neither may year-end rewards for loyalty be
considered in lieu of 13th month pay.
JRC v NLRC
Teachers paid by the hour are NOT
entitled to holiday pay whether the same
may be during regular semesters,
semestral break, Christmas break or Holy
Week Vacations.
However they are entitled to their regular
hourly rate on special holidays (nonworking) or on days classes are
suspended or shortened
In case of extensions in work hours, the
teacher is entitled to their hourly rates
(not overtime pay/premium)
NOTE: Private school teachers are not paid for
the regular holidays during semestral vacations.
However, they shall be paid for regular holidays
during Christmas vacation (Sec. 8 Rule IV,
Implementing Rules of Book III) ~ I assume
that the IRR refers to teachers NOT paid by the
hour
Kwok v Phil Carpet Mfg Corp Absent any
agreement to the contrary, Sick Leaves and
Vacation Leaves are not convertible to cash since
these benefits are voluntary in nature; NOT
statutory requirements.
Labor Congress v NLRC Piece-rate Workers:
Entitled to 13th month pay
If they are paid according to the
standards issued by DOLE NOT entitled
to premium or overtime pay
If they are NOT paid according to the
DOLE standards entitled to the
difference between the legal rate and the
employer's rate (if employer's rate is
lower)
LABOR LAW I
[ATTY. CADIZ]
Meralco Workers Union v Meralco General
Rule: Overtime pay cannot be waived.
Exception: When the total benefits are over and
above the legal amount
Mercidar v NLRC Fishing crew members are
not field personnel since the employer still
exercised control over the crew even aboard the
vessel through its ship master.
National Semiconductor v NLRC The
employee's allegation that he is not paid is a
negative allegation, thus the burden of proof
does not rest upon him. Employee is also not in
a position to prove non-payment since the
payrolls and records are in the possession of the
employer. Burden of proof lies on the employer
National Sugar Refineries v NLRC Supervisors
are considered managerial staff not by their title
but by the duties and responsibilities they
exercise (authority to hire and fire, decision
making, training of subordinates, exercise of
independent judgment and discretion)
National Federation of Sugar Workers v Ovejera
Christmas bonuses, profit-sharing payments
and other cash bonuses amounting to not less
than 1/12th of the basic salary are considered
equivalents of the 13th month pay. Nonmonetary benefits and allowances already
enjoyed by the employee are NOT considered as
equivalents
Petroleum Shipping v NLRC Seafarers are not
regular employees but contractual employees,
thus they are not entitled to 13th month pay
Philippine Duplicators v NLRC Commissions of
salesmen are part of their basic salary for
purposes of computing their 13th month pay.
However, medical representatives, are not
salesmen, thus their commissions are
productivity bonuses, thus not included in their
basic salary (citing Boie-Takeda Case)
San Miguel v Inciong The following are not
deemed part of the basic salary:
Cost of Living Allowances (COLA)
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LABOR LAW I
[ATTY. CADIZ]
Profit-sharing payments
Overtime pay
Premium pay
All monetary benefits and allowances not
considered part of the basic salary at the
time PD 851 was promulgated
Sime Darby v NLRC A change in work schedule

(from one with a paid 30-minute lunch break to
a one with a full 1-hour, but unpaid, lunch
break) is not considered a diminution of their
benefits since such management prerogative
was exercised in good faith
Union of Filipro Workers v Vivar The phrase
whose actual hours of work in the field cannot
be determined with reasonable certainty means
that the employer has no way of determining
whether or not the employee really spends
actual work in the field. It means that their time
and performance in the field is unsupervised by
the employer.
UP Union v UP Teachers paid on monthly or
daily basis are entitled to ECOLA pay and their
regular pay during semestral breaks
NOTE: There are differences between hourly
paid and monthly/daily paid teachers when it
comes to their regular pay during school breaks
Hourly Paid Teachers
Monthly Paid Teachers
Paid only for actual

hours worked
Entitled to regular pay

during semestral breaks
Not entitled to holiday

pay during Christmas
vacations or semestral
breaks
Not entitled to holiday

pay during semestral
breaks except during
the Christmas vacation
Universal Corn v NLRC A Christmas bonus

given for employee loyalty (and as provided for
in the CBA) cannot be considered equivalents of
13th Month Pay since it has a different purpose
from P.D. 851 (rewarding employee loyalty)
Villuga v NLRC The test of managerial status
depends on whether a person possesses
authority that is not merely routinary or clerical

in nature but one that requires the use of
independent judgment.
VII. WAGES
Application and Coverage
Title on Wages does not cover:
Farm tenancy or leasehold
Domestic service
Persons working in their respective
homes in needlework
Cottage industries duly registered (small
business enterprise)
Cooperatives (I.R.R. and DOJ Opinion)
Barangay Micro Business Enterprise (R.A. 9178)
Engaged in the processing or
manufacturing of products including agroprocessing, trading and services
Total assets, including loans BUT
exclusive of land where the business is
situated, is not more than
Php3,000,000.00.
What Constitutes as Wages or Basic Pay?
Remuneration or earnings capable of
being expressed in money
Salesmen's commission
Facilities or Commodities furnished for
the benefit of employees
o Value is to be determined by
Secretary of Labor
o Facilities must be for the benefit of
the employee or his family
o Items of expense necessary for
the employees subsistence
o Eg: Food and housing
o NOT the same as supplements
What are Deemed Excluded?
Overtime pay
Any compensation for work rendered
beyond the normal workload or hours
Cost of Living Allowances
13th Month Pay
Profit-sharing agreements
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LABOR LAW I
[ATTY. CADIZ]
Other monetary benefits not considered

integrated as part of the basic salary
Facilities
Food, housing
Wage-deductible
For benefit of
employee
Necessary for
laborers subsistence
Supplements
Tools of trade
Not wage-deductible
For benefit of employer
Extra remunerations
and privileges
Legal requirements before deducting value of

facilities
1. Proof that such facilities are customarily
furnished by the trade
2. Provision of deductible facilities are
VOLUNTARILY accepted by employee in
writing
3. Facilities are charged or deducted at a
reasonable value
Minimum Wage Rates
Lowest wage rate fixed by law
Prescribed by the Regional Tripartite
Wage and Productivity Boards
Rates differ per region and are dependent
on the following factors:
o Cost of living
o Consumer price index
o Needs of the workers and their
families
o Demand for living wages
o Fair return of capital invested and
capacity to pay of employers
o Need to induce industries to invest
in country side (incentives to
investors)
o Prevailing wage rates
Daily-Paid vs. Monthly-Paid
Daily-Paid
Monthly-Paid
Paid only for the
Uniformly paid by the
days actually
month
worked
Worked days are
Presumed to be paid for
easier to count
ALL days in the month
whether worked or not
Minimum legal
rates are easier to
compute (daily
rate)
Monthly wage >= Legal

minimum x (365/12)
Computation of Daily Rate for Monthly Paid

Employees
Daily Rate = (Monthly Wage x 12/365)
Divisor shows the number of days
covered
Divisor must be 365, to show that all
days are paid, even unworked rest days.
This determines the legal minimum rate.
If divisor is less than 365, it means:
o Daily rate is higher BUT
o It indicates that not all days of the
year are covered
o If divisor is 314, it means only 6 days
out of a week are paid
o If divisor is 261, it means only 5 days
out a week are paid
o Regular holidays are to be subtracted
or added to the divisor accordingly
13th Month Pay
A statutory obligation
1/12 of the total basic salary earned by
the employee within the calendar year
All rank-and-file employees are entitled to
13th month pay provided they have
worked at least 1 month during the
calendar year
P.D. 851 exempts employers who are
already paying their employees 13th
month pay or its equivalent
Payment of Wages
Permissible forms of Payment
Cash (legal tender)
Check or money order when such manner
of payment is customary on the date of
effectivity of the Labor Code (Art. 102)
Payment through ATM (Labor Advisory)
NOTE: Other forms (promissory note, coupons,
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tokens, etc.) of payment shall NOT be allowed
even when expressly requested by the employee
Time of Payment
At least once every 2 weeks or twice a
month
In case of force majeure, employer must
pay the wages immediately after such
force majeure has ceased
No employer shall make payment with
less frequency than once a month
Q: What if the employees' is engaged to work a
specific task which cannot be completed in 2
weeks? How will the wages be paid?
LABOR LAW I
[ATTY. CADIZ]
regards to their wages
Unpaid wages shall be paid in full before
the claims of the government or creditors
A declaration of bankruptcy or a judicial
liquidation is a prerequisite in the
enforcement of worker's preference
Attorney's Fees
10% of the amount of wages recovered is
the MAXIMUM allowable for attorney's
fees. Anything lower than 10% is
permissible
What is prohibited is fees exceeding 10%
Prohibitions Regarding Wages
A: Payments are made at intervals not

exceeding 16 days (in proportion to the amount
of work completed) and the final settlement is
made upon completion of the work
Wage Deductions
Q: Is there an exception to this rule?
Exceptions:
Labor Code Exceptions:
1. Worker is insured with his consent by the
employer and deduction is for payment of
the insurance premium
2. Payment of Union Dues
3. Other cases authorized by law or the
Secretary of Labor
A: Yes. If a Collective Bargaining Agreement or

arbitration award states a contrary manner of
payment of wages
Direct Payment of Wages
General Rule: Wages shall be paid directly to
the workers to whom they are due
Exceptions:
1. Force Majeure worker may be paid
through another person under written
authority given by the worker
2. Where worker has died wages are paid
to the heirs of the deceased worker:
Claimants shall execute an affidavit
Affidavit is presented to employer
Employer pays to the Secretary of
Labor and the latter shall act as
referee in dividing the amount among
the heirs
Employer is then absolved from any
further liability with respect to the
amount paid
Employers Bankruptcy
Employees shall enjoy first preference as
General Rule: No employer shall make any

deduction from the wages of his employees
Other Exceptions Authorized by Existing Laws:

1. Where employee is indebted to the
employer and such debt has become due
and demandable (Civil Code Art. 1706)
2. Court Awards (execution and attachment)
3. Withholding Tax
4. Salary deductions of a legally established
cooperative
5. Deductions for payment to 3rd persons,
upon written authorization of employee
6. Union Dues
7. Agency Fee
8. Deductions for value of meals and other
facilities
9. Deductions for loss or damage (Art. 114)
10. SSS, Philhealth, Pag-IBIG Premiums
Deductions for Loss or Damage
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General Rule: No employer shall require his
worker to make deposits for the reimbursement
of loss or damage to materials, tools or
equipment supplied by employer
Exception: When the trade, occupation or
business of the employer recognizes such
practice, or the practice is necessary or desirable
as determined by the Secretary of Labor
Requisites for Payment for Loss/Damage:
1. Employee is shown to be responsible for
such loss or damage
2. Employee is given ample opportunity to
show cause why deduction should not be
made
3. Amount of deduction is fair and
reasonable and shall not exceed actual
loss or damage
4. Deduction does not exceed 20% of the
employee's wages in a week
Other Prohibitions
Withholding any amount of the wages or
inducing the worker to give up any part
of his wages by force, intimidation or
threat
Withholding of wages because the worker
has not completed an assigned task or
has violated company rules
Deduction of wages as consideration of a
promise of employment or retention in
employment
Withholding or reduction of wages as a
retaliatory measure against an employee
who has filed any complaint against the
employer
False reporting
Wage Orders and Wage Fixing
National Wages and Productivity Commission
National consultative and advisory body
on matters on wages, income and
productivity
Exercise supervision over the Regional
Tripartite Wages and Productivity Boards
Review regional wage levels set by the
Regional Tripartite Wages and
LABOR LAW I
[ATTY. CADIZ]
Productivity Boards
Undertake studies and research on
information regarding employment, cost
of living, labor costs, investments and
returns
Regional Tripartite Wages and Productivity Board
Develop plans, programs and projects
relative to wages, income and
productivity improvement for their
respective regions
Determine and fix the minimum wage
rates applicable in their region, provinces
or industries and issue the wage orders
Receive and process applications for
exemption from prescribed wage rates
Exercise technical supervision over the
regional office of the DOLE
Conduct public hearings, consultations
and give notices to interested parties in
determining the appropriate wages
Wage Orders
Issued by the Regional Boards
Aggrieved parties may appeal the wage
order to the Commission within 10 days
from the publication of such order
Filing of appeal does NOT stay the order
unless the person appealing shall file an
undertaking with a surety or sureties
Wage Distortion
If the pay advantage is of a position over
another is removed or significantly
reduced by a pay adjustment required by
a wage order, such pay advantage should
somehow be restored
For salary distortion to exist, the law does
not require FULL elimination of salary
differences; a severe contraction is
enough
Full compliance with the wage order and
upward adjustment of the distorted
salaries is prejudicial to the employer
Wage orders adjusts the minimum level
but not the levels above the minimum it
DOES NOT mandate across-the-board
salary increase
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LABOR LAW I
[ATTY. CADIZ]
Supreme Court formula to correct a salary

distortion:
Prescribed Increase = Minimum Wage x 100
Actual Salary
Elements of Wage Distortion
1. Existing hierarchy of positions with
corresponding salary rates
2. Significant change in the salary rate of
lower pay class without a concomitant
increase in salary rate of a higher one
3. Elimination of distinction between the two
levels
4. Existence of the distortion in the same
region of the country
How to Resolve Wage Distortion Disputes
No Union
With Union
NCMB
CBA Arbitration Process
NLRC
Voluntary Arbitration
Court of Appeals
Court of Appeals
Supreme Court
Supreme Court
*NCMB National Conciliation and Mediation Board (A

conciliator; NOT an arbitrator)
Case Doctrines
American Wire Employees v American Wire
The withdrawal of benefits gratuitously given by
the employer is not violative of the Nondiminution of benefits (Art. 100) and such
benefits may not ripen into a demandable
obligation
Apodaca v NLRC The wages of an employee
may not be applied to satisfy his obligation to
pay his stock subscriptions. The employee is
indebted to the employer-corporation not as a
worker but as a stock purchaser
Bankard Employees v NLRC While seniority
may be a factor in determining the wages of
employees, it cannot be the SOLE basis in cases

where the nature of their work differs (for wage
distortion cases)
Commando Security v NLRC An employer may
not deduct its so-called share from the wages
of its employees even if such deduction has been
agreed by them being contrary to law. This is
especially true if the employer is placed in a
contractually disadvantaged position and signs a
waiver contrary to law and public policy
Eastern Telecom v Eastern Telecom Union The
practice of giving bonuses beyond the legal
requirement, whether the company has earned
profits or not, may not be withdrawn since it will
be against Art. 100 (non-diminution of benefits)
Gaa v CA The salaries of managers and those
holding supervisory positions may be the subject
of judicial execution since they are not laborers
as contemplated by Art. 1708 of the Civil Code
Lingkod Manggagawa v Rubberworld Upon the
appointment of a rehabilitation receiver, for
bankruptcy and liquidation proceedings, all
claims for actions, including labor claims, shall
be suspended accordingly
Metrobank Employees Union v NLRC In
mandating an adjustment in wage distortion
cases, the law does not require that there be a
total elimination of wage differences; a severe
contraction is enough
Millares v NLRC Transportation allowance given
primarily for the benefit of the employer or
necessary to the conduct of the employer's
business does NOT form part of the employer's
wages
Nasipit Lumber v NWPC Guidelines issued by
the Regional Tripartite Wages and Productivity
Board (RTWPB) without the approval of the
National Wages and Productivity Commission
(NWPC) are ineffectual, void and cannot be a
source of rights and privileges
PNB v Cruz Art. 110 (Preference of worker's
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claims in case of bankruptcy) covers not only
unpaid wages but also separation pay.
Separation pay must be considered as part of
remuneration for services rendered or to be
rendered.
Prubankers Association v Prudential Bank A
wage disparity between employees in the same
rung but located in different regions of the
country is NOT the situation the law
contemplates regarding wage distortion. The
distortion must exist in the same region of the
country
VIII. CONTRACTORS OR SUBCONTRACTORS
Contracting in General
An arrangement whereby a principal
agrees to put out or farm out with a
contractor or subcontractor the
performance or completion of a specific
job within a definite or predetermined
period (D.O. No. 18-A)
Creates a trilateral relationship:
o Contractor and its employees
(Employment)
o Contractor and Principal (Agency)
The principal-employer is deemed to be
an indirect employer in such a way that
he is joint and severally liable with the
contractor in the event the latter fails to
pay wages to its employees
The employer may require the contractor
to post a bond to answer for the unpaid
wages of the employees
Requisites of Legitimate Contracting (D.O. 18-A)
1. Registration with DOLE
2. Carries on a distinct and independent
business and undertakes to perform the
work or service in its own responsibility,
free from the control and direction of the
principal in all matters except as to the
results thereof
3. Possesses substantial capital/investment
4. Engaged through a Service Agreement
that ensures compliance with all the
rights and benefits under Labor Laws
LABOR LAW I
[ATTY. CADIZ]
NOTE: Under the current I.R.R. (D.O. 18-A),

substantial capital refers to at least:
Php3,000,000 paid-up capital stocks
(corporations, partnerships and
cooperatives)
Php3,000,000 net worth for single
proprietorship
Labor Only Contracting
Where the person supplying the workers
does not have substantial capital or
investment and the workers placed by
such persons are performing activities
which are directly related to the principal
business of the employer (ART. 106 (4))
Where the contractor does not have
substantial capital or investment and the
employees recruited are performing
activities usually necessary or desirable
to the operation of the company OR
Contractor does not exercise right of
control over the performance of the work
of the employee (D.O. No. 18-A)
Intent to create or engage in a laboronly contracting is immaterial
Labor-Only Contracting as defined by:
Labor Code
Relevance of work + Capital
I.R.R. (D.O.
No. 18-A)
Capital AND relevance of work +

Control of principal
Atty. Azucena EE + CE1 or CE2

EE (Essential Element) to place or recruit workers
to perform a job for the principal
CE (Confirming Element):
CE1 Capital AND Relevance of Work
CE2 Control of Principal
Consequences and Liabilities

The labor-only contractor shall be
considered merely as an agent of the
principal
The employees of the contractor shall be
treated as regular employees of the
principal
The principal becomes liable as a direct
employer
Principal becomes solidarily liable with
Page 20 of 41
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the contractor for any violation of any
provision of the Labor Code
Other Prohibitions Under D.O. No. 18-A
Contracting out of jobs not done in good faith:
Contracting out when the same results in
the termination of regular employees
Contracting out of work with a Cabo
Taking undue advantage of the economic
situation or circumventing the provisions
of regular employment by:
o Requiring them to perform functions
currently being performed by regular
employees of the principal
o Requiring the contractor's employees
to sign an antedated resignation
letter, a blank payroll or a waiver of
labor standards
Contracting out of a job through an inhouse agency
Contracting out of a job by reason of a
strike or lockout
Contracting out of a job in order to
interfere, restrain or coerce union
members in the exercise of their rights to
self-organization
Repeated hiring of employees under an
employment contract of short duration
Fixing the period of employment to a
term shorter than the term of the service
agreement, unless the contract is
divisible unto phases for which different
skills are required
Refusal to provide a copy of the Service
Agreement to the Sole and Exclusive
Bargaining Agent
Maintaining subcontracted employees in
excess of those provided in the CBA
Contracting out of jobs analogous to the
above
Q: Is it possible to contract out the core
processes of a business (activities which are
relevant or necessary to the business of the
principal)?
A: Yes, provided that the contractor is legitimate
LABOR LAW I
[ATTY. CADIZ]
Case Doctrines
Aliviado v PnG (2010) Even if the work of the
employees recruited is necessarily desirable to
the business of the principal, as long as the
contractor has substantial capital and retains
control over its employees, the contractor is a
legitimate one.
Baguio v NLRC The mere fact that the
independent contractor ran out of capital (as an
after-the-fact development) does not detract his
status as an independent contractor.
Bernarte v PBA Basketball referees are
independent contractors since the PBA does not
exercise control as to how the referees exercise
its authority or judgment on the playing court
Coca Cola v Agito For contractor corporations,
substantial capital refers not to the authorized
capital stock but to the paid up capital. Capital is
deemed to be substantial if it can meet the
demands of the principal
Coca Cola v Climaco Since the respondent
doctor is only required to be in the company
premises for 2 hours a day and that the
company does not dictate how he does his work,
there is no employer-employee relationship. The
company never exercised control over the
respondent doctor
DOLE v Esteva Primary standard of
determining regular employment is the
reasonable connection between the activities
performed by the employer in relation to the
usual business of the employer. If the employee
has been performing the job for at least a year,
whether continuous or intermittent, the law
deems it as sufficient evidence of the
indispensability of the activity to the business
Emmanuel Babas v Lorenzo Shipping Co The
mere possession of a Certificate of Registration
is not conclusive proof that the contractor is a
legitimate contractor
GSIS v NLRC The principal is solidarily liable
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with the contractor, regardless of whether or not
the latter is legitimate or labor-only, in the
event the contractor fails to pay its employees.
Jaguar Security v Sales The jurisdiction of the
labor courts extends only to cases where an
employer-employee relationship exists. In the
event that the principal seeks reimbursement
from the contractor after paying its obligations
to the contractors employees, such claim must
be filed as an ordinary civil action in the regular
civil courts
Kaisahan at Kapatiran v Manila Water The
10% attorneys fees in Art. 111 of the Labor
Code refer to extraordinary fees, which are paid
as indemnity to the prevailing party. The fees
arising from the relationship between the lawyer
and the client is not covered by Art. 111 and
may exceed 10% on the basis of quantum
meruit.
Meralco Industrial v NLRC General Rule: The
principal's solidary liability with the contractor is
only up to the payment of wages and overtime
pay. Separation pay and other liabilities arising
from illegal dismissal are NOT included.
Exceptions: When the principal has conspired
with the contractor in the acts giving rise to the
illegal dismissal. When the contractor is a laboronly contractor, the principal is now deemed the
employer thus the latter is liable for separation
pay.
Neri v NLRC Once substantial capital is
established or proved, it is no longer necessary
for the contractor to show evidence that it has
investment in the form of tools, machineries,
equipment, work premises, among others.
Sonza v ABS CBN Radio and TV talents are
deemed to be independent contractors since the
employer-network has no control over what they
say or discuss on their shows. Even if the
network supplied the equipment and crew, they
are not the tools and instrumentalities Sonza
needed to perform his job. What Sonza
principally needed were his talent, skills or
costumes necessary for his appearances.
LABOR LAW I
[ATTY. CADIZ]
Urbanes v Secretary of Labor The Regional

Director has no jurisdiction over a claim for
reimbursement by a principal employer from a
contractor since it is a civil action, which must be
ventilated in the proper civil courts.
Vinoya v NLRC It is not enough to show
substantial capitalization or investment in the
form of tools, equipment and work premises to
be considered as an independent contractor.
NOTES: Cadiz Sez:
Once investment or substantial capital is
proved, there is no need to prove the
existence or absence of the other
elements (relevance of employee's work
and control of principal may be dispensed
with) Neri v NLRC
The Vinoya Case has an opposite stand
from the Neri Case. It says that
substantial capitalization is not enough to
prove contractor independence
IX. ADMINISTRATION AND ENFORCEMENT
Secretary of Labor (Art. 128)
Has access to employer's records and
premises at any time of the day or night
whenever work is being undertaken
Authority to question any employee
Investigate any fact which may aid in the
enforcement of any labor law
Right to copy records
Power to issue compliance orders based
on findings made in the course of
inspection
May order stoppage of work or
suspension of operations when the noncompliance poses a grave and imminent
danger to the safety of the employees
Issue writs of execution for the
enforcement of their orders, EXCEPT, in
cases where the employer contests the
findings of the labor employment and
enforcement officer and raises issues
supported by documentary proofs which
were not considered in the course of
inspection
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Process of Suspension of Operations

1. Issuance of order suspending operations
or stopping work
2. Within 24 hours, a hearing shall be
conducted to determine whether the
order shall be lifted or not
3. If violation is attributable to the fault of
the employer, he shall pay the employees
concerned their wages during the period
of such stoppage or suspension
Appeals
Orders issued by authorized
representatives of the DOLE Secretary
may be appealed to the latter
Appeal period: 10 calendar days
If order involves monetary award, appeal
by employer is perfected only upon the
posting of a bond equivalent to the award
in the order appealed from
Limits of the Enforcement Power
Case does not arise from the exercise of
the visitorial power
When employer-employee relationship
ceased to exist at the time of inspection
If employer contests the finding of the
labor officer and such contestable issue is
not verifiable in the normal course of
inspection
Regional Director (Art. 129)
Jurisdiction over recovery of wages,
simple money claims and other benefits
including legal interest
Proceeding is summary and non-litigious
in character
Aggregate claims of each employee nor
househelper does NOT exceed Php5,000
Complaint must NOT include:
o a claim for reinstatement
o claims for Employees
Compensation, SSS, PhilHealth
and Maternity benefits
Claims arise from an employer-employee
relationship
LABOR LAW I
[ATTY. CADIZ]
Appeals
Appeal to NLRC within 5 calendar days
NLRC to resolve appeal within 10
calendar days from submission of last
pleading
Summary
WHO
EXERCISES
POWER
NATURE OF
POWER
EXISTENCE
OF E.E.R.
HOW
INITIATED
LIMITS TO
CLAIM
APPEAL
Art. 128
DOLE Secretary
or his authorized
representative
Visitorial and
enforcement
power exercised
through routine
inspections of
establishment
Requires
existence of EER
Enforcement
power is an
offshoot of
visitorial power
No limit
Appeal to
Secretary of
Labor within 10
calendar days
Art. 129
Regional director
or any authorized
hearing officer of
DOLE
Adjudicatory
power on matter
involving recovery
of wages
EER not
necessary since it
should not include
a claim for
reinstatement
Sworn complaint
filed by any
interested party
Aggregate claim
of each
complainant does
not exceed
Php5,000
Appeal to NLRC
within 5 calendar
days
Procedures
Art. 128 DOLE Secretary
Visitorial Power Initiated by DOLE Secretary or
his duly authorized representative
Issues Compliance Order
Appeal Compliance
Order to DOLE
Secretary
Employer contests
findings of
enforcement officer
Appeal to NLRC
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LABOR LAW I
[ATTY. CADIZ]
Filing of sworn complaint to the Regional

Director or any authorized hearing officer
his duly authorized representatives. The failure

to keep payrolls and daily time records in the
work premises (Laguna), since the same is kept
in their head office (Quezon City), is not an
acceptable excuse.
Claim does not exceed

Php5,000.00 and no
reinstatement is
demanded
People's Broadcasting v Secretary of Labor

(2009) Power to determine the existence of an
employer-employee relationship lies with the
NLRC and NOT with the Secretary of Labor
Art. 129 Regional Director
Conducts summary
proceeding
Claim exceeds
Php5,000.00
or reinstatement is
demanded
[Appeal]
Case is indorsed
to NLRC
Case Doctrines
Aboitiz v Dela Serna The Regional Director has
jurisdiction over cases involving recovery of
wages and other monetary claims provided:
1. the claim is presented by an employee or
househelper
2. claim arises from an employer-employee
relationship
3. claimant does not seek reinstatement
4. aggregate money claim does not exceed
Php5,000.00
In the absence of any of the requisites, it is the
Labor Arbiter who shall have exclusive
jurisdiction, EXCEPT claims for employee's
compensation, social security, medicare and
maternity benefits.
Ex-Bataan Security v Secretary of Labor The
visitorial power of the DOLE Regional Director, in
his capacity as the representative of the
Secretary of Labor, to enforce compliance with
labor laws can be exercised even where the
individual claim exceeds Php5,000.00. However,
if the case is covered by the exception clause in
Art. 128(b) of the Labor Code, then the Regional
Director will gave to endorse the case to the
appropriate Arbitration Branch of the NLRC.
Jethro Intelligence v Secretary of Labor The
Php5,000.00 monetary claim limit in Art. 129 of
the Labor Code does not cover the visitorial and
enforcement power of the Secretary of Labor or
People's Broadcasting v Secretary of Labor

(2012) (overturned the 2009 case) In the
exercise of the DOLE visitorial and enforcement
power, the Secretary or his authorized
representative, shall have the power to
determine the existence of an employeremployee relationship (EER), to the exclusion of
the NLRC. The determination of the EER in the
exercise of its visitorial and enforcement power
is subject to judicial review, NOT review by
the NLRC.
X. CLASSIFICATION OF EMPLOYMENT
Security of Tenure
It is the right not to be removed from
one's job except for a valid reason and
through proper procedure
Applies not only to regular employees but
also to non-regular employees (eg: fixedperiod employment, project employment,
probationary employment)
Managerial employees are entitled to
security of tenure
An employee unjustly dismissed is
entitled to reinstatement and to his full
backwages and other benefits
NOTE: Security of tenure for non-regular
employees means that they may not be
terminated without a valid cause during the
period in which they are hired.
Classifications of Employment
As to Nature
o Regular
o Probationary
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o
o
o
o
As
o
o
o
Project
Fixed-Term
Seasonal
Casual
to Rank
Managerial
Supervisory
Rank-and-File
Managerial Vested with powers or prerogatives

to lay down and execute management policies,
to hire, transfer, suspend and lay-off employees
Supervisory Those who effectively recommend
such managerial actions if the exercise of such
authority is not merely routinary or clerical in
nature but requires independent judgment
Rank-and-File Everybody else
General Rule: Employment is deemed regular
Exception: Probationary, seasonal, fixed-term,
casual and project employment
Exceptions to the Exception:
1. Probationary employees allowed to work
after probationary period
2. Casual workers rendering service for
more than 1 year
3. Seasonal workers hired repeatedly for the
same tasks every season
4. Fixed-term employees who entered the
contract on unequal terms with the
employer
5. Project employees hired even after the
completion of the project they engaged in
Types of Employment
Regular Employment
Those who are hired for activities which
are necessary or desirable in the usual
trade or business of the employer
2 kinds of regular employees:
1. Those engaged in labor which is
necessary or desirable in the usual
trade or business of the employer
LABOR LAW I
[ATTY. CADIZ]
2. Those who have rendered at least 1
year of service, whether continuous or
broken, with respect to the activity in
which they are employed
Standards for determining regular
employment:
o Reasonable connection between the
work performed and the usual trade
or business of the employer
o Length of service
Casual Employment
When employment is neither regular,
seasonal, fixed or for a specific project
When employment is irregular, sporadic,
occasional, unpredictable and brief in
nature
When the work performed is NOT in the
usual course of the employer's business
Legally, the period is only for 1 year
Regularization of a casual employee:
o Rendered service for at least 1 year,
whether continuous or broken
o The activity for which he is hired still
exists (regularization is only with
respect to such activity)
Casual employees who are dismissed
from their employment before the
expiration of the 1-year period CANNOT
lawfully claim that their dismissal is illegal
Fixed-Term Employment
Contract of employment that lasts for a
definite period as agreed by the parties
Employment is not terminated; it merely
expires along with the contract
Standards for validity:
1. Contract was entered into knowingly
and voluntarily by the parties
2. Both parties dealt with each other on
more or less equal terms
Must not be used to circumvent the law
granting security of tenure
If the fixed-term employee is dismissed
without a valid cause prior to the
expiration of said contract, the employee
is entitled to the payment of salaries
corresponding to the unexpired portion of
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the employment contract (Medenilla v.
Phil Veterans Bank)
Project Employment
When employment is fixed for a specific
project or undertaking
Period of employment is coterminous with
the project for which the employee was
hired
Standards for validity:
1. The employees were assigned to carry
out a specific project or undertaking
2. The duration and scope of which were
specified at the time the employees
were engaged in said project
(employees were duly informed)
2 types of projects as determined by
the Supreme Court:
1. A particular undertaking that is within
the usual business of the employer
BUT which is distinct, separate and
identifiable as such, from the other
undertakings of the company (eg:
different construction projects of a
construction firm)
2. A particular undertaking which is NOT
within the regular business of the
employer, separate and distinct from
the ordinary business or operations
Separation Pay for Project Employment
o General Rule: Project employees are
not entitled to separation pay upon
the completion of the project
o Exception: When the employee has
been terminated before the
completion of the project
Employees from Labor Pool
o Those employed (eg: construction
company) without reference to any
particular project in which they are
hired
o Considered as regular or probationary
employees NOT project employees
o Employee is thus obligated to be
always available o/n call of the
employer employee may not offer
his services to other employers
Policy Instruction No. 20
LABOR LAW I
[ATTY. CADIZ]
Covers the construction industry
Employer is mandated to report to the
nearest public employment office the
termination of employees every time
a project is completed
o Failure to comply is an indication that
the petitioner is a regular employee
When project employee is presumed to
be a regular employee:
o When employee is not duly informed
of their status as such or the specific
project or undertaking to be done
o When employee, while not engaged in
a project, is not free to offer his
services to another employer
o When employment is extended after
the supposed project is completed
o When there is a continuous rehiring
even after the cessation of a project
AND the tasks performed is necessary
and indispensable to the usual trade
or business of the employer
o Failure to report the termination to
the DOLE pursuant to Policy
Instruction No. 20
o
o
General Rule: Length of employment is NOT

the controlling determinant of the employment
tenure of a project employee
Exception: When the project or work is done for
a very long period (see DMCI v Jamin)
Seasonal Employment
Employment is from time to time
according to the occurrence of varying
need during a season
Jurisprudential tests and standards:
o The worker is seasonal if the duration
of the employment is for one season
only
o When the workers are not hired
regularly for the same phases of the
work, but only for a single phase
thereof
Regularization of seasonal employee
o Continuous rehiring of workers for the
same tasks for several years or for
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more than 1 season
Such workers during the off-season
are merely considered on leave
o The employer-employee relationship
is merely suspended and NOT severed
Separation pay When the business
establishment is sold which effectively
terminated the employment of the
seasonal worker
LABOR LAW I
[ATTY. CADIZ]
o
Probationary Employment
When employee is on tentative
employment during which the employer
determines whether he is qualified for
permanent employment
Standards for Validity:
o Employee is informed of the standards
by which he will qualify as a regular
employee
o Probationary period shall not exceed 6
months (subject to exceptions)
Regularization of probationary employee
o When employee is allowed to work
beyond the probationary period
o When employee is not appraised of
his probationary status
o When employee is not informed of the
standards he needs to comply with to
be a regular employee
Security of Tenure and Termination
o Except for just causes provided by law
or employment contract, a
probationary employee cannot be
terminated
o Valid grounds for termination:
Just cause
Failure to comply with the
reasonable standards made known
to the employee at the time of his
engagement
o Limits to terminating probationary
employee:
Must accord with the requirements
of the employment contract
Dissatisfaction of employer is real
and in good faith
No unlawful discrimination against
the employee
Due Process
Termination due to just cause
notice and hearing is required
Termination for failure to comply
with company standards no
notice required
General Rule: Probationary period cannot

exceed 6 months
Exceptions:
1. Learnership or apprenticeship period
2. 3 years in case of teachers
3. When the parties agree to a longer term:
o by virtue of company policy -ORo when it is required by the nature of
the work
Summary
Employee
Standard/Validity
Regularization
Regular
Relevance of work
to the employer's
business OR
employed for at
least 1 year
N/A
Casual
Work is not in the

usual course of
employer's
business
Working for at
least 1 year; the
task or work still
exists after such
period
Probationary Employee is
informed of
standards for
qualification
Working beyond
the probationary
term
Fixed Term
Parties entered
contract freely,
voluntarily and on
equal terms
When contract is
used to circumvent
security of tenure
Seasonal
Worker is hired for

a specific phase
and for one
season only
Continuous
rehiring for more
than 1 season for
the same phase
Project
Project, scope and

duration is
specified at the
time contract is
entered into
When employment
is extended even
after end of
project
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Employee
Regular
Casual
LABOR LAW I
[ATTY. CADIZ]
Termination
Separation Pay
Notice and
Hearing required
based on just and
valid causes
If cause is due to
employee's fault
no separation pay
If cause is not
related to moral
character of worker
separation pay is
appropriate
Entitled to notice
and hearing
Possibly the same

as a regular worker
Probationary Just cause

Possibly the same
notice and
reasons or causes
hearing required
as a regular worker
Failure to comply
with standards
no notice required
Fixed Term
Employment
expires along with
contract (notice
and hearing NOT
required)
Generally not
required unless it is
stipulated in the
contract
Seasonal
Employment is
terminated upon
end of season
Yes, when business

is sold resulting in
termination
Project
Employment is
terminated upon
completion of the
project AND
termination is
reported to DOLE
GR: Not entitled to

separation pay
Except: when
terminated before
project is
completed
Case Doctrines
Aliling v Feliciano If a probationary employee
has been informed of the standards of his job
but was subsequently transferred to a different
department or ordered to do a job different from
what he was informed of, the he is deemed to be
a regular employee
submitted a report of termination to the nearest

DOLE office every time a project is completed.
The failure to do so is proof that the worker is
not a project employee
Buiser v Leogardo When the nature of the job
requires a longer period for the employer to
evaluate the employee's performance, the
probationary period may be longer than 6
months. In this case, since the solicited ads are
published only 1 year after the sale has been
made, only then will the company be able to
evaluate the ability of its sales representatives
Caseres v URC The fact that the employees
were constantly re-hired does not ipso facto
establish that they became regular employees
when it is proved that they are hired to perform
different phases of special projects for a definite
period (eg: crane operator assistant for one
season and underchassis reconditioning assistant
in another season)
Cocomangas Hotel v Visca In cases where the
employees were hired without any mention of a
project to which they are specifically assigned
and where no project reports were submitted at
the end of each alleged project, then the
workers are regular employees
DMCI v Jamin The continuous re-hiring of the
employee for a very long period (8 years) to
perform tasks necessary or desirable in the
employer's business made the worker a regular
employee despite the specification of the project
in the employment contract and the submission
of termination reports to the DOLE
AM Oreta v NLRC Probationary employees

should be informed of their probationary status
AND the standards or qualifications to be a
regular employee. Absent such requisites, the
employee is deemed to be a regular employee
Hacienda Fatima v NFSW To be classified as

seasonal workers, is not enough that they
perform work that are seasonal in nature. They
must have also been employed only for the
duration of 1 season. The fact that the workers
have been hired to perform the same tasks
every season for several years makes them
regular employees.
Aurora Land v NLRC If the worker is indeed a

project employee, the employer should have
Hanjin v Ibanez Employees who are hired for a

separate job, distinct from the other
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undertakings of the company, the scope and
duration of which has been determined and
made known to the employees at the time of the
employment, are properly treated as project
employees; otherwise, they cannot be
considered project employees.
Holiday Inn v NLRC A period of on-the-job
training in addition to a six-month probationary
period should be considered as 1 probationary
period only (thus it may not exceed a total of 6
months) since a system of double probation
clearly circumvents the plain mandate of the law
Mariwasa Mfg v Leogardo The probationary
period may be extended beyond 6 months when
it is an act of liberality on the part of the
employer affording the employee a second
chance to make good after having initially failed
to prove his worth as an employee
Millares v NLRC Seafarers are contractual
employees (fixed-term employment) pursuant to
the accepted maritime industry practice and the
fact that there was continuous re-hiring for a
very long period does not and cannot make
them regular employees
Mylene Carvajal v Luzon Bank If the ground
for terminating a probationary employee is the
failure to qualify in accordance with the
standards prescribed by the employer, notice
and hearing of termination is NOT required
Pangilinan v General Milling Corp Lack of
notice of termination for fixed-term employment
is of no consequence since the employment
expires by its own terms at the end of the period
expressly stated in the contract
PDI v Magtibay Due process for the second
ground of termination (failure to comply with the
prescribed standards) consists of making the
reasonable standards known to the employee at
the time of his probationary employment.
Hearing and notice of termination is not required
for the second ground
Pine City v NLRC Where a probationary
LABOR LAW I
[ATTY. CADIZ]
employee is dismissed for failure to comply with
standards, and they were NOT informed of such
standards and qualifications, they must be given
ample opportunity to refute the allegations that
they failed to meet such standards
Price v Innodata Applicable test to determine
whether an employment is regular or nonregular is the reasonable connection between
the task performed by the employee with the
usual business of the employer
Purefoods Corp v NLRC The failure to prove
that the parties entered the contract voluntarily
and on equal terms with each other negates the
contention that an employment contract is a
fixed-term employment. In this case, cannery
workers are NEVER on equal terms with their
employer.
Woodridge v Pe Benito As probationary
employees, their security of tenure is limited to
the period of their probation. They cannot claim
security of tenure and compel their employers to
renew their employment contracts upon
expiration of said period
XI. TERMINATION OF EMPLOYMENT
Due Process
Substantive due process dismissal is
justified by a valid and lawful cause
o Just cause (Art. 296)
o Authorized cause (Arts. 297-298)
Procedural due process
o 2 Notice Rule
Notice specifying the ground/s for
termination and giving employee
to explain his side
Notice of termination indicating
the circumstances and grounds
which have been established to
justify the termination
o Opportunity to be heard
An actual face-to-face hearing or
conference is NOT always required
Any meaningful opportunity given
to the employee to answer the
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charges against him, whether
verbal or written will suffice
Just Causes
Refers to the faults and misdeeds of the
employee
Just Causes under Art. 296
o Serious Misconduct
o Willful Disobedience
o Gross and Habitual Neglect
o Fraud, breach or loss of trust
o Commission of a Crime or Offense
o Analogous Causes
General Rule: Employer is not liable for
separation pay based on just causes of
termination
Exception: Separation pay as a form of financial
assistance may be given out of compassion of
the employer OR if such benefits are stipulated
in the CBA
A. Serious Misconduct
Transgression of some established and
definite rule of action; a forbidden act
Act must be of a grave and aggravated
character and not merely trivial
It is not enough that the act violated
some established rules of policies the
act or conduct must have been performed
with wrongful intent
Requisites:
The act must be serious (there is
wrongful intent)
It must be related to the work of the
employee
It must show that employee is unfit to
continue working for the employer
Examples:
Sexual harassment
Fighting within the company premises
Intimidating a co-employee
Immorality
Negative attitude eroding employee
morale
Theft whether it may be against the
employer or a co-employee
LABOR LAW I
[ATTY. CADIZ]
NOTE: Sleeping on the job is NOT always a valid

ground for dismissal, EXCEPT when the job
necessitates the alertness of the employee (eg:
security guards)
B. Willful Disobedience
Insubordination or refusal to follow the
instruction of a superior
Requisites:
Orders or instructions are reasonable
and lawful
They are sufficiently made known to
the employee
They must be in connection with the
duties which the employee has been
engaged to discharge
Reasonableness as to both:
The kind and character of the
instruction or command
The manner in which they are made
or communicated
Examples:
o Refusal to transfer to another job
assignment or location (but this
presupposes that the transfer is
reasonable and lawful)
Failure to follow order to deliver
merchandise without justification
Totality of Infractions Doctrine
General Rule: The totality of the infractions
that the employee has committed may justify
the penalty of dismissal
Exception: Past infractions for which the
employee has already been penalized may NOT
be collectively used to justify the dismissal
Exception to the Exception: Such past
infractions may be used as justification only if
in connection with a subsequent similar offense.
C. Gross and Habitual Neglect
Gross Neglect
o Absence of diligence that a prudent
man would use
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o An entire absence of care
Habitual Neglect
o Repeated failure to perform one's
duties over a period of time
o Bad faith or wrongful intent is
immaterial
It is not necessary for the employer to
show that he is injured or prejudiced by
reason of the employee's negligence
Examples:
o Habitual absenteeism and tardiness
o Abandonment of work (requisites)
Absence without valid reasons
Intent to sever the employeremployee relationship
General Rule: Neglect of duties must not only
be gross but also habitual. A single or isolated
act of negligence does not constitute a just
cause for dismissal of the employee
Exception: When the negligence also results in
the breach of trust or loss of confidence, or the
damage caused by such single act is so great, an
isolated incident is enough to justify dismissal
(see School of Holy Spirit v Taguiam)
D. Fraud, Breach of Trust or Loss of
Confidence
A breach of legal trust, duty or confidence
justly reposed and is injurious to another
Must be committed against the employer
or his agent and is a work-related offense
Breach is done intentionally and
knowingly; not merely ordinary or casual
2 Classes of Positions of Trust:
o Managerial Employees
o Employees who handle significant
amounts of money or property in the
normal and routine exercise of their
functions (eg: cashiers, auditors,
property custodians)
Requisites:
o Employee is holding a position of trust
and confidence
o Willful breach of trust founded on
clearly established facts
o The act or omission is work-related
LABOR LAW I
[ATTY. CADIZ]
What will NOT negate a valid dismissal for
breach of trust
o Length of service of the employee
o Return of the misappropriated
company funds or property
E. Commission of a Crime or Offense
Must be against the person of the
employer or:
o His agent
o Immediate members of his family
Immediate members are limited to:
o Spouse
o Ascendants
o Descendants
o Brothers or Sisters
o Relative by affinity in the same
degrees (in-laws)
o Relative by consanguinity within the
fourth civil degree
Conviction of an employee in a criminal
case is NOT indispensable to warrant his
dismissal
What will NOT negate a valid dismissal for
commission of a crime
o Acquittal of the employee in the
criminal prosecution
o Failure to show proof beyond
reasonable doubt (substantial
evidence is sufficient)
F. Analogous Causes
Depends on the circumstances of each
case
To be considered analogous to the just
causes, a cause must be due to the
voluntary or willful act or omission of the
employee.
The willful and voluntary act or omission
attests to the employee's moral depravity
Dismissal Procedure for Just Causes
Twin Notice Rule: Employee is entitled to
two written notices before termination
o 1st notice informs the employee of the
acts or omissions that may warrant
his dismissal
o 2nd notice informs the employee of the
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employer's findings and decision
Opportunity to be heard
o Employee is given at least 5 calendar
days from receipt of the notice to
explain his side
o A face-to-face investigation or
conference is not always required
except:
If requested by employee in
writing
If substantial evidentiary dispute
exists
If company policy requires it
If similar circumstances
necessitates a formal hearing
LABOR LAW I
[ATTY. CADIZ]
o
o
o
Redundancy
Retrenchment
Closure or Cessation of Business:
Mere closure NOT due to losses
Sale of the business or mergers
Serious business losses
Disease of Employee
A. Automation
Installation of labor-saving devices
resulting in the reduction of the number
of laborers is justified
The aim to achieve economy and
efficiency in business operations is an
unquestioned management prerogative
NOTES:
The 5-day period within which an
employee is required to explain his side is
a rule laid down by jurisprudence NOT
the I.R.R.
While the I.R.R. requires a formal faceto-face hearing, the Supreme Court ruled
that a formal hearing or conference is not
required. As long as the employee is
given ample opportunity to be heard, it
satisfies the due process requirement. In
case of conflict between the I.R.R. and
the law or jurisprudence, the latter must
prevail
If the employee voluntarily and expressly
admitted his infractions, no formal
investigation is necessary. Only thing
needed is to inform of the employee of
the decision of the employer (2nd notice)
B. Redundancy
Where the services of the employee are
in excess of what is demanded by the
requirements of the enterprise
Requisites:
o Written notice to DOLE and employees
at least 1 month prior to termination
o Payment of separation pay
o Good faith in abolishing redundant
positions
o Fair and reasonable criteria in
ascertaining the positions to be
abolished to justify redundancy
Usual criteria in selecting employees:
o Less preferred status (eg: temporary
employees)
o Efficiency and economy
o Seniority (Last in-First out)
Authorized Causes
Termination is by reason of the exercise
of management prerogatives
General Rule: Employee dismissed for
authorized causes is entitled to
separation pay
Exceptions: Closure of business due to:
o Serious business losses
o Compulsory acquisition of the
government of the business
Authorized Causes
o Automation
C. Retrenchment
When the reduction of the labor supply is
resorted to in order to avoid or minimize
business losses
Standards or Justifications
o Expected losses are substantial not
merely de minimis in extent
o Losses expected must be reasonably
imminent and perceived in good faith
o Employer must have taken other
measures prior or parallel to
retrenchment to forestall losses
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LABOR LAW I
[ATTY. CADIZ]
Losses, expected or realized, must be

proved by sufficient evidence
Evidence of business losses must be
proved through an independent auditor
Illegal Retrenchment
o Produces no legal effect
o Acceptance of retrenchment pay does
not place employee in estoppel
Criteria in selecting employees:
o Less preferred status (eg: temporary
employees)
o Efficiency
o Seniority (Last in-First out)
o
Q: Is a record showing 2 years of net loss

sufficient to justify retrenchment?
A: Yes. It is enough to be considered as proof of
historical losses
Redundancy
Retrenchment
Labor supply is in excess A measure to avoid or

of what is required
minimize business losses
Not a means of last
A means of last resort.
resort but it must still be Other measures must have
supported by evidence
been resorted to prior to it
D. Closure or Cessation of Business

2 Types of closure or cessation:
o Due to business losses
o Not due to business losses
Requisites for closure NOT due to losses:
o Written notice to DOLE and employees
1 month before intended date of
termination
o Cessation or closure of business must
be bona fide in character
o Payment of separation pay
Cause of Cessation of Business
Separation Pay
Closure due to business losses
NO
Closure due to act of government
NO
Closure NOT due to business losses
YES
Sale of business in good faith
YES
Sale of business in bad faith
YES + damages
Q: Who pays for the separation pay in case of a

sale or transfer of the business in good faith?
A: The liability falls on the seller as there is no
law which requires the purchaser to absorb the
employees of the selling corporation (San Felipe
v NLRC)
E. Disease of Employee
Requisites
Continued employment of employee is
prohibited by law or prejudicial to his
health or the health of his coemployees
Certification by a competent public
health authority that the disease is
cannot be cured within 6 months even
with proper treatment
Notice to employee and the DOLE 1
month prior to intended date of
termination
Payment of separation pay
A medical certificate issued by the
company physician is not valid since said
physician is NOT a competent public
health authority
Dismissal Procedure for Authorized Causes
General Procedure (common to all)
1. Written notice to DOLE 1 month prior to
intended date of termination
2. Written notice to employees 1 month
prior to intended date of termination
3. Payment of separation pay (except for
closure due to business losses or an act
of the government)
Separation Pay
Authorized Cause
Amount of Payment
Automation,
Redundancy
1 month pay or 1 month pay

for every year of service
whichever is higher
Retrenchment,
Closure NOT due to
serious losses,
Disease
1 month pay or month pay

for every year of service
whichever is higher
Page 33 of 41
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NOTE: A fraction of 6 months or more is considered
one year
Termination by Employee
May be with just cause or without just
cause
A voluntary act by the employee
General Rule: Voluntary resignation may be
withdrawn even if the employee has called it
irrevocable
Exception: Once resignation is accepted or
approved by the employer, it may not be
withdrawn without employer's consent
Just Causes of Termination by Employee
1. Serious insult by employer or his agent
on the honor and person of the employee
2. Inhumane and unbearable treatment by
the employer or his representative
3. Commission of a crime by the employer
or his agent against the person of the
employee or any of the immediate
members of his family
4. Other analogous causes
Procedural Requirement
No just cause serve notice to employer
at least 1 month in advance. If no notice
is served, employee may be liable for
damages
With just cause no notice necessary
Temporary Lay-Off
The following situations do not terminate
employment merely suspends it
o Bona fide suspension of business
operations for a period not exceeding
6 months
o Fulfillment by the employee of a
military or civic duty
In all cases, employee shall be reinstated
if he indicates his desires to resume work
not later than 1 month from resumption
of operations or from his relief from duty
If the bona fide suspension exceeds 6
months, employee shall be deemed
terminated, thus entitled to separation
LABOR LAW I
[ATTY. CADIZ]
pay (this is probably the only instance
where the employee is entitled to
separation pay despite the business
losses of the employer since there is
constructive dismissal ~ see International
Hardware v NLRC)
Retirement
Retirement age may be established by:
Collective Bargaining Agreement
Employment contract
Labor Code
Default retirement plan (Labor Code):
Conditions:
Retirement may be exercised upon
reaching 60 years but NOT more
than 65 years old
Compulsory retirement age: 65
Employee must have served at
least 5 years
Retirement Pay:
month salary for every year of
service
A fraction of at least 6 months is
considered as 1 whole year
month salary = 15 days pay +
1/12 of 13th month pay + cash
equivalent of 5 days of service
incentive leaves
Not covered by the retirement provision:
Retail, service and agricultural
establishments or operations
employing not more than 10
employees
NOTE: For underground mining employees:
Retirement may be exercised: 50-60
years of age
Compulsory retirement age: 60 years old
Has served at least 5 years as
underground mine worker
Monetary Claims and Reliefs
General Remedies
Backwages
Separation Pay
Reinstatement
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LABOR LAW I
[ATTY. CADIZ]
Remedies are normally awarded together

with one another (backwages +
reinstatement or separation pay) BUT
they are distinct remedies and
independent from one another
Backwages
Compensation that
should have been
earned but were not
collected because of the
unjust dismissal
Computed based on
actual period when the
employee was
unlawfully prevented
from working
Separation Pay
Granted where
reinstatement is no longer
possible because of the
strained relationship
between employer and
employee
Computed based on actual
length of employee's
service
Doctrine of Strained Relations

If an employee is reinstated and an atmosphere
of antipathy and antagonism would be
generated as to adversely affect the efficiency
and productivity of the employee concerned,
then the employee will be entitled to separation
pay in lieu of reinstatement
The strained relationship must be proved as a
fact otherwise, the doctrine will be applied
indiscriminately and an employer can easily get
rid of an employee by simply paying the
separation pay on the pretext that his
relationship with his employee had been
strained
Backwages
Full backwages includes the basic salary,
the statutory and CBA benefits
However, it does NOT include any salary
increase or adjustments
But if the wage increase is supported by a
lawful decree (such as an order from the
Regional Tripartite Wage and Productivity
Boards), then such adjustments may be
included in the computation (this is
implied by Equitable v Sadac)
Reckoning Periods:
If there is reinstatement From time

actual compensation was withheld
until actual date of reinstatement
If there is no reinstatement From
time employee was terminated until
finality of the Court's/Labor Arbiter's
decision finding the dismissal unlawful
Reinstatement
Restoring the dismissed employee to his
original position
General Rule: An employee that is illegally
dismissed is entitled to be reinstated without
loss of seniority rights
Exceptions:
1. When the relationship between employer
and employee is already strained
2. When the position to which the employee
is supposed to be reinstated to is no
longer available (but see Cabigting v San
Miguel as a unique exception to this case)
3. When it has been a long time since the
employee has been illegally dismissed
Separation Pay
Reckoning Period From time employee
was hired up to the time employee was
deemed separated; NOT up to the time
he was unjustly dismissed
When employee is deemed separated upon receipt of his full separation pay. It
is the only time when the employeremployee relationship is effectively
terminated (see Sarona v NLRC)
Defective Dismissal
Defective Dismissal
Illegal Dismissal
Cause for termination

is valid but procedural
due process is absent
Both substantive and

procedural due process
are not observed
Termination is still
effective but employee
is awarded nominal
damages
Employee is either
reinstated or given
separation pay with
backwages
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LABOR LAW I
[ATTY. CADIZ]
Consequences on Employer (see Culili v ETPI)

If dismissal is based on a just cause (Art.
282) but the employer failed to comply
with the notice requirement:
The sanction must be tempered
This is because the dismissal process
was initiated by the employee
If the dismissal is based on an authorized
cause (Art. 283) but the employer failed
to comply with the notice requirement
The sanction should be stiffer
This is because the dismissal process
was initiated by the employer's
exercise of management prerogative
NOTE: The act of government contemplates a

situation where the employees actually benefit from
such government intervention such as Agrarian
Reform (see NFL v NLRC)
Elements of Valid Termination

Cause of Termination
Serious Misconduct
(there is wrongful intent)

work of the employee
It must show that employee

is unfit to continue working
for the employer
Willful Disobedience
Payment of Separation Pay

Just
General Rules
Exceptions
No obligation Payment out of

to give
compassion of employer
separation pay OR if stipulated in CBA
Authorized Must give

Closure due to losses or
separation pay government action
Gross and Habitual

Neglect
Procedural Due Process

Cause
Procedure
Just
1. 1st Notice informing employee of

the charges against him and the
period in which to explain his side
2. Opportunity to be heard
3. 2nd Notice of the findings and
decision of the employee
Authorized
1. Written notice to DOLE 1 month
Termination
by Employee
prior to intended date of

termination
2. Written notice to employees 1
month prior to intended date of
termination
3. Payment of separation pay (except
for closure due to business losses
or an act of the government)*
No just cause serve notice to

employer at least 1 month in
advance
With just cause no notice
necessary
The act must be serious

It must be related to the
Summary
Cause
Requisites
Orders or
instructions are reasonable
and lawful
They are
sufficiently made known to
the employee
They must be in
connection with the duties
which the employee has
been engaged to discharge
Neglect
Total absence of diligence
and care
Repeated failure to perform
ones duties
Abandonment
Absence without valid

reason
Intent to sever
employer-employee
relationship
Fraud, breach or loss

of trust
Employee is holding a
Commission of a
Crime or Offense
Must be against the person
Automation
position of trust and

confidence
Willful breach of trust
founded on clearly
established facts
The act or omission is workrelated
of the employer or:
o His agent
o Immediate members of
his family
N/A
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Redundancy
Retrenchment
LABOR LAW I
[ATTY. CADIZ]
Written notice to
DOLE and employees at
least 1 month prior to
termination
Payment of
separation pay
Good faith in
abolishing redundant
positions
Fair and
reasonable criteria in
ascertaining the positions to
be abolished to justify
redundancy
Losses are substantial not

merely de minimis in extent
Losses are perceived in

good faith and proved by
evidence
Employer must have taken
other measures prior or
parallel to retrenchment
Notice to DOLE and
employees concerned 1
month prior to intended
date of retrenchment
Closure of Business
Disease of Employee
Not due to Losses

Bona fide closure of
business
Notice to DOLE and
employees 1 month prior to
date of closure
Due to Losses
Bona fide closure of
business
Notice to DOLE and
employees 1 month prior to
date of closure
Continued
employment is prohibited
by law or prejudicial to his
health or the health of his
co-employees
Certification by a
competent public health
authority that the disease is
cannot be cured within 6
months even with proper
treatment
Notice to employee
and the DOLE 1 month prior
to intended date of
termination
Payment of
separation pay
Case Doctrines Just Causes

Batongbacal v Associated Bank An employee
who refuses to follow an order to tender his
courtesy resignation, being an unlawful directive
of the employer, may not be terminated for
insubordination. This is because resignation is a
voluntary relinquishment of a position on the
part of the employee.
Caltex v Agad Theft of company property is
akin to serious misconduct or willful
disobedience of lawful orders of the employer.
And since the employee holds a position of trust,
the act committed constitutes willful breach of
trust, which is another just cause for termination
Cosmos Bottling v Fermin Theft committed
against a co-employee is a case analogous to
serious misconduct. Proof of material damage to
the employer is immaterial since only the moral
depravity of the employee is considered in
rendering him unfit for employment
Duterte v Kingswood Refusal to get a medical
certificate from the company physician, despite
the presence of a certificate of fitness to work
issued by a public health official, cannot be
considered as an act of insubordination. The
burden of proof that the disease of the worker
can or cannot be treated within 6 months may
not shifted to said employee
Elcee Farms v NLRC Leasing the business or its
properties, which effectively terminates the
original business of the owner, is a cessation of
operations which entitles the employees to
separation pay
Exodus International v Biscocho Mere absence
or failure to report for work is not enough to
amount to abandonment of work. Absence must
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be coupled with the clear intent to sever the
employer-employee relationship, which may not
be presumed by the employer
Felix v Buenaseda A residency or resident
physician position in a medical specialty is never
a permanent one. By its nature and purpose, it
is always a temporary position which a physician
must relinquish eventually.
Hospital Mgt v Hospital Mgt Assoc The Court
considered the factors in absolving the employee
from gross and habitual negligence:
1. Incident was not serious it was not of a
magnitude that would require medical
intervention on the patient who was not
assisted by the employee
2. Duration of employment employee was
working for 9 years without any previous
derogatory record
3. Incident was a first offense even if the
act constituted gross negligence, it was
not habitual
Lopez v Alturas There is no violation of due
process even if no formal hearing was conducted
as long as the employee was given a chance to
be heard through any other reasonable means.
The acquittal of the employee in a criminal case
(theft) does not automatically preclude a
determination that he has been guilty of acts
resulting in loss of trust and confidence
Lores Realty v Pacia A refusal to issue checks
due to insufficient funds (and in order to protect
the company from B.P. 22) is not a wrongful act
and may not amount to insubordination
PAL v NLRC Employers are allowed a wider
latitude of discretion in terminating managerial
personnel or those who perform functions
requiring the employer's full trust and confidence
On issue of separation pay While the dismissal
was for a just cause, the employee is entitled to
separation pay since the dismissal was neither
for serious misconduct nor for an offense
involving moral turpitude (based on equitable
LABOR LAW I
[ATTY. CADIZ]
considerations)
Philippine Telegraph v CA A refusal of an
employee to be transferred, as a result of a
promotion, may not amount to insubordination
since a promotion needs to be accepted by the
employee thus it may not be effected without
the employee's consent
PLDT v Berbano When the wrongful conduct
did not result in economic loss on the part of the
employer, and the fact that the employee has
worked a long time for the company without any
irregularities, such offense is only a simple
misconduct which does NOT warrant the penalty
of dismissal
Press v Galit The mere fact that the infractions
of the employee have not been immediately
subjected to sanctions cannot be interpreted as
condonation of the offense this management
prerogative to discipline employees cannot be
impliedly waived
On issue of due process Employer must still
comply with the twin-notice rule even if:
There is preventive suspension (the
suspension cannot substitute as a notice)
Employee has been caught in flagrante
Evidence of the commission of the
offense is strong
Samahan v Magsalin An employee validly
dismissed due to serious misconduct adversely
reflecting his moral character may not be given
separation pay or financial assistance
Sampaguita Garments v NLRC If an employee
is absolved of an offense in an administrative
proceeding (NLRC) and is ordered to be
reinstated, a subsequent conviction in a criminal
prosecution for the same offense renders the
previous administrative decision without force
and effect
School of Holy Spirit v Taguiam The death of a
student is gross negligence on the part of the
teacher-employee which resulted in the loss of
trust and confidence of the employer. Even if it is
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an isolated incident (meaning not habitual), it
would be absurd for the employer to wait for
many more students to die before terminating
the employee just to prove habitual negligence
Yrasuegui v PAL There can be no
discrimination in a case where overweight
employees are dismissed when reasonable
weight standards are required by the nature of
the work involved (flight attendants in this case)
Case Doctrines Authorized Causes
Alabang Country Club v NLRC Retrenchment is
a reduction of personnel for the purpose of
cutting down cost on operations, and it must be
proved that losses are substantial or imminent.
Closure of a business includes both the complete
cessation of operation or only a part thereof. It
need not be proved by the same degree of
evidence as in retrenchment cases since a
business owner may close his business anytime
he wants. The law does not compel a person to
remain in business if he does not want to.
Asian Alcohol Corp v NLRC An employer's good
faith in implementing a redundancy program is
not necessarily destroyed by availment of the
services of an independent contractor to replace
the services of the terminated employees
Ever Electrical v Samahan Closure of a
business due to an ejectment case against the
corporation is cessation due to a government
action and NOT due to business reverses. Since
this government action was not for the benefit of
the employees (thus not covered by the
exception), the employer is still liable to pay
separation pay.
Flight Attendants v PAL Guidelines for
retrenchment:
Not every loss incurred or expected to be
incurred will justify retrenchment
Even assuming that losses were incurred
because of a global or regional economic
crisis, retrenchment is not completely
justified if there is no showing that it was
the last recourse resorted to
LABOR LAW I
[ATTY. CADIZ]
Financial statements audited by
independent external auditors constitute
the normal method of proof or evidence
The fact that the corporation underwent
corporate rehabilitation does not
automatically justify retrenchment
A retrenchment scheme without taking
seniority into account renders the
retrenchment invalid even as against
other factors such as discipline, job
performance and attitude towards work
International Hardware v NLRC If an employee
consented to his retrenchment or VOLUNTARILY
applied for retrenchment due to the installation
of labor-saving devices, redundancy or to
prevent financial losses, the required notice to
the DOLE is not necessary
When the bona fide suspension of the operation
of a business exceeds 6 months, the employee
shall be deemed terminated
Mindanao Terminal v Nagkahiusang Should the
temporary lay-off (suspension of operations)
exceed 6 months, the employees should either
be recalled to work or permanently retrenched
following the requirements of law and the failure
to comply would be tantamount to dismissing
the employees
NFL v NLRC Closure of the employer's business
due to a government action, and such act of
government is for the benefit of the employees
(in this case, agrarian reform), does not entitle
the employees to separation pay from their
employer
San Felipe Neri v NLRC Absent an agreement
to the contrary, the owner of the business who
sells the same shall be liable to give due notice
and the proper separation pays to his employees
since there is no law which requires the buyer to
absorb the employees of the selling company.
Case Doctrines Claims and Reliefs
Banares v Tabaco Cooperative Separation pay
is made in lieu of reinstatement:
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1. When a long period of time has elapsed
since the dismissal of the employee
2. Reinstatement is inimical to the interest
of the employer and employee
3. Reinstatement is no longer feasible
4. Reinstatement does not serve the best
interests of the parties involved
5. Employer is prejudiced by the worker's
continued employment
6. The facts that make execution unjust or
inequitable have supervened
7. Strained relations between employer and
employee
Cabigting v San Miguel Guidelines on the
doctrine of Strained Relations:
1. No strained relations should arise from a
valid and legal act of asserting one's right
2. The strained relationship must be proved
as a fact if either the employer or
employee does not want the employment
to remain
3. The fact alone that the employee filed a
case against the employer (since it is a
legal right) cannot be the basis of a
strained relationship
NOTE: This case is unique since the Supreme
Court directed the employer to create an
equivalent position for the employee to be
reinstated. Normally, when an employee is to be
reinstated to a position no longer available,
separation pay is paid in lieu thereof.
Cainta Catholic School v CCSEU A CBA may
validly accord management the prerogative to
optionally retire an employee under the terms
and conditions mutually agreed upon by the
parties even if such agreement allows for
retirement at an age lower than the optional
retirement age or the compulsory retirement age
Equitable Bank v Sadac - Backwages means
that the employee is paid at the wage rate at the
time of his dismissal plus bonuses and benefits.
However, a salary increases cannot be
interpreted as either an allowance or benefit. If
the salary increases are a mere expectancy (eg:
by reason of excellent performance) or are not
LABOR LAW I
[ATTY. CADIZ]
supported by a lawful decree or order, such
increases may NOT be made a component in the
computation of backwages
Golden Ace v Talde While an illegally dismissed
employee is normally entitled to 2 reliefs
(backwages and reinstatement/separation pay),
such reliefs are distinct and independent of each
other as their purposes are different. Just
because an employee has already been paid
backwages does not mean he cannot claim to
separation pay
Moreno v San Sebastian College Even if the
employer had the right to terminate the
employee given the moonlighting activities of
the latter, the penalty of dismissal is too harsh
given that:
1. The employer was not adversely affected
by the disobedience of the employee
2. The employee was forced to violate
company policies given serious economic
necessities
3. The employees performance was not
compromised and her work was not
prejudiced
4. The employer had the discretion to
impose a lighter penalty
Nestle Phils v NLRC Even if the retirement plan
under the CBA is non-contributory, it is still a
contractual obligation and may not be
considered as merely gratuitous, thus the
employees have a demandable right over such
retirement plan
Perez v PT&T While the Implementing Rules
require a formal hearing, the Labor Code only
requires that the employee is given an
opportunity to defend his side, whether it may
be verbal or written. In case of conflict between
the rules and the law, the latter prevails
Sarona v NLRC If a dissolved corporation's
successor is merely a continuation of the former
one (not a bona fide new entity), then the
employee's term of employment should be
counted from the time he was hired by the
former corporation and not by the successor
Page 40 of 41
ATENEO LAW SCHOOL

3-A
L.T.J.F.
LABOR LAW I
[ATTY. CADIZ]
Session Delights v CA A re-computation by a

higher court of the awards and damages made
by a lower tribunal, without modifying a final
judgment on the rights and status of the
prevailing party, does not violate the principle of
immutability of final judgments
Suico v NLRC Due process means compliance
with the Labor Code, CBA and company policy.
No matter how serious the infraction or
misconduct of the employee, the due process
requirement may not be dispensed with
Page 41 of 41

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ATENEO LAW SCHOOL

LABOR LAW REVIEWER

measures that protect and enhance the

Civil Code Provisions

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Claims arising from employeremployee relationship

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Max term of 6 months

Max term of 3 months

75% of minimum wage 75% of minimum wage

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V. SPECIAL CLASS OF WORKERS

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Leave of not more than 7 working days

Solo Parents R.A. 8972

the homeworker, the employer shall be

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Apex Mining v NLRC A house helper is

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1. Overtime Work work performed beyond 8

10% of regular wage for each hour

25% of regular wage for ordinary

30% of regular wage

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Implementing Rules on Holiday Pay

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Piece Rate A - Following the DOLE Standard

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Sime Darby v NLRC A change in work schedule

Monthly Paid Teachers

Paid only for actual

Entitled to regular pay

Not entitled to holiday

Not entitled to holiday

Universal Corn v NLRC A Christmas bonus

authority that is not merely routinary or clerical

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Other monetary benefits not considered

Legal requirements before deducting value of

Monthly wage >= Legal

Computation of Daily Rate for Monthly Paid

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A: Payments are made at intervals not

Q: Is there an exception to this rule?

A: Yes. If a Collective Bargaining Agreement or

General Rule: No employer shall make any

Other Exceptions Authorized by Existing Laws:

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Supreme Court formula to correct a salary

CBA Arbitration Process

*NCMB National Conciliation and Mediation Board (A

employees, it cannot be the SOLE basis in cases

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NOTE: Under the current I.R.R. (D.O. 18-A),

Capital AND relevance of work +

Atty. Azucena EE + CE1 or CE2

Consequences and Liabilities

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