III Labor(LaborStandards)

III. LABOR STANDARDS
A. Hours of work
1. Coverage/Exclusions (Art. 82, Labor Code)
Art. 82. Coverage. The provisions of this Title shall apply to employees in all establishments and undertakings
whether for profit or not, but not to government employees, managerial employees, field personnel, members
of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal
service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate
regulations.
As used herein, "managerial employees" refer to those whose primary duty consists of the management of the
establishment in which they are employed or of a department or subdivision thereof, and to other officers or
members of the managerial staff.
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in the field cannot
be determined with reasonable certainty.
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE I
Hours of Work
SECTION 1. General statement on coverage. — The provisions of this Rule shall apply to all employees in all
establishments and undertakings, whether operated for profit or not, except to those specifically exempted
under Section 2 hereof.
SECTION 2. Exemption. — The provisions of this Rule shall not apply to the following persons if they qualify for
exemption under the conditions set forth herein:
(a) Government employees whether employed by the National Government or any of its political
subdivision, including those employed in government-owned and/or controlled corporations;
(b) Managerial employees, if they meet all of the following conditions:
(1) Their primary duty consists of the management of the establishment in which they are
employed or of a department or sub-division thereof.
(2) They customarily and regularly direct the work of two or more employees therein.
(3) They have the authority to hire or fire employees of lower rank; or their suggestions and
recommendations as to hiring and firing and as to the promotion or any other change of status of
other employees, are given particular weight.
(c) Officers or members of a managerial staff if they perform the following duties and responsibilities:
(1) The primary duty consists of the performance of work directly related to management policies
of their employer;
(2) Customarily and regularly exercise discretion and independent judgment; and
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty
consists of the management of the establishment in which he is employed or subdivision thereof;
or (ii) execute under general supervision work along specialized or technical lines requiring
special training, experience, or knowledge; or (iii) execute, under general supervision, special
assignments and tasks; and
(4) Who do not devote more than 20 percent of their hours worked in a work week to activities
which are not directly and closely related to the performance of the work described in paragraphs
(1), (2) and (3) above.
(d) Domestic servants and persons in the personal service of another if they perform such services in
the employer's home which are usually necessary or desirable for the maintenance and enjoyment
thereof, or minister to the personal comfort, convenience, or safety of the employer as well as the
members of his employer's household.

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(e) Workers who are paid by results, including those who are paid on piece-work, "takay," "pakiao" or
task basis, and other non-time work if their output rates are in accordance with the standards prescribed
under Section 8, Rule VII, Book Three of these regulations, or where such rates have been fixed by the
Secretary of Labor and Employment in accordance with the aforesaid Section.
(f) Non-agricultural field personnel if they regularly perform their duties away from the principal or
branch office or place of business of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty.
2. Normal hours of work
Art. 83. Normal hours of work. The normal hours of work of any employee shall not exceed eight (8) hours a
day.
Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals
and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a
day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require
that such personnel work for six (6) days or forty-eight (48) hours, in which case, they shall be entitled to an
additional compensation of at least thirty percent (30%) of their regular wage for work on the sixth day. For
purposes of this Article, "health personnel" shall include resident physicians, nurses, nutritionists, dietitians,
pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives,
attendants and all other hospital or clinic personnel.
Art. 84. Hours worked. Hours worked shall include (a) all time during which an employee is required to be on
duty or to be at a prescribed workplace; and (b) all time during which an employee is suffered or permitted to
work.
Rest periods of short duration during working hours shall be counted as hours worked.
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE I
Hours of Work
SECTION 3. Hours worked. — The following shall be considered as 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 work place; and
(b) All time during which an employee is suffered or permitted to work.
SECTION 4. Principles in determining hours worked. — The following general principles shall govern in
determining whether the time spent by an employee is considered hours worked for purposes of this Rule:
(a) All hours are hours worked which the employee is required to give his employer, regardless of
whether or not such hours are spent in productive labor or involve physical or mental exertion.
(b) An employee need not leave the premises of the work place in order that his rest period shall not be
counted, it being enough that he stops working, may rest completely and may leave his work place, to
go elsewhere, whether within or outside the premises of his work place.
(c) If the work performed was necessary, or it benefited the employer, or the employee could not
abandon his work at the end of his normal working hours because he had no replacement, all time spent
for such work shall be considered as hours worked, if the work was with the knowledge of his employer
or immediate supervisor.
(d) The time during which an employee is inactive by reason of interruptions in his work beyond his
control shall be considered working time either if the imminence of the resumption of work requires the
employee's presence at the place of work or if the interval is too brief to be utilized effectively and
gainfully in the employee's own interest.
a) Compressed work week
DOLE Department Advisory No. 02, Series of 2004
(http://www.dole.gov.ph/fndr/bong/files/DA%2002-04.pdf, July 27, 2014)
Republic of the Philippines
DEPARTMENT OF LABOR AND EMPLOYMENT
Intramuros, Manila

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DEPARTMENT ADVISORY NO. 02
Series of 2004
IMPLEMENTATION OF COMPRESSED WORKWEEK SCHEMES
I. PURPOSE AND COVERAGE
This Advisory is being issued to guide employers and workers who may opt to adopt a mutually
acceptable compressed workweek (CWW) scheme suitable to the requirements of the firm.
This Advisory may be used in all establishments except those in the construction industry, health
services, in occupations requiring heavy manual labor, or in occupations or workplaces in which workers are
exposed to airborne contaminants, human carcinogens, substances, chemicals or noise that exceed threshold
limit values or tolerance levels for an eight-hour workday as prescribed under existing Occupation Safety and
Health Standards (OSHS).
II. POLICY
As a matter of policy, and taking into account the emergence of new technology and the continuing
restructuring and modernization of the work process, the Department of Labor and Employment (DOLE)
encourages employers and workers to enter into voluntary agreements adopting CWW schemes based on the
following objectives:
1. To promote business competitiveness and productivity, improve efficiency by lowering operating costs, and
reduce work-related expenses of employees;
2. To give employers and workers flexibility in fixing hours of work compatible with business requirements
and .the employees’ need for a balanced work life; and
3. To ensure the safety and health of employees at the workplace at all times.
For purposes of administering or enforcing existing laws and rules on work hours, overtime
compensation and other relevant labor standards, DOLE shall recognized only those CWW schemes that have
been entered into consistent with this Advisory.
III. CONCEPT AND DEFINITION
The Labor Code provides that the normal work hours per day shall be eight hours. Work may be
performed beyond eight hours a day provided the employee is paid for overtime work. On the other hand,
the normal number of workdays per week shall be six days, or a total of forty-eight (48) hours based on the
normal work of eight hours. This is without prejudice to firms whose normal workweek is five days, or a total
of forty (40) hours based on the normal workday of eight hours.
For purposes of this Advisory, a CWW scheme is an alternative arrangement whereby the normal
workweek is reduced to less than six days but the total number of normal work hours per week shall remain
at 48 hours. The normal workday is increased to more than eight hours without corresponding overtime
premium. This concept can be adjusted accordingly in cases where the normal workweek of the firm is five
days.
IV. SPECIFIC GUIDELINES
Conditions. DOLE shall recognize CWW schemes adopted in accordance with the following:
1. The CWW scheme is undertaken as a result of an express and voluntary agreement of majority of the
covered employees or their duly authority representatives. This agreement may be expressed through
collective bargaining or other legitimate workplace mechanisms of participation such a labor-management
councils, employee assemblies or referenda.
2. In firms using substances, chemicals and processes or operating under conditions where there are airborne
contaminants, human carcinogens or noise prolonged exposure to which may pose hazards to the
employees’ health and safety, there must be a certification from an accredited health and safety organization
or practitioner or from the firm’s safety committee that work beyond eight hours is within threshold limits or
tolerable levels of exposure, as set in the OSHS.
3. The employer shall notify the DOLE, through the Regional Office having jurisdiction over the workplace, of
the adoption of the CWW scheme. The notice shall be in DOLE CWW Report Form attached to this Advisory.
Effects. A CWW scheme which complies with the foregoing conditions shall have the following effects:
1. Unless there is a more favorable practice existing in the firm, work beyond eight hours will not be
compensable by overtime premium provided the total number of hours worked per day shall not exceed

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twelve (12) hours. In any case, any work performed beyond 12 hours a day or 48 hours a week shall be
subject to overtime premium.
2. Consistent with Article 85 of the Labor Code, employees under a CWW scheme are entitled to meal periods
of not less than sixty (60) minutes. Nothing herein shall impair the right of employees to rest days as well as
to holiday pay, rest day pay or leaves in accordance with law or applicable collective bargaining agreement
or company practice.
3. Adoption of the CWW scheme shall in no case result in diminution of existing benefits. Reversion to the
normal eight-hour workday shall not constitute a diminution of benefits. The reversion shall be considered a
legitimate exercise of management prerogative, provided that the employer shall give the employees prior
notice of such reversion within a reasonable period of time.
Administration of CWW Scheme. The parties to the CWW scheme shall be primarily responsible for its
administration. In case of differences of interpretation, the following shall be observed;
1. The difference shall be treated as grievances under the applicable grievance mechanism of the firm.
2. If there is no grievance mechanism or if this mechanism is inadequate, the grievance shall be referred to
the Regional Office which shall conduct a training and assistance visit (TAV) pursuant to Section 3 of
Department Order No. 57-04.
3. The purpose of the TAV is to ascertain, through the most practical and least litigious way possible, whether
or not the scheme is the result of a voluntary agreement or is supported by the appropriate certification from
an accredited safety and health organization or practitioner. Where appropriate, the TAV may include the
conduct, as may be appropriate, of a referendum or work environment measurement (WEM) to determine
actual work conditions.
To facilitate the resolution of grievances, employers are required to keep and maintain, as part of their
records, the documentary requirements proving that the CWW scheme was voluntarily adopted and the
certification that the scheme is consistent with OSHS.
4. In the absence of proof of voluntary agreement or safety and health certification, the employer shall pay
the employees concerned any overtime pay that may be owing to them as if the CWW scheme did not exist.
If it turns out that work beyond eight hours is not consistent with OSHS, the parties shall immediately revert
to a normal eight-hour workday.
V. PUBLICATION AND POSTING
This Advisory shall be published in two newspapers of general circulation and henceforth shall be part
of the labor education manuals to be developed by the DOLE. Every firm adopting a CWW scheme shall
ensure that a copy of this advisory is posted in a conspicuous location in the work place.
(SIGNED) PATRICIA A. STO. TOMAS
Secretary
02 December 2004
After resolving the technical aspects of this case, we now proceed to the merits thereof. The main issue in this
labor dispute is whether or not there was an illegal reduction of work when Linton implemented a compressed
workweek by reducing from six to three the number of working days with the employees working on a rotation
basis.
In Philippine Graphic Arts, Inc. v. NLRC, [G.R. No. L-80737, 29 September 1988, 166 SCRA 118.] the Court
upheld for the validity of the reduction of working hours, taking into consideration the following: the
arrangement was temporary, it was a more humane solution instead of a retrenchment of personnel, there was
notice and consultations with the workers and supervisors, a consensus were reached on how to deal with
deteriorating economic conditions and it was sufficiently proven that the company was suffering from losses.
The Bureau of Working Conditions of the DOLE, moreover, released a bulletin providing for in determining when
an employer can validly reduce the regular number of working days. The said bulletin states that a reduction of
the number of regular working days is valid where the arrangement is resorted to by the employer to prevent
serious losses due to causes beyond his control, such as when there is a substantial slump in the demand for
his goods or services or when there is lack of raw materials. xxx
As previously stated, financial losses must be shown before a company can validly opt to reduce the work hours
of its employees. However, to date, no definite guidelines have yet been set to determine whether the alleged
losses are sufficient to justify the reduction of work hours. If the standards set in determining the justifiability
of financial losses under Article 283 (i.e., retrenchment) or Article 286 (i.e., suspension of work) of the Labor
Code were to be considered, petitioners would end up failing to meet the standards.
On the one hand, Article 286 applies only when there is a bona fide suspension of the employer’s
operation of a business or undertaking for a period not exceeding six (6) months. [Phil. Industrial

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Security Agency Corp. v. Dapiton, 377 Phil. 951, 962 (1999)] Records show that Linton continued its
business operations during the effectivity of the compressed workweek, which spanned more than the
maximum period.
On the other hand, for retrenchment to be justified, any claim of actual or potential business losses must
satisfy the following standards: (1) the losses incurred are substantial and not de minimis; (2) the losses
are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be
effective in preventing the expected losses; and (4) the alleged losses, if already incurred, or the
expected imminent losses sought to be forestalled, are proven by sufficient and convincing evidence.
[Tanjuan v. Phil. Postal Savings Bank, Inc., 457 Phil. 993, 1009 (2003), reiterating Bogo-Medellin
Sugarcane Planters Association, Inc. v. NLRC, 357 Phil. 110, 120, 25 September 1998.] Linton failed to
comply with these standards.
Linton Commercial Co. Inc. vs. Alex A. Hellera, et. al. (G.R. No. 163147, October 10, 2007, Second
Division, J. Tinga)
3. Meal break
Art. 85. Meal periods. Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty
of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals.
Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE I
Hours of Work
Sec. 7. Meal and Rest Periods.—Every employer shall give his employees, regardless of sex, not less than one
(1) hour time-off for regular meals, except in the following cases when a meal period of not less than twenty
(20) minutes may be given by the employer provided that such shorter meal period is credited as compensable
hours worked of the employee;
(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than sixteen hours a day;
(c) In cases of actual or impending emergencies or there is urgent work to be performed on machineries,
equipment or installations to avoid serious loss which the employer would otherwise suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.
Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable
working time.
There is no such proof in support of Menese’s claim for overtime pay other than her contention that she worked
from 8:00 a.m. up to 5:00 p.m. She presented no evidence to show that she was working during the entire one
hour meal break. We thus find the NLRC’s deletion of the overtime pay award in order.
Emirate Security and Maintenance System, Inc. vs. Glenda M. Menese (G.R. No. 182848, October 5,
2011, Second Division, J. Brion)
Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be inferred that
employees must take their meals within the company premises. Employees are not prohibited from going out
of the premises as long as they return to their posts on time. Private respondent’s act, therefore, of going
home to take his dinner does not constitute abandonment.
PAL, Inc. vs. NLRC (G.R. No. 132805, February 2, 1999, Second Division, J. Puno)
BEQ 2011 (LABOR LAW) Q17. The meal time (lunch break) for the dining crew in Glorious Restaurant is either
from 10 a.m. to 11 a.m. or from 1:30 p.m. to 2:30 p.m., with pay. But the management wants to change the
mealtime to 11: a.m. to 12 noon or 12:30 p.m. to 1:30 p.m., without pay. Will the change be legal?
A. Yes, absent an agreement to the contrary, the management determines work hours and, by law, meal break
is without pay.
B. No, because lunchbreak regardless of time should be with pay.
C. Yes, the management has control of its operations.
D. No, because existing practice cannot be discontinued unilaterally.

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4. Waiting time
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE I
Hours of Work
SECTION 5. Waiting time. — (a) Waiting time spent by an employee shall be considered as working time if
waiting is an integral part of his work or the employee is required or engaged by the employer to wait.
(b) An employee who 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 shall be considered as working while on call . An
employee who is not required to leave word at his home or with company officials where he may be reached is
not working while on call.
(Ruling the Minister of Labor cited in one case)
The thirty (30)-minute assembly time long practiced and institutionalized by mutual consent of the parties
under Article IV, Section 3, of the Collective Bargaining Agreement cannot be considered as waiting time within
the purview of Section 5, Rule I, Book III of the Rules and Regulations Implementing the Labor Code. ...
Furthermore, the thirty (30)-minute assembly is a deeply-rooted, routinary practice of the employees, and the
proceedings attendant thereto are not infected with complexities as to deprive the workers the time to attend
to other personal pursuits. They are not new employees as to require the company to deliver long briefings
regarding their respective work assignments. Their houses are situated right on the area where the farms are
located, such that after the roll call, which does not necessarily require the personal presence, they can go back
to their houses to attend to some chores. In short, they are not subject to the absolute control of the company
during this period otherwise, their failure to report in the assembly time would justify the company to impose
disciplinary measures.
Teofilo Arica, et. al. vs. NLRC (G.R. No. 78210, February 28, 1989, Second Division, J. Paras)
5. Overtime work, overtime pay
Art. 87. Overtime work. Work may be performed beyond eight (8) hours a day provided that the employee is
paid for the overtime work, an additional compensation equivalent to his regular wage plus at least twenty-five
percent (25%) thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an additional
compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty percent
(30%) thereof.
Labor Code
Art. 88. Under time not offset by overtime. Under time work on any particular day shall not be offset by
overtime work on any other day. 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 in this Chapter.
Labor Code
Art. 89. Emergency overtime work. Any employee may be required by the employer to perform overtime work
in any of the following cases:
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;
When it is necessary to prevent loss of life or property or in case of imminent danger to public safety due to an
actual or impending emergency in the locality caused by serious accidents, fire, flood, typhoon, earthquake,
epidemic, or other disaster or calamity;
When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious
loss or damage to the employer or some other cause of similar nature;
When the work is necessary to prevent loss or damage to perishable goods; and
Where the completion or continuation of the work started before the eighth hour is necessary to prevent
serious obstruction or prejudice to the business or operations of the employer.
Any employee required to render overtime work under this Article shall be paid the additional compensation
required in this Chapter.

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Labor Code
Art. 90. Computation of additional compensation. For purposes of computing overtime and other additional
remuneration as required by this Chapter, the "regular wage" of an employee shall include the cash wage only,
without deduction on account of facilities provided by the employer.
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE I
Hours of Work
SECTION 8. Overtime pay. — Any employee covered by this Rule who is permitted or required to work beyond
eight (8) hours on ordinary working days shall be paid an additional compensation for the overtime work in the
amount equivalent to his regular wage plus at least twenty-five percent (25%) thereof.
SECTION 9. Premium and overtime pay for holiday and rest day work. — (a) Except employees referred to under
Section 2 of this Rule, an employee who is permitted or suffered to work on special holidays or on his
designated rest days not falling on regular holidays, shall be paid with an additional compensation as premium
pay of not less than thirty percent (30%) of his regular wage. For work performed in excess of eight (8) hours on
special holidays and rest days not falling on regular holidays, an employee shall be paid an additional
compensation for the overtime work equivalent to his rate for the first eight hours on a special holiday or rest
day plus at least thirty percent (30%) thereof.
(b) Employees of public utility enterprises as well as those employed in non-profit institutions and organizations
shall be entitled to the premium and overtime pay provided herein, unless they are specifically excluded from
the coverage of this Rule as provided in Section 2 hereof.
(c) The payment of additional compensation for work performed on regular holidays shall be governed by Rule
IV, Book Three, of these Rules.
SECTION 10. Compulsory overtime work. — In any of the following cases, an employer may require any of his
employees to work beyond eight (8) hours a day, provided that the employee required to render overtime work
is paid the additional compensation required by these regulations:
(a) When the country is at war or when any other national or local emergency has been declared by
Congress 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 disaster or calamities;
(c) When there is urgent work to be performed on machines, installations, or equipment, 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; or
(f) When overtime work is necessary to avail of favorable weather or environmental conditions where
performance or quality of work is dependent thereon.
In cases not falling within any of these enumerated in this Section, no employee may be made to work beyond
eight hours a day against his will.
We find that both the Labor Arbiter and the NLRC erred in this regard. The handwritten itemized computations
are self-serving, unreliable and unsubstantial evidence to sustain the grant of salary differentials, particularly
overtime pay. Unsigned and unauthenticated as they are, there is no way of verifying the truth of the
handwritten entries stated therein. Written only in pieces of paper and solely prepared by Canoy and
Pigcaulan, these representative daily time records, as termed by the Labor Arbiter, can hardly be considered as
competent evidence to be used as basis to prove that the two were underpaid of their salaries. We find nothing
in the records which could substantially support Pigcaulan’s contention that he had rendered service beyond
eight hours to entitle him to overtime pay and during Sundays to entitle him to restday pay. Hence, in the
absence of any concrete proof that additional service beyond the normal working hours and days had indeed
been rendered, we cannot affirm the grant of overtime pay to Pigcaulan.

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Abduljuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. etc. (G.R. No. 173648, January 16,
2012, First Division, J. Del Castillo)
6. Night work (R.A. No. 10151), Night shift differential
Night work (R.A. No. 10151)
.
REPUBLIC ACT NO. 10151
AN ACT ALLOWING THE EMPLOYMENT OF NIGHT WORKERS, THEREBY REPEALING ARTICLES 130
AND 131 OF PRESIDENTIAL DECREE NUMBER FOUR HUNDRED FORTY-TWO, AS AMENDED,
OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:
SECTION 1. Article 130 of the Labor Code is hereby repealed.
SEC. 2. Article 131 of the Labor Code is hereby repealed.
SEC. 3. The subsequent articles in Boot Three, Title III, Chapter I to Chapter IV of Presidential
Decree No. 442 are hereby renumbered accordingly.
SEC. 4. A new chapter is hereby inserted after Book Three, Title III of Presidential Decree No. 442,
to read as follows:
“Chapter V
“Employment of Night Workers
“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 organizations and employers.
‘”Night worker’ means any employed person whose work requires performance of a substantial
number of hours of night work which exceeds a specified limit. This limit shall be fixed by the
Secretary of Labor after consulting the workers’ representatives/labor organizations and
employers.”
“Art. 155. 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.”
“Art. 156. Mandatory Facilities.— Suitable first-aid facilities shall be made available for workers
performing night work, including arrangements where such workers, where necessary, can be
taken immediately to a place for appropriate treatment. The employers are likewise required to
provide safe and healthful working conditions and adequate or reasonable facilities such as
sleeping or resting quarters in the establishment and transportation from the work premises to
the nearest point of their residence subject to exceptions and guidelines to be provided by the
DOLE.”
“Art. 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.

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“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.”
“Art. 158. Women Night Workers.— Measures shall be taken to ensure that an alternative to night
work is available to women workers who would otherwise be called upon to perform such work:
“(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
authorised 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 women and nursing mothers may he 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 ease 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.”
“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.”
“Art. 160. Social Services.—Appropriate social services shall be provided for night workers and,
where necessary, for workers performing night work.”
“Art. 161. Night Work Schedules.— Before introducing work schedules 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 organization 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.”
SEC. 5. The subsequent articles starting from Book Four, Title I, Chapter I of Presidential Decree
No. 442 are hereby renumbered accordingly.
SEC. 6. Application.— The measures referred to in this chapter shall be applied not later than six
(6) months from the effectivity of this Act.
SEC. 7. Guidelines.— The DOLE shah promulgate appropriate regulations in addition to existing
ones to ensure protection, safety and welfare of night workers.
SEC. 8. Penalties.— Any violation of this Act, and the rules and regulations issued pursuant hereof
shall be punished with a fine of not less than Thirty thousand pesos (P30,000.00) nor more than
Fifty thousand pesos (P50,000.00) or imprisonment of not less than six (6) months, or both , at the
discretion of the court. If the offense is committed by a corporation, trust, firm, partnership or
association, or other entity, the penalty shall be imposed upon the guilty officer or officers of
such corporation, trust, firm, partnership or association, or entity.
SEC. 9. Separability Clause.— If any portion of this Act is declared unconstitutional, the same
shall not affect the validity and effectivity of the other provisions not affected thereby.

9

SEC. 10. Repealing Clause.— All laws, acts, decrees, executive orders, rules and regulations or
other issuances or parts thereof, which are inconsistent with this Act, are hereby modified and
repealed.
SEC. 11 Effectivity Clause.— This Act shall take effect after fifteen (15) days following its
publication in two (2) national newspapers of general circulation.
Night shift differential
Art. 86. Night shift differential. Every employee shall be paid a night shift differential of not less than ten
percent (10%) of his regular wage for each hour of work performed between ten o’clock in the evening and six
o’clock in the morning.
Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE II
Night Shift Differential
SECTION 1. Coverage. — This Rule shall apply to all employees except:
(a) Those of the government and any of its political subdivisions, including government-owned and/or
controlled corporations;
(b) Those of retail and service establishments regularly employing not more than five (5) workers;
(c) Domestic helpers and persons in the personal service of another;
(d) Managerial employees as defined in Book Three of this Code;
(e) Field personnel and other employees whose time and performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those who are
paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.
SECTION 2. Night shift differential. — An employee shall be paid night shift differential of no less than ten per
cent (10%) of his regular wage for each hour of work performed between ten o'clock in the evening and six
o'clock in the morning.
SECTION 3. Additional compensation. — Where an employee is permitted or suffered to work on the period
covered after his work schedule, he shall be entitled to his regular wage plus at least twenty-five per cent (25%)
and an additional amount of no less than ten per cent (10%) of such overtime rate for each hour or work
performed between 10 p.m. to 6 a.m.
SECTION 4. Additional compensation on scheduled rest day/special holiday. — An employee who is required or
permitted to work on the period covered during rest days and/or special holidays not falling on regular holidays,
shall be paid a compensation equivalent to his regular wage plus at least thirty (30%) per cent and an
additional amount of not less than ten (10%) per cent of such premium pay rate for each hour of work
performed.
SECTION 5. Additional compensation on regular holidays. — For work on the period covered during regular
holidays, an employee shall be entitled to his regular wage during these days plus an additional compensation
of no less than ten (10%) per cent of such premium rate for each hour of work performed.
SECTION 6. Relation to agreements. — Nothing in this Rule shall justify an employer in withdrawing or reducing
any benefits, supplements or payments as provided in existing individual or collective agreements or employer
practice or policy.
It is settled that in order to ascertain the intention of the contracting parties, the Voluntary Arbitrator shall
principally consider their contemporaneous and subsequent acts as well as their negotiating and contractual
history and evidence of past practices. [United Kimberly-Clark Employees Union Philippine Transport General
Workers’ Organization v. Kimberly-Clark Phils., Inc., G.R. No. 162965, 6 March 2006, 484 SCRA 187.] xxx
In fact, the Court of Appeals found that even after the promulgation of the Voluntary Arbitrator’s decision and
while the case was pending appeal, petitioner still paid night shift differential for work performed beyond 3:00
p.m. It affirms the intention of the parties to the CBA to grant night shift differential for work performed beyond
3:00 p.m.

10

Lepanto Consolidated Mining Company vs. Lepanto Local Staff Union (G.R. No. 161713, August 20, 2008,
First Division, J. Carpio
7. Part-time work
(School)
A part-time employee does not attain permanent status no matter how long he has served the school . [U.
Sarmiento III, op. cit. supra note 9 at 186.] And as a part-timer, his services could be terminated by the school
without being held liable for illegal dismissal. Moreover, the requirement of twin-notice applicable only to
regular or permanent employees could not be invoked by respondent.
Saint Mary’s University vs. CA (G.R. No. 157788, March 8, 2005, First Division, J. Quisumbing]
(Retainership Agreement)
The Court agrees with the Labor Arbiter and the NLRC that there is nothing wrong with the employment of
respondent as a retained physician of petitioner company and upholds the validity of the Retainership
Agreement which clearly stated that no employer-employee relationship existed between the parties. The
Agreement also stated that it was only for a period of 1 year beginning January 1, 1988 to December 31, 1998,
but it was renewed on a yearly basis.
Considering that there is no employer-employee relationship between the parties, the termination of the
Retainership Agreement, which is in accordance with the provisions of the Agreement, does not constitute
illegal dismissal of respondent. Consequently, there is no basis for the moral and exemplary damages granted
by the Court of Appeals to respondent due to his alleged illegal dismissal.
Coca Cola Bottlers (Phils.) vs. Dr. Dean N. Climaco (G.R. No. 146881, February 5, 2007, First Division, J.
Azcuna]
(Will attain full time status)
It is basic to the point of being elementary that nomenclatures assigned to a contract shall be disregarded if it
is apparent that the attendant circumstances do not support their use or designation. The same is true with
greater force concerning contracts of employment, imbued as they are with public interest. Although
respondents were initially hired as part-time employees for one year, thereafter the over-all circumstances with
respect to duties assigned to them, number of hours they were permitted to work including over-time, and the
extension of employment beyond two years can only lead to one conclusion: that they should be declared fulltime employees. Thus, not without sufficient and substantial reasons, the claim of management prerogative by
petitioner ought to be struck down for being contrary to law and policy, fair play and good faith.
PAL, Inc. vs. Joselito Pascua (G.R. No. 143258, August 15, 2003, Second Division, J. Quisumbing]
8. Contract for piece work (see Civil Code)
SECTION 3. - Contract for a Piece of Work
Art. 1713. By the contract for a piece of work the contractor binds himself to execute a piece of
work for the employer, in consideration of a certain price or compensation. The contractor may
either employ only his labor or skill, or also furnish the material. (1588a)
Art. 1714. If the contractor agrees to produce the work from material furnished by him, he shall
deliver the thing produced to the employer and transfer dominion over the thing. This contract
shall be governed by the following articles as well as by the pertinent provisions on warranty of
title and against hidden defects and the payment of price in a contract of sale. (n)
Art. 1715. The contract shall execute the work in such a manner that it has the qualities agreed
upon and has no defects which destroy or lessen its value or fitness for its ordinary or stipulated
use. Should the work be not of such quality, the employer may require that the contractor
remove the defect or execute another work. If the contract fails or refuses to comply with this
obligation, the employer may have the defect removed or another work executed, at the
contractor's cost. (n)
Art. 1716. An agreement waiving or limiting the contractor's liability for any defect in the work is
void if the contractor acted fraudulently. (n)
Art. 1717. If the contractor bound himself to furnish the material, he shall suffer the loss if the
work should be destroyed before its delivery, save when there has been delay in receiving it.
(1589)
Art. 1718. The contractor who has undertaken to put only his work or skill, cannot claim any
compensation if the work should be destroyed before its delivery, unless there has been delay in
receiving it, or if the destruction was caused by the poor quality of the material, provided this

11

fact was communicated in due time to the owner. If the material is lost through a fortuitous
event, the contract is extinguished. (1590a)
Art. 1719. Acceptance of the work by the employer relieves the contractor of liability for any
defect in the work, unless:
(1) The defect is hidden and the employer is not, by his special knowledge, expected to
recognize the same; or
(2) The employer expressly reserves his rights against the contractor by reason of the
defect. (n)
Art. 1720. The price or compensation shall be paid at the time and place of delivery of the work,
unless there is a stipulation to the contrary. If the work is to be delivered partially, the price or
compensation for each part having been fixed, the sum shall be paid at the time and place of
delivery, in the absence if stipulation. (n)
Art. 1721. If, in the execution of the work, an act of the employer is required, and he incurs in
delay or fails to perform the act, the contractor is entitled to a reasonable compensation.
The amount of the compensation is computed, on the one hand, by the duration of the delay and
the amount of the compensation stipulated, and on the other hand, by what the contractor has
saved in expenses by reason of the delay or is able to earn by a different employment of his time
and industry. (n)
Art. 1722. If the work cannot be completed on account of a defect in the material furnished by
the employer, or because of orders from the employer, without any fault on the part of the
contractor, the latter has a right to an equitable part of the compensation proportionally to the
work done, and reimbursement for proper expenses made. (n)
Art. 1723. The engineer or architect who drew up the plans and specifications for a building is
liable for damages if within fifteen years from the completion of the structure, the same should
collapse by reason of a defect in those plans and specifications, or due to the defects in the
ground. The contractor is likewise responsible for the damages if the edifice falls, within the same
period, on account of defects in the construction or the use of materials of inferior quality
furnished by him, or due to any violation of the terms of the contract. If the engineer or architect
supervises the construction, he shall be solidarily liable with the contractor.
Acceptance of the building, after completion, does not imply waiver of any of the cause of action
by reason of any defect mentioned in the preceding paragraph.
The action must be brought within ten years following the collapse of the building. (n)
Art. 1724. The contractor who undertakes to build a structure or any other work for a stipulated
price, in conformity with plans and specifications agreed upon with the land-owner, can neither
withdraw from the contract nor demand an increase in the price on account of the higher cost of
labor or materials, save when there has been a change in the plans and specifications, provided:
(1) Such change has been authorized by the proprietor in writing; and
(2) The additional price to be paid to the contractor has been determined in writing by
both parties. (1593a)
Art. 1725. The owner may withdraw at will from the construction of the work, although it may
have been commenced, indemnifying the contractor for all the latter's expenses, work, and the
usefulness which the owner may obtain therefrom, and damages. (1594a)
Art. 1726. When a piece of work has been entrusted to a person by reason of his personal
qualifications, the contract is rescinded upon his death.
In this case the proprietor shall pay the heirs of the contractor in proportion to the price agreed
upon, the value of the part of the work done, and of the materials prepared, provided the latter
yield him some benefit.
The same rule shall apply if the contractor cannot finish the work due to circumstances beyond
his control. (1595)
Art. 1727. The contractor is responsible for the work done by persons employed by him. (1596)
Art. 1728. The contractor is liable for all the claims of laborers and others employed by him, and
of third persons for death or physical injuries during the construction. (n)

12

Art. 1729. Those who put their labor upon or furnish materials for a piece of work undertaken by
the contractor have an action against the owner up to the amount owing from the latter to the
contractor at the time the claim is made. However, the following shall not prejudice the laborers,
employees and furnishers of materials:
(1) Payments made by the owner to the contractor before they are due;
(2) Renunciation by the contractor of any amount due him from the owner.
This article is subject to the provisions of special laws. (1597a)
Art. 1730. If it is agreed that the work shall be accomplished to the satisfaction of the proprietor,
it is understood that in case of disagreement the question shall be subject to expert judgment.
If the work is subject to the approval of a third person, his decision shall be final, except in case
of fraud or manifest error. (1598a)
Art. 1731. He who has executed work upon a movable has a right to retain it by way of pledge
until he is paid. (1600)
(Distinguish from contract of sale)
Article 1713 of the Civil Code defines a contract for a piece of work.
A contract for a piece of work, labor and materials may be distinguished from a contract of sale by the inquiry
as to whether the thing transferred is one not in existence and which would never have existed but for the
order of the person desiring it. In such case, the contract is one for a piece of work, not a sale.
On the other hand, if the thing subject of the contract would have existed and been the subject of a sale to
some other person even if the order had not been given, then the contract is one of sale. If the parties
intended that at some future date an object has to be delivered, without considering the work or labor of the
party bound to deliver, the contract is one of sale. But if one of the parties accepts the undertaking on the
basis of some plan, taking into account the work he will employ personally or through another, there is a
contract for a piece of work.
The obligations of a contractor for a piece of work are set forth in Articles 1714, and 1715 of the Civil Code .
The provisions on warranty against hidden defects, referred to in Art. 1714 are found in Articles 1561 and 1566 .
The remedy against violations of the warranty against hidden defects is either to withdraw from the contract
(redhibitory action) or to demand a proportionate reduction of the price (accion quanti minoris), with damages
in either case.
Engineering & Machinery Corporation vs. CA (G.R. No. 52267, January 24, 1996, Third Division, J.
Panganiban]
As can be clearly seen from the wordings of Art. 1467, what determines whether the contract is one of work or
of sale is whether the thing has been “manufactured specially for the customer and upon his special order.”
Thus, if the thing is specially done on the order of another, this is a contract for a piece of work. If, on the other
hand, the thing is manufactured or procured for the general market in the ordinary course of one’s business, it
is a contract of sale.”
Del Monte Philippines, Inc. vs. Napoleon N. Aragones (G.R. No. 153033, June 23, 2005, Third Division, J.
Carpio Morales]
(Solidary liability)
This provision (Article 1729) imposes a direct liability on an owner of a piece of work in favor of suppliers of
materials (and laborers) hired by the contractor “up to the amount owing from the [owner] to the contractor at
the time the claim is made.” [Flores v. Ruelo, No. 13905-R, 29 September 1955, 52 O.G. No. 2, 850]
Thus, to this extent, the owner’s liability is solidary with the contractor, if both are sued together. By creating a
constructive vinculum between suppliers of materials (and laborers), on the one hand, and the owner of a piece
of work, on the other hand, as an exception to the rule on privity of contracts , Article 1729 protects suppliers of
materials (and laborers) from unscrupulous contractors and possible connivance between owners and
contractors. [Velasco v. Court of Appeals, No. L-47544, 28 January 1980, 95 SCRA 6168]
As the Court of Appeals correctly ruled, the supplier’s cause of action under this provision, reckoned from the
time of judicial or extra-judicial demand, subsists so long as any amount remains owing from the owner to the
contractor. Only full payment of the agreed contract price serves as a defense against the supplier’s claim.
[ See V A. Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines 295 (1992 ed.).]
JL Investment and Development, Inc. vs. Tendon Philippines, Inc. etc. (G.R. No. 148596, January 22,
2007, Second Division, J. Carpio]

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B. Wages
1. Wage vs. salary
The terms “wages” as distinguished from “salary”, applies to the compensation for manual labor, skilled or
unskilled, paid at stated times, and measure by the day, week, month, or season, while “salary” denotes a
higher degree of employment, or a superior grade of services, and implies a position or office ; by contrast, the
term “wages” indicates inconsiderable pay for a lower and less responsible character of employment, while
“salary” is suggestive of a larger and more permanent or fixed compensation for more important service. By
some of the authorities, it has been noted that the word “wages” in its ordinary acceptance, has a less
extensive meaning than the word “salary”, “wages” being ordinarily restricted to sums paid as hire or reward to
domestic or menial servants and to sums paid to artisans, mechanics, laborers, and other employee of like
class, as distinguished from the compensation of clerks, officers of public corporations, and public offices. In
many situations, however, the words “wages” and “salaries” are synonymous.
(35 Am. Jur., Sec. 63, pp. 496-497, cited in Azucena, 2007)
2. Minimum wage defined, Minimum wage setting
Art. 99. Regional minimum wages. The minimum wage rates for agricultural and non-agricultural employees
and workers in each and every region of the country shall be those prescribed by the Regional Tripartite Wages
and Productivity Boards. (As amended by Section 3, Republic Act No. 6727, June 9, 1989).
Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be construed to
eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of
promulgation of this Code.
Art. 101. Payment by results. (a) The Secretary of Labor and Employment shall regulate the payment of wages
by results, including pakyao, piecework, and other non-time work, in order to ensure the payment of fair and
reasonable wage rates, preferably through time and motion studies or in consultation with representatives of
workers’ and employers’ organizations.
Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE VII
Wages
SECTION 1. Definition of Terms. As used in this Rules —
n) "Basic Wage" means all remuneration or earnings paid by an employer to a worker for services rendered on
normal working days and hours but does not include cost-of-living allowances, profit sharing payments,
premium payments, 13th month pay or other monetary benefits which are not considered as part of or
integrated into the regular salary of the workers on the date the Act became effective."
o) "Statutory Minimum Wage" is the lowest wage fixed by law that an employer can pay his workers;
(Minimum Wage Setting)
Art. 122. Creation of Regional Tripartite Wages and Productivity Boards. There is hereby created Regional
Tripartite Wages and Productivity Boards, hereinafter referred to as Regional Boards, in all regions, including
autonomous regions as may be established by law. The Commission shall determine the offices/headquarters of
the respective Regional Boards.
The Regional Boards shall have the following powers and functions in their respective territorial jurisdictions:
To develop plans, programs and projects relative to wages, incomes and productivity improvement for their
respective regions;
To determine and fix minimum wage rates applicable in their regions, provinces or industries therein and to
issue the corresponding wage orders, subject to guidelines issued by the Commission;
To undertake studies, researches, and surveys necessary for the attainment of their functions, objectives and
programs, and to collect and compile data on wages, incomes, productivity and other related information and
periodically disseminate the same;

14

To coordinate with the other Regional Boards as may be necessary to attain the policy and intention of this
Code;
To receive, process and act on applications for exemption from prescribed wage rates as may be provided by
law or any Wage Order; and
To exercise such other powers and functions as may be necessary to carry out their mandate under this Code.
Implementation of the plans, programs, and projects of the Regional Boards referred to in the second
paragraph, letter (a) of this Article, shall be through the respective regional offices of the Department of Labor
and Employment within their territorial jurisdiction; Provided, however, That the Regional Boards shall have
technical supervision over the regional office of the Department of Labor and Employment with respect to the
implementation of said plans, programs and projects.
Each Regional Board shall be composed of the Regional Director of the Department of Labor and Employment
as chairman, the Regional Directors of the National Economic and Development Authority and the Department
of Trade and Industry as vice-chairmen and two (2) members each from workers’ and employers’ sectors who
shall be appointed by the President of the Philippines, upon the recommendation of the Secretary of Labor and
Employment, to be made on the basis of the list of nominees submitted by the workers’ and employers’
sectors, respectively, and who shall serve for a term of five (5) years.
Each Regional Board to be headed by its chairman shall be assisted by a Secretariat. (As amended by Republic
Act No. 6727, June 9, 1989)
Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE VII
Wages
CHAPTER II
The National Wages and Productivity Commission and Regional Tripartite Wages and Productivity Boards
SECTION 5. Regional Tripartite Wages and Productivity Boards. — The Regional Wages and Productivity Boards
created under the Act in all regions, including autonomous regions as may be established by law, shall hold
offices in areas where the Regional Offices of the Department are located.
SECTION 6. Powers and Functions of the Boards. — The Boards shall have the following powers and functions:
a) To develop plans, programs and projects relative to wages, incomes and productivity improvement for their
respective regions;
b) To determine and fix minimum wage rates applicable in their region, provinces or industries therein and to
issue the corresponding wage orders, subject to guidelines issued by the Commission;
c) To undertake studies, researches, and surveys necessary for the attainment of their functions, objectives and
programs, and to collect and compile data on wages, incomes, productivity and other related information and
periodically disseminate the same;
d) To coordinate with the other Boards as may be necessary to attain the policy and intention of the Labor
Code;
e) To receive, process and act on applications for exemption from prescribed wage rates as may be provided by
law or any Wage Order; and
f) To exercise such other powers and functions as may be necessary to carry out their mandate under the Labor
Code.
Implementation of the plans, programs and projects of the Boards shall be through the respective Regional
Offices of the Department, provided, however, that the Boards shall have technical supervision over the
Regional Office of the Department with respect to the implementation of these plans, programs and projects.
3. Minimum wage of workers paid by results
a) Workers paid by results
Art. 124. Standards/Criteria for minimum wage fixing. The regional minimum wages to be established by the
Regional Board shall be as nearly adequate as is economically feasible to maintain the minimum standards of

15

living necessary for the health, efficiency and general well-being of the employees within the framework of the
national economic and social development program xxx
All workers paid by result, including those who are paid on piecework, takay, pakyaw or task basis, shall receive
not less than the prescribed wage rates per eight (8) hours of work a day, or a proportion thereof for working
less than eight (8) hours.
Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE VII
Wages
CHAPTER I
Wage Increase
SECTION 9. Workers Paid by Results. —
a) All workers paid by results, including those who are paid on piecework, takay, pakyaw, or task basis, shall
receive not less than the applicable statutory minimum wage rates prescribed under the Act for the normal
working hours which shall not exceed eight hours work a day, or a proportion thereof for work of less than the
normal working hours.
The adjusted minimum wage rates for workers paid by results shall be computed in accordance with the
following steps:
1) Amount of increase in AMW - Previous AMW x 100 = % Increase;
2) Existing rate/piece x % increase = increase in rate/piece;
3) Existing rate/piece + increase in rate/piece = Adjusted rate/piece.
Where AMW is the applicable minimum wage rate.
b) The wage rates of workers who are paid by results shall continue to be established in accordance with Article
101 of the Labor Code, as amended and its implementing regulations.
(Meaning)
There is no dispute that petitioners were employees of private respondents although they were paid not on the
basis of time spent on the job but according to the quantity and the quality of work produced by them. There
are two categories of employees paid by results: (1) those whose time and performance are supervised by the
employer. (Here, there is an element of control and supervision over the manner as to how the work is to be
performed. A piece-rate worker belongs to this category especially if he performs his work in the company
premises.); and (2) those whose time and performance are unsupervised. (Here, the employer’s control is over
the result of the work. Workers on pakyao and takay basis belong to this group.) Both classes of workers are
paid per unit accomplished. Piece-rate payment is generally practiced in garment factories where work is done
in the company premises, while payment on pakyao and takay basis is commonly observed in the agricultural
industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify.
Petitioners belong to the first category, i.e., supervised employees.
In determining the existence of an employer-employee relationship, the following elements must be considered:
(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and
(4) the power to control the employee’s conduct. Of these elements, the most important criterion is whether
the employer controls or has reserved the right to control the employee not only as to the result of the work but
also as to the means and methods by which the result is to be accomplished.
In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked in
the company’s premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact that
they were paid on a piece-rate basis does not negate their status as regular employees of private respondents.
The term “wage” is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being
expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. Payment
by the piece is just a method of compensation and does not define the essence of the relations. Nor does the
fact that petitioners are not covered by the SSS affect the employer-employee relationship.
Indeed, the following factors show that petitioners, although piece-rate workers, were regular employees of
private respondents: (1) within the contemplation of Art. 280 of the Labor Code, their work as tailors was
necessary or desirable in the usual business of private respondents, which is engaged in the tailoring business ;

16

(2) petitioners worked for private respondents throughout the year, their employment not being dependent on
a specific project or season; and, (3) petitioners worked for private respondents for more than one year.
Avelino Lambo vs. NLRC (G.R. No. 111042, October 26, 1999, Second Division, J. Mendoza]
(Compensation of Pieceworkers)
In the absence of wage rates based on time and motion studies determined by the labor secretary or submitted
by the employer to the labor secretary for his approval, wage rates of piece-rate workers must be based on the
applicable daily minimum wage determined by the Regional Tripartite Wages and Productivity Commission. To
ensure the payment of fair and reasonable wage rates, Article 101 of the Labor Code provides that “the
Secretary of Labor shall regulate the payment of wages by results, including pakyao, piecework and other
nontime work.”
The same statutory provision also states that the wage rates should be based, preferably, on time and motion
studies, or those arrived at in consultation with representatives of workers’ and employers’ organizations. In
the absence of such prescribed wage rates for piece-rate workers, the ordinary minimum wage rates prescribed
by the Regional Tripartite Wages and Productivity Boards should apply.
Pulp and Paper, Inc. vs. NLRC (G.R. No. 116593, September 24, 1997, Second Division, J. Panganiban]
b) Apprentices
Art. 58. Definition of Terms. As used in this Title:
"Apprenticeship" means practical training on the job supplemented by related theoretical instruction.
An "apprentice" is a worker who is covered by a written apprenticeship agreement with an individual employer
or any of the entities recognized under this Chapter.
An "apprenticeable occupation" means any trade, form of employment or occupation which requires more than
three (3) months of practical training on the job supplemented by related theoretical instruction.
"Apprenticeship agreement" is an employment contract wherein the employer binds himself to train the
apprentice and the apprentice in turn accepts the terms of training.
Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK TWO
National Manpower Development Program
RULE VI
Apprenticeship Training and Employment of Special Workers
SECTION 1. Objectives. — The promotion, development, and maintenance of apprenticeship programs shall
have the following objectives:
(a) To meet the needs of the economy for training manpower in the widest possible range of
employment;
(b) To establish a national apprenticeship program through the participation of employers, workers,
government, civic and other groups; and
(c) To establish apprenticeship standards for the protection of apprentices and upgrading of skills.
SECTION 2. Definition of terms. —
(a) "Apprenticeship" means any training on the job supplemented by related theoretical instructions
involving apprenticeable occupations and trades as may be approved by the Secretary of Labor and
Employment.
(b) "Apprentice" is a worker who is covered by a written apprenticeship agreement with an employer.
(c) "Apprenticeship agreement" is a written employment contract wherein the employer binds himself to
train the apprentice and the latter in turn agrees to work for the employer.
(d) "Apprenticeable occupation" means any trade, form of employment or occupation approved for
apprenticeship by the Secretary of Labor and Employment, which requires for proficiency more than
three months of practical training on the job supplemented by related theoretical instructions.

17

c) Learners
Art. 73. Learners defined. Learners are persons hired as trainees in semi-skilled and other industrial occupations
which are non-apprenticeable and which may be learned through practical training on the job in a relatively
short period of time which shall not exceed three (3) months.
Art. 74. When learners may be hired. Learners may be employed when no experienced workers are available,
the employment of learners is necessary to prevent curtailment of employment opportunities, and the
employment does not create unfair competition in terms of labor costs or impair or lower working standards.
Art. 75. Learnership agreement. Any employer desiring to employ learners shall enter into a learnership
agreement with them, which agreement shall include:
1. The names and addresses of the learners;
2. The duration of the learnership period, which shall not exceed three (3) months;
3. The wages or salary rates of the learners which shall begin at not less than seventy-five percent
(75%) of the applicable minimum wage; and
4. A commitment to employ the learners if they so desire, as regular employees upon completion of the
learnership. All learners who have been allowed or suffered to work during the first two (2) months shall
be deemed regular employees if training is terminated by the employer before the end of the stipulated
period through no fault of the learners.
The learnership agreement shall be subject to inspection by the Secretary of Labor and Employment or his duly
authorized representative.
Labor
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK TWO
National Manpower Development Program
RULE VII
Learners
SECTION 1. Definition of terms. — (a) "Learner" is a person hired as a trainee in industrial occupations which
are non-apprenticeable and which may be learned through practical training on the job for a period not
exceeding three (3) months, whether or not such practical training is supplemented by theoretical instructions.
(b) "Learnership agreement" refers to the employment and training contract entered into between the
employer and the learner.
SECTION 2. When learners may be employed. — Learners may be employed when no experienced workers are
available, the employment of learners being necessary to prevent curtailment of employment opportunities,
and such employment will not create unfair competition in terms of labor costs nor impair working standards.
d) Persons with disability
Art. 78. Definition. Handicapped workers are those whose earning capacity is impaired by age or physical or
mental deficiency or injury.
Art. 79. When employable. Handicapped workers may be employed when their employment is necessary to
prevent curtailment of employment opportunities and when it does not create unfair competition in labor costs
or impair or lower working standards.
Art. 80. Employment agreement. Any employer who employs handicapped workers shall enter into an
employment agreement with them, which agreement shall include:
1. The names and addresses of the handicapped workers to be employed;
2. The rate to be paid the handicapped workers which shall not be less than seventy five (75%) percent
of the applicable legal minimum wage;
3. The duration of employment period; and
4. The work to be performed by handicapped workers.

18

The employment agreement shall be subject to inspection by the Secretary of Labor or his duly authorized
representative.
Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK TWO
National Manpower Development Program
RULE VIII
Handicapped Workers
SECTION 1. Definition of terms. — (a) "Handicapped workers" are those whose earning capacity is impaired by
age or physical or mental deficiency or injury.
(b) "Employment agreement" is the contract of employment entered into between the employer and the
handicapped worker.
SECTION 2. When handicapped workers may be employed. — Handicapped workers may be employed when
their employment is necessary to prevent curtailment of employment opportunities and when it does not create
unfair competition in labor costs or impair working standards.
SECTION 3. Contents of employment agreement. — An employer who hires a handicapped worker shall enter
into an employment agreement with the latter which shall include:
(a) The names and addresses of the employer and the handicapped worker;
(b) The rate of pay of the handicapped worker which shall not be less than seventy-five (75%) percent of
the legal minimum wage;
(c) The nature of work to be performed by the handicapped worker; and
(d) The duration of the employment.
REPUBLIC ACT NO. 7277
AN ACT PROVIDING FOR THE REHABILATION, SELF DEVELOPMENT AND SELF-RELIANCE OF
DISABLE PERSONS AND THEIR INTEGRATION INTO THE MAINSTREAM OF SOCIETY AND FOR
OTHER PURPOSES.
TITLE II
RIGHTS AND PRIVILEGES OF DISABLED PERSONS
CHAPTER I
EMPLOYMENT
Sec. 5. Equal Opportunity for Employment. — No disable person shall be denied access to
opportunities for suitable employment. A qualified disabled employee shall be subject to the
same terms and conditions of employment and the same compensation, privileges, benefits,
fringe benefits, incentives or allowances as a qualified able bodied person.
Five percent (5%) of all casual emergency and contractual positions in the Departments of Social
Welfare and Development; Health; Education, Culture and Sports; and other government
agencies, offices or corporations engaged in social development shall be reserved for disabled
persons.
Sec. 6. Sheltered Employment — If suitable employment for disabled persons cannot be found
through open employment as provided in the immediately preceding Section, the State shall
endeavor to provide it by means of sheltered employment. In the placement of disabled persons
in sheltered employment, it shall accord due regard to the individual qualities, vocational goals
and inclinations to ensure a good working atmosphere and efficient production.
Sec. 7. Apprenticeship. — Subject to the provisions of the Labor Code as amended, disabled
persons shall be eligible as apprentices or learners: Provided, That their handicap is not as much
as to effectively impede the performance of job operations in the particular occupation for which
they are hired; Provided, further, That after the lapse of the period of apprenticeship, if found
satisfactory in the job performance, they shall be eligible for employment.
Sec. 8. Incentives for Employers. — (a) To encourage the active participation of the private sector
in promoting the welfare of disabled persons and to ensure gainful employment for qualified

19

disabled persons, adequate incentives shall be provided to private entities which employ
disabled persons.
(b) Private entities that employ disabled persons who meet the required skills or qualifications,
either as regular employee, apprentice or learner, shall be entitled to an additional deduction,
from their gross income, equivalent to twenty-five percent (25%) of the total amount paid as
salaries and wages to disabled persons: Provided, however, That such entities present proof as
certified by the Department of Labor and Employment that disabled persons are under their
employ: Provided, further, That the disabled employee is accredited with the Department of
Labor and Employment and the Department of Health as to his disability, skills and qualifications.
(c) Private entities that improve or modify their physical facilities in order to provide reasonable
accommodation for disabled persons shall also be entitled to an additional deduction from their
net taxable income, equivalent to fifty percent (50%) of the direct costs of the improvements or
modifications. This Section, however, does not apply to improvements or modifications of
facilities required under Batas Pambansa Bilang 344.
Sec. 9. Vocational Rehabilitation. — Consistent with the principle of equal opportunity for disabled
workers and workers in general, the State shall take appropriate vocational rehabilitation
measures that shall serve to develop the skills and potentials of disabled persons and enable
them to compete favorably for available productive and remunerative employment opportunities
in the labor market.
The State shall also take measures to ensure the provision of vocational rehabilitation and
livelihood services for disabled persons in the rural areas. In addition, it shall promote
cooperation and coordination between the government and nongovernmental organizations and
other private entities engaged in vocational rehabilitation activities.
The Department of Social Welfare and Development shall design and implement training
programs that will provide disabled persons with vocational skills to enable them to engage in
livelihood activities or obtain gainful employment. The Department of Labor and Employment
shall likewise design and conduct training programs geared towards providing disabled persons
with skills for livelihood.
Sec. 10. Vocational Guidance and Counseling. — The Department of Social and Welfare and
Development, shall implement measures providing and evaluating vocational guidance and
counseling to enable disabled persons to secure, retain and advance in employment. It shall
ensure the availability and training of counselors and other suitably qualified staff responsible for
the vocational guidance and counseling of disabled persons.
Sec. 11. Implementing Rules and Regulations. — The Department of Labor and Employment shall
in coordination with the Department of Social Welfare and Development (DSWD) and National
Council for the Welfare of the Disabled Persons (NCWDP) shall promulgate the rules and
regulations necessary to implement the provisions under this Chapter.
(wages paid to apprentices, learners, persons with disability)
Art. 124. Standards/Criteria for minimum wage fixing. The regional minimum wages to be established by the
Regional Board shall be as nearly adequate as is economically feasible to maintain the minimum standards of
living necessary for the health, efficiency and general well-being of the employees within the framework of the
national economic and social development program. xxx
Any person, company, corporation, partnership or any other entity engaged in business shall file and register
annually with the appropriate Regional Board, Commission and the National Statistics Office, an itemized listing
of their labor component, specifying the names of their workers and employees below the managerial level,
including learners, apprentices and disabled/handicapped workers who were hired under the terms prescribed
in the employment contracts, and their corresponding salaries and wages.
Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE VII
Wages
CHAPTER I
Wage Increase

20

SECTION 10. Wages of Special Groups of Workers. — Wages of apprentices, learners and handicapped workers
shall in no case be less than 75 percent of the applicable statutory minimum wage rates.
All recognized learnership and apprenticeship agreements entered into before July 1, 1989 shall be considered
as automatically modified insofar as their wage clauses are concerned to reflect the increases prescribed under
the Act.
4. Commissions
The mere fact that they were paid on commission basis does not affect or change their status as regular
employees. The test for determining whether an employee is regular or casual has nothing to do with the
manner of computing or paying an employee’s wages or compensation.
On the other hand, we should hasten to add that while in this particular case, these “commission-basis”
employees involved were regular employees (by operation of law, plus of course, the fact that their status as
employees had never been challenged at any stage of the present case), it does not follow that every employee
paid (whether wholly or partly) on commission basis can be considered a regular employee, or an employee at
all, for that matter.
While this caveat may seem rather elementary, it is still needful to stress that there are many lines of business
legally and legitimately engaging the services of workers, who are paid on commission basis to perform
activities desirable and necessary for such businesses, without creating any kind of employer-employee
relationship at any time.
San Miguel Jeepney Service vs. NLRC (G.R. No. 92772, November 28, 1996, Third Division, J. Panganiban]
5. Deductions from wages
Art. 112. Non-interference in disposal of wages. No employer shall limit or otherwise interfere with the freedom
of any employee to dispose of his wages. He shall not in any manner force, compel, or oblige his employees to
purchase merchandise, commodities or other property from any other person, or otherwise make use of any
store or services of such employer or any other person.
Art. 113. Wage deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction
from the wages of his employees, except:
1. In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
2. For union dues, in cases where the right of the worker or his union to check-off has been recognized
by the employer or authorized in writing by the individual worker concerned; and
3. In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and
Employment.
Art. 114. 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.
Art. 115. Limitations. No deduction from the deposits of an employee for the actual amount of the loss or
damage shall be made unless the employee has been heard thereon, and his responsibility has been clearly
shown.
Art. 116. 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.
Art. 117. Deduction 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.
Art. 118. 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 or
instituted any proceeding under this Title or has testified or is about to testify in such proceedings.
Art. 119. 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 or record to be false in any
material respect.

21

Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE VIII
Payment of Wages
SECTION 12. Non-interference in disposal of wages. — No employer shall limit or otherwise interfere with the
freedom of any employee to dispose of his wages and no employer shall in any manner oblige any of his
employees to patronize any store or avail of the services offered by any person.
SECTION 13. Wages 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, 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 the third
person and the employer agrees to do so; Provided, That the latter does not receive any pecuniary
benefit, directly or indirectly, from the transaction.
SECTION 14. Deduction for loss or damage. — Where the employer is engaged in a trade, occupation or
business where the practice of making deductions or requiring deposits is recognized to answer for the
reimbursement of loss or damage to tools, materials, or equipment supplied by the employer to the employee,
the employer may make wage deductions or require the employees to make deposits from which deductions
shall be made, subject to the following conditions:
(a) That the employee concerned is clearly shown to be responsible for the loss or damage;
(b) That the employee is given reasonable opportunity to show cause why deduction should not be
made;
(c) That the amount of such deduction is fair and reasonable and shall not exceed the actual loss or
damage; and
(d) That the deduction from the wages of the employee does not exceed 20 percent of the employee's
wages in a week.
(Exception to the general rule)
Articles 113 and 114 of the Labor Code are clear as to what are the exceptions to the general prohibition
against requiring deposits and effecting deductions from the employees' salaries. Hence, a statutory
construction of the aforecited provisions is not called for. Even if we were however called upon to interpret the
provisions, our inclination would still be to strictly construe the same against the employer because evidently,
the posting of cash bonds and the making of deductions from the wages would inarguably impose an additional
burden upon the employees.
While the petitioners are not absolutely precluded from imposing the new policy, they can only do so upon
compliance with the requirements of the law. [Dentech Manufacturing Corporation, et al. v. NLRC, et al., 254
Phil 595 (1989).] In other words, the petitioners should first establish that the making of deductions from the
salaries is authorized by law, or regulations issued by the Secretary of Labor.
Further, the posting of cash bonds should be proven as a recognized practice in the jewelry manufacturing
business, or alternatively, the petitioners should seek for the determination by the Secretary of Labor through
the issuance of appropriate rules and regulations that the policy the former seeks to implement is necessary or
desirable in the conduct of business.
The petitioners failed in this respect. It bears stressing that without proofs that requiring deposits and effecting
deductions are recognized practices, or without securing the Secretary of Labor's determination of the
necessity or desirability of the same, the imposition of new policies relative to deductions and deposits can be
made subject to abuse by the employers. This is not what the law intends.
Niña Jewelry Manufacturing vs. Madeline C. Montecillo (G.R. No. 188169, November 28, 2011, Second
Division, J. Reyes]
(Illegal withholding is constructive dismissal)

22

In this case, the withholding of respondent’s salary does not fall under any of the circumstances provided under
Article 113. Neither was it established with certainty that respondent did not work from November 16 to
November 30, 2005. Hence, the Court agrees with the LA and the CA that the unlawful withholding of
respondent’s salary amounts to constructive dismissal.
SHS Perforated Materials, Inc. vs. Manuel F. Diaz (G.R. No. 185814, October 13, 2010, Second Division, J.
Mendoza]
(Deduction of 10% tithe)
Forest Hills claimed that the Seventh Day Adventist Church requires its members to pay tithes xxx In the
absence then of petitioner’s written conformity to the deduction of the 10% tithe from her salary, the deduction
made by Forest Hills was illegal.
Lilia P. Labadan vs. Forest Hills Academy (G.R. No. 172295, December 23, 2008, Second Division, J.
Carpio Morales]
(legal compensation)
There is no causal connection between the petitioner employees’ claim for unpaid wages and the respondent
employers’ claim for damages for the alleged “Goodwill Clause” violation. Portillo’s claim for unpaid salaries did
not have anything to do with her alleged violation of the employment contract as, in fact, her separation from
employment is not “rooted” in the alleged contractual violation.
She resigned from her employment. She was not dismissed. Portillo’s entitlement to the unpaid salaries is not
even contested. Indeed, Lietz Inc.’s argument about legal compensation necessarily admits that it owes the
money claimed by Portillo.
Indeed, the application of compensation in this case is effectively barred by Article 113 of the Labor Code which
prohibits wage deductions except in three circumstances
Marietta Portillo vs. Rudolf Lietz and CA (G.R. No. 196539, October 10, 2012, Second Division, J. Perez]
6. Non-diminution of benefits
Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be construed to
eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of
promulgation of this Code.
Art. 127. Non-diminution of benefits. No wage order issued by any regional board shall provide for wage rates
lower than the statutory minimum wage rates prescribed by Congress. (As amended by Republic Act No. 6727,
June 9, 1989)
Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE VII
Wages
CHAPTER III
Minimum Wage Determination
SECTION 8. Non-Diminution of Benefits. — Nothing in the Act and in these Rules shall be construed to reduce
any existing laws, decrees, issuances, executive orders, and/or under any contract or agreement between the
workers and employers.
(Constitutional principle)
The giving of the subject bonuses cannot be peremptorily withdrawn by ETPI without violating Article 100 of the
Labor Code:
Art. 100. Prohibition against elimination or diminution of benefits. – Nothing in this Book shall be
construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at
the time of promulgation of this Code.

23

The rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced,
diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded
on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor
full protection. [Arco Metal Products Co., Inc. v. Samahan Ng Mga Manggagawa Sa Arco Metal-NAFLU, G.R. No.
170734, May 14, 2008, 554 SCRA 110, 118.]
Eastern Telecommunications vs. Eastern Telecoms Employees Union (G.R. No. 185565, February 8, 2012,
Third Division, J. Mendoza]
(Company practice)
Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or
eliminated by the employer. The principle of non-diminution of benefits is founded on the Constitutional
mandate to "protect the rights of workers and promote their welfare,” and “to afford labor full protection.”
Said mandate in turn is the basis of Article 4 of the Labor Code which states that “all doubts in the
implementation and interpretation of this Code, including its implementing rules and regulations shall be
rendered in favor of labor.”
Jurisprudence is replete with cases which recognize the right of employees to benefits which were voluntarily
given by the employer and which ripened into company practice. Thus in Davao Fruits Corporation v.
Associated Labor Unions, et al. [G.R. No. 85073, 24 August 1993, 225 SCRA 562.] where an employer had freely
and continuously included in the computation of the 13th month pay those items that were expressly excluded
by the law, we held that the act which was favorable to the employees though not conforming to law had thus
ripened into a practice and could not be withdrawn, reduced, diminished, discontinued or eliminated.
Arco Metal Products vs. SAMARM-NAFLU (G.R. No. 170734, May 14, 2008, Second Division, J. Tinga]
(Non-Diminution Rule)
Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that benefits given to
employees cannot be taken back or reduced unilaterally by the employer because the benefit has become part
of the employment contract, written or unwritten.
The rule against diminution of benefits applies if it is shown that the grant of the benefit is based on an express
policy or has ripened into a practice over a long period of time and that the practice is consistent and
deliberate. Nevertheless, the rule will not apply if the practice is due to error in the construction or application
of a doubtful or difficult question of law. But even in cases of error, it should be shown that the correction is
done soon after discovery of the error.
Central Azucarera de Tarlac vs. Central Azucarera de Tarlac Labor Union-NLU (G.R. No. 188949, July 26,
2010, Second Division, J. Nachura]
7. Facilities vs. supplements
The Court, at this point, makes a distinction between “facilities” and “supplements .” It is of the view that the
food and lodging, or the electricity and water allegedly consumed by private respondents in this case were not
facilities but supplements. In the case of Atok-Big Wedge Assn. v. Atok-Big Wedge Co., [97 Phil. 294 (1955)] the
two terms were distinguished from one another in this wise:
"Supplements," therefore, constitute extra remuneration or special privileges or benefits given to
or received by the laborers over and above their ordinary earnings or wages. "Facilities," on the
other hand, are items of expense necessary for the laborer's and his family's existence and
subsistence so that by express provision of law (Sec. 2[g]), they form part of the wage and when
furnished by the employer are deductible therefrom, since if they are not so furnished, the
laborer would spend and pay for them just the same.
In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and over
his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers'
basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus
or sick leave) given, but in the purpose for which it is given. [States Marine Corporation and Royal Line, Inc. v.
Cebu Seamen's Association, Inc., 117 Phil. 307 (1963).] In the case at bench, the items provided were given
freely by SLL for the purpose of maintaining the efficiency and health of its workers while they were working at
their respective projects.
SLL International Cables Specialist vs. NLRC 4 th Division (G.R. No. 172161, March 2, 2011, Second
Division, J. Mendoza]
8. Wage Distortion/Rectification

24

Art. 124. Standards/Criteria for minimum wage fixing. The regional minimum wages to be established by the
Regional Board shall be as nearly adequate as is economically feasible to maintain the minimum standards of
living necessary for the health, efficiency and general well-being of the employees within the framework of the
national economic and social development program. In the determination of such regional minimum wages, the
Regional Board shall, among other relevant factors, consider the following:
Where the application of any prescribed wage increase by virtue of a law or wage order issued by any Regional
Board results in distortions of the wage structure within an establishment, the employer and the union shall
negotiate to correct the distortions. Any dispute arising from wage distortions shall be resolved through the
grievance procedure under their collective bargaining agreement and, if it remains unresolved, through
voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the
voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary
arbitration.
In cases where there are no collective agreements or recognized labor unions, the employers and workers shall
endeavor to correct such distortions. Any dispute arising therefrom shall be settled through the National
Conciliation and Mediation Board and, if it remains unresolved after ten (10) calendar days of conciliation, shall
be referred to the appropriate branch of the National Labor Relations Commission (NLRC). It shall be mandatory
for the NLRC to conduct continuous hearings and decide the dispute within twenty (20) calendar days from the
time said dispute is submitted for compulsory arbitration.
The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any
increase in prescribed wage rates pursuant to the provisions of law or wage order.
As used herein, a wage distortion shall mean a situation where an increase in prescribed wage rates results in
the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and
among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage
structure based on skills, length of service, or other logical bases of differentiation.
Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE VII
Wages
SECTION 1. Definition of Terms. As used in this Rules —
p) "Wage Distortion" means a situation where an increase in prescribed wage rates results in the elimination or
severe contraction of intentional quantitative differences in wage or salary rates between and among employee
groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based
on skills, length of service, or other logical bases of differentiation;
CHAPTER III
Minimum Wage Determination
SECTION 7. Wage Distortions. — Where the application of any wage increase resulting from a Wage Order
issued by any Board results in distortions in the wage structure within an establishment, the employer and the
union shall negotiate to correct the distortions using the grievance procedure under their collective bargaining
agreement. If it remains unresolved, it shall be decided through voluntary arbitration ten calendar days from
the time the dispute was referred for voluntary arbitration, unless otherwise agreed by the parties in writing.
Where there are no collective agreements or recognized labor unions, the employer and workers shall endeavor
to correct the wage distortion. Any dispute arising therefrom shall be settled through the National Conciliation
and Mediation Board and if it remains unresolved after ten calendar days of conciliation, it shall be referred to
the appropriate branch of the National Labor Relations Commission (NLRC). The NLRC shall conduct continuous
hearings and decide the dispute within twenty calendar days from the time said dispute is submitted for
compulsory arbitration.
The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any
wage increase prescribed pursuant to the provisions of law or Wage Order.
(Elements)
Prubankers Association v. Prudential Bank and Trust Company [Prubankers Association v. Prudential Bank and
Trust Company, 302 SCRA 74 (1999)] laid down the four elements of wage distortion, to wit: (1.) An existing
hierarchy of positions with corresponding salary rates; (2) A significant change in the salary rate of a lower pay

25

class without a concomitant increase in the salary rate of a higher one; (3) The elimination of the distinction
between the two levels; and (4) The existence of the distortion in the same region of the country.
Normally, a company has a wage structure or method of determining the wages of its employees. In a problem
dealing with “wage distortion,” the basic assumption is that there exists a grouping or classification of
employees that establishes distinctions among them on some relevant or legitimate bases. [National
Federation of Labor v. NLRC, et al., 234 SCRA 311 (1994)]
Involved in the classification of employees are various factors such as the degrees of responsibility, the skills
and knowledge required, the complexity of the job, or other logical basis of differentiation. The differing wage
rate for each of the existing classes of employees reflects this classification.
Bankard Employees Union vs. NLRC (G.R. No. 140689, February 17, 2004, Third Division, J. Carpio
Morales]
(Wage parity between employees of same rung but different regions)
Contrary to petitioner’s postulation, a disparity in wages between employees holding similar positions but in
different regions does not constitute wage distortion as contemplated by law. As previously enunciated, it is
the hierarchy of positions and the disparity of their corresponding wages and other emoluments that are sought
to be preserved by the concept of wage distortion. Put differently, a wage distortion arises when a wage order
engenders wage parity between employees in different rungs of the organizational ladder of the same
establishment. It bears emphasis that wage distortion involves a parity in the salary rates of different pay
classes which, as a result, eliminates the distinction between the different ranks in the same region.
Prubankers Association vs. Prudential Bank & Trust Company (G.R. No. 131247, January 25, 1999, Third
Division, J. Panganiban]
9. Divisor to determine daily rate
(Section 6, RA 6727)
On the other hand, Section 6 of the Implementing Rules and Regulations of Republic Act No. 6727 provides:
Section 6. Suggested Formula in Determining the Equivalent Monthly Statutory Minimum Wage Rates.- Without
prejudice from existing company practices, agreements or policies, the following formulas may be used as
guides in determining the equivalent monthly statutory minimum wage rates:
xxx

xxx

xxx

d) For those who do not work and are not considered paid on Saturdays and Sundays or rest days:
Equivalent Monthly = Average Daily Wage Rate x 262 days
Rate (EMR)
12
Where 262 days =
250 days – Ordinary working days
10 days – Regular holidays
2 days – Special days (If considered paid; if actually worked, this is equivalent to 2.6 days)
---------262 days – Total equivalent number of days
Based on the above, the proper divisor that should be used for a situation wherein the employees do not work
and are not considered paid on Saturdays and Sundays or rest days is 262 days.
Trans-Asia Phils. Employees Association (TAPEA) vs. NLRC (G.R. No. 118289, December 13, 1999, Third
Division, J. Kapunan]
(263, minimum allowable divisor)
In Union of Filipro Employees v. Vivar, Jr. [G.R. No. 79255, January 20, 1992, 205 SCRA 200] the Court held that
“[t]he divisor assumes an important role in determining whether or not holiday pay is already included in the
monthly paid employee’s salary and in the computation of his daily rate”.
This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano, [G.R. No. 114698,
July 3, 1995, 245 SCRA 561] Producers Bank of the Philippines v. National Labor Relations Commission [G.R. No.
100701, 28 March 2001, 355 SCRA 489, 508.] and Odango v. National Labor Relations Commission, [G. R. No.
147420, June 10, 2004, 431 SCRA 633, 641-642] among others. [See Trans-Asia Phils. Employees Association v.
National Labor Relations Commission, G. R. No. 118289, December 13, 1999, 320 SCRA 5]

26

In Wellington, the monthly salary was fixed by Wellington to provide for compensation for every working day of
the year including the holidays specified by law – and excluding only Sundays. In fixing the salary, Wellington
used what it called the “314 factor”; that is, it simply deducted 51 Sundays from the 365 days normally
comprising a year and used the difference, 314, as basis for determining the monthly salary. The monthly
salary thus fixed actually covered payment for 314 days of the year, including regular and special holidays, as
well as days when no work was done by reason of fortuitous cause, such as transportation strike, riot, or
typhoon or other natural calamity, or cause not attributable to the employees.
In Producers Bank, the employer used the divisor 314 in arriving at the daily wage rate of monthly salaried
employees. The divisor 314 was arrived at by subtracting all Sundays from the total number of calendar days
in a year, since Saturdays are considered paid rest days. The Court held that the use of 314 as a divisor leads
to the inevitable conclusion that the ten legal holidays are already included therein.
In Odango v. National Labor Relations Commission, the Court ruled that the use of a divisor that was less than
365 days cannot make the employer automatically liable for underpayment of holiday pay. In said case, the
employees were required to work only from Monday to Friday and half of Saturday. Thus, the minimum
allowable divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half
Saturdays). Any divisor below 287 days meant that the employees were deprived of their holiday pay for some
or all of the ten legal holidays. The 304-day divisor used by the employer was clearly above the minimum of
287 days.
In this case, the employees are required to work only from Monday to Friday. Thus, the minimum allowable
divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked Saturdays from 365
days. Considering that petitioner used the 360-day divisor, which is clearly above the minimum, indubitably,
petitioner's employees are being given their holiday pay.
Leyte IV Electric Cooperative, Inc. vs. Leyeco IV Employees Union-ALU (G.R. No. 15775, October 19,
2007, Third Division, J. Austria Martinez]
(CBA divisor 251 days below the minimum)
Finally, petitioners cite Chartered Bank Employees Association v. Ople [G.R. No. L-44717, 28 August 1985, 138
SCRA 273.] as an analogous situation. Petitioners have misread this case.
In Chartered Bank, the workers sought payment for un-worked legal holidays as a right guaranteed by a valid
law. In this case, petitioners seek payment of wages for un-worked non-legal holidays citing as basis a void
implementing rule. The circumstances are also markedly different. In Chartered Bank, there was a collective
bargaining agreement that prescribed the divisor. No CBA exists in this case. In Chartered Bank, the employer
was liable for underpayment because the divisor it used was 251 days, a figure that clearly fails to account for
the ten legal holidays the law requires to be paid.
A final note. ANTECO’s defense is likewise based on Section 2, Rule IV of Book III of the Omnibus Rules
Implementing the Labor Code although ANTECO’s interpretation of this provision is opposite that of petitioners.
It is deplorable that both parties premised their arguments on an implementing rule that the Court had
declared void twenty years ago in Insular Bank [G.R. No. L-52415, October 23, 1984]. This case is cited
prominently in basic commentaries. And yet, counsel for both parties failed to consider this. This does not
speak well of the quality of representation they rendered to their clients. This controversy should have ended
long ago had either counsel first checked the validity of the implementing rule on which they based their
contentions.
Cesar Odango vs. NLRC (G.R. No. 147420, June 10, 2004, First Division, J. Carpio]
*********
C. Rest Periods
1. Weekly rest day
2. Emergency rest day work
Art. 91. Right to weekly rest day.
1. It shall be the duty of every employer, whether operating for profit or not, to provide each of his
employees a rest period of not less than twenty-four (24) consecutive hours after every six (6)
consecutive normal work days.
2. The employer shall determine and schedule the weekly rest day of his employees subject to collective
bargaining agreement and to such rules and regulations as the Secretary of Labor and Employment may
provide. However, the employer shall respect the preference of employees as to their weekly rest day
when such preference is based on religious grounds.
Art. 92. When employer may require work on a rest day . The employer may require his employees to work on
any day:

27

1. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disaster or calamity to prevent loss of life and property, or imminent
danger to public safety;
2. In cases of urgent work to be performed on the machinery, equipment, or installation, to avoid serious
loss which the employer would otherwise suffer;
3. In the event of abnormal pressure of work due to special circumstances, where the employer cannot
ordinarily be expected to resort to other measures;
4. To prevent loss or damage to perishable goods;
5. Where the nature of the work requires continuous operations and the stoppage of work may result in
irreparable injury or loss to the employer; and
6. Under other circumstances analogous or similar to the foregoing as determined by the Secretary of
Labor and Employment.
Art. 93. Compensation for rest day, Sunday or holiday work.
1. Where an employee is made or permitted to work on his scheduled rest day, he shall be paid an
additional compensation of at least thirty percent (30%) of his regular wage. An employee shall be
entitled to such additional compensation for work performed on Sunday only when it is his established
rest day.
2. When 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.
3. Work performed on any special holiday shall be paid 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 an additional compensation of at least fifty per cent (50%) of
his regular wage.
4. Where the collective bargaining agreement or other applicable employment contract stipulates the
payment of a higher premium pay than that prescribed under this Article, the employer shall pay such
higher rate.
Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE III
Weekly Rest Periods
SECTION 1. General statement on coverage. — This Rule shall apply to all employers whether operating for
profit or not, including public utilities operated by private persons.
SECTION 2. Business on Sundays/Holidays. — All establishments and enterprises may operate or open for
business on Sundays and holidays provided that the employees are given the weekly rest day and the benefits
as provided in this Rule.
SECTION 3. Weekly rest day. — Every employer shall give his employees a rest period of not less than twentyfour (24) consecutive hours after every six consecutive normal work days.
SECTION 4. Preference of employee. — The preference of the employee as to his weekly day of rest shall be
respected by the employer if the same is based on religious grounds . The employee shall make known his
preference to the employer in writing at least seven (7) days before the desired effectivity of the initial rest day
so preferred.
Where, however, the choice of the employee as to his rest day based on religious grounds will inevitably result
in serious prejudice or obstruction to the operations of the undertaking and the employer cannot normally be
expected to resort to other remedial measures, the employer may so schedule the weekly rest day of his choice
for at least two (2) days in a month.

28

SECTION 5. Schedule of rest day. — (a) Where the weekly rest is given to all employees simultaneously, the
employer shall make known such rest period by means of a written notice posted conspicuously in the work
place at least one week before it becomes effective.
(b) Where the rest period is not granted to all employees simultaneously and collectively, the employer shall
make known to the employees their respective schedules of weekly rest through written notices posted
conspicuously in the work place at least one week before they become effective.
SECTION 6. When work on rest day authorized. — An employer may require any of his employees to work on his
scheduled rest day for the duration of the following emergencies and exceptional conditions:
(a) In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disaster or calamity, to prevent loss of life or property, or in cases of force
majeure or imminent danger to public safety;
(b) In case of urgent work to be performed on machineries, equipment or 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 to 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 quality of work is dependent thereon.
No employee shall be required against his will to work on his scheduled rest day except under circumstances
provided in this Section: Provided, However, that where an employee volunteers to work on his rest day under
other circumstances, he shall express such desire in writing, subject to the provisions of Section 7 hereof
regarding additional compensation.
SECTION 7. Compensation on rest day/Sunday/holiday. — (a) Except those employees referred to under Section
2, Rule I, Book Three, an employee who is made or permitted to work on his scheduled rest day shall be paid
with an additional compensation of at least 30% of his regular wage. An employee shall be entitled to such
additional compensation for work performed on a Sunday only when it is his established rest day.
(b) Where the nature of the work of the employee is such that he has no regular work days and no regular rest
days can be scheduled, he shall be paid an additional compensation of at least 30% of his regular wage for
work performed on Sundays and holidays.
(c) Work performed on any special holiday shall be paid with an additional compensation of at least 30% of the
regular wage of the employees. Where such holiday work falls on the employee's scheduled rest day, he shall
be entitled to additional compensation of at least 50% of his regular wage.
(d) The payment of additional compensation for work performed on regular holiday shall be governed by Rule
IV, Book Three, of these regulations.
(e) Where the collective bargaining agreement or other applicable employment contract stipulates the payment
of a higher premium pay than that prescribed under this Section, the employer shall pay such higher rate.
SECTION 8. Paid-off days. — Nothing in this Rule shall justify an employer in reducing the compensation of his
employees for the unworked Sundays, holidays, or other rest days which are considered paid-off days or
holidays by agreement or practice subsisting upon the effectivity of the Code.
SECTION 9. Relation to agreements. — Nothing herein shall prevent the employer and his employees or their
representatives in entering into any agreement with terms more favorable to the employees than those
provided herein, or be used to diminish any benefit granted to the employees under existing laws, agreements,
and voluntary employer practices.
D. Holiday pay/Premium pay
Republic Act No. 9849
AN ACT DECLARING THE TENTH DAY OF ZHUL HIJJA, THE TWELFTH MONTH OF THE ISLAMIC
CALENDAR, A NATIONAL HOLIDAY FOR THE OBSERVANCE OF EIDULADHA, FURTHER AMENDING
FOR THE PURPOSE SECTION 26, CHAPTER 7, BOOK I OF EXECUTIVE ORDER NO. 292, OTHERWISE
KNOWN AS THE ADMINISTRATIVE CODE OF 1987, AS AMENDED.

29

Section 2. Section 26, Chapter 7, Book I of Executive Order No. 292, otherwise known as “The
Administrative Code of 1987″, as amended, is hereby amended to read as follows:
“SEC. 26. Regular Holidays and Nationwide Special Days. (1) Unless otherwise modified by law, order, or proclamation, the following regular holidays and
special days shall be observed in the country:
“(a) Regular Holidays
New Year’s Day
Maundy Thursday
Good Friday
Eidul Fitr
Eidul Adha
Araw ng Kagitingan
(Bataan and Corregidor Day)
Labor Day
Independence Day
National Heroes Day
Bonifacio Day
Christmas Day
Rizal Day

-

January 1
Movable Date
Movable Date
Movable Date
Movable Date

-

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

-

Monday nearest August 21
November 1
December 31

“(b) Nationwide Special Holidays
Ninoy Aquino Day
All Saints Day
Last Day of the Year

“(c) In the event the holiday falls on a Wednesday, the holiday will be observed on the Monday of
the week. If the holiday falls on a Sunday, the holiday will be observed on the Monday that
follows:
“Provided, That for movable holidays, the President shall issue a specific date shall be declared
as a nonworking day.”
1. Coverage, exclusions
Art. 94. Right to holiday pay.
Every worker shall be paid his regular daily wage during regular holidays , except in retail and service
establishments regularly employing less than ten (10) workers;
The employer may require an employee to work on any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate; and
As used in this Article, "holiday" includes: New Year’s Day, Maundy Thursday, Good Friday, the ninth of April,
the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and thirtieth of
December and the day designated by law for holding a general election.
Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE IV
Holidays with Pay
SECTION 1. Coverage. — This rule shall apply to all employees except:
(a) Those of the government and any of the political subdivision, including government-owned and
controlled corporation;
(b) Those of retail and service establishments regularly employing less than ten (10) workers;
(c) Domestic helpers and persons in the personal service of another;
(d) Managerial employees as defined in Book Three of the Code;

30

(e) Field personnel and other employees whose time and performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those who are
paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.
SECTION 2. Status of employees paid by the month. — Employees who are uniformly paid by the month,
irrespective of the number of working days therein, with a salary of not less than the statutory or established
minimum wage shall be paid for all days in the month whether worked or not.
For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by
365 days divided by twelve.
SECTION 3. Holiday Pay. — Every employer shall pay his employees their regular daily wage for any worked
regular holidays.
As used in the rule, the term 'regular holiday' shall exclusively refer to: New Year's Day, Maundy Thursday,
Good Friday, the ninth of April, the first of May, the twelfth of June, the last Sunday of August, the thirtieth of
November, the twenty-fifth and thirtieth of December. Nationwide special days shall include the first of
November and the last day of December.
As used in this Rule legal or regular holiday and special holiday shall now be referred to as 'regular holiday' and
'special day', respectively.
SECTION 4. Compensation for holiday work. — Any employee who is permitted or suffered to work on any
regular holiday, not exceeding eight (8) hours, shall be paid at least two hundred percent (200%) of his regular
daily wage. If the holiday work falls on the scheduled rest day of the employee , he shall be entitled to an
additional premium pay of at least 30% of his regular holiday rate of 200% based on his regular wage rate.
SECTION 5. Overtime pay for holiday work. — For work performed in excess of eight hours on a regular holiday,
an employee shall be paid an additional compensation for the overtime work equivalent to his rate for the first
eight hours on such holiday work plus at least 30% thereof.
Where the regular holiday work exceeding eight hours falls on the scheduled rest day of the employee, he shall
be paid an additional compensation for the overtime work equivalent to his regular holiday-rest day for the first
8 hours plus 30% thereof. The regular holiday rest day rate of an employee shall consist of 200% of his regular
daily wage rate plus 30% thereof.
SECTION 6. Absences. — (a) All covered employees shall be entitled to the benefit provided herein when they
are on leave of absence with pay. Employees who are on leave of absence without pay on the day immediately
preceding a regular holiday may not be paid the required holiday pay if he has not worked on such regular
holiday.
(b) Employees 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.
(c) Where the day immediately preceding the holiday is a non-working day in the establishment or the
scheduled rest day of the employee, he shall not be deemed to be on leave of absence on that day, in
which case he shall be entitled to the holiday pay if he worked on the day immediately preceding the
non-working day or rest day.
SECTION 7. Temporary or periodic shutdown and temporary cessation of work. —
(a) In cases of temporary or periodic shutdown and temporary cessation of work of an establishment, as when a
yearly inventory or when the repair or cleaning of machineries and equipment is undertaken, the regular
holidays falling within the period shall be compensated in accordance with this Rule.
(b) The regular holiday during the cessation of operation of an enterprise due to business reverses as
authorized by the Secretary of Labor and Employment may not be paid by the employer.
SECTION 9. Regular holiday falling on rest days or Sundays. —
(a) A regular holiday falling on the employee's rest day shall be compensated accordingly.
(b) Where a regular holiday falls on a Sunday, the following day shall be considered a special holiday for
purposes of the Labor Code, unless said day is also a regular holiday.
SECTION 10. Successive regular holidays. — Where there are two (2) successive regular holidays, like Holy
Thursday and Good Friday, 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.

31

SECTION 11. Relation to agreements. — Nothing in this Rule shall justify an employer in withdrawing or
reducing any benefits, supplements or payments for unworked holidays as provided in existing individual or
collective agreement or employer practice or policy.
(No illegal dismissal, not back wages)
Thus, inasmuch as no finding of illegal dismissal had been made, and considering that the absence of such
finding is supported by the records of the case, this Court is bound by such conclusion and cannot allow an
award of the payment of backwages.
Exodus International Construction Corporation vs. Guillermo Biscocho (G.R. No. 166109, February 23,
2011, First Division, J. Del Castillo]
(3 year prescriptive period)
Consistent with the rule that all money claims arising from an employer-employee relationship shall be filed
within three years from the time the cause of action accrued, [Article 291, Labor Code] Pigcaulan can only
demand the amounts due him for the period within three years preceding the filing of the complaint in 2000.
Furthermore, since the records are insufficient to use as bases to properly compute Pigcaulan’s claims, the case
should be remanded to the Labor Arbiter for a detailed computation of the monetary benefits due to him.
Abduljuahid Pigcaulan vs. Security and Credit Investigation, Inc. (G.R. No. 173648, January 16, 2012,
First Division, J. Del Castillo]
2. Teachers, piece workers, takay, seasonal workers, seafarers
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE IV
Holidays with Pay
SECTION 8. Holiday pay of certain employees. — (a) Private school teachers, including faculty members of
colleges and universities, may not be paid for the regular holidays during semestral vacations. They shall,
however, be paid for the regular holidays during Christmas vacation;
(b) Where a covered employee, is paid by results or output, such as payment on piece work, his holiday
pay shall not be less than his average daily earnings for the last seven (7) actual working days
preceding the regular holiday; Provided, However, that in no case shall the holiday pay be less than the
applicable statutory minimum wage rate.
(c) Seasonal workers may not be paid the required holiday pay during off-season when they are not at
work.
(d) Workers who have no regular working days shall be entitled to the benefits provided in this Rule.
(Seafarers)
Moreover, it is an accepted maritime industry practice that employment of seafarers are for a fixed period only .
Constrained by the nature of their employment which is quite peculiar and unique in itself, it is for the mutual
interest of both the seafarer and the employer why the employment status must be contractual only or for a
certain period of time. Seafarers spend most of their time at sea and understandably, they can not stay for a
long and an indefinite period of time at sea. Limited access to shore society during the employment will have
an adverse impact on the seafarer. The national, cultural and lingual diversity among the crew during the COE
(Contract of Enlistment) is a reality that necessitates the limitation of its period.
Douglas Millares and Roger Lagda vs. NLRC, Trans-Global Maritime Agency, Inc. (G.R. No. 110527, July
29, 2002, Special First Division, J. Kapunan]
(Evidence that work was performed during the period)
The word salaries in Section 10 (5) does not include overtime and leave pay. For seafarers like petitioner, DOLE
Department Order No. 33, series 1996, provides a Standard Employment Contract of Seafarers, in which salary
is understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay is
compensation for all work “performed” in excess of the regular eight hours, and holiday pay is compensation
for any work “performed” on designated rest days and holidays.

32

By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and holiday pay in
the computation of petitioner's monetary award, unless there is evidence that he performed work during those
periods.
Antonio M. Serrano vs. Gallan Maritime Services, Inc. (G.R. No. 167614, March 24, 2009, En Banc, J.
Austria-Martinez]; and Claudio S. Yap vs. Thenamaris Ship’s Management (G.R. No. 179532, May 30,
2011, Second Division, J. Nachura]
E. Leaves
1. Service Incentive Leave
Art. 95. Right to service incentive leave.
1. Every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.
2. This provision shall not apply to those who are already enjoying the benefit herein provided, those
enjoying vacation leave with pay of at least five days and those employed in establishments regularly
employing less than ten employees or in establishments exempted from granting this benefit by the
Secretary of Labor and Employment after considering the viability or financial condition of such
establishment.
3. The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any
court or administrative action.
Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE V
Service Incentive Leave
SECTION 1. Coverage. — This rule shall apply to all employees except:
(a) Those of the government and any of its political subdivisions, including government-owned and
controlled corporations;
(b) Domestic helpers and persons in the personal service of another;
(c) Managerial employees as defined in Book Three of this Code;
(d) Field personnel and other employees whose performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed
amount for performing work irrespective of the time consumed in the performance thereof;
(e) Those who are already enjoying the benefit herein provided;
(f) Those enjoying vacation leave with pay of at least five days; and
(g) Those employed in establishments regularly employing less than ten employees.
SECTION 2. Right to service incentive leave. — Every employee who has rendered at least one year of service
shall be entitled to a yearly service incentive leave of five days with pay.
SECTION 3. Definition of certain terms. — The term "at least one-year service" shall mean service for not less
than 12 months, whether continuous or broken reckoned from the date the employee started working, including
authorized absences and paid regular holidays unless the working days in the establishment as a matter of
practice or policy, or that provided in the employment contract is less than 12 months, in which case said
period shall be considered as one year.
SECTION 4. Accrual of benefit. — Entitlement to the benefit provided in this Rule shall start December 16, 1975,
the date the amendatory provision of the Code took effect.
SECTION 5. Treatment of benefit. — The service incentive leave shall be commutable to its money equivalent if
not used or exhausted at the end of the year.

33

SECTION 6. Relation to agreements. — Nothing in the Rule shall justify an employer from withdrawing or
reducing any benefits, supplements or payments as provided in existing individual or collective agreements or
employer's practices or policies.

(Workers paid by results)
The Bureau of Working Conditions classifies workers paid by results into two groups, namely; (1) those whose
time and performance is supervised by the employer, and (2) those whose time and performance is
unsupervised by the employer. The first involves an element of control and supervision over the manner the
work is to be performed, while the second does not. If a piece worker is supervised, there is an employeremployee relationship, as in this case. However, such an employee is not entitled to service incentive leave pay
since, as pointed out in Makati Haberdashery v. NLRC [179 SCRA 448 (1989)] and Mark Roche International v.
NLRC, [313 SCRA 356 (1999) citing Omnibus Rules Implementing The Labor Code, Bk. III, Rule V, §1(d).] he is
paid a fixed amount for work done, regardless of the time he spent in accomplishing such work.
Rolando Tan vs. Leovigildo Lagrama and CA (G.R. No. 151228, August 15, 2002, Second Division, J.
Mendoza]
(Team supervisor of call center agents)
As correctly observed by the CA and the LA, these duties clearly pertained to “Division Managers/Department
Managers/ Supervisors,” which respondent was not, as he was merely a team supervisor. Petitioners
themselves described respondent as “the superior of a call center agent; he heads and guides a specific
number of agents, who form a team.”
From the foregoing, respondent is thus entitled to his claims for holiday pay, service incentive leave pay ,
overtime pay and rest day pay, pursuant to Book Three of the Labor Code, specifically Article 82, in relation to
Articles 87, [Overtime work] 93, [Compensation for rest day, Sunday or holiday work] and 95 [Right to Service
Incentive Leave] thereof.
Clientlogic Philippines, Inc vs. Benedict Castro (G.R. No. 186070, April 11, 2011, Second Division, J.
Nachura]
(A matter of right)
Indeed, the Labor Arbiter failed to provide sufficient basis for the monetary awards granted. Such failure,
however, should not result in prejudice to the substantial rights of the party. While we disallow the grant of
overtime pay and rest day pay in favor of Pigcaulan, he is nevertheless entitled, as a matter of right, to his
holiday pay, service incentive leave pay and 13th month pay for year 2000. Hence, the CA is not correct in
dismissing Pigcaulan’s claims in its entirety.
Abduljuahid Pigcaulan vs. Security and Credit Investigation, Inc. (G.R. No. 173648, January 16, 2012,
First Division, J. Del Castillo]
(Paid by commission refer to field personnel)
It bears emphasis that under P.D. 851 or the SIL Law, the exclusion from its coverage of workers who are paid
on a purely commission basis is only with respect to field personnel. The more recent case of Auto Bus
Transport Systems, Inc., v. Bautista [G.R. No. 156367, May 16, 2005, 458 SCRA 578, 587-588] clarifies that an
employee who is paid on purely commission basis is entitled to SIL:
A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive
leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to
those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules,
Service Incentive Leave shall not apply to employees classified as “field personnel.” The phrase “other
employees whose performance is unsupervised by the employer” must not be understood as a separate
classification of employees to which service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel under the Labor Code as those
“whose actual hours of work in the field cannot be determined with reasonable certainty.”
Rodolfo J. Serrano vs. Severino Santos Transit (G.R. No. 187698, August 9, 2010, Third Division, J. Carpio
Morales]
2. Maternity Leave
Art. 133. Maternity leave benefits.
1. Every employer shall grant to any pregnant woman employee who has rendered an aggregate service of at
least six (6) months for the last twelve (12) months, maternity leave of at least two (2) weeks prior to the
expected date of delivery and another four (4) weeks after normal delivery or abortion with full pay based on

34

her regular or average weekly wages. The employer may require from any woman employee applying for
maternity leave the production of a medical certificate stating that delivery will probably take place within two
weeks.
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 provided in this Article shall be paid by the employer only for the first four (4) deliveries
by a woman employee after the effectivity of this Code.
Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE XII
Employment of Women and Minors
SECTION 7. Maternity leave benefits. — Every employer shall grant to a pregnant woman employee who has
rendered an aggregate service of at least six (6) months for the last twelve (12) months immediately preceding
the expected date of delivery, or the complete abortion or miscarriage, maternity leave of at least two (2)
weeks before and four (4) weeks after the delivery, miscarriage or abortion, with full pay based on her regular
or average weekly wages.
SECTION 8. Accreditation of leave credits. — Where the pregnant woman employee fails to avail of the twoweek pre-delivery leave, or any portion thereof, the same shall be added to her post-delivery leave with pay.
SECTION 9. Payment of extended maternity leave. — When so requested by the woman employee, the
extension of her maternity leave beyond the four-week post-delivery leave shall be paid by the employer from
her unused vacation and/or sick leave credits, if any, or allowed without pay in the absence of such leave
credits, where the extended leave is due to illness medically certified to arise out of her pregnancy, delivery,
complete abortion or miscarriage which renders her unfit for work.
SECTION 10. Limitation on leave benefits. — The maternity benefits provided herein shall be paid by an
employer only for the first four (4) deliveries, miscarriages, and/or complete abortions of the employee from
March 13, 1973, regardless of the number of employees and deliveries, complete abortions or miscarriages the
woman employee had before said date. For purposes of determining the entitlement of a woman employee to
the maternity leave benefits as delimited herein, the total number of her deliveries, complete abortions, or
miscarriages after said date shall be considered regardless of the identity or number of employers she has had
at the time of such determination, provided that she enjoyed the minimum benefits therefor as provided in
these regulations.
(Marriage stipulations and maternity leaves)
Petitioner would have the Court believe that although private respondent defied its policy against its female
employees contracting marriage, what could be an act of insubordination was inconsequential. What it submits
as unforgivable is her concealment of that marriage yet, at the same time, declaring that marriage as a trivial
matter to which it supposedly has no objection. In other words, PT&T says it gives its blessings to its female
employees contracting marriage, despite the maternity leaves and other benefits it would consequently
respond for and which obviously it would have wanted to avoid. If that employee confesses such fact of
marriage, there will be no sanction; but if such employee conceals the same instead of proceeding to the
confessional, she will be dismissed. This line of reasoning does not impress us as reflecting its true
management policy or that we are being regaled with responsible advocacy.
Philippine Telegraph and Telephone Company vs. NLRC (G.R. No. 118978, May 23, 1997, Second Division,
J. Regalado]

3. Paternity Leave
REPUBLIC ACT NO. 8187
AN ACT GRANTING PATERNITY LEAVE OF SEVEN (7) DAYS WITH FULL PAY TO ALL MARRIED MALE
EMPLOYEES IN THE PRIVATE AND PUBLIC SECTORS FOR THE FIRST FOUR (4) DELIVERIES OF THE
LEGITIMATE SPOUSE WITH WHOM HE IS COHABITING AND FOR OTHER PURPOSES.
SECTION 1. Short Title. -This Act shall be known as the "Paternity Leave Act of 1996".

35

SECTION 2. Notwithstanding any law, rules and regulations to the contrary, every married male
employee in the private and public sectors shall be entitled to a paternity leave of seven (7) days
with full pay for the first four (4) deliveries of the legitimate spouse with whom he is cohabiting.
The male employee applying for paternity leave shall notify his employer of the pregnancy of his
legitimate spouse and the expected date of such delivery.
For purposes, of this Act, delivery shall include childbirth or any miscarriage.
SECTION 3. Definition of Term. -For purposes of this Act, Paternity Leave refers to the benefits
granted to a married male employee allowing him not to report for work for seven (7) days but
continues to earn the compensation therefor, on the condition that his spouse has delivered a
child or suffered a miscarriage for purposes of enabling him to effectively lend support to his wife
in her period of recovery and/or in the nursing of the newly-born child.
SECTION 4. The Secretary of Labor and Employment, the Chairman of the Civil Service
Commission and the Secretary of Health shall, within thirty (30) days from the effectivity of this
Act, issue such rules and regulations necessary for the proper implementation of the provisions
hereof.
SECTION 5. Any person, corporation, trust, firm, partnership, association or entity found violating
this Act or the rules and regulations promulgated thereunder shall be punished by a fine not
exceeding Twenty-five thousand pesos (P25,000) or imprisonment of not less than thirty (30)days
nor more than six (6) months.
If the violation is committed by a corporation, trust or firm, partnership, association or any other
entity, the penalty of imprisonment shall be imposed on the entity's responsible officers,
including, but not limited to, the president, vice-president, chief executive officer, general
manager, managing director or partner directly responsible therefor.
SECTION 6. Nondiminution Clause. -Nothing in this Act shall be construed to reduce any existing
benefits of any form granted under existing laws, decrees, executive orders, or any contract
agreement or policy between employer and employee.
SECTION 7. Repealing Clause. -All laws, ordinances, rules, regulations, issuances, or parts thereof
which are inconsistent with this Act are hereby repealed or modified accordingly.
SECTION 8. Effectivity. -This Act shall take effect (15) days from its publication in the Official
Gazette or in at least two (2) newspapers of national circulation.
Approved: June 11, 1996
IMPLEMENTING RULES AND REGULATIONS OF
REPUBLIC ACT NO. 8187 FOR THE PRIVATE SECTOR
SECTION 3. Conditions for entitlement of paternity leave benefits. — A married male employee
shall be entitled to paternity benefits provided that:
a. he is employed at the time of delivery of his child;
b. he has notified his employer of the pregnancy of his wife and her expected date of delivery
subject to the provisions of Section 4 hereof; and
c. his wife has given birth, suffers a miscarriage or an abortion.
SECTION 4. Notification. — As so on as the married male employee learns that his spouse is
pregnant , he shall inform his employer of such pregnancy and the expected date of delivery
within a reasonable period of time. The employee shall accomplish a Paternity Notification Form
to be provided for by the employer and submit the same to the latter, together with a copy of his
marriage contract, or where not applicable, any proof of marriage. Provided, That this notification
requirement shall not apply in cases of miscarriage or abortion.
Any employee who has availed of the paternity benefits shall, within a reasonable period of time,
submit a copy of the birth certificate of the newly born child, death or medical certificate in case
of miscarriage or abortion, duly signed by the attending physician or midwife showing actual date
of childbirth, miscarriage or abortion, as the case may be
(BEQ 2011) 41. To avail himself of paternity leave with pay, when must the male employee file his application
for leave?
A. Within one week from the expected date of delivery by the wife.
B. Not later than one week after his wife’s delivery or miscarriage
C. Within a reasonable time from the expected deliver date of his wife.
D. When a physician has already ascertained the date the wife will give birth

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4. Parental Leave (R.A. No. 8972)
REPUBLIC ACT NO. 8972
“THE SOLO PARENTS' WELFARE ACT OF 2000” AN ACT PROVIDING FOR BENEFITS AND
PRIVILEGES TO SOLO PARENTS AND THEIR CHILDREN, APPROPRIATING FUNDS THEREFOR AND
FOR OTHER PURPOSES.
Sec. 1. Title. - This Act shall be known as the "Solo Parents' Welfare Act of 2000."
Sec. 2. Declaration of Policy. - It is the policy of the State to promote the family as the foundation
of the nation, strengthen its solidarity and ensure its total development. Towards this end, it shall
develop a comprehensive program of services for solo parents and their children to be carried out
by the Department of Social Welfare and Development (DSWD), the Department of Health (DOH),
the Department of Education, Culture and Sports (DECS), the Department of the Interior and
Local Government (DILG), the Commission on Higher Education (CHED), the Technical Education
and Skills Development Authority (TESDA), the National Housing Authority (NHA), the
Department of Labor and Employment (DOLE) and other related government and nongovernment
agencies.
Sec. 3. Definition of Terms. - Whenever used in this Act, the following terms shall mean as
follows:
(a) "Solo parent" - any individual who falls under any of the following categories:
(1) A woman who gives birth as a result of rape and other crimes against chastity even
without a final conviction of the offender: Provided, That the mother keeps and raises the
child;
(2) Parent left solo or alone with the responsibility of parenthood due to death of spouse;
(3) Parent left solo or alone with the responsibility of parenthood while the spouse is
detained or is serving sentence for a criminal conviction for at least one (1) year;
(4) Parent left solo or alone with the responsibility of parenthood due to physical and/or
mental incapacity of spouse as certified by a public medical practitioner;
(5) Parent left solo or alone with the responsibility of parenthood due to legal separation
or de facto separation from spouse for at least one (1) year, as long as he/she is entrusted
with the custody of the children;
(6) Parent left solo or alone with the responsibility of parenthood due to declaration of
nullity or annulment of marriage as decreed by a court or by a church as long as he/she is
entrusted with the custody of the children;
(7) Parent left solo or alone with the responsibility of parenthood due to abandonment of
spouse for at least one (1) year;
(8) Unmarried mother/father who has preferred to keep and rear her/his child/children
instead of having others care for them or give them up to a welfare institution;
(9) Any other person who solely provides parental care and support to a child or children;
(10) Any family member who assumes the responsibility of head of family as a result of
the death, abandonment, disappearance or prolonged absence of the parents or solo
parent.
A change in the status or circumstance of the parent claiming benefits under this Act, such that
he/she is no longer left alone with the responsibility of parenthood, shall terminate his/her
eligibility for these benefits.
(b) "Children" -refer to those living with and dependent upon the solo parent for support who are
unmarried, unemployed and not more than eighteen (18) years of age, or even over eighteen
(18) years but are incapable of self-support because of mental and/or physical
defect/disability.chan robles virtual law library
(c) "Parental responsibility" -with respect to their minor children shall refer to the rights and
duties of the parents as defined in Article 220 of Executive Order No. 209, as amended, otherwise
known as the "Family Code of the Philippines."
(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.

37

(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.
Sec. 4. Criteria for Support. -Any solo parent whose income in the place of domicile falls below
the poverty threshold as set by the National Economic and Development Authority (NEDA) and
subject to the assessment of the DSWD worker in the area shall be eligible for assistance:
Provided, however, That any solo parent whose income is above the poverty threshold shall enjoy
the benefits mentioned in Sections 6, 7 and 8 of this Act.
Sec. 5. Comprehensive Package of Social Development and Welfare Services. -A comprehensive
package of social development and welfare services for solo parents and their families will be
developed by the DSWD, DOH, DECS, CHED, TESDA, DOLE, NHA and DILG, in coordination with
local government units and a nongovernmental organization with proven track record in
providing services for solo parents.
The DSWD shall coordinate with concerned agencies the implementation of the comprehensive
package of social development and welfare services for solo parents and their families. The
package will initially include:
(a) Livelihood development services which include trainings on livelihood skills, basic
business management, value orientation and the provision of seed capital or job
placement.
(b) Counseling services which include individual, peer group or family counseling. This will
focus on the resolution of personal relationship and role conflicts.
(c) Parent effectiveness services which include the provision and expansion of knowledge
and skills of the solo parent on early childhood development, behavior management,
health care, rights and duties of parents and children.
d) Critical incidence stress debriefing which includes preventive stress management
strategy designed to assist solo parents in coping with crisis situations and cases of
abuse.
e) Special projects for individuals in need of protection which include temporary shelter,
counseling, legal assistance, medical care, self-concept or ego-building, crisis
management and spiritual enrichment.
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.
Sec. 7. Work Discrimination. -No employer shall discriminate against any solo parent employee
with respect to terms and conditions of employment on account of his/her status.
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.
Sec. 9. Educational Benefits. -The DECS, CHED and TESDA shall provide the following benefits and
privileges:
(1) Scholarship programs for qualified solo parents and their children in institutions of
basic, tertiary and technical/skills education; and
(2) Non-formal education programs appropriate for solo parents and their children. The DECS,
CHED and TESDA shall promulgate rules and regulations for the proper implementation of this
program.
Sec. 10. Housing Benefits. -Solo parents shall be given allocation in housing projects and shall be
provided with liberal terms of payment on said government low-cost housing projects in
accordance with housing law provisions prioritizing applicants below the poverty line as declared
by the NEDA.
Sec. 11. Medical Assistance. -The DOH shall develop a comprehensive health care program for
solo parents and their children. The program shall be implemented by the DOH through their
retained hospitals and medical centers and the local government units (LGUs) through their
provincial/district/city/municipal hospitals and rural health units (RHUs).
Sec. 12. Additional Powers and Functions of the DSWD. — The DSWD shall perform the following
additional powers and functions relative to the welfare of solo parents and their families:

38

a) Conduct research necessary to: (1) develop a new body of knowledge on solo parents; (2)
define executive and legislative measures needed to promote and protect the interest of solo
parents and their children; and (3) assess the effectiveness of programs designed for
disadvantaged solo parents and their children;
(b) Coordinate the activities of various governmental and nongovernmental organizations
engaged in promoting and protecting the interests of solo parents and their children; and
(c) Monitor the implementation of the provisions of this Act and suggest mechanisms by
which such provisions are effectively implemented.
Sec. 13. Implementing Rules and Regulations. - An interagency committee headed by the DSWD,
in coordination with the DOH, DECS, CHED, TESDA, DOLE, NHA, and DILG is hereby established
which shall formulate, within ninety (90) days upon the effectivity of this Act, the implementing
rules and regulations in consultation with the local government units, nongovernment
organizations and people's organizations.
Sec. 14. Appropriations. - The amount necessary to carry out the provisions of this Act shall be
included in the budget of concerned government agencies in the General Appropriations Act of
the year following its enactment into law and thereafter.
Sec. 15. Repealing Clause. - All laws, decrees, executive orders, administrative orders or parts
thereof inconsistent with the provisions of this Act are hereby repealed, amended or modified
accordingly.
Sec. 16. Separability Clause. - If any provision of this Act is held invalid or unconstitutional,
other provisions not affected thereby shall continue to be in full force and effect.
Sec. 17. Effectivity Clause. - This Act shall take effect fifteen (15) days following its complete
publication in the Official Gazette or in at least two (2) newspaper of general circulation.
Approved: November 7, 2000
5. Leave for Victims of Violence against Women and Children (R.A. No. 9262)
Republic Act No. 9262
March 08, 2004
AN ACT DEFINING VIOLENCE AGAINST WOMEN AND THEIR CHILDREN, PROVIDING FOR
PROTECTIVE MEASURES FOR VICTIMS, PRESCRIBING PENALTIES THEREFORE, AND FOR OTHER
PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:
SECTION 1. Short Title.- This Act shall be known as the "Anti-Violence Against Women and Their
Children Act of 2004".
SECTION 2. Declaration of Policy.- It is hereby declared that the State values the dignity of women
and children and guarantees full respect for human rights. The State also recognizes the need to
protect the family and its members particularly women and children, from violence and threats to
their personal safety and security.
Towards this end, the State shall exert efforts to address violence committed against women and
children in keeping with the fundamental freedoms guaranteed under the Constitution and the
Provisions of the Universal Declaration of Human Rights, the convention on the Elimination of all
forms of discrimination Against Women, Convention on the Rights of the Child and other
international human rights instruments of which the Philippines is a party.
SECTION 5. Acts of Violence Against Women and Their Children.- The crime of violence against
women and their children is committed through any of the following acts:
(a) Causing physical harm to the woman or her child;
(b) Threatening to cause the woman or her child physical harm;
(c) Attempting to cause the woman or her child physical harm;
(d) Placing the woman or her child in fear of imminent physical harm;
(e) Attempting to compel or compelling the woman or her child to engage in conduct which the
woman or her child has the right to desist from or desist from conduct which the woman or her
child has the right to engage in, or attempting to restrict or restricting the woman's or her child's

39

freedom of movement or conduct by force or threat of force, physical or other harm or threat of
physical or other harm, or intimidation directed against the woman or child. This shall include,
but not limited to, the following acts committed with the purpose or effect of controlling or
restricting the woman's or her child's movement or conduct:
(1) Threatening to deprive or actually depriving the woman or her child of custody to
her/his family;
(2) Depriving or threatening to deprive the woman or her children of financial support
legally due her or her family, or deliberately providing the woman's children insufficient
financial support;
(3) Depriving or threatening to deprive the woman or her child of a legal right;
(4) Preventing the woman in engaging in any legitimate profession, occupation, business
or activity or controlling the victim's own mon4ey or properties, or solely controlling the
conjugal or common money, or properties;
(f) Inflicting or threatening to inflict physical harm on oneself for the purpose of controlling her
actions or decisions;
(g) Causing or attempting to cause the woman or her child to engage in any sexual activity which
does not constitute rape, by force or threat of force, physical harm, or through intimidation
directed against the woman or her child or her/his immediate family;
(h) Engaging in purposeful, knowing, or reckless conduct, personally or through another, that
alarms or causes substantial emotional or psychological distress to the woman or her child. This
shall include, but not be limited to, the following acts:
(1) Stalking or following the woman or her child in public or private places;
(2) Peering in the window or lingering outside the residence of the woman or her child;
(3) Entering or remaining in the dwelling or on the property of the woman or her child
against her/his will;
(4) Destroying the property and personal belongings or inflicting harm to animals or pets
of the woman or her child; and
(5) Engaging in any form of harassment or violence;
(i) Causing mental or emotional anguish, public ridicule or humiliation to the woman or her child,
including, but not limited to, repeated verbal and emotional abuse, and denial of financial
support or custody of minor children of access to the woman's child/children. xxx
SECTION 43. Entitled to Leave. – Victims under this Act shall be entitled to take a paid leave of
absence up to ten (10) days in addition to other paid leaves under the Labor Code and Civil
Service Rules and Regulations, extendible when the necessity arises as specified in the protection
order.
Any employer who shall prejudice the right of the person under this section shall be penalized in
accordance with the provisions of the Labor Code and Civil Service Rules and Regulations.
Likewise, an employer who shall prejudice any person for assisting a co-employee who is a victim
under this Act shall likewise be liable for discrimination.
6. Special leave benefit for women
Republic Act No. 9710
August 14, 2009
AN ACT PROVIDING FOR THE MAGNA CARTA OF WOMEN
Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:
Section 1. Short Title. - This Act shall be known as "The Magna Carta of Women".
Section 2. Declaration of Policy. - Recognizing that the economic, political, and socio cultural
realities affect women's current condition, the State affirms the role of women in nation building
and ensures the substantive equality of women and men. It shall promote empowerment of
women and pursue equal opportunities for women and men and ensure equal access to
resources and to development results and outcome. Further, the State realizes that equality of

40

men and women entails the abolition of the unequal structures and practices that perpetuate
discrimination and inequality. To realize this, the State shall endeavor to develop plans, policies,
programs, measures, and mechanisms to address discrimination and inequality in the economic,
political, social, and cultural life of women and men.
The State condemns discrimination against women in all its forms and pursues by all appropriate
means and without delay the policy of eliminating discrimination against women in keeping with
the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) and
other international instruments consistent with Philippine law. The State shall accord women the
rights, protection, and opportunities available to every member of society.
The State affirms women's rights as human rights and shall intensify its efforts to fulfill its duties
under international and domestic law to recognize, respect, protect, fulfill, and promote all
human rights and fundamental freedoms of women, especially marginalized women, in the
economic, social, political, cultural, and other fields without distinction or discrimination on
account of class, age, sex, gender, language, ethnicity, religion, ideology, disability, education,
and status. The State shall provide the necessary mechanisms to enforce women's rights and
adopt and undertake all legal measures necessary to foster and promote the equal opportunity
for women to participate in and contribute to the development of the political, economic, social,
and cultural realms.
The State, in ensuring the full integration of women's concerns in the mainstream of
development, shall provide ample opportunities to enhance and develop their skills, acquire
productive employment and contribute to their families and communities to the fullest of their
capabilities.
In pursuance of this policy, the State reaffirms the right of women in all sectors to participate in
policy formulation. planning, organization, implementation, management, monitoring, and
evaluation of all programs, projects, and services. It shall support policies, researches,
technology, and training programs and other support services such as financing, production, and
marketing to encourage active participation of women in national development.
Section 3. Principles of Human Rights of Women. - Human rights are universal and inalienable. All
people in the world are entitled to them. The universality of human rights is encompassed in the
words of Article 1 of the Universal Declaration of Human Rights, which states that all human
beings are free and equal in dignity and rights.
Human rights are indivisible. Human rights are inherent to the dignity of every human being
whether they relate to civil, cultural, economic, political, or social issues.
Human rights are interdependent and interrelated. The fulfillment of one right often depends,
wholly or in part, upon the fulfillment of others.
All individuals are equal as human beings by virtue of the inherent dignity of each human person.
No one, therefore, should suffer discrimination on the basis of ethnicity, gender, age, language,
sexual orientation, race, color, religion, political, or other opinion, national, social, or geographical
origin, disability, property, birth, or other status as established by human rights standards.
All people have the right to participate in and access information relating to the decision- making
processes that affect their lives and well-being. Rights-based approaches require a high degree of
participation by communities, civil society, minorities, women, young people, indigenous peoples,
and other identified groups.
States and other duty-bearers are answerable for the observance of human rights. They have to
comply with the legal norms and standards enshrined in international human rights instruments
in accordance with the Philippine Constitution. Where they fail to do so, aggrieved rights-holders
are entitled to institute proceedings for appropriate redress before a competent court or other
adjudicator in accordance with the rules and procedures provided by law.
Section 18. Special Leave Benefits for Women. - A woman employee having rendered continuous
aggregate employment service of at least six (6) months for the last twelve (12) months shall be
entitled to a special leave benefit of two (2) months with full pay based on her gross monthly
compensation following surgery caused by gynecological disorders.
F. Service Charge
Art. 96. Service charges. All service charges collected by hotels, restaurants and similar establishments shall be
distributed at the rate of eighty-five percent (85%) for all covered employees and fifteen percent (15%) for
management. The share of the employees shall be equally distributed among them. In case the service charge
is abolished, the share of the covered employees shall be considered integrated in their wages.
Labor Code

41

OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK THREE
Conditions of Employment
RULE VI
Service Charges
SECTION 1. Coverage. — This rule shall apply only to establishments collecting service charges such as hotels,
restaurants, lodging houses, night clubs, cocktail lounge, massage clinics, bars, casinos and gambling houses,
and similar enterprises, including those entities operating primarily as private subsidiaries of the Government.
SECTION 2. Employees covered. — This rule shall apply to all employees of covered employers, regardless of
their positions, designations or employment status, and irrespective of the method by which their wages are
paid except to managerial employees.
As used herein, a "managerial employee" shall mean one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign, or
discipline employees or to effectively recommend such managerial actions. All employees not falling within this
definition shall be considered rank-and-file employees.
SECTION 3. Distribution of service charges. — All service charges collected by covered employers shall be
distributed at the rate of 85% for the employees and 15% for the management. The 85% shall be distributed
equally among the covered employees. The 15% shall be for the disposition by management to answer for
losses and breakages and distribution to managerial employees at the discretion of the management in the
latter case.
SECTION 4. Frequency of distribution. — The shares referred to herein shall be distributed and paid to the
employees not less than once every two (2) weeks or twice a month at intervals not exceeding sixteen (16)
days.
SECTION 5. Integration of service charges. — In case the service charges is abolished the share of covered
employees shall be considered integrated in their wages. The basis of the amount to be integrated shall be the
average monthly share of each employee for the past twelve (12) months immediately preceding the abolition
of withdrawal of such charges.
SECTION 6. Relation to agreements. — Nothing in this Rule shall prevent the employer and his employees from
entering into any agreement with terms more favorable to the employees than those provided herein, or be
used to diminish any benefit granted to the employees under existing laws, agreement and voluntary employer
practice.
SECTION 7. This rule shall be without prejudice to existing, future collective bargaining agreements.
Nothing in this rule shall be construed to justify the reduction or diminution of any benefit being enjoyed by any
employee at the time of effectivity of this rule.
(Service Charge separate from right to ECOLA [Emergency Cost of Living Allowance)
Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its employees and
management their respective shares in the service charges collected, the hotel cannot claim that payment
thereof to its 82 employees constitute substantial compliance with the payment of ECOLA under WO No. 9 .
Undoubtedly, the hotel employees’ right to their shares in the service charges collected by Dusit Hotel is
distinct and separate from their right to ECOLA; gratification by the hotel of one does not result in the
satisfaction of the other.
Philippine Hoteliers, Inc., Dusit Hotel Nikko-Manila vs. NUWHRAIN – Dusit Hotel Nikko Chapter (G.R. No.
181972, August 25, 2009, Third Division, J. Chico-Nazario)
(Service charge collected during the period of preventive suspension)
As regards the share of Damalerio in the service charges collected during the period of his preventive
suspension, the same form part of his earnings, and his dismissal having been adjudged to be illegal , he is
entitled not only to full backwages but also to other benefits, including a just share in the service charges, to be
computed from the start of his preventive suspension until his reinstatement.
Maranaw Hotels and Resort Corporation vs. NLRC (G.R. No. 123880, February 23, 2009, Third Division, J.
Purisima)
G. Thirteenth Month Pay

42

PRESIDENTIAL DECREE NO. 851
REQUIRING ALL EMPLOYERS TO PAY THEIR EMPLOYEES A 13th-MONTH PAY
WHEREAS, it is necessary to further protect the level of real wages from the ravage of worldwide
inflation;
WHEREAS, there has been no increase in the legal minimum wage rates since 1970;
WHEREAS, the Christmas season is an opportune time for society to show its concern for the
plight of the working masses so they may properly celebrate Christmas and New Year.
NOW, THEREFORE, I, FERDINAND E. MARCOS, by virtue of the powers vested in me by the
Constitution, do hereby decree as follows:
Section 1. All employers are hereby required to pay all their employees receiving a basic salary of
not more than P1,000 a month, regardless of the nature of their employment, a 13th-month pay
not later than December 24 of every year.
Sec. 2. Employers already paying their employees a 13th-month pay or its equivalent are not
covered by this Decree.
Sec. 3. This Decree shall take effect immediately.
Done in the City of Manila, this 16th day of December 1975.
PRESIDENTIAL DECREE NO. 851
RULES AND REGULATIONS IMPLEMENTING
PRESIDENTIAL DECREE NO. 851
By virtue of the powers vested in me by law, the following rules and regulations implementing
Presidential Decree No. 851 are hereby issued for the guidance of all concerned.
Section 1. Payment of 13th-month Pay. - All employers covered by Presidential Decree No. 851,
hereinafter referred to as the "Decree" , shall pay to all their employees receiving a basic salary
of not more than P1,000 a month a thirteenth-month pay not later than December 24 of every
year.
Sec. 2. Definition of certain terms. - As used in this issuance:
(a) "Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of an
employee within a calendar year;
(b) "Basic salary" shall include all remunerations or earnings paid by an employer to an
employee for services rendered but may not include cost-of-living allowances granted
pursuant to Presidential Decree No. 525 or Letter of Instructions No. 174, profit-sharing
payments, and all allowances and monetary benefits which are not considered or
integrated as part of the regular or basic salary of the employee at the time of the
promulgation of the Decree on December 16, 1975.
Sec. 3. Employers covered. - The Decree shall apply to all employers except to:
(a) Distressed employers, such as (1) those which are currently incurring substantial
losses or (2) in the case of non-profit institutions and organizations, where their income,
whether from donations, contributions, grants and other earnings from any source, has
consistently declined by more than forty (40%) percent of their normal income for the last
two (2) years, subject to the provision of Section 7 of this issuance;
(b) The Government and any of its political subdivisions, including government-owned and
controlled corporations, except those corporations operating essentially as private
subsidiaries of the Government;
(c) Employers already paying their employees 13-month pay or more in a calendar year or
its equivalent at the time of this issuance;
(d) Employers of household helpers and persons in the personal service of another in
relation to such workers; and
(e) Employers of those who 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

43

basis in which case the employer shall be covered by this issuance insofar as such
workers are concerned.
As used herein, workers paid on piece-rate basis shall refer to those who are paid a standard
amount for every piece or unit of work produced that is more or less regularly replicated, without
regard to the time spent in producing the same.
The term "its equivalent" as used in paragraph c) hereof 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 employees basic salary, the employer shall pay the
difference.
Sec. 4. Employees covered. - Except as provided in Section 3 of this issuance, all employees of
covered employers shall be entitled to benefit provided under the Decree who are receiving not
more than P1,000 a month, regardless of their position, designation or employment status, and
irrespective of the method by which their wages are paid, provided that they have worked for at
least one month during the calendar year.
Sec. 5. Option of covered employers. - A covered employer may pay one-half of the 13th-month
pay required by the Decree before the opening of the regular school year and the other half on or
before the 24th day of December of every year.
In any establishment where a union has been recognized or certified as the collective bargaining
agent of the employees therein, the periodicity or frequency of payment of the 13th-month pay
may be the subject of agreement.
Nothing herein shall prevent employers from giving the benefits provided in the Decree to their
employees who are receiving more than One Thousand (P1,000) Pesos a month or benefits higher
than those provided by the Decree.
Sec. 6. Special feature of benefit. - The benefits granted under this issuance shall not be credited
as part of the regular wage of the employees for purposes of determining overtime and premium
pay, fringe benefits, as well as premium contributions to the State Insurance Fund, social
security, medicare and private welfare and retirement plans.
Sec. 7. Exemption of Distressed employers. - Distressed employers shall qualify for exemption
from the requirement of the Decree upon prior authorization by the Secretary of Labor. Petitions
for exemptions may be filed within the nearest regional office having jurisdiction over the
employer not later than January 15, 1976. The regional offices shall transmit the petitions to the
Secretary of Labor within 24 hours from receipt thereof.
Sec. 8. Report of compliance. - Every covered employer shall make a report of his compliance
with the Decree to the nearest regional labor office not later than January 15 of each year.
The report shall conform substantially with the following form:
REPORT ON COMPLIANCE WITH P.D. NO. 851
1.
2.
3.
4.
5.
6.
7.
8.

Name of establishment
Address
Principal product or business
Total employment
Total number of workers benefited
Amount granted per employee
Total amount of benefits granted
Name, position and tel. no. of person giving information

Sec. 9. Adjudication of claims. - Non-payment of the thirteenth-month pay provided by the
Decree and these rules shall be treated as money claims cases and shall be processed in
accordance with the Rules Implementing the Labor Code of the Philippines and the Rules of the
National Labor Relations Commission.
Sec. 10. Prohibition against reduction or elimination of benefits. - Nothing herein shall be
construed to authorize any employer to eliminate, or diminish in any way, supplements, or other
employee benefits or favorable practice being enjoyed by the employee at the time of
promulgation of this issuance.
Sec. 11. Transitory Provision. - These rules and regulations shall take effect immediately and for
purposes of the 13th-month pay for 1975, the same shall apply only to those who are employees
as of December 16, 1975.

44

Manila, Philippines, 22 December 1975.
PRESIDENTIAL DECREE NO. 851
SUPPLEMENTARY RULES AND REGULATIONS
IMPLEMENTING P.D. NO. 851
To insure uniformity in the interpretation, application and enforcement of the provisions of
Presidential Decree No. 851 and its implementing regulations, the following clarifications are
hereby made for the information and guidance of all concerned:
1. Contractors and Subcontractors, including Security and Watchman Agencies, are exempt for
the year 1975 subject to the following conditions:
(a) that the contracts of such enterprises were entered into before December 16, 1975;
(b) that such enterprises have complied with all labor standards laws during the year;
(c) that the contract cannot really accomodate 13-month pay or its equivalent; and
(d) that the contract does not provide for cost escalation clause.
This exemption is without prejudice on the part of the workers to negotiate with their employers
or to seek payment thereof by filing appropriate complaints with the Regional Offices of the
Department of Labor.
2. Private school teachers, including faculty members of colleges and universities, are entitled to
1/12 of their annual basic pay regardless of the number of months they teach or are paid within a
year.
3. New establishments operating for less than one year are not covered except subsidiaries or
branches of foreign and domestic corporations.
4. Overtime pay, earnings and other remunerations which are not part of the basic salary shall
not be included in the computation of the 13th-month pay.
5. In view of the lack of sufficient time for the dissemination of the provisions of P.D. No. 851 and
its Rules and the unavailability of adequate cash flow due to the long holiday season, compliance
and reporting of compliance with this Decree are hereby extended up to March 31, 1976 except
in private schools where compliance for 1975 may be made not later than 30 June 1976.
6. Nothing herein shall sanction the withdrawal or diminution of any compensation, benefits or
any supplements being enjoyed by the employees on the effective date of this issuance.
Manila, January 16, 1976
PRESIDENTIAL DECREE NO. 851
ADMINISTRATIVE ORDER NO. 2,
SERIES OF 1976
In the interest of public service and efficiency, more particularly to facilitate the disposition of
cases involving petitions for exemption, complaints, enforcement and implementation of P.D. No.
851 and its implementing rules and regulations, the following guidelines shall be followed:
I. Petition for exemption
1. The Regional Office concerned shall transmit immediately the petition for exemption to the
Chairman, Wage Commission with comments and recommendations, if any.
The petition shall contain a sworn statement on the inability to implement the Decree and the
reasons, therefore, and shall be accompanied by the following documents and statements:
(a) A certified true copy of the income tax returns for the last two (2) years;
(b) A certified copy of the financial reports for the last two (2) years filed with the
Government entities, such as the Securities and Exchange Commission, Department of
Trade, Department of Industries and Board of Investments;
(c) A detailed sworn statement of the actual monthly losses not covered by the report
required under paragraph (b) above and such other proofs or documents as may be
required by the Chairman, Wage Commission to establish such exemption.

45

2. The Chairman, Wage Commission and the duly designated staff, shall evaluate all
petitions for exemption and make appropriate recommendations within 20 working days
from receipt of the petition to the Secretary of Labor.
3. Whenever a petition for exemption has been filed, and complaint for
non-compliance shall be held in abeyance pending the disposition or resolution of the petition for
exemption.
II. Complaint, enforcement and/or implementation
1. All complaints for non-payment of the 13th-month pay shall be filed with the Field Services
Division of the Regional Office concerned. The Regional Director shall direct the said Division to
conduct an inspection and investigation in connection with the complaint filed.
2. The Field Service Division of the Regional Office concerned shall see to it that all covered
employees comply with P.D. No. 851.
The Regional Director shall submit a monthly progress report of compliance with the Decree.
The reports of the Regional Offices shall be submitted to the LSS and BLS, and shall contain the
following:
(a) The total number of establishments;
(b) total number of workers benefited; and
(c) total amount of benefits paid.
3. The Regional Office shall compile, analyze and evaluate compliance reports and update the
listing of establishments on the basis of the reports submitted.
Any prior order, circular, instruction or memorandum or parts thereof, inconsistent herewith are
hereby revoked.
This Order shall take effect immediately.
Manila, 9 January 1976.
(Personal obligation, claim against the estate)
Petitioner's arguments are well-taken. The claim for 13th month pay pertains to the personal obligation of Raul
Martinez which did not survive his death. The rule is settled that unless expressly assumed, labor contracts are
not enforceable against the transferee of an enterprise. In the present case, petitioner does not only disavow
that she continued the operation of the business of her son but also disputes the existence of labor contracts
between her son and private respondents.
The reason for the rule is that labor contracts are in personam, [Robledo v. NLRC, G.R. No. 110358, 9 November
1994, 238 SCRA 52.] and that claims for backwages earned from the former employer cannot be filed against
the new owners of an enterprise. [Sundowner Development Corporation v. Drilon, G.R. No. 82341, 6 December
1989, 180 SCRA 14.] Nor is the new operator of a business liable for claims for retirement pay of employees.
[Filipinas Port Services, Inc. v. NLRC, G.R. No. 86026, 31 August 1989, 177 SCRA 203.] Thus the claim of private
respondents should have been filed instead in the intestate proceedings involving the estate of Raul Martinez in
accordance with Sec. 5, Rule 86, of the Rules of Court which provides in part Nelly Acta Martinez vs. NLRC (G.R. No. 117495, May 29, 1997, First Division, J. Bellosillo)
(Managerial employees exempt)
Being a managerial employee, the petitioner is not entitled to 13 th month pay. Pursuant to Memorandum Order
No. 28, as implemented by the Revised Guidelines on Implementation of the 13 th Month Pay Law dated
November 16, 1987, managerial employees are exempt from receiving such benefit without prejudice to the
granting of other bonuses, in lieu of the 13 th month pay, to managerial employees upon the employer’s
discretion (House of Sara Lee vs. Rey, 532 Phil 121, 145 [2006])
Rolando DS. Torres vs. Rural Bank of San Juan Inc. (G.R. No. 184520, March 13, 2013, First Division, J.
Reyes)
(Managerial employee entitled, company policy)
Anent the CA's ruling that respondent should be entitled to 13th month pay, We clarify that the 13th Month Pay
Law, which provides the rules on the entitlement and computation of the 13th month pay, cannot be applied to
him because he is a managerial employee, and the law applies only to rank- and-file employees. Be that as it
may, although he is not covered by the said law, records showed that he is entitled to this benefit. However,
the Court cannot make a proper determination as to the exact amount – either full or pro-rated amount – of the
13th month pay, if any, that he would be entitled to. Thus, reference should be made in consonance with the
existing company policy on the payment of the 13th month pay vis-á-vis the number of days that he actually
worked.

46

Wuerth Philippines, Inc. vs. Rodante Ynson (G.R. No. 175932, February 15, 2012, Third Division, J.
Peralta)
(Company practice or policy)
With regard to the length of time the company practice should have been exercised to constitute voluntary
employer practice which cannot be unilaterally withdrawn by the employer, jurisprudence has not laid down
any hard and fast rule.
In the case of Davao Fruits Corporation v. Associated Labor Unions, [G.R. No. 85073, August 24, 1993, 225
SCRA 562] the company practice of including in the computation of the 13th-month pay the maternity leave
pay and cash equivalent of unused vacation and sick leave lasted for six (6) years.
While in Sevilla Trading v. Semana, [G.R. No. 152456, April 28, 2004, 428 SCRA 239.] the employer kept the
practice of including non-basic benefits such as paid leaves for unused sick leave and vacation leave in the
computation of their 13th-month pay for at least two (2) years.
In all these cases, this Court held that the grant of these benefits has ripened into company practice or policy
which cannot be peremptorily withdrawn. The common denominator in these cases appears to be the
regularity and deliberateness of the grant of benefits over a significant period of time.
Metropolitan Bank and Trust Company vs. NLRC (G.R. No. 152928, June 18, 2009, First Division, J.
Leonardo-De Castro)
(Computation)
It appears that public respondent computed the 13th month pay differential by multiplying the daily wage rate
by the number of days each private respondents worked in petitioner school. This is incorrect.
According to No. 4 (a) of the Revised Guidelines on the Implementation of the 13th Month Law (Presidential
Decree 851) dated November 16, 1987, the 13th month pay of an individual is (not less than) one-twelfth (1/12)
of the total basic salary earned by an employee within a calendar year.
Moreover, in No. 6 thereof, it is provided that an employee who has resigned or whose services were
terminated at any time before the time for payment of the 13th month pay is entitled to this monetary benefit
in proportion to the length of time he worked during the year, reckoned from the time he started working during
the calendar year up to the time of his resignation or termination from the service. [International School of
Speech v. NLRC, 242 SCRA 382 [1995].]
Following these guidelines, the proportionate 13th month pay of private respondents Bolosiño, Delorino,
Oserraos, Rebadulla, Aleria and Daclag for the second half of 1989 should be computed by multiplying their
basic monthly wage at that time by 7/12. For the year 1990, private respondents, except Golo, should be given
the remaining half of the 13th month pay. For the year 1991, private respondents, except Rebadulla, should be
given the differential. For 1992, no differential is due to private respondents since petitioner school paid all of
them an amount over and above their proportionate 13th month pay.
St. Michael Academy vs. NLRC (G.R. No. 119512, July 13, 1998, Second Division, J. Puno)
(Employer’s burden to prove payment)
With respect to the issue of unpaid salaries and 13 th month pay, the Court agrees with the appellate court that
petitioners’ evidence does not support their contention of payment.
When there is an allegation of nonpayment of salaries and other monetary benefits, it is the employer’s burden
to prove it payment to its employee. The employer’s evidence must show, with a reasonable degree of
certainty, that it paid and that the workers actually received the payment. “The reason for the rule is that the
pertinent personnel files, payrolls, records, remittances and other similar documents xxx are not in the
possession of the worker but [are] in the custody and absolute control of the employer.”
JARL Construction vs. Simeon A. Atencio (G.R. No. 175969, August 1, 2012, First Division, J. Del Castillo)
(Teacher’s overload not included in 13th month pay computation)
Moreover, petitioner failed to refute private respondent’s contention that the excess teaching load is paid by
the hour while the regular teaching load is being paid on a monthly basis and that the assignment of overload
is subject to the availability of teaching loads. This only goes to show that overload pay is not integrated with a
teacher’s basic salary for his or her regular teaching load. In addition, overload varies from one semester to
another as it is dependent upon the availability of extra teaching loads. As such, it is not legally feasible to
consider payments of such overload as part of a teacher’s regular basic salary. Verily, overload pay may not be
included as basis for determining a teacher’s 13th month pay.

47

Letran Calamba Faculty and Employees Association vs. NLRC (G.R. No. 156225, January 29, 2008, Third
Division, J. Austria-Martinez)
H. Separation Pay
(Separation Pay)
It may not be amiss to point out at this juncture that aside from Article 284 of the Labor Code, the award of
separation pay is also authorized in the situations dealt with in Article 283 of the same Code and under Section
4 (b), Rule I, Book VI of the Implementing Rules and Regulations of the said Code [Book VI, Rule I, Section 4(b) –
In case the establishment where the employee is to be reinstated has closed or ceased operations or where his
former position no longer exists at the time of reinstatement for reasons not attributable to the fault of the
employer, the employee shall be entitled to separation pay equivalent to at least one month salary or to one
month salary for every year of service, whichever is higher, a fraction of at least six months being considered
as one whole year.] where there is illegal dismissal and reinstatement is no longer feasible.
Romeo Villaruel vs. Yeo Han Guan (G.R. No. 169191, June 1, 2011, Second Division, J. Peralta)
Art. 282. Termination by employer. An employer may terminate an employment for any of the following 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. Gross and habitual neglect by the employee of his duties;
3. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;
4. 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 representatives; and
5. Other causes analogous to the foregoing.
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is
for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for
every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious business losses or financial reverses,
the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year
of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
Art. 284. Disease as ground for termination. An employer may terminate the services of an employee who has
been found to be suffering from any disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay
equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service,
whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year.
Labor Code
OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
BOOK SIX
Post Employment
TITLE I
Termination of Employment
ARTICLE 280. Regular and casual employment. — The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer except where the employment has been fixed for a specific project
or undertaking, the completion or termination of which has been determined at the time of the engagement of
the employee or where the work or service to be performed is seasonal in nature and the employment is for the
duration of the season.

48

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That
any employee who has rendered at least one year of service, where the position no longer exists at the time of
reinstatement for reasons not attributable to the fault of the employer, the employee shall be entitled to
separation pay equivalent to at least one-month salary or to one-month salary for every year of service,
whichever is higher, a fraction of at least six months being considered as one whole year. (Articles 278 to 280
and then Section 5, these are what appeared in the official version)
(Doctrine of strained relations; in lieu of reinstatement)
Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative
to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates
the employee from what could be a highly oppressive work environment. On the other hand, it releases the
employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.
Golden Ace Builders vs. Jose A. Talde (G.R. No. 187200, January 29, 2008, First Division, J. Carpio
Morales); Bank of Lubao, Inc. vs. Rommel J. Manabat and NLRC (G.R. No. 188722, February 1, 2012,
Second Division, J. Reyes)
(No separation pay in case of resignation)
Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes
that personal reasons cannot be sacrificed in favor of the exigency of the service and he has no other choice
but to disassociate himself from his employment. [Virjen Shipping Corporation v. Barraquio, G.R. No. 178127,
April 16, 2009, 585 SCRA 541, 548.]
By way of exception, this Court has allowed grants of separation pay to stand as “a measure of social justice”
where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his
moral character. [CJC Trading, Inc. v. NLRC, 316 Phil. 887, 893 (1995)]
However, there is no provision in the Labor Code which grants separation pay to voluntarily resigning
employees. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled to
separation pay, except when it is stipulated in the employment contract or CBA, or it is sanctioned by
established employer practice or policy. [Hinatuan Mining Corporation v. NLRC, 335 Phil. 1090, 1093-1094
(1997)]
In the present case, neither the abovementioned provisions of the Labor Code and its implementing rules and
regulations nor the exceptions apply because petitioner was not dismissed from his employment and there is
no evidence to show that payment of separation pay is stipulated in his employment contract or sanctioned by
established practice or policy of herein respondent, his employer.
Since petitioner was not terminated from his employment and, instead, is deemed to have resigned therefrom,
he is not entitled to separation pay under the provisions of the Labor Code.
Romeo Villaruel vs. Yeo Han Guan (G.R. No. 169191, June 1, 2011, Second Division, J. Peralta)
(Instances when granted; loyalty and long service)
It is well to note that there is no provision in the Labor Code that grants separation pay to voluntarily resigning
employees. Separation pay may be awarded only in cases when the termination of employment is due to (a)
installation of labor-saving devices, (b) redundancy, (c) retrenchment, (d) closing or cessation of business
operations, (e) disease of an employee and his continued employment is prejudicial to himself or his coemployees, or (f) when an employee is illegally dismissed but reinstatement is no longer feasible . In fact, the
rule is that an employee who voluntarily resigns from employment is not entitled to separation pay, except
when it is stipulated in the employment contract or collective bargaining agreement (CBA), or it is sanctioned
by established employer practice or policy. [Hinatuan Mining Corporation v. National Labor Relations
Commission, G.R. No. 117394, February 21, 1997, 268 SCRA 622, 626]
Here, respondent was separated from his employment not on the grounds mentioned above. Neither was
there a stipulation in his employment contract or CBA or even a company practice or policy that would grant
separation pay to employees who voluntarily resigned. Nevertheless, the labor tribunals as well as the CA
resolved to grant respondent his prayer for separation pay, explaining that he deserved to receive the same as
a gratuity for his loyalty and long service to the company, not to mention the representation of Caludac that he
would be given all the benefits due him.
We agree. Clearly, the primary consideration that impelled respondent to tender his resignation letter was the
assurance that he would be paid his separation pay. It is thus unlikely for someone to just leave his employer
for whom he has worked for twelve (12) years without any expectation of financial assistance. This We can
glean from respondent's resignation letter stating: “I hope my resignation be granted and whatever help the
management can extend to me and my family, I would highly appreciate it.”
In Alfaro v. Court of Appeals, [G.R. No. 140812, August 28, 2001, 363 SCRA 799, 801] We held that as a general
rule, separation pay need not be paid to an employee who voluntarily resigns. However, an employer who

49

agrees to expend such benefit as an incident of the resignation should not be allowed to renege on the
fulfillment of such commitment.
“J” Marketing Corporation vs. Cesar L. Taran (G.R. No. 163924, June 18, 2009, Third Division, J. Peralta)
(Acquittal in qualified theft; Instances when not granted; long years of service)
(Acquittal in qualified theft)
In Nicolas v. National Labor Relations Commission, [327 Phil. 883, 886-887 (1996).] we held that a criminal
conviction is not necessary to find just cause for employment termination. Otherwise stated, an employee’s
acquittal in a criminal case, especially one that is grounded on the existence of reasonable doubt, will not
preclude a determination in a labor case that he is guilty of acts inimical to the employer’s interests. [Vergara v.
National Labor Relations Commission, 347 Phil. 161, 173-174 (1997); Chua v. National Labor Relations
Commission, G.R. No. 105775, February 8, 1993, 218 SCRA 545, 548; See MGG Marine Services, Inc. v. National
Labor Relations Commission, 328 Phil. 1047, 1068 (1996).]
Criminal cases require proof beyond reasonable doubt while labor disputes require only substantial evidence,
which means such relevant evidence as a reasonable mind might accept as adequate to justify a conclusion.
[See Patna-an v. National Labor Relations Commission, G.R. No. 92878, March 6, 1992, 207 SCRA 106; Iriga
Telephone Co., Inc. v. National Labor Relations Commission, 350 Phil. 245, 253 (1998).]
The evidence in this case was reviewed by the appellate court and two labor tribunals endowed with expertise
on the matter – the Labor Arbiter and the NLRC. They all found substantial evidence to conclude that Capor
had been validly dismissed for dishonesty or serious misconduct. It is settled that factual findings of quasijudicial agencies are generally accorded respect and finality so long as these are supported by substantial
evidence. In the instant case, we find no compelling reason to doubt the common findings of the three
reviewing bodies.
(Instances when separation pay not granted)
In fact, in the recent case of Toyota Motors Philippines, Corp. Workers Association (TMPCWA) v. National Labor
Relations Commission, [G.R. Nos. 158798-99, October 19, 2007, 537 SCRA 171, 219-223] we ruled that
separation pay shall not be granted to all employees who are dismissed on any of the four grounds provided in
Article 282 of the Labor Code. Such ruling was reiterated and further explained in Central Philippines Bandag
Retreaders, Inc. v. Diasnes [G.R. No. 163607, July 14, 2008, 558 SCRA 194, 207.]
(long years of service)
Indeed, length of service and a previously clean employment record cannot simply erase the gravity of the
betrayal exhibited by a malfeasant employee. [See Philippine Long Distance Telephone Company v. The Late
Romeo F. Bolso, G.R. No. 159701, August 17, 2007, 530 SCRA 550, 563-564; Central Pangasinan Electric
Cooperative, Inc. v. National Labor Relations Commission, supra; Philippine Long Distance Telephone Company
v. National Labor Relations Commission, supra note 12; United South Dockhandlers, Inc. v. National Labor
Relations Commission, 335 Phil. 76, 81-82 (1997).]
Length of service is not a bargaining chip that can simply be stacked against the employer. After all, an
employer-employee relationship is symbiotic where both parties benefit from mutual loyalty and dedicated
service. If an employer had treated his employee well, has accorded him fairness and adequate compensation
as determined by law, it is only fair to expect a long-time employee to return such fairness with at least some
respect and honesty.
Reno Foods, Inc. and/or Vicente Khu vs. NLM-Katipunan, Nenita Capor (G.R. No. 164016, March 15, 2010,
Second Division, J. Del Castillo)
(Computation of separation pay if reinstatement no longer viable)
Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for
every year of service should be awarded as an alternative. This has been the consistent ruling in the award of
separation pay to illegally dismissed employees in lieu of reinstatement. [Diversified Security, Inc. v. Bautista,
G.R. No. 152234, April 15, 2010, 618 SCRA 289, 296]
Dup Sound Phils. vs. CA (G.R. No. 168317, November 21, 2011, Third Division, J. Peralta)
(In the alternative with reinstatement; in conjunction with award backwages)
Thus, as an illegally or constructively dismissed employee, respondent is entitled to: (1) either reinstatement, if
viable, or separation pay, if reinstatement is no longer viable; and (2) backwages. These two reliefs are
separate and distinct from each other and are awarded conjunctively. [Siemens v. Domingo, G.R. No. 150488,
July 28, 2008, 560 SCRA 86, 100]

50

In this case, since respondent was a probationary employee at the time she was constructively dismissed by
petitioners, she is entitled to separation pay and backwages. Reinstatement of respondent is no longer viable
considering the circumstances.
Robinsons Galleria vs. Irene R. Ranches (G.R. No. 177937, January 19, 2011, Second Division, J. Nachura)
(Employers can provide greater amount of separation pay)
Article 283 of the Labor Code provides only the required minimum amount of separation pay, which employees
dismissed for any of the authorized causes are entitled to receive. Employers, therefore, have the right to
create plans, providing for separation pay in an amount over and above what is imposed by Article 283. There
is nothing therein that prohibits employers and employees from contracting on the terms of employment, or
from entering into agreements on employee benefits, so long as they do not violate the Labor Code or any
other law, and are not contrary to morals, good customs, public order, or public policy.
Ma. Coriuna C. Jiao, et. al. vs. NLRC (G.R. No. 182331, April 18, 2012, Second Division, J. Reyes)
I. Retirement Pay
a. Eligibility
b. Amount
Art. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned
under existing laws and any collective bargaining agreement and other agreements: Provided, however, That
an employee’s retirement benefits under any collective bargaining and other agreements shall not be less than
those provided therein.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the
said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2)
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 fifteen (15)
days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of
service incentive leaves.
Retail, service and agricultural establishments or operations employing not more than ten (10) employees or
workers are exempted from the coverage of this provision.
Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of
this Code.
Labor Code as amended by RA 7641 New Retirement Law
RULES IMPLEMENTING THE NEW
RETIREMENT LAW
(April 1, 1993)
Pursuant to the provisions of Article 287 of the Labor Code as amended by Republic Act No. 7641,
in relation to Article 5 of the same Code, RULE II of Book VI of the Rules Implementing the Labor
Code is hereby issued, the full text of which shall read as follows:
RULE II
Retirement Benefits
SECTION 1. General Statement on Coverage. — This Rule shall apply to all employees in the
private sector, regardless of their position, designation or status and irrespective of the method
by which their wages are paid, except to those specifically exempted under Section 2 hereof. As
used herein, the term “Act” shall refer to Republic Act No. 7641 which took effect on January 7,
1993.
SECTION 2. Exemptions. — This Rule shall not apply to the following employees:
2.1 Employees of the National Government and its political subdivisions, including Governmentowned and/or controlled corporations, if they are covered by the Civil Service Law and its
regulations.

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2.2 Domestic helpers and persons in the personal service of another. (Deleted by Department
Order No. 20 issued by Secretary Ma. Nieves R. Confessor on May 31, 1994.)
2.3 Employees of retail, service and agricultural establishment or operations regularly
employing not more than ten (10) employees. As used in this sub-section;
(a) “Retail establishment” is one principally engaged in the sale of goods to end-users for
personal or household use. It shall lose its retail character qualified for exemption if it is
engaged in both retail and wholesale sale of goods.
(b) “Service establishment” is one principally engaged in the sale of service to individuals
for their own or household use and is generally recognized as such.
(c) “Agricultural establishment/operations” refers to an employer which is engaged in
“agriculture”. This terms refers to all farming activities in all its branches and includes
among others, the cultivation and tillage of the soil, production, cultivation, growing and
harvesting of any agricultural or horticultural commodities, dairying, raising of livestock or
poultry, the culture of fish and other aquatic products in farms or ponds, and any activities
performed by a farmer or on a farm as incident to or in conjunction with such farming
operations, but does not include the manufacture and/or processing of sugar, coconut,
abaca, tobacco, pineapple, aquatic or other farm products.
SECTION 3. Retirement under CBA/contract.
3.1 Any employee may retire or be retired by his employer upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract or
retirement plan subject to the provisions of Section 5 hereof on the payment of retirement
benefits.
3.2 In case of retirement under this Section, the employee shall be entitled to receive such
retirement benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements; provided, however, that an employee’s retirement benefits
under any collective bargaining and other agreements shall not be less than those provided
under this Rule, and provided further that if such benefits are less, the employer shall pay the
difference between the amount due the employee under this Rule and that provided under the
collective or individual agreement or retirement plan.
3.3 Where both the employer and the employee contribute to a retirement fund in accordance
with an individual or collective agreement or other applicable employment contract, the
employer’s total contribution thereto shall not be less than the total retirement benefits to which
the employee would have been entitled had there been no such retirement fund. In case the
employer’s contribution is less than the retirement benefits provided under this Rule, the
employer shall pay the deficiency.
SECTION 4. Optional; Compulsory Retirement.
4.1 Optional Retirement. — In the absence of a retirement plan or other applicable agreement
providing for retirement benefits of employees in an establishment, an employee may retire upon
reaching the age of sixty (60) years or more if he has served for at least five (5) years in said
establishment.
4.2 Compulsory Retirement. — Where there is no such plan or agreement referred to in the
immediately preceding sub-section, an employee shall be retired upon reaching the age of sixtyfive (65) years.
4.3 Upon retirement of an employee, whether optional or compulsory, his services may be
continued or extended on a case to case basis upon agreement of the employer and employee.
4.4 Service Requirement. — The minimum length of service in an establishment or with an
employer of at least five (5) years required for entitlement to retirement pay shall include
authorized absences and vacations, regular holidays and mandatory fulfillment of a military or
civic duty.
SECTION 5. Retirement Benefits.
5.1 In the absence of an applicable agreement or retirement plan, an employee who retires
pursuant to the Act shall be entitled to retirement pay equivalent to at least one-half (½) month
salary for every year of service, a fraction of at least six (6) months being considered as one
whole year.
5.2 Components of One-half (½) Month Salary. — For the purpose of determining the minimum
retirement pay due an employee under this Rule, the term “one-half month salary” shall include
all of the following:

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(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used herein,
the term “salary” includes all remunerations paid by an employer to his employees for
services rendered during normal working days and hours, whether such payments are fixed or
ascertained on a time, task, piece of commission basis, or other method of calculating the
same, and includes the fair and reasonable value, as determined by the Secretary of Labor
and Employment, of food, lodging or other facilities customarily furnished by the employer to
his employees. The term does not include cost of living allowances, profit-sharing payments
and other monetary benefits which are not considered as part of or integrated into the regular
salary of the employees.
(b) The cash equivalent of not more than five (5) days of service incentive leave;
(c) One-twelfth of the 13th month pay due the employee.
(d) All other benefits that the employer and employee may agree upon that should be
included in the computation of the employee’s retirement pay.
5.3 One-half month salary of employees who are paid by results. — For covered workers who
are paid by results and do not have a fixed monthly rate, the basis for determination of the
salary for fifteen days shall be their average daily salary (ADS), subject to the provisions of
Rule VII-A, Book III of the Rules Implementing the Labor Code on the payment of wages of
workers who are paid by results. The ADS is the average salary for the last twelve (12)
months reckoned from the date of their retirement, divided by the number of actual working
days in that particular period.
SECTION 6. Exemption from tax. — The retirement pay provided in the Act may be exempted
from tax if the requirements set by the Bureau of Internal Revenue under Sec. 2 (b) item (1)
of Revenue Regulations No. 12-86 dated August 1, 1986 are met, to wit:
Pensions, retirement and separation pay. — Pensions, retirement and separation pay
constitute compensation subject to withholding, except the following:
(1) Retirement benefits received by officials and employees of private firms under a
reasonable private benefit plan maintained by the employer, if the following requirements are
met:
(i) The benefit plan must be approved by the Bureau of Internal Revenue;
(ii) The retiring official or employee must have been in the service of the same employer for
at least ten (10) years and is not less than fifty (50) years of age at the time of retirement;
and
(iii) The retiring official or employee shall not have previously availed of the privilege under
the retirement benefit plan of the same or another employer.
SECTION 7. Penal Provision. — It shall be unlawful for any person or entity to circumvent or
render ineffective the provisions of the Act. Violations thereof shall be subject to the penal
provisions provided under Article 288 of the Labor Code of the Philippines.
SECTION 8. Relation to agreements and regulations. — Nothing in this Rule shall justify an
employer from withdrawing or reducing any benefits, supplements or payments as provided in
existing laws, individual or collective agreements or employment practices or policies.
All rules and regulations, policy issuances or orders contrary to or inconsistent with these rules
are hereby repealed or modified accordingly.
SECTION 9. Effectivity. — This Rule took effect on January 7, 1993 when the Act went into force.
(SGD.) MA. NIEVES R. CONFESOR
Secretary
GUIDELINES FOR THE EFFECTIVE IMPLEMENTATION OF R.A. 7641,
THE RETIREMENT PAY LAW
A. Coverage
Republic Act No. 7641 or the Retirement Pay Law shall apply to all employees in the private
sector, regardless of their position, designation or status and irrespective of the method by which
their wages are paid. They shall include part-time employees, employees of service and other job
contractors and domestic helpers or persons in the Personal service of another.

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The law does not cover employees of retail, service and agricultural establishments or operations
employing not more than ten (10) employees or workers and employees of the National
Government and its political subdivisions, including Government-owned and/or controlled
corporations, if they are covered by the Civil Service Law and its regulations.
B. Computation of Retirement Pay
A covered employee who retires pursuant to RA 7641 shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least
six (6) months being considered as one whole year.
The law is explicit that “one-half month salary shall mean fifteen (15) days plus one-twelfth (1/12)
of the 13th month pay and the cash equivalent of not more than five (5) days service incentive
leaves” unless the parties provide for broader inclusions. Evidently, the law expanded the
concept of “one-half month salary” from the usual one-month salary divided by two.
In reckoning the length of service, the period of employment with the same employer before the
effectivity date of the law on January 7, 1993 should be included.
C. Substitute Retirement Plan
Qualified workers shall be entitled to the retirement benefit under RA 7641 in the absence of any
individual or collective agreement, company policy or practice. In case there is such an
agreement, policy or practice providing retirement benefit which is equal or superior to that
which is provided in the Act, said agreement, policy or practice will prevail.
As provided in RA 7742, a private employer shall have the option to treat the coverage of the
PAG-IBIG Fund as a substitute retirement benefit for the employee concerned within the purview
of the Labor Code as amended; provided, such option does not in any way contravene an existing
collective bargaining agreement or other employment agreement. Thus, the PAG-IBIG Fund can
be considered as a substitute retirement plan of the company for its employees provided that
such scheme offers benefits which are more than or at least equal to the benefits under RA 7641.
If said scheme provides less than what the employee is entitled to under RA 7641, the employer
is liable to pay the difference.
If both the employee and the employer contribute to a retirement plan, only the employer’s
contribution and its increments shall be considered for full or partial compliance with the benefit
under RA 7641. On the other hand, where the employee is the lone contributor to the PAG-IBIG
Fund, the employer being exempted from its coverage, the employer is under obligation to give
his employee retirement benefits under the Act.
Adopted: 24 October 1996
(SGD.) LEONARDO A. QUISUMBING
Secretary
(Included in retirement computation)
Admittedly, petitioner worked for 14 years for the bus company which did not adopt any retirement scheme.
Even if petitioner as bus conductor was paid on commission basis then, he falls within the coverage of R.A.
7641 and its implementing rules. As thus correctly ruled by the Labor Arbiter, petitioner’s retirement pay
should include the cash equivalent of the 5-day SIL and 1/12 of the 13th month pay.
Rodolfo J. Serrano vs. Severino Santos Transit (G.R. No. 187698, April 9, 2010, Third Division, J.
Carpio Morales
(Nature of Article 287)
Undoubtedly, under this provision, the retirement age is primarily determined by the existing agreement or
employment contract. Absent such an agreement, the retirement age shall be fixed by law. The above-cited
law mandates that the compulsory retirement age is at 65 years, while the minimum age for optional
retirement is set at 60 years.
Moreover, Article 287 of the Labor Code, as amended, applies only to a situation where (1) there is no CBA or
other applicable employment contract providing for retirement benefits for an employee; or (2) there is a
collective bargaining agreement or other applicable employment contract providing for retirement benefits for
an employee, but it is below the requirement set by law.
The rationale for the first situation is to prevent the absurd situation where an employee, deserving to receive
retirement benefits, is denied them through the nefarious scheme of employers to deprive employees of the

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benefits due them under existing labor laws.
contracts from derogating from the public law.

The rationale for the second situation is to prevent private

Amelia R. Obusan vs. Philippine National Bank (G.R. No. 181178, July 26, 2010, Second Division, J.
Nachura) reiterated in Bibiano C. Elegir vs. Philippine Airlines, Inc. (G.R. No. 181995, July 16, 2012,
Second Division, J. Reyes)
(Purpose of the amendment to Article 287)
Emphasis must be placed on the fact that the purpose of the amendment is not merely to establish precedence
in application or accord blanket priority to existing CBAs in computing retirement benefits . The determining
factor in choosing which retirement scheme to apply is still superiority in terms of benefits provided. Thus, even
if there is an existing CBA but the same does not provide for retirement benefits equal or superior to that which
is provided under Article 287 of the Labor Code, the latter will apply. In this manner, the employee can be
assured of a reasonable amount of retirement pay for his sustenance.
Bibiano C. Elegir vs. Philippine Airlines, Inc. (G.R. No. 181995, July 16, 2012, Second Division, J. Reyes)
c. Retirement benefits of workers paid by results
5.3 One-half month salary of employees who are paid by results. — For covered workers who are paid by results
and do not have a fixed monthly rate, the basis for determination of the salary for fifteen days shall be their
average daily salary (ADS), subject to the provisions of Rule VII-A, Book III of the Rules Implementing the Labor
Code on the payment of wages of workers who are paid by results. The ADS is the average salary for the last
twelve (12) months reckoned from the date of their retirement, divided by the number of actual working days in
that particular period.
Implementing Rules of RA 7641 (New Retirement Law)
d. Retirement benefits of part-time workers
Republic Act No. 7641 or the Retirement Pay Law shall apply to all employees in the private sector, regardless
of their position, designation or status and irrespective of the method by which their wages are paid. They shall
include part-time employees, employees of service and other job contractors and domestic helpers or persons
in the Personal service of another.
Guidelines for the effective implementation of RA 7641 (New Retirement Law)
e. Taxability
We also agree with petitioner’s contention that, under the NIRC, the retirement benefits of respondents are part
of their gross income subject to taxes. Section 28 (b) (7) (A) of the NIRC of 1986 [Now Section 32 (B) (6) (a) of
the NIRC of 1997]
Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer is burdened to prove the
concurrence of the following elements: (1) a reasonable private benefit plan is maintained by the employer; (2)
the retiring official or employee has been in the service of the same employer for at least 10 years; (3) the
retiring official or employee is not less than 50 years of age at the time of his retirement; and (4) the benefit
had been availed of only once.
Intercontinental Broadcasting Corporation (IBC) vs. Noemi B. Amarilla (G.R. No. 162775, October 27,
2006, Second Division, J. Callejo Sr.), reiterated in Ma. Isabel T. Santos vs. Servier Philippines, Inc. and
NLRC (G.R. No. 166377, November 28, 2008, Third Division, J. Nachura)
************************************
J. Women Workers
a. Provisions against discrimination
b. Stipulation against marriage
Art. 136. 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.
(discriminatory chauvinism)

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The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining & Industrial Corporation [CAG.R. No. 52753-R, June 28, 1978] considered as void a policy of the same nature. In said case, respondent, in
dismissing from the service the complainant, invoked a policy of the firm to consider female employees in the
project it was undertaking as separated the moment they get married due to lack of facilities for married
women. Respondent further claimed that complainant was employed in the project with an oral understanding
that her services would be terminated when she gets married. Branding the policy of the employer as an
example of “discriminatory chauvinism” tantamount to denying equal employment opportunities to women
simply on account of their sex, the appellate court struck down said employer policy as unlawful in view of its
repugnance to the Civil Code, Presidential Decree No. 148 and the Constitution.
Philippine Telegraph and Telephone Company vs. NLRC (G.R. No. 118978, May 23, 1997, Second Division,
J. Regalado]

c. Prohibited acts
d. Anti-Sexual Harassment Act (R.A. No. 7877)
K. Employment of Minors (Labor Code and R.A. No. 7678, R.A. No. 9231)
L. Househelpers (Labor Code as amended by R.A. No. 7655, An Act Increasing the Minimum Wage of
Househelpers; see also – Household Service under the Civil Code)
M. Employment of Homeworkers
N. Apprentices and Learners
O. Persons with disability (R.A. No. 7277, as amended by R.A. No. 9442)
a. Definition
b. Rights of persons with disability
c. Prohibition on discrimination against persons with disability
d. Incentives for employers

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