Atty Lorenzo Labor Law

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 and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. ―The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in 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 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 principles governing the relations, interactions or dynamics between labor and capital, which include but not limited to their rights, obligations and liabilities. 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 or comply with and to which employees are entitled as a matter of legal right. Labor standards, as defined more specially by jurisprudence, are the minimum requirements prescribed by existing laws, rules and regulations relating to wages, hours of work, cost of living allowance, and other

monetary and welfare benefits, including occupational, 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 of compulsory or voluntary arbitration, conciliation and mediation. The end objective of labor law, is the attainment of industrial peace 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 the legislature is geared to flesh-out the Constitution's social justice provisions, their intendment being 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 its relationship with collective capital or management. It also means the "worker," who as 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 an employee, whether physical or mental that is necessary 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 labor standards, employees compensation and labor relations respectively. (Refer to Art. 97 (c); Art.167 (g), now Art. 173 (g); and Art. 218 (f), now renumbered as Aty. 224 (f) of the Labor Code, as amended). Concept of Management Prerogative. This refers to an employer's right to freely regulate all aspects of employment through the adoption of strategies or schemes 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 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 State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.‖ Article XIII, Section 3 of the 1987 Constitution provides that ―The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organizations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth.

FUNDAMENTAL PRINCIPLES AND POLICIES I.

Constitutional Provisions

1. 2. 3.

a. Art II, Secs. 9, 10, 11, 13, 14, 18, 20. b. Art III, Secs. 1, 4, 8. 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 from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all. 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 shall promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. Section 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men. Section 18. The State affirms labor as a primary social economic force. It shall protect 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 due process 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, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances. Section 8. The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. ARTICLE XIII --

SOCIAL JUSTICE AND HUMAN RIGHTS

Section 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good. To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments. 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 of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. ―The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in 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 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) 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 healthful working conditions, taking into account their maternal functions, and such facilities and opportunities that will enhance their welfare and enable them to realize their full potential in the service of the nation.

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 doctrines that defines State policies on labor and employment, and governs the rights and duties of workers and employers respecting terms and conditions of employment by prescribing certain standards therefore, or by establishing a legal framework within which better terms and conditions of work could be obtained through collective bargaining 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 requirements prescribed by existing laws, rules and regulations relating to wages, hours of work, cost-of-living allowance, and other monetary and welfare benefits, including occupational safety, and health standards.

c) Labor Relations refers to the law which seeks to stabilize the relation between employers and employees, to forestall and thresh out their differences through the encouragement of collective bargaining and the settlement of labor disputes through conciliation, mediation and arbitration. d) Social Legislation comprises the general laws that are supposed to protect the 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 these enactments and legislations is SOCIAL JUSTICE. Q: Define Social Justice. A: Social Justice simply means ―the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception 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, what is the foundation of labor laws? A: The basis and foundation of labor laws is the police power of the State. It is the power of the Government to enact laws, within Constitutional limits, to promote 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 as amended? A: Article 3 of the Labor Code as amended provides that ―The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure and just and humane conditions of work. Q: A:

How should Labor Laws be construed? Under the Article 4 of the Labor Code, as amended, it is provided: ―All doubts in the implementation and interpretation of the provisions of this Code, 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 is a doubt as to the meaning of the legal and contractual provision. If the provision is clear and unambiguous, it must be applied in accordance with its express terms.

The law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer. Q: What is management prerogative? ANSWER: Management prerogative simply means that except as otherwise limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place, and manner of work, tools to be used, 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: A:

What are the limitations on the exercise of management prerogative? The following prerogative:

are

the limitations

on

the

exercise of

management

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 LABOR RELATIONS 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, work assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers, 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 protects management from oppression and destruction in this wise: "(t)he Constitutional policy of providing full protection to labor is not intended to oppress or destroy management xxxx. The unfledging commitment of this Court to the cause of the labor 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 labor and management and placed the parties in relatively equal positions. d. Likewise, in earlier cases, the Court ruled that the law in protecting the rights of the employees does not authorize the oppression nor selfdestruction of the employer. It should be made clear that when the law tilts the scales of justice to put the two (2) parties in favor of labor, it is but recognition of the inherent inequality between 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 cases where the circumstances warrant favoring labor over the interests of management but never should the scale be so tilted if the result is an injustice to the 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 Loan Association, 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 in managing because it is deemed important to society as a whole that he should succeed." Our law, therefore, recognizes certain rights as inherent in the management of business enterprises. These rights are collectively called management prerogatives or acts by which directing the business is able to control the variables thereof, so as to enhance the chances of making a profit. Together, they may taken as the freedom to 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 the quest for profits"(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 by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers and the 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 of the employer to transfer and re-assign its employees according to the requirements of its business (Pocketbell Philippines, Inc. vs. NLRC, et. al., G.R. No. 106843, 20 January 1995; Phil. Telegraph and Telephone Co. vs. Laplana, 199 SCRA 485 [1991] ). 4. This same ruling was the Court's position in Interwood Employees Association 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". 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 governing the relations, interactions or dynamics between labor and capital, which include 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 comply with and to which employees are entitled as a matter of legal right. Labor standards, as defined more specially by jurisprudence, are the minimum requirements prescribed by existing laws, rules and regulations relating to wages, hours of work, cost of living allowance, and other monetary and welfare benefits, including occupational, 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 of compulsory or voluntary arbitration, conciliation and mediation. The end objective of labor law, is the attainment of industrial peace 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 the legislature is geared to flesh-out the Constitution's social justice provisions, their intendment being 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 its relationship with collective capital or management. It also means the "worker," who as 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 an employee, whether physical or mental that is necessary 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 labor standards, employees compensation and labor relations respectively. (Refer to Art. 97 (c); Art.167 (g), now Art. 173 (g); and Art. 218 (f), now renumbered as Aty. 224 (f) of the Labor Code, as amended). Concept of Management Prerogative. This refers to an employer's right to freely regulate all aspects of employment through the adoption of strategies or schemes 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 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 State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.‖ Article XIII, Section 3 of the 1987 Constitution provides that ―The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organizations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns 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 from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all. 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 shall promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. Section 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men. Section 18. The State affirms labor as a primary social economic force. It shall protect 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 due process 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, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances. Section 8. The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. ARTICLE XIII

--

SOCIAL JUSTICE AND HUMAN RIGHTS

Section 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good. To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments. 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 of employment opportunities for all. It shall guarantee the rights of all workers to selforganization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. ―The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in 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 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 accordance with 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 and healthful working conditions, taking into account their maternal functions, and such facilities and opportunities that will enhance their welfare and enable them to realize their full potential in the service of the nation.

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

d)

ANSWER: a) Labor legislation refers to the body of statutes, rules and doctrines that defines State policies on labor and employment, and governs the rights and duties of workers and employers respecting terms and conditions of employment by prescribing certain standards therefore, or by establishing a legal framework within which better terms and conditions of work could be obtained through collective bargaining 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 requirements prescribed by existing laws, rules and regulations relating to wages, hours of work, cost-of-living allowance, and other monetary and welfare benefits, including occupational safety, and health standards. c) Labor Relations refers to the law which seeks to stabilize the relation between employers and employees, to forestall and thresh out their differences through the encouragement of collective bargaining and the settlement of labor disputes through conciliation, mediation and arbitration. d) Social Legislation comprises the general laws that are supposed to protect the 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 these enactments and legislations is SOCIAL JUSTICE. Q:

Define Social Justice.

A: Social Justice simply means ―the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception 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, what is the foundation of labor laws? A: The basis and foundation of labor laws is the police power of the State. It is the power of the Government to enact laws, within Constitutional limits, to promote 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 as amended? A: Article 3 of the Labor Code as amended provides that ―The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. 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: ―All doubts in the implementation and interpretation of the provisions of this Code, 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 is a doubt as to the meaning of the legal and contractual provision. If the provision is clear and unambiguous, it must be applied in accordance with its express terms. The law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer. Q:

What is management prerogative?

ANSWER: Management prerogative simply means that except as otherwise limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place, and manner of work, tools to be used, 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 prerogative:

following

are

the

limitations

on

the

exercise

of

management

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; and 10.) 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 RELATIONS 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, work assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers, 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 protects management from oppression and destruction in this wise: "(t)he Constitutional policy of providing full protection to labor is not intended to oppress or destroy management xxxx. The unfledging commitment of this Court to the cause of the labor 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 labor and management and placed the parties in relatively equal positions. d. Likewise, in earlier cases, the Court ruled that the law in protecting the rights of the employees does not authorize the oppression nor self-destruction of the employer. It should be made clear that when the law tilts the scales of justice to put the two (2) parties in favor of labor, it is but recognition of the inherent inequality between 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 cases where the circumstances warrant favoring labor over the interests of management

but never should the scale be so tilted if the result is an injustice to the 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 Loan Association, 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 in managing because it is deemed important to society as a whole that he should succeed." Our law, therefore, recognizes certain rights as inherent in the management of business enterprises. These rights are collectively called management prerogatives or acts by which directing the business is able to control the variables thereof, so as to enhance the chances of making a profit. Together, they may taken as the freedom to 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 the quest for profits"(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 by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers and the 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 of the employer to transfer and re-assign its employees according to the requirements of its business (Pocketbell Philippines, Inc. vs. NLRC, et. al., G.R. No. 106843, 20 January 1995; Phil. Telegraph and Telephone Co. vs. Laplana, 199 SCRA 485 [1991] ). 4. This same ruling was the Court's position in Interwood Employees Association 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 equal work opportunities regardless of sex, race or creed and regulate the relations between 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. 1. Labor contracts are not ordinary contracts as the relation between capital and 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 for domestic/overseas work. Entities authorized to engage in recruitment and placement a. 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 of Labor and Employment; and g. Construction contractors. Money claims of OFW‘s – jurisdiction and appeal 1. Jurisdiction over money claims of OFW‘s is vested with Labor Arbiters 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 principal 1. 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 Benefits 1. Labor Arbiters have jurisdiction over claims for death, disability and other benefits arising from employment.

2. Basis of compensation for death generally is whichever is greater between Philippine law or foreign law. 3. Work-connection required. Disciplinary Action Cases [POEA retains jurisdiction over disciplinary action cases] Direct-hiring 1. Employers cannot directly hire workers for overseas employment except through authorized entities (see enumeration above). 2. Rationale for the ban – to ensure full regulation of employment in order to avoid exploitation. 3. Non-resident foreign corporation directly hiring Filipino workers is doing business in the Philippines and may be sued in the Philippines. Illegal recruitment – 1. Illegal recruitment under Article 38 applies to both local and overseas employment. 2. Illegal recruitment- may be committed by any person whether licensees or non-licensees or holders or non-holders of authority. 3. Elements of illegal recruitment: a. First element: recruitment and placement activities. Any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether from profit or not, when undertaken by a nonlicensee or non-holder of authority: Provided, That any such licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed as engaged in such act. b. Second element: Non-licensee or non-holder of authority – means any person, corporation or entity which has not been issued a valid license or authority to engage in recruitment and placement by the Secretary of Labor and Employment, or whose license or authority has been suspended, revoked or canceled by the POEA or the Secretary of Labor and Employment. Note: i. Mere impression that recruiter is capable of providing work abroad is sufficient. i. ―Referral‖ of recruits also constitutes recruitment activity. ii. Absence of receipt to prove payment is not essential to prove recruitment. iii. Only one (1) person recruited is sufficient to constitute recruitment. iv. Non-prosecution of another suspect is not material.

4. Illegal recruitment, when considered economic sabotage – when the commission 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 economic sabotage which prescribes in 20 years. Employment of non-resident aliens 1. 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: APPRENTICES 1. 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 as may be approved by the Secretary of Labor and Employment. An ―apprentice‖ is a worker who is covered by a written apprenticeship agreement 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 for apprenticeship 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; and d. 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-thejob. LEARNERS 1. ―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 or not 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; and c. 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 WORKERS 1. Handicapped workers are those whose earning capacity is impaired: a. by age; or b. physical deficiency; or c. mental deficiency; or d. injury 2. If disability is not related to the work for which he was hired, he should not be so considered as handicapped worker. He may have a disability but since the same is not related to his work, he cannot be considered a handicapped worker insofar as that particular work is concerned. 3. Wage rate – 75% of the statutory minimum wage. CONDITIONS OF EMPLOYMENT 1. 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 covered by the following provisions of Title I, Book III of the Labor Code: Article Article Article Article Article Article Article Article Article

83 84 85 86 87 88 89 90 91

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Normal hours of work; Hours worked; Meal periods; Night shift differential; Overtime work; Undertime not offset by overtime; Emergency overtime work; Computation of additional compensation; Right to weekly rest period;

Article Article Article Article Article

92 93 94 95 96

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When employer may require work on a rest day; Compensation for the rest day, Sunday or holiday work; Right to holiday pay; Right to service incentive leave; and 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 – mere substantial evidence (e. g. I. D. card, Cash Vouchers for salaries, inclusion in payroll, reporting to SSS). Normal hours of work 1. ―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 starts to work at this unusual hour. 4. ―Work week‖ is a week consisting of 168 consecutive hours or 7 consecutive 24-hour work days beginning at the same hour and on the same calendar day each calendar week. 5. Reduction of eight-hour working day – not prohibited by law provided there is no reduction in pay of workers. 6. Shortening of work week – allowed provided employees voluntarily agree thereto; there is no diminution in pay; and only on temporary duration. 7. Hours of work of part-time workers – payment of wage should be in proportion only to the hours worked. 8. Hours of work of hospital and clinic personnel – The Supreme Court has voided Policy Instructions No. 54 in San Juan de Dios Hospital Employees Association vs. NLRC (G. R> No. 12638683, Nov. 28, 1997). Consequently, the rule that hospital employees who worked for only 40 hours/5 days in any given workweek should be compensated for full weekly wage for 7 days is no longer applicable.

Home work 1. The following are the compensable hours worked: a. All time during which an employee is required to be on duty or to be at the 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 nature of the employee‘s work allows sleeping without interrupting or prejudicing work or when there is an agreement between the employee and his employer to that effect. For example, a truck helper may sleep after performing his task and while his truck is travelling on its way to its assignment. But the same may not be done by the driver. 5. Working while on call – compensable if employee is required to remain on call in the employer‘s premises or so close thereto that he cannot use the time effectively and gainfully for his own purpose. 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 are present: a. The employees can leave their workplace or go elsewhere whether within or without the work premises; or b. The employees can use the time effectively for their own interest. 9. Attendance in CBA negotiations or grievance meeting – compensable hours worked. 10. Attendance in hearings in cases filed by employee – not compensable hours worked. 11. Participation in strikes – not compensable working time. Meal period 1. 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 hours worked and employee is free to do anything he wants, except to work. If he required 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 is considered coffee break or rest period of short duration and, therefore, compensable. Night shift differential 1. 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 following day. 2. Night shift differential and overtime pay, distinguished. When the work of an employee falls at nighttime, the receipt of overtime pay shall not preclude the right to receive night differential pay. The reason is, the payment 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 regular eight (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 of 110% of the regular hourly rate. b. Where night shift (10 p.m. to 6a.m.) work is overtime work 1. 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 usually eight (8) hours, the compensation for overtime night shift work is also computed 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 the applicable regular hourly rate. Overtime work 1. 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 required by law for work performed within 8 hours on non-working days, such as rest days and special days.

4. ―Overtime pay‖ means the additional compensation for work performed beyond 8 hours. Every employee entitled to premium pay is also entitled to the 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 includes 50% additional compensation as provided in Article 93 [c] of the Labor Code. d. For overtime work performed on a regular holiday, the overtime pay is plus 30% of the basic hourly rate which includes 100% additional compensation as provided in compensation. e. For overtime work performed on a rest day which falls on a regular holiday, the overtime pay is plus 30% of the basic hourly rate which includes 160% additional compensation. Undertime not offset by overtime 1. 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 additional compensation required by law such as overtime pay or night shift differential pay. Emergency overtime work 1. 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 local emergency has been declared by the National Assembly or the Chief Executive; b. When overtime work is necessary to prevent loss of life or property or in case of imminent danger to public safety due to actual or impending emergency in the locality caused by serious accident, fire, floods, typhoons, earthquake, epidemic or other disasters or calamities; c. When there is urgent work to be performed on machines, installations or equipment, or in order to avoid serious loss or damage to the employer or some other causes of similar nature; d. When the work is necessary to prevent loss or damage to perishable goods.

e. When the completion or continuation of work started before the 8th hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer; and f. When overtime is necessary to avail of favorable weather or environmental 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 of insubordination or willful disobedience of the lawful order of the employer. WEEKLY REST PERIODS 1. 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 disaster or calamity to prevent loss of life and property, or in case of force majeure 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 would otherwise suffer; c. In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be expected to resort to other measures; d. To prevent 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 the case of the crew members of a vessel complete a voyage and in other similar cases; and f. When the work is necessary to avail of favorable weather or environmental conditions where performance or equality of work is dependent thereon. Compensations for rest day, Sunday or holiday work a. Premium pay for work on scheduled rest day. A covered employee who is made or permitted to work on his scheduled rest day shall be paid with an additional compensation of at least thirty percent (30%) of his regular 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 thirty percent (30%) of his regular wage for work performed on a Sunday only when it is his established rest day. c. Premium pay for work performed on Sundays and holidays when employee has no regular workdays and no scheduled regular rest day. Where the nature of the work of the employee is such that he has no regular workdays and no regular rest days can be scheduled, he shall be paid an additional compensation of at least thirty percent (30%) of his regular wage for work performed on Sundays and holidays. d. Premium pay for work performed on special holidays (now special days) which fall on employee‘s scheduled rest day. Work performed on any special holiday (now special day) shall be paid with an additional compensation of at least thirty percent (30%) of the regular wage of the employee. Where such holiday work falls on the employee‘s scheduled rest day, he shall be entitled to additional compensation of at least fifty percent (50%) of his regular wage. e. Higher rate provided in agreements. Where the collective bargaining agreement or other applicable employment contract stipulates the payment of higher premium pay than that prescribed by law, the employer shall pay such higher rate. HOLIDAY PAY 1. Holiday pay; meaning and purpose: Holiday pay is a premium given to employees pursuant to law even if he is not suffered to work on a regular holiday. - If worker did not work on regular holiday, he is entitled to 100% of his basic 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 Maundy Thursday Good Friday Araw ng Kagitingan [Bataan and Corregidor Day] Labor Day Independence Day National Heroes Day Bonifacio Day Christmas Day Rizal Day

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January 1 Movable date Movable date

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April 9 May 1 June 12 Last Sunday of August November 30 December 25 December 30

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

B. Nationwide special days. All Saint‘s Day Last Day of the Year Plus Ninoy Aquino Day

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November 1 December 31

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 who does not work during a special day does not receive any compensation under the principle of ―no work, no pay.‖ b. A covered employee who works during special days is paid 200% of his regular daily wage; while a covered employee who works during special days is only paid an additional compensation of not less than 30% of the basic pay or a total of 130% and at least 50% over and above 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 rest day. 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 of 100% of their basic pay. 6. Premium pay for work performed during special days – 30% on top of basic pay. 7. Premium pay for work performed during special days falling on scheduled rest 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 holiday pay. b. Employees on leave of absence without pay on the day immediately preceding a regular holiday may not be paid the required holiday pay if he has not worked on such regular holiday. c. Employees on leave while on SSS or employee‘s compensation benefits – Employers shall grant the same percentage of the holiday pay as the benefit granted by competent authority in the form of employee‘s compensation or social security payment, whichever is higher, if they are not reporting for work while on such benefits. d. When the day preceding regular holiday is a non-working day or scheduled rest day – employees shall not be deemed to be on leave of absence on that day, in which case, he shall be entitled to the regular holiday pay if he worked on the day immediately preceding the nonworking day or rest day.

9. Rule in case of successive regular holidays – an employee may not be paid for both holidays if he absents himself from work on the day immediately preceding the first holiday, unless he works on the first holiday, in which case, 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 not work: 200% of basic pay; If employee worked: 300% of basic pay. Service incentive leave 1. 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 with pay. 2. Meaning of ―one year of service‖ – service within twelve (12) months, whether continuous or broken, reckoned from the date the employee started 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 less than twelve (12) months, in which case, said period shall be considered as one (1) year for the purpose of determining entitlement to the service incentive leave. 3. Service incentive leave is commutable to cash if unused at the end of the year. 4. The basis of computation of service incentive leave is the salary rate at the date of commutation. 5. Grant of vacation leave or sick leave may be considered substitute for service incentive leave. (Note: there is no provision in the Labor Code granting vacation or sick leave). Service charges 1. 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 gambling houses, and similar enterprises, including those entities operating primarily as private subsidiaries of the government. It applies to all employees of covered employers, regardless of their positions, designation or employment status, and irrespective of the method by which their wages are paid. 2. Distribution of service charges (Percentage of sharing): a. eighty-five percent (85%) for the employees to be distributed equally among them; and b. fifteen percent (15%) for the management to answer for losses and breakages 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 once every 3 weeks or twice a month at intervals not exceeding 16 days. WAGES 1. Attributes of wage: a. It is the renumeration or earnings, however designated, for work done or to be done or for services rendered or to be rendered. b. It is capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same; c. It is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered; and d. It includes the fair and reasonable value, as determined by the Secretary 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 any person affiliated with the employer. 2. ―Wage‖, ―salary‖ and ―pay‖; distinction – they are synonymous in meaning and usage. 3. Commission – may or may not be treated as part of wage depending on the circumstances. 4. Actual work is the basis of claim for wages (No work, no pay‖). Facilities 1. ―Facilities‖ shall include articles or services for the benefit of the employee or his family but shall not include tools of the trade or articles or services primarily for the benefit of the employer or necessary to the conduct of the employer‘s business. 2. Value of facilities – the fair and reasonable value of board, lodging and other facilities customarily furnished by an employer to his employees both in agricultural and non-agricultural enterprises. Supplements 1. ―Supplements‖ means extra renumeration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. 2. ―Facilities‖ and ―supplements‖, distinction: The benefit or privilege given to the employee which constitutes an extra renumeration over and above his basic or ordinary earning or wage, is supplement; and when said benefit or privilege is part of the laborer‘s basic wage, it is a facility. The criterion is not so much with the kind of the benefit or item (food, lodging, bonus or sick leave) given but its purpose. Thus, free meals supplied by the ship operators to crew members, out of necessity, cannot be considered as

facilities but supplements which could not be reduced having been given not as a part of wages but as necessary matter in the maintenance of the health and efficiency of the crew personnel during the voyage. 1. Rule on deductibility. – Facilities may be charged to or deducted from wages. 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 is not intended as compensation for actual work. It is further not demandable as a matter of right. 2. ―Allowances‖ are not part of wages. Therefore, in the computation of the amount of retirement and other benefits, allowances shall not be included therein. Bonus 1. Bonus, not generally demandable.- bonus is an amount granted and paid ex gratia to the employee for his industry or loyalty, hence, generally not demandable or enforceable. If there is no profit, there should be no bonus. If profit is reduced, bonus should likewise be reduced, absent any agreement making such bonus part of the compensation of the employees. 2. Bonus; when demandable and enforceable. On the basis of equitable considerations, long practice, agreement (e. g. CBA) and other peculiar circumstances, bonus may become demandable and enforceable. Consequently, if bonus is given as an additional compensation which the employer agreed to give without any condition such as success of business or more efficient or more productive operation, it is deemed part of wage or salary, hence, demandable. 3. Unlike 13th month pay, bonus may be forfeited in case employee is found guilty of an administrative charge. 13th month pay 1. ―Thirteenth-month pay‖ shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year. 2. All rank-and-file employees are entitled to a 13th-month pay regardless of the amount of basic salary that they receive in a month and regardless of their designation or employment status, and inspective of the method by which their wages are paid, provided that they have worked for at least one (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 those corporations operating essentially as private subsidiaries of the government.

4.

5. 6.

7. 8.

b. Employers already paying their employees 13th-month pay or more in a calendar year or its equivalent at the time of this issuance. c. Employers of household helpers and persons in the personal service of another 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 specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case, the employer shall be covered by the 13th month pay law insofar as such workers are concerned. The term ―its equivalent‖ shall include Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employee, as well as non-monetary benefits. Where an employer pays less than 1/12th of the employee‘s basic salary, the employer shall pay the difference. Time of payment. – The required 13th month pay shall be paid not later than December 24 of each year. 13th-month pay for employees with multiple employers. – Government employees working part-time in a private enterprise, including private educational institutions, as well as employees working in two or more private firms, whether on full or part-time basis, are entitled to the required 13th-month pay from their private employers regardless of their total earnings from each or all their employers. 13th month pay is tax exempt (R. A. 7833). May payment of bonus be credited as payment of 13th-month pay? a. Marcopper Mining Corp. vs. Ople, et. al. case – No b. NFSW vs. Ovejera, et. al. case – Yes c. DOLE Philippines vs. Leogardo, et. al. case – Yes d. Brokenshire Memorial Hospital, Inc. vs. NLRC, et. al. case –No e. United CMC Textile Workers union vs. Valenzuela, et. al. case – No f. Universal Corn Products vs. NLRC, et. al. case – Yes g. FEU Employees Labor Union vs. FEU case (involving transportation allowance which was treated as compliance with 13th month pay) h. Framanlis Farms, Inc. vs. Minister of Labor, et. al. case – No i. Kamaya Point Hotel vs. NLRC, et. al. case – Yes j. UST Faculty Union vs. NLRC, et. al. case – No

No 14th month pay There is no law mandating the payment of 14th-month pay. It is, therefore, in the nature of a bonus which may not be imposed upon the employer. It is a gratuity to 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).

MINIMUM WAGE Regional minimum wages 1. The minimum wage rates for agricultural and non-agricultural workers and employees in every region shall be those prescribed by the Regional Tripartite Wages and Productivity Boards (RTWPB) which shall in no case be lower than the statutory minimum wage rates. 2. The term ―statutory minimum wages‖ refers simply to the lowest basic wage rate fixed by law that an employer can pay his workers. 3. The basis of the minimum wage rates prescribed by law shall be the normal working hours which shall not be more than eight (8) hours a day. Prohibition against elimination or diminution of benefits This principle mandates that the reduction or diminution or withdrawal by employers of any benefits, supplements or payments as provided in existing laws, individual agreements or collective bargaining agreements between workers and employers or voluntary employer practice or policy, is not allowed. PAYMENT OF WAGES:

In what form, where, when and to should wages be paid>

Forms of payment of wages 1. Under the Civil Code, it is mandated that the laborer‘s wages shall be paid in legal currency. Under the Labor Code and its implementing rules, as a general rule, wages shall be paid in legal tender and the use of tokens, promissory notes; vouchers, coupons or any other form alleged to represent legal tender is prohibited even when expressly requested by the employee. 2. Exceptions; payment by check or money order, or through automatic teller machines (ATM card) or other similar electronic devices, provided the following concur: a. there is a bank or other facility for encashment within a radius of one (1) kilometer from the workplace; b. the employer or any of his agents or representatives does not receive any pecuniary benefit directly or indirectly from the arrangement; c. the employees are given reasonable time during banking hours to withdraw their wages from the bank which time shall be considered as compensable hours worked if done during working hours; and d. the payment by check or through ATM Card is with the written consent of the employees concerned, if there is no collective agreement authorizing the payment of wages by bank checks. Time of payment of wages 1. Time of payment; exception.- The general rule is, wages shall be paid not less often than once every two (2) weeks or twice a month at intervals not

exceeding sixteen (16) days. No employer shall make payment with less frequency than once a month. The exception to above rule is when payment cannot be made with such regularity due to force majeure or circumstances beyond the employer‘s control, in which case, the employer shall pay the wages immediately after such force majeure or circumstances have ceased. Place of payment of wages 1. 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 by reason of the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible; b. When the employer provides free transportation to the employees back and forth; and c. Under any other analogous circumstances, provided that the time spent by the employees in collecting their wages shall be considered as compensable hours worked. 3. Payment of wages in bars, massage clinics or nightclubs is prohibited except in the case of employees thereof. 4. Payment through banks – allowed in business and other entities with twenty five (25) or more employees and located within one (1) kilometer radius to a commercial, savings or rural bank. Direct payment of wages 1. 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 his wages to a member of his family; b. Where payment to another person of any part of the employee‘s wages is authorized by existing law, including payments for the insurance premiums of the employee and union dues where the right to check-off has been recognized by the employer in accordance with a collective agreement or authorized in writing by the individual employees concerned; or c. In case of death of the employee, in which case, the same shall be paid to his heirs without necessity of intestate proceedings. THE LAW ON LABOR-ONLY CONTRACTING (PROHIBITED) AND INDEPENDENT OR JOB CONTRACTING (PERMITTED)

DOLE Department Arrangements) Department Series

Order

18-A

(Rules

Order

on

Contracting

No. of

and

Subcontracting

18-A 2011

RULES IMPLEMENTING ARTICLES 106 TO 109 OF THE LABOR CODE, AS AMENDED By virtue of the power vested in the Secretary of Labor and Employment under Articles 5 and 106 to 109 of the Labor Code of the Philippines, as amended, the following regulations governing contracting and subcontracting arrangements are hereby issued: Section 1. Guiding principles. Contracting and subcontracting arrangements are expressly allowed by law and are subject to regulations for the promotion of employment and the observance of the rights of workers to just and humane conditions of work, security of tenure, self-organization and collective bargaining. Labor-only contracting as defined herein shall be prohibited. Section 2. Coverage. These Rules shall apply to all parties of contracting and subcontracting arrangements where employer-employee relationships exist. It shall also apply to cooperatives engaging in contracting or subcontracting arrangements. Contractors and subcontractors referred to in these Rules are prohibited from engaging in recruitment and placement activities as defined in Article 13(b) of the Labor Code, whether for local or overseas employment. Section 3. Definition of terms. The following terms as used in these Rules, shall mean: (a) ―Bond/s‖ refers to the bond under Article 108 of the Labor Code that the principal may require from the contractor to be posted equal to the cost of labor under contract. The same may also refer to the security or guarantee posted by the principal for the payment of the services of the contractors under the Service Agreement. (b) ―Cabo‖ refers to a person or group of persons or to a labor group which, in the guise of a labor organization, cooperative or any entity, supplies workers to an employer, with or without any monetary or other consideration, whether in the capacity of an agent of the employer or as an ostensible independent contractor. (c) ―Contracting‖ or ―Subcontracting‖ refers to an arrangement whereby a principal agrees to put out 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 whether such job, work or service is to be performed or completed within or outside the premises of the principal.

(d) ―Contractor‖ refers to any person or entity, including a cooperative, engaged in a legitimate contracting or subcontracting arrangement providing either services, skilled workers, temporary workers, or a combination of services to a principal under a Service Agreement. (e) ―Contractor‘s employee‖ includes one employed by a contractor to perform or 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 not dependent on the performance or completion of a specific job, work or service within a definite period of time, i.e., administrative staff. (f) ―In-house agency‖ refers to a contractor which is owned, managed, or controlled directly or indirectly by the principal or one where the principal owns/represents any share of stock, and which operates solely or mainly for the principal. (g) ―Net Financial Contracting Capacity (NFCC)1‖ refers to the formula to determine the financial capacity of the contractor to carry out the job, work or services sought to be undertaken under a Service Agreement. NFCC is current assets minus current liabilities multiplied by K, which stands for contract duration equivalent 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 or ongoing projects including contracts to be started. 1 Refers to the formula set out in the Implementing Rules and Regulations of Republic Act No. 9184, or An Act Providing for the Modernization, Standardization and Regulation of the Procurement Activities of the Government and For Other Purposes. (h) ―Principal‖ refers to any employer, whether a person or entity, including government agencies and government-owned and controlled-corporations, who/which puts out or farms out a job, service or work to a contractor. (i) ―Right to control‖ refers to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. (j) ―Service Agreement‖ refers to the contract between the principal and contractor containing the terms and conditions governing the performance or completion of a specific job, work or service being farmed out for a definite or predetermined period. (k) ―Solidary liability‖ refers to the liability of the principal, pursuant to the provision of Article 109 of the Labor Code, as direct employer together with the contractor 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 performed under 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 capital‖ refers to paid-up capital stocks/shares of at least Three Million Pesos (P3,000,000.00) in the case of corporations, partnerships and cooperatives; in the case of single proprietorship, a net worth of at least Three Million Pesos (P3,000,000.00). (m) ―Trilateral Relationship‖ refers to the relationship in a contracting or subcontracting arrangement where there is a contract for a specific job, work or service between the principal and the contractor, and a contract of employment between the contractor and its workers. There are three (3) parties involved in these arrangements: the principal who decides to farm out a job, work or service to a contractor; the contractor who has the capacity to independently undertake the performance of the job, work or service; and the contractual workers engaged by the contractor to accomplish the job, work or service. Section 4. Legitimate contracting or subcontracting. Contracting or subcontracting shall be legitimate if all the following circumstances concur: (a) The contractor must be registered in accordance with these Rules and carries a distinct and independent business and undertakes to perform the job, work or service on its own responsibility, according to its own manner and method, and free from control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; (b)

The

contractor

has

substantial

capital

and/or

investment;

and

(c) The Service Agreement ensures compliance with all the rights and benefits under Labor Laws. Section 5. Trilateral relationship in contracting arrangements; Solidary liability. In legitimate contracting or subcontracting arrangement there exists: (a) An employer-employee relationship between the contractor and the employees it engaged to perform the specific job, work or service being contracted; and (b) A contractual relationship between the principal and the contractor as governed by the provisions of the Civil Code. In the event of any violation of any provision of the Labor Code, including the failure to pay wages, there exists a solidary liability on the part of the principal and the contractor for purposes of enforcing the provisions of the Labor Code and other

social legislation, to the extent of the work performed under the employment contract. However, the principal shall be deemed the direct employer of the contractor‘s employee 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 a violation of either Sections 8 or 9 hereof. Section 6. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, labor only contracting shall refer to an arrangement where: (a) The contractor does not have substantial capital or investments in the form of tools, equipment, machineries, work premises, among others, and the employees recruited and placed are performing activities which are usually necessary or desirable to the operation of the company, or directly related to the main business of the principal within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal; or (b) The contractor does not exercise the right to control over the performance of the work of the employee. Section 7. Other Prohibitions. Notwithstanding Section 6 of these Rules, the following are hereby declared prohibited for being contrary to law or public policy: A. Contracting out of jobs, works or services when not done in good faith and not justified by the exigencies of the business such as the following: (1) Contracting out of jobs, works or services when the same results in the termination or reduction of regular employees and reduction of work hours or reduction or splitting of the bargaining unit. (2)

Contracting

out

of

work

with

a

―Cabo‖.

(3) Taking undue advantage of the economic situation or lack of bargaining strength of the contractor‘s employees, or undermining their security of tenure or basic rights, or circumventing the provisions of regular employment, in any of the following instances:

the

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

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

releasing the principal, contractor or from any liability as to payment of future claims. (4) Contracting out of a job, work or service through an in-house agency. (5) Contracting out of a job, work or service that is necessary or desirable or directly related to the business or operation of the principal by reason of a strike or lockout whether actual or imminent. (6) Contracting out of a job, work or service being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to 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 duration or under a Service Agreement of short duration with the same or different contractors, which circumvents the Labor Code provisions on Security of Tenure. (8) Requiring employees under a subcontracting arrangement to sign a contract fixing the period of employment to a term shorter than the term of the Service Agreement, unless the contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the time of engagement. (9) Refusal to provide a copy of the Service Agreement and the employment contracts between the contractor and the employees deployed to work in the bargaining unit of the principal‘s certified bargaining agent to the sole and exclusive bargaining agent (SEBA). (10) Engaging or maintaining by the principal of subcontracted employees in excess of those provided for in the applicable Collective Bargaining Agreement (CBA) or as set by the Industry Tripartite Council (ITC). B. Contracting out of jobs, works or services analogous to the above when not done in good faith and not justified by the exigencies of the business. Section 8. Rights of contractor‘s employees. All contractor‘s employees, whether deployed 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 Labor Code, 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 in the Service Agreement or under the Labor Code;

(c) Retirement benefits under the SSS or retirement plans of the contractor, if there 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 contract between the contractor and its employee shall be governed by the provisions of Articles 279 and 280 of the Labor Code, as amended. It shall include the following terms and conditions: i. The specific description of the job, work or service to be performed by the employee; ii. The place of work and terms and conditions of employment, including a statement of the wage rate applicable to the individual employee; and iii. The term or duration of employment that must be co-extensive with the Service Agreement or with the specific phase of work for which the employee is engaged. The contractor shall inform the employee of the foregoing terms and conditions of employment in writing on or before the first day of his/her employment. (b) Service Agreement between the principal and the contractor. The Service Agreement shall include the following: i. The specific description of the job, work or service being subcontracted. ii. The place of work and terms and conditions governing the contracting arrangement, to include the agreed amount of the services to be rendered, the standard administrative fee of not less than ten percent (10%) of the total contract cost. iii. Provisions ensuring compliance with all the rights and benefits of the employees under the Labor Code and these Rules on: provision for safe and healthful working conditions; labor standards such as, service incentive leave, rest days, overtime pay, 13th month pay and separation pay; retirement benefits; contributions and remittance of SSS, Philhealth, PagIbig Fund, and other welfare benefits; the right to self-organization, collective bargaining and peaceful concerted action; and the right to security of tenure.

iv. A provision on the Net Financial Contracting Capacity of the contractor, which must be equal to the total contract cost. v. A provision on the issuance of the bond/s as defined in Section 3(m) renewable every year. vi. The contractor or subcontractor shall directly remit monthly the employers‘ share and employees‘ contribution to the SSS, ECC, Philhealth and Pagibig. vii. The term or duration of engagement. The Service Agreement must conform to the DOLE Standard Computation and Standard Service Agreement, which form part of these Rules as Annexes ―A‖ and ―B‖. Section 10. Duties of the principal. Pursuant to the authority of the Secretary of Labor and Employment to restrict or prohibit the contracting of labor to protect the rights 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 services of 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 all contractor‘s employees enjoy security of tenure regardless of whether the contract of employment is co-terminus with the service agreement, or for a specific job, work or service, or phase thereof. Section 12. Observance of required standards of due process; requirements of notice. In all cases of termination of employment, the standards of due process laid down 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 the standards of due process that must be observed: 2 King of Kings Transport, Inc., Claire dela Fuente, and Melissa Lim, vs. Santiago O. Mamac, G.R. No. 166208, (29 June 2007); and Felix B. Perez and Amante G. Doria v. 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 282 of the Code, the requirement of two written notices served on the employee shall observe 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 the charge 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 is being charged against the employee; and (4) A directive that the employee is given opportunity to submit a written explanation within a reasonable period. ―Reasonable period‖ should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employee an opportunity to study the accusation, consult a union official or lawyer, gather data and evidence, and decide on the defenses against the complaint. (B) After serving the first notice, the employer should afford the employee ample opportunity to be heard and to defend himself/herself with the assistance of his/her representative 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 or written) given to the employee to answer the charges against him/her and submit evidence in support of his/her defense, whether in a hearing, conference or some other fair, just and reasonable way. A formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it. (C) After determining that termination of employment is justified, the employer contractor 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 of their employment. The foregoing notices shall be served on the employee‘s last known address. II. For termination of employment based on authorized causes defined in Article 283 of the Labor Code, the requirement of due process shall be deemed complied with upon service of a written notice to the employee and the appropriate regional office of the Department of Labor and Employment at least thirty days before the effectivity of the termination, specifying the ground or grounds for termination. III. If the termination is brought about by the completion of the contract or phase thereof, no prior notice is required. If the termination is brought about by the failure of a probationary employee to meet the reasonable standards of the employer, which was made known to the employee at the time of his/her employment, it shall be sufficient that a written notice is served upon the employee within a reasonable time prior 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 be governed by Articles 282, 283 and 284 of the Labor Code. In case the termination of employment is caused by the pre-termination of the Service Agreement not due to authorized causes under Article 283, the right of the contractor employee to unpaid wages and other unpaid benefits including unremitted legal mandatory contributions, e.g., SSS, Philhealth, Pag-ibig, ECC, shall be borne by the party at fault, without prejudice to the solidary liability of the parties to the Service Agreement. Where the termination results from the expiration of the service agreement, or from the completion of the phase of the job, work or service for which the employee is engaged, the latter may opt for payment of separation benefits as may be provided by law or the Service Agreement, without prejudice to his/her entitlement to the completion bonuses or other emoluments, including retirement benefits whenever applicable. Section 14. Mandatory Registration and Registry of Legitimate Contractors. Consistent with the authority of the Secretary of Labor and Employment to restrict or prohibit the contracting out of labor to protect the rights of workers, it shall be mandatory 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 engaged in labor-only contracting. Accordingly, the registration system governing contracting arrangements and implemented by the Regional Offices of the DOLE is hereby established, with the Bureau of Working Conditions (BWC) as the central registry. Section 15. Requirements for registration. The application for registration as a contractor shall be filed at the DOLE Regional Office in the region where it seeks to principally operate. The applicant shall provide in the application form the following information: (a) The name and business address of the applicant and the areas where it seeks 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 the applicant 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 Section 3(l) of these Rules. The application shall be supported by: (a) A certified true copy of a certificate of registration of firm or business name from the Securities and Exchange Commission (SEC), Department of Trade and Industry (DTI), Cooperative Development Authority (CDA), or from the DOLE if the applicant is a 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 are actually 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 of the 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 the applicant is a sole proprietorship; and (e) A sworn disclosure that the registrant, its officers and owners or principal stockholders or any one of them, has not been operating or previously operating as a contractor under a different business name or entity or with pending cases of violations of these Rules and/or labor standards, or with a cancelled registration. In case any of the foregoing has a pending case, a copy of the complaint and the latest status of the case shall be attached. The application shall be verified. It shall include a DOLE certification of attendance to orientation seminar on these Rules and an undertaking that the contractor shall abide by all applicable labor laws and regulations. Section 16. Filing and processing of application. The application with all supporting documents shall be filed in triplicate in the Regional Office where the applicant principally operates. No application for registration shall be accepted unless 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 representative of 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 verification inspection. Applications that fail to meet the requirements set forth in Section 15 of these Rules shall be denied. Section 19. Registration fee. Payment of registration fee of Twenty-Five Thousand Pesos (P25,000.00) shall be required upon approval of the application. Upon registration, the Regional Office shall return one set of the duly-stamped application documents to the applicant, retain one set for its file, and transmit the remaining set to the Bureau of Working Conditions (BWC) within five (5) days from registration. Section 20. Validity of certificate of registration of contractors. The contractor shall be deemed registered only on the date of issuance of its Certificate of Registration. The Certificate of Registration shall be effective for three (3) years, unless cancelled after due process. The same shall be valid in the region where it is registered. In case the contractor has Service Agreements or operates outside the region where it is registered, it shall request a duly authenticated copy of its Certificate of Registration from the registering Regional Office and submit the same to the DOLE Regional Office where it seeks to operate, together with a copy of its Service Agreement/s in the area, for purposes of monitoring compliance with these Rules. Section 21. Renewal of registration. All registered contractors shall apply for renewal of their Certificates of Registration thirty (30) days before the expiration of their registration to remain in the roster of legitimate service contractors. The applicant 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 15 hereof shall be attached to the duly accomplished application form, including the following: (a) Certificate of membership and proof of payment of SSS, Philhealth, BIR, ECC and 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 the National Labor Relations Commission (NLRC) and Department of Labor and Employment (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 DOLE Regional Director. Section 22. Semi-annual reporting. The contractor shall submit in triplicate its subscribed semi-annual report using a prescribed form to the appropriate Regional Office. The report shall include: (a) A list of contracts entered with the principal during the subject reporting period; (b) The number of workers covered by each contract with the principal; (c) Proof of payment of remittances to the Social Security System (SSS), the Pag-Ibig Fund, Philhealth, Employees Compensation Commission (ECC), and Bureau of Internal Revenue (BIR) due its employees during the subject reporting period and of amortization 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 the contractor, retain one set for its file, and transmit the remaining set to the Bureau of Working 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 due process, 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 to the application for registration; (c) Non-submission of Service Agreement between the principal and the contractor 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-only contracting and/or the prohibited activities as provided in Section 7 (Other

Prohibitions) (f)

hereof;

Non-compliance

with

labor

standards

and

working

conditions;

(g) Findings of violation of Section 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 and regulations. Section 24. Due process in cancellation of registration. Complaint/s based on any of the grounds enumerated in the preceding Section against the contractor shall be filed in writing and under oath with the Regional Office which issued the Certificate of Registration. The complaint/s shall state the following: (a) The name/s and address/es (b)

Name

(c)

and

The

(d)

When

(e)

The

and

address ground/s

where

amount

the of

action money

of of

the

complainant/s;

the

contractor;

for

cancellation;

complained claim,

if

of

happened; 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 documents in 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 the respondent. No motion to dismiss shall be entertained. The Regional Director or his duly authorized representative may conduct a clarificatory hearing within the prescribed ten (10) calendar days within which to file a verified answer/counter affidavit. Within the said ten (10) calendar days period, the contractor shall make the necessary corrections/rectifications on the violations that are immediately rectifiable 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, and examination 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 days from the first scheduled clarificatory hearing. The Regional Director shall resolve the case within ten (10) working days from the date of the last hearing. If there is no necessity to conduct a hearing, the case shall be resolved within ten (10) working days from receipt of the verified answer/counter affidavit. Any motion for reconsideration from the Order of the Regional Director shall be treated as an appeal. Section 25. Appeal. The Order of the Regional Director is appealable to the Secretary 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 the records of the case to resolve the appeal. The Decision of the Secretary shall become 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 cancellation shall divest the contractor of its legitimate status to engage in contracting/subcontracting.

of

Such Order of cancellation shall be a ground to deny an application for renewal registration to a contractor under the Rules.

The cancellation of the registration of the contractor for engaging in labor-only contracting or for violation of any of the provisions of these Rules involving a particular Service Agreement will not, however, impair the validity of existing legitimate jobcontracting arrangements the contractor may have entered into with other principals prior to the cancellation of its registration. Any valid and subsisting Service Agreement shall be respected until its expiration; thereafter, contracting with a delisted contractor shall make the principal direct employer of all employees under 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 of Sections 7. 8 or 9 of the Rules. A finding by competent authority of labor-only contracting shall render the principal jointly and severally liable with the contractor to the latter's employees, in the same manner and extent that the principal is liable to employees directly hired by him/her, as provided in Article 106 of the Labor Code, as amended.

A finding of commission of any of the prohibited activities in Section 7, or violation of either Sections 8 or 9 hereof, shall render the principal the direct employer of the employees of the contractor or subcontractor, pursuant to Article 109 of the Labor Code, as amended. Section 28. Retaliatory measures. Pursuant to Article 118 of the Labor Code, as amended, it shall be unlawful for the principal, contractor, or any party privy to the contract or services provided to refuse to pay or reduce the wages and benefits, and discharge or in any manner discriminate against any worker who has filed any complaint or instituted any proceeding on wages (under Title II, Book III of the Labor Code), labor standards violation, or has testified or is about to testify in such proceedings. Section 29. Enforcement of labor standards and working conditions. Consistent with Article 128 (Visitorial and Enforcement Power) of the Labor Code, as amended, the Regional Director through his/her duly authorized representatives, shall conduct routine inspection of establishments engaged in contracting arrangement regardless of the number of employees engaged by the principal or by the contractor. They shall have access to employer‘s records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of the Labor Code and of any labor law, wage order, or rules and regulations issued pursuant thereto. The findings of the duly authorized representative shall be referred to the Regional Director for appropriate action as provided for in Article 128, and shall be furnished the collective bargaining agent, if any. Based on the visitorial and enforcement power of the Secretary of Labor and Employment in Article 128 (a), (b), (c), and (d), the Regional Director shall issue compliance orders to give effect to the labor standards provisions of the Labor Code, other labor legislation, and these Rules. Section 30. Duty to produce copy of contract between the principal and the contractor. The principal or the contractor shall be under an obligation to produce a copy of the Service Agreement in the ordinary course of inspection. The contractor shall likewise be under an obligation to produce a copy of any contract of employment when directed to do so by the Regional Office Director or his/her authorized representative. Section 31. Tripartite implementation and monitoring of compliance; Use of registration fees. A region-based tripartite monitoring team on the observance of labor standards in contracting and subcontracting arrangements shall be constituted

as a subcommittee of the Regional Tripartite Industrial Peace Council (RTIPC) within fifteen (15) days from the effectivity of these Rules. It shall submit a quarterly regional monitoring report to the DOLE Secretary and to the National Tripartite Industrial Peace Council (NTIPC). The Bureau of Working Conditions (BWC) shall ensure 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 the operation of the region-based tripartite monitoring team, including in the development of an internet-based monitoring system and database. It shall likewise be used for transmittal of the monthly report of all registered contractors to the Bureau of Local Employment (BLE), and in generating labor market information. Section 32. Oversight function of the National TIPC. The National Tripartite Industrial Peace Council (NTIPC) as created under Executive Order No. 49, Series of 1998, as amended, shall serve as the oversight committee to verify and monitor the following: (a)

Engagement

(b)

Compliance

in with

allowable

contracting

administrative

reporting

activities;

and

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 a legitimate 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 tripartite partners may agree, through a voluntary code of good practices, on the functions or processes that can or cannot be contracted out to a legitimate contractor. Section 34. Financial Relief Program; Tripartite Co-Regulation Engagement. A Financial Relief Program or Unemployment Assistance Fund shall be established for employees under a Service Agreement or employees in transition from one Service Agreement to the next. For this purpose, the National Tripartite Industrial Peace Council (NTIPC), upon the effectivity of this issuance, shall constitute a Local Service Provider Tripartite Working Group (LSP-TWG) composed of representatives of the stakeholders in the industry. The LSP-TWG shall: (a) Recommend the mechanics and details in setting up the Financial Relief Program or Unemployment Assistance Fund with proposed funding sources before end of June 2012; and

(b) Draw-up the terms of a Tripartite Co-Regulation Engagement in ensuring full compliance with labor laws for approval/endorsement by the NTIPC, including a proposed Table of Progressive Rate of Increases in the minimum capitalization requirement at reasonable intervals to ensure that only legitimate contractors can engage in subcontracting arrangement. Section 35. Enrollment in DOLE programs on improving compliance with labor standards. For purposes of ensuring compliance with labor standards, the principal and subcontractors covered by these Rules are encourage to enroll and participate in the DOLE Kapatiran Work Improvement for Small Enterprise (WISE)-TAV Program (Department Advisory No. 06, dated 07 March 2011) and/or in the Incentivizing Compliance Program (Department Order No. 115-11). Section 36. Contracting or subcontracting arrangements in the Construction and Other Industries. Contracting or subcontracting arrangements in the Construction Industry, under the licensing coverage of the Philippine Construction Accreditation Board (PCAB), shall be covered by the applicable provisions of these Rules and shall continue to be governed by Department Order No. 19, Series of 1993 (Guidelines Governing the Employment of Workers in the Construction Industry); Department Order No. 13, Series of 1998 (Guidelines Governing the Occupational Safety and Health in the Construction Industry); and DOLE-DPWH-DILG-DTI and PCAB Memorandum of Agreement-Joint Administrative Order No. 1, Series of 2011 (on coordination and harmonization of policies and programs on occupational safety and health in the construction industry). In industries covered by a separate regulation of the DOLE or other government agency, 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 of the DOLE or its attached agencies is prohibited from engaging or having any interest in 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, the applicable provisions of the Civil Code and existing jurisprudence, nothing herein shall impair the rights or diminish the benefits being enjoyed by the parties to existing contracting or subcontracting arrangements. The effectivity of Certificates of Registration acquired under Department Order No. 18, Series of 2002, issued on 21 February 2002, shall be respected until expiration. Section 39. Supersession. All rules and regulations issued by the Secretary of Labor and Employment inconsistent with the provisions of these Rules are hereby

superseded. Section 40. Separability Clause. If any provision or portion of these Rules are declared void or unconstitutional, the remaining portions or provisions hereof shall continue to be valid and effective. Section 41. Effectivity. This Department Order shall be effective fifteen (15) days after completion of its publication in a newspaper of general circulation. Manila,

Philippines,

14 ROSALINDA Secretary

November

2011.

DIMAPILIS-BALDOZ

DEPARTMENT CIRCULAR NO. 01 SERIES OF 2012

Republic of the Philippines DEPARTMENT OF LABOR AND EMPLOYMENT lntramuros, Manila Department Circular No. 01 Series of 2012 Clarifying the Applicability of Department Order No. 18-A, Series of 2011, to Business Processing Outsourcing (BPO)/Knowledge Process Outsourcing (KPO) and the Construction Industry

1. Purpose. This Circular is being issued in response to queries on whether firms or companies in the Business Process Outsourcing (BPO) or Knowledge Process Outsourcing (KPO) and in the Construction Industry are covered by Department Order No. 18-A, Series of 2011, or the Rules Implementing Articles 106 to 109 of the Labor Code 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) that contracting or subcontracting is ―an arrangement whereby a principal agrees to put out 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 whether such job, work or service is to be performed or completed within or outside the premises of the principal". Additionally, it defines trilateral relationship in Section 3 (m) to refer to the relationship in a contracting or subcontracting arrangement where there is a contract for a specific job, work or service between the principal and the contractor,

and a contract of employment between the contractor and its workers. There are three (3) parties involved in contracting or subcontracting arrangements, the principal who decides to farm out a job, work or service to a contractor; the contractor 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 licensing coverage of the Philippine Contractors (Construction) Accreditation Board (PCAB), shall be covered by the applicable provisions of these Rules and shall continue to be governed by Department Order No. 19, Series of 1993 (Guidelines Governing the Employment of Workers in the Construction Industry); Department Order No. 13, Series of 1998 (Guidelines Governing the Occupational Safety and Health in the Construction Industry); and DOLE-DPWH-DILG-DTI and PCAB Memorandum of Agreement-Joint Administrative Order No. 1, Series of 2011 (on coordination and harmonization of policies and programs on occupational safety and health in the construction industry). While other industries covered by a separate regulation of the DOLE or other government agency, contracting or subcontracting therein shall be governed by these Rules unless expressly provided otherwise. 2.3. Section 2, subparagraph 2.5 of Department Order No. 19, Series of 1993, or the Guidelines Governing the Employment of Workers in the Construction Industry provides: "Contracting and subcontracting. — The practice of contracting out certain phases of a construction project is recognized by law, particularly wage legislations and wage orders, and by industry practices. The Labor Code and its Implementing Regulations 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 Article 109 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, vendorvendee relationship for entire business processes covered by the applicable provisions of the Civil Code on Contracts is excluded. 3.2 D018-A, Series of 2011, contemplates generic or focused singular activity in one contract between the principal and the contractor (for example, janitorial, security, merchandising, specific production work) and does not contemplate information technology-enabled services involving an entire business processes (for example, business process outsourcing, knowledge process outsourcing, legal process outsourcing. hardware and/or software support, medical transcription, animation services, back office operations/support). These companies engaged in business processes (―BPOs‖) may hire employees in accordance with applicable laws, and maintain these employees based on business requirements, which may or may 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; Coordination with PCAB-CIAP. 4.1 Licensing and the exercise of regulatory powers over the construction industry is lodged with the Philippine Contractors Accreditation Board (PCAB), which is under the Construction Industry Authority of the Philippines (CIAP), pursuant to the provisions of Presidential Decree No. 1746, Series of 1980, and not with the Department of Labor and Employment or any of its regional offices. PCAB registers all contractors, whether general or subcontractors, in the Construction Industry and regulates the same including ensuring compliance with DOLE Department Order No. 13, Series of 1998 (Guidelines Goveming the Occupational Safety and Health in the Construction Industry); and DOLE-DPWH-DILGDTI and PCAB Memorandum of Agreement-Joint Administrative Order No. 1, Series of 2011 (on coordination and harmonization of policies and programs on occupational safety and health in the construction industry). Thus, the DOLE, through its regional offices, shall not require contractors licensed by PCAB in the Construction Industry to register under D.O. 18-A, Series of 2011. Moreover, findings of violation/s on labor standards and occupational health and 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 in a 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 main difference between the two? A: The two types of contractors are the Labor-only contractor and the Job contractor. Labor only contracting is prohibited while job contracting is legally allowed by law. Q: When is there labor-only contracting? A: There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the 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 and extent 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 a contractor or series of contractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work, or service is to be performed or completed within or outside the premises of the principal. 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 independent business and undertakes to perform the job on his own account and under his own responsibility, according to its own manner and method and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; b) the independent contractor or subcontractor has substantial capital or investment; and c) the agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure and social and welfare benefits Q:

Who is an independent or job contractor?

A: An independent or job contractor is one who carries on a distinct and independent business and undertakes to perform the job or to do a piece of work on its own account and under its own responsibility, according to his own manner and methods and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. A television anchor is one example of an independent contractor. (Jose Sonza vs. ABS-CBN [G.R. 138051 June 10, 2004] A mere statement in a contract with a company that laborers who are paid according to the amount and quality of work are independent contractors does not change 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 or subcontractor may be a natural or jurisdictional person. - ―Principal‖ refers to any employer who puts out or farms out a job, service, or work to a contractor or subcontractor, whether or not the arrangement is covered by a written contract. - ―Contractor‖ or ―Subcontractor‖ refers to any person or entity engaged in a legitimate contracting and subcontracting arrangements. - ―Contractual employee‖ includes one employed by a contractor subcontractor to perform or complete a job, work or service pursuant to an 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 or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. 3. Contracting or Subcontracting; when legitimate. It shall be if the following circumstances concur: (i) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility, according to its own manner and method, and free from the control and directions of the principal in all matters connected with the performance of the work except as to the results thereof; (ii) The contractor or subcontractor has substantial capital or investment; and (iii) The agreement between the principal and the contractor or subcontractor assures the contractual employees‘ entitlement to all labor and occupational safety and health standards, free exercise of the right of self-organization, security of tenure, and social and welfare benefits. 4. Permissible contracting or subcontracting The 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 normal production capacity or regular workforce of the principal cannot reasonably cope with such demands;

(b) Works or services temporarily or occasionally needed by the principal for undertaking requiring expert or highly technical personnel to improve the management or operations of an enterprise; (c) Services temporarily needed for the introduction or promotion of new products, only for the duration of the introductory or promotional period; (d) Works and services not directly related or not integral to the main business or operation of the principal, including casual work, janitorial, security, landscaping, and messengerial services and work not related to manufacturing processes in manufacturing establishments; (e) Services involving the public display of manufacturers‘ products which do not involve the act of selling or issuance of receipts or invoices; (f) Specialized works involving the use of some particular, unusual or peculiar skills, expertise, tools or equipment the performance of whish is beyond the competence of the regular workforce or production capacity of the principal; and (g) Unless a reliever system is in place among the regular workforce, substitute services for absent regular employees provided that the period of service shall be coextensive with the period of absence and the same is made to the substitute employee at the time of engagement. The phrase ―absent regular employees‖ includes those who are serving suspensions or other disciplinary measures not amounting to termination of employment meted out by the principal but excludes those on strike where all the formal requisites for the legality of the strike have been prima facie complied with based on the records filed with the National Conciliation and Mediation Board. (Section 6, Rule VIII-A, Book III, Rules to 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 or public 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 labor organization, supplies workers to an employer, with or without any monetary or other consideration whether in the capacity of an agent of the employer or as an ostensible independent contractor.] (d) Taking undue advantage of the economic situation or lack of bargaining strength of the contractual employee, or undermining his security of tenure or basic rights, or circumventing the provisions or regular employment in any of the following instances:

(i) In addition to his assigned function, requiring the contractual employee to perform functions which are currently being performed by the regular employee of the principal or of the contractor or subcontractor; (ii) Requiring him to sign as a precondition to employment or continued employment an antedated resignation letter; a blank payroll; a waiver of labor standards including minimum wages and social welfare benefits; or a quitclaim releasing the principal, contractor or subcontractor from any liability as to payment of the future claims; and (iii) Requiring him to sign a contract fixing the period of employment to a term shorter than the term of the contract between the principal and the contractor or subcontractor, unless the latter contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the time of engagement. (e) Contracting out of a job, work or service through an in-house agency as defined 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 or imminent; and (g) Contracting out of a job, work or service when not justified by the exigencies of the business and the same results in the reduction or splitting of the bargaining unit. Labor-only contracting There is ―labor-only contracting‖ when contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal and 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 subcontractor are performing activities which are directly related to the main business of the principal. In-house agency Similarly 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 a finding that there exists an employer-employee relationship between the owner of the project and the employee of the ―labor-only‖ contractor since that relationship is defined and prescribed by law itself. Indirect Employer; liability

1. The principal is considered the indirect employer of the workers supplied by independent contractor or subcontractor. 2. The nature of the liability of the principal is joint and solidarily with the contractor or subcontractor in case the latter failed to pay the wages of the employees. Worker preference in case of bankruptcy 1. The right to perform given to workers under Article 110 cannot exist in any effective way prior to the time of its presentation in distribution proceedings. Article 110 applies only in case of bankruptcy or judicial liquidation of the employer. 2. Judicial proceedings in rein is required for creditors‘ claims against debtors to become operative. 3. To contend that Article 110 of the Labor Code is applicable also to extrajudicial proceedings would be putting the worker in a better position than 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 the insolvent debtor in favor of the workers but a right to a first preference in the discharge of the funds of the judgment debtor. 5. Article 110 of the Labor Code does not purport to create a lien in favor of workers or employees for unpaid wages upon all of the properties or upon any particular property owned by their employer. Claims for unpaid wages do not, therefore, fall at all within the category of specially preferred claims established under articles 2241 and 2242 of the Civil Code, except to the extent that such claims for unpaid wages are already covered by Article 2241, number 6: ―claims of laborers and other workers engaged in the construction, reconstruction or repair of buildings, canals and other works, upon said buildings, canals or other works.‖ To the extent that claims for unpaid wages fall outside the scope of Article 2241, number 6 and 2242, number 3, they would come within the ambit of the category of ordinary preferred credits under Article 2242. 6. Mortgage credit.- A mortgage credit id a special preferred credit under Article 2241 of the Civil Code while workers‘ preference is an special preferred credit. 7. Preference of taxes. In one case, it has held that there is no merit in the contention of the NLRC that taxes are also absolutely preferred claims only with respect to movable and immovable properties on which they are due. The claim of the government predicated on a tax lien is superior to the claim of a private litigant predicated on a judgment. the tax lien attaches not only from the service of the warrant of distraint property but from the time of the tax become due and payable. Attorney‘s fees

1. In cases of unlawful withholding of wages, the employer may be assessed attorney‘s fees equivalent to ten percent (10%) of the amount of wages recovered. 2. It shall be unlawful for any person to demand or accept, in any judicial or administrative 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 withholding 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, the same may not be assessed or subjected to the 10% attorney‘s fees. PROHIBITIONS REGARDING WAGES Non-interference in disposal of wages 1. Employers are not allowed to interfere in the disposal of wages of employees. Wage deduction Deductions from the wages of the employees may be made by the employer in any of the following cases: a. When the deductions are authorized by law, (e. g. SSS, Pag-IBIG), including deductions for the insurance premiums advanced by the employer in behalf of the employee as well as union dues where the right to check-off has been recognized by the employer or authorized in writing by the individual employee himself; b. When the deductions are with the written authorization of the employees for payment to a third person and the employer agrees to do so, provided that the latter does not receive any pecuniary, directly or indirectly, from the 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 or execution but only for debts incurred for food, clothing, shelter and medical 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 of deduction does not require the written authorization of the non-union member. Deposits for loss or damage

No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deductions or requiring 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 prohibited It 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 by force, stealth, intimidation, threat or by any other means whatsoever without the worker‘s consent. Deductions to ensure employment It 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 measures It 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 has filed any complaint institute any proceeding or has testified or is about to testify in such proceedings. False reporting It 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 Order 1. ―Wage order‖ refers to the Order promulgated by the Regional Tripartite Wages and Productivity Board (RTWPB) pursuant to its wage fixing authority. 2. Necessity for wage order.- Wherever conditions in a particular region so warrant, the RTWPB shall investigate and study all pertinent facts and based on the standards and criteria herein prescribed, shall proceed to determine whether a Wage Order should be issued. 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 of general circulation in the region. 4. Appeal to the National Wages and Productivity Commission.- Any party aggrieved by the Wage Order issued by the RTWPB may appeal such order to the Commission within ten (10) calendar days from the publication of such order. The filing of the appeal does not stay the order or suspend the affectivity thereof unless the person appealing such order shall file with

the Commission, an undertaking with a surety or sureties satisfactory to the Commission for the payment to the employees affected by the order of the corresponding increase, in the event such order is affirmed. Standards/Criteria for minimum wage fixing In the determination of regional minimum wages, the Regional Board shall, 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 rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure 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 that is within the jurisdiction of the quasi-judicial tribunals. ADMINISTRATION AND ENFORCEMENT Distinctions between Article 128 (b), Article 129 and Article 217 For purposes of clarification, the following are the major distinctions regarding the jurisdictions over money claims of the Secretary of Labor and Employment under Article 128 [b], the Regional Director of the Department of Labor and Employment under Article 129 and the Labor Arbiter under Article 217 of the Labor Code. 1. On the nature of the powers granted and proceedings. Article 128 [b] involves the exercise by the Secretary of Labor and Employment or his duly authorized representatives, of the visitorial and enforcement powers provided therein. Article 129 involves the exercise by the Regional Director of the Department of Labor and Employment or any of the duly authorized hearing officers of the Department, of adjudicatory powers over cases concerning recovery of wages, simple money claims

and other benefits not exceeding P5,000.00 and not accompanied by any claim for reinstatement. Article 217 involves the exercise by the Labor Arbiter of its quasi-judicial power to hear and decide claims involving an amount exceeding P5,000.00 regardless of whether accompanied with a claim for reinstatement. 2. On the person or officer granted the powers Article 128 [b] grants the power to specifically to the Secretary of Labor and Employment or his duly authorized representative. The Regional Directors shall be the duly authorized representatives of the Secretary of Labor and Employment in the administration and enforcement of labor standards within their respective territorial jurisdictions. (Section 3, Rule I, Rules on the Disposition of Labor Standards Cases in the Regional Offices, September 16, 1987). Article 129 grants the power specifically to the Regional Director of the Department of Labor and Employment or any of the duly authorized hearing officers of the Department. Article 217 grants the power specifically to the Labor Arbiters of the National Labor Relations Commission. 3. On the subject matter. Article 128 [b] applies only to inspection cases involving findings of the labor employment and the enforcement officers or industrial safety engineers regarding violations of labor standards provisions of the Labor Code and other labor legislations. The term ―labor standards‖ refers to the minimum requirements prescribed by existing laws, rules and regulations and other issuances relating to wages, hours of work, cost of living allowances and other monetary and welfare benefits, including those set by occupational safety and health standards. (Section 7, Rule 1, Rules on the Disposition of Labor Standards Cases in the Regional Offices, September 16, 1987). Article 129 applies only to cases initiated by complaint filed by any interested party involving the recovery of wages and other monetary claims and benefits (including interest) but the amount of which should not exceed P5,000.00 and should not include a claim for reinstatement. Article 217 applies only to cases of claims involving an amount exceeding P5,000.00 whether or not accompanied with a claim for reinstatement. 4. On the party initiating the action.

Article 128 [b] contemplates situations where the case for violation of labor standards laws and other labor regulations, arose from the routine inspection conducted by the labor employment and enforcement officer or industrial safety engineers of the Department of Labor and Employment, with or without a complaint initiated 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 an interested 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 the action. 5. On the existence of employer-employee relationship. Article 128 [b] is applicable only when the employer-employee relationship still exists. In case the relationship no longer exists, claims for payment of monetary benefits fall within the exclusive and original jurisdiction of the Labor Arbiters. Accordingly, if on the face of the complaint, it can be ascertained that employeremployee relationship no longer exists, the case, whether or not accompanied by an allegation of illegal dismissal, shall immediately be endorsed by the Regional Director to the appropriate Branch of the National Labor Relations Commission. (Section 3, Rule II, Rules on the Disposition of Labor Standards Cases in the Regional Offices, 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-employee relationship 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 authorized representative of the Secretary of Labor and Employment to the latter. Article 129 grants appeal from the decision of the Regional Director or Hearing Officer to the National Labor Relations Commission. Article 217 grants appeal from the decision of the Labor Arbiter to the National Labor Relations Commission. 7. On the reglementary period of appeal. Article 128 [b] prescribes no specific reglementary period for appeal. The law is silent on this matter. However, under the Rules on the Disposition of Labor

Standards Cases in the Regional Offices promulgated on September16, 1987 by the Secretary 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 Disposition of Labor Standards Cases in the Regional Offices, September 16, 1987). Article 129 prescribes the reglementary period of five (5) calendar days from receipt of 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 days from receipt of the decision, award or order of the Labor Arbiter, within which to perfect 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 involves monetary 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 the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. Article 129 is silent on the requirement of bond, hence, this is not required to perfect the appeal. Article 127 does not embody the provision requiring posting of bond to perfect the appeal but Article 223. A bond may stay the execution of monetary awards but not the 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 Disposition of Labor Standards Cases in the Regional Offices which issued Secretary of Labor and Employment on September 16, 1987, to implement 128 [b] (prior to its amendment by Republic Act No. 7730 on June 2, enumerates the following grounds:

on the by the Article 1994),

a. there is a prima facie evidence of abuse of discretion on the part of the Regional Director; b. the Order was secured through fraud, coercion or graft and corruption; c. the appeal is made purely on questions of law; or d. 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 the Labor Code as applicable to appeals brought under this Article. Article 217 does not contain the grounds but those mentioned in Article 223 are applicable 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 and when such decision will become final and executory. However, its implementing rules, while not providing the period within which the decision should be rendered, mention that the decisions, orders or resolutions of the Secretary of Labor and Employment shall become final and executory after ten (10) calendar days from receipt thereof. (Section 5, Rules on the Disposition of Labor Standards Cases in the Regional 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 allowed under 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 provides that the same shall be final and executory after ten (10) calendar days from receipt thereof by the parties. Article 217 does not embody the provision on the period to decide appealed cases or the period within which such decision shall become final and executory. These matters 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 the provisions 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 the provisions 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 employed or permitted or suffered to work at night, except those employed in agriculture, stock raising, fishing, maritime transport and inland navigation, during a period of not less than seven (7) consecutive hours, including the interval from midnight to five o‘clock in the morning, to be determined by the Secretary of Labor and Employment, after consulting the workers‘ representatives/labor orbanizations and employers. Night worker means any employed person whose work requires performance of a substantial number of hours of night work which exceeds a specific limit. This limit 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 21 June 2011). Art. 156. Health Assessment. – At their request, workers shall have the right to undergo 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 such assessments shall not be transmitted to others without the workers‘ consent and shall 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 which they are fit to work. If such transfer to a similar job is not practicable, these workers shall be granted the same benefits as other workers who are unable to work, or to secure employment during such period. A night worker certified as temporarily unfit for night work shall be given the same protection against dismissal or notice of dismissal as other workers who are prevented from working for reasons of health. (R.A. 10151, signed into law on 21 June 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 be called 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 is produced stating that said additional periods are necessary for the health of 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 be determined by the DOLE after consulting the labor organizations and employers. 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 in this Code that are not connected with pregnancy, childbirth and childcare responsibilities

(ii)

A woman worker shall not lose the benefits regarding her status, seniority, and access to promotion which may attach to her regular night work position.

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 fitness to render night work, and specify, in the case of pregnant employees, the period of the pregnancy that they can safely work. The measures referred to in this article may include transfer to day work where this is possible, the provision of social security benefits or an extension of maternity leave. The provisions of this article shall not have the effect of reducing the protection 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 working time, 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 night workers 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 the services 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 establishment and its personnel, as well as, on the occupational health measures and social services which are required. In establishments employing night workers, consultation shall take place regularly. (R.A. 10151, signed into law on 21 June 2011).

Q: What are the different facilities that an employer must at least furnish for his women 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 are free from work or during office hours provided the quality of the work will not be compromised; 2. Establish separate toilet rooms and lavatories for men and women and provide at least a dressing room for women; 3. Establish a nursery in the establishment; and

4. 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 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 period immediately preceding the semester of her childbirth or miscarriage shall be paid a daily maternity benefit equivalent 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 should be employed at the time of the delivery, miscarriage, or abortion. The employee shall have notified her employer of her pregnancy and the probable date of her childbirth, which notice shall be transmitted to the SSS in accordance with the rules and regulations it may provide. 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 the employer upon receipt of satisfactory proof of such payment and legality thereof. If an employee member should give birth or suffer miscarriage without the required contributions having been remitted for her by her employer to the SSS, or without the latter having been previously notified the employer of the time of the pregnancy, the employer shall pay to the SSS damages equivalent to the benefits which said employee would otherwise have been entitled to.

Q: What are the different facilities that an employer must at least furnish for his women 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 are free from work or during office hours provided the quality of the work will not be compromised;

6. Establish separate toilet rooms and lavatories for men and women and provide at least a dressing room for women; 7. Establish a nursery in the establishment; and 8. 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: A:

Discuss briefly the concept of Maternity Leave. MATERNITY LEAVE UNDER THE SSS LAW:

A female member, who need not be legally married, who has paid for at least three (3) monthly contributions in the 12-month period immediately preceding the semester of her childbirth or miscarriage shall be paid a daily maternity benefit equivalent 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 13th month pay for the calendar year. In order to be entitled to the SSS benefit, the female employee should be employed at the time of the delivery, miscarriage, or abortion. The employee shall have notified her employer of her pregnancy and the probable date of her childbirth, which notice shall be transmitted to the SSS in accordance with the rules and regulations it may provide. 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 the employer upon receipt of satisfactory proof of such payment and legality thereof. If an employee member should give birth or suffer miscarriage without the required contributions having been remitted for her by her employer to the SSS, or without the latter having been previously notified the employer of the time of the pregnancy, the employer shall pay to the SSS damages equivalent to the benefits which said employee would otherwise have been entitled to. 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 basic salary, to all married male employees in the public and private sector. Available only for the first 4 deliveries of the legitimate spouse with whom the husband is cohabiting; the term delivery includes childbirth, miscarriage or abortion. In the event that such leave was not availed of, said leave shall not be convertible to cash The purpose is to enable the husband to lend support to his wife during the 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 expected date of delivery by the pregnant spouse and within such period as may be provided by company rules & regulations or CBA. However, prior application for leave shall NOT 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 of their 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 it shall be unlawful for an employer: 1. to require as a condition for employment or continuation of employment that a woman employee shall not get married, 2. to stipulate expressly or tacitly that upon getting married a woman employee shall be deemed resigned or separated 3. to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.

Q: What are the prohibited acts of an employer with respect to his female employees? A: 1.

The following constitute prohibited acts: To discharge any woman employed by him for the purpose of preventing such woman from enjoying the maternity leave, facilities and other benefits provided under the Code;

2. To discharge such woman employee on account of her pregnancy, or while on leave or in confinement due to her pregnancy; 3. To discharge or refuse the admission of such woman upon returning to her work for fear that she may be pregnant; 4. To discharge any woman or child or any other employee for having filed a complaint or having testified or being about to testify under the Code; 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 any woman 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 of time as determined by the Secretary of Labor, shall be considered as an employee of such 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 the rule are: 1. When the child works directly under the sole responsibility of his/her parents or legal guardian who employs members of his/her family only under the following conditions: a. employment does not endanger the child‘s life, safety, health and morals; b. employment does 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 or information through cinema, theater, radio, or television is essential, provided that: a. employment does not involve advertisements or commercials promoting alcoholic beverages, intoxicating drinks, tobacco and its by-products or exhibiting violence; b. There is a written contract approved by the DOLE; and

c.

The conditions prescribed for the employment of minors {above stated} are met.

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 environmental elements, 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 mechanized farming; 3 where the workers are engaged in the manufacture or handling of explosives and other pyrotechnic products; 4.where the workers use or are exposed to heavy or power-driven machinery or equipment; 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 work b) They are entitled to reasonable compensation c) They are entitled to be furnished lodging, food, and medical attendance d) 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 treatment g) 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, the same is permissible. h) They have the right to four days vacation each month with pay. (If the helper does not ask for the vacation, the number of vacation days cannot be accumulated, she is entitled only to its monetary equivalent.) i) Funeral expenses must be paid by the employer if the househelper has no relatives 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 househelper may demand from the employer a written statement of the nature and duration of the service and his or her efficiency and conduct as househelper. Q:

Who are homeworkers?

A: Homeworkers are those who perform in or about his home any processing of goods or materials, in whole or in part, which have been furnished directly or indirectly by an employer and thereafter to be returned to the latter. 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 on behalf of any person residing outside the Philippines, directly or indirectly, or through any employee, agent, contractor, sub-contractor; or any other person: (1) Delivers or causes to be delivered any goods or articles to be processed in or about a home and thereafter to be returned or to be disposed of or distributed in accordance with his direction; or (2) Sells any goods or articles for the purpose of having such goods or articles processed in or about a home and then repurchases them himself or through another after such processing.

Facilities for women Employers 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 can perform their duties in this position without detriment to efficiency; (b) To establish separate toilet rooms and lavatories for men and women and provide at least a dressing room for women; (c) To establish a nursery in a workplace for the benefit of the women employees therein; and (d) To determine appropriate minimum age and other standards for retirement or termination in special occupations such as those of flight attendants and the like. Maternity leave benefits (Pregnant women, whether married or not, are entitled) 1. A female member who has paid at least 3 monthly contributions in the 12month period immediately proceeding the semester of childbirth or miscarriage shall be paid a daily maternity benefit of 100% of her average daily salary credit for 60 days or 78 days in case of caesarian delivery. This payment of daily maternity benefit shall be a ___ to the recovery of sickness benefit for the same compensable period. 2. The maternity leave shall be extended without pay on account of illness medically certified to arise out of the pregnancy, delivery, abortion or miscarriage, which renders the woman unfit for work, unless she has earned unused leave credits from which such extended leave may be charged. 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 to paternity leave of 7 days (for each delivery) with full pay for the first 4 deliveries of the legitimate spouse with whom he is cohabiting. If paternity leave is not availed of, it is not convertible to cash. Discrimination against woman prohibited It 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 her from enjoying any of the benefits provided under the Labor Code. (2) To discharge such woman on account of her pregnancy, or while on leave or in confinement due to her pregnancy; (3) To discharge or refuse the admission of such woman upon returning to her work for work of equal value. (4) To pay lesser compensation to a female employee with respect to promotion, training opportunities, study and scholarship grants solely on account of their sexes. Stipulation against marriage It 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 to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage. 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 similar establishments under the effective control or supervision of the employer for a substantial period of time as determined by the Secretary of Labor and Employment, shall be considered as an employee of such establishment for purposes of labor and social legislation. They are considered regular employees of said establishments except when the night club operator does not control nor direct the details and manner of their work in the entertainment of nightclub patrons and, having no fixed hours or work, they may come and go as they please. EMPLOYMENT OF MINORS 1. prohibition against child discrimination.- No Employer shall discriminate against any person in respect to terms and conditions of employment on account of his age. 2. Relevant law: Republic Act No. 7610 – The Special Protection of Cild Against Child Abuse, Exploitation and Discrimination Act.

Minimum employment age. 1. No child below fifteen (15) years of age shall be employed, except when he works directly under the sole responsibility of his parents or guardian, and his employment does not in any way interfere with his schooling. 2. Any person between fifteen (15) and eighteen (18) years of age may be employed for such number of hours and such periods of the day as determined by the Secretary of Labor and Employment in appropriate regulations. 3. The foregoing provisions shall in no case allow the employment of a person below eighteen (18) years of age in an undertaking which is hazardous or deleterious in nature as determined by the Secretary of Labor and Employment. Employment of househelpers 1. ―Househelper‖ or ―domestic servant‖ shall refer to any person, whether male or female, who renders services in and about the employer‘s home and which services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the employer‘s family. 2. Household services include the services of family drivers, cooks, nursemaids or family servants, but not the services of laborers in a commercial 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 wages which 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 deductions therefrom shall be made by the employer unless authorized by the househelper himself or by existing laws. 6. Assignment to non-household work. – No househelper shall be assigned to work in a commercial, industrial or agricultural enterprise at a wage or salary rate lower than that provided for agricultural or non-agricultural workers as prescribed herein. 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 least elementary education. The cost of education shall be part of the househelper‘s compensation, unless there is a stipulation to the contrary. 8. Treatment of househelpers – just and humane manner and no physical violence. 9. The employer shall furnish the househelper, free of charge, suitable and sanitary living quarters as well as adequate food and medical attendance.

10. Indemnity for unjust termination of services.- If the period of household service is fixed, neither the employer nor the househelper may terminate the contract before the expiration of the term, except for a just cause. If the househelper is unjustly dismissed, he or she shall be paid compensation already earned plus that for fifteen (15) days by way of indemnity. If the househelper leaves without a justifiable reason, he or she shall forfeit any unpaid salary due him or her not exceeding fifteen (15) days. EMPLOYMENT OF HOMEWORKERS & FIELD PERSONNEL 1. An industrial homeworker is a worker who is engaged in industrial homework, a system of production under which work for an employer or contractor is carried out by a homeworker at his/her home. The materials may or may not be furnished by the employer or contractor. 2. A field personnel is a non-agricultural employee who regularly performs his duties away from the principal place of business or branch office of the employer an whose actual hours or work in the field cannot be determined with reasonable certainty. \

Q:

Who are homeworkers?

A: Homeworkers are those who perform in or about his home any processing of goods or materials, in whole or in part, which have been furnished directly or indirectly by an employer and thereafter to be returned to the latter. 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 on behalf of any person residing outside the Philippines, directly or indirectly, or through any employee, agent, contractor, subcontractor; or any other person: (1) Delivers or causes to be delivered any goods or articles to be processed in or about a home and thereafter to be returned or to be disposed of or distributed in accordance with his direction; or (2) Sells any goods or articles for the purpose of having such goods or articles processed in or about a home and then repurchases them himself or through another after such processing.

THE LAWS ON DISMISSALS, TERMINATION, RETIREMENT AND RELATED 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 the employee, that the employer shall not terminate the services of an employee 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 from which he has been unjustly removed or separated without loss of seniority rights and other privileges. THE TWO (2) FORMS OF REINSTATEMENT:

1.

ACTUAL OR PHYSICAL REINSTATEMENT

the employee shall be admitted back to work 2. PAYROLL REINSTATEMENT - the employee is merely reinstated in the payroll

Q. May a court order the reinstatement of a dismissed employee even if 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 even if the complaint does not include a prayer for reinstatement, unless, of course, the employee has waived his right to reinstatement. By law, an employee who is unjustly dismissed is entitled to reinstatement, among others. The mere fact that the complaint did not pray for reinstatement will not prejudice the employee, because technicalities of law and procedure are frowned upon in labor proceedings (General Baptist Bible College v. NLRC, 219 SCRA 549). Q. What happens if there is an order of reinstatement but the position is 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 the employer to do the impossible. In such a situation, the employee should merely be given separation pay consisting of one month salary for every year of service (1:1). Q. UNDER WHAT CIRCUMSTANCES MAY A COMPANY NOT REINSTATE DESPITE ORDER OF REINSTATEMENT? A. 1. Transfer of business ownership -There is no law requiring a purchasing corporation to absorb the employees of the selling corporation. A fortiori, reinstatement of unjustly dismissed employees

CANNOT be enforced against the new owner UNLESS there is an express agreement on the assumption of liabilities by the purchasing corporation: 2. When reinstatement is rendered impossible due to the abolition of the position; 3. When the business has closed down; 4. Physical incapacity of the employee; and 5. Doctrine of Strained Relations - When the employer can no longer trust the employee and vice-versa, reinstatement could not effectively serve as a remedy. This doctrine only applies only to positions which require trust and confidence NOTE: Under the circumstances where the employment relationship has become so strained to preclude a harmonious working relationship, and that all hopes at reconciliation are nil after reinstatement, it would be more beneficial to accord the employee backwages and separation pay. B. BACKWAGES – the relief given to an employee to compensate him for lost earnings during the period of his dismissal. PERIOD COVERED BY THE PAYMENT OF BACKWAGES - Backwages shall cover the period from the date of dismissal of the employee up to the date of actual reinstatement How computed - Under existing law, backwages is computed from the time of the illegal dismissal up to time of actual reinstatement. Q. WHAT ARE DEEMED INCLUDED IN THE COMPUTATION OF BACKWAGES? A. 1. transportation and emergency allowances 2. vacation or service incentive leave and sick leave 3. 13th month pay.

NOTE: facilities such as uniforms, shoes, helmets and ponchos should NOT 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 OF BACKWAGES? A. 1. death of the employee 2. physical and mental incapacity 3. business reverses 4. closure of business 5. reinstatement of dismissed employ 6. confinement in jail Q. Which takes precedence in conflicts arising between employer‘s MANAGEMENT PREROGATIVE and the employ ees‘ right to security of tenure? A. The employee‘s right to security of tenure. Thus, an employer‘s management prerogative includes the right to terminate the services of the employee but this management prerogative is limited by the labor code which provides that the employer can terminate an employee only for a just cause or when authorized by law. This limitation is because no less than the constitution recognizes and guarantees employee‘s right to security of tenure. (Art. 279, Labor Code; Art. XIII, Sec. 3, Constitution) KINDS OF EMPLOYMENT  ART. 280. REGULAR AND CASUAL EMPLOYMENT Q. WHAT ARE THE KINDS OF EMPLOYMENT UNDER THE LABOR CODE? A.

a. REGULAR EMPLOYMENT - one wherein an employee is engaged to perform activities which are usually necessary or desirable in 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 one engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer

a project employee is one whose employment is fixed for a specific project or undertaking the completion of which has been determined at the time of the engagement of the employee. (See Art. 280 LC)

b. TEMPORARY EMPLOYMENT - one wherein an employee is engaged to work on a specific project or undertaking which is usually necessary or desirable in the usual business or trade of the employer, the completion of which has been determined at the time of the engagement of the employee. c. SEASONAL EMPLOYMENT - one wherein an employee is engaged to work during a particular season on an activity that is usually necessary or desirable in the usual business or trade of the employer. 

Pakiao employees are considered employees as long as the employer exercises control over the means by which such workers are to perform their work.

d. PROBATIONARY PERIOD OF EMPLOYMENT - the period needed to determine 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 the employee is qualified for possible inclusion in the regular force. Purpose: To afford the employer an opportunity to observe the fitness of a probationary employee at work.

NOTE: The standard which the probationary employee is to meet must be made known by the employer to the employee at the time of engagement. The services of probationary employees may be terminated for the same causes as in the case of regular employee, except that there is an additional ground – failure to meet the standard. Q. WHAT ARE LIMITATIONS ON THE EMPLOYER‘S POWER TO TERMINATE A PROBATIONARY EMPLOYMENT CONTRACT? A. The limitations are: 1. the power must be exercised in accordance with the specific requirements of the contract [COMPLIANCE WITH SPECIFIC REQUIREMENTS]; 2. if a particular time is prescribed, the termination must be within such time and if formal notice is required, then that form must be used [WITHIN PARTICULAR PRESCRIBED TIME]; 3. the employer‘s dissatisfaction must be real and in good faith, not feigned so as to circumvent the contract or the law [DISSATISFACTION—REAL AND IN GOOD FAITH]; and 4. there must be no unlawful discrimination in the dismissal. GENERAL RULE: Probationary employment shall not exceed six months from the date the employee started working. EXCEPTIONS: 1. when it is covered by an apprenticeship agreement stipulating a longer period; or 2. when the parties to an employment contract agree otherwise, such as when the same is established by company policy or when the same is required by the nature of the work to be performed by the employee Q. WHAT IS THE EFFECT IF PROBATIONARY EMPLOYEE IS ALLOWED TO WORK BEYOND 6 MONTHS?

A. If the probationary employee is allowed to work beyond the period of 6 months or the agreed probationary period, said employee becomes a regular employee by operation of law. Under the Labor Code, ―an employee who is allowed to work after a probationary period shall be considered a regular employee.‖ (Art. 281.)

ART. 282. TERMINATION BY EMPLOYER  SECURITY OF TENURE - An employer CANNOT terminate the services of an employee EXCEPT for a just cause or when authorized by law. Q. WHAT ARE THE GUIDELINES TO DETERMINE THE VALIDITY OF TERMINATION? 1. Gravity of the offense 2. Position occupied by the employee 3. Degree of damage to the employer 4. Previous infractions of the same offense 5. Length of service A. JUST CAUSES 1. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; 2. Misconduct- transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. (Dept. of Labor Manual, 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 in him by his employer or duly organized representative

5. Fraud must be committed against the employer or his representative and in connection with the employee‘s work. ((Dept. of Labor Manual) 6. Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; 7. Conviction or prosecution is not requiOther causes analogous to the foregoing; and .8. A cause must be due to the voluntary or willful act or omission of the employee. (Nadura v. Benguet Consolidated, G.R. No. L-17780)

Q. WHAT IS THE PROCEDURE ON DUE PROCESS TO BE OBSERVED BY THE EMPLOYER BEFORE AN EMPLOYEE IS DISMISSED? A. For termination of the employment based on the any of the just causes for termination, the requirements of due process that an employer must comply with are: 1. Written notice should be served to the employee specifying the ground or grounds for termination and giving the said employee reasonable opportunity within which to explain; 2. A hearing or conference should be held during which the employee concerned, with the assistance of counsel, if the employee so desires, is given the opportunity to respond to the charge, present his evidence and present the evidence presented against him; 3. A written notice of termination, if termination is the decision of the employer, should be served on the employee 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 with upon service of a written notice to the employee and the appropriate Regional office of the Department of Labor and employment at least thirty days before the effectivity of the termination specifying the grounds for termination.

NOTE: Under the so-called WENPHIL DOCTRINE if the services of the employee 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 way of indemnification for the violation of the right. NOTE: New Doctrine is Agabon and Jaka Food, wherein nominal damages were awarded. For just causes it is P 30,000 and for authorized causes, it is P 50,000 in cases of lack of dur process, respectively. ARTS. 283-284.B. AUTHORIZED CAUSES OF TERMINATION BY THE EMPLOYER: 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 the services of an employee are in excess of what is reasonably demanded 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 a new policy conducive to a more economical and effective management, and the law does not require that the employer should be suffering financial losses before he can terminate the services of the employee on the ground of redundancy (DOLE

PHILIPPINES, INC et al., vs. NATIONAL LABOR RELATIONS COMMISSION 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 MAY RETRENCH 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 or undertaking UNLESS the closing is for the purpose of circumventing the provisions of the Labor Code. 5. Disease a. the disease is incurable within 6 months and the continued employment of the employee is prohibited by law or prejudicial to his health as well as to the health of his co-employees



b. with a certification from public heath officer that the disease is 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 Rules Implementing the Labor Code requires a certification by a competent public health authority that the disease is of such a nature or at such stage that it cannot be cured within a period of 6 months even with proper medical treatment. (Cathay 44Pacific Airways vs. NLRC and Martha Singson)

Cause of termination Automation

Redundancy

Retrenchment

Closures or cessation of operations not due to serious business losses or financial reverses Disease

Separation pay Equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher Equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher Equivalent to one month pay or at least one-half month pay for every year of service Equivalent to one month pay or at least one-half month pay for every year of service Equivalent to at least one-month salary or to ½ month salary for every year of service, whichever is greater, a fraction of at least 6 months shall be considered one (1) whole year.

NOTE: ARTICLE 283 governs the grant of separation benefits ‗in case of closures or cessation of operation‘ of business establishments NOT due to serious business losses or cessation of operation [North Davao Mining Corp. vs. NLRC, et al]. Therefore, the employee is not entitled to such benefit if the closure was due to SERIOUS BUSINESS LOSSES.  When termination of employment is brought by the failure of an employee to meet the standards of the employer in case of probationary employment, it shall be sufficient that a written notice is served the employee within a reasonable time from the effective date of termination. When termination is brought about by the completion of the contract or 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 the employer at least one month in advance. . The employer upon whom no such notice was served may hold the employee liable for damages. b. WITH A JUST CAUSE - An employee may put an end to establish WITHOUT SERVING ANY NOTICE on the employer for any of the following just causes [SUCA]: 1. Serious insult by the employer or his representative on the hour and person of the employee; 2. Inhuman and unbearable treatment accorded the employee by the employer 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 the immediate members of his family; and 4. Other causes analogous to any of the foregoing.

THE LAWS ON RETIREMENT, COVERAGE, EXEMPTIONS AND BENEFITS THEREUNDER

ART. 287. RETIREMENT RETIREMENT AGE - The age of retirement is that specified in the CBA or iin the employment contract. If it is not specified,  The rule is different with respect to underground mining employees whose optional retirement age is 50-60 provided they have at least served for a period of 5 years (Art. 287 as amended by RA 8558).

BENEFITSA retiree is entitled to a retirement pay equivalent to at least ½ month salary for every year of service, a fraction of at least six (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 13th 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 the age and service requirements of the applicable retirement laws shall be given ONE RANGE SALARY RAISE upon retirement, which shall be the basis of the computation of the lump sum of the retirement pay and the monthly benefit thereafter. NOTE: Exempted from the payment of retirement pay are retail, service and agricultural establishments or operations employing NOT more than ten (10) employees or workers.

Age

Retirement

60-65

Optional but the employee must have served at least 5 years

65

Compulsory (no need for five years of service

BOOK SEVEN TRANSITORY AND FINAL PROVISIONS TITLE II PRESCRIPTION OF OFFENSES AND CLAIMS ART. 291. MONEY CLAIMS PERIODS OF PRESCRIPTION Cause Money Claims ULP

Period of Prescription 3 years from the accrual of the causes of action 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 the Labor Code refers to and is limited to money claims, all other cases of injury 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 employment environment- in a work-related or employment environment, sexual harassment is committed when: 1. the sexual favor is made a condition in the hiring or in the employment, re-employment or continued employment of said individual or granting said individual favorable compensation, terms, conditions, promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or classifying the employee which in any way would discriminate, deprive or diminish employment opportunities or otherwise adversely affect said employee; 2. the above acts would impair the employee‘s rights or privileges under existing labor laws; or 3. the above acts would result in an intimidating, hostile, or offensive environment for the employee. (Section 3(a), Republic Act No. 7877) Sexual harassment in an education or training environment- in an education or training environment, sexual harassment is committed: 1. against one who is under the care, custody or supervision of the offender; 2. against one whose education, training, apprenticeship or tutorship is entrusted to the offender; 3. when the sexual favor is made a condition to the giving of a passing grade, or the granting of honors and scholarships, or the payment of a stipend, allowance or other benefits, privileges, or considerations; or 4. when the sexual advances result in an intimidating, hostile or offensive 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 and Privileges to Solo Parents and Their Children, Appropriating Funds Therefor and for Other Purposes), otherwise known as ―The Solo Parents‘ Welfare Act of 2000,‖ was approved on November 7, 2000 providing 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 and responsibilities where physical presence is required.‖ It bears noting that this leave privilege is an additional leave benefit which is separate and distinct from any other leave benefits provided under existing laws or agreements. Thus, under Section 8 thereof, it is provided: ―Sec. 8. Parental Leave. - In addition to leave privileges under existing laws, parental leave of not more than seven (7) working days every year shall be granted to any solo parent employee who has rendered service 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 to work 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 same shall not affect individual and company productivity: Provided, further, That any employer may request exemption from the above requirements from the DOLE on certain meritorious grounds.‖ (Section 6, Republic Act No. 8972).

The phrase ―flexible work schedule‖ is defined in the same law as follows: (e) ―Flexible work schedule‖ - is the right granted to a solo parent employee to vary his/her arrival and departure time without affecting the core work hours as defined by the employer. (Section 3[e], Republic Act No. 8972). Entitlement Q: How many days are entitled to a solo parent? A: A Male or Female Solo Parent is entitled to 1 – 7 days of leave each year. 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 of children; 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; and 10. Any family member who assumes responsibility of a parent who abandons. (R.A. NO. 8972, 11/7/2000)

BATTERED WOMAN LEAVE Q: 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 in addition to other paid leaves under the labor code, other laws and company 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 acts of 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 the barangay captain or kagawad or prosecutor or the clerk of court that an 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. It shall cover the day or days when she will have to attend to medical and 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 act of 2004; 3/8/04).

SOCIAL SECURITY SYSTEM RA1161 as amended by RA 8282 COVERAGE: Compulsory: 1. Compulsory upon all employees not over 60 years of age and their employers 2. In case of domestic helpers, their monthly income should not be less 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 Act shall 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 the SSS in such a way where the employer‘s contribution to his private plan is more than that required of him in this Act, he shall pay to the SSS only the contribution required of him and he shall continue his contribution to such private plan less his contribution to the SSS so that the employer‘s total contribution to his benefit plan and and to the SSS shall be

the same as his contribution to his private benefit plan before any compulsory coverage. c. Any changes, adjustments, modifications, eliminations or improvements in the benefits to be available under the remaining private plan, which may be necessary to adopt by reason of the reduced contribution thereto as a result of the integration shall be subject to agreements between the employers and the employees concerned d. The private benefit plan which the employer shall continue for his employees shall remain under the employer‘s managementand control unless there is an existing agreement to the contrary. e. Nothing in this Act shall be construed as a limitation on the right of employers and employees to agree on and adopt benefits which are over and above those provided under this act 3. Compulsory upon such self- employed persons as may be determined by the Commission including but not limited to the following (Sec 9-A): (APAPI) 1. All self employed professionals 2. Partners and single proprietors 3. Actors and actresses directors, scriptwriters and news correspondents who do not fall within the definition of the term employee in Section 8 (d) of this Act 4. Professional athletes, coaches, trainers, and jockeys 5. 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 or employment which is subject to mandatory coverage, may be covered by the SSS on a voluntary basis. 2. Filipinos recruited by foreign based employers for employment abroad may be covered by the SSS on a voluntary basis 3. Employees separated from employment may continue to pay contributions 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 their wholly-owned instrumentality employing workers in the Philippines, may enter into an agreement with the Philippine government for the inclusion of such employees in the SSS except those already covered by 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 an employee if he is employed when such vessel is outside the Philippines. 3. Service performed in the employ of the Philippine government or instrumentality 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 be excluded by regulation of the commission.

EFFECTIVE DATE OF COVERAGE: 1. Employer: It shall take effect on the first day of his operation 2. Employee: On the day of his employment 3. 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 on in the Philippines, any trade business, industry undertaking or activity of any kind and uses the services of another person who is under his orders as regards the employment except the Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or controlled by the Government

Self- employed person shall be both the employer and employee at the same time

EMPLOYEE Any person who performs services for an employer in which either or both mental and physical efforts are used and who receives compensation for such services, where there is an employeremployee relationship. Self- employed person shall be both the employer and employee at the same time

DEPENDENTS: 1. The legal spouse entitled by law to receive support from the member 2. the legitimate, legitimated or legally adopted and illegitimate child who is unmarried, not gainfully employed and has not reached 21 years of age or if 21 years of age, he is congenitally incapacitated or while still a minor has been permanently incapacitated and incapable of self- support, physically and mentally and 3. the parent who is receiving regular support from the member

BENEFICIARIES a. The dependent spouse until he or she remarries, the dependent legitimate, legitimated or legally adopted and illegitimate children who shall be the primary beneficiaries of the member b. PROVIDED that the dependent illegitimate children shall be entitled to 50% of the share of the legitimate, legitimated or legally adopted children. c. PROVIDED FURTHER in the absence of the legitimated, legally adopted or legitimate children, illegitimate children shall be entitled to 100% of the benefits. d. In their absence, the dependent parents who shall be the secondary beneficiaries.

e. In the absence of all of the foregoing, any person designated by the covered employee as secondary beneficiary.

Benefits 1. Monthly pension 2. Dependents pension It shall be paid for each dependent child conceived on or before the date of the contingency but not exceeding five, beginning with the youngest without substitution PROVIDED that where there are legitimate and illegitimate children, the former shall be preferred. 3. Retirement benefits A member who has paid at least 120 monthly contributions prior to the semester of retirement and who: a. has reached the age of 60 years and is already separated from employment or has ceased to be self-employed b. has reached the age of 65 years, shall be entitled for as a covered 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 continuing payment of contributions to the SSS on his own. SUSPENSION OF MONTHLY PENSION: Upon the re-employment or resumption of self-employment of a retired employee who is less than 65 years old. 4. Death Benefits 5. Permanent disability benefits 6. Funeral Benefit A funeral grant equivalent to Twelve thousand pesos (P12, 000.00) shall be paid, in cash or in kind, to help defray the cost of funeral expenses upon the death of a member, including permanently totally disabled member or retiree.

7. Sickness Benefit Requirements: a. A member must have paid at least 3 monthly contributions in the twelve month period immediately preceding the semester of sickness or injury b. and is confined therefor for more than three days in a hospital or 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 immediately preceding the semester of her childbirth or miscarriage PROVIDED: a. That the employee shall have notified her employer of her pregnancy and the probable date of her childbirth which notice shall be transmitted to the SSS. b. The full payment shall be advanced by the employer within 30 days from the filing of the maternity leave application c. Payment of daily maternity benefits shall be a bar to the recovery of sickness benefits d. The maternity benefits provided under this section shall be paid only for the first 4 deliveries or miscarriages e. The SSS shall immediately reimburse the employer 100% of the benefits advanced by the latter f. If no contributions were remitted by the employer or no notice was given to SS, the employer shall be liable for damages equivalent to the benefits which said employee member would otherwise have been entitled to.

Non-transferability of Benefits (Sec. 15) Such benefits are not transferable and no power of attorney or other document executed by those entitled thereto, in favor of any agent, attorney or any other person for the collection thereof on their behalf shall be recognized, except when they are physically unable to collect personally such benefits.

Sources of Fund 1. Collection: Beginning on the last day of the month when an employee‘s compulsory coverage takes effect and every month thereafter during his employment, his employer shall pay the employer‘s contribution and shall deduct and withhold from such employee‘s monthly salary the employees contribution.The same time of collection for selfemployed 2. Remittance: It shall be remitted within the first 10 days of each calendar month following the month for which they are applicable or within such time as the Commission may prescribe. For self-employed they shall remit their contributions quarterly on such dates and schedules as the Commission may require. (NOTE: SEE TABLE ON SOCIAL WELFARE LEGISLATION FOR COMPARISON WITH GSIS)

TRANSFER OF HEALTH INSURANCE FUNDS OF SSS AND GSIS It shall be transferred to the Corporation within 60 days from the promulgation of the Implementing Rules and Regulation The SSS and GSIS shall continue to perform Medicare functions under contract with the Corporation until such time that such functions are assumed by the Corporation.  TRANSFER OF MEDICARE FUNCTIONS OF THE SSS AND GSIS

Within 5 years from the promulgation of the implementing rules and regulations. But the SSS and GSIS shall continue performing its Medicare functions beyond the stipulated 5-year period if such extension will benefit Program members.

PRIMER ON SOCIAL SECURITY LAW OF 1997 Republic 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 Development Mutual Fund Law of 1980 or the PAG-IBIG Fund. 2. What law governs the social security system of the private employees? The Social Security Law of 1997 which is RA No. 1161 as amended by RA No. 8282 which took effect last 24 May 1997. 3. What is the declared policy of the state relative to social security system? 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-exempt social security system suitable to the needs of the people throughout

the Philippines which shall promote social justice and provide meaningful protection to members and their beneficiaries against the hazards, disability, sickness, maternity, old age, and death and other contingencies resulting in loss of income or financial burden. Towards this end, the State shall endeavor to extend social security protection to workers and their beneficiaries. 4. Give the organizational set-up of the Social Security System. The Social Security System is a corporate body, with principal place of business in Metro Manila. It is directed and controlled by the Social Security System. The Social Security System is composed by the Secretary of Labor and Employment or his duly designated undersecretary, the SSS president and sever (7) appointive members, three of whom shall represent the workers' group, one of whom shall be a woman, three from the employers' group, at least one of whom shall be a woman and one, the general public whose representative shall have adequate knowledge and experience regarding social security, to be appointed by 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 executive officer 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 the President such rules and regulations as may be necessary to carry out the provision and purposes of this Act. (2) To establish a provident fund for the members which will consist of voluntary contributions of employers and/or employees, selfemployed and voluntary members and their earnings, for payment of

benefits, subject to such rules and regulations as it may promulgate and approved by the President of the Philippines. (3) To maintain a Provident Fund which consist of contributions made by both the SSS and its officials and employees and their earnings, for th payment of benefits to such officials and employees or their heirs under such terms and conditions as it may prescribe; (4) To approve restructuring proposals for the payment of due but unremitted contributions and unpaid loan amortization under such terms and conditions as it may prescribe. (5) To authorize cooperatives registered with cooperative development authority to act as collecting agent of SSS with respect to 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 under Sec. 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 SSS benefit program every four years; and to undertake actual studies and cancellations for any possible increase of benefits. (3) To establish SSS offices covering many provinces and cities and congressional districts; (4) To enter into contracts or agreements for such services and aids; (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 statistical and 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 deem appropriate for the proper enforcement of this Act [Sec. 4(b), RA No. 8282]. 8. Are decisions of the Commission appealable by judicial review to regular courts? Yes. The appeal by judicial review under Sec. 5( c ), RA No. 8282 may be made within 15 days from receipt of decision/order/denial of motion 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 of coverages? 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 compulsory or 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 or employment which is subject to mandatory coverage may be covered by the SSS on a voluntary basis. [Sec.9(b), RA No. 8282] (2) Filipinos recruited by foreign-based employers for employment 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 or foreign, who carries on in the Philippines any trade, business, industry, undertaking or activity of any kind and uses the services of another person who is under his orders as regards the employment, except government and any of its political subdivisions, branches or instrumentalities including corporations owned and controlled by the Government; Provided, That a self-employed person shall be both employee 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 which either or both mental and physical efforts are used and who receives compensation for such services, where there is an employer-employee relationship. Provided, that a self-employed person shall be both employee 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 not derived from employment, as defined in this Act, as well as those workers 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 the Philippines; (3) Service performed in the employ of the Philippine Government or instrumentality or agency thereof. (4) Service performed in the employ of a foreign government or international organization or their wholly-owned instrumentality. (5) Such other services performed by temporary employees which may be excluded by the regulation of the Commission. [Sec.8(j)] 16. When does the compulsory coverage of an employer, employee or a self-employed person take effect? or when is the effective date of SSS coverage? Compulsory coverage of the employer shall take effect on the first day of his operation and that the compulsory coverage of the selfemployed 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 upon his membership in the SSS. When an employee under compulsory coverage is separated from employment, his employer's contribution on his account and his obligation to pay contribution arising from that employment shall cease at the end of the month of separation, but said employee shall be credited with all contributions paid on his behalf and entitled to the benefits according to the provisions of this Act. He may, however, continue to pay the total contribution to maintain his right to full benefits. (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, he shall not be required to pay contributions for that month. He may,

however, be allowed to continue paying contributions under the same rules 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 P300.00 plus: (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; or One thousand pesos (P1,000.00) Provided that the monthly pension shall in no case be paid for an aggregate amount of less than 60 months. * Monthly salary credit means- the compensation base for contributions 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 not reached 21 years of age or over if congenitally incapacitated or incapable 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 or P250.00 whichever is higher to be received by each dependent but not exceeding 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 by the member. 26. How much is the death benefit to be enjoyed by the primary beneficiaries?

If the member has paid at least 36 monthly contributions, the benefit shall be a lump sum equivalent to 36 times the monthly pension. However, if he had not paid the 36 monthly contributions, the beneficiary shall be entitled to a lump sum benefit equivalent to the monthly pension times the number of monthly contributions paid to SSS 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 earning capacity due to impairment of the normal functions of the physical and/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 than one injury or disease amounts to at least 100%. [Sec.13-1 (g), RA No. 8282]. (2) Permanent partial disability - accrues or arises when the loss or reduction or earning capacity amounts to less than 75% or when the aggregate loss or reduction of earning capacity resulting from more than one injury or disease amounts to less than 100% as a result of unrecoverable anatomical loss. 28. What is the condition to entitle a member to permanent disability benefits? He has paid 36 monthly contributions prior to the semester of the disability. [Sec.13-A(a), RA No. 8282]. 29. How are permanent disability benefits classified? They are classified as permanent total disability benefits and the permanent 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.13A(c ), RA No. 8282] 31. What are the disability benefits provided by SSS? (1) Upon the permnanent total disability of a member who has paid at least 36 monthly contributions prior to the semester of disability, he shall be entitled to the monthly pension. [Sec.13-A(a)] (2) If the disability is permanent partial, and such disability occurs before the 36 monthly contributions have been paid prior to the semester of disability, the benefit shall be such percentage of the lump sum benefit prescribed in the preceding paragraph with due regard to the degree of disability as the Commission may determine. (3) If the disability is permanent partial and such disability occurs after 36 monthly contributions have been paid prior to the semester of disability, the benefit shall be the monthly pension for permanent total disability payable than the period designated in the schedules set forth in par. (f), Sec.13-A, RA No. 8282. 32. When is the monthly pension as well as the dependent's pension be suspended? The monthly pension and the dependent's pension shall be suspended upon the re-employment or resumption of self-employment or the recovery of the disabled member from his permanent total disability or his failure to present himself for examination of at least once 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 total disability 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 monthly pensions upon the death of the permanent total disability pensioner. (Sec.13-A) 35. If a retired employee pensioner dies, what death benefits if any will his beneficiaries and dependents get? Upon the death of the retired employee pensioner, his primary beneficiaries shall be entitled to the monthly pension and if he has no primary beneficiaries, his secondary beneficiaries shall be entitled to a lump sum benefit. [Sec. 12-B (c ), RA No. 8282]. 36. In case no beneficiary qualifies for entitlement of death benefit under 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 becomes sick and is confined in a hospital for more than three days or elewhere with the Commission's approval. Such daily sickness benefit equivalent to 90% of his average daily salary credit. (Sec.14). * Average daily salary credit - the result obtained by dividing the sum 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, injury or 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 in one calendar year; (2) The daily sickness benefits shall not be paid for more than 240 days on account of the same confinement; and (3) The employee shall notify his employer of the fact of his sickness 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 provided said employer complied the notification requirement. 41. Give the effect if the employer has failed to make the proper notification. The employer is not entitled to reimbursement. 42. When is the employer or the unemployed member not entitled to reimbursement of sickness benefits? (1) Where the employer failed to notify the SSS of the confinement; (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) year from date of confinement. 43. Who are entitled to maternity benefit under SSS?

A female employee who has paid at least three (3) monthly contributions in the twelve month period immediately preceding the semester of her childbirth or miscarriage shall be paid daily maternity benefit 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 her pregnancy and the probable date of her childbirth which notice shall be transmitted to the SSS in accordance with the rules and regulations it may provide; (2) The full payment shall be advanced by the employer within 30 days from the filing of the maternity leave application. (3) That the payment of daily maternity benefits shall be a bar to the recovery of sickness benefits provided by this Act for the same period for which daily maternity benefits have been received. (4) That the maternity benefits provided under this section shall be paid only for the first four (4) deliveries or miscarriages. [Sec.14A(a-d), RA No. 8282]. 45. What are the effects if no contributions being made due to the fault of the employer? As a rule, the SSS shall immediately reimburse the employer of the 100% of the amount of maternity benefits advanced by the employer upon the receipt of satisfactory proof of such payment and legality thereof [Sec.14-A(e), RA No. 8282]. However, if an employee should give birth or suffer a miscarriage without the required contribution having been remitted for her by her employer to the SSS or without the latter having been previously notified by the employer of the time of the pregnancy, the employer shall pay to the SSS damages equivalent to the benefits which said employee member would otherwise have been entitled to [Sec.14-A(f), RA No. 8282].

46. Who are those beneficiaries disqualified to receive any benefits under the SSS law? Those beneficiaries who are nationals of foreign countries which do not extend benefits to the Filipino beneficiaries residing in the Philippines or which are not recognized by the Philippines, shall not be entitled to receive any benefit under this Act; Provided, that notwithstanding the foregoing, where the best interest of the SSS will be served, the Commission may direct payments without regard to nationality or country of residence. (Sec.15, RA No. 8282). 47. What are the characteristics of the SSS benefits? (1) (2) (3) (4)

Enjoyable only by covered members; Non-transferrable (Sec.15) Exempted from tax or attachments (Sec.16) 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 member in accordance with Sec. 18 of this Act. 49. Define compensation. All actual remunerations for employment, the mandated cost of living allowance, as well as the cash value of any remuneration paid in any medium other than cash except that part of the remuneration received during the month in excess of the maximum salary credit as provided 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 and payment of contributions and proper collection and payment of contributions and proper identification of the employer and the employee. 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 current administrative and operational expenses incidental to the carrying of this 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 the current benefit obligations thereof shall be known as the "Investment Reserve Fund" which the Commission shall manage and invest with the skill, care, prudence and diligence necessary under the circumstances then prevailing that a prudent man setting in like capacity and familiar with such matters would exercise in the conduct of an enterprise of a like character and with similar aims. (Sec.26, RA No. 8282). 54. For what purpose are the contributions to the Social Security System utilized? The revenue of the SSS are to be used to meet current administrative and operational expenses and for the payment of the benefits under the SSS law. 55. What are the various loans that may be extended by SSS to its members?

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 units shall prior to issuing any annual business license or permit, require submission of certificate of SSS coverage and compliance with the provisions of this Act. Provided, that the certification or clearance shall be issued by the SSS within five (5) working days from receipt of the request [Sec.239(g), RA No. 8282]. 57. Relative to the SSS Investment Reserve Fund, in what fields of investments are they allowed to be invested? The SSS Reserve Fund may be invested in any or all of the following: (1) Interest-bearing bonds or securities of the Government of the Philippines; (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 determination of the Social Security Commission, shall redound to the benefit of the SSS, 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 estate of the SSS member. Further, persons other than the heirs of deceased employee may be entitled to the said benefits. 59. What are the proprietary functions of the SSS? The SSS is exercising proprietary reasons for the following reasons: (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 its members and their beneficiaries. Any doubt shall be resolved in favor of the claimant. Even if a person was mistakenly or wrongfully covered, when he paid the premium regularly and where the mistaken covered was discovered only after his death, his beneficiaries or heirs upon his death, shall be entitled to the death benefits. Thus it was ruled that the provisions of the SSS should be liberally construed in favor of those seeking its benefits. Any interpretation which would defeat rather than promote the ends for which the SSS was enacted should be schewed. 61. Distinguish ECC and SSS. Employers' Compensation System 1) requires injury or death to be work be work connected 2) only employers contribute contribute 3) no loan benefits

Social Security 1) injury or death need not connected 2) both are required to 3) affords loan benefits

4) administered by Employees Compensation Commission

4) GSIS or SSS

62. What rules or guidelines govern the Househelpers? Circular No. 21-V dated September 1, 1993 entitled " Guidelines on 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 the SSS 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 one thousand 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 household services exclusively to a household employer. (i.e., driver, babysitter, gardener, cook, nursemaid, etc.) (2) Domestic or household services - service in the employer's home which is usually necessary or desirable for the maintenance thereof and includes ministering to the personal comfort and convenience of the members of the employer's household including services of family drivers. (3) Household employer - any person who engages the services of a 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 the household helper's employer (Secs.1-3. I, (Circular No. 21-V). 65. Define Compensation, Contribution, Monthly Salary Credit and Quarter 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 the househelper and by his/her employer in accordance with the attached scheduled of Monthly contributions. (3) Monthly Salary Credit - the compensation base for contributions/benefits as indicated in the attached Schedule Monthly Contribution. (4) Quarter - period of three consecutive calendar months ending on 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 than 1 September 1, 1993. 67. What are required in the registration of househelpers? Prior to reporting by the household employer, a househelper subject to compulsory coverage shall first secure his SSS number by submitting duly accomplished SSS Form No. E-1 together with: birth certificate (in its absence, baptismal certificate) and if none, joint affidavit of two persons personally known attesting to the correct names and date of birth. 68. State the effect of separation. He may continue to pay voluntarily the contributions of both the employer and employee shares. If re-employed he can use the same SSS number. 69. What are the rights of the covered household employer? Covered househelper? A household employer shall be subject to the same rights and obligations 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, Implementing Guidelines). 70. What are the prohibited and penal acts under the SSS? (1) Whoever, for the purpose of any payment to be made under this Act, or under agreement thereunder, where none is authorized to be paid, shall make or cause to be made, false statement or representation as to any compensation paid or received or whoever makes or causes to be made any false statement of a material fact of any claim for any benefit payable under this act, or application for loan with SSS, or whoever or causes to be made false statement or representation, affidavit or document in connection with such claim or loan, shall suffer the penalty provided for in Art. 172 of the Revised Penal Code. (2) Whoever shall obtain or receive any money or check under this Act or any agreement thereunder, without being entitled thereto with intent to defraud any covered employee, employer or the SSS shall be fined not less than P5,000.00 nor more than P20,000.00 and imprisoned for not less than six years and one day nor more than 12 years. (3) Whoever buys, sells, offers for sale, uses, transfers, takes or gives in exchange, or pledges to give a pledge, except as authorized in this Act or in regulation made pursuant thereto any stamp, coupon, ticket, book or other device, prescribed pursuant to Sec.27 hereof by the Commission for the collection or payment of contributions required herein, shall be fined not less than P5,000.00 nor more than P20,000.00 or imprisoned for not less than six years and one day nor more than 12 years, or both at the discretion of the court. (4) Whoever, with intent to defraud, alters, forges or makes counterfeits any stamp, coupon, ticket, book or other device prescribed by the Commission for the collection or payment of any contribution required herein, or uses, sells, lends, or has in his possession any such altered, forged or counterfeited materials, or makes, uses, sells or has in his possession any material imitation of the 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 and one day nor more than 12 years, or both at the discretion of the court. (5) Whoever fails or refuses to comply with the provisions promulgated 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 less than six years and one day nor more than 12 years, or both at the discretion of the court. Provided, that when the violation consists in failure or refusal to register employees or himself, in case of the covered self-employed or to deduct contributions from employee's compensation and remit the same to the SSS, the penalty shall be a fine not less than P5,000.00 nor more than P20,000.00 and imprisoned for 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 shall appropriate the same, or shall take or misappropriate or shall consent or through abandonment or negligence shall permit any other person to take such property or funds, wholly or partially, or shall otherwise be guilty of misappropriation of such funds or property, shall suffer the penalties provided in Art. 217 of the RPC. (7) Any employer who, after deducting the monthly contribution or loan amortizations from his employee's compensation fails to remit said contribution to the SSS within 30 days from the date they become due shall be presumed to have misappropriated such contributions or loan amortizations and shall suffer penalties provided in Art.315 of the RPC. (Sec. 28, RA No. 8282). 71. In case juridical person commits any of the prohibited acts under the SSS law, who shall be liable? If the act or omission penalized by this Act be committed by an association, partnership, corporation or any other institution, its managing head, directors or partners shall be liable to the penalties provided in this Act for the offense. [Sec.28 (f), RA No.8282]. 72. Who will initiate the filing of the criminal cases under the penal cause of this Act?

Criminal action arising from a violation of the provisions of this Act may be commenced by the SSS or the employee concerned either under this Act or in appropriate case under the RPC; Provided, that such criminal action may be filed by the SSS in the city or municipality where the SSS provincial or regional office is located if the violation was committed within its territorial jurisdiction or in Metro Manila, at the 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 of which are circulated through dealers in Metro Mla. These dealers, who are single proprietors exclusively distributing the Daily News but handling competing dailies for a fixed amount per copy sold, engage the services of newsboys. These newsboys are given a specified number of copies to sell everyday within a six hour period in the morning. After this period, the newsboys are free to sell other newspapers or go to school or engage in other activities. Each newsboy is paid 50c for every copy sold. As counsel for the Phil. Daily News would you advise your client to report the dealers and newsboys as its employees pursuant to the SSS Act? (BAR 1987). I will advise my client not to cover the dealers and newsboys because Phil. Daily News will not qualify as their employer under the SSS law. They are not under its supervision or control. But dealers and newsboys may be covered by SSS as its self-employed persons. 2. Union Drug Company has sick leave policy, contained in a collective bargaining agreement requiring the accumulation of five days of the 15 days sick leave earned annually. Thus, an employee could use only 10 days of earned sick leave every year. The accumulated leave is convertible to cash when employment is terminated for any cause but may be used upon prior application with and approved by the company.

Pedro San Juan, an employee of the company, applied for sickness benefits under the Social Security Act, when he fell ill of pneumonia 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 benefits because 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 days in one calendar year; nor shall any unused portion of the 120 days of sickness benefit granted under this section be carried forward and added to the total number of compensable days allowable in the subsequent year [Sec.14(a)(1), RA No. 8282]. (2) The daily sickness benefit shall not be paid for more than 240 days on account of the same confinement. Second, The compensable confinement shall begin on the first day of sickness, and the payment of such allowances shall be promptly made by the employer every regular payday or on the 15th and last day of each month and similarly, in the case of direct payment by the 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 Development Corporation in August 1984 when it was being organized and had no fixed offices. The company did not ask for his Social Security Registration number, nor did it report him to the SSS. He died a year later 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 and the premiums covering the entire period from August 1984 were remitted. Leonardo's widow came to you for assistance. What would be your legal advice? (BAR 1987).

I will advise the widow that as primary beneficiary she is entitled to receive the SSS death benefits. The nonreporting is not fatal because the premium were adequately remitted. Since Leonardo failed to pay 36 monthly contributions, his widow is not entitled to a monthly pension but the widow as primary beneficiary is entitled to a lump sum benefit equivalent to 35 times the monthly pension. 4. Sapatilya Company, a manufacturer of wooden shoes, started its operations on Jan. 1, 1989. As of June 15, 1989, the company had in its payroll a general manager, an assistant general manager, three supervisors 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 10 casual employees who had been in the company since Feb. 16, 1989 and 12 contractual employees whose contract of employment with the company is for the period from Aug.1, 1989 to Sept. 30, 1989. Who among the aforementioned employees are under the coverage of the Social Security Law? When did their coverage under the said law take effect? (BAR 1987). All of them are covered (Sec. 9, RA No. 8282). Formerly, employment purely casual and not for the purpose of occupation or business of employer are not covered. The mandatory coverage of all employees takes effect on the day of their employment. 5. Don Jose, a widower owns a big house with a large garden. One day, his househelper and gardener left after they were scolded. For days, Don Jose, who lives alone in the compound to look for someone who could water the plants in the garden and clean the house. He chanced upon Mang Kiko on the street and asked him to water the plants and clean the house. Without asking any question, Mang Kiko attended to the plants in the garden and cleaned the house. He finished the work in two days. (a). Is there an employer-employee relationship between Don Jose and Mang Kiko? (b) Are they compulsorily covered by the SSS? (BAR 1991).

(a) No employer-employee relationship exists between them. The test and elements of the relationship are not present. (b) No, he was performing a domestic service. He cannot be covered 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 doing household or domestic services within the coverage of SSS. 6. Ma. Sara Mira is an unwed mother with three children from 3 different fathers. In 1999, she became a member of the Social Security System. In August 2000, she suffered a miscarriage, also out of wedlock and again by a different father. Can Ma. Mira claim maternity benefits 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 benefits cannot extend beyond four deliveries/miscarriages. 7. Marvin Patrimonio is a caddy rendering caddying services for the members and guests of the Barili Gold and Country Club. As such caddy, he is subject to Barili's golf's rules and regulations governing Caddies regarding conduct, dress, language, etc. However, he does not have to observe any working hours, he is free to leave anytime he pleases and he can stay away for as long as he likes. Nonetheless, if he is found remise in the observance of club rules, he can be disciplined by being barred from the premises of the Barili Golf. Is Marvin within the compulsory coverage of the Social Security System? When? (BAR 1999). No employer-employee relationship exists between them (Manila Golf & Country Club, Inc. vs. IAC; 237 SCRA 207). However, Marvin Patrimonio may qualify as self-employed person under Sec.9-A of the Social Security Act of 1997.

FREQUENTLY ASKED QUESTIONS ON SSS 1. How can one register with the SSS?

a. General Requirements A person registering with the SSS for the first time as an employee, self employed, non-working spouse or OFW should submit, together with 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 employment o GSIS member's record o certificate from the National Archive o birth/baptismal certificate of children o marriage contract o driver‘s license o school records or voter‘s ID card o Alien Certificate of Registration, or o joint affidavit of two disinterested parties attesting to the correct name and/or fact of birth of the person concerned A married person should also submit his or her marriage contract upon registration. If reporting children, he or she should submit the birth or baptismal certificate of the child, if legitimate; proof of filiation showing acknowledgment of the child, if illegitimate; or decree of adoption, if legally adopted. The original or certified true copies of these documents should be presented to the SSS for authentication. b. For Employees An employee should accomplish SSS Form E-1 (Personal Data Record) and submit it together with the general requirements. c. For Employers a. Single Proprietorships An owner of a single proprietorship business should accomplish and submit SSS Forms R-1 (Employer's Data Record) and R-1A (Initial or Subsequent List of Employees). b. Partnerships Any of the partners of a partnership firm should accomplish SSS Forms R-1 (Employer's Data Record) and R-1A (Initial or Subsequent List of Employees) and submit these forms together with a photocopy of the Articles of Partnership. The original copy of the Articles of Partnership must be presented for authentication.

c. Corporations A corporation must accomplish SSS Forms R-1 (Employer's Data Record) and R-1A (Initial or Subsequent List of Employees) signed by its President or any of the corporate officers or incorporators and submit these forms together with the photocopy of the Articles of Incorporation. The original copy of the Articles of Incorporation must be presented to the SSS for authentication. d. Household-Helper Employers A household-helper employer who has an existing SS number should use his personal SS number as his employer number in all transactions with regard to his householdhelper. 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 Members A self-employed person should accomplish SSS Form RS-1 (SelfEmployed Data Record) and submit it together with the general requirements. If the self-employed member has employees, he should also register as an employer and secure an employer ID number that his company must use in all transactions with the SSS. e. For Voluntary Members a. Separated Members A member who is separated from employment or ceased to be selfemployed/ overseas Filipino worker/ non-working spouse and would like to continue paying his contributions should get in touch with the nearest SSS office. Being a previous member, he will not be issued a new number. It is only his membership status that will be changed from covered employee, self-employed, OFW or non-working spouse to a voluntary paying member. b. Non-Working Spouses A non-working spouse should accomplish SSS Form NW-1 (NonWorking Spouse Data Record) and submit it, duly signed by the working spouse, with a copy of his marriage certificate. In the absence of the marriage certificate, the applicant may submit a copy of SSS Form E-1 or E-4 of the working spouse where his name is reported.

c. Overseas Filipino Workers (OFWs) An OFW should accomplish SSS Form OW-1 (Overseas Worker Record Form) 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 the nearest SSS office by accomplishing SSS Form E-4 (Member's Data Amendment 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 civil registrar of the place where the member was born and from the parish priest of the locality where the member was baptized, together with any 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 concerned The original or certified true copies of the documents should be presented 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 married spouse, legitimate, legitimated, legally adopted or illegitimate children. These are his primary beneficiaries. If he is single, his benefits will go to his dependent parents, who are considered his secondary beneficiaries. In the absence of both primary and secondary beneficiaries, whoever is 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 SS number, should he secure another SS number? No. The SS number assigned to a member is his lifetime number and must always be used in all transactions with the SSS. He should not secure another number at any other time. If he wishes to secure another SS ID and cannot remember his SS number, he may inquire from the nearest SSS office. 5. What are the duties and responsibilities of an SSS employeemember? 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 his employer every quarter; 5. pay his monthly loan amortization, if any, through salary deduction and ensure that these payments are remitted to the SSS by his employer; 6. update or correct his personal records with the SSS by submitting a duly filled-up SSS Form E-4 (Member's Data Amendment Form) and supporting documents, such as marriage certificate for change of status, or birth or baptismal certificate for change or correction of name or date of birth, to avoid delays in the processing of benefit claims; and 7. be conscious of changes and improvements in SSS policies and benefit structure. 6. What are the duties and responsibilities of an SSS employermember? 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 of the nearest SSS office; 4. deduct from his employees the monthly SS contribution based on the schedule of contributions; pay his share of contributions including Employees' Compensation (EC) and remit these contributions to any SSS-accredited bank within five days after the covered month; 5. submit a summary of all his employees' contributions (Contribution Collection List) together with a copy of the Special Bank Receipt (SBR) and SSS Form R-5 (Payment Return Form) to the nearest SSS branch or Postal Services Office within 10 days after the applicable quarter; An employer may also participate in the SSSNet, a computer service using the electronic data interchange technology, designed to hasten the posting of employees contributions for faster processing and availment of benefits and loan privileges. Employers who are using this facility shall pay their employees' contributions and transmit both the employee and employer contributions data on or before the 10th day following the month when said contributions are due and applicable. Or, the employer may opt to participate in the R3 Tape/ Diskette Project, which allows the submission of the quarterly summary of employees' contributions thru a computer tape or diskette. This system is a better alternative to manual reporting as it minimizes encoding errors and processing time. Under this scheme, the employer shall submit the R3 tape or diskette on or before the last working day of the applicable month. 6. issue official receipts and maintain official records of employment and remittances for all contributions deducted from his employees every month or indicate such deductions from his employees' pay envelopes; A household helper employer should submit an accomplished SSS 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 the Auto-Debit Arrangement System, which allows the one-time enrollment of the employer's bank account for the automatic payment of monthly SS contributions and loan repayments. This arrangement is open at the United Coconut Planters Bank, Far East Bank and Trust Co., Equitable Bank, Bank of the Philippine Islands, Metropolitan Bank and Trust Co. and the Philippine National Bank. 7. remit to the SSS all salary, educational, stocks investment or privatization loan amortization of his employees and submit an accomplished SSS Form ML-1 (Quarterly Salary/ Educational/ Calamity/ Stock Investment Loan Payment Return Form) to any of the SSS-accredited banks on or before the 20th day of the month after the applicable quarter; submit a summary of all employees' loan amortization thru an accomplished SSS Form ML-2 (Collection List) with copies of the SBRs and SSS Form ML-1 to the nearest branch or Postal Services Office within 10 days after the applicable quarter; An employer may also participate in the Salary Loan Repayment Tape/Diskette project, which allows the submission of the quarterly summary of employees' loan repayment thru a computer tape or diskette. This system provides the employer with convenience and hastens the posting of member's loan repayments. Under this scheme, the employer shall submit the ML-2 tape or diskette on or before the last working day of the applicable month. 8. advance SS and EC sickness benefits due his employees once these are approved by the SSS; 9. advance SS maternity benefits due to qualified female employees; 10. file for reimbursement for all legally advanced sickness and maternity 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, business name, or temporary/permanent cessation of business operations thru the submission of a duly notarized SSS Form R-8 (Employer's Data Amendment Form); 14. submit annually an updated SSS Form L-501 (Specimen Signature Card); and, 15. certify Medicare forms and other SSS-related documents for the employees when required for purposes of their claims. 7. What are the duties and responsibilities of a voluntary/self-employed member? A voluntary/self-employed member should: 1. pay his contributions using SSS Form RS-5 (Contributions Payment Return Form) monthly or in accordance with the prescribed schedule; In case of change in monthly earnings or contribution, he should notify the nearest SSS office in writing. 2. update or correct his personal records with the SSS by submitting a duly filled-up SSS Form E-4 (Member's Data Amendment Form) and supporting documents such as marriage certificate; 3. be conscious of changes and improvements in SSS policies and benefit structure. Self-employed and voluntary members in the National Capital Region may enroll in the Auto-Debit Arrangement System, which allows the one-time enrollment of the member's bank account for the automatic payment of monthly SSS contributions and loan repayments. This arrangement is open at the United Coconut Planters Bank, Far East Bank 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 exceeding P15,000 and payable by both employer (6.07%) and employee (3.33%). 2. EC - 1% of average monthly compensation not exceeding P1,000 and payable only by the employer.

9. What is the basis for determining the monthly salary credit and monthly contributions of an SSS member? 1. For an employee - The monthly salary credit should be based on the total actual remuneration from employment, including cost of living allowance, as well as the cash value of any remuneration paid in kind as stated in the Social Security Law of 1997, Sec. 8 (f). The monthly contributions of a member can be determined based on his monthly salary credit which will be according to the Table of Contributions. 2. For self-employed or voluntary members - the monthly earnings declared at the time of registration shall be the basis of his monthly salary credit. However, the declared earnings should 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 is P15,000 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 in the SSS head office;  electronic data interchange (EDI) for enrolled employer members;  automatic debit arrangement (ADA) with banks. 12. How should the member pay his monthly contributions? 1. For an employee, including household helpers - monthly through salary deduction, starting on the first month of employment. The employer should use SSS Form R-5 (Contributions Payment Return) 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 Payment Return 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 Form RS-5 (Contributions Payment Return for Self-employed/ Voluntary Members) for payment through accredited banks or over-the-counter. He may also pay through ADA. Self-employed and voluntary members are allowed to change their monthly salary credit (MSC) once in a given year without a need for a written request. Increase or decrease in MSC shall be up to 20 percent of the current MSC but in no case shall it be lower than P1,000 (P3,000 for OFWs). Increase made in excess of 20 percent shall require the presentation and submission of a copy of the income tax return (ITR) for the prior year, duly received by the Bureau of Internal Revenue (BIR). Retroactive payment of contributions will not be allowed for self employed and voluntary members. 13. When is the remittance of contributions due? 1. For employers 1. Employers who remit through the electronic data interchange (EDI) system - on or before the 10th day of the month following the applicable month 2. Household employers who remit through automatic debit arrangement (ADA) - deducted from bank account every 10th day of the month following the applicable month 3. Employers, including household helper employers, who remit over-the-counter or through banks - on or before the 5th calendar day of the month following the applicable month 2. For self-employed and voluntary members 1. 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 following the applicable month 2. Self-employed and voluntary members who remit overthe-counter or through banks - on or before the 5th day of the month following the applicable month 14. When and how should employers report their contribution payments 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 the applicable month. 2. Household employers who remit through automatic debit arrangement (ADA) - reporting is done between the SSS and the bank upon enrollment of the employer. 3. Employers, including household employers, who remit over-thecounter or through banks - within the first 10 days after every quarter ending in March, June, September and December using the Contribution Collection List (SSS Form R-3) with the copies of the validated SSS Form R-5 and SBR; or within the first 5 days following the applicable month using R-3 diskette with copies of the validated Form R-5 and SBR and transmittal letter.

PRIMER ON GOVERNMENT SERVICE INSURANCE SYSTEM-Republic Act 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 Service Insurance 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 amended by Republic Act No. 8921? PD 1146 is the law expanding and improving the Social Service Insurance System. It increases the pension benefits, expands disability benefits, expands disability benefits, expands disability benefits and will eventually extend the compulsory coverage of the

social security and insurance programs to all government officers regardless 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 or controlled corporations, and financial institutions with original charters, 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 an employer as defined herein, whether by election or appointment, irrespective of status of appointment, including barangay and Sanggunian officials; 5. Who may be considered as dependents of a member? Dependents shall be the following: (a) the legitimate spouse dependent for support upon the member or pensioner; (b) the legitimate, legitimated, legally adopted child, including the illegitimate child, who is unmarried, not gainfully employed, not over the age of majority, or is over the age of majority but incapacitated and incapable of self-support due to a mental or physical defect acquired prior to age of majority; and (c) the parents dependent upon the member for support; 6. Classify the different beneficiaries of a member. a. Primary beneficiaries- The legal dependent spouse until he/she remarries 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 the sources of funds of GSIS? a. Contribution- the amount payable to the GSIS by the member and the 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 emoluments received in addition to the basic pay which are not integrated into the basic pay under existing laws ( Sec 2(j), GSIS)

c. The funds of the GSIS come from the monthly contributions required by 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 employees receiving compensation who have not reached the compulsory retirement age, irrespective of employment status, except members of the Armed Forces of the Philippines and the Philippine National Police, subject to the condition that they must settle first their financial obligation with the GSIS, and contractuals who have no employer and employee 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 the GSIS shall have life insurance, retirement, and all other social security protections such as disability, survivorship, separation, and unemployment 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 the event 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, their corresponding employment status, positions, salaries and other information; 2. To remit directly to GSIS the employer and employees contribution within the first ten days of the calendar month following the month to which the contributions apply. (Section 6, 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 of GSIS. The benefits are: 1. Basic monthly pension benefit 2. Separation benefits 3. Retirement benefits

4. Permanent disability benefits 5. Temporary disability benefits 6. Survivorship benefits 7. Funeral benefits 8. Life insurance benefits 12.How is the basic monthly basic Pension Computed? SEC. 9. Computation of the Basic Monthly Pension. - (a) The basic monthly pension is equal to: "1) thirty-seven and one-half percent (37.5%) of the revalued average monthly compensation; plus "2) two and one-half percent (2.5%) of said revalued average monthly compensation 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 the recommendation of the President and General Manager of the GSIS and approved by the President of the Philippines in accordance with the rules and regulations prescribed by the GSIS: Provided, however, that the basic monthly pension shall not be less than One thousand and three hundred pesos (P1,300.00): Provided, further, that the basic monthly 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 for the purpose of determining the amount of benefits payable under this Act shall be from the date of original appointment/election, including periods of service at different times under one or more employers, those performed overseas under the authority of the Republic of the Philippines, and those that may be prescribed by the GSIS in coordination with the Civil Service Commission. "(b) All service credited for retirement, resignation or separation for which corresponding benefits have been awarded under this Act or other laws shall be excluded in the computation of service in case of reinstatement in the service of an employer and subsequent retirement or separation which is compensable under this Act. "For the purpose of this section, the term service shall include fulltime service with compensation: Provided, that part-time and other

services with compensation may be included under such rules and regulations 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 15 years of service. Provided That if he has less than 15 years of service he may be allowed to continue in the service in accordance with existing 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 equivalent to one hundred percent (100%) of his average monthly compensation for each year of service he paid contributions, but not less than Twelve thousand pesos (P12,000) payable upon reaching sixty (60) years of age upon separation, whichever comes later: Provided, that the member resigns or separates from the service after he has rendered at least three (3) years of service but less than fifteen (15) years; or "(b) a cash payment equivalent to eighteen (18) times his basic monthly pension at the time of resignation or separation, plus an oldage pension benefit equal to the basic monthly pension payable monthly for life upon reaching the age of sixty (60): Provided, that the member resigns or separates from the service after he has rendered at least fifteen (15) years of service and is below sixty (60) years of age at the time of resignation or separation. 16. Supposing a government employee retires, what are the benefits that he may receive from the GSIS? Retirement benefits shall be: "(1) the lump sum payment as defined in this Act payable at the time of retirement plus an old-age pension benefit equal to the basic monthly pension payable monthly for life, starting upon expiration of the five-year (5) guaranteed period covered by the lump sum; or "(2) cash payment equivalent to eighteen (18) months of his basic monthly pension plus monthly pension for life payable immediately with 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) years of age with at least fifteen (15) years of service: Provided, That if he has less than fifteen (15) years of service, he may be allowed to

continue in the service in accordance with existing civil service rules and 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 total disability. 18. Under the GSIS, what are the two classes of disability benefits? 1. Permanent Disability Benefits 2. Temporary Disability Benefits 19. What do you mean by the following terms: 1. disability 2. total disability 3. permanent total disability 3. temporary total disability 4. permanent partial disability? 1. Disability- any loss or impairment of the normal functions of the physical and/ or mental faculty of a member which reduces or eliminates his/ her capacity to continue with his/her current gainful occupation or engage in any other gainful occupation. 2. Total disabilty- complete incapacity to continue with his present employment or engage in any gainful occupation due to the loss or impairment of the normal functions of the physical and/ or mental faculties of the members. 3. Permanent total disability- accrues or arises when recovering from impairment mentioned in Sec 2 Q is medically remitted. 4. Temporary Total Disability- accrues or arises when the impaired physical or mental faculties can be rehabilitated and/ or restored to their 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 benefits 2. Permanent partial disability benefits

21. What are the general conditions that must concur before a member may be entitled to permanent disability benefits? A member, who suffers permanent disability for reasons not due to his grave misconduct, notorious negligence, habitual intoxication, or willful intention to kill himself or another, shall be entitled to the benefits 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 receive because of such disability? If the permanent disability is total, he shall receive a monthly income benefit for life equal to the basic monthly pension effective from the date 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 immediately preceding 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 a total of at least one hundred eighty (180) monthly contributions, in addition 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 income benefit for permanent disability and the old-age retirement simultaneously. "(b) If a member who suffers permanent total disability does not satisfy conditions (1) and (2) in paragraph (a) of this section but has rendered at least three (3) years of service at the time of his disability, he shall be advanced the cash payment equivalent to one hundred percent (100%) of his average monthly compensation for each year of service he paid contributions, but not less than Twelve thousand pesos (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, whose decision shall 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 due to any of the conditions enumerated in Section 15 hereof shall be entitled to seventy-five percent (75%) of his current daily compensation for each day or fraction thereof of temporary disability benefit not exceeding one hundred twenty (120) days in one calendar year after exhausting all his sick leave credits and collective bargaining agreement sick leave benefits, if any, but not earlier than the 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 service and has paid at least six (6) monthly contributions in the twelve-month period immediately preceding his disability. "Provided, however, That a member cannot enjoy the temporary total disability 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 temporary total disability benefit may be extended by the GSIS but not to exceed a total of two hundred forty (240) days. 27. In case a GSIS pensioner dies, will his survivors receive any benefit 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 the conditions therein provided for. The survivorship pension shall consist of: (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 deceased member 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 has rendered at least 15 years of creditable service: 1. The primary beneficiaries shall receive the survivorship pension and cash payment equivalent to 18 x the basic monthly pension; or 2. In the absence of primary beneficiaries, his secondary, the legal heirs of members shall receive the cash payment. Second, if at the time of death, the member was in the service with less than 15 years of creditable service, his primary beneficiaries shall receive the cash payment equivalent to 100% of the average monthly compensation for every year of creditable service, but not less than P12, 000 . 29. What should be the governing rules and policies on the survivorship benefits of inactive members? 1. Survivors of members who retired under retirement laws not administered by the GSIS shall not receive any survivorship benefits from the system. 2. Primary beneficiaries of inactive members who have at least 15 years of creditable service shall receive the survivorship pension. 3. Primary beneficiaries of inactive members who have at least three years but les than 15 years of creditable service and were less than sixty years of age at the time of death shall receive a cash benefit equivalent of 100% of the deceased

inactive member‘s average monthly compensation for every year of creditable service but not less than P12,000. 4. Primary beneficiaries of inactive members who have less than 15 years of creditable service and were at least 60 years of age at time of separation from service, shall not be entitled to receive survivorship benefits. However, if the member has not yet received the separation benefits within four years after his separation, the primary beneficiaries shall receive the cash benefit equivalent to 100% of the inactive member‘s average monthly compensation for every year of creditable service. 30. State the new rule or policy on the GSIS Pensioner or Recipient of Monthly Income Benefits for Permanent Total Disability? The survivorship benefits of a retiree- pensioner or a member receiving a monthly income benefit for permanent total disability shall be entitled to: 1. The primary beneficiaries shall receive the survivorship pension. 2. In the case of a pensioner who dies within the covered period by the lump sum, the survivorship pension shall be paid after the expiration of the said period. 31. Under Res. No. 188, what is meant by average monthly compensation(AMC)? Consistent with the Premium based Policy, the AMC shall be the average salary for the last three years of service of the member prior to his/ hr death or separation, where the corresponding premium contributions have been paid and remitted to the GSIS.( Res. No. 188 No. 6, August 13, 2003). 32. Under the GSIS law, is there such a thing as compulsory life insurance? Yes, all employees except for Members of the Armed Forces of the Philippines (AFP) and the Philippine National Police (PNP) shall, under such terms and conditions as may be promulgated by the GSIS, be compulsorily covered with life insurance. 33. What are the benefits under the compulsory insurance?

The member of his designated beneficiaries/ legal heirs are entitled to any of the following benefits available under the compulsory life insurance: 1. Maturity benefit 2. Death Benefit 3. Accident Cash benefit 4. Cash Surrender Value 5. Insurance Loans 34. What are the two classes of life insurance under the GSIS? 1. Compulsory life insurance 2. Optional Insurance 35. When may a member apply for optional insurance? What are the benefits under an optional life insurance policy. Subject to the rules and regulations prescribed by GSIS, a member may apply for insurance and / or pre need coverage embracing life, health, hospitalization, education, memorial plans, and such other plans as may be designed by the GSIS for himself and/ or his dependents. 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 and pre- need products may be made by the insured or his employer and/ or any person acceptable to the GSIS. 37. Until what time should claims for benefits under the GSIS law be filed? Claims for benefits under this Act except for life and retirement shall prescribe 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 to ineligible/disqualified party?

Payments made by the GSIS, prior to receipt of an adverse claim,to a beneficiary or claimant subsequently found not entitled thereto shall not bar the legal and eligible recipient to his right to demand the payment of benefits, proceeds and claims from the GSIS, who shall however, have a right to institute the appropriate action in a court of law against the ineligible recipient.(Sec 29 GSIS) 40. What government agency has exclusive original jurisdiction to hear disputes arising from the GSIS law? The GSIS shall have original and exclusive jurisdiction to settle any disputes arising under this Act and any other laws administered by the GSIS. The Board may designate any member of the Board, or official of the GSIS who is a lawyer, to act as hearing officer to receive evidence, make findings of fact and submit recommendations, together with all documentary and testimonial evidence to the Board within thirty (30) working days from the time the parties have closed their respective evidence and filed their last pleading. The Board shall decide the case within thirty (30) days from the receipt of the hearing officer‘s findings and recommendations. The cases heard directly by the Board shall be decided within thirty (30) working days from the time they are submitted 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 on any GSIS dispute within its jurisdiction? They have the power: 1. To administer oaths and affirmation 2. Take depositions 3. Certify to official acts 4. 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 by Rules 43 and 45 of the 1997 Rules of Civil Procedure adopted by the Supreme 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 shall be 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 or reclusion perpetua is imposable. The appeal shall not stay the execution of the order or award unless ordered 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 of certiorari when proper. 43. What constitute GSIS Social Insurance Fund? All contributions payable under Sec. 5 of this Act together with the earnings and accrual thereon shall constitute the GSIS social Insurance Fund (Section 34, GSIS) 44. What are the other funds being administered by GSIS? 1. Optional Insurance Fund 2. Employees‘ Compensation Insurance Fund 3. General Insurance Fund 4. 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 last day of service in the government: Provided, That all requirements are submitted to the GSIS within a reasonable period prior to the effective date of the retirement; 46. In case an employee is also covered by another law, which grants similar 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 the GSIS law: ―Exclusiveness of Benefits. - Whenever other laws provide similar benefits for the same contingencies covered by this Act, the member who qualifies to the benefits shall have the option to choose which benefits will be paid to him. However, if the benefits provided by the law chosen are less than the benefits provided under this Act, the GSIS 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 to determine 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 and employees; 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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