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BONUS: GUIDE TO CORRECT ANSWERS FOR THE 2013 BAR

By: J. OSWALD B. LORENZO, Professor of Law and Pre-Bar Reviewer

CONSTITUTIONAL MANDATE.

“The state shall afford full protection to labor, local and overseas, organized andunorganized, and promote full employment and equality of employment opportunitiesfor all. It shall guarantee the rights of all workers to self-organization, collectivebargaining and negotiations, and peaceful concerted activities, including the right tostrike in accordance with law. They shall be entitled to security of tenure, humaneconditions of work, and a living wage. They shall also participate in policy anddecision-making processes affecting their rights and benefits as may be provided bylaw.

“The State shall promote the principle of shared responsibility between workers

and employers and the preferential use of voluntary modes in setting disputes,including conciliation, and shall enforce their mutual compliance therewith to fosterindustrial peace.

“The State shall regulate the relations between workers and employers,recognizing the right of labor to its just share in the fruits of production and the rightof enterprises to reasonable returns on investments, and to expansion and growth.”(Section 3 (Labor), Article XIII [Social Justice and Human Rights] of the 1987).

LABOR LAW AND THE CONSTITUTION

A. General Principles.

Q. What is labor law?

A. It is the body of statutes, rules, regulations, doctrines and principlesgoverning the relations, interactions or dynamics between labor andcapital, which include but not limited to their rights, obligations andliabilities.

Q. What is Scope or Divisions of Labor Law?Answer.1. Labor standards. These are laws which set out the minimum terms,

conditions and benefits of employment that the employers must provide orcomply with and to which employees are entitled as a matter of legal right.Labor standards, as defined more specially by jurisprudence, are theminimum requirements prescribed by existing laws, rules and regulationsrelating to wages, hours of work, cost of living allowance, and other



monetary and welfare benefits, including occupational, safety and healthstandards (Maternity Children's Hospital vs. Secretary of Labor, G.R. No.78909, 30 June 1989).

2. Labor relations law. These are the body of laws, which have for itspurpose, the harmonization of the relationship between labor andmanagement, through institutional mechanism, whether individually orcollective, by means of compulsory or voluntary arbitration, conciliation andmediation. The end objective of labor law, is the attainment of industrialpeace in company level in particular and in the industrial front in general

.3. Social and welfare legislation. These refer to the special laws and

statutes impressed with public interest, the enactment of which by thelegislature is geared to flesh-out the Constitution's social justice provisions,their intendment being the welfare of society as a whole and the workingclass in particular.

Basic Labor Law Concepts.

Labor Explained. In its present day connotation the term labor may refercollectively to the working or laboring class when taken in connection withits relationship with collective capital or management. It also means the"worker," who as defined, is "one who belongs to the labor force whetheremployed or not." Labor, as commonly understood, may also refer to the toil

exerted by any worker or an employee, whether physical or mental that isnecessary in the production of goods and services.

The Labor Code definitions of the term "employee" are at times,interchangeably used, when referring to a laborer or worker. It should,therefore be noted, that in Book II, the term "worker" is defined. "Employee"is likewise defined in Book III, Book IV and Book V for the purpose of laborstandards, employees compensation and labor relations respectively. (Referto Art. 97 (c); Art.167 (g), now Art. 173 (g); and Art. 218 (f), now renumberedas Aty. 224 (f) of the Labor Code, as amended).

Concept of Management Prerogative. This refers to an employer's rightto freely regulate all aspects of employment through the adoption ofstrategies or schemes geared toward attaining profit, subject, however, tolimitations set by law, the CBA and the principles of fairness and justice andmust be effected in good faith and not tainted by unfair labor practice.



Q: What are the constitutional provisions related to labor?

A: Article II, Section 18 of the 1987 Constitution provides that “The Stateaffirms labor as a primary social economic force. It shall protect the rights ofworkers and promote their welfare.” Article XIII, Section 3 of the 1987 Constitution provides that “The State shallafford full protection to labor, local and overseas, organized and unorganized,and promote full employment and equality of employment opportunities forall.

It shall guarantee the rights of all workers to self-organizations, and peacefulconcerted activities, including the right to strike in accordance with law.They shall be entitled to security of tenure, humane conditions of work, and aliving wage. They shall also participate in policy and decision-makingprocesses affecting their rights and benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workersand employers and the preferential use of voluntary modes in settlingdisputes, including conciliation, and shall enforce their mutual compliancetherewith to foster industrial peace.

The State shall regulate the relations between workers and employers,recognizing the right of labor to its just share in the fruits of production andthe right of enterprises to reasonable returns on investments, and toexpansion and growth.

FUNDAMENTAL PRINCIPLES AND POLICIES

I. Constitutional Provisions

1. a. Art II, Secs. 9, 10, 11, 13, 14, 18, 20.2. b. Art III, Secs. 1, 4, 8.3. c. Art. XIII, Secs. 1, 2, 3, 14.

Q. What are the Constitutional Provisions Related to Labor?

ANSWER:Article II

Section 9. The State shall promote a just and dynamic social order that will ensure theprosperity and independence of the nation and free the people from poverty through policiesthat provide adequate social services, promote full employment, a rising standard of living,and an improved quality of life for all.

Section 10. The State shall promote social justice in all phases of national development.Section 11. The State values the dignity of every human person and guarantees full respect

for human rights.



Section 13. The State recognizes the vital role of the youth in nation-building and shallpromote and protect their physical, moral, spiritual, intellectual, and social well-being. It shallinculcate in the youth patriotism and nationalism, and encourage their involvement in publicand civic affairs.

Section 14. The State recognizes the role of women in nation-building, and shall ensure thefundamental equality before the law of women and men.

Section 18. The State affirms labor as a primary social economic force. It shall protect therights of workers and promote their welfare.

Section 20. The State recognizes the indispensable role of the private sector, encouragesprivate enterprise, and provides incentives to needed investments.Article III

Section 1. No person shall be deprived of life, liberty, or property without due process oflaw, nor shall any person be denied the equal protection of the laws.

Section 4. No law shall be passed abridging the freedom of speech, of expression, or of thepress, or the right of the people peaceably to assemble and petition the government forredress of grievances.

Section 8. The right of the people, including those employed in the public and privatesectors, to form unions, associations, or societies for purposes not contrary to law shall not

be abridged.

ARTICLE XIII -- SOCIAL JUSTICE AND HUMAN RIGHTS

Section 1. The Congress shall give highest priority to the enactment of measures thatprotect and enhance the right of all the people to human dignity, reduce social, economic, andpolitical inequalities, and remove cultural inequities by equitably diffusing wealth and politicalpower for the common good.

To this end, the State shall regulate the acquisition, ownership, use, and disposition ofproperty and its increments.

Section 2. The promotion of social justice shall include the commitment to createeconomic opportunities based on freedom of initiative and self-reliance.

LABOR

Sec. 3. “The state shall afford full protection to labor, local and overseas, organized andunorganized, and promote full employment and equality of employment opportunities for all. Itshall guarantee the rights of all workers to self-organization, collective bargaining andnegotiations, and peaceful concerted activities, including the right to strike in accordancewith law. They shall be entitled to security of tenure, humane conditions of work, and a livingwage. They shall also participate in policy and decision-making processes affecting theirrights and benefits as may be provided by law.

“The State shall promote the principle of shared responsibility between workers andemployers and the preferential use of voluntary modes in setting disputes, including

conciliation, and shall enforce their mutual compliance therewith to foster industrial peace.“The State shall regulate the relations between workers and employers, recognizing the

right of labor to its just share in the fruits of production and the right of enterprises toreasonable ret urns on investments, and to expansion and growth.” (Section 3 (Labor), ArticleXIII [Social Justice and Human Rights] of the 1987).

The Rights of Labor Guaranteed by the Constitution (Sec. 3, Art. XIII)1. full protection to labor;



2. promotion of full employment and equality of employment opportunity to all;

3. guarantee of right of workers to self-organization;

4. collective bargaining and negotiations;

5. right to peaceful concerted activities including the right to strike in accordance with law;

6. right to security of tenure;

7. right to human conditions of work;

8. right to participate in policy and decision-making affecting their rights and benefIts.

4. WOMEN

Section 14. The State shall protect working women by providing safe and healthfulworking conditions, taking into account their maternal functions, and such facilities andopportunities that will enhance their welfare and enable them to realize their full potential in

the service of the nation.

Q: Define: a) Labor Legislation; b) Labor Standards c) Labor Relations; andd) Social Legislation

ANSWER: a) Labor legislation refers to the body of statutes, rules anddoctrines that defines State policies on labor and employment, and governsthe rights and duties of workers and employers respecting terms andconditions of employment by prescribing certain standards therefore, or by

establishing a legal framework within which better terms and conditions ofwork could be obtained through collective bargaining or other concertedactivity

b) As defined in the case of Maternity Children’s Hospital vs. Sec of Labor[G.R. No. 78909. June 30,1989], Labor Standards refers to the minimumrequirements prescribed by existing laws, rules and regulations relating towages, hours of work, cost-of-living allowance, and other monetary andwelfare benefits, including occupational safety, and health standards.

c) Labor Relations refers to the law which seeks to stabilize the relationbetween employers and employees, to forestall and thresh out theirdifferences through the encouragement of collective bargaining and thesettlement of labor disputes through conciliation, mediation and arbitration.

d) Social Legislation comprises the general laws that are supposed to protectthe welfare of the public in general. Part of this would be the Social Security



Law, the Employees Compensation Commission and the revised GSIS Act.The Agrarian Reforms Law is also included. The basis of all theseenactments and legislations is SOCIAL JUSTICE.

Q: Define Social Justice.

A: Social Justice simply means “the humanization of laws and the equalizationof social and economic forces by the State so that justice in its rational andobjectively secular concept ion may at least be proximated.” (Calalang vs.Williams 70 Phil. 726)

This is the aim, reason and justification for the enactment of labor laws.

Q: While m social justice is the aim, reason and justification of labor laws, whatis the foundation of labor laws?

A: The basis and foundation of labor laws is the police power of the State. It isthe power of the Government to enact laws, within Constitutional limits, topromote the order, safety, health, morals and general welfare of society.

Q: What is the State’s basic policy on labor as provided in the Labor Code asamended?

A: Article 3 of the Labor Code as amended provides that “The State shall affordprotection to labor, promote full employment, ensure equal work

opportunities regardless of sex, race or creed, and regulate the relationsbetween workers and employers.The State shall assure the rights of workers to self-organization, collective

bargaining, security of tenure and just and humane conditions of work.

Q: How should Labor Laws be construed?

A: Under the Article 4 of the Labor Code, as amended, it is provided : “Alldoubts in the implementation and interpretation of the provisions of thisCode, including its implementing rules and regulations, shall be resolved in

favor of labor.”However, it should not be supposed that every labor dispute be

automatically decided in favor of labor. The rule is applicable only if there isa doubt as to the meaning of the legal and contractual provision. If theprovision is clear and unambiguous, it must be applied in accordance with itsexpress terms.



The law, in protecting the rights of the laborer, authorizes neitheroppression nor self-destruction of the employer.

Q: What is management prerogative?

ANSWER: Management prerogative simply means that except as otherwiselimited by special laws, an employer is free to regulate, according to his owndiscretion and judgment, all aspects of employment, including hiring, workassignments, working methods, time, place, and manner of work, tools to beused, processes to be followed, supervision of workers, working regulations,transfer of employees, work supervision, lay-off of workers and discipline,dismissal and recall of workers.

Q: What are the limitations on the exercise of management prerogative?

A: The following are the limitations on the exercise of managementprerogative:

1.) It must be exercised in good faith;2.) It must not be tainted with unfair labor practice;3.) The exercise of management prerogative must be within the

limitations set by law;4.) It must also be within the limitations set by the Collective

Bargaining Agreement; and

5.) The exercise must be consistent with the principles of fair play and justice.

Supreme Court Rulings On Management Rights.

a. In NORKIS TRADING CO., INC., ET AL. vs. NATIONAL LABORRELATIONS COMMISSION, ET AL; G.R. No. 168159. August 19, 2005, the

employers are allowed, under the broad concept of management prerogative,to regulate all aspects of personnel administration including hiring, workassignments, working methods, time, place and manner of work, tools to beused, processes to be followed, supervision of workers, working regulations,transfer of employees, work supervision, lay-off of workers, and the dismissaland recall of workers .

http://www.supremecourt.gov.ph/jurisprudence/2005/aug2005/168159.htm




b. The Supreme Court in Garcia vs. National Labor RelationsCommission, 243 SCRA 632, reiterated the existing doctrine that theConstitution also protects management from oppression and destruction inthis wise: "(t)he Constitutional policy of providing full protection to labor isnot intended to oppress or destroy management xxxx. The unfledgingcommitment of this Court to the cause of the labor will not prevent Us fromsustaining the employer, when it is in the right xxxx."

c. In Philippine Geothermal, Inc. vs. The National Labor RelationsCommission, 236 SCRA 371, the Supreme Court balanced the conflictinginterests of both labor and management and placed the parties in relativelyequal positions.

d. Likewise, in earlier cases, the Court ruled that the law in protectingthe rights of the employees does not authorize the oppression nor self-destruction of the employer. It should be made clear that when the law tiltsthe scales of justice to put the two (2) parties in favor of labor, it is butrecognition of the inherent inequality between labor and management. Theevident intent is to balance the scale of justice to put the two parties onrelatively equal positions. There may be cases where the circumstanceswarrant favoring labor over the interests of management but never shouldthe scale be so tilted if the result is an injustice to the employer. (Justicianemeni neganda est (Justice is to be denied to none).

RELATED SC DECISIONS

1. In a 1996 case, the Supreme Court ruled in Home Owners Savings andLoan Association, Inc. vs. NLRC and Marilyn Cabatbat, G.R No.97067, 26September 1996, that an "(a)n owner of a business enterprise is givenconsiderable leeway in managing because it is deemed important to societyas a whole that he should succeed."

Our law, therefore, recognizes certain rights as inherent in themanagement of business enterprises. These rights are collectively called

management prerogatives or acts by which directing the business is able tocontrol the variables thereof, so as to enhance the chances of making aprofit. Together, they may taken as the freedom to administer the affairs of abusiness enterprise such that the costs of running it would be below theexpected earnings or receipts. In short, the elbow room in the quest forprofits"(Citing Chu vs. NLRC, 232 SCRA 764 [1994].



2. The scope of these prerogatives was laid down in a number of cases,one of which was San Miguel Brewery Sales Force Union (PTGWO) vs. Ople,170 SCRA 25 (1989), where the Court held that "(e)xcept as limited byspecial laws, an employer is free to regulate, according to his own discretionand judgment, all aspects of employment, including hiring, workassignments, working methods, time, place and manner of work, tools to beused, processes to be followed, supervision of workers, working regulations,transfer of employees, work supervision, lay-off of workers and thediscipline, dismissal and recall of work." (Based on National Labor Union(NLU) vs. Insular La Yebana Co., 2 SCRA 924, Republic Savings Bank vs. CIR,21 SCRA 226, 235).

3. As a general rule, it is recognized "that normally it is theprerogative of the employer to transfer and re-assign its employeesaccording to the requirements of its business (Pocketbell Philippines, Inc. vs.NLRC, et. al., G.R. No. 106843, 20 January 1995; Phil. Telegraph andTelephone Co. vs. Laplana, 199 SCRA 485 [1991] ).

4. This same ruling was the Court's position in Interwood EmployeesAssociation vs. International Hardwood and Veneer Co. of the Phil., 99 Phil.82 (1956) and in Yuco Chemical Chemical Industries, Inc. vs. MOLE, 185SCRA 727 (1990), which upheld "the employer's right to transfer its personnelfor valid reasons".

LABOR LAW AND THE CONSTITUTION

A. General Principles.

R. What is labor law?

B. It is the body of statutes, rules, regulations, doctrines and principles governingthe relations, interactions or dynamics between labor and capital, whichinclude but not limited to their rights, obligations and liabilities.

R. What is Scope or Divisions of Labor Law?Answer.

1. Labor standards. These are laws which set out the minimum terms,conditions and benefits of employment that the employers must provide or complywith and to which employees are entitled as a matter of legal right. Labor standards,as defined more specially by jurisprudence, are the minimum requirementsprescribed by existing laws, rules and regulations relating to wages, hours of work,cost of living allowance, and other monetary and welfare benefits, includingoccupational, safety and health standards (Maternity Children's Hospital vs.Secretary of Labor, G.R. No. 78909, 30 June 1989).



2. Labor relations law. These are the body of laws, which have for its

purpose, the harmonization of the relationship between labor and management,through institutional mechanism, whether individually or collective, by means ofcompulsory or voluntary arbitration, conciliation and mediation. The end objective of

labor law, is the attainment of industrial peace in company level in particular and inthe industrial front in general

.3. Social and welfare legislation. These refer to the special laws and

statutes impressed with public interest, the enactment of which by the legislature isgeared to flesh-out the Constitution's social justice provisions, their intendmentbeing the welfare of society as a whole and the working class in particular.

Basic Labor Law Concepts.

Labor Explained. In its present day connotation the term labor may refer

collectively to the working or laboring class when taken in connection with itsrelationship with collective capital or management. It also means the "worker," whoas defined, is "one who belongs to the labor force whether employed or not." Labor,as commonly understood, may also refer to the toil exerted by any worker or anemployee, whether physical or mental that is necessary in the production of goodsand services.

The Labor Code definitions of the term "employee" are at times,interchangeably used, when referring to a laborer or worker. It should, therefore benoted, that in Book II, the term "worker" is defined. "Employee" is likewise definedin Book III, Book IV and Book V for the purpose of labor standards, employees

compensation and labor relations respectively. (Refer to Art. 97 (c); Art.167 (g), nowArt. 173 (g); and Art. 218 (f), now renumbered as Aty. 224 (f) of the Labor Code, asamended).

Concept of Management Prerogative. This refers to an employer's right tofreely regulate all aspects of employment through the adoption of strategies orschemes geared toward attaining profit, subject, however, to limitations set by law,the CBA and the principles of fairness and justice and must be effected in good faithand not tainted by unfair labor practice.

Q: What are the constitutional provisions related to labor?

A: Article II, Section 18 of the 1987 Constitution provides that “The State affirmslabor as a primary social economic force. It shall protect the rights of workers andpromote their welfare.”

Article XIII, Section 3 of the 1987 Constitution provides that “The State shallafford full protection to labor, local and overseas, organized and unorganized, andpromote full employment and equality of employment opportunities for all.



It shall guarantee the rights of all workers to self-organizations, and peacefulconcerted activities, including the right to strike in accordance with law. They shallbe entitled to security of tenure, humane conditions of work, and a living wage. Theyshall also participate in policy and decision-making processes affecting their rightsand benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workersand employers and the preferential use of voluntary modes in settling disputes,including conciliation, and shall enforce their mutual compliance therewith to fosterindustrial peace.

The State shall regulate the relations between workers and employers, recognizingthe right of labor to its just share in the fruits of production and the right ofenterprises to reasonable returns on investments, and to expansion and growth.

FUNDAMENTAL PRINCIPLES AND POLICIES

II. Constitutional Provisions

4. a. Art II, Secs. 9, 10, 11, 13, 14, 18, 20.5. b. Art III, Secs. 1, 4, 8.6. c. Art. XIII, Secs. 1, 2, 3, 14.

Q. What are the Constitutional Provisions Related to Labor?

ANSWER:Article II

Section 9. The State shall promote a just and dynamic social order that will

ensure the prosperity and independence of the nation and free the people frompoverty through policies that provide adequate social services, promote fullemployment, a rising standard of living, and an improved quality of life for all.

Section 10. The State shall promote social justice in all phases of nationaldevelopment.

Section 11. The State values the dignity of every human person and guaranteesfull respect for human rights.

Section 13. The State recognizes the vital role of the youth in nation-buildingand shall promote and protect their physical, moral, spiritual, intellectual, and socialwell-being. It shall inculcate in the youth patriotism and nationalism, and encouragetheir involvement in public and civic affairs.

Section 14. The State recognizes the role of women in nation-building, and shallensure the fundamental equality before the law of women and men.

Section 18. The State affirms labor as a primary social economic force. It shallprotect the rights of workers and promote their welfare.

Section 20. The State recognizes the indispensable role of the private sector,encourages private enterprise, and provides incentives to needed investments.

Article III



Section 1. No person shall be deprived of life, liberty, or property without dueprocess of law, nor shall any person be denied the equal protection of the laws.

Section 4. No law shall be passed abridging the freedom of speech, ofexpression, or of the press, or the right of the people peaceably to assemble andpetition the government for redress of grievances.

Section 8. The right of the people, including those employed in the public andprivate sectors, to form unions, associations, or societies for purposes not contraryto law shall not be abridged.

ARTICLE XIII -- SOCIAL JUSTICE AND HUMAN RIGHTS

Section 1. The Congress shall give highest priority to the enactment ofmeasures that protect and enhance the right of all the people to human dignity,reduce social, economic, and political inequalities, and remove cultural inequities byequitably diffusing wealth and political power for the common good.

To this end, the State shall regulate the acquisition, ownership, use, and

disposition of property and its increments.Section 2. The promotion of social justice shall include the commitment to

create economic opportunities based on freedom of initiative and self-reliance.

LABOR

Sec. 3. “The state shall afford full protection to labor, local and overseas,organized and unorganized, and promote full employment and equality ofemployment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concertedactivities, including the right to strike in accordance with law. They shall be entitled

to security of tenure, humane conditions of work, and a living wage. They shall alsoparticipate in policy and decision-making processes affecting their rights andbenefits as may be provided by law.

“The State shall promote the princ iple of shared responsibility betweenworkers and employers and the preferential use of voluntary modes in settingdisputes, including conciliation, and shall enforce their mutual compliance therewithto foster industrial peace.

“The State shall regu late the relations between workers and employers,recognizing the right of labor to its just share in the fruits of production and the rightof enterprises to reasonable returns on investments, and to expansion and growth.”(Section 3 (Labor), Article XIII [Social Justice and Human Rights] of the 1987).

The Rights of Labor Guaranteed by the Constitution (Sec. 3, Art. XIII)9. full protection to labor;10. promotion of full employment and equality of employment opportunity to all;11. guarantee of right of workers to self-organization;12. collective bargaining and negotiations;



13. right to peaceful concerted activities including the right to strike in accordancewith law;

14. right to security of tenure;15. right to human conditions of work;16. right to participate in policy and decision-making affecting their rights and

benefIts.4. WOMEN

Section 14. The State shall protect working women by providing safe andhealthful working conditions, taking into account their maternal functions, and suchfacilities and opportunities that will enhance their welfare and enable them to realizetheir full potential in the service of the nation.

Q: Define: a) Labor Legislation; b) Labor Standards c) Labor Relations; and d)Social Legislation

ANSWER: a) Labor legislation refers to the body of statutes, rules and doctrinesthat defines State policies on labor and employment, and governs the rights andduties of workers and employers respecting terms and conditions of employment byprescribing certain standards therefore, or by establishing a legal framework withinwhich better terms and conditions of work could be obtained through collectivebargaining or other concerted activity

b) As defined in the case of Maternity Children’s Hospital vs. Sec of Labor [G.R.No. 78909. June 30,1989], Labor Standards refers to the minimum requirementsprescribed by existing laws, rules and regulations relating to wages, hours of work,

cost-of-living allowance, and other monetary and welfare benefits, includingoccupational safety, and health standards.

c) Labor Relations refers to the law which seeks to stabilize the relation betweenemployers and employees, to forestall and thresh out their differences through theencouragement of collective bargaining and the settlement of labor disputes throughconciliation, mediation and arbitration.

d) Social Legislation comprises the general laws that are supposed to protect thewelfare of the public in general. Part of this would be the Social Security Law, theEmployees Compensation Commission and the revised GSIS Act. The AgrarianReforms Law is also included. The basis of all these enactments and legislations isSOCIAL JUSTICE.

Q: Define Social Justice.



A: Social Justice simply means “the humanization of laws and the equalization ofsocial and economic forces by the State so that justice in its rational and objectivelysecular concept ion may at least be proximated.” (Calalang vs. Williams 70 Phil. 726)

This is the aim, reason and justification for the enactment of labor laws.

Q: While m social justice is the aim, reason and justification of labor laws, whatis the foundation of labor laws?

A: The basis and foundation of labor laws is the police power of the State. It isthe power of the Government to enact laws, within Constitutional limits, to promotethe order, safety, health, morals and general welfare of society.

Q: What is the State’s basic policy on labor as provided in the Labor Code asamended?

A: Article 3 of the Labor Code as amended provides that “The State shall afford

protection to labor, promote full employment, ensure equal work opportunitiesregardless of sex, race or creed, and regulate the relations between workers andemployers.

The State shall assure the rights of workers to self-organization, collectivebargaining, security of tenure and just and humane conditions of work.

Q: How should Labor Laws be construed?

A: Under the Article 4 of the Labor Code, as amended, it is provided: “All doubtsin the implementation and interpretation of the provisions of this Code, including itsimplementing rules and regulations, shall be resolved in favor of labor.”

However, it should not be supposed that every labor dispute beautomatically decided in favor of labor. The rule is applicable only if there is a doubtas to the meaning of the legal and contractual provision. If the provision is clear andunambiguous, it must be applied in accordance with its express terms.

The law, in protecting the rights of the laborer, authorizes neither oppressionnor self-destruction of the employer.

Q: What is management prerogative?

ANSWER: Management prerogative simply means that except as otherwiselimited by special laws, an employer is free to regulate, according to his owndiscretion and judgment, all aspects of employment, including hiring, workassignments, working methods, time, place, and manner of work, tools to be used,processes to be followed, supervision of workers, working regulations, transfer ofemployees, work supervision, lay-off of workers and discipline, dismissal and recallof workers.



Q: What are the limitations on the exercise of management prerogative?

A: The following are the limitations on the exercise of managementprerogative:

6.) It must be exercised in good faith;7.) It must not be tainted with unfair labor practice;8.) The exercise of management prerogative must be within the limitations set

by law;9.) It must also be within the limitations set by the Collective Bargaining

Agreement; and10.) The exercise must be consistent with the principles of fair play and

justice.

Supreme Court Rulings On Management Rights.

a. In NORKIS TRADING CO., INC., ET AL. vs. NATIONAL LABOR RELATIONSCOMMISSION, ET AL; G.R. No. 168159. August 19, 2005, the employers are allowed,under the broad concept of management prerogative, to regulate all aspects ofpersonnel administration including hiring, work assignments, working methods, time,place and manner of work, tools to be used, processes to be followed, supervision ofworkers, working regulations, transfer of employees, work supervision, lay-off ofworkers, and the dismissal and recall of workers .

b. The Supreme Court in Garcia vs. National Labor Relations Commission, 243

SCRA 632, reiterated the existing doctrine that the Constitution also protectsmanagement from oppression and destruction in this wise: "(t)he Constitutionalpolicy of providing full protection to labor is not intended to oppress or destroymanagement xxxx. The unfledging commitment of this Court to the cause of thelabor will not prevent Us from sustaining the employer, when it is in the right xxxx."

c. In Philippine Geothermal, Inc. vs. The National Labor Relations Commission,236 SCRA 371, the Supreme Court balanced the conflicting interests of both laborand management and placed the parties in relatively equal positions.

d. Likewise, in earlier cases, the Court ruled that the law in protecting therights of the employees does not authorize the oppression nor self-destruction of theemployer. It should be made clear that when the law tilts the scales of justice to putthe two (2) parties in favor of labor, it is but recognition of the inherent inequalitybetween labor and management. The evident intent is to balance the scale of

justice to put the two parties on relatively equal positions. There may be caseswhere the circumstances warrant favoring labor over the interests of management





but never should the scale be so tilted if the result is an injustice to the employer.(Justicia nemeni neganda est (Justice is to be denied to none).

RELATED SC DECISIONS

1. In a 1996 case, the Supreme Court ruled in Home Owners Savings and LoanAssociation, Inc. vs. NLRC and Marilyn Cabatbat, G.R No.97067, 26 September 1996,that an "(a)n owner of a business enterprise is given considerable leeway inmanaging because it is deemed important to society as a whole that he shouldsucceed."

Our law, therefore, recognizes certain rights as inherent in the management ofbusiness enterprises. These rights are collectively called management prerogativesor acts by which directing the business is able to control the variables thereof, so asto enhance the chances of making a profit. Together, they may taken as the freedomto administer the affairs of a business enterprise such that the costs of running it

would be below the expected earnings or receipts. In short, the elbow room in thequest for profits"(Citing Chu vs. NLRC, 232 SCRA 764 [1994].

2. The scope of these prerogatives was laid down in a number of cases, oneof which was San Miguel Brewery Sales Force Union (PTGWO) vs. Ople, 170 SCRA 25(1989), where the Court held that "(e)xcept as limited by special laws, an employer isfree to regulate, according to his own discretion and judgment, all aspects ofemployment, including hiring, work assignments, working methods, time, place andmanner of work, tools to be used, processes to be followed, supervision of workers,working regulations, transfer of employees, work supervision, lay-off of workers andthe discipline, dismissal and recall of work." (Based on National Labor Union (NLU)

vs. Insular La Yebana Co., 2 SCRA 924, Republic Savings Bank vs. CIR, 21 SCRA 226,235).

3. As a general rule, it is recognized "that normally it is the prerogative ofthe employer to transfer and re-assign its employees according to the requirementsof its business (Pocketbell Philippines, Inc. vs. NLRC, et. al., G.R. No. 106843, 20January 1995; Phil. Telegraph and Telephone Co. vs. Laplana, 199 SCRA 485 [1991] ).

4. This same ruling was the Court's position in Interwood EmployeesAssociation vs. International Hardwood and Veneer Co. of the Phil., 99 Phil. 82 (1956)and in Yuco Chemical Chemical Industries, Inc. vs. MOLE, 185 SCRA 727 (1990),which upheld "the employer's right to transfer its personnel for valid reasons".

Declaration of basic principles.

The State shall afford protection to labor, promote full employment, ensure equalwork opportunities regardless of sex, race or creed and regulate the relationsbetween workers and employers. The State shall assure the rights of workers to self-



organization, collective bargaining, security of tenure, and just and humaneconditions of work.

1. Labor contracts are not ordinary contracts as the relation between capitaland labor is impressed with public interest.

2. In case of doubt, labor laws and rules shall be interpreted in favor of labor.

3.Labor Code applies to all workers, whether agricultural or non-agricultural.

4.Applicability of Labor Code to government-owned or controlled corporations:- When created with original or special charter – Civil Service laws, rules

and regulations;- When created under the Corporation Code applies.

RECRUITMENT AND PLACEMENT OF WORKERS

1. Relevant law – Migrant Workers and Overseas Filipinos Act of 1995 (R. A.No. 8042 AS RECENTLY AMENDED BY Rep. Act No. 10022 )

2. Free placement services by public employment offices fordomestic/overseas work.

Entities authorized to engage in recruitment and placementa. public emplyment offices;b. Philippine Overseas Employment Administration (POEA);c. Private recruitment entities;d. Private employment agencies;e. Shipping or manning agents or representatives;

f. Such other persons or entities as may be authorized by the Secretary ofLabor and Employment; and

g. Construction contractors.

Money claims of OFW’s – jurisdiction and appeal1. Jurisdiction over money claims of OFW’s is vested with Labor Arbite rs of

the NLRC and not with POEA (R. A. no. 8042).2. Decisions of Labor Arbiters in money claims of OFW’s are appealable to

NLRC.

Liability of local recruitment agency and foreign principal1. Local Agency is solidarily liable with foreign principal.2. Severance of relations between local agent and foreign principal does not

affect liability of local recruiter.

Claims for Death and other Benefits1. Labor Arbiters have jurisdiction over claims for death, disability and other

benefits arising from employment.



4. Illegal recruitment, when considered economic sabotage – when thecommission thereof is attended by the qualifying circumstances as follows:a. By a syndicate – if carried out by a group of 3 or more persons

conspiring and confederating with one another;b. In large scale – if committed against 3 or more persons individually or

as a group.5. Prescriptive period of illegal recruitment cases – Under Republic Act No.

8042 – Five (5) years except illegal recruitment involving economicsabotage which prescribes in 20 years.

Employment of non-resident aliens1. Non-resident aliens should secure Alien Employment Registration

Certificate (AERC).2. There should be understudies.3. Alien employee should not transfer to another job or charge his employer.

TRAINING AND EMPLOYMENT OF SPECIAL WORKERS:

APPRENTICES1. Apprenticeship program to be implemented and administered by TESDA.2. “Apprenticeship” means any training on the job supplemented by related

theoretical instruction involving apprenticeable occupations and trades asmay be approved by the Secretary of Labor and Employment. An“apprentice” is a worker who is covered by a written apprenticeshipagreement with an employer.

3. Qualifications of apprentices:a. be at least fifteen (15) years of age, provided those who are at least

fifteen (15) years of age but less than eighteen may be eligible forapprenticeship only in non-hazardous occupation;

b. be physically fit for the occupation in which he desires to be trained;c. possess vocational aptitude and capacity for the particular occupation

as established through appropriate tests; andd. possess the ability to comprehend and follow oral and written

instructions.4. Wage rate of apprentices – 75% of the statutory minimum wage.5. Apprentices become regular employees if program is not approved by

DOLE.6. Ratio of theoretical instructions and on-the-job training – 100 hours of

theoretical instructions for every 1,000 hours of practical training on-the- job.

LEARNERS1. “Learners” is a person hired as a trainee in industrial occupations which

are non-apprenticeable and which may be learned through practical



training on the job for a period not exceeding three (3) months, whether ornot such practical training is supplemented by theoretical instructions.

2. Pre-requisites before learners may be validly employed:a. when no experienced workers are available;b. the employment of learners is necessary to prevent curtailment of

employment opportunities; andc. the employment does not create unfair competition in terms of labor

costs or impair or lower working standards.3. Wage rate of learners – 75% of the statutory minimum wage.

HANDICAPPED WORKERS1. Handicapped workers are those whose earning capacity is impaired:

a. by age; orb. physical deficiency; orc. mental deficiency; ord. injury

2. If disability is not related to the work for which he was hired, he should notbe so considered as handicapped worker. He may have a disability butsince the same is not related to his work, he cannot be considered ahandicapped worker insofar as that particular work is concerned.

3. Wage rate – 75% of the statutory minimum wage.

CONDITIONS OF EMPLOYMENT1. Employees covered – applicable to all employees in all establishments

whether operated for profit or not.2. Employees not covered:

a. Government employees;

b. Managerial employees;c. Other officers or members of a managerial staff;d. Domestic servants and persons in the personnel service of another;e. Workers paid by results;f. Non-agricultural field employer;g. Members of the family of the employer;

3. More specially, the above excluded groups of employees are not coveredby the following provisions of Title I, Book III of the Labor Code:

Article 83 - Normal hours of work;Article 84 - Hours worked;Article 85 - Meal periods;Article 86 - Night shift differential;Article 87 - Overtime work;Article 88 - Undertime not offset by overtime;Article 89 - Emergency overtime work;Article 90 - Computation of additional compensation;Article 91 - Right to weekly rest period;



Article 92 - When employer may require work on a rest day;Article 93 - Compensation for the rest day, Sunday or holiday work;Article 94 - Right to holiday pay;Article 95 - Right to service incentive leave; andArticle 96 - Service charges.

4. Existence of employer-employee relations is necessary.a. Employment relationship; contractual and voluntary in nature.b. Existence of employment relationship is both a question of fact and

law.5. Test of employment relationship (there is no uniform test) but the four (4)

elements of the employer-employee relationship are as follows:(a) Selection and engagement of employee;(b) Payment of wages;(c) Power of dismissal; and(d) Power of control (the most important test).

6. Quantum of evidence required to prove employment relationship – meresubstantial evidence (e. g. I. D. card, Cash Vouchers for salaries, inclusionin payroll, reporting to SSS).

Normal hours of work1. “Normal” hours of work of employees SHALL NOT EXCEED eight (8) hours

per day.2. The phrase SHALL NOT EXCEED is the basis for parttime work in this

country.3. “Work day” means consecutive -hour period which commences from the

time the employee regularly starts to work. It does not necessarily mean

the ordinary calendar day from 12:00 midnight unless the employee startsto work at this unusual hour.

4. “Work week” is a week consisting of 168 consecutive hours or 7consecutive 24-hour work days beginning at the same hour and on thesame calendar day each calendar week.

5. Reduction of eight-hour working day – not prohibited by law provided thereis no reduction in pay of workers.

6. Shortening of work week – allowed provided employees voluntarily agreethereto; there is no diminution in pay; and only on temporary duration.

7. Hours of work of part-time workers – payment of wage should be inproportion only to the hours worked.

8. Hours of work of hospital and clinic personnel – The Supreme Court hasvoided Policy Instructions No. 54 in San Juan de Dios Hospital EmployeesAssociation vs. NLRC (G. R> No. 12638683, Nov. 28, 1997). Consequently,the rule that hospital employees who worked for only 40 hours/5 days inany given workweek should be compensated for full weekly wage for 7days is no longer applicable.



Home work1. The following are the compensable hours worked:

a. All time during which an employee is required to be on duty or to be atthe employer’s premises or to be at a prescribed workplace; and

b. All time during which an employee is suffered or permitted to work.2. Coffee breaks and rest period of short duration – considered compensable

hours worked.3. Waiting time – considered compensable if waiting is an integral part of the

employer’s work or he is required or engaged by the employer to wait. 4. Sleeping while on duty is compensable if the natur e of the employee’s work

allows sleeping without interrupting or prejudicing work or when there isan agreement between the employee and his employer to that effect. Forexample, a truck helper may sleep after performing his task and while histruck is travelling on its way to its assignment. But the same may not bedone by the driver.

5. Working while on call – compensable if employee is required to remain oncall in the employer’s premises or so close thereto that he cannot use thetime effectively and gainfully for his own purpose.

6. Travel time:a. Travel from home to work – not compensable working time.b. Travel that is all in the day’s work – compensable hours worked.

c. Travel away from home – compensable hours worked.7. Attendance in lectures, meetings, and training periods sanctioned by

employer-considered hours worked.8. Power interruptions or brown-outs, basic rules:

- Brown-outs of short duration not exceeding twenty (20) minutes –

compensable hours worked.- Brown-outs running for more than twenty (20) minutes may not be

treated as hours worked provided any of the following conditions arepresent:a. The employees can leave their workplace or go elsewhere whether

within or without the work premises; orb. The employees can use the time effectively for their own interest.

9. Attendance in CBA negotiations or grievance meeting – compensable hoursworked.

10. Attendance in hearings in cases filed by employee – not compensablehours worked.

11. Participation in strikes – not compensable working time.

Meal period1. Every employee is entitled to not less than one (1) hour (or 60 minutes)

time-off for regular meals. Being time-off, it is not compensable hoursworked and employee is free to do anything he wants, except to work. If herequired to work while eating, he should be compensated therefor.



2. If meal time is shortened to not less than twenty (20) minutes – compensable hours worked. If shortened to less than 20 minutes, it isconsidered coffee break or rest period of short duration and, therefore,compensable.

Night shift differential1. Night shift differential is equivalent to 10% of employee’s regular wage for

each hour of work performed between 10:00 p.m. and a.m. of the followingday.

2. Night shift differential and overtime pay, distinguished. When the work ofan employee falls at nighttime, the receipt of overtime pay shall notpreclude the right to receive night differential pay. The reason is, thepayment of the night differential pay is for the work done during the night;while the payment of the overtime pay is for work in excess of the regulareight (8) working hours.

3. Computation of Night Shift Differential Pay.

a. Where night shift (10 p.m. to 6 a.m.) work is regular work.1. On an ordinary day: Plus 10% of the basic hourly rate or a total of 110%

of the basic hourly rate.2. On a rest day, special day or regular holiday: Plus 10% of the regular

hourly rate on a rest day, special day or regular holiday or a total of110% of the regular hourly rate.

b. Where night shift (10 p.m. to 6a.m.) work is overtime work1. On an ordinary day: Plus 10% of the overtime hourly rate on an ordinary

day or a total of 110% of the overtime hourly rate on an ordinary day.2. On a rest day or special day or regular holiday: Plus 10% of the

overtime hourly rate on a rest day or special day or regular holiday.

b. For overtime work in the night shift. Since overtime work is not usuallyeight (8) hours, the compensation for overtime night shift work is alsocomputed on the basis of hourly rate.1. On an ordinary day. Plus 10% of 125% of basic hourly rate or a total of

110% of 125% of basic hourly rate.2. On a rest day or special day or regular holiday. Plus 10% of 130% of

regular hourly rate on said days or a total of 110% of 130% of theapplicable regular hourly rate.

Overtime work1. Work rendered after normal eight (8) hours of work is called overtime work.2. In computing overtime work, “regular wage” or basic salary” means “cash”

wage only without deduction for facilities provided by the employer.3. “Premium pay” means the additional compensation require d by law for

work performed within 8 hours on non-working days, such as rest days andspecial days.



4. “Overtime pay” means the additional compensation for work performedbeyond 8 hours. Every employee entitled to premium pay is also entitled tothe benefit of overtime pay.

5. Illustrations on how overtime is computed:a. For ovetime work performed on an ordianry day, the overtime pay is

plus 25% of the basic hourly work.b. For overtime work performed on a rest day or on a special day, the

overtime pay is plus 30% of the basic hourly rate which includes 30%additional compensation as provided in Article 93 [a] of the Labor Code.

c. For overtime work performed on a rest day which falls on a special day,the overtime pay is plus 30% of the basic hourly rate which includes50% additional compensation as provided in Article 93 [c] of the LaborCode.

d. For overtime work performed on a regular holiday, the overtime pay isplus 30% of the basic hourly rate which includes 100% additionalcompensation as provided in compensation.

e. For overtime work performed on a rest day which falls on a regularholiday, the overtime pay is plus 30% of the basic hourly rate whichincludes 160% additional compensation.

Undertime not offset by overtime1. Undertime work on any particular day shall not be offset by overtime on

any other day.2. Permission given to the employee to go on leave on some other day of the

week shall not exempt the employer from paying the additionalcompensation required by law such as overtime pay or night shiftdifferential pay.

Emergency overtime work1. The general rule remains that no employee may be compelled to render

overtime work against his will.2. Exceptions when employee may be compelled to render overtime work:

a. When the country is at war or when any other national or localemergency has been declared by the National Assembly or the ChiefExecutive;

b. When overtime work is necessary to prevent loss of life or property or incase of imminent danger to public safety due to actual or impendingemergency in the locality caused by serious accident, fire, floods,typhoons, earthquake, epidemic or other disasters or calamities;

c. When there is urgent work to be performed on machines, installationsor equipment, or in order to avoid serious loss or damage to theemployer or some other causes of similar nature;

d. When the work is necessary to prevent loss or damage to perishablegoods.



e. When the completion or continuation of work started before the 8 th houris necessary to prevent serious obstruction or prejudice to the businessor operations of the employer; and

f. When overtime is necessary to avail of favorable weather orenvironmental conditions where or quality of work is dependent

thereon.3. When employee refuses to render emergency overtime work under any of

the foregoing conditions, he may be dismissed on the ground ofinsubordination or willful disobedience of the lawful order of the employer.

WEEKLY REST PERIODS1. Every employer shall give his employees a rest period of no less than 24

consecutive hours after every 6 consecutive normal work days.2. If business is open on Sundays/holidays, rest day may be scheduled on

another day.3. Preference of employee as to his rest day should be respected if based on

religious grounds.4. Waiver of compensation for work on rest days and holidays is not valid.

When employer may require work on a rest day.a. In case of actual or impending emergencies cause by serious

accident, fire, flood, typhoon, earthquake, epidemic or other disasteror calamity to prevent loss of life and property, or in case of forcemajeure or imminent danger to public safety;

b. In case of urgent work to be performed on machineries, equipment,or installations, to avoid serious loss which the employer wouldotherwise suffer;

c. In the event of abnormal pressure of work due to specialcircumstances, where the employer cannot ordinarily be expectedto resort to other measures;

d. To prevent serious loss of perishable goods;e. Where the nature of the work is such that the employees have to

work continuously for seven (7) days in a week or more, as in thecase of the crew members of a vessel complete a voyage and inother similar cases; and

f. When the work is necessary to avail of favorable weather orenvironmental conditions where performance or equality of work isdependent thereon.

Compensations for rest day, Sunday or holiday worka. Premium pay for work on scheduled rest day.

A covered employee who is made or permitted to work on his scheduled rest dayshall be paid with an additional compensation of at least thirty percent (30%) of hisregular wage.

b. Premium pay for work on Sunday when it is employee’s rest day.



A covered employee shall be entitled to such additional compensation of thirtypercent (30%) of his regular wage for work performed on a Sunday only when it is hisestablished rest day.

c. Premium pay for work performed on Sundays and holidays when employeehas no regular workdays and no scheduled regular rest day.

Where the nature of the work of the employee is such that he has no regularworkdays and no regular rest days can be scheduled, he shall be paid an additionalcompensation of at least thirty percent (30%) of his regular wage for work performedon Sundays and holidays.

d. Premium pay for work performed on special holidays (now special days)whic h fall on employee’s scheduled rest day.

Work performed on any special holiday (now special day) shall be paid with anadditional compensation of at least thirty percent (30%) of the regular wage of theemployee. Where such holiday work falls on the employ ee’s scheduled rest day, heshall be entitled to additional compensation of at least fifty percent (50%) of hisregular wage.

e. Higher rate provided in agreements.Where the collective bargaining agreement or other applicable employment contractstipulates the payment of higher premium pay than that prescribed by law, theemployer shall pay such higher rate.

HOLIDAY PAY1. Holiday pay; meaning and purpose:

Holiday pay is a premium given to employees pursuant to law even if he is notsuffered to work on a regular holiday.

- If worker did not work on regular holiday, he is entitled to 100% of hisbasic pay;

- If he worked, he is entitled to 200% thereof.2. List of regular holidays and special days:

A. Regular holidays.New Year’s Day - January 1Maundy Thursday - Movable dateGood Friday - Movable dateAraw ng Kagitingan[Bataan and Corregidor Day] - April 9Labor Day - May 1Independence Day - June 12National Heroes Day - Last Sunday of AugustBonifacio Day - November 30Christmas Day - December 25Rizal Day - December 30

Plus Eidl-Fer, a Muslim holiday at the end of Ramadan



B. Nationwide special days.

All Saint’s Day - November 1Last Day of the Year - December 31Plus Ninoy Aquino Day

3. Distinction between “regular holidays” and “special days”: a. A covered employee who does not work during regular holidays is

paid 100% of his regular daily wage; while a covered employee whodoes not work during a special day does not receive anycompensation under the principle of “no work, no pay.”

b. A covered employee who works during special days is paid 200% ofhis regular daily wage; while a covered employee who works duringspecial days is only paid an additional compensation of not less than30% of the basic pay or a total of 130% and at least 50% over andabove the basic pay or a total of 150% if the worker is permitted or

suffered to work on special days which fall on his scheduled restday.

4. “Special holidays” are now known as “special days.” 5. Principle of “no work, no pay” applies to special days but not to unworked

regular holidays where the employees are always paid the equivalent of100% of their basic pay.

6. Premium pay for work performed during special days – 30% on top of basicpay.

7. Premium pay for work performed during special days falling on scheduledrest day – 50% over and above the basic pay.

8. Effect of absences on entitlement to regular holiday pay:

a. Employees on leave of absence with pay – entitled to regular holidaypay.

b. Employees on leave of absence without pay on the day immediatelypreceding a regular holiday may not be paid the required holiday pay ifhe has not worked on such regular holiday.

c. Employees on leave while on SSS or employee’s compensation benefits – Employers shall grant the same percentage of the holiday pay as thebenefi t granted by competent authority in the form of employee’scompensation or social security payment, whichever is higher, if theyare not reporting for work while on such benefits.

d. When the day preceding regular holiday is a non-working day orscheduled rest day – employees shall not be deemed to be on leave ofabsence on that day, in which case, he shall be entitled to the regularholiday pay if he worked on the day immediately preceding the non-working day or rest day.



9. Rule in case of successive regular holidays – an employee may not be paidfor both holidays if he absents himself from work on the day immediatelypreceding the first holiday, unless he works on the first holiday, in whichcase, he is entitled to his holiday pay on the second holiday.

10. Rule in case of two regular holidays falling on the same day (e. g., Araw ng

Kagitingan and Good Friday falling on April 9, 1993) – if employee did notwork: 200% of basic pay; If employee worked: 300% of basic pay.

Service incentive leave1. Every covered employee who has rendered at least one (1) year of service

shall be entitled to a yearly service incentive leave of five (5) days withpay.

2. Meaning of “one year of service” – service within twelve (12) months,whether continuous or broken, reckoned from the date the employeestarted working, , including authorized absences and paid regular holidays,unless the number of working days in the establishment as a matter of

practice or policy, or that provided in the employment contract, is lessthan twelve (12) months, in which case, said period shall be considered asone (1) year for the purpose of determining entitlement to the serviceincentive leave.

3. Service incentive leave is commutable to cash if unused at the end of theyear.

4. The basis of computation of service incentive leave is the salary rate atthe date of commutation.

5. Grant of vacation leave or sick leave may be considered substitute forservice incentive leave. (Note: there is no provision in the Labor Codegranting vacation or sick leave).

Service charges1. Coverage – The rule on service charges applies only to establishments

collecting service charges, such as hotels, restaurants, lodging houses,night clubs, cocktail lounges, massage clinics, bars, casinos and gamblinghouses, and similar enterprises, including those entities operatingprimarily as private subsidiaries of the government. It applies to allemployees of covered employers, regardless of their positions, designationor employment status, and irrespective of the method by which theirwages are paid.

2. Distribution of service charges (Percentage of sharing):

a. eighty-five percent (85%) for the employees to be distributed equallyamong them; and

b. fifteen percent (15%) for the management to answer for losses andbreakages and distribution to managerial employees.

3. The P2,000.00 salary ceiling for entitlement thereto is no longer applicable.



4. The shares shall be distributed to employees not less often than onceevery 3 weeks or twice a month at intervals not exceeding 16 days.

WAGES1. Attributes of wage:

a. It is the renumeration or earnings, however designated, for work doneor to be done or for services rendered or to be rendered.

b. It is capable of being expressed in terms of money, whether fixed orascertained on a time, task, piece, or commission basis, or othermethod of calculating the same;

c. It is payable by an employer to an employee under a written orunwritten contract of employment for work done or to be done, or forservices rendered or to be rendered; and

d. It includes the fair and reasonable value, as determined by theSecretary of Labor and Employment, of board, lodging, or other facilities

customarily furnished by the employer to the employee. “Fair and reasonable value” shall not include any profit to the employer, or to anyperson affiliated with the employer.

2. “Wage”, “salary” and “pay”; distinction – they are synonymous in meaningand usage.

3. Commission – may or may not be treated as part of wage depending on thecircumstances.

4. Actual work is the basis of claim for wages (No work, no pay”).

Facilities1. “Facilities” shall include articles or services for the benefit of the

employee or his family but shall not include tools of the trade or articles orservices primarily for the benefit of the employer or necessary to theconduct of the employer’s business.

2. Value of facilities – the fair and reasonable value of board, lodging andother facilities customarily furnished by an employer to his employees bothin agricultural and non-agricultural enterprises.

Supplements1. “Supplements” means extra renumeration or special privileges or benefits

given to or received by the laborers over and above their ordinary earningsor wages.

2. “Facilities” and “supplements”, distinction: The benefit or privilege givento the employee which constitutes an extra renumeration over and abovehis basic or ordinary earning or wage, is supplement; and when said benefitor privilege is part of the laborer’s basic wage, it is a facilit y. The criterionis not so much with the kind of the benefit or item (food, lodging, bonus orsick leave) given but its purpose. Thus, free meals supplied by the shipoperators to crew members, out of necessity, cannot be considered as



facilities but supplements which could not be reduced having been givennot as a part of wages but as necessary matter in the maintenance of thehealth and efficiency of the crew personnel during the voyage.

1. Rule on deductibility. – Facilities may be charged to or deducted fromwages. Supplements, on the other hand, may not be so charged.

Gratuity and allowances.1. “Gratuity” is a gift given by the employer in appreciation of certain favors

or services rendered. It is not part of wages since, strictly speaking, it isnot intended as compensation for actual work. It is further not demandableas a matter of right.

2. “Allowances” are not part of wages. Therefore, in the computation of theamount of retirement and other benefits, allowances shall not be includedtherein.

Bonus

1. Bonus, not generally demandable.- bonus is an amount granted and paid exgratia to the employee for his industry or loyalty, hence, generally notdemandable or enforceable. If there is no profit, there should be no bonus.If profit is reduced, bonus should likewise be reduced, absent anyagreement making such bonus part of the compensation of the employees.

2. Bonus; when demandable and enforceable. On the basis of equitableconsiderations, long practice, agreement (e. g. CBA) and other peculiarcircumstances, bonus may become demandable and enforceable.Consequently, if bonus is given as an additional compensation which theemployer agreed to give without any condition such as success of businessor more efficient or more productive operation, it is deemed part of wage

or salary, hence, demandable.3. Unlike 13 th month pay, bonus may be forfeited in case employee is found

guilty of an administrative charge.

13 th month pay

1. “Thirteenth -month pay” shall mean one twelfth (1/12) of the basic salary ofan employee within a calendar year.

2. All rank-and-file employees are entitled to a 13 th -month pay regardless ofthe amount of basic salary that they receive in a month and regardless oftheir designation or employment status, and inspective of the method bywhich their wages are paid, provided that they have worked for at leastone (1) month during a calendar year.

3. Exempted employers – a. the government and any of its political subdivision, including

government-owned and controlled corporations, except thosecorporations operating essentially as private subsidiaries of thegovernment.



b. Employers already paying their employees 13 th -month pay or more in acalendar year or its equivalent at the time of this issuance.

c. Employers of household helpers and persons in the personal service ofanother in relation to such workers.

d. Employers of those are paid on purely commission, boundary, or task

basis, and those who are paid a fixed amount for performing a specificwork, irrespective of the time consumed in the performance thereof,except where the workers are paid on piece-rate basis in which case,the employer shall be covered by the 13 th month pay law insofar as suchworkers are concerned.

4. The term “its equivalent” shall include Christmas bonus, mid -year bonus,profit-sharing payments and other cash bonuses amounting to not less than1/12 th of the basic salary but shall not include cash and stock dividends,cost of living allowances and all other allowances regularly enjoyed by theemployee, as well as non-monetary benefits. Where an employer pays lessthan 1/12 th of the employee’s basic salary, the employer shall pay the

difference.5. Time of payment. – The required 13 th month pay shall be paid not later than

December 24 of each year.6. 13 th -month pay for employees with multiple employers. – Government

employees working part-time in a private enterprise, including privateeducational institutions, as well as employees working in two or moreprivate firms, whether on full or part-time basis, are entitled to the required13 th -month pay from their private employers regardless of their totalearnings from each or all their employers.

7. 13 th month pay is tax exempt (R. A. 7833).8. May payment of bonus be credited as payment of 13 th -month pay?

a. Marcopper Mining Corp. vs. Ople, et. al. case – Nob. NFSW vs. Ovejera, et. al. case – Yesc. DOLE Philippines vs. Leogardo, et. al. case – Yesd. Brokenshire Memorial Hospital, Inc. vs. NLRC, et. al. case – Noe. United CMC Textile Workers union vs. Valenzuela, et. al. case – Nof. Universal Corn Products vs. NLRC, et. al. case – Yesg. FEU Employees Labor Union vs. FEU case (involving transportation

allowance which was treated as compliance with 13 th month pay)h. Framanlis Farms, Inc. vs. Minister of Labor, et. al. case – Noi. Kamaya Point Hotel vs. NLRC, et. al. case – Yes

j. UST Faculty Union vs. NLRC, et. al. case – No

No 14 th month payThere is no law mandating the payment of 14 th -month pay. It is, therefore, in

the nature of a bonus which may not be imposed upon the employer. It is a gratuityto which the recipient has no right to make a demand. Kamaya Point Hotel vs. NLRC,et. al., G. R. No. 75289, August 31, 1989, 177 SCRA 160).



exceeding sixteen (16) days. No employer shall make payment with lessfrequency than once a month. The exception to above rule is whenpayment cannot be made with such regularity due to force majeure orcircumstances beyond the employer’s control, in which case, the employershall pay the wages immediately after such force majeure or

circumstances have ceased.

Place of payment of wages1. As a general rule, the place of payment shall be at or near the place of

undertaking.2. Exceptions:

a. When payment cannot be effected at or near the place of work byreason of the deterioration of peace and order conditions, or by reasonof actual or impending emergencies caused by fire, flood, epidemic orother calamity rendering payment thereat impossible;

b. When the employer provides free transportation to the employees backand forth; and

c. Under any other analogous circumstances, provided that the time spentby the employees in collecting their wages shall be considered ascompensable hours worked.

3. Payment of wages in bars, massage clinics or nightclubs is prohibitedexcept in the case of employees thereof.

4. Payment through banks – allowed in business and other entities withtwenty five (25) or more employees and located within one (1) kilometerradius to a commercial, savings or rural bank.

Direct payment of wages1. General rule: payment of wages shall be made directly to the employee

entitled thereto and to nobody else.2. Exceptions.

a. Where the employer is authorized in writing by the employee to pay hiswages to a member of his family;

b. Where payment to another person of any part of the employee’s wagesis authorized by existing law, including payments for the insurancepremiums of the employee and union dues where the right to check-offhas been recognized by the employer in accordance with a collectiveagreement or authorized in writing by the individual employeesconcerned; or

c. In case of death of the employee, in which case, the same shall be paidto his heirs without necessity of intestate proceedings.

THE LAW ON LABOR-ONLY CONTRACTING (PROHIBITED) AND INDEPENDENT ORJOB CONTRACTING (PERMITTED)



DOLE Department Order 18-A (Rules on Contracting and SubcontractingArrangements)

Department Order No. 18-ASeries of 2011

RULES IMPLEMENTING ARTICLES 106 TO 109 OF THE LABOR CODE, AS AMENDEDBy virtue of the power vested in the Secretary of Labor and Employment under

Articles 5 and 106 to 109 of the Labor Code of the Philippines, as amended, thefollowing regulations governing contracting and subcontracting arrangements arehereby issued:

Section 1. Guiding principles. Contracting and subcontracting arrangementsare expressly allowed by law and are subject to regulations for the promotion ofemployment and the observance of the rights of workers to just and humaneconditions of work, security of tenure, self-organization and collective bargaining.Labor-only contracting as defined herein shall be prohibited.

Section 2. Coverage. These Rules shall apply to all parties of contracting andsubcontracting arrangements where employer-employee relationships exist. It shallalso apply to cooperatives engaging in contracting or subcontracting arrangements.

Contractors and subcontractors referred to in these Rules are prohibited fromengaging in recruitment and placement activities as defined in Article 13(b) of theLabor Code, whether for local or overseas employment.

Section 3. Definition of terms. The following terms as used in these Rules, shallmean:

(a) “Bond/s” refers to the bond under Article 108 of the Labor Code that theprincipal may require from the contractor to be posted equal to the cost of laborunder contract. The same may also refer to the security or guarantee posted by theprincipal for the payment of the services of the contractors under the ServiceAgreement.

(b) “Cabo” refers to a person or group of persons or to a labor group which, inthe guise of a labor organization, cooperative or any entity, supplies workers to anemployer, with or without any monetary or other consideration, whether in thecapacity of an agent of the employer or as an ostensible independent contractor.

(c) “Contracting” or “Subcontracting” refers to an arrangement whereby aprincipal agrees to put out or farm out with a contractor the performance orcompletion of a specific job, work or service within a definite or predeterminedperiod, regardless of whether such job, work or service is to be performed orcompleted within or outside the premises of the principal.

http://pinoy-business.com/hr-and-labor/dole-department-order-18-a-rules-on-contracting-and-subcontracting-arrangements






(d) “Contractor” refers to any person or entity, including a cooperative, engagedin a legitimate contracting or subcontracting arrangement providing either services,skilled workers, temporary workers, or a combination of services to a principal undera Service Agreement.

(e) “Contractor’s employee” includes one employed by a contractor to performor complete a job, work, or service pursuant to a Service Agreement with a principal.It shall also refer to regular employees of the contractor whose functions are notdependent on the performance or completion of a specific job, work or service withina definite period of time, i.e., administrative staff.

(f) “In -house agency” refers to a contractor w hich is owned, managed, orcontrolled directly or indirectly by the principal or one where the principalowns/represents any share of stock, and which operates solely or mainly for theprincipal.

(g) “Net Financial Contracting Capacity (NFCC)1” r efers to the formula todetermine the financial capacity of the contractor to carry out the job, work orservices sought to be undertaken under a Service Agreement. NFCC is currentassets minus current liabilities multiplied by K, which stands for contract durationequivalent to: 10 for one year or less; 15 for more than one (1) year up to two (2)years; and 20 for more than two (2) years, minus the value of all outstanding orongoing projects including contracts to be started.

1 Refers to the formula set out in the Implementing Rules and Regulations ofRepublic Act No. 9184, or An Act Providing for the Modernization, Standardizationand Regulation of the Procurement Activities of the Government and For Other

Purposes.

(h) “Principal” refers to any employer, whether a person or entity, includinggovernment agencies and government-owned and controlled-corporations,who/which puts out or farms out a job, service or work to a contractor.

(i) “Right to control” refers to the right reserved to the person for whom theservices of the contractual workers are performed, to determine not only the end tobe achieved, but also the manner and means to be used in reaching that end.

(j) “Service Agreement” refers to the contract between the principal andcontractor containing the terms and conditions governing the performance orcompletion of a specific job, work or service being farmed out for a definite orpredetermined period.

(k) “Solidary liability” refers to the liability of the principal , pursuant to theprovision of Article 109 of the Labor Code, as direct employer together with thecontractor for any violation of any provision of the Labor Code.



It also refers to the liability of the principal, in the same manner and extent that

he/she is liable to his/her direct employees, to the extent of the work performedunder the contract when the contractor fails to pay the wages of his/her employees,as provided in Article 106 of the Labor Code, as amended.

(l) "Substantial capi tal” refers to paid -up capital stocks/shares of at least ThreeMillion Pesos (P3,000,000.00) in the case of corporations, partnerships andcooperatives; in the case of single proprietorship, a net worth of at least ThreeMillion Pesos (P3,000,000.00).

(m) “Trilateral Relationship” refers to the relationship in a contracting orsubcontracting arrangement where there is a contract for a specific job, work orservice between the principal and the contractor, and a contract of employmentbetween the contractor and its workers. There are three (3) parties involved in thesearrangements: the principal who decides to farm out a job, work or service to a

contractor; the contractor who has the capacity to independently undertake theperformance of the job, work or service; and the contractual workers engaged by thecontractor to accomplish the job, work or service.

Section 4. Legitimate contracting or subcontracting. Contracting orsubcontracting shall be legitimate if all the following circumstances concur:

(a) The contractor must be registered in accordance with these Rules andcarries a distinct and independent business and undertakes to perform the job, workor service on its own responsibility, according to its own manner and method, andfree from control and direction of the principal in all matters connected with theperformance of the work except as to the results thereof;

(b) The contractor has substantial capital and/or investment; and

(c) The Service Agreement ensures compliance with all the rights and benefitsunder Labor Laws.

Section 5. Trilateral relationship in contracting arrangements; Solidary liability. Inlegitimate contracting or subcontracting arrangement there exists:

(a) An employer-employee relationship between the contractor and the employees itengaged to perform the specific job, work or service being contracted; and

(b) A contractual relationship between the principal and the contractor as governedby the provisions of the Civil Code.

In the event of any violation of any provision of the Labor Code, including the failureto pay wages, there exists a solidary liability on the part of the principal and thecontractor for purposes of enforcing the provisions of the Labor Code and other



social legislation, to the extent of the work performed under the employmentcontract.

However, the principal shall be deemed the direct employer of the contractor’semployee in cases where there is a finding by a competent authority of labor-only

contracting, or commission of prohibited activities as provided in Section 7, or aviolation of either Sections 8 or 9 hereof.

Section 6. Prohibition against labor-only contracting. Labor-only contracting ishereby declared prohibited. For this purpose, labor only contracting shall refer to anarrangement where:

(a) The contractor does not have substantial capital or investments in the form oftools, equipment, machineries, work premises, among others, and the employeesrecruited and placed are performing activities which are usually necessary ordesirable to the operation of the company, or directly related to the main business of

the principal within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premisesof the principal; or

(b) The contractor does not exercise the right to control over the performance of thework of the employee.

Section 7. Other Prohibitions. Notwithstanding Section 6 of these Rules, thefollowing are hereby declared prohibited for being contrary to law or public policy:

A. Contracting out of jobs, works or services when not done in good faith and not

justified by the exigencies of the business such as the following:(1) Contracting out of jobs, works or services when the same results in the

termination or reduction of regular employees and reduction of work hours orreduction or splitting of the bargaining unit.

(2) Contracting out of work with a “Cabo”.

(3) Taking undue advantage of the economic situation or lack of bargainingstrength of the contractor’s employees, or undermining their security of tenure orbasic rights, or circumventing the provisions of regular employment, in any of thefollowing instances:

(i) Requiring them to perform functions which are currently being performed bythe regular employees of the principal; and

(ii) Requiring them to sign, as a precondition to employment or continuedemployment, an antedated resignation letter; a blank payroll; a waiver of laborstandards including minimum wages and social or welfare benefits; or a quitclaim



releasing the principal, contractor or from any liability as to payment of futureclaims.

(4) Contracting out of a job, work or service through an in-house agency.

(5) Contracting out of a job, work or service that is necessary or desirable ordirectly related to the business or operation of the principal by reason of a strike orlockout whether actual or imminent.

(6) Contracting out of a job, work or service being performed by union memberswhen such will interfere with, restrain or coerce employees in the exercise of theirrights to self-organization as provided in Art. 248 (c) of the Labor Code, as amended.

(7) Repeated hiring of employees under an employment contract of short durationor under a Service Agreement of short duration with the same or differentcontractors, which circumvents the Labor Code provisions on Security of Tenure.

(8) Requiring employees under a subcontracting arrangement to sign a contractfixing the period of employment to a term shorter than the term of the ServiceAgreement, unless the contract is divisible into phases for which substantiallydifferent skills are required and this is made known to the employee at the time ofengagement.

(9) Refusal to provide a copy of the Service Agreement and the employmentcontracts between the contractor and the employees deployed to work in thebargaining unit of the principal’s cert ified bargaining agent to the sole and exclusivebargaining agent (SEBA).

(10) Engaging or maintaining by the principal of subcontracted employees inexcess of those provided for in the applicable Collective Bargaining Agreement(CBA) or as set by the Industry Tripartite Council (ITC).

B. Contracting out of jobs, works or services analogous to the above when notdone in good faith and not justified by the exigencies of the business.

Section 8. Rights of contractor’s employees. All contractor’s employees, whetherdeployed or assigned as reliever, seasonal, week-ender, temporary, or promo

jobbers, shall be entitled to all the rights and privileges as provided for in the LaborCode, as amended, to include the following:

(a) Safe and healthful working conditions;

(b) Labor standards such as but not limited to service incentive leave, rest days,overtime pay, holiday pay, 13th month pay, and separation pay as may be provided inthe Service Agreement or under the Labor Code;



(c) Retirement benefits under the SSS or retirement plans of the contractor, ifthere is any;

(d) Social security and welfare benefits;

(e) Self-organization, collective bargaining and peaceful concerted activities; and

(f) Security of tenure.

Section 9. Required contracts under these Rules.(a) Employment contract between the contractor and its employee.

Notwithstanding any oral or written stipulations to the contrary, the contractbetween the contractor and its employee shall be governed by the provisions ofArticles 279 and 280 of the Labor Code, as amended. It shall include the followingterms and conditions:

i. The specific description of the job, work or service to be performed by theemployee;

ii. The place of work and terms and conditions of employment, including astatement of the wage rate applicable to the individual employee; and

iii. The term or duration of employment that must be co-extensive with theService Agreement or with the specific phase of work for which the employee isengaged.

The contractor shall inform the employee of the foregoing terms and conditionsof employment in writing on or before the first day of his/her employment.

(b) Service Agreement between the principal and the contractor. The ServiceAgreement shall include the following:

i. The specific description of the job, work or service being subcontracted.

ii. The place of work and terms and conditions governing the contractingarrangement, to include the agreed amount of the services to be rendered, thestandard administrative fee of not less than ten percent (10%) of the total contractcost.

iii. Provisions ensuring compliance with all the rights and benefits of theemployees under the Labor Code and these Rules on: provision for safe and healthfulworking conditions; labor standards such as, service incentive leave, rest days,overtime pay, 13th month pay and separation pay; retirement benefits; contributionsand remittance of SSS, Philhealth, PagIbig Fund, and other welfare benefits; the rightto self-organization, collective bargaining and peaceful concerted action; and theright to security of tenure.



iv. A provision on the Net Financial Contracting Capacity of the contractor, whichmust be equal to the total contract cost.

v. A provision on the issuance of the bond/s as defined in Section 3(m) renewableevery year.

vi. The contractor or subcontractor shall directly remit monthly th e employers’share and employees’ contribution to the SSS, ECC, Philhealth and Pagibig.

vii. The term or duration of engagement. The Service Agreement must conform tothe DOLE Standard Computation and Standard Service Agreement, which form partof these Rules as Annexes “A” and “B”.

Section 10. Duties of the principal. Pursuant to the authority of the Secretary ofLabor and Employment to restrict or prohibit the contracting of labor to protect therights of the workers and to ensure compliance with the provisions of the Labor

Code, as amended, the principal, as the indirect employer or the user of the servicesof the contractor, is hereby required to observe the provisions of these Rules.

Section 11. Security of tenure of contractor’s employees. It is understood that allcontractor’s employees enjoy security of tenure regardless of whether the contractof employment is co-terminus with the service agreement, or for a specific job, workor service, or phase thereof.

Section 12. Observance of required standards of due process; requirements ofnotice. In all cases of termination of employment, the standards of due process laiddown in Article 277(b) of the Labor Code, as amended, and settled jurisprudence on

the matter2, must be observed. Thus, the following is hereby set out to clarify thestandards of due process that must be observed:

2 King of Kings Transport, Inc., Claire dela Fuente, and Melissa Lim, vs. SantiagoO. Mamac, G.R. No. 166208, (29 June 2007); and Felix B. Perez and Amante G. Doriav. Philippine Telegraph and Telephone Company and Jose Luis Santiago, G.R. No.152048, (7 April 2009), (en banc Decision).

I. For termination of employment based on just causes as defined in Article 282of the Code, the requirement of two written notices served on the employee shallobserve the following:

(A) The first written notice should contain:(1) The specific causes or grounds for termination;

(2) Detailed narration of the facts and circumstances that will serve as basis for thecharge against the employee. A general description of the charge will not suffice;



(3) The company rule, if any, that is violated and/or the ground under Art. 282 that isbeing charged against the employee; and

(4) A directive that the employee is given opportunity to submit a written explanationwithin a reasonable period.

“Reasonable period” should be construed as a period of at least five (5) calendardays from receipt of the notice to give the employee an opportunity to study theaccusation, consult a union official or lawyer, gather data and evidence, and decideon the defenses against the complaint.

(B) After serving the first notice, the employer should afford the employee ampleopportunity to be heard and to defend himself/herself with the assistance of his/herrepresentative if he/she so desires, as provided in Article 277(b) of the Labor Code,as amended.

“Ample opportunity to be heard” means any meaningful opportunity (verbal orwritten) given to the employee to answer the charges against him/her and submitevidence in support of his/her defense, whether in a hearing, conference or someother fair, just and reasonable way. A formal hearing or conference becomesmandatory only when requested by the employee in writing or substantial evidentiarydisputes exist or a company rule or practice requires it, or when similarcircumstances justify it.

(C) After determining that termination of employment is justified, the employercontractor shall serve the employee a written notice of termination indicating that:(1) all circumstances involving the charge against the employees have been

considered; and (2) the grounds have been established to justify the severance oftheir employment. The foregoing n otices shall be served on the employee’s lastknown address.

II. For termination of employment based on authorized causes defined in Article283 of the Labor Code, the requirement of due process shall be deemed compliedwith upon service of a written notice to the employee and the appropriate regionaloffice of the Department of Labor and Employment at least thirty days before theeffectivity of the termination, specifying the ground or grounds for termination.

III. If the termination is brought about by the completion of the contract or phasethereof, no prior notice is required. If the termination is brought about by the failureof a probationary employee to meet the reasonable standards of the employer, whichwas made known to the employee at the time of his/her employment, it shall besufficient that a written notice is served upon the employee within a reasonable timeprior to the expiration of the probationary period.

Section 13. Effect of termination of employment. The termination of employment



of the contractor employee prior to the expiration of the Service Agreement shall begoverned by Articles 282, 283 and 284 of the Labor Code.

In case the termination of employment is caused by the pre-termination of theService Agreement not due to authorized causes under Article 283, the right of the

contractor employee to unpaid wages and other unpaid benefits including unremittedlegal mandatory contributions, e.g., SSS, Philhealth, Pag-ibig, ECC, shall be borne bythe party at fault, without prejudice to the solidary liability of the parties to theService Agreement.

Where the termination results from the expiration of the service agreement, orfrom the completion of the phase of the job, work or service for which the employeeis engaged, the latter may opt for payment of separation benefits as may be providedby law or the Service Agreement, without prejudice to his/her entitlement to thecompletion bonuses or other emoluments, including retirement benefits wheneverapplicable.

Section 14. Mandatory Registration and Registry of Legitimate Contractors.Consistent with the authority of the Secretary of Labor and Employment to restrict orprohibit the contracting out of labor to protect the rights of workers, it shall bemandatory for all persons or entities, including cooperatives, acting as contractors,to register with the Regional Office of the Department of Labor and Employment(DOLE) where it principally operates.

Failure to register shall give rise to the presumption that the contractor is engagedin labor-only contracting.

Accordingly, the registration system governing contracting arrangements andimplemented by the Regional Offices of the DOLE is hereby established, with theBureau of Working Conditions (BWC) as the central registry.

Section 15. Requirements for registration. The application for registration as acontractor shall be filed at the DOLE Regional Office in the region where it seeks toprincipally operate. The applicant shall provide in the application form the followinginformation:

(a) The name and business address of the applicant and the areas where itseeks to operate;

(b) The names and addresses of officers, if the applicant is a corporation,partnership, cooperative or a labor organization;

(c) The nature of the applicant’s business and the industry or industries where theapplicant seeks to operate;

(d) The number of regular workers and the total workforce;



(e) The list of clients, if any, the number of personnel assigned to each client, if any,and the services provided to the client;

(f) The description of the phases of the contract, including the number of

employees covered in each phase, where appropriate; and

(g) Proof of compliance with substantial capital requirement as defined in Section3(l) of these Rules.The application shall be supported by:

(a) A certified true copy of a certificate of registration of firm or business namefrom the Securities and Exchange Commission (SEC), Department of Trade andIndustry (DTI), Cooperative Development Authority (CDA), or from the DOLE if theapplicant is a labor organization;

(b) A certified true copy of the license or business permit issued by the local

government unit or units where the contractor operates;

(c) A certified listing, with proof of ownership or lease contract, of facilities,tools, equipment, premises implements, machineries and work premises, that areactually and directly used by the contractor in the performance or completion of the

job, work or service contracted out. In addition, the applicant shall submit a photo ofthe office building and premises where it holds office;

(d) A copy of audited financial statements if the applicant is a corporation,partnership, cooperative or a labor organization, or copy of the latest ITR if theapplicant is a sole proprietorship; and

(e) A sworn disclosure that the registrant, its officers and owners or principalstockholders or any one of them, has not been operating or previously operating as acontractor under a different business name or entity or with pending cases ofviolations of these Rules and/or labor standards, or with a cancelled registration. Incase any of the foregoing has a pending case, a copy of the complaint and the lateststatus of the case shall be attached.

The application shall be verified. It shall include a DOLE certification ofattendance to orientation seminar on these Rules and an undertaking that thecontractor shall abide by all applicable labor laws and regulations.

Section 16. Filing and processing of application. The application with allsupporting documents shall be filed in triplicate in the Regional Office where theapplicant principally operates. No application for registration shall be acceptedunless all the requirements in the preceding Section are complied with.

Section 17. Verification inspection. Within two (2) working days upon receipt of



the application with complete supporting documents, the authorized representativeof the Regional Director shall conduct a verification inspection of the facilities, tools,equipment, and work premises of the applicant.

Section 18. Approval or denial of the application. The Regional Office shall deny

or approve the application within one (1) working day after the verificationinspection.

Applications that fail to meet the requirements set forth in Section 15 of these Rulesshall be denied.

Section 19. Registration fee. Payment of registration fee of Twenty-Five ThousandPesos (P25,000.00) shall be required upon approval of the application.

Upon registration, the Regional Office shall return one set of the duly-stampedapplication documents to the applicant, retain one set for its file, and transmit the

remaining set to the Bureau of Working Conditions (BWC) within five (5) days fromregistration.

Section 20. Validity of certificate of registration of contractors. The contractorshall be deemed registered only on the date of issuance of its Certificate ofRegistration.

The Certificate of Registration shall be effective for three (3) years, unlesscancelled after due process. The same shall be valid in the region where it isregistered.

In case the contractor has Service Agreements or operates outside the regionwhere it is registered, it shall request a duly authenticated copy of its Certificate ofRegistration from the registering Regional Office and submit the same to the DOLERegional Office where it seeks to operate, together with a copy of its ServiceAgreement/s in the area, for purposes of monitoring compliance with these Rules.

Section 21. Renewal of registration. All registered contractors shall apply forrenewal of their Certificates of Registration thirty (30) days before the expiration oftheir registration to remain in the roster of legitimate service contractors. Theapplicant shall pay a registration renewal fee of Twenty-Five Thousand Pesos(P25,000.00) to the DOLE Regional Office.

Copies of all the updated supporting documents in letters (a) to (e) of Section 15hereof shall be attached to the duly accomplished application form, including thefollowing:

(a) Certificate of membership and proof of payment of SSS, Philhealth, BIR, ECCand Pag-Ibig contributions for the last three (3) years, as well as loan amortizations;



and

(b) Certificate of pending or no pending labor standards violation case/s with theNational Labor Relations Commission (NLRC) and Department of Labor andEmployment (DOLE). The pendency of a case will not prejudice the renewal of the

registration, unless there is a finding of violation of labor standards by the DOLERegional Director.

Section 22. Semi-annual reporting. The contractor shall submit in triplicate itssubscribed semi-annual report using a prescribed form to the appropriate RegionalOffice. The report shall include:

(a) A list of contracts entered with the principal during the subject reportingperiod;

(b) The number of workers covered by each contract with the principal;

(c) Proof of payment of remittances to the Social Security System (SSS), the Pag-Ibig Fund, Philhealth, Employees Compensation Commission (ECC), and Bureau ofInternal Revenue (BIR) due its employees during the subject reporting period and ofamortization of declared loans due from its employees; and

(d) A certified listing of all cases filed against the contractor before the NLRC

The Regional Office shall return one set of the duly-stamped report to thecontractor, retain one set for its file, and transmit the remaining set to the Bureau ofWorking Conditions (BWC) within five (5) days from receipt thereof.

Section 23. Grounds for cancellation of registration. The Regional Director shall,upon a verified complaint, cancel or revoke the registration of a contractor after dueprocess, based on any of the following grounds:

(a) Misrepresentation of facts in the application;

(b) Submission of a falsified or tampered application or supporting documents tothe application for registration;

(c) Non-submission of Service Agreement between the principal and thecontractor when required to do so;

(d) Non-submission of the required semi-annual report as provided in Section 22(Semi-annual reporting) hereof;

(e) Findings through arbitration that the contractor has engaged in labor-onlycontracting and/or the prohibited activities as provided in Section 7 (Other



Prohibitions) hereof;

(f) Non-compliance with labor standards and working conditions;

(g) Findings of violation of Sec tion 8 (Rights of contractor’s employees) or

Section 9 (Required contracts) of these Rules;

(h) Non-compliance with SSS, the HDMF, Pag-Ibig, Philhealth, and ECC laws; and

(i) Collecting any fees not authorized by law and other applicable rules andregulations.

Section 24. Due process in cancellation of registration. Complaint/s based onany of the grounds enumerated in the preceding Section against the contractor shallbe filed in writing and under oath with the Regional Office which issued theCertificate of Registration.

The complaint/s shall state the following:(a) The name/s and address/es of the complainant/s;

(b) Name and address of the contractor;

(c) The ground/s for cancellation;

(d) When and where the action complained of happened;

(e) The amount of money claim, if any; and

(f) The relief/s sought.Upon receipt of the complaint, the Regional Director shall direct the contractor,

with notice to the complainant, to file a verified answer/counter affidavit within ten(10) calendar days without extension, incorporating therein all pertinent documentsin support of his/her defenses, with proof of service of a copy to the complainant.Failure to file an answer/counter affidavit shall constitute a waiver on the part of therespondent. No motion to dismiss shall be entertained.

The Regional Director or his duly authorized representative may conduct aclarificatory hearing within the prescribed ten (10) calendar days within which to filea verified answer/counter affidavit.

Within the said ten (10) calendar days period, the contractor shall make thenecessary corrections/rectifications on the violations that are immediatelyrectifiable upon its own initiative in order to be fully compliant.

The Regional Director may avail himself of all reasonable means to ascertain the



facts of the case, including conduct of inspection, where appropriate, andexamination of informed persons.

The proceedings before the Regional Office shall be summary in nature.

The conduct of hearings shall be terminated within fifteen (15) calendar daysfrom the first scheduled clarificatory hearing. The Regional Director shall resolve thecase within ten (10) working days from the date of the last hearing. If there is nonecessity to conduct a hearing, the case shall be resolved within ten (10) workingdays from receipt of the verified answer/counter affidavit.

Any motion for reconsideration from the Order of the Regional Director shall betreated as an appeal.

Section 25. Appeal. The Order of the Regional Director is appealable to theSecretary within ten (10) working days from receipt of the copy of the Order. The

appeal shall be filed with the Regional Office which issued the cancellation Order.The Office of the Secretary shall have thirty (30) working days from receipt of therecords of the case to resolve the appeal. The Decision of the Secretary shallbecome final and executory after ten (10) days from receipt thereof by the parties.No motion for reconsideration of the Decision shall be entertained.

Section 26. Effects of cancellation of registration. A final Order of cancellationshall divest the contractor of its legitimate status to engage incontracting/subcontracting.

Such Order of cancellation shall be a ground to deny an application for renewal of

registration to a contractor under the Rules.

The cancellation of the registration of the contractor for engaging in labor-onlycontracting or for violation of any of the provisions of these Rules involving aparticular Service Agreement will not, however, impair the validity of existinglegitimate jobcontracting arrangements the contractor may have entered into withother principals prior to the cancellation of its registration. Any valid and subsistingService Agreement shall be respected until its expiration; thereafter, contractingwith a delisted contractor shall make the principal direct employer of all employeesunder the Service Agreement pursuant to Articles 106 and 109 of the Labor Code.

Section 27. Effects of finding of labor-only contracting and/or violation ofSections 7. 8 or 9 of the Rules. A finding by competent authority of labor-onlycontracting shall render the principal jointly and severally liable with the contractorto the latter's employees, in the same manner and extent that the principal is liableto employees directly hired by him/her, as provided in Article 106 of the Labor Code,as amended.



A finding of commission of any of the prohibited activities in Section 7, orviolation of either Sections 8 or 9 hereof, shall render the principal the directemployer of the employees of the contractor or subcontractor, pursuant to Article109 of the Labor Code, as amended.

Section 28. Retaliatory measures. Pursuant to Article 118 of the Labor Code, asamended, it shall be unlawful for the principal, contractor, or any party privy to thecontract or services provided to refuse to pay or reduce the wages and benefits, anddischarge or in any manner discriminate against any worker who has filed anycomplaint or instituted any proceeding on wages (under Title II, Book III of the LaborCode), labor standards violation, or has testified or is about to testify in suchproceedings.

Section 29. Enforcement of labor standards and working conditions. Consistentwith Article 128 (Visitorial and Enforcement Power) of the Labor Code, as amended,the Regional Director through his/her duly authorized representatives, shall conduct

routine inspection of establishments engaged in contracting arrangement regardlessof the number of employees engaged by the principal or by the contractor.

They shall have access to employer’s records and pre mises at any time of theday or night whenever work is being undertaken therein, and the right to copytherefrom, to question any employee and investigate any fact, condition or matterwhich may be necessary to determine violations or which may aid in theenforcement of the Labor Code and of any labor law, wage order, or rules andregulations issued pursuant thereto.

The findings of the duly authorized representative shall be referred to the

Regional Director for appropriate action as provided for in Article 128, and shall befurnished the collective bargaining agent, if any.

Based on the visitorial and enforcement power of the Secretary of Labor andEmployment in Article 128 (a), (b), (c), and (d), the Regional Director shall issuecompliance orders to give effect to the labor standards provisions of the Labor Code,other labor legislation, and these Rules.

Section 30. Duty to produce copy of contract between the principal and thecontractor. The principal or the contractor shall be under an obligation to produce acopy of the Service Agreement in the ordinary course of inspection. The contractorshall likewise be under an obligation to produce a copy of any contract ofemployment when directed to do so by the Regional Office Director or his/herauthorized representative.

Section 31. Tripartite implementation and monitoring of compliance; Use ofregistration fees. A region-based tripartite monitoring team on the observance oflabor standards in contracting and subcontracting arrangements shall be constituted



as a subcommittee of the Regional Tripartite Industrial Peace Council (RTIPC) withinfifteen (15) days from the effectivity of these Rules. It shall submit a quarterlyregional monitoring report to the DOLE Secretary and to the National TripartiteIndustrial Peace Council (NTIPC). The Bureau of Working Conditions (BWC) shallensure the implementation of this provision, and shall conduct capacity building to

the members of the regional tripartite monitoring team.

For this purpose, a portion of the collected registration fees shall be used in theoperation of the region-based tripartite monitoring team, including in thedevelopment of an internet-based monitoring system and database. It shall likewisebe used for transmittal of the monthly report of all registered contractors to theBureau of Local Employment (BLE), and in generating labor market information.

Section 32. Oversight function of the National TIPC. The National TripartiteIndustrial Peace Council (NTIPC) as created under Executive Order No. 49, Series of1998, as amended, shall serve as the oversight committee to verify and monitor the

following:

(a) Engagement in allowable contracting activities; and

(b) Compliance with administrative reporting requirements.

Section 33. Collective bargaining and/or Industry Tripartite Council (ITC).Nothing herein shall preclude the parties in collective bargaining agreements (CBAs)to determine the functions that can or cannot be farmed out or contracted out to alegitimate contractor, including the terms and conditions of the workers’engagement under the arrangement, provided the provisions of these Rules are

observed.

In industries with established Industry Tripartite Councils (ITCs), the tripartitepartners may agree, through a voluntary code of good practices, on the functions orprocesses that can or cannot be contracted out to a legitimate contractor.

Section 34. Financial Relief Program; Tripartite Co-Regulation Engagement. AFinancial Relief Program or Unemployment Assistance Fund shall be established foremployees under a Service Agreement or employees in transition from one ServiceAgreement to the next. For this purpose, the National Tripartite Industrial PeaceCouncil (NTIPC), upon the effectivity of this issuance, shall constitute a LocalService Provider Tripartite Working Group (LSP-TWG) composed of representatives ofthe stakeholders in the industry. The LSP-TWG shall:

(a) Recommend the mechanics and details in setting up the Financial ReliefProgram or Unemployment Assistance Fund with proposed funding sources beforeend of June 2012; and



(b) Draw-up the terms of a Tripartite Co-Regulation Engagement in ensuring fullcompliance with labor laws for approval/endorsement by the NTIPC, including aproposed Table of Progressive Rate of Increases in the minimum capitalizationrequirement at reasonable intervals to ensure that only legitimate contractors canengage in subcontracting arrangement.

Section 35. Enrollment in DOLE programs on improving compliance with laborstandards. For purposes of ensuring compliance with labor standards, the principaland subcontractors covered by these Rules are encourage to enroll and participatein the DOLE Kapatiran Work Improvement for Small Enterprise (WISE)-TAV Program(Department Advisory No. 06, dated 07 March 2011) and/or in the IncentivizingCompliance Program (Department Order No. 115-11).

Section 36. Contracting or subcontracting arrangements in the Construction andOther Industries. Contracting or subcontracting arrangements in the ConstructionIndustry, under the licensing coverage of the Philippine Construction Accreditation

Board (PCAB), shall be covered by the applicable provisions of these Rules and shallcontinue to be governed by Department Order No. 19, Series of 1993 (GuidelinesGoverning the Employment of Workers in the Construction Industry); DepartmentOrder No. 13, Series of 1998 (Guidelines Governing the Occupational Safety andHealth in the Construction Industry); and DOLE-DPWH-DILG-DTI and PCABMemorandum of Agreement-Joint Administrative Order No. 1, Series of 2011 (oncoordination and harmonization of policies and programs on occupational safety andhealth in the construction industry).

In industries covered by a separate regulation of the DOLE or other governmentagency, contracting or subcontracting therein shall be governed by these Rules

unless expressly provided otherwise.

Section 37. Prohibition on DOLE officials or employees. Any official or employee ofthe DOLE or its attached agencies is prohibited from engaging or having any interestin any contracting or subcontracting business.

Section 38. Non-impairment of existing contracts; Non-diminution of benefits.Subject to the provisions of Articles 106 to 109 of the Labor Code, as amended, theapplicable provisions of the Civil Code and existing jurisprudence, nothing hereinshall impair the rights or diminish the benefits being enjoyed by the parties toexisting contracting or subcontracting arrangements.

The effectivity of Certificates of Registration acquired under Department OrderNo. 18, Series of 2002, issued on 21 February 2002, shall be respected untilexpiration.

Section 39. Supersession. All rules and regulations issued by the Secretary ofLabor and Employment inconsistent with the provisions of these Rules are hereby



superseded.

Section 40. Separability Clause. If any provision or portion of these Rules aredeclared void or unconstitutional, the remaining portions or provisions hereof shallcontinue to be valid and effective.

Section 41. Effectivity. This Department Order shall be effective fifteen (15) daysafter completion of its publication in a newspaper of general circulation.

Manila, Philippines, 14 November 2011.

ROSALINDA DIMAPILIS-BALDOZSecretary

DEPARTMENT CIRCULAR NO. 01 SERIES OF 2012

Republic of the PhilippinesDEPARTMENT OF LABOR AND EMPLOYMENTlntramuros, Manila

Department Circular No. 01 Series of 2012Clarifying the Applicability of Department Order No. 18-A, Series of 2011, to

Business Processing Outsourcing (BPO)/Knowledge Process Outsourcing (KPO) andthe Construction Industry

1. Purpose. This Circular is being issued in response to queries on whether firmsor companies in the Business Process Outsourcing (BPO) or Knowledge ProcessOutsourcing (KPO) and in the Construction Industry are covered by Department OrderNo. 18-A, Series of 2011, or the Rules Implementing Articles 106 to 109 of the LaborCode of the Philippines, as amended.

2. Existing Rules under Department Order No.18-A, Series of 2011.2.1. In the implementation of Articles 106 to 109 of the Labor Code, as

amended, Department Order No. 18-A, Series of 2011, states in Section 3(c) thatcontracting or subcontracting is “an arrangement whereby a principal agrees to putout or farm out with a contractor the performance or completion of a specific job,work or service within a definite or predetermined period, regardless of whethersuch job, work or service is to be performed or completed within or outside thepremises of the principal".

Additionally, it denes trilateral relationship in Section 3 (m) to refer to therelationship in a contracting or subcontracting arrangement where there is acontract for a specic job, work or service between the principal and the contractor,



and a contract of employment between the contractor and its workers. There arethree (3) parties involved in contracting or subcontracting arrangements, theprincipal who decides to farm out a job, work or service to a contractor; thecontractor who has the capacity to independently undertake the performance of the

job, work or service; and the workers engaged by the contractor to accomplish the

job, work or service.2.2. Further, Section 36 of D.O.18-A, Series of 2011, provides that contracting or

subcontracting arrangements in the Construction Industry, under the licensingcoverage of the Philippine Contractors (Construction) Accreditation Board (PCAB),shall be covered by the applicable provisions of these Rules and shall continue to begoverned by Department Order No. 19, Series of 1993 (Guidelines Governing theEmployment of Workers in the Construction Industry); Department Order No. 13,Series of 1998 (Guidelines Governing the Occupational Safety and Health in theConstruction Industry); and DOLE-DPWH-DILG-DTI and PCAB Memorandum ofAgreement-Joint Administrative Order No. 1, Series of 2011 (on coordination andharmonization of policies and programs on occupational safety and health in the

construction industry). While other industries covered by a separate regulation of theDOLE or other government agency, contracting or subcontracting therein shall begoverned by these Rules unless expressly provided otherwise.

2.3. Section 2, subparagraph 2.5 of Department Order No. 19, Series of 1993, orthe Guidelines Governing the Employment of Workers in the Construction Industryprovides:"Contracting and subcontracting. — The practice of contracting out certain phasesof a construction project is recognized by law, particularly wage legislations andwage orders, and by industry practices. The Labor Code and its ImplementingRegulations allow the contracting out of jobs under certain conditions. Where such

job contracting is permissible, the construction workers are generally considered as

employees of the contractor or subcontractor, as the case may be, subject to Article109 of the Labor Code, as amended."

3. Applicability of the D.O.18-A, Series of 2011 to BPO.3.1. DO 18-A, Series of 2011, clearly speaks of a trilateral relationship that

characterizes the covered contracting/subcontracting arrangement. Thus, vendor-vendee relationship for entire business processes covered by the applicableprovisions of the Civil Code on Contracts is excluded.

3.2 D018-A, Series of 2011, contemplates generic or focused singular activityin one contract between the principal and the contractor (for example, janitorial,security, merchandising, specic production work) and does not contemplateinformation technology-enabled services involving an entire business processes (forexample, business process outsourcing, knowledge process outsourcing, legalprocess outsourcing. hardware and/or software support, medical transcription,animation services, back of ce operations/support). These companies engaged inbusiness processes (“BPOs”) may hire employees in accordance with applicablelaws, and maintain these employees based on business requirements, which may ormay not be for different clients of the BPOs at different periods of the employees’employment.



4. Applicability of D.O.18-A, Series of 2011 to the Construction Industry; Coordinationwith PCAB-CIAP.

4.1 Licensing and the exercise of regulatory powers over the constructionindustry is lodged with the Philippine Contractors Accreditation Board (PCAB), which

is under the Construction Industry Authority of the Philippines (CIAP), pursuant to theprovisions of Presidential Decree No. 1746, Series of 1980, and not with theDepartment of Labor and Em ployment or any of its regional ofces.

PCAB registers all contractors, whether general or subcontractors, in theConstruction Industry and regulates the same including ensuring compliance withDOLE Department Order No. 13, Series of 1998 (Guidelines Goveming theOccupational Safety and Health in the Construction Industry); and DOLE-DPWH-DILG-DTI and PCAB Memorandum of Agreement-Joint Administrative Order No. 1, Series of2011 (on coordination and harmonization of policies and programs on occupationalsafety and health in the construction industry).

Thus, the DOLE, through its regional ofces, shall not require contractors

licensed by PCAB in the Construction Industry to register under D.O. 18-A, Series of2011. Moreover, ndings of violatio n/s on labor standards and occupational healthand safety standards shall be coordinated with PCAB for its appropriate action,including the possible cancellation/suspension of the contractor's license.

5. Effectivity. This Circular shall take effect immediately after its publication ina newspaper of general circulation.Manila, Philippines. 13 March 2012.

ROSALINDA DlMAPlLlS-BALDOZ - - Secretary

Q: What are the two types of contractors under the law? What is the maindifference between the two?

A: The two types of contractors are the Labor-only contractor and the Jobcontractor. Labor only contracting is prohibited while job contracting is legallyallowed by law.

Q: When is there labor-only contracting?

A: There is labor-only contracting where the person supplying workers to anemployer does not have substantial capital or investment in the form of tools,equipment, machineries, work premises, among others, and the workers recruitedand placed by such persons are performing activities which are directly related tothe principal business of such employer.

Q: What are the consequences of labor-onlt contracting?



A: The person acting as contractor shall be considered merely as an agent of the

employer and the latter shall be responsible to the workers in the same manner andextent as if the latter were directly employed by him.

Q: What is job-contracting?

A: It is an arrangement whereby a principal agrees to put out or farm out with acontractor or series of contractor the performance or completion of a specific job,work or service within a definite or predetermined period, regardless of whethersuch job, work, or service is to be performed or completed within or outside thepremises of the principal.

Q: What are the elements of job or independent contracting?

A: The following are the elements of job or independent contracting:

a) the contractor or subcontractor carries on a distinct and independentbusiness and undertakes to perform the job on his own account and under his ownresponsibility, according to its own manner and method and free from the controland direction of the principal in all matters connected with the performance of thework except as to the results thereof;

b) the independent contractor or subcontractor has substantial capital orinvestment; and

c) the agreement between the principal and contractor or subcontractor assuresthe contractual employees entitlement to all labor and occupational safety andhealth standards, free exercise of the right to self-organization, security of tenure

and social and welfare benefits

Q: Who is an independent or job contractor?

A: An independent or job contractor is one who carries on a distinct andindependent business and undertakes to perform the job or to do a piece of work onits own account and under its own responsibility, according to his own manner andmethods and free from the control and direction of the principal in all mattersconnected with the performance of the work except as to the results thereof.

A television anchor is one example of an independent contractor. (Jose Sonzavs. ABS-CBN [G.R. 138051 June 10, 2004]

A mere statement in a contract with a company that laborers who are paidaccording to the amount and quality of work are independent contractors does notchange their status as mere employees in contemplation of labor laws.



Contracting or subcontracting

1. Parties.- There are 3 parties: principal, the contractor or subcontractor,and the workers engaged by the latter. The principal and the contractor orsubcontractor may be a natural or jurisdictional person.

- “Principal” refers to any employer who puts out or fa rms out a job,service, or work to a contractor or subcontractor, whether or not thearrangement is covered by a written contract.

- “Contractor” or “Subcontractor” refers to any person or entity engagedin a legitimate contracting and subcontracting arrangements.

- “Contractual employee” includes one employed by a contractorsubcontractor to perform or complete a job, work or service pursuant toan arrangement between the latter and a principal called “Contractor”or “Subcontractor”.

2. Contracting or Subcontracting; definition.- It refers to an arrangement

whereby a principal agrees to put out or farm out with a contractor orsubcontractor the performance or completion of a specific job, work orservice within a definite or predetermined period, regardless of whethersuch job, work or service is to be performed or completed within or outsidethe premises of the principal.

3. Contracting or Subcontracting; when legitimate. It shall be if the followingcircumstances concur:

(i) The contractor or subcontractor carries on a distinct and independentbusiness and undertakes to perform the job, work or service on its ownaccount and under its own responsibility, according to its own mannerand method, and free from the control and directions of the principal in

all matters connected with the performance of the work except as tothe results thereof;

(ii) The contractor or subcontractor has substantial capital or investment;and

(iii) The agreement between the principal and the contractor orsubcontractor assures the contractual em ployees’ entitlement to alllabor and occupational safety and health standards, free exercise of theright of self-organization, security of tenure, and social and welfarebenefits.

4. Permissible contracting or subcontractingThe principal may engage the services of a contractor or subcontractor for

the performance of any of the following:(a) Works or services temporarily or occasionally needed to meet abnormal

increase in the demand of products or services, provided that the normalproduction capacity or regular workforce of the principal cannotreasonably cope with such demands;



(b) Works or services temporarily or occasionally needed by the principal forundertaking requiring expert or highly technical personnel to improve themanagement or operations of an enterprise;

(c) Services temporarily needed for the introduction or promotion of newproducts, only for the duration of the introductory or promotional period;

(d) Works and services not directly related or not integral to the mainbusiness or operation of the principal, including casual work, janitorial,security, landscaping, and messengerial services and work not related tomanufacturing processes in manufacturing establishments;

(e) Services involving the public display of manufacturers’ prod ucts which donot involve the act of selling or issuance of receipts or invoices;

(f) Specialized works involving the use of some particular, unusual orpeculiar skills, expertise, tools or equipment the performance of whish isbeyond the competence of the regular workforce or production capacity ofthe principal; and

(g) Unless a reliever system is in place among the regular workforce,

substitute services for absent regular employees provided that the periodof service shall be coextensive with the period of absence and the sameis made to the substitute employee at the time of engagement. The phrase“absent regular employees” includes those who are serving suspensionsor other disciplinary measures not amounting to termination ofemployment meted out by the principal but excludes those on strikewhere all the formal requisites for the legality of the strike have beenprima facie complied with based on the records filed with the NationalConciliation and Mediation Board. (Section 6, Rule VIII-A, Book III, Rulesto Implement the Labor Code, as amended by Department Order No. 10,Series of 1997).

5. Prohibitions.

The following are hereby declared prohibited for being contrary to law orpublic policy:

(a) Labor-only contracting;(b) Contracting out of work which will either displace employees of the

principal from their jobs or reduce their regular working hours;(c) Contracting out of work with a “cabo”. [A “cabo” refers to a person or

group of persons or to a labor group which, in the guise of a labororganization, supplies workers to an employer, with or without anymonetary or other consideration whether in the capacity of an agent of theemployer or as an ostensible independent contractor.]

(d) Taking undue advantage of the economic situation or lack of bargainingstrength of the contractual employee, or undermining his security of tenureor basic rights, or circumventing the provisions or regular employment inany of the following instances:



(i) In addition to his assigned function, requiring the contractual employeeto perform functions which are currently being performed by the regular employee ofthe principal or of the contractor or subcontractor;

(ii) Requiring him to sign as a precondition to employment or continuedemployment an antedated resignation letter; a blank payroll; a waiver of

labor standards including minimum wages and social welfare benefits;or a quitclaim releasing the principal, contractor or subcontractor fromany liability as to payment of the future claims; and

(iii) Requiring him to sign a contract fixing the period of employment to aterm shorter than the term of the contract between the principal andthe contractor or subcontractor, unless the latter contract is divisibleinto phases for which substantially different skills are required and thisis made known to the employee at the time of engagement.

(e) Contracting out of a job, work or service through an in-house agency asdefined herein;

(f) Contracting out of a job, work or service directly related to the business or

operation of the principal by reason of a strike or lockout whether actual orimminent; and

(g) Contracting out of a job, work or service when not justified by theexigencies of the business and the same results in the reduction orsplitting of the bargaining unit.

Labor-only contractingThere is “labor -only contracting” when contractor or subcontractor merely

recruits, supplies or places workers to perform a job, work or service for a principaland the following elements are present:

(i) The contractor or subcontractor does not have substantial capital or investment

to actually perform a job, work or service under its own account and responsibility;and(ii) The employees recruited, supplied or placed by such contractor or subcontractorare performing activities which are directly related to the main business of theprincipal.

In-house agencySimilarly prohibited under the law is the operation of an “in -house agency”

whereby a contractor or subcontractor is engaged in the supply of labor which:(i) is owned, managed or controlled by the principal; and(ii) operates solely for the principal owning, managing, or controlling it.

A finding that a contractor is a “labor -only” contractor is equivalent to afinding that there exists an employer-employee relationship between the owner ofthe project and the employee of the “labor -only” contractor since that relationship isdefined and prescribed by law itself.

Indirect Employer; liability



1. The principal is considered the indirect employer of the workers suppliedby independent contractor or subcontractor.

2. The nature of the liability of the principal is joint and solidarily with thecontractor or subcontractor in case the latter failed to pay the wages ofthe employees.

Worker preference in case of bankruptcy1. The right to perform given to workers under Article 110 cannot exist in any

effective way prior to the time of its presentation in distributionproceedings. Article 110 applies only in case of bankruptcy or judicialliquidation of the employer.

2. Judicial proceedings in rein is required for creditors’ claims againstdebtors to become operative.

3. To contend that Article 110 of the Labor Code is applicable also toextrajudicial proceedings would be putting the worker in a better positionthan the State which could only assert its own prior preference in case of a

judicial proceeding.4. The right of preference as regards unpaid wages recognized by Article 110

of the Labor Code does not constitute a lien on the property of theinsolvent debtor in favor of the workers but a right to a first preference inthe discharge of the funds of the judgment debtor.

5. Article 110 of the Labor Code does not purport to create a lien in favor ofworkers or employees for unpaid wages upon all of the properties or uponany particular property owned by their employer. Claims for unpaid wagesdo not, therefore, fall at all within the category of specially preferredclaims established under articles 2241 and 2242 of the Civil Code, exceptto the extent that such claims for unpaid wages are already covered by

Article 2241, number 6: “claims of laborers and other workers engaged inthe construction, reconstruction or repair of buildings, canals and otherworks, upon said buildings, canals or other works.” To the extent thatclaims for unpaid wages fall outside the scope of Article 2241, number 6and 2242, number 3, they would come within the ambit of the category ofordinary preferred credits under Article 2242.

6. Mortgage credit.- A mortgage credit id a special preferred credit underArticle 2241 of the Civil Code while workers’ preference is an specialpreferred credit.

7. Preference of taxes. In one case, it has held that there is no merit in thecontention of the NLRC that taxes are also absolutely preferred claims onlywith respect to movable and immovable properties on which they are due.The claim of the government predicated on a tax lien is superior to theclaim of a private litigant predicated on a judgment. the tax lien attachesnot only from the service of the warrant of distraint property but from thetime of the tax become due and payable.

Attorney’s fees



1. In cases of unlawful withholding of wages, the employer may be assessedattorney’s fees equivalent to ten percent (10%) of the amount of wagesrecovered.

2. It shall be unlawful for any person to demand or accept, in any judicial oradministrative proceedings for the recovery of wages, attorney’s fees

which exceed ten percent (10%) of the amount of wages recovered.3. The attorney’s fees may be awarded only when the withholdin g of wages is

declared unlawful.4. The basis of the 10% attorney’s fees is the amount of wages recovered.

Should there be any other monetary awards given in the proceedings, thesame may not be assessed or subjected to the 10% attorney’s fees.

PROHIBITIONS REGARDING WAGES

Non-interference in disposal of wages1. Employers are not allowed to interfere in the disposal of wages of

employees.

Wage deductionDeductions from the wages of the employees may be made by the employer in

any of the following cases:a. When the deductions are authorized by law, (e. g. SSS, Pag-IBIG), including

deductions for the insurance premiums advanced by the employer in behalfof the employee as well as union dues where the right to check-off hasbeen recognized by the employer or authorized in writing by the individualemployee himself;

b. When the deductions are with the written authorization of the employees

for payment to a third person and the employer agrees to do so, providedthat the latter does not receive any pecuniary, directly or indirectly, fromthe transaction;

c. Withholding tax mandated under the National Internal Revenue Code;d. Withholding of wages because of employee’s debt to the employer which is

already due;e. Deductions made pursuant to a judgment against the worker under

circumstances where the wages may be the subject of attachment orexecution but only for debts incurred for food, clothing, shelter andmedical attendance.

f. When deductions from wages are ordered by the court;g. Deductions made for agency fee from non-union members who accept the

benefits under the CBA negotiated by the bargaining union. This form ofdeduction does not require the written authorization of the non-unionmember.

Deposits for loss or damage



No employer shall require his worker to make deposits from which deductionsshall be made for the reimbursement of loss of or damage to tools, materials, orequipment supplied by the employer, except when the employer is engaged in suchtrades, occupations or business where the practice of making deductions orrequiring deposits is a recognized one, or is necessary or desirable as determined by

the Secretary of Labor and Employment in appropriate rules and regulations.

Withholding of wages and kickbacks prohibitedIt shall be unlawful for any person, directly or indirectly, to withhold any

amount from the wages of a worker or induce him to give up any part of his wages byforce, stealth, intimidation, threat or by any other means whatsoever without theworker’s consent.

Deductions to ensure employmentIt shall be unlawful to make any deduction from the wages of any employee

for the benefit of the employer or his representative or intermediary as consideration

of a promise of employment or retention in employment.

Retaliatory measuresIt shall be unlawful for an employer to refuse to pay or reduce the wages and

benefits, discharge or in any manner discriminate against any employee who hasfiled any complaint institute any proceeding or has testified or is about to testify insuch proceedings.

False reportingIt shall be unlawful for any person to make any statement, report, or record

filed or kept pursuant to the provisions of this Code knowing such statement, report

to be false in any material respect.

Wage Order1. “Wage order” refers to the Order p romulgated by the Regional Tripartite

Wages and Productivity Board (RTWPB) pursuant to its wage fixingauthority.

2. Necessity for wage order.- Wherever conditions in a particular region sowarrant, the RTWPB shall investigate and study all pertinent facts andbased on the standards and criteria herein prescribed, shall proceed todetermine whether a Wage Order should be issued.

3. Affectivity of wage order.- Any Wage Order shall take effect after fifteen(15) days from its complete publication in at least one (1) newspaper ofgeneral circulation in the region.

4. Appeal to the National Wages and Productivity Commission.- Any partyaggrieved by the Wage Order issued by the RTWPB may appeal such orderto the Commission within ten (10) calendar days from the publication ofsuch order. The filing of the appeal does not stay the order or suspend theaffectivity thereof unless the person appealing such order shall file with



the Commission, an undertaking with a surety or sureties satisfactory tothe Commission for the payment to the employees affected by the order ofthe corresponding increase, in the event such order is affirmed.

Standards/Criteria for minimum wage fixing

In the determination of regional minimum wages, the Regional Boardshall, among other relevant factors, consider the following:(a) The demand for living wages;(b) Wage adjustment vis-à-vis the consumer price index;(c) The cost of living and changes or increases therein;(d) The needs of workers and their families;(e) The need to induce industries to invest in the countryside;(f) Improvements in standards of living;(g) The prevailing wage levels;(h) Fair return of the capital invested and capacity to pay of employers;

(i) Effects on employment generation and family income; and(j) The equitable distribution of income and wealth along the imperatives

of economic and social development.Wage distortion

“Wage distortion” is a situation where an increase in prescribed wage ratesresults in the elimination or severe contraction of intentional quantitativedifferences in wage or salary rates between among employee groups in anestablishment as to effectively obliterate the distinctions embodied in such wagestructure based on skills, length or service, or other logical bases of differentiation.

The issue of whether or not a wage distortion exists is a question of fact thatis within the jurisdiction of the quasi-judicial tribunals.

ADMINISTRATION AND ENFORCEMENTDistinctions between Article 128 (b), Article 129 and Article 217

For purposes of clarification, the following are the major distinctionsregarding the jurisdictions over money claims of the Secretary of Labor andEmployment under Article 128 [b], the Regional Director of the Department of Laborand Employment under Article 129 and the Labor Arbiter under Article 217 of theLabor Code.

1. On the nature of the powers granted and proceedings.Article 128 [b] involves the exercise by the Secretary of Labor and Employment orhis duly authorized representatives, of the visitorial and enforcement powersprovided therein.

Article 129 involves the exercise by the Regional Director of the Department of Laborand Employment or any of the duly authorized hearing officers of the Department, ofadjudicatory powers over cases concerning recovery of wages, simple money claims



Article 128 [b] contemplates situations where the case for violation of laborstandards laws and other labor regulations, arose from the routine inspectionconducted by the labor employment and enforcement officer or industrial safetyengineers of the Department of Labor and Employment, with or without a complaintinitiated by an interested party. Here, it is generally the Department of Labor and

Employment which initiates the action.

Article 129 contemplates situations where there is a complaint initiated by aninterested party for recovery of wages, simple money claims and other benefits.Here, it is the complainant who initiates the action.

Article 217 contemplates situations where a complaint is initiated by a worker,whether agricultural or non-agricultural. Here, it is the complainant who initiates theaction.

5. On the existence of employer-employee relationship.

Article 128 [b] is applicable only when the employer-employee relationship stillexists. In case the relationship no longer exists, claims for payment of monetarybenefits fall within the exclusive and original jurisdiction of the Labor Arbiters.Accordingly, if on the face of the complaint, it can be ascertained that employer-employee relationship no longer exists, the case, whether or not accompanied by anallegation of illegal dismissal, shall immediately be endorsed by the RegionalDirector to the appropriate Branch of the National Labor Relations Commission.(Section 3, Rule II, Rules on the Disposition of Labor Standards Cases in the RegionalOffices, September 16, 1987).

Article 129 is applicable whether the employer-employee relationship still exists or

not for as long as the claim arose from said relationship.

Article 217 is applicable irrespective of whether or not the employer-employeerelationship still exists for as long as the claim arose from said relationship.

6. On the remedy of appeal, how taken.Article 128 [b] grants appeal from the order issued by the duly authorizedrepresentative of the Secretary of Labor and Employment to the latter.

Article 129 grants appeal from the decision of the Regional Director or HearingOfficer to the National Labor Relations Commission.

Article 217 grants appeal from the decision of the Labor Arbiter to the National LaborRelations Commission.

7. On the reglementary period of appeal.Article 128 [b] prescribes no specific reglementary period for appeal. The law issilent on this matter. However, under the Rules on the Disposition of Labor



Standards Cases in the Regional Offices promulgated on September16, 1987 by theSecretary of Labor and Employment, the reglementary period is fixed at ten (10)calendar days from receipt of the order. (Section 1, Rule IV, Rules on the Dispositionof Labor Standards Cases in the Regional Offices, September 16, 1987).

Article 129 prescribes the reglementary period of five (5) calendar days from receiptof a copy of the decision or resolution, within which to perfect the appeal.

Article 217 does not contain any provision on the reglementary period for appeal.However, Article 223 prescribes the reglementary period of ten (10) calendar daysfrom receipt of the decision, award or order of the Labor Arbiter, within which toperfect appeal.

8. On requirement of posting of bond to perfect the appeal.Article 128 [b] requires that in case the order subject of the appeal involvesmonetary award, an appeal by the employer may be perfected only upon the posting

of cash or surety bond issued by a reputable bonding company duly accredited by theSecretary of Labor and Employment in the amount equivalent to the monetary awardin the order appealed from.Article 129 is silent on the requirement of bond, hence, this is not required to perfectthe appeal.

Article 127 does not embody the provision requiring posting of bond to perfect theappeal but Article 223. A bond may stay the execution of monetary awards but notthe order of reinstatement which is executory even pending appeal.

9. On the grounds for appeal.

Article 128 [b] does not specify the grounds for appeal. But the Rules on theDisposition of Labor Standards Cases in the Regional Offices which issued by theSecretary of Labor and Employment on September 16, 1987, to implement Article 128[b] (prior to its amendment by Republic Act No. 7730 on June 2, 1994), enumeratesthe following grounds:

a. there is a prima facie evidence of abuse of discretion on the part of theRegional Director;

b. the Order was secured through fraud, coercion or graft and corruption;c. the appeal is made purely on questions of law; ord. serious errors in the findings of facts were committed which, if not

corrected, would cause grave or irreparable damage to the appellant.

Article 129 expressly makes reference to the grounds provided in Article223 of theLabor Code as applicable to appeals brought under this Article.

Article 217 does not contain the grounds but those mentioned in Article 223 areapplicable to appeals from decisions, awards or orders of the Labor Arbiter.



10. On period to decide appeal and finality of decisions.Article 128 [b] does not prescribe the period within which to decide the appeal andwhen such decision will become final and executory. However, its implementingrules, while not providing the period within which the decision should be rendered,

mention that the decisions, orders or resolutions of the Secretary of Labor andEmployment shall become final and executory after ten (10) calendar days fromreceipt thereof. (Section 5, Rules on the Disposition of Labor Standards Cases in theRegional Office).

Article 129 mentions expressly that the NLRC should resolve the appeal within ten(10) calendar days from the submission of the last pleading required or allowedunder its rules contrary to Article 223 which provides for twenty (20) calendar days.With respect to the finality of the decision on the appealed case. Article 223 providesthat the same shall be final and executory after ten (10) calendar days from receiptthereof by the parties.

Article 217 does not embody the provision on the period to decide appealed cases orthe period within which such decision shall become final and executory. Thesematters are provided under Article 223 of the Labor Code.

EMPLOYMENT OF WOMEN

NOTE: Article 130 and 131 of the Labor Code, as amended was replaced with theprovisions on Nightworkers (Articles 154 to 161) pursuant to Rep. Act No. 10151,June, 2011

THE LAW ON WORKING CONDITIONS FOR SPECIAL GROUP OF EMPLOYEES

NOTE: Article 130 and 131 of the Labor Code, as amended was replaced with theprovisions on Nightworkers (Articles 154 to 161) pursuant to Rep. Act No. 10151,June, 2011

NEW: The provisions on night workers are:

Art. 154. Coverage. – This chapter shall apply to all persons who shall be employedor permitted or suffered to work at night, except those employed in agriculture,stock raising, fishing, maritime transport and inland navigation, during a period ofnot less than seven (7) consecutive hours, including the interval from midnight tofive o’clock in the morning, to be determined by the Secretary of L abor andEmployment, after consulting the workers’ representatives/labor orbanizations andemployers.

Night worker means any employed person whose work requires performanceof a substantial number of hours of night work which exceeds a specific limit. Thislimit shall be fixed by the Secretary of Labor after consulting the worker’s



representatives/labot organizations and employers (R.A. 10151, signed into law on 21June 2011).

Art. 156. Health Assessment. – At their request, workers shall have the right toundergo a health assessment without charge and to receive advice on how to reduce

or avoid health problems associated with their work:(a) Before taking up an assignment as a night worker;(b) At regular intervals during such an assignment; and(c) If they experience health problems during such an assignment which are

not caused by factors other than the performance of night work.

With the exception of a finding of unfitness for night work, the findings of suchassessments shall not be transmitted to oth ers without the workers’ consent andshall not be used to their detriment. (R.A. 10151, signed into law on 21 June 2011).

Art. 157. Transfer. – Night workers who are certified as unfit for night work, due to

health reasons, shall be transferred, whenever practicable, to a similar job for whichthey are fit to work.

If such transfer to a similar job is not practicable, these workers shall begranted the same benefits as other workers who are unable to work, or to secureemployment during such period.

A night worker certified as temporarily unfit for night work shall be given thesame protection against dismissal or notice of dismissal as other workers who areprevented from working for reasons of health. (R.A. 10151, signed into law on 21June 2011).

Art. 158. Women Night Workers.- Measures shall be taken to ensure that an

alternative to night work is available to womenworkers who would otherwise becalled upon to perform such work:

(a) Before and after childbirth, for a period of at least sixteen (16) weeks,which shall be divided between the time before and after childbirth;

(b) For additional periods, in respect of which a medical certificate isproduced stating that said additional periods are necessary for the healthof the mother or child:

1. During pregnancy;2. During a specified time beyond the period, after childbirth is fixed

pursuant to subparagraph (a) above, the length of which shall bedetermined by the DOLE after consulting the labor organizations andemployers.

During the periods referred to in this article:(i) A woman worker shall not be dismissed or given notice of

dismissal, except for just or authorized causes provided for inthis Code that are not connected with pregnancy, childbirthand childcare responsibilities



(ii) A woman worker shall not lose the benefits regarding herstatus, seniority, and access to promotion which may attachto her regular night work position.

Pregnant woman and nursing mothers may be allowed to work at night only if

a competent physician, other than the company physician, shall certify their fitnessto render night work, and specify, in the case of pregnant employees, the period ofthe pregnancy that they can safely work.

The measures referred to in this article may include transfer to day workwhere this is possible, the provision of social security benefits or an extension ofmaternity leave.

The provisions of this article shall not have the effect of reducing theprotection and benefits connected with maternity leave under existing laws. (R.A.10151, signed into law on 21 June 2011).

Art. 159. Compensation. – The compensation for night workers in the form of workingtime, pay or similar benefits shall recognize the exceptional nature of night work.(R.A. 10151, signed into law on 21 June 2011).

Art. 160. Social Services. – Appropriate social services shall be provided for nightworkers and where necessary, for workers performing night work. (R.A. 10151,signed into law on 21 June 2011).

Art. 161. Night Work Schedules. – Before introducing work schedule requiring theservices of night workers, the employer shall consult the workers’representatives/labor organizations concerned on the details of such schedules and

the forms of organizations of night work that are best adapted to the establishmentand its personnel, as well as, on the occupational health measures and socialservices which are required. In establishments employing night workers,consultation shall take place regularly. (R.A. 10151, signed into law on 21 June2011).

Q: What are the different facilities that an employer must at least furnish for hiswomen employees?

A: The Secretary of Labor may require employers to:

1. Provide seats proper for women and permit them to use the seats when they arefree from work or during office hours provided the quality of the work will not becompromised;

2. Establish separate toilet rooms and lavatories for men and women and provide atleast a dressing room for women;

3. Establish a nursery in the establishment; and



4. Determine appropriate minimum age and other standards for retirement ortermination in special occupations such as those of flight attendants and the like.

THE MATERNITY LEAVE UNDER THE SSS LAW:

Q: Discuss briefly the concept of Maternity Leave.

A: MATERNITY LEAVE- A female member, who need not be legally married,who has paid for at least three (3) monthly contributions in the 12-month periodimmediately preceding the semester of her childbirth or miscarriage shall be paid adaily maternity benefit equivalent to 100% of her average daily salary credit for 60days or 78 days, in case of caesarian delivery.

Maternity benefits provided herein shall be paid only for the first four (4)deliveries or miscarriages;

Maternity benefits like other benefits granted by the SSS, are granted inlieu of wages and therefore, may not be included in computing the employee’s 13 th

month pay for the calendar year.

In order to be entitled to the SSS benefit, the female employee shouldbe employed at the time of the delivery, miscarriage, or abortion.

The employee shall have notified her employer of her pregnancy and theprobable date of her childbirth, which notice shall be transmitted to the SSS inaccordance with the rules and regulations it may provide.

Full payment shall be advanced by the employer within thirty (30) daysfrom the filing of the maternity leave application.

Payment of daily maternity benefits have been received.The SSS shall immediately reimburse the employer of one hundred

percent (100%) of the amount of maternity benefits advanced to the employee by theemployer upon receipt of satisfactory proof of such payment and legality thereof.

If an employee member should give birth or suffer miscarriage withoutthe required contributions having been remitted for her by her employer to the SSS,or without the latter having been previously notified the employer of the time of thepregnancy, the employer shall pay to the SSS damages equivalent to the benefitswhich said employee would otherwise have been entitled to.

Q: What are the different facilities that an employer must at least furnish for hiswomen employees?

A: The Secretary of Labor may require employers to:

5. Provide seats proper for women and permit them to use the seats when they arefree from work or during office hours provided the quality of the work will not becompromised;



6. Establish separate toilet rooms and lavatories for men and women and provide atleast a dressing room for women;

7. Establish a nursery in the establishment; and8. Determine appropriate minimum age and other standards for retirement or

termination in special occupations such as those of flight attendants and the like.

THE MATERNITY LEAVE LAW

Q: Discuss briefly the concept of Maternity Leave.

A: MATERNITY LEAVE UNDER THE SSS LAW:

A female member, who need not be legally married, who has paid for at leastthree (3) monthly contributions in the 12-month period immediately preceding thesemester of her childbirth or miscarriage shall be paid a daily maternity benefitequivalent to 100% of her average daily salary credit for 60 days or 78 days, in case

of caesarian delivery.Maternity benefits provided herein shall be paid only for the first four (4)

deliveries or miscarriages;Maternity benefits like other benefits granted by the SSS, are granted in

lieu of wages and therefore, may not be included in computing the employee’s 13 th month pay for the calendar year.

In order to be entitled to the SSS benefit, the female employee shouldbe employed at the time of the delivery, miscarriage, or abortion.

The employee shall have notified her employer of her pregnancy and theprobable date of her childbirth, which notice shall be transmitted to the SSS in

accordance with the rules and regulations it may provide.Full payment shall be advanced by the employer within thirty (30) days

from the filing of the maternity leave application.Payment of daily maternity benefits have been received.The SSS shall immediately reimburse the employer of one hundred

percent (100%) of the amount of maternity benefits advanced to the employee by theemployer upon receipt of satisfactory proof of such payment and legality thereof.

If an employee member should give birth or suffer miscarriage withoutthe required contributions having been remitted for her by her employer to the SSS,or without the latter having been previously notified the employer of the time of thepregnancy, the employer shall pay to the SSS damages equivalent to the benefitswhich said employee would otherwise have been entitled to.

THE PATERNITY LEAVE LAW

Q: Briefly discuss paternity leave.



A: It is a benefit grants paternity leave of 7 days with full pay, consisting of basicsalary, to all married male employees in the public and private sector.

Available only for the first 4 deliveries of the legitimate spouse withwhom the husband is cohabiting; the term delivery includes childbirth, miscarriageor abortion.

In the event that such leave was not availed of, said leave shall not beconvertible to cash

The purpose is to enable the husband to lend support to his wife duringthe period of recovery and/ or in the nursing of the newly born child.

In order to be entitled, the following conditions must be met:1. He is an employee at the time of the delivery of his child;2. He is cohabiting with his spouse at the time she gives birth or suffers a

miscarriage;3. He has applied for paternity leave with his employer;4. His wife has given birth or suffered a miscarriage; the term wife refers

to the lawful wife which means the woman who is legally married to the

male employee concerned.

The application must be made within a reasonable time from the expecteddate of delivery by the pregnant spouse and within such period as may be providedby company rules & regulations or CBA. However, prior application for leave shallNOT be required in case of miscarriage.

Q: When is there discrimination based on sex?

A: The following constitute acts of discrimination:1. Payment of a lesser compensation for work of equal value.

2. Favoring a male employee over a female employee solely on the account oftheir sexes.

Q: What is the law on prohibitions or stipulation against marriage?

A: Article 134 of the Labor Code as amended and renumbered provides that itshall be unlawful for an employer:

1. to require as a condition for employment or continuation of employment that awoman employee shall not get married,

2. to stipulate expressly or tacitly that upon getting married a woman employeeshall be deemed resigned or separated

3. to actually dismiss, discharge, discriminate or otherwise prejudice a womanemployee merely by reason of her marriage.



Q: What are the prohibited acts of an employer with respect to his femaleemployees?

A: The following constitute prohibited acts:1. To discharge any woman employed by him for the purpose of preventing

such woman from enjoying the maternity leave, facilities and other benefitsprovided under the Code;

2. To discharge such woman employee on account of her pregnancy, or while onleave or in confinement due to her pregnancy;

3. To discharge or refuse the admission of such woman upon returning to herwork for fear that she may be pregnant;

4. To discharge any woman or child or any other employee for having filed acomplaint or having testified or being about to testify under the Code;

Q: State the law on women working nightclubs and other similar establishments.

A: Article 136 of the Labor Code as amended and renumbered provides that anywoman who is permitted to work or suffered to work, with or without compensation,in any night club, cocktail lounge, massage clinic, bar or similar establishment,under the effective control or supervision of the employer for a substantial period oftime as determined by the Secretary of Labor, shall be considered as an employee ofsuch establishment for purposes of labor and social legislation.

Q: Briefly state the laws on employment of minors.

A: As a general rule, no child below 15 shall be employed. The exceptions to therule are:

1. When the child works directly under the sole responsibility of his/herparents or legal guardian who employs members of his/her family only under thefollowing conditions:

a. employment does not endanger the child’s life, safety, health and morals; b. employment d oes not impair the child’s normal development; and c. the parent/legal guardian provides the child with the primary and/or secondary

education prescribed by DECS.

2. Where the child’s employment or participation in public entertainment orinformation through cinema, theater, radio, or television is essential, provided that:

a. employment does not involve advertisements or commercials promotingalcoholic beverages, intoxicating drinks, tobacco and its by-products orexhibiting violence;

b. There is a written contract approved by the DOLE; and



c. The conditions prescribed for the employment of minors {above stated} aremet.

Q: What are considered hazardous work places?

A: The following are considered hazardous places:

1 where the nature of the work exposes the workers to dangerous environmentalelements, contaminants or work conditions;2 where the workers are engaged in construction work, logging, fire-fighting, mining,quarrying, blasting, stevedoring, dock work, deep-sea fishing, and mechanizedfarming;3 where the workers are engaged in the manufacture or handling of explosives andother pyrotechnic products;4.where the workers use or are exposed to heavy or power-driven machinery orequipment; and

5.where the workers use or are exposed to power-driven tools,

Q: What are the rights of house helpers?

A: a) They cannot be assigned to non-household workb) They are entitled to reasonable compensation

c) They are entitled to be furnished lodging, food, and medical attendanced) If under 18 years old, she must be given an opportunity for elementary

education (the cost of which shall be part of househelpers’ compensation) e) The contract for household service shall not exceed 2 years. (Renewable

however from year to year)

f) They are entitled to just and humane treatmentg) They must not to be required to work for more than 10 hours a day. If the

househelper agrees to work overtime, and there is additional compensation, thesame is permissible.

h) They have the right to four days vacation each month with pay. (If thehelper does not ask for the vacation, the number of vacation days cannot beaccumulated, she is entitled only to its monetary equivalent.)

i) Funeral expenses must be paid by the employer if the househelper has norelatives with sufficient means in the place where the head of the family lives

j) Her termination must only be for a just cause.

Upon the severance of the household service relationship, the househelpermay demand from the employer a written statement of the nature and duration of theservice and his or her efficiency and conduct as househelper.

Q: Who are homeworkers?



A: Homeworkers are those who perform in or about his home any processing ofgoods or materials, in whole or in part, which have been furnished directly orindirectly by an employer and thereafter to be returned to the latter.

Q: Who are considered by law as the employers of these homeworkers?

A: Any natural or artificial person who, for his own account or benefit, or onbehalf of any person residing outside the Philippines, directly or indirectly, or throughany employee, agent, contractor, sub-contractor; or any other person:

(1) Delivers or causes to be delivered any goods or articles to be processed in orabout a home and thereafter to be returned or to be disposed of or distributed inaccordance with his direction; or(2) Sells any goods or articles for the purpose of having such goods or articlesprocessed in or about a home and then repurchases them himself or through anotherafter such processing.

Facilities for womenEmployers are required to:(a) Provide seats proper for women and permit them to use such seats when

they are free from work and during working hours, provided they canperform their duties in this position without detriment to efficiency;

(b) To establish separate toilet rooms and lavatories for men and women andprovide at least a dressing room for women;

(c) To establish a nursery in a workplace for the benefit of the womenemployees therein; and

(d) To determine appropriate minimum age and other standards for retirementor termination in special occupations such as those of flight attendantsand the like.

Maternity leave benefits (Pregnant women, whether married or not, are entitled)1. A female member who has paid at least 3 monthly contributions in the 12-

month period immediately proceeding the semester of childbirth ormiscarriage shall be paid a daily maternity benefit of 100% of her averagedaily salary credit for 60 days or 78 days in case of caesarian delivery. Thispayment of daily maternity benefit shall be a ___ to the recovery ofsickness benefit for the same compensable period.

2. The maternity leave shall be extended without pay on account of illnessmedically certified to arise out of the pregnancy, delivery, abortion ormiscarriage, which renders the woman unfit for work, unless she hasearned unused leave credits from which such extended leave may becharged.

3. The maternity leave shall be paid by the employer only for the first four (4)deliveries by a woman employee after the effectivity of this Code.



Paternity leave

Every married employee in the private and public sectors shall be entitled topaternity leave of 7 days (for each delivery) with full pay for the first 4 deliveries ofthe legitimate spouse with whom he is cohabiting. If paternity leave is not availed of,

it is not convertible to cash.

Discrimination against woman prohibitedIt shall be unlawful for any employer:(1) To deny any woman employee the benefits provided for in the law or to

discharge any woman employed by him for the purpose of preventing herfrom enjoying any of the benefits provided under the Labor Code.

(2) To discharge such woman on account of her pregnancy, or while on leaveor in confinement due to her pregnancy;

(3) To discharge or refuse the admission of such woman upon returning to herwork for work of equal value.

(4) To pay lesser compensation to a female employee with respect topromotion, training opportunities, study and scholarship grants solely onaccount of their sexes.

Stipulation against marriageIt shall be unlawful for an employer to require as a condition of employment or

continuation of employment that a woman employee shall not get married, or tostipulate expressly or tacitly that upon getting married, a woman employee shall bedeemed resigned or separated, or to actually dismiss, discharge, discriminate orotherwise prejudice a woman employee merely by reason of her marriage.

Woman working in nightclubs, massage clinics, etc.Any woman who is permitted or suffered to work, with or without

compensation, in any night club, cocktail lounge, massage clinic, bar or similarestablishments under the effective control or supervision of the employer for asubstantial period of time as determined by the Secretary of Labor and Employment,shall be considered as an employee of such establishment for purposes of labor andsocial legislation.

They are considered regular employees of said establishments except whenthe night club operator does not control nor direct the details and manner of theirwork in the entertainment of nightclub patrons and, having no fixed hours or work,they may come and go as they please.

EMPLOYMENT OF MINORS1. prohibition against child discrimination.- No Employer shall discriminate

against any person in respect to terms and conditions of employment onaccount of his age.

2. Relevant law: Republic Act No. 7610 – The Special Protection of CildAgainst Child Abuse, Exploitation and Discrimination Act.



Minimum employment age.

1. No child below fifteen (15) years of age shall be employed, except when heworks directly under the sole responsibility of his parents or guardian, andhis employment does not in any way interfere with his schooling.

2. Any person between fifteen (15) and eighteen (18) years of age may beemployed for such number of hours and such periods of the day asdetermined by the Secretary of Labor and Employment in appropriateregulations.

3. The foregoing provisions shall in no case allow the employment of a personbelow eighteen (18) years of age in an undertaking which is hazardous ordeleterious in nature as determined by the Secretary of Labor andEmployment.

Employment of househelpers1. “Househelper” or “domestic servant” shall refer to any person, whether

male or female, who renders services in and about the employer’s homeand which services are usually necessary or desirable for the maintenanceand enjoyment thereof, and ministers exclusively to the personal comfortand enjoyment of the employer’s family.

2. Household services include the services of family drivers, cooks,nursemaids or family servants, but not the services of laborers in acommercial or industrial enterprise.

3. The original contract of domestic service shall not last for more than two(2) years but it may be mutually renewed for such periods by the parties.

4. The minimum wage rates of househelpers shall be the basic cash wageswhich shall be paid to the househelpers in addition to lodging, food and

medical attendance.5. Time and manner of payment of wages.- Wages shall be paid directly to the

househelper to whom they are due at least once a month. No deductionstherefrom shall be made by the employer unless authorized by thehousehelper himself or by existing laws.

6. Assignment to non-household work. – No househelper shall be assigned towork in a commercial, industrial or agricultural enterprise at a wage orsalary rate lower than that provided for agricultural or non-agriculturalworkers as prescribed herein.

7. Opportunity for education. – If the househelper is under the age of eighteen(18) years, the employer shall give him or her an opportunity for at leastelementary education. The cost of education shall be part of thehousehelper’s compensation, unless there is a stipulation to the contrary.

8. Treatment of househelpers – just and humane manner and no physicalviolence.

9. The employer shall furnish the househelper, free of charge, suitable andsanitary living quarters as well as adequate food and medical attendance.



10. Indemnity for unjust termination of services.- If the period of householdservice is fixed, neither the employer nor the househelper may terminatethe contract before the expiration of the term, except for a just cause. Ifthe househelper is unjustly dismissed, he or she shall be paidcompensation already earned plus that for fifteen (15) days by way of

indemnity. If the househelper leaves without a justifiable reason, he or sheshall forfeit any unpaid salary due him or her not exceeding fifteen (15)days.

EMPLOYMENT OF HOMEWORKERS & FIELD PERSONNEL1. An industrial homeworker is a worker who is engaged in industrial

homework, a system of production under which work for an employer orcontractor is carried out by a homeworker at his/her home. The materialsmay or may not be furnished by the employer or contractor.

2. A field personnel is a non-agricultural employee who regularly performs hisduties away from the principal place of business or branch office of the

employer an whose actual hours or work in the field cannot be determinedwith reasonable certainty.

\

Q: Who are homeworkers?

A: Homeworkers are those who perform in or about his home anyprocessing of goods or materials, in whole or in part, which have beenfurnished directly or indirectly by an employer and thereafter to bereturned to the latter.

Q: Who are considered by law as the employers of thesehomeworkers?

A: Any natural or artificial person who, for his own account orbenefit, or on behalf of any person residing outside the Philippines,directly or indirectly, or through any employee, agent, contractor, sub-contractor; or any other person:

(1) Delivers or causes to be delivered any goods or articles to beprocessed in or about a home and thereafter to be returned or to bedisposed of or distributed in accordance with his direction; or(2) Sells any goods or articles for the purpose of having such goodsor articles processed in or about a home and then repurchases themhimself or through another after such processing.



THE LAWS ON DISMISSALS, TERMINATION, RETIREMENT ANDRELATED LAWS

BOOK VI. LABOR CODE,AS AMENDED

TERMINATION OF EMPLOYMENT

BOOK SIX

POST EMPLOYMENT

TITLE I

ART. 279. Q. WHAT IS SECURITY OF TENURE?

A. SECURITY OF TENURE - the constitutional right granted theemployee, that the employer shall not terminate the services of anemployee except for just cause or when authorized by law

Q. WHAT ARE THE RELIEFS AVAILABLE TO AN ILLEGALLY DISMISSED

EMPLOYEE?

A. REINSTATEMENT - Restoration of the employee to the state fromwhich he has been unjustly removed or separated without loss ofseniority rights and other privileges.

THE TWO (2) FORMS OF REINSTATEMENT:



1. ACTUAL OR PHYSICAL REINSTATEMENT

- the employee shall be admitted back to work2. PAYROLL REINSTATEMENT

- the employee is merely reinstated in the payroll

Q. May a court order the reinstatement of a dismissed employee evenif the prayer of the complaint did not include such relief?

A. YES. So long as there is a finding that the employee was illegally

dismissed, the court can order the reinstatement of an employee evenif the complaint does not include a prayer for reinstatement, unless, ofcourse, the employee has waived his right to reinstatement. By law, anemployee who is unjustly dismissed is entitled to reinstatement,among others. The mere fact that the complaint did not pray forreinstatement will not prejudice the employee, because technicalitiesof law and procedure are frowned upon in labor proceedings (GeneralBaptist Bible College v. NLRC, 219 SCRA 549).

Q. What happens if there is an order of reinstatement but the positionis no longer available?

A. The employee should be given a substantially equivalent position.If no substantially equivalent position is available, reinstatement

should not be ordered because that would in effect compel theemployer to do the impossible. In such a situation, the employeeshould merely be given separation pay consisting of one month salaryfor every year of service (1:1).

Q. UNDER WHAT CIRCUMSTANCES MAY A COMPANY NOT REINSTATEDESPITE ORDER OF REINSTATEMENT?

A. 1. Transfer of business ownership -There is no law requiring apurchasing corporation to absorb the employees of the sellingcorporation. A fortiori, reinstatement of unjustly dismissed employees



CANNOT be enforced against the new owner UNLESS there is anexpress agreement on the assumption of liabilities by the purchasingcorporation:

2. When reinstatement is rendered impossible due to theabolition of the position;

3. When the business has closed down;4. Physical incapacity of the employee; and5. Doctrine of Strained Relations - When the employer can no

longer trust the employee and vice-versa, reinstatement could noteffectively serve as a remedy. This doctrine only applies only topositions which require trust and confidence

NOTE: Under the circumstances where the employment relationshiphas become so strained to preclude a harmonious workingrelationship, and that all hopes at reconciliation are nil afterreinstatement, it would be more beneficial to accord the employeebackwages and separation pay.

B. BACKWAGES – the relief given to an employee to compensate himfor lost earnings during the period of his dismissal.

PERIOD COVERED BY THE PAYMENT OF BACKWAGES - Backwagesshall cover the period from the date of dismissal of the employee up tothe date of actual reinstatement

How computed - Under existing law, backwages is computed from thetime of the illegal dismissal up to time of actual reinstatement.

Q. WHAT ARE DEEMED INCLUDED IN THE COMPUTATION OFBACKWAGES?

A.

1. transportation and emergency allowances2. vacation or service incentive leave and sick leave3. 13 th month pay.



NOTE: facilities such as uniforms, shoes, helmets and ponchos shouldNOT be included in the computation of backwages.

REASON: said items are given free, to be used only during official tour

of duty not for private or personal use.

Q. WHAT CIRCUMSTANCES THAT MAY PREVENT AWARD OFBACKWAGES?A.1. death of the employee2. physical and mental incapacity3. business reverses4. closure of business

5.

reinstatement of dismissed employ6. confinement in jail

Q. Which takes precedence in conflicts arising between employer’sMANAGEMENT PREROGATIVE and the employ ees’ right to securityof tenure?

A. The employee’s right to security of tenure. Thus, an employer’smanagement prerogative includes the right to terminate the services

of the employee but this management prerogative is limited by thelabor code which provides that the employer can terminate anemployee only for a just cause or when authorized by law. Thislimitation is because no less than the constitution recognizes andguarantees employee’s right to security of tenure. (Art. 279, LaborCode; Art. XIII, Sec. 3, Constitution)

KINDS OF EMPLOYMENT

ART. 280. REGULAR AND CASUAL EMPLOYMENT

Q. WHAT ARE THE KINDS OF EMPLOYMENT UNDER THE LABORCODE?

A.



a. REGULAR EMPLOYMENT - one wherein an employee isengaged to perform activities which are usually necessary or desirablein the usual business or trade of the employer.Test of regularity: nature of employment

PROJECT vs. REGULAR EMPLOYEE

PROJECT EMPLOYEE REGULAR EMPLOYEE

A regular employee is oneengaged to perform activitieswhich are usually necessary ordesirable in the usual business or

trade of the employer

a project employee is one whoseemployment is fixed for a specificproject or undertaking thecompletion of which has been

determined at the time of theengagement of the employee. (SeeArt. 280 LC)

b. TEMPORARY EMPLOYMENT - one wherein an employee is engagedto work on a specific project or undertaking which is usuallynecessary or desirable in the usual business or trade of the employer,the completion of which has been determined at the time of theengagement of the employee.

c. SEASONAL EMPLOYMENT - one wherein an employee is engaged towork during a particular season on an activity that is usuallynecessary or desirable in the usual business or trade of the employer.

Pakiao employees are considered employees as long as theemployer exercises control over the means by which suchworkers are to perform their work.

d. PROBATIONARY PERIOD OF EMPLOYMENT - the period needed todetermine the fitness for the job, i .e., the time needed to learn the job.It is the period during which the employer may determine if theemployee is qualified for possible inclusion in the regular force.Purpose: To afford the employer an opportunity to observe the fitnessof a probationary employee at work.



NOTE: The standard which the probationary employee is to meetmust be made known by the employer to the employee at the time ofengagement. The services of probationary employees may be

terminated for the same

causes as in the case of regular employee, except that there is anadditional ground – failure to meet the standard.

Q. WHAT ARE LIMITATIONS ON THE EMPLOYER’S POWER TOTERMINATE A PROBATIONARY EMPLOYMENT CONTRACT?

A. The limitations are:

1. the power must be exercised in accordance with the specificrequirements of the contract [COMPLIANCE WITH SPECIFICREQUIREMENTS];

2. if a particular time is prescribed, the termination must be withinsuch time and if formal notice is required, then that form must beused [WITHIN PARTICULAR PRESCRIBED TIME];

3. the employer’s dissatisfaction must be real and in good faith, notfeigned so as to circumvent the contract or the law

[DISSATISFACTION — REAL AND IN GOOD FAITH]; and4. there must be no unlawful discrimination in the dismissal.

GENERAL RULE: Probationary employment shall not exceed sixmonths from the date the employee started working.

EXCEPTIONS:1. when it is covered by an apprenticeship agreement stipulating alonger period; or

2. when the parties to an employment contract agree otherwise, suchas when the same is established by company policy or when the sameis required by the nature of the work to be performed by the employee

Q. WHAT IS THE EFFECT IF PROBATIONARY EMPLOYEE IS ALLOWEDTO WORK BEYOND 6 MONTHS?



A. If the probationary employee is allowed to work beyond the periodof 6 months or the agreed probationary period, said employeebecomes a regular employee by operation of law.

Under the Labor Code, “an employee who is allowed to work after a

probati onary period shall be considered a regular employee.” (Art.281.)

ART. 282. TERMINATION BY EMPLOYER

SECURITY OF TENURE - An employer CANNOT terminate theservices of an employee EXCEPT for a just cause or when authorizedby law.

Q. WHAT ARE THE GUIDELINES TO DETERMINE THE VALIDITY OFTERMINATION?1. Gravity of the offense2. Position occupied by the employee3. Degree of damage to the employer4. Previous infractions of the same offense5. Length of service

A. JUST CAUSES

1. Serious misconduct or willful disobedience by the employee of thelawful orders of his employer or representative in connection with hiswork;2. Misconduct- transgression of some established and definite rule ofaction, a forbidden act, a dereliction of duty, willful in character, andimplies wrongful intent and not mere error in judgment. (Dept. of LaborManual, Sec. 4353.01)

3. Gross and habitual neglect by the employee of his duties;

4. Fraud or willful breach by the employee of the trust reposed inhim by his employer or duly organized representative



5. Fraud must be committed against the employer or hisrepresentative and in connection with the employee’s work. ((Dept. ofLabor Manual)

6. Commission of a crime or offense by the employee against theperson of his employer or any immediate member of his family or hisduly authorized representative;7. Conviction or prosecution is not requiOther causes analogous to theforegoing; and

.8. A cause must be due to the voluntary or willful act or omission ofthe employee. (Nadura v. Benguet Consolidated, G.R. No. L-17780)

Q. WHAT IS THE PROCEDURE ON DUE PROCESS TO BE OBSERVED BYTHE EMPLOYER BEFORE AN EMPLOYEE IS DISMISSED?

A. For termination of the employment based on the any of the justcauses for termination, the requirements of due process that an

employer must comply with are:

1. Written notice should be served to the employeespecifying the ground or grounds for termination andgiving the said employee reasonable opportunity withinwhich to explain;

2. A hearing or conference should be held during which theemployee concerned, with the assistance of counsel, ifthe employee so desires, is given the opportunity to

respond to the charge, present his evidence and presentthe evidence presented against him;

3. A written notice of termination, if termination is thedecision of the employer, should be served on theemployee indicating that upon due consideration of all



the circumstances, grounds have been established to justify his termination.

For termination of employment based on authorized causes, the

requirements of due process shall be deemed complied withupon service of a written notice to the employee and theappropriate Regional office of the Department of Labor andemployment at least thirty days before the effectivity of thetermination specifying the grounds for termination.

NOTE: Under the so-called WENPHIL DOCTRINE if the services of theemployee was terminated due to a just or authorized cause but

the affected employee’s right to due process has been violated, the

dismissal is legal but the employee is entitled to damages by wayof indemnification for the violation of the right.NOTE: New Doctrine is Agabon and Jaka Food, wherein nominaldamages were awarded. For just causes it is P 30,000 and forauthorized causes, it is P 50,000 in cases of lack of dur process,respectively.

ARTS. 283-284.B. AUTHORIZED CAUSES OF TERMINATION BY THEEMPLOYER:

1. installation of labor-saving devices (automation)

2. redundancy (superfluity in the performance of a particular work)

redundancy, for purposes of the Labor Code, exists where theservices of an employee are in excess of what is reasonablydemanded by the actual requirements of the enterprise.(Wishire File Co. Inc. vs. NLRC)

Reorganization as a cost-saving device is acknowledged by jurisprudence. An employer is not precluded from adopting anew policy conducive to a more economical and effectivemanagement, and the law does not require that the employershould be suffering financial losses before he can terminate theservices of the employee on the ground of redundancy (DOLE



PHILIPPINES, INC et al., vs. NATIONAL LABOR RELATIONSCOMMISSION et al.)

3. retrenchment to prevent losses (there is excess of employees and

employer wants to prevent financial losses)

Q. UNDER WHAT CONDITIONS WHEREIN AN EMPLOYER MAYRETRENCH ITS EMPLOYEES?

A. (a) substantial losses which are not merely de minimis in extent;(b) imminence of such substantial losses;

(c) retrenchment would effectively prevent the expected and

additional losses;(d) the alleged losses and expected losses must be proven by

sufficient and convincing evidence. (NDC-GUTHRIE PLANTATIONS,INC., vs. NATIONAL LABOR RELATIONS COMMISSION, ET. AL)

4. closing or cessation of operation of the establishment orundertaking UNLESS the closing is for the purpose of circumventingthe provisions of the Labor Code.

5.

Disease

a. the disease is incurable within 6 months and the continuedemployment of the employee is prohibited by law or prejudicialto his health as well as to the health of his co-employees

b. with a certification from public heath officer that the diseaseis incurable within 6 months.

Before an employer could dismiss an employee based on a

disease, Section 8 of Rule 1, Book VI of the Omnibus RulesImplementing the Labor Code requires a certification by acompetent public health authority that the disease is of such anature or at such stage that it cannot be cured within a period of6 months even with proper medical treatment. (Cathay 44PacificAirways vs. NLRC and Martha Singson)



Cause of termination Separation payAutomation Equivalent to at least one month pay

or at least one month pay for every

year of service, whichever is higherRedundancy Equivalent to at least one month pay

or at least one month pay for everyyear of service, whichever is higher

Retrenchment Equivalent to one month pay or atleast one-half month pay for everyyear of service

Closures or cessation ofoperations not due to serious

business losses or financialreverses

Equivalent to one month pay or atleast one-half month pay for every

year of service

Disease Equivalent to at least one-monthsalary or to ½ month salary for everyyear of service, whichever is greater,a fraction of at least 6 months shallbe considered one (1) whole year.

NOTE: ARTICLE 283 governs the grant of separation benefits ‘in caseof closures or cessation of operat ion’ of business establishments NOTdue to serious business losses or cessation of operation [North DavaoMining Corp. vs. NLRC, et al]. Therefore, the employee is not entitledto such benefit if the closure was due to SERIOUS BUSINESS LOSSES.

When termination of employment is brought by the failure of anemployee to meet the standards of the employer in case ofprobationary employment, it shall be sufficient that a written notice isserved the employee within a reasonable time from the effective dateof termination.

When termination is brought about by the completion of the contractor phase thereof, no prior notice is required



ART. 285. TERMINATION BY EMPLOYEE

Q. MAY A TERMINATION BE MADE BY THE EMPLOYEE?

A. YES, BUT IF:

a. WITHOUT A JUST CAUSE- by serving a WRITTEN NOTICE on theemployer at least one month in advance. . The employer upon whomno such notice was served may hold the employee liable for damages.

b. WITH A JUST CAUSE - An employee may put an end to establishWITHOUT SERVING ANY NOTICE on the employer for any of thefollowing just causes [SUCA]:

1. Serious insult by the employer or his representative on the hour andperson of the employee;

2. Inhuman and unbearable treatment accorded the employee by theemployer or his representative;

3. Commission of a crime or offense by the employer or his

representative against the person of the employee or any of theimmediate members of his family; and4. Other causes analogous to any of the foregoing.

THE LAWS ON RETIREMENT, COVERAGE, EXEMPTIONS ANDBENEFITS THEREUNDER

ART. 287. RETIREMENTRETIREMENT AGE - The age of retirement is that specified in the CBAor iin the employment contract. If it is not specified,

The rule is different with respect to underground miningemployees whose optional retirement age is 50-60 providedthey have at least served for a period of 5 years (Art. 287 asamended by RA 8558).



BENEFITS- A retiree is entitled to a retirement pay equivalent toat least ½ month salary for every year of service, a fraction of at leastsix (6) months being considered as one whole year.

Unless the parties provide for broader inclusions, the term “one half(1/2) month salary” shall mean: 15 days plus 1/12 of the 13 th month pay and the cash equivalent of NOT more than 5 days of service incentive

leaves.(22.5 days per year of service)

Under Section 26, R.A. No. 4670, otherwise known as the Magna Carta

for Public School Teachers, public school teachers having fulfilled theage and service requirements of the applicable retirement laws shallbe given ONE

RANGE SALARY RAISE upon retirement, which shall be the basis ofthe computation of the lump sum of the retirement pay and themonthly benefit thereafter.

NOTE: Exempted from the payment of retirement pay are retail,

service and agricultural establishments or operations employing NOTmore than ten (10) employees or workers.

Age Retirement

60-65 Optional but the employee must have servedat least 5 years

65 Compulsory (no need for five years of service



BOOK SEVEN

TRANSITORY AND FINAL PROVISIONSTITLE IIPRESCRIPTION OF OFFENSES AND CLAIMS ART. 291. MONEY CLAIMSPERIODS OF PRESCRIPTION

Cause Period of Prescription

Money Claims 3 years from the accrual of the causes ofaction

ULP 1 year from the accrual of the cause of action

Illegal Dismissal 4 years from the accrual of the cause of action

Reinstatement 4 years based on Art. 1146 of the Civil Code

NOTE: The period of prescription mentioned under Article 292 of theLabor Code refers to and is limited to money claims, all other cases ofinjury to rights of a workingman being governed by the Civil Code.Hence, reinstatement prescribes in four (4) years



SOCIAL LEGISLATION

Republic Act No. 7877- The Anti-Sexual Harassment Act

SEXUAL HARASSMENT in a work-related or employmentenvironment- in a work-related or employment environment, sexualharassment is committed when:

1. the sexual favor is made a condition in the hiring or in theemployment, re-employment or continued employment of saidindividual or granting said individual favorable compensation,terms, conditions, promotions, or privileges; or the refusal togrant the sexual favor results in limiting, segregating or

classifying the employee which in any way would discriminate,deprive or diminish employment opportunities or otherwiseadversely affect said employee;

2. the above acts would impair the employee’s rights or privilegesunder existing labor laws; or

3. the above acts would result in an intimidating, hostile, oroffensive environment for the employee. (Section 3(a), RepublicAct No. 7877)

Sexual harassment in an education or training environment- in aneducation or training environment, sexual harassment is committed:1. against one who is under the care, custody or supervision of the

offender;2. against one whose education, training, apprenticeship or

tutorship is entrusted to the offender;3. when the sexual favor is made a condition to the giving of a

passing grade, or the granting of honors and scholarships, or thepayment of a stipend, allowance or other benefits, privileges, or

considerations; or4. when the sexual advances result in an intimidating, hostile oroffensive environment for the student, trainee or apprentice.(Section 3(b), Republic Act No. 7877)



THE SOLO PARENTS' WELFARE ACT OF 2000

Q. What is parental leave?

Answer: Republic Act No. 8972 (An Act Providing for Benefits andPrivileges to Solo Parents and Their Children, Appropriating FundsTherefor and for Other Purposes), otherwise known as “The SoloParents’ Welfare Act of 2000,” was approved on November 7, 2000providing for parental leave of seven (7) days. It is defined as follows:

“(d) ‘Parental leave’ - shall mean leave benefits granted to a solo

parent to enable him/her to perform parental duties andresponsibilities where physical presence is required.”

It bears noting that this leave privilege is an additional leave benefitwhich is separate and distinct from any other leave benefits providedunder existing laws or agreements. Thus, under Section 8 thereof, it isprovided:

“Sec. 8. Parental Leave. - In addition to leave privileges under existing

laws, parental leave of not more than seven (7) working days everyyear shall be granted to any solo parent employee who has renderedservice of at least one (1) year.”

Q. What is meant by flexible work schedule under R. A. No. 8972?

Answer: Under Republic Act No. 8972, solo parents are allowed towork on a flexible schedule, thus:

“Sec. 6. Flexible Work Schedule. – The employer shall provide for a

flexible working schedule for solo parents: Provided, That the sameshall not affect individual and company productivity: Provided, further,That any employer may request exemption from the aboverequirements from the DOLE on certain meritorious grounds.” (Section6, Republic Act No. 8972).



The phrase “flexible work schedule” is defined in the same law asfollows:

(e) “Flexible work schedule” - is the right granted to a solo parent

employee to vary his/her arrival and departure time without affectingthe core work hours as defined by the employer. (Section 3[e],Republic Act No. 8972).EntitlementQ: How many days are entitled to a solo parent?A: A Male or Female Solo Parent is entitled to 1 – 7 days of leave eachyear.

Q: Who is considered a solo parent under Republic Act 8972\

A: The following are considered a solo parent:1. A woman who gives birth as a result of rape;2. A widow or widower;3. A spouse of convict in jail;4. A spouse of insane;5. A spouse after legal separation with custody of children;6. A spouse after declaration of nullity of marriage with custody ofchildren;7. A spouse abandoned for at least one year;

8. An unmarried mother or father with custody of children;9. Any person who solely provides pastoral care and support to a child;and10. Any family member who assumes responsibility of a parent whoabandons. (R.A. NO. 8972, 11/7/2000)

BATTERED WOMAN LEAVEQ: How many days leave is entitled to a battered woman under R.A.

9262?

A: A battered woman is entitled to ten (10) days leave with pay inaddition to other paid leaves under the labor code, other laws andcompany policies.BATTERED WOMAN DEFINED.Q: Who is considered a Battered Woman?



A: A Battered Woman is one who is a victim of any act or series of actsof violence committed by any person which resulted to her physical,sexual or psychological suffering.Q: How does a battered woman apply for such leave?

A: The woman employee has to submit a certification from thebarangay captain or kagawad or prosecutor or the clerk of court thatan action under R.A. No. 9262 has been filed and is pending.

– Usage of the 10-day leave is at the option of the woman employee. Itshall cover the day or days when she will have to attend to medicaland legal concerns.

Leaves not availed of are non-cumulative and not convertible to cash(r.a. no. 9262, the anti-violence against women and their children actof 2004; 3/8/04).

SOCIAL SECURITY SYSTEMRA1161 as amended by RA 8282

COVERAGE:

Compulsory:1. Compulsory upon all employees not over 60 years of age and

their employers2. In case of domestic helpers, their monthly income should not beless than one thousand pesos

Limitation: Sec. 9 (a)a. Any benefit already earned by the employees under private

benefit plans existing at the time of the approval of the Actshall not be discontinued, reduced or otherwise impaired

b. Private plans which are existing and in force at the time of

compulsory coverage shall be integrated with the plan of theSSS in such a way where the employer’s contribution to hisprivate plan is more than that required of him in this Act, heshall pay to the SSS only the contribution required of him andhe shall continue his contribution to such private plan less hiscontribution to the SSS so that the employer’s totalcontribution to his benefit plan and and to the SSS shall be



the same as his contribution to his private benefit plan beforeany compulsory coverage.

c. Any changes, adjustments, modifications, eliminations orimprovements in the benefits to be available under the

remaining private plan, which may be necessary to adopt byreason of the reduced contribution thereto as a result of theintegration shall be subject to agreements between theemployers and the employees concerned

d. The private benefit plan which the employer shall continue forhis employees shall remain under the employer’smanagementand control unless there is an existing agreementto the contrary.

e. Nothing in this Act shall be construed as a limitation on the

right of employers and employees to agree on and adoptbenefits which are over and above those provided under thisact

3. Compulsory upon such self- employed persons as may bedetermined by the Commission including but not limited to thefollowing (Sec 9-A): (APAPI)

1. All self employed professionals2. Partners and single proprietors

3.

Actors and actresses directors, scriptwriters and newscorrespondents who do not fall within the definition of theterm employee in Section 8 (d) of this Act

4. Professional athletes, coaches, trainers, and jockeys5. Individual farmers and fishermen

Voluntary:

1. Spouses who devote full time to managing the household and

family affairs, unless they are also engaged in other vocation oremployment which is subject to mandatory coverage, may becovered by the SSS on a voluntary basis.

2. Filipinos recruited by foreign based employers for employmentabroad may be covered by the SSS on a voluntary basis

3. Employees separated from employment may continue to paycontributions to maintain his right to full benefits (Sec. 11)



4. Self-employed with no income (11-A)

BY AGREEMENT:

Any foreign government, international organization, or theirwholly-owned instrumentality employing workers in the Philippines,may enter into an agreement with the Philippine government for theinclusion of such employees in the SSS except those already coveredby their respective civil service retirement systems (Sec.8 (j (4)).

Excluded Employment (Sec. 8 (j)):1. Employment purely casual and not for the purpose of occupation or

business of the employer

2.

Service performed on or in connection with an alien vessel by anemployee if he is employed when such vessel is outside thePhilippines.

3. Service performed in the employ of the Philippine government orinstrumentality or agency thereof.

4. Service performed in the employ of a foreign government,international organization, or their wholly owned instrumentality;

5. Services performed by temporary employees, which may beexcluded by regulation of the commission.

EFFECTIVE DATE OF COVERAGE:

1. Employer: It shall take effect on the first day of his operation2. Employee: On the day of his employment3. Self-employed: It shall take effect upon his registration with SSS

Definition of Terms

EMPLOYER Any person natural or juridical, domestic or foreign, who carries onin the Philippines, any trade business, industry undertaking or activityof any kind and uses the services of another person who is under hisorders as regards the employment except the Government and any ofits political subdivisions, branches or instrumentalities, includingcorporations owned or controlled by the Government



Self- employed person shall be both the employer and employee at thesame time

EMPLOYEE

Any person who performs services for an employer in which eitheror both mental and physical efforts are used and who receivescompensation for such services, where there is an employer-employee relationship.Self- employed person shall be both the employer and employee at thesame time

DEPENDENTS :

1. The legal spouse entitled by law to receive support from themember

2. the legitimate, legitimated or legally adopted and illegitimatechild who is unmarried, not gainfully employed and has notreached 21 years of age or if 21 years of age, he is congenitallyincapacitated or while still a minor has been permanentlyincapacitated and incapable of self- support, physically andmentally and

3.

the parent who is receiving regular support from the member

BENEFICIARIES

a. The dependent spouse until he or she remarries, the dependentlegitimate, legitimated or legally adopted and illegitimatechildren who shall be the primary beneficiaries of the member

b. PROVIDED that the dependent illegitimate children shall beentitled to 50% of the share of the legitimate, legitimated or

legally adopted children.c. PROVIDED FURTHER in the absence of the legitimated, legallyadopted or legitimate children, illegitimate children shall beentitled to 100% of the benefits.

d. In their absence, the dependent parents who shall be thesecondary beneficiaries.



e. In the absence of all of the foregoing, any person designated bythe covered employee as secondary beneficiary.

Benefits

1. Monthly pension

2. Dependents pensionIt shall be paid for each dependent child conceived on or before thedate of the contingency but not exceeding five, beginning with theyoungest without substitution PROVIDED that where there arelegitimate and illegitimate children, the former shall be preferred.

3.

Retirement benefits

A member who has paid at least 120 monthly contributions prior tothe semester of retirement and who:

a. has reached the age of 60 years and is already separatedfrom employment or has ceased to be self-employed

b. has reached the age of 65 years, shall be entitled for as acovered member who is 60 years old not qualified under No.1 shall still be entitled to retirement benefits PROVIDED, he

is separated from employment and is not continuingpayment of contributions to the SSS on his own.

SUSPENSION OF MONTHLY PENSION: Upon the re-employment orresumption of self-employment of a retired employee who is less than65 years old.

4. Death Benefits

5.

Permanent disability benefits

6. Funeral BenefitA funeral grant equivalent to Twelve thousand pesos (P12,

000.00) shall be paid, in cash or in kind, to help defray the cost offuneral expenses upon the death of a member, including permanentlytotally disabled member or retiree.



7. Sickness Benefit

Requirements:

a. A member must have paid at least 3 monthly contributions inthe twelve month period immediately preceding the semesterof sickness or injury

b. and is confined therefor for more than three days in a hospitalor elsewhere with the approval of the SSS

8. Maternity Leave Benefit

It shall be paid to a female employee who has paid at least 3

monthly contributions in the twelve month period immediatelypreceding the semester of her childbirth or miscarriage PROVIDED:

a. That the employee shall have notified her employer of herpregnancy and the probable date of her childbirth which noticeshall be transmitted to the SSS.

b. The full payment shall be advanced by the employer within 30days from the filing of the maternity leave application

c. Payment of daily maternity benefits shall be a bar to therecovery of sickness benefits

d.

The maternity benefits provided under this section shall be paidonly for the first 4 deliveries or miscarriagese. The SSS shall immediately reimburse the employer 100% of the

benefits advanced by the latterf. If no contributions were remitted by the employer or no notice

was given to SS, the employer shall be liable for damagesequivalent to the benefits which said employee member wouldotherwise have been entitled to.

Non-transferability of Benefits (Sec. 15)

Such benefits are not transferable and no power of attorney orother document executed by those entitled thereto, in favor of anyagent, attorney or any other person for the collection thereof on theirbehalf shall be recognized, except when they are physically unable tocollect personally such benefits.



Sources of Fund

1. Collection:

Beginning on the last day of the month when an employee’scompulsory coverage takes effect and every month thereafter duringhis employment, his employer shall pa y the employer’s contributionand shall deduct and withhold from such employee’s monthly salarythe employees contribution.The same time of collection for self-employed

2. Remittance:It shall be remitted within the first 10 days of each calendar

month following the month for which they are applicable or withinsuch time as the Commission may prescribe.For self-employed they shall remit their contributions quarterly on suchdates and schedules as the Commission may require.

(NOTE: SEE TABLE ON SOCIAL WELFARE LEGISLATION FORCOMPARISON WITH GSIS)

TRANSFER OF HEALTH INSURANCE FUNDS OF SSS AND GSIS

It shall be transferred to the Corporation within 60 days from thepromulgation of the Implementing Rules and Regulation

The SSS and GSIS shall continue to perform Medicare functions undercontract with the Corporation until such time that such functions areassumed by the Corporation.

TRANSFER OF MEDICARE FUNCTIONS OF THE SSS AND GSIS



Within 5 years from the promulgation of the implementing rules andregulations. But the SSS and GSIS shall continue performing itsMedicare functions beyond the stipulated 5-year period if suchextension will benefit Program members.

PRIMER ON SOCIAL SECURITY LAW OF 1997Republic Act No. 8282

1. In addition to the Employees Compensation Law found in the Labor

Code, what are the other social securities law in the Philippines?

The following social security laws:(1) RA No. 8282-Social Security Act of 1997(2) RA No. 8291-Government Service Insurance System Act of

1997(3) RA No. 7875-National Health Insurance Act of 1995(4) RA No. 7699-Limited Portability Scheme in Social Security

System

(5) PD 1753 as amended by RA No. 7743 - The Home DevelopmentMutual Fund Law of 1980 or the PAG-IBIG Fund.

2. What law governs the social security system of the privateemployees?

The Social Security Law of 1997 which is RA No. 1161 asamended by RA No. 8282 which took effect last 24 May 1997.

3. What is the declared policy of the state relative to social securitysystem?

As provided by Sec.2, RA No. 8282:Sec. 2. Declaration of Policy- It is the policy of the State to

establish, develop, promote and perfect a sound and viable tax-exemptsocial security system suitable to the needs of the people throughout



the Philippines which shall promote social justice and providemeaningful protection to members and their beneficiaries against thehazards, disability, sickness, maternity, old age, and death and othercontingencies resulting in loss of income or financial burden. Towards

this end, the State shall endeavor to extend social security protectionto workers and their beneficiaries.

4. Give the organizational set-up of the Social Security System.

The Social Security System is a corporate body, with principalplace of business in Metro Manila. It is directed and controlled by theSocial Security System.

The Social Security System is composed by the Secretary of

Labor and Employment or his duly designated undersecretary, the SSSpresident and sever (7) appointive members, three of whom shallrepresent the workers' group, one of whom shall be a woman, threefrom the employers' group, at least one of whom shall be a woman andone, the general public whose representative shall have adequateknowledge and experience regarding social security, to be appointedby the President of the Philippines. (Sec. 3, RA No. 8282)

5. Who shall generally conduct the operations and management

functions of the SSS?

Vested in the SSS President who shall serve as chief executiveofficer in carrying the SSS program.

6. What are the duties and powers of the Commission?

These powers and duties:

(1) To adopt, amend, rescind, subject to the approval of thePresident such rules and regulations as may be necessary to carry outthe provision and purposes of this Act.

(2) To establish a provident fund for the members which willconsist of voluntary contributions of employers and/or employees, self-employed and voluntary members and their earnings, for payment of



benefits, subject to such rules and regulations as it may promulgateand approved by the President of the Philippines.

(3) To maintain a Provident Fund which consist of contributionsmade by both the SSS and its officials and employees and their

earnings, for th payment of benefits to such officials and employees ortheir heirs under such terms and conditions as it may prescribe;

(4) To approve restructuring proposals for the payment of due butunremitted contributions and unpaid loan amortization under suchterms and conditions as it may prescribe.

(5) To authorize cooperatives registered with cooperativedevelopment authority to act as collecting agent of SSS with respectto their members;

(6) To compromise or release in whole or in part any interest,

penalty or civil liability to SSS in connection with the investment underSec. 26 of this Act.

(7) To approve, confirm, pass upon any and all actions of the SSS.[ Sec. 4(a), RA No. 8282].

7. What are the powers and duties of the Social Security System?

The following:(1) To submit annually public report to the President, not later

than 30 April;(2) To require the actuary to submit a valuation report on the SSSbenefit program every four years; and to undertake actual studies andcancellations for any possible increase of benefits.

(3) To establish SSS offices covering many provinces and citiesand congressional districts;

(4) To enter into contracts or agreements for such services andaids;

(5) To adopt from time to time a budget of expenditures;

(6) To set up its accounting systems;(7) To require reports, compilations and analyses of statisticaland economic data;

(8) To acquire and dispose of property, real or personal;(9) To acquire, receive or hold by way of purchase, expropriation

or otherwise, public and private property(10) To sue and be sued in court;



(11) To perform such other corporate acts as it may deemappropriate for the proper enforcement of this Act [Sec. 4(b), RA No.8282].

8. Are decisions of the Commission appealable by judicial review toregular courts?

Yes. The appeal by judicial review under Sec. 5( c ), RA No. 8282may be made within 15 days from receipt of decision/order/denial ofmotion for reconsideration to:

(1) Court of Appeals if it involves question of law and fact.(2) Supreme Court if it involves solely question of law

NOTE: On No. 2, the same is to be processed first with the Court of

Appeals under the doctrine of hierarchy of courts.

9. Under the existing SSS system what are the two classes ofcoverages?

Coverage of the system may either be:(1) Compulsory coverage of the system; and(2) Voluntary coverage of the system.

10. When shall the coverage in the SSS be considered as compulsoryor mandatory?

Coverage shall be compulsory upon:(1) All employees not over sixty (60) years of age and their

employers;(2) Domestic helpers whose monthly income shall not be less

than P1,000.00 a month(3) Self-employed persons, including but not limited to:

(a) All self-employed professionals;(b) Partners and single proprietors of business;(c ) Actors and actresses, directors, scriptwriters and news

correspondents who do not fall within the term "employee under Sec.8(d) of this act

(d) Individual farmers and fishermen. [Sec.9(a), RA No. 8282].



11. Who may be covered by the SSS on a voluntary basis?

The following:(1) Spouses who devote full time to managing the household and

family affairs unless they are also engaged in other vocation oremployment which is subject to mandatory coverage may be coveredby the SSS on a voluntary basis. [Sec.9(b), RA No. 8282]

(2) Filipinos recruited by foreign-based employers foremployment abroad may be covered by the SSS on a voluntary basis.[Sec.9(c ), RA No. 8282].

12. What is meant by "employer" under the SSS?

Employer means any person, natural or juridical, domestic orforeign, who carries on in the Philippines any trade, business, industry,undertaking or activity of any kind and uses the services of anotherperson who is under his orders as regards the employment, exceptgovernment and any of its political subdivisions, branches orinstrumentalities including corporations owned and controlled by theGovernment; Provided, That a self-employed person shall be bothemployee and employer at the same time. [Sec.8(c), RA No. 8282].

13. What is an "employee" within the coverage of the SSS?

Any person who performs services for an employer in whicheither or both mental and physical efforts are used and who receivescompensation for such services, where there is an employer-employeerelationship. Provided, that a self-employed person shall be bothemployee and employer at the same time. [Sec.8(d), RA No. 8282].

14. Under the SSS, what do you mean by "self-employed"?

Self-employed shall mean any person whose income is notderived from employment, as defined in this Act, as well as thoseworkers enumerated in Section 9-A hereof.

15. Under the SSS, what is meant by employment?



Any service performed by an employee for an employer except:(1) Employment purely casual and not for the purpose of

business or occupation of the employer;(2) Service performed on or in connection with an alien vessel by

an employee if he is employed when such vessel is outside of thePhilippines;

(3) Service performed in the employ of the Philippine Governmentor instrumentality or agency thereof.

(4) Service performed in the employ of a foreign government orinternational organization or their wholly-owned instrumentality.

(5) Such other services performed by temporary employeeswhich may be excluded by the regulation of the Commission. [Sec.8(j)]

16. When does the compulsory coverage of an employer, employee or aself-employed person take effect? or when is the effective date of SSScoverage?

Compulsory coverage of the employer shall take effect on thefirst day of his operation and that the compulsory coverage of the self-employed shall take effect upon his registration with the SSS. (Sec.10,RA No. 8282)

17. State the effect of the employee's separation of employment uponhis membership in the SSS.

When an employee under compulsory coverage is separated fromemployment, his employer's contribution on his account and hisobligation to pay contribution arising from that employment shallcease at the end of the month of separation, but said employee shallbe credited with all contributions paid on his behalf and entitled to thebenefits according to the provisions of this Act. He may, however,

continue to pay the total contribution to maintain his right to fullbenefits. (Sec.11, RA No. 8282).

18. Cite the effects of interruption of business or professional income.

If the self-employed realizes no income in an government, heshall not be required to pay contributions for that month. He may,



however, be allowed to continue paying contributions under the samerules and regulations applicable to separated employee member. (Sec.11-A).

19. What are the benefits accorded/available to the SSS members?

The benefits are:(1) Monthly pensions (Sec.12)(2) Dependent's pension (Sec.12-A);(3) Retirement benefits (Sec.12-B);(4) Death benefits (Sec.13)(5) Permanent disability benefits (Sec.13-A);(6) Funeral benefits (Sec.13-B);

(7) Sickness benefit (Sec.14);(8) Maternity leave benefit (Sec.14-A)

20. What is the minimum monthly pension?

The following:(1) P1,200.00 for members with at least 10 credited years of

service;(2) P2,400.00 for those with 20 credited years of service

[Sec.12(b), RA No. 8282].

21. What shall be the highest monthly pension?

The monthly pension shall be the highest of the sum of P300.00plus:

(1) 20% of the average monthly salary credit; plus(2) 2% of the average monthly salary credit for each credited

year of service in excess of ten years; or

Forty percent (40%) of the average monthly salary credit; orOne thousand pesos (P1,000.00) Provided that the monthlypension shall in no case be paid for an aggregate amount of less than60 months. * Monthly salary credit means- the compensation base forcontributions and benefits as indicated in the schedule 18 of this Act.[Sec.8(g), RA No. 8282].



22. Who are the dependents under SSS?

The dependents shall be the following:(1) The legal spouse entitled by law to receive support from the

member.(2) The legitimate, legitimated or legally adopted, and

illegitimate child who is unmarried, not gainfully employed and has notreached 21 years of age or over if congenitally incapacitated orincapable of self-support, physically or mentally. [Sec.8(e), RA No.8282].

(3) The parent who is receiving regular support from the member.

23. Explain briefly dependent's pension.

The dependent pension shall be 10% of the monthly pension orP250.00 whichever is higher to be received by each dependent but notexceeding five. (Sec. 12-A)

24. Who are the members to enjoy retirement benefits?

The following:(1) Those who contributed prior to his semester of retirement has

paid 120 monthly contributions;(2) Those who reach the age of 60 or 65 years of age. (Sec.12-B)

25. Classify beneficiaries under SSS.

They are:(1) Primary beneficiaries - dependent spouse, dependent

legitimate/legitimated/adopted/illegitimate children;(2) Secondary beneficiaries - in the absence of the primary

beneficiaries, the dependent parents and other person designated bythe member.

26. How much is the death benefit to be enjoyed by the primarybeneficiaries?



If the member has paid at least 36 monthly contributions, thebenefit shall be a lump sum equivalent to 36 times the monthlypension.

However, if he had not paid the 36 monthly contributions, the

beneficiary shall be entitled to a lump sum benefit equivalent to themonthly pension times the number of monthly contributions paid toSSS or 12 times the monthly pension whichever is higher.

27. What are the two types of permanent disability?

(1) Permanent total disability - is loss or reduction of earningcapacity due to impairment of the normal functions of the physicaland/or mental faculties, recovery therefrom being medically remote.

The loss or reduction of earning capacity must amount to at least 75%or the aggregate loss or reduction of earning capacity from more thanone injury or disease amounts to at least 100%. [Sec.13-1 (g), RA No.8282].

(2) Permanent partial disability - accrues or arises when the lossor reduction or earning capacity amounts to less than 75% or when theaggregate loss or reduction of earning capacity resulting from morethan one injury or disease amounts to less than 100% as a result ofunrecoverable anatomical loss.

28. What is the condition to entitle a member to permanent disabilitybenefits?

He has paid 36 monthly contributions prior to the semester ofthe disability. [Sec.13-A(a), RA No. 8282].

29. How are permanent disability benefits classified?

They are classified as permanent total disability benefits and thepermanent partial disability benefits.

30. What disabilities are considered permanent and total?

The following:(1) Complete loss of sight of both eyes;



(2) Loss of two limbs at or above the ankle or wrists;(3) Permanent complete paralysis of two limbs;(4) Brain injury resulting to incurable imbecility or insanity; and(5) Such cases as determined and approved by the SSS [Sec.13-

A(c ), RA No. 8282]

31. What are the disability benefits provided by SSS?

(1) Upon the permnanent total disability of a member who haspaid at least 36 monthly contributions prior to the semester ofdisability, he shall be entitled to the monthly pension. [Sec.13-A(a)]

(2) If the disability is permanent partial, and such disabilityoccurs before the 36 monthly contributions have been paid prior to the

semester of disability, the benefit shall be such percentage of thelump sum benefit prescribed in the preceding paragraph with dueregard to the degree of disability as the Commission may determine.

(3) If the disability is permanent partial and such disabilityoccurs after 36 monthly contributions have been paid prior to thesemester of disability, the benefit shall be the monthly pension forpermanent total disability payable than the period designated in theschedules set forth in par. (f), Sec.13-A, RA No. 8282.

32. When is the monthly pension as well as the dependent's pension besuspended?

The monthly pension and the dependent's pension shall besuspended upon the re-employment or resumption of self-employmentor the recovery of the disabled member from his permanent totaldisability or his failure to present himself for examination of at leastonce a year upon notice by the SSS. [Sec.13-A(b), RA No. 8282].

33. Who are entitled to monthly pensions?

(1) Those who are receiving retirement benefits (Sec.12-B);(2) Those who are receiving permanent disability benefits

(Sec.13-A);(3) Primary beneficiaries upon the death of the retired members

[Sec.12-B (d), RA No. 8282];



(4) Primary beneficiaries upon the death of the permanent totaldisability pensioner. [Sec. 13-A(c )].

34. In case a permanent total disability pensioner dies, are his

beneficiaries entitled to any death benefits?

His primary beneficiaries shall be entitled to the monthlypensions upon the death of the permanent total disability pensioner.(Sec.13-A)

35. If a retired employee pensioner dies, what death benefits if any willhis beneficiaries and dependents get?

Upon the death of the retired employee pensioner, his primarybeneficiaries shall be entitled to the monthly pension and if he has noprimary beneficiaries, his secondary beneficiaries shall be entitled to alump sum benefit. [Sec. 12-B (c ), RA No. 8282].

36. In case no beneficiary qualifies for entitlement of death benefitunder the SSS law, how will such benefits be disposed of?

The death benefits shall be paid to the legal heirs of the

deceased in accordance with the law of succession (Sec. 15, RA No.8282)

37. How much is the funeral benefit?

P12,000.00 (Sec.13-B).

38. What is the sickness benefit?

It is a daily allowance paid to a covered employee who becomessick and is confined in a hospital for more than three days or elewherewith the Commission's approval. Such daily sickness benefitequivalent to 90% of his average daily salary credit. (Sec.14).

* Average daily salary credit - the result obtained by dividing thesum of the six highest monthly salary credits in the twelve month



period immediately preceding the semester of contingency by 180[Sec.8(n), RA No. 8282].

*Contingency - the retirement, death, permanent disability, injuryor sickness and maternity of the member [Sec.8 (l)].

39. What are the conditions governing sickness benefits?

(1) The payment of the daily allowance not to exceed 120 days inone calendar year;

(2) The daily sickness benefits shall not be paid for more than240 days on account of the same confinement; and

(3) The employee shall notify his employer of the fact of hissickness or injury within five days from the start of the confinement.

[Sec.14(1)(20)(3), RA No. 8282].

40. Who may advance the daily allowance for the sickness benefit?

The employer subject to 100% reimbursement by SSS providedsaid employer complied the notification requirement.

41. Give the effect if the employer has failed to make the propernotification.

The employer is not entitled to reimbursement.

42. When is the employer or the unemployed member not entitled toreimbursement of sickness benefits?

(1) Where the employer failed to notify the SSS of theconfinement;

(2) In case of the unemployed, where he failed to send the notice

directly to the SSS except when the confinement is in a hospital; and(3) Where the claim for reimbursement is made after one (1) yearfrom date of confinement.

43. Who are entitled to maternity benefit under SSS?



A female employee who has paid at least three (3) monthlycontributions in the twelve month period immediately preceding thesemester of her childbirth or miscarriage shall be paid daily maternitybenefit equivalent to 100% of her average salary credit for 60 days or

78 days in case of Caesarian delivery subject to certain conditions.(Sec.14-A).

44. What are the conditions set by SSS relative to maternity benefits?

The conditions are:

(1) That the employee shall have notified her employer of herpregnancy and the probable date of her childbirth which notice shall

be transmitted to the SSS in accordance with the rules and regulationsit may provide;

(2) The full payment shall be advanced by the employer within 30days from the filing of the maternity leave application.

(3) That the payment of daily maternity benefits shall be a bar tothe recovery of sickness benefits provided by this Act for the sameperiod for which daily maternity benefits have been received.

(4) That the maternity benefits provided under this section shallbe paid only for the first four (4) deliveries or miscarriages. [Sec.14-

A(a-d), RA No. 8282].

45. What are the effects if no contributions being made due to the faultof the employer?

As a rule, the SSS shall immediately reimburse the employer ofthe 100% of the amount of maternity benefits advanced by theemployer upon the receipt of satisfactory proof of such payment andlegality thereof [Sec.14-A(e), RA No. 8282]. However, if an employee

should give birth or suffer a miscarriage without the requiredcontribution having been remitted for her by her employer to the SSSor without the latter having been previously notified by the employer ofthe time of the pregnancy, the employer shall pay to the SSS damagesequivalent to the benefits which said employee member wouldotherwise have been entitled to [Sec.14-A(f), RA No. 8282].



46. Who are those beneficiaries disqualified to receive any benefitsunder the SSS law?

Those beneficiaries who are nationals of foreign countries which

do not extend benefits to the Filipino beneficiaries residing in thePhilippines or which are not recognized by the Philippines, shall not beentitled to receive any benefit under this Act; Provided, thatnotwithstanding the foregoing, where the best interest of the SSS willbe served, the Commission may direct payments without regard tonationality or country of residence. (Sec.15, RA No. 8282).

47. What are the characteristics of the SSS benefits?

(1) Enjoyable only by covered members;(2) Non-transferrable (Sec.15)(3) Exempted from tax or attachments (Sec.16)(4) Not chargeable by any agent or attorneys (Sec.17)

48. What is contribution?

It is the amount paid to the SSS by and on behalf of the memberin accordance with Sec. 18 of this Act.

49. Define compensation.

All actual remunerations for employment, the mandated cost ofliving allowance, as well as the cash value of any remuneration paid inany medium other than cash except that part of the remunerationreceived during the month in excess of the maximum salary credit asprovided under Sec.18 of this Act [Sec.8(f)].

50. What are the sources of funds of the SSS?

From the contributions of the following:

(1) Employees contributions (Sec.18);(2) Employers contributions(3) Contributions of the self-employed. (Sec.19-A)



(4) Government contribution and guarantee (Sec.20 & 21)

51. What is the method of remittance, collection and payment?

The SSS shall require a complet and proper collection andpayment of contributions and proper collection and payment ofcontributions and proper identification of the employer and theemployee. Payment may be made in cash, checks, stamps, coupons,tickets or other reasonable devices that the Commission may adopt(Sec. 23, RA No. 8282).

52. What is a "Reserved Fund"?

All revenues of the SSS that are not needed to meet the currentadministrative and operational expenses incidental to the carrying ofthis Act shall be known as the the Reserve Fund (Sec.26, RA No.8282).

53. What is an "Investment Reserve Fund"?

Such portion of the Reserve Fund as are not needed to meet thecurrent benefit obligations thereof shall be known as the "Investment

Reserve Fund" which the Commission shall manage and invest withthe skill, care, prudence and diligence necessary under thecircumstances then prevailing that a prudent man setting in likecapacity and familiar with such matters would exercise in the conductof an enterprise of a like character and with similar aims. (Sec.26, RANo. 8282).

54. For what purpose are the contributions to the Social SecuritySystem utilized?

The revenue of the SSS are to be used to meet currentadministrative and operational expenses and for the payment of thebenefits under the SSS law.

55. What are the various loans that may be extended by SSS to itsmembers?



The various loans are:(1) salary loan(2) educational loan

(3) housing loan(4) community hospital loan

56. Before local government may issue any business permit or license,what is required?

Notwithstanding any law to the contrary, local government unitsshall prior to issuing any annual business license or permit, requiresubmission of certificate of SSS coverage and compliance with the

provisions of this Act. Provided, that the certification or clearanceshall be issued by the SSS within five (5) working days from receipt ofthe request [Sec.239(g), RA No. 8282].

57. Relative to the SSS Investment Reserve Fund, in what fields ofinvestments are they allowed to be invested?

The SSS Reserve Fund may be invested in any or all of thefollowing:

(1) Interest-bearing bonds or securities of the Government of thePhilippines;(2) Interest-bearing deposits or securities in any domestic bank

doing business in the Philippines;(3) In loans or interest-bearing advances to the National

Government for construction of bridges, roads and public buildings;(4) In direct housing loans;(5) In small short-term loans to covered employees;(6) In other income earning projects and investments secured by

first mortgages on real estate collaterals which, in the determinationof the Social Security Commission, shall redound to the benefit of theSSS, its members as well as the public welfare. (Sec.26, RA No. 8282).

58. Is the SSS law a law of succession?



No. The benefits under the SSS law do not form part of the estateof the SSS member. Further, persons other than the heirs of deceasedemployee may be entitled to the said benefits.

59. What are the proprietary functions of the SSS?

The SSS is exercising proprietary reasons for the followingreasons:

(1) It can enter into agreements or contracts for the proper,stable and efficient administration of the System;

(2) It can sue and be sued;(3) It covers an insurance scheme of general application; and(4) It is operated for profit, it being authorized to invest its funds

in profitable securities.

60. How is the Social Security law to be construed?

The SSS law should be construed in favor of giving benefits to itsmembers and their beneficiaries. Any doubt shall be resolved in favorof the claimant. Even if a person was mistakenly or wrongfullycovered, when he paid the premium regularly and where the mistakencovered was discovered only after his death, his beneficiaries or heirs

upon his death, shall be entitled to the death benefits. Thus it wasruled that the provisions of the SSS should be liberally construed infavor of those seeking its benefits. Any interpretation which woulddefeat rather than promote the ends for which the SSS was enactedshould be schewed.

61. Distinguish ECC and SSS.

Employers' Compensation Social Security

System 1) requires injury or death to 1) injury or death need notbe work

be work connected connected2) only employers contribute 2) both are required to

contribute3) no loan benefits 3) affords loan benefits



4) administered by Employees 4) GSIS or SSSCompensation Commission

62. What rules or guidelines govern the Househelpers?

Circular No. 21-V dated September 1, 1993 entitled " Guidelineson SSS Coverage of Househelpers".

63. Who are the househelpers that are mandatorily covered by SSS?

Under Sec. 1, Rule II, the following appears: "Coverage in theSSS shall be compulsory upon all househelpers who are sixty (60)years of age and below (i.e., have not yet reached their 61 st birth) and

who are receiving a monthly cash compensation of at least onethousand pesos. (Sec.1, II, Coverage).

64. Define the following: househelper, domestic or household services,and household employer.

(1) Househelper - any person who renders domestic or householdservices exclusively to a household employer. (i.e., driver, babysitter,gardener, cook, nursemaid, etc.)

(2) Domestic or household services - service in the employer'shome which is usually necessary or desirable for the maintenancethereof and includes ministering to the personal comfort andconvenience of the members of the employer's household includingservices of family drivers.

(3) Household employer - any person who engages the services ofa househelper. For the purposes of this rule, the head of the family(i.e., the husband or in his absence, the wife) shall be deemed thehousehold helper's employer (Secs.1-3. I, (Circular No. 21-V).

65. Define Compensation, Contribution, Monthly Salary Credit andQuarter as used in Circular No. 21-V.

(1) Compensation - monthly cash wage paid to the househelper.



(2) Contribution - amount paid or to be paid to the SSS by thehousehelper and by his/her employer in accordance with the attachedscheduled of Monthly contributions.

(3) Monthly Salary Credit - the compensation base for

contributions/benefits as indicated in the attached Schedule MonthlyContribution.

(4) Quarter - period of three consecutive calendar months endingon the last day of March, June, September and December.

66. When is the effective date of the coverage?

To take effect on the day of his employment but not earlier than1 September 1, 1993.

67. What are required in the registration of househelpers?

Prior to reporting by the household employer, a househelpersubject to compulsory coverage shall first secure his SSS number bysubmitting duly accomplished SSS Form No. E-1 together with: birthcertificate (in its absence, baptismal certificate) and if none, jointaffidavit of two persons personally known attesting to the correctnames and date of birth.

68. State the effect of separation.

He may continue to pay voluntarily the contributions of both theemployer and employee shares. If re-employed he can use the sameSSS number.

69. What are the rights of the covered household employer? Coveredhousehelper?

A household employer shall be subject to the same rights andobligations applicable to a regular covered employer under SSS,Medicare and EC laws and pertinent rules and regulations (Sec.2, III.Implementing Guidelines).

A covered househelper shall be entitled to the same benefits,loans and other privileges that are made available to a regular covered



employee under the SSS, Medicare and EC laws (V, ImplementingGuidelines).

70. What are the prohibited and penal acts under the SSS?

(1) Whoever, for the purpose of any payment to be made underthis Act, or under agreement thereunder, where none is authorized tobe paid, shall make or cause to be made, false statement orrepresentation as to any compensation paid or received or whoevermakes or causes to be made any false statement of a material fact ofany claim for any benefit payable under this act, or application for loanwith SSS, or whoever or causes to be made false statement orrepresentation, affidavit or document in connection with such claim or

loan, shall suffer the penalty provided for in Art. 172 of the RevisedPenal Code.

(2) Whoever shall obtain or receive any money or check underthis Act or any agreement thereunder, without being entitled theretowith intent to defraud any covered employee, employer or the SSSshall be fined not less than P5,000.00 nor more than P20,000.00 andimprisoned for not less than six years and one day nor more than 12years.

(3) Whoever buys, sells, offers for sale, uses, transfers, takes or

gives in exchange, or pledges to give a pledge, except as authorized inthis Act or in regulation made pursuant thereto any stamp, coupon,ticket, book or other device, prescribed pursuant to Sec.27 hereof bythe Commission for the collection or payment of contributions requiredherein, shall be fined not less than P5,000.00 nor more thanP20,000.00 or imprisoned for not less than six years and one day normore than 12 years, or both at the discretion of the court.

(4) Whoever, with intent to defraud, alters, forges or makescounterfeits any stamp, coupon, ticket, book or other device

prescribed by the Commission for the collection or payment of anycontribution required herein, or uses, sells, lends, or has in hispossession any such altered, forged or counterfeited materials, ormakes, uses, sells or has in his possession any material imitation ofthe materials, used in the manufacture of such stamps, coupons,ticket, book or other device shall be fined not less than P5,000.00 nor



more than P20,000.00 or imprisoned for not less than six years andone day nor more than 12 years, or both at the discretion of the court.

(5) Whoever fails or refuses to comply with the provisionspromulgated by the Commission, shall be punished by a fine not less

than P5,000.00 nor more than P20,000.00 or imprisoned for not lessthan six years and one day nor more than 12 years, or both at thediscretion of the court. Provided, that when the violation consists infailure or refusal to register employees or himself, in case of thecovered self-employed or to deduct contributions from employee'scompensation and remit the same to the SSS, the penalty shall be afine not less than P5,000.00 nor more than P20,000.00 and imprisonedfor not less than six years and one day nor more than 12 years.

(6) Any employee of the SSS who receives or keeps funds or

property belonging, payable or deliverable to the SSS and who shallappropriate the same, or shall take or misappropriate or shall consentor through abandonment or negligence shall permit any other personto take such property or funds, wholly or partially, or shall otherwisebe guilty of misappropriation of such funds or property, shall suffer thepenalties provided in Art. 217 of the RPC.

(7) Any employer who, after deducting the monthly contributionor loan amortizations from his employee's compensation fails to remitsaid contribution to the SSS within 30 days from the date they become

due shall be presumed to have misappropriated such contributions orloan amortizations and shall suffer penalties provided in Art.315 of theRPC. (Sec. 28, RA No. 8282).

71. In case juridical person commits any of the prohibited acts underthe SSS law, who shall be liable?

If the act or omission penalized by this Act be committed by anassociation, partnership, corporation or any other institution, its

managing head, directors or partners shall be liable to the penaltiesprovided in this Act for the offense. [Sec.28 (f), RA No.8282].

72. Who will initiate the filing of the criminal cases under the penalcause of this Act?



Criminal action arising from a violation of the provisions of thisAct may be commenced by the SSS or the employee concerned eitherunder this Act or in appropriate case under the RPC; Provided, thatsuch criminal action may be filed by the SSS in the city or municipality

where the SSS provincial or regional office is located if the violationwas committed within its territorial jurisdiction or in Metro Manila, atthe option of the SSS. [Sec.28 (j), RA No. 8282].

QUESTIONS ON SSS LAW

1. Phil. Daily News prints and publishes the Daily News, copies ofwhich are circulated through dealers in Metro Mla. These dealers, whoare single proprietors exclusively distributing the Daily News buthandling competing dailies for a fixed amount per copy sold, engagethe services of newsboys. These newsboys are given a specifiednumber of copies to sell everyday within a six hour period in themorning. After this period, the newsboys are free to sell othernewspapers or go to school or engage in other activities. Eachnewsboy is paid 50c for every copy sold.

As counsel for the Phil. Daily News would you advise your clientto report the dealers and newsboys as its employees pursuant to theSSS Act? (BAR 1987).

I will advise my client not to cover the dealers and newsboysbecause Phil. Daily News will not qualify as their employer under theSSS law. They are not under its supervision or control. But dealers andnewsboys may be covered by SSS as its self-employed persons.

2. Union Drug Company has sick leave policy, contained in acollective bargaining agreement requiring the accumulation of fivedays of the 15 days sick leave earned annually. Thus, an employeecould use only 10 days of earned sick leave every year. Theaccumulated leave is convertible to cash when employment isterminated for any cause but may be used upon prior application withand approved by the company.



Pedro San Juan, an employee of the company, applied forsickness benefits under the Social Security Act, when he fell ill ofpneumonia and his 10 day company sick leave had been exhausted.The System denied the application.

Decide. (BAR 1987).

The System has no reason to deny the applied sick benefitsbecause of these reasons:First, the sickness benefit has not yet reached its limitations. Thus,

(1) In no case shall daily sickness benefit be paid longer than 120 daysin one calendar year; nor shall any unused portion of the 120 days ofsickness benefit granted under this section be carried forward andadded to the total number of compensable days allowable in the

subsequent year [Sec.14(a)(1), RA No. 8282]. (2) The daily sicknessbenefit shall not be paid for more than 240 days on account of thesame confinement.

Second, The compensable confinement shall begin on the firstday of sickness, and the payment of such allowances shall bepromptly made by the employer every regular payday or on the 15 th andlast day of each month and similarly, in the case of direct payment bythe SSS, for as long as such allowance are due and payable; Provided,That such allowances shall being only after all sick leaves of absence

with full pay to the credit of the employee shall have been exhausted[Sec.14(b), RA No. 8282].

3. Leonardo Marasigan started working for Madrid DevelopmentCorporation in August 1984 when it was being organized and had nofixed offices. The company did not ask for his Social SecurityRegistration number, nor did it report him to the SSS. He died a yearlater and his widow filed a claim for death benefits with the SSS.While following up the claim, the widow discovered that it was only in

November 1985 whn he was reported by his employer to the SSS andthe premiums covering the entire period from August 1984 wereremitted.

Leonardo's widow came to you for assistance. What would beyour legal advice? (BAR 1987).



I will advise the widow that as primary beneficiary she is entitledto receive the SSS death benefits.

The nonreporting is not fatal because the premium wereadequately remitted.

Since Leonardo failed to pay 36 monthly contributions, his widowis not entitled to a monthly pension but the widow as primarybeneficiary is entitled to a lump sum benefit equivalent to 35 times themonthly pension.

4. Sapatilya Company, a manufacturer of wooden shoes, started itsoperations on Jan. 1, 1989. As of June 15, 1989, the company had inits payroll a general manager, an assistant general manager, threesupervisors and forty rank and file employees,all of whom started with

the company on Jan.1, 1989. On July 1, 1989, the company also had 10casual employees who had been in the company since Feb. 16, 1989and 12 contractual employees whose contract of employment with thecompany is for the period from Aug.1, 1989 to Sept. 30, 1989. Whoamong the aforementioned employees are under the coverage of theSocial Security Law? When did their coverage under the said law takeeffect? (BAR 1987).

All of them are covered (Sec. 9, RA No. 8282). Formerly,

employment purely casual and not for the purpose of occupation orbusiness of employer are not covered. The mandatory coverage of allemployees takes effect on the day of their employment.

5. Don Jose, a widower owns a big house with a large garden. Oneday, his househelper and gardener left after they were scolded. Fordays, Don Jose, who lives alone in the compound to look for someonewho could water the plants in the garden and clean the house. Hechanced upon Mang Kiko on the street and asked him to water the

plants and clean the house. Without asking any question, Mang Kikoattended to the plants in the garden and cleaned the house. Hefinished the work in two days.

(a). Is there an employer-employee relationship between DonJose and Mang Kiko?

(b) Are they compulsorily covered by the SSS? (BAR 1991).



(a) No employer-employee relationship exists between them. Thetest and elements of the relationship are not present.

(b) No, he was performing a domestic service. He cannot becovered by the SSS because there is no mention in the problem that

his monthly salary is P1,000.00 or more which makes a person doinghousehold or domestic services within the coverage of SSS.

6. Ma. Sara Mira is an unwed mother with three children from 3different fathers. In 1999, she became a member of the Social SecuritySystem. In August 2000, she suffered a miscarriage, also out ofwedlock and again by a different father. Can Ma. Mira claim maternitybenefits under the Social Security Act of 1997? Reason. (BAR 2000).

Yes. She is entitled to maternity benefits because such benefit(not dependent upon her being married or not under Sec.14-A, RA No.8282). However, the delivery or miscarriage under such benefitscannot extend beyond four deliveries/miscarriages.

7. Marvin Patrimonio is a caddy rendering caddying services for themembers and guests of the Barili Gold and Country Club. As suchcaddy, he is subject to Barili's golf's rules and regulations governingCaddies regarding conduct, dress, language, etc. However, he does

not have to observe any working hours, he is free to leave anytime hepleases and he can stay away for as long as he likes. Nonetheless, ifhe is found remise in the observance of club rules, he can bedisciplined by being barred from the premises of the Barili Golf.

Is Marvin within the compulsory coverage of the Social SecuritySystem? When? (BAR 1999).

No employer-employee relationship exists between them (ManilaGolf & Country Club, Inc. vs. IAC; 237 SCRA 207). However, Marvin

Patrimonio may qualify as self-employed person under Sec.9-A of theSocial Security Act of 1997.

FREQUENTLY ASKED QUESTIONS ON SSS

1. How can one register with the SSS?



a. General RequirementsA person registering with the SSS for the first time as an employee,self employed, non-working spouse or OFW should submit, togetherwith the SSS registration form, a photocopy of his/her birth or

baptismal certificate or passport. In the absence of these documents,any two of the following documents:

o record of employmento GSIS member's recordo certificate from the National Archiveo birth/baptismal certificate of childreno marriage contracto driver’s licenseo school records or voter’s ID cardo

Alien Certificate of Registration, oro joint affidavit of two disinterested parties attesting to the

correct name and/or fact of birth of the person concernedA married person should also submit his or her marriage contract uponregistration. If reporting children, he or she should submit the birth orbaptismal certificate of the child, if legitimate; proof of filiationshowing acknowledgment of the child, if illegitimate; or decree ofadoption, if legally adopted.The original or certified true copies of these documents should be

presented to the SSS for authentication.b. For EmployeesAn employee should accomplish SSS Form E-1 (Personal Data Record)and submit it together with the general requirements.

c. For Employersa. Single Proprietorships

An owner of a single proprietorship business should accomplish andsubmit SSS Forms R-1 (Employer's Data Record) and R-1A (Initial orSubsequent List of Employees).

b.

PartnershipsAny of the partners of a partnership firm should accomplishSSS Forms R-1 (Employer's Data Record) and R-1A (Initial orSubsequent List of Employees) and submit these formstogether with a photocopy of the Articles of Partnership.The original copy of the Articles of Partnership must bepresented for authentication.

http://69.42.87.214/cgi-bin/ezlclk.fcgi?id=6718





c. CorporationsA corporation must accomplish SSS Forms R-1 (Employer'sData Record) and R-1A (Initial or Subsequent List ofEmployees) signed by its President or any of the corporate

officers or incorporators and submit these forms togetherwith the photocopy of the Articles of Incorporation . Theoriginal copy of the Articles of Incorporation must bepresented to the SSS for authentication.

d. Household-Helper EmployersA household-helper employer who has an existing SSnumber should use his personal SS number as his employernumber in all transactions with regard to his household-helper. If the employer has no existing SS number, he

should get his SS number by accomplishing SSS Form E-1(Member's Data Record).

d. For Self-Employed MembersA self-employed person should accomplish SSS Form RS-1 (Self-Employed Data Record) and submit it together with the generalrequirements. If the self-employed member has employees, he shouldalso register as an employer and secure an employer ID number thathis company must use in all transactions with the SSS.

e.

For Voluntary Membersa. Separated MembersA member who is separated from employment or ceased to be self-employed/ overseas Filipino worker/ non-working spouse and wouldlike to continue paying his contributions should get in touch with thenearest SSS office. Being a previous member, he will not be issued anew number. It is only his membership status that will be changedfrom covered employee, self-employed, OFW or non-working spouse toa voluntary paying member.

b.

Non-Working SpousesA non-working spouse should accomplish SSS Form NW-1 (Non-Working Spouse Data Record) and submit it, duly signed by theworking spouse, with a copy of his marriage certificate. In theabsence of the marriage certificate, the applicant may submit a copyof SSS Form E-1 or E-4 of the working spouse where his name isreported.

http://69.42.87.196/cgi-bin/v40/ezlclk.fcgi?id=9222






c. Overseas Filipino Workers (OFWs)An OFW should accomplish SSS Form OW-1 (Overseas Worker RecordForm) and submit it together with the general requirements.

2. How can a member change the data in his membership records?Changes in a member's record should be reported immediately to thenearest SSS office by accomplishing SSS Form E-4 (Member's DataAmendment Form). He should submit a photocopy of the following:

marriage certificate for change of status birth or baptismal certificates of children for change or addition

of dependents birth or baptismal certificate for correction of birth date and

name

In case of non-availability of birth record or baptismal certificate,submit a certificate of loss or non-availability from the local civilregistrar of the place where the member was born and from the parishpriest of the locality where the member was baptized, together withany two of the following documents:

record of employment GSIS member's record certificate from the National Archive Alien Certificate of Registration

birth/baptismal certificates of children marriage contract school records passport joint affidavit of two disinterested parties attesting to the correct

name and/or fact of birth of the person concernedThe original or certified true copies of the documents should bepresented to the SSS for authentication.3. Who are considered the legal dependents of a member?

The legal beneficiaries of a married member are his legally marriedspouse, legitimate, legitimated, legally adopted or illegitimatechildren. These are his primary beneficiaries.If he is single, his benefits will go to his dependent parents, who areconsidered his secondary beneficiaries.In the absence of both primary and secondary beneficiaries, whoeveris designated by the member in his membership record becomes the



legal beneficiary.

4. When the member loses his SS ID card or cannot remember his SSnumber, should he secure another SS number?

No. The SS number assigned to a member is his lifetime number andmust always be used in all transactions with the SSS. He should notsecure another number at any other time.If he wishes to secure another SS ID and cannot remember his SSnumber, he may inquire from the nearest SSS office.5. What are the duties and responsibilities of an SSS employee-member?An SSS member should:

1. secure an SS number;

2.

ensure that he is reported by his employer to the SSS;3. pay his monthly share of contributions and ensure that these

contributions are remitted to the SSS by his employer;4. ensure that SSS Form R3s (Quarterly Collection Lists), where

his name is included, are submitted to the SSS by hisemployer every quarter;

5. pay his monthly loan amortization, if any, through salarydeduction and ensure that these payments are remitted to theSSS by his employer;

6.

update or correct his personal records with the SSS bysubmitting a duly filled-up SSS Form E-4 (Member's DataAmendment Form) and supporting documents, such asmarriage certificate for change of status, or birth or baptismalcertificate for change or correction of name or date of birth, toavoid delays in the processing of benefit claims; and

7. be conscious of changes and improvements in SSS policiesand benefit structure.

6. What are the duties and responsibilities of an SSS employer-

member?An employer is obliged to:1. require the presentation of the SS number of prospective

employees;2. report all his employees for SS coverage within one month

from date of employment by submitting an



3. accomplished SSS Form R-1A at the membership counter ofthe nearest SSS office;

4. deduct from his employees the monthly SS contribution basedon the schedule of contributions; pay his share of

contributions including Employees' Compensation (EC) andremit these contributions to any SSS-accredited bank withinfive days after the covered month;

5. submit a summary of all his employees' contributions(Contribution Collection List) together with a copy of theSpecial Bank Receipt (SBR) and SSS Form R-5 (PaymentReturn Form) to the nearest SSS branch or Postal ServicesOffice within 10 days after the applicable quarter;

An employer may also participate in the SSSNet, a computerservice using the electronic data interchange technology,designed to hasten the posting of employees contributions forfaster processing and availment of benefits and loanprivileges. Employers who are using this facility shall pay theiremployees' contributions and transmit both the employee andemployer contributions data on or before the 10th dayfollowing the month when said contributions are due andapplicable.

Or, the employer may opt to participate in the R3 Tape/Diskette Project, which allows the submission of the quarterlysummary of employees' contributions thru a computer tape ordiskette. This system is a better alternative to manualreporting as it minimizes encoding errors and processing time.Under this scheme, the employer shall submit the R3 tape ordiskette on or before the last working day of the applicablemonth.

6.

issue official receipts and maintain official records ofemployment and remittances for all contributions deductedfrom his employees every month or indicate such deductionsfrom his employees' pay envelopes;A household helper employer should submit an accomplishedSSS Form H-3 (Quarterly Collection List for Househelpers)together with the SSS Form R-5s. Household helpers



employers in the National Capital Region may enroll in theAuto-Debit Arrangement System, which allows the one-timeenrollment of the employer's bank account for the automaticpayment of monthly SS contributions and loan repayments.

This arrangement is open at the United Coconut PlantersBank, Far East Bank and Trust Co., Equitable Bank, Bank ofthe Philippine Islands, Metropolitan Bank and Trust Co. andthe Philippine National Bank.

7. remit to the SSS all salary, educational, stocks investment orprivatization loan amortization of his employees and submit anaccomplished SSS Form ML-1 (Quarterly Salary/ Educational/Calamity/ Stock Investment Loan Payment Return Form) to anyof the SSS-accredited banks on or before the 20th day of the

month after the applicable quarter; submit a summary of allemployees' loan amortization thru an accomplished SSS FormML-2 (Collection List) with copies of the SBRs and SSS FormML-1 to the nearest branch or Postal Services Office within 10days after the applicable quarter;

An employer may also participate in the Salary LoanRepayment Tape/Diskette project, which allows thesubmission of the quarterly summary of employees' loan

repayment thru a computer tape or diskette. This systemprovides the employer with convenience and hastens theposting of member's loan repayments. Under this scheme, theemployer shall submit the ML-2 tape or diskette on or beforethe last working day of the applicable month.

8. advance SS and EC sickness benefits due his employees oncethese are approved by the SSS;

9. advance SS maternity benefits due to qualified femaleemployees;

10.

file for reimbursement for all legally advanced sickness andmaternity benefits;11. keep his employees updated on the changes in SSS policies

and increases in their benefits;12. ensure that all forms submitted are properly and accurately

accomplished;



13. inform SSS of any change in company address, businessname, or temporary/permanent cessation of businessoperations thru the submission of a duly notarized SSS FormR-8 (Employer's Data Amendment Form);

14. submit annually an updated SSS Form L-501 (SpecimenSignature Card); and,

15. certify Medicare forms and other SSS-related documents forthe employees when required for purposes of their claims.

7. What are the duties and responsibilities of a voluntary/self-employedmember?A voluntary/self-employed member should:

1. pay his contributions using SSS Form RS-5 (Contributions

Payment Return Form) monthly or in accordance with theprescribed schedule; In case of change in monthly earnings orcontribution, he should notify the nearest SSS office in writing.

2. update or correct his personal records with the SSS bysubmitting a duly filled-up SSS Form E-4 (Member's DataAmendment Form) and supporting documents such asmarriage certificate;

3. be conscious of changes and improvements in SSS policiesand benefit structure.

Self-employed and voluntary members in the National Capital Regionmay enroll in the Auto-Debit Arrangement System, which allows theone-time enrollment of the member's bank account for the automaticpayment of monthly SSS contributions and loan repayments. Thisarrangement is open at the United Coconut Planters Bank, Far EastBank and Trust Co., Equitable Bank, Bank of the Philippine Islands,Metropolitan Bank and Trust Co., and the Philippine National Bank.

8. Monthly contributions based on the gross compensation of SSS

members are payable under two programs, as follows:1. SSS - 9.4% average monthly compensation not exceedingP15,000 and payable by both employer (6.07%) and employee(3.33%).

2. EC - 1% of average monthly compensation not exceedingP1,000 and payable only by the employer.



9. What is the basis for determining the monthly salary credit andmonthly contributions of an SSS member?

1. For an employee - The monthly salary credit should be basedon the total actual remuneration from employment, including

cost of living allowance, as well as the cash value of anyremuneration paid in kind as stated in the Social Security Lawof 1997, Sec. 8 (f). The monthly contributions of a member canbe determined based on his monthly salary credit which willbe according to the Table of Contributions.

2. For self-employed or voluntary members - the monthlyearnings declared at the time of registration shall be the basisof his monthly salary credit. However, the declared earningsshould not be lower than P1,000 per month except for the

OFWs whose lowest monthly salary credit is pegged at P3,000.

10. What is the minimum/maximum monthly salary credit of a member?

The minimum monthly salary credit is P1,000 and the maximum isP15,000 beginning January 2002.

11. What are the different modes of paying the SSS contributions?SSS contributions may be paid through:

accredited banks; over-the-counter transactions at the Cashiering Department inthe SSS head office;

electronic data interchange (EDI) for enrolled employermembers;

automatic debit arrangement (ADA) with banks.

12. How should the member pay his monthly contributions?

1.

For an employee, including household helpers - monthlythrough salary deduction, starting on the first month ofemployment.

The employer should use SSS Form R-5 (Contributions PaymentReturn) for payments over-the-counter and through accredited banks.Household employers may also pay through ADA.



2. For a self-employed member, including farmers and fisherfolks- monthly, upon approval of membership.

The self-employed should use SSS Form RS-5 (Contributions PaymentReturn for Self-employed/ Voluntary Members) for payment through

accredited banks or over-the-counter. He may also pay through ADA.3. For a voluntary member, including non-working spouses and

OFWs - monthly. The voluntary member should use SSS FormRS-5 (Contributions Payment Return for Self-employed/Voluntary Members) for payment through accredited banks orover-the-counter. He may also pay through ADA.

Self-employed and voluntary members are allowed to changetheir monthly salary credit (MSC) once in a given year without

a need for a written request. Increase or decrease in MSCshall be up to 20 percent of the current MSC but in no caseshall it be lower than P1,000 (P3,000 for OFWs). Increasemade in excess of 20 percent shall require the presentationand submission of a copy of the income tax return (ITR) for theprior year, duly received by the Bureau of Internal Revenue(BIR).

Retroactive payment of contributions will not be allowed for selfemployed and voluntary members.

13. When is the remittance of contributions due?1. For employers

1. Employers who remit through the electronic datainterchange (EDI) system - on or before the 10th day ofthe month following the applicable month

2. Household employers who remit through automatic debitarrangement (ADA) - deducted from bank account every10th day of the month following the applicable month

3.

Employers, including household helper employers, whoremit over-the-counter or through banks - on or beforethe 5th calendar day of the month following theapplicable month

2. For self-employed and voluntary members1. Self-employed and voluntary members who remit through

automatic debit arrangement (ADA) - deducted from bank



account on or before the 10th day of the month followingthe applicable month

2. Self-employed and voluntary members who remit over-the-counter or through banks - on or before the 5th day of

the month following the applicable month14. When and how should employers report their contributionpayments to the SSS?

1. Employers who remit through the electronic data interchange(EDI) system - monthly, through the Monthly Collection List(MCL), on or before the 10th day of the month following theapplicable month.

2. Household employers who remit through automatic debitarrangement (ADA) - reporting is done between the SSS and the

bank upon enrollment of the employer.3. Employers, including household employers, who remit over-the-

counter or through banks - within the first 10 days after everyquarter ending in March, June, September and December usingthe Contribution Collection List (SSS Form R-3) with the copies ofthe validated SSS Form R-5 and SBR; or within the first 5 daysfollowing the applicable month using R-3 diskette with copies ofthe validated Form R-5 and SBR and transmittal letter.

PRIMER ON GOVERNMENT SERVICE INSURANCE SYSTEM-RepublicAct No. 8921

1. What is the title of Rep. Act No. 8921?Rep. Act No. 8921 provides: “Sec. 1 Presidential Decree as

amended, otherwise known as the “Revised Government ServiceInsurance Act of 1997 is further amended to read as the follows: “Sec.1 Title- The short title of this Act shall be the Government service Act

of 1997”. 2. What is the significance of PD No. 1146 of the GSIS law as amendedby Republic Act No. 8921?

PD 1146 is the law expanding and improving the Social ServiceInsurance System. It increases the pension benefits, expandsdisability benefits, expands disability benefits, expands disabilitybenefits and will eventually extend the compulsory coverage of the



social security and insurance programs to all government officersregardless of employment status.3. Who is the employer for purposes of the GSIS law?

The national government, its political subdivisions, branches, agencies

or instrumentalities, including government-owned orcontrolled corporations, and financial institutions with originalcharters, the constitutional commissions and the judiciary;4. Who is an employee or member of the GSIS?

Any person receiving compensation while in the service of anemployer as defined herein, whether by election or appointment,irrespective of status of appointment, including barangay andSanggunian officials;5. Who may be considered as dependents of a member?

Dependents shall be the following: (a) the legitimate spousedependent for support upon the member or pensioner; (b) thelegitimate, legitimated, legally adopted child, including the illegitimatechild, who is unmarried, not gainfully employed, not over the age ofmajority, or is over the age of majority but incapacitated and incapableof self-support due to a mental or physical defect acquired prior to ageof majority; and (c) the parents dependent upon the member forsupport;6. Classify the different beneficiaries of a member.

a. Primary beneficiaries- The legal dependent spouse until he/sheremarries and the dependent children;b. Secondary beneficiaries- The dependent parents and, subject to

the restrictions on dependent children, the legitimate descendants;7. What is meant by a. contribution? b. compensation c. What are thesources of funds of GSIS?

a. Contribution- the amount payable to the GSIS by the member andthe employer in accordance with Section 5 of this Act:1. Member- 9.0% and 12 %

2. Employee of the Judiciary 3% and employer- 3%b. Compensation- basic pay or salary received by an employee,pursuant to his election/ appointment, excluding per diem, bonuses,overtime pay, honoraria, allowances and any other emolumentsreceived in addition to the basic pay which are not integrated into thebasic pay under existing laws ( Sec 2(j), GSIS)



c. The funds of the GSIS come from the monthly contributions requiredby the covered employees and their employers (Sec 5, GSIS).5. What do you understand of the term lump sum?The basic monthly pension multiplied by sixty (60);

6. Is membership in the GSIS Compulsory?Membership in the GSIS shall be compulsory for all employeesreceiving compensation who have not reached the compulsoryretirement age, irrespective of employment status, except members ofthe Armed Forces of the Philippines and the Philippine National Police,subject to the condition that they must settle first their financialobligation with the GSIS, and contractuals who have no employer andemployee relationship with the agencies they serve."Except for the members of the judiciary and constitutional

commissions who shall have life insurance only, all members of theGSIS shall have life insurance, retirement, and all other social securityprotections such as disability, survivorship, separation, andunemployment benefits. (Section 3)7. What is the effect of separation from government service?“A member separated from the service shall continue to be a member,and shall be entitled to whatever benefits he has qualified to in theevent of any contingency compensable under this Act.” (SEC. 4.) 8. What are the obligations of the employer under the GSIS law?

The employer has the following obligations under the GSIS law:1. To report to the GSIS the names of all employees, theircorresponding employment status, positions, salaries andother information;

2. To remit directly to GSIS the employer and employeescontribution within the first ten days of the calendar monthfollowing the month to which the contributions apply. (Section6, GSIS).

10. What is the penalty for non- remittance or delayed remittance?

Penalized by interest penalty not less than 2% per month.11. Enumerate the benefits that may be enjoyed by covered member ofGSIS.The benefits are:

1. Basic monthly pension benefit2. Separation benefits3. Retirement benefits



4. Permanent disability benefits5. Temporary disability benefits6. Survivorship benefits7. Funeral benefits

8. Life insurance benefits12.How is the basic monthly basic Pension Computed?SEC. 9. Computation of the Basic Monthly Pension. - (a) The basicmonthly pension is equal to:"1) thirty-seven and one-half percent (37.5%) of the revalued averagemonthly compensation; plus"2) two and one-half percent (2.5%) of said revalued average monthlycompensation for each year of service in excess of (15) years:Provided, That the basic monthly pension shall not exceed ninety

percent (90%) of the average monthly compensation."(b) The basic monthly pension may be adjusted upon therecommendation of the President and General Manager of the GSISand approved by the President of the Philippines in accordance withthe rules and regulations prescribed by the GSIS: Provided, however,that the basic monthly pension shall not be less than One thousandand three hundred pesos (P1,300.00): Provided, further, that the basicmonthly pension for those who have rendered at least twenty (20)years of service after the effectivity of this Act shall not be less than

Two thousand four hundred pesos (P2,400.00) a month.13. How is the length of service computed?"SEC. 10. Computation of Service. - (a) The computation of service forthe purpose of determining the amount of benefits payable under thisAct shall be from the date of original appointment/election, includingperiods of service at different times under one or more employers,those performed overseas under the authority of the Republic of thePhilippines, and those that may be prescribed by the GSIS incoordination with the Civil Service Commission.

"(b) All service credited for retirement, resignation or separation forwhich corresponding benefits have been awarded under this Act orother laws shall be excluded in the computation of service in case ofreinstatement in the service of an employer and subsequentretirement or separation which is compensable under this Act."For the purpose of this section, the term service shall include full-time service with compensation: Provided, that part-time and other



services with compensation may be included under such rules andregulations as may be prescribed by the GSIS.14. When is retirement compulsory?Unless the service is extended by appropriate authorities, retirement

shall be compulsory for an employee 65 years of age, with at least 15years of service. Provided That if he has less than 15 years of servicehe may be allowed to continue in the service in accordance withexisting civil service rules and regulations ( Sec 13 b, GSIS)15. What shall consist the separation benefits?The separation benefits shall consist of: (a) a cash payment equivalentto one hundred percent (100%) of his average monthly compensationfor each year of service he paid contributions, but not less thanTwelve thousand pesos (P12,000) payable upon reaching sixty (60)

years of age upon separation, whichever comes later: Provided, thatthe member resigns or separates from the service after he hasrendered at least three (3) years of service but less than fifteen (15)years; or"(b) a cash payment equivalent to eighteen (18) times his basicmonthly pension at the time of resignation or separation, plus an old-age pension benefit equal to the basic monthly pension payablemonthly for life upon reaching the age of sixty (60): Provided, that themember resigns or separates from the service after he has rendered at

least fifteen (15) years of service and is below sixty (60) years of ageat the time of resignation or separation.16. Supposing a government employee retires, what are the benefitsthat he may receive from the GSIS?Retirement benefits shall be:

"(1) the lump sum payment as defined in this Act payable at the timeof retirement plus an old-age pension benefit equal to the basicmonthly pension payable monthly for life, starting upon expiration ofthe five-year (5) guaranteed period covered by the lump sum; or

"(2) cash payment equivalent to eighteen (18) months of his basicmonthly pension plus monthly pension for life payable immediatelywith no five-year (5) guarantee."(b) Unless the service is extended by appropriate authorities,retirement shall be compulsory for an employee of sixty-five (65) yearsof age with at least fifteen (15) years of service: Provided, That if hehas less than fifteen (15) years of service, he may be allowed to



continue in the service in accordance with existing civil service rulesand regulations.17. To be entitled to the retirement benefits mentioned under No. 12,what requirements must a government employee satisfy?

(1) he has rendered at least fifteen years of service;(2) he is at least sixty (60) years of age at the time of retirement; and(3) he is not receiving a monthly pension benefit from permanent totaldisability.18. Under the GSIS, what are the two classes of disability benefits?

1. Permanent Disability Benefits2. Temporary Disability Benefits

19. What do you mean by the following terms: 1. disability 2. totaldisability 3. permanent total disability 3. temporary total disability 4.permanent partial disability?

1. Disability- any loss or impairment of the normal functions of thephysical and/ or mental faculty of a member which reduces oreliminates his/ her capacity to continue with his/her current gainfuloccupation or engage in any other gainful occupation.2. Total disabilty- complete incapacity to continue with his present

employment or engage in any gainful occupation due to the loss orimpairment of the normal functions of the physical and/ or mentalfaculties of the members.3. Permanent total disability- accrues or arises when recovering fromimpairment mentioned in Sec 2 Q is medically remitted.4. Temporary Total Disability- accrues or arises when the impairedphysical or mental faculties can be rehabilitated and/ or restored totheir normal functions.5. Permanent Partial Disability- accrues or arises upon the irrevocable

loss or impairment of certain portion/s of the physical faculties,despite which the member is able to pursue a gainful occupation.

20. What are the two classes of permanent disability benefits?1. Permanent total disability benefits2. Permanent partial disability benefits



21. What are the general conditions that must concur before a membermay be entitled to permanent disability benefits?A member, who suffers permanent disability for reasons not due to hisgrave misconduct, notorious negligence, habitual intoxication, or

willful intention to kill himself or another, shall be entitled to thebenefits provided for under Sections 16 and 17 immediately following,subject to the corresponding conditions thereof.22. In case the disability is total, what amount will a member receivebecause of such disability?If the permanent disability is total, he shall receive a monthly incomebenefit for life equal to the basic monthly pension effective from thedate of disability:23. What additional conditions must concur before a member may be

entitled to permanent disability benefits?(1) he is in the service at the time of disability; or(2) if separated from the service, he has paid at least thirty-six (36)monthly contributions within the five (5) year period immediatelypreceding disability, or has paid a total of at least one hundred eighty(180) monthly contributions, prior to his disability: Provided, further,That if at the time of disability, he was in the service and has paid atotal of at least one hundred eighty (180) monthly contributions, inaddition to the monthly income benefit, he shall receive a cash

payment equivalent to eighteen (18) times his basic monthly pension:Provided, finally, That a member cannot enjoy the monthly incomebenefit for permanent disability and the old-age retirementsimultaneously."(b) If a member who suffers permanent total disability does notsatisfy conditions (1) and (2) in paragraph (a) of this section but hasrendered at least three (3) years of service at the time of his disability,he shall be advanced the cash payment equivalent to one hundredpercent (100%) of his average monthly compensation for each year of

service he paid contributions, but not less than Twelve thousandpesos (P12,000.00) which should have been his separation benefit.24. When is the disability benefit suspended?Unless the member has reached the minimum retirement age,disability benefit shall be suspended when:"(1) he is reemployed; or



"(2) he recovers from his disability as determined by the GSIS, whosedecisionshall be final and binding; or"(3) he fails to present himself for medical examination when required

by the GSIS.

25. What disabilities are considered total and permanent?

The following disabilities shall be deemed total and permanent:"(1) complete loss of sight of both eyes;"(2) loss of two (2) limbs at or above the ankle or wrist;"(3) permanent complete paralysis of two (2) limbs;"(4) brain injury resulting in incurable imbecility or insanity; and

"(5) such other cases as may be determined by the GSIS.26. What are the conditions that must concur before a member may

be entitled to temporary disability benefits?"A member who suffers temporary total disability for reasons not dueto any of the conditions enumerated in Section 15 hereof shall beentitled to seventy-five percent (75%) of his current dailycompensation for each day or fraction thereof of temporary disabilitybenefit not exceeding one hundred twenty (120) days in one calendaryear after exhausting all his sick leave credits and collective

bargaining agreement sick leave benefits, if any, but not earlier thanthe fourth day of his temporary total disability: Provided, That:"(1) he is in the service at the time of his disability; or"(2) if separated, he has rendered at least three (3) years of serviceand has paid at least six (6) monthly contributions in the twelve-monthperiod immediately preceding his disability."Provided, however, That a member cannot enjoy the temporary totaldisability benefit and sick leave pay simultaneously: Provided, further,That if the disability requires more extensive treatment that lasts

beyond one hundred twenty (120) days, the payment of the temporarytotal disability benefit may be extended by the GSIS but not to exceeda total of two hundred forty (240) days.27. In case a GSIS pensioner dies, will his survivors receive anybenefit under this Act?Yes, his survivors will receive survivorship benefits. When a member

or pensioner dies, the beneficiaries shall be entitled to survivorship



benefits provided in Sections 21 and 22 hereunder subject to theconditions therein provided for. The survivorship pension shall consistof:(1) the basic survivorship pension which is fifty percent (50%) of the

basic monthly pension; and(2) the dependent children’s pension not exceeding fifty percent (50%)of the basic monthly pension.

28. State the policies on survivorship benefits when the deceasedmember was in the active service?The policies or rules are:First, if at the time of death, a member is in the active service and hasrendered at least 15 years of creditable service:

1.

The primary beneficiaries shall receive the survivorshippension and cash payment equivalent to 18 x the basicmonthly pension; or

2. In the absence of primary beneficiaries, his secondary, thelegal heirs of members shall receive the cash payment.

Second, if at the time of death, the member was in the service withless than 15 years of creditable service, his primary beneficiaries shallreceive the cash payment equivalent to 100% of the average monthlycompensation for every year of creditable service, but not less than

P12, 000 .

29. What should be the governing rules and policies on thesurvivorship benefits of inactive members?

1. Survivors of members who retired under retirement laws notadministered by the GSIS shall not receive any survivorshipbenefits from the system.

2. Primary beneficiaries of inactive members who have at least

15 years of creditable service shall receive the survivorshippension.3. Primary beneficiaries of inactive members who have at least

three years but les than 15 years of creditable service andwere less than sixty years of age at the time of death shallreceive a cash benefit equivalent of 100% of the deceased



inactive member’s average monthly compensation for e veryyear of creditable service but not less than P12,000.

4. Primary beneficiaries of inactive members who have less than15 years of creditable service and were at least 60 years of

age at time of separation from service, shall not be entitled toreceive survivorship benefits. However, if the member has notyet received the separation benefits within four years after hisseparation, the primary beneficiaries shall receive the cashbenefit equivalent to 100% of the inactive member’s averagemonthly compensation for every year of creditable service.

30. State the new rule or policy on the GSIS Pensioner or Recipient ofMonthly Income Benefits for Permanent Total Disability?

The survivorship benefits of a retiree- pensioner or a member receivinga monthly income benefit for permanent total disability shall beentitled to:

1. The primary beneficiaries shall receive the survivorshippension.

2. In the case of a pensioner who dies within the covered periodby the lump sum, the survivorship pension shall be paid afterthe expiration of the said period.

31. Under Res. No. 188, what is meant by average monthlycompensation(AMC)?

Consistent with the Premium based Policy, the AMC shall be theaverage salary for the last three years of service of the member priorto his/ hr death or separation, where the corresponding premiumcontributions have been paid and remitted to the GSIS.( Res. No. 188No. 6, August 13, 2003).

32. Under the GSIS law, is there such a thing as compulsory lifeinsurance?Yes, all employees except for Members of the Armed Forces of thePhilippines (AFP) and the Philippine National Police (PNP) shall, undersuch terms and conditions as may be promulgated by the GSIS, becompulsorily covered with life insurance.33. What are the benefits under the compulsory insurance?



The member of his designated beneficiaries/ legal heirs are entitled toany of the following benefits available under the compulsory lifeinsurance:

1. Maturity benefit

2. Death Benefit3. Accident Cash benefit4. Cash Surrender Value5. Insurance Loans

34. What are the two classes of life insurance under the GSIS?

1. Compulsory life insurance2. Optional Insurance

35. When may a member apply for optional insurance? What are thebenefits under an optional life insurance policy.

Subject to the rules and regulations prescribed by GSIS, a membermay apply for insurance and / or pre need coverage embracing life,health, hospitalization, education, memorial plans, and such otherplans as may be designed by the GSIS for himself and/ or hisdependents. Any employer may likewise apply for group insurance

coverage for its employees.

36. Who will effect payment of premium in optional insurance?

The payment of the premium/ installments for optional insurance andpre- need products may be made by the insured or his employer and/ orany person acceptable to the GSIS.37. Until what time should claims for benefits under the GSIS law befiled?

Claims for benefits under this Act except for life and retirement shallprescribe after four (4) years from the date of contingency.38. Does this 4 year prescriptive period cover life and retirement?No.39. Give the effects in case of wrong payment of benefits toineligible/disqualified party?



Payments made by the GSIS, prior to receipt of an adverse claim,to abeneficiary or claimant subsequently found not entitled thereto shallnot bar the legal and eligible recipient to his right to demand thepayment of benefits, proceeds and claims from the GSIS, who shall

however, have a right to institute the appropriate action in a court oflaw against the ineligible recipient.(Sec 29 GSIS)40. What government agency has exclusive original jurisdiction to heardisputes arising from the GSIS law?The GSIS shall have original and exclusive jurisdiction to settle anydisputes arising under this Act and any other laws administered by theGSIS.The Board may designate any member of the Board, or official of theGSIS who is a lawyer, to act as hearing officer to receive evidence,

make findings of fact and submit recommendations, together with alldocumentary and testimonial evidence to the Board within thirty (30)working days from the time the parties have closed their respectiveevidence and filed their last pleading. The Board shall decide the casewithin thirty (30) days from the receipt o f the hearing officer’s findingsand recommendations. The cases heard directly by the Board shall bedecided within thirty (30) working days from the time they aresubmitted by the parties for decision.41. What powers have been enjoyed by officials and employees

authorized by the Board to hear and receive evidence for the Board onany GSIS dispute within its jurisdiction?They have the power:

1. To administer oaths and affirmation2. Take depositions3. Certify to official acts4. Issue subpoena to persons to testify and for the production of

books, papers, correspondence and other records.

42. What rules shall govern appeals from any decision of the Board?Appeals from any decision or award of the Board shall be governed byRules 43 and 45 of the 1997 Rules of Civil Procedure adopted by theSupreme Court on April 8, 1997 which will take effect on July 1, 1997:Provided, That pending cases and those filed prior to July 1, 1997 shallbe governed by the applicable rules of procedure: Provided, further,That the appeal shall take precedence over all other cases except



criminal cases when the penalty of life imprisonment or death orreclusion perpetua is imposable.The appeal shall not stay the execution of the order or award unlessordered by the Board, by the Court of Appeals or by the Supreme Court

and the appeal shall be without prejudice to the special civil action ofcertiorari when proper.43. What constitute GSIS Social Insurance Fund?All contributions payable under Sec. 5 of this Act together with theearnings and accrual thereon shall constitute the GSIS socialInsurance Fund (Section 34, GSIS)44. What are the other funds being administered by GSIS?

1. Optional Insurance Fund2. Employees’ Compensation Insurance Fund

3.

General Insurance Fund4. Other Special Funds

45. When should the retirement benefits be paid to a member?"The GSIS shall pay the retirement benefits to the employee on his lastday of service in the government: Provided, That all requirements aresubmitted to the GSIS within a reasonable period prior to the effectivedate of the retirement;46. In case an employee is also covered by another law, which grantssimilar benefits to what is granted by the GSIS law, may such

employee claim under both laws?No, the employee may not claim under both. Under Section 55. of theGSIS law:“Exclusiveness of Benefits. - Whenever other laws provide similarbenefits for the same contingencies covered by this Act, the memberwho qualifies to the benefits shall have the option to choose whichbenefits will be paid to him. However, if the benefits provided by thelaw chosen are less than the benefits provided under this Act, theGSIS shall pay only the difference.

47. What are the powers and functions of the GSIS?1. To formulate, adopt and amend rules and regulations;2. To adopt and approve the annual supplemental budget of

receipts and expenditures;3. To invest funds of GSIS;4. To acquire, utilize and dispose of its real and personal

properties;



5. To conduct actuarial and statistical studies and evaluation todetermine the financial condition of the GSIS

6. To have the power of succession.7. To sue and be sued

8. To enter into contracts;9. To carry on any lawful business;10. To establish offices for the conduct of its business;11. To borrow money from other sources;12. To invest, own or participate in equity in any establishment

firm or entity;13. To approve appointments;14. To design and adopt early Retirement Incentive plan;15. To fix and periodically review and adjust rates of interest

and other terms and conditions;16. To enter into any agreement with SSS or with any other

entity;17. To be able to float proper instrument to liquefy long term

maturity by pooling funds for short term secondary market;18. To submit annually report to the President and Congress of

the Philippines;19. To maintain provident fund;20. To approve guidelines affecting investments;

21.

To authorize payment of remunerations to officials andemployees;22. To determine an impose interest upon unpaid premiums due

from employers and employees;23. To ensure all collection of all indebtedness, liabilities, and

accountabilities;24. To design and implement programs;25. To exercise such other powers and functions as may be

necessary and useful in promoting the purposes and

objectives of GSIS.

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