III. LABOR STANDARDSA. Hours of work 1. Coverage/Excluso!s "Ar#.
$%& La'or Co(e) Ar#. $%. Coverage. The provisions of this Title
shall apply to employees in all establishments and
undertakingswhether for proft or not, but not to
governmentemployees, managerial employees, feld personnel,
membersof the family of the employer who aredependent on him for
support , domestic helpers , persons in the personalserviceof
another, and workers who are paid by resultsas determined by the
Secretary of Labor in appropriateregulations.As used herein,
"managerial employees" refer to those whose primary duty consists
of the management of theestablishment in which they are employed or
of a department or subdivision thereof, and to other ocers
ormembers of the managerial sta!.""ield personnel"shall refer to
non#agricultural employees who regularly perform their duties away
from theprincipal place of business or branch oce of the employer
and whose actual hours of work in the feld cannotbe determined with
reasonable certainty.$%&'()S *)L+S'%,L+%+&T'&- T.+
LA($* /$0+($$1 T.*++/onditions of +mployment*)L+ '.ours of
2orkS+/T'$& 3. -eneral statement on coverage. 4 The provisions
of this *ule shall apply to all employees in allestablishments and
undertakings,whether operated for proftornot,e5cept to those
specifcally e5emptedunder Section 6 hereof.S+/T'$& 6.
+5emption. 4 The provisions of this *ule shall not apply to the
following persons if they 7ualify fore5emption under the conditions
set forth herein89a:-overnment employeeswhether
employedbythe&ational -overnment or anyof its
politicalsubdivision, including those employed in government#owned
and;or controlled corporationsusted accordingly in cases where the
normal workweek of the frm is fvedays.I2. S0ECI5IC
31IDELINES/onditions. 0$L+ shall recogni?e /22 schemes adopted in
accordance with the following83. The /22 scheme is undertaken as a
result of an e5press and voluntary agreement of ma>ority of
thecoveredemployeesor their dulyauthorityrepresentatives.
Thisagreement maybee5pressedthroughcollective bargaining or other
legitimate workplace mechanisms of participation such a
labor#managementcouncils, employee assemblies or referenda.6. 'n
frms using substances, chemicals and processes or operating under
conditions where there are airbornecontaminants, human carcinogens
or noise prolonged e5posure to which may pose ha?ards to
theemployeesJ health and safety, there must be a certifcation from
an accredited health and safety organi?ationor practitioner or from
the frmJs safety committee that work beyond eight hours is within
threshold limits ortolerable levels of e5posure, as set in the
$S.S.=. The employer shall notify the 0$L+, through the *egional
$ce having >urisdiction over the workplace, ofthe adoption of
the /22 scheme.The notice shall be in 0$L+ /22 *eport "orm attached
to this Advisory.+!ects. A /22 scheme which complies with the
foregoing conditions shall have the following e!ects83.
)nlessthereisamorefavorablepracticee5istinginthefrm,
workbeyondeight hourswill not becompensable byovertime
premiumprovided the total number of hours worked perday shallnot
e5ceed=twelve 936: hours . 'n any case, any work performed beyond
36 hours a day or @C hours a week shall besub>ect to overtime
premium.6. /onsistent with Article CE of the Labor /ode, employees
under a /22 scheme are entitled to meal periodsof not less than
si5ty 9FA: minutes.&othing herein shall impair the right of
employees to rest days as well asto holiday pay, rest day pay or
leaves in accordance with law or applicable collective bargaining
agreementor company practice.=. Adoption of the /22 scheme shall in
no case result in diminution of e5isting benefts.*eversion to
thenormal eight#hour workday shall not constitute a diminution of
benefts. The reversion shall be considered alegitimate e5ercise of
management prerogative, provided that the employer shall give the
employees priornotice of such reversion within a reasonable period
of time.Administration of /22 Scheme.The parties to the /22 scheme
shall be primarily responsible for itsadministration.'n case of
di!erences of interpretation, the following shall be observedustify
the reduction of work hours. 'f the standards set in determining
the >ustifabilityof fnancial losses under Article 6C= 9i.e.,
retrenchment: or Article 6CF 9i.e., suspension of work: of the
Labor/ode were to be considered, petitioners would end up failing
to meet the
standards.$ntheonehand,Article6CFappliesonlywhenthereisabonafdesuspensionof
theemployerJsoperationof abusinessor undertakingfor aperiodnot
e5ceedingsi59F: months.$%h&l. 'ndustr&(l@)e*ur&t Agen*
+orp. v. D(p&ton, ,!! %h&l. -.", -/2 ("---#0 *ecords show
that Linton continued itsbusiness operations during the e!ectivity
of the compressed workweek, which spanned more than thema5imum
period. $n the other hand, for retrenchment to be >ustifed, any
claim of actual or potential business losses mustsatisfy the
following standards8 93: the losses incurred are substantial and
not de minimis< 96: the lossesareactualor reasonably imminentect
to such regulations as the Secretary of Labor may prescribe,it
shall be the dutyof every employer to give his employeesnot less
than si5ty 9FA: minutes time#o! for their regular meals.Labor
/ode$%&'()S *)L+S'%,L+%+&T'&- T.+ LA($* /$0+($$1
T.*++/onditions of +mployment*)L+ '.ours of 2orkSec. K.%eal and
*est ,eriods.4+very employer shall give his employees, regardless
of se5, not less than one93: hour time#o! for regular meals, e5cept
in the following cases when a meal period of not less than
twenty96A: minutes may be given by the employer provided that such
shorter meal period is credited as compensablehours worked of the
employeeudice to the business or operations of the employer.Any
employee re7uired to render overtime work under this Article shall
be paid the additional compensationre7uired in this /hapter.FLabor
/odeArt. MA./omputation ofadditional compensation.
"orpurposesofcomputing overtimeandotheradditionalremuneration as
re7uired by this /hapter, the "regular wage" of an employee shall
include the cash wage only,without deduction on account of
facilities provided by the employer.$%&'()S
*)L+S'%,L+%+&T'&- T.+ LA($* /$0+($$1 T.*++/onditions of
+mployment*)L+ '.ours of 2orkS+/T'$& C. $vertime pay. 4 Any
employee covered by this *ule who is permitted or re7uired to work
beyondeight 9C: hours on ordinary working days shall be paid an
additional compensation for the overtime work in theamount
e7uivalent to his regular wageplus at least twenty#fve percent
96EG: thereof.S+/T'$& M. ,remium and overtime pay for holiday
and rest day work. 4 9a: +5cept employees referred to
underSection6of this*ule,anemployeewhoispermittedor
su!eredtoworkonspecial holidaysor onhisdesignated rest days not
falling on regular holidays, shall be paid with an additional
compensation as premiumpay of not less than thirty percent 9=AG: of
his regular wage. "or work performed in e5cess of eight 9C: hours
onspecial holidays andrest days not fallingonregular holidays,
anemployeeshall bepaidanadditionalcompensation for the overtime
work e7uivalent to his rate for the frst eight hours on a special
holiday or restday plus at least thirty percent 9=AG: thereof.9b:
+mployees of public utility enterprises as well as those employed
in non#proft institutions and organi?ationsshall be entitled to the
premium and overtime pay provided herein, unless they are
specifcally e5cluded fromthe coverage of this *ule as provided in
Section 6 hereof.9c: The payment of additional compensation for
work performed on regular holidays shall be governed by *ule'D,
(ook Three, of these *ules.S+/T'$& 3A. /ompulsory overtime
work. 4 'n any of the following cases, an employer may re7uire any
of hisemployees to work beyond eight 9C: hours a day, provided that
the employee re7uired to render overtime workis paid the additional
compensation re7uired by these regulations89a: 2hen the country is
at war or when any other national or local emergency has been
declared by/ongress or the /hief
+5ecutiveobisnotpracticable,theseworkersshall be
grantedthesamebenefts as other workers who are unable to work, or
to secure employment during such period.CRA night worker certifed
as temporarily unft for night work shall be given the same
protectionagainst dismissalor notice of dismissalas other workers
who are prevented from working forreasons of health.TRArt. 3EC.
2omen &ight 2orkers.4 %easures shall be taken to ensure that an
alternative to nightwork is available to women workers who would
otherwise be called upon to perform such work8R9a: (efore and after
childbirth, for a period of at least si5teen 93F: weeks, which
shall be dividedbetween the time before and after childbirthects
relative to wages, incomes and productivity improvement for
theirrespective regionsect to guidelines issued by the
/ommissionectives andprograms, and to collect and compile data on
wages, incomes, productivity and other related information
andperiodically disseminate the sameects of the (oards shall be
through the respective *egional$cesof the0epartment, provided,
however, that the(oardsshall havetechnical supervisionover
the*egional $ce of the 0epartment with respect to the
implementation of these plans, programs and pro>ects.6. 7!*u*
wage of workers ,a( '- resul#s a) 8orkers ,a( '- resul#s Art. 36@.
Standards;/riteria for minimum wage f5ing. The regional minimum
wages to be established by the*egional (oard shall be as nearly
ade7uate as is economically feasible to maintain the minimum
standards of3Eliving necessary for the health, eciency and general
well#being of the employees within the framework of thenational
economic and social development program 555All workers paid by
result, including those who are paid on piecework, takay, pakyaw or
task basis, shall receivenot less than the prescribed wage rates
per eight 9C: hours of work a day, or a proportion thereof for
workingless than eight 9C: hours.Labor /ode$%&'()S
*)L+S'%,L+%+&T'&- T.+ LA($* /$0+($$1 T.*++/onditions of
+mployment*)L+ D''2ages/.A,T+* '2age 'ncreaseS+/T'$& M. 2orkers
,aid by *esults. 4a: All workers paid by results, including those
who are paid on piecework, takay, pakyaw, or task basis,
shallreceive not less than the applicable statutory minimum wage
rates prescribed under the Act for the normalworking hours which
shall not e5ceed eight hours work a day, or a proportion thereof
for work of less than thenormal working
hours.Thead>ustedminimumwageratesfor workerspaidbyresultsshall
becomputedinaccordancewiththefollowing steps83: Amount of increase
in A%2 # ,revious A%2 5 3AA W G 'ncreaseob but according to the
7uantity and the 7uality of work produced by them.Thereare two
categories of employees paid by results893: those whose time and
performance aresupervisedby theemployer.9.ere, there is an element
of control and supervision over the manner as to how the work is to
beperformed. A piece#rate worker belongs to this categoryespecially
if he performs his work in the companypremises.:< and 96: those
whose time and performance areunsupervised.9.ere, the employerJs
control is overthe result of the work. 2orkers on pakyao and takay
basis belong to this group.: (oth classes of workers arepaid per
unit accomplished.,iece#rate payment is generally practiced in
garment factories where work is donein the company premises, while
payment on pakyao and takay basis is commonly observed in the
agriculturalindustry, such as in sugar plantations where the work
is performed in bulk or in volumes dicult to 7uantify.,etitioners
belong to the frst category, i.e., supervised employees.'n
determining the e5istence of an employer#employee relationship, the
following elements must be considered893: the selection and
engagement of the employee< 96: the payment of wages< 9=: the
power of dismissal< and9@: the power to control the employeeJs
conduct.$f these elements, the most important criterion is
whetherthe employer controls or has reserved the right to control
the employee not only as to the result of the work butalso as to
the means and methods by which the result is to be accomplished.'n
this case, private respondents e5ercised control over the work of
petitioners.As tailors, petitioners worked inthe companyJs premises
from C8AA a.m. to K8AA p.m. daily, including Sundays and
holidays.The mere fact thatthey were paid on a piece#rate basis
does not negate their status as regular employees of private
respondents.The term RwageT is broadly defned in Art. MK of the
Labor /ode as remuneration or earnings, capable of beinge5pressed
in terms of money whether f5ed or ascertained on a time, task,
piece or commission basis.,aymentby the piece is >ust a method
of compensation and does not defne the essence of the relations.
&or does thefact that petitioners are not covered by the SSS
a!ect the employer#employee relationship.'ndeed, thefollowing
factorsshow thatpetitioners, although piece#rate workers, were
regular employees ofprivate respondents8 93: within the
contemplation of Art.6CAof theLabor/ode,their work as tailors
wasnecessary or desirable in the usual business of private
respondents, which is engaged in the tailoring businessect or
season< and, 9=: petitioners worked for private respondents for
more than one year.Avelino Lambo vs. &L*/ 9-.*. &o. 333A@6,
$ctober 6F, 3MMM, Second 0ivision, O. %endo?aN9/ompensation of
,ieceworkers:'n the absence of wage rates based on time and motion
studies determined by the labor secretary or submittedby the
employer to the labor secretary for his approval, wage rates of
piece#rate workers must be based on theapplicable daily minimum
wage determined by the *egional Tripartite 2ages and ,roductivity
/ommission.Toensurethepayment of fair andreasonablewagerates,
Article3A3of theLabor /odeprovidesthat RtheSecretaryofLaborshall
regulatethepaymentof wagesbyresults, includingpakyao,
pieceworkandothernontime work.TThe same statutory provision also
states that the wage rates should be based, preferably, on time and
motionstudies, or those arrived at in consultation with
representatives of workersJ and employersJ organi?ations. 'nthe
absence of such prescribed wage rates for piece#rate workers, the
ordinary minimum wage rates prescribedby the *egional Tripartite
2ages and ,roductivity (oards should apply.,ulp and ,aper, 'nc. vs.
&L*/ 9-.*. &o. 33FEM=, September 6@, 3MMK, Second 0ivision,
O. ,anganibanN') A,,re!#ces Art. EC. 0efnition of Terms. As used in
this Title8" Apprenticeship " means practical training on the
>ob supplemented by related theoretical instruction. An
"apprentice" is a worker who is covered by a written apprenticeship
agreement with an individual employeror any of the entities
recogni?ed under this /hapter.
An "apprenticeable occupation" means any trade, form of
employment or occupation which re7uires more thanthree 9=: months
of practical training on the >ob supplemented by related
theoretical instruction. "Apprenticeshipagreement" is anemployment
contract whereintheemployer binds himself totraintheapprentice and
the apprentice in turn accepts the terms of training.Labor
/ode$%&'()S *)L+S'%,L+%+&T'&- T.+ LA($* /$0+($$1
T2$&ational %anpower 0evelopment ,rogram*)L+ D'Apprenticeship
Training and +mployment of Special 2orkersS+/T'$&3.
$b>ectives. 4Thepromotion, development,
andmaintenanceofapprenticeshipprogramsshallhave the following
ob>ectives89a: To meet the needs of the economy for training
manpower in the widest possible range ofemploymentury.9b:
"+mployment agreement" isthecontract of employment
enteredintobetweentheemployer andthehandicapped worker. S+/T'$&
6. 2hen handicapped workers may be employed.4 .andicapped workers
may be employed whentheir employment is necessary to prevent
curtailment of employment opportunities and when it does not
createunfair competition in labor costs or impair working
standards.S+/T'$& =. /ontents of employment agreement. 4 An
employer who hires a handicapped worker shall enterinto an
employment agreement with the latter which shall include89a: The
names and addresses of the employer and the handicapped worker.8.
6o. :.0!,, 24 August "--,, 22. )+8A ./2.0 where an employer had
freelyand continuously included in the computation of the 3=th
month pay those items that were e5pressly e5cludedby the law, we
held that the act which was favorable to the employees though not
conforming to law had thusripened into a practice and could not be
withdrawn, reduced, diminished, discontinued or eliminated.Arco
%etal ,roducts vs. SA%A*%#&A"L) 9-.*. &o. 3KAK=@, %ay 3@,
6AAC, Second 0ivision, O. TingaN9&on#0iminution *ule:Article
3AA of the Labor /ode, otherwise known as the &on#0iminution
*ule, mandates that benefts given toemployees cannot be taken back
or reducedunilaterallyby the employer because the beneft has become
partof the employment contract, written or unwritten. The rule
against diminution of benefts applies if it is shown that the grant
of the beneft is based on an e5presspolicyor
hasripenedintoapracticeover alongperiodof timeandthat
thepracticeisconsistent anddeliberate. &evertheless, the rule
will not apply if the practice is due to error in the construction
or applicationof a doubtful or dicult 7uestion of law. (ut even in
cases of error, it should be shown that the correction isdone soon
after discovery of the error./entral A?ucarera de Tarlac vs.
/entral A?ucarera de Tarlac Labor )nion#&L) 9-.*. &o.
3CCM@M, Ouly 6F,6A3A, Second 0ivision, O. &achuraNust the
same.'n short, the beneft or privilege given to the employee which
constitutes an e5tra remuneration above and overhis basic or
ordinary earning or wage is supplement< and when said beneft or
privilege is part of the laborersBbasic wages, it is a facility.
The distinction lies not so much in the kind of beneft or item
9food, lodging, bonusor sick leave: given, but in the purpose for
which it is given. $)t(tes 5(r&ne +orpor(t&on (nd 8o(l
7&ne, 'n*. v.+ebu )e(9enEs Asso*&(t&on, 'n*., ""!
%h&l. ,0! ("-/,#.0 'n the case at bench, the items provided
were givenfreely by SLLfor the purpose of maintaining the eciency
and health of its workers while they were working attheir
respective pro>ects.SLL'nternational /ablesSpecialist vs.
&L*/@th0ivision9-.*. &o. 3K63F3, %arch6, 6A33,
Second0ivision, O. %endo?aN$. 8age Ds#or#o!/Rec#>ca#o! 6@Art.
36@. Standards;/riteria for minimum wage f5ing. The regional
minimum wages to be established by the*egional (oard shall be as
nearly ade7uate as is economically feasible to maintain the minimum
standards ofliving necessary for the health, eciency and general
well#being of the employees within the framework of thenational
economic and social development program. 'n the determination of
such regional minimum wages, the*egional (oard shall, among other
relevant factors, consider the following82here the application of
any prescribed wage increase by virtue of a law or wage order
issued by any *egional(oard results in distortions of the wage
structure within an establishment, the employer and the union
shallnegotiate to correct the distortions. Any dispute arising from
wage distortions shall be resolved through
thegrievanceprocedureunder their collectivebargainingagreement and,
if it remains unresolved, throughvoluntary arbitration. )nless
otherwise agreed by the parties in writing, such dispute shall be
decided by thevoluntaryarbitratorswithinten93A: calendar
daysfromthetimesaiddisputewasreferredtovoluntaryarbitration.'n
cases where there are no collective agreements or recogni?ed labor
unions, the employers and workers shallendeavor tocorrect
suchdistortions.Anydisputearisingtherefromshall
besettledthroughthe&ational/onciliation and %ediation (oard
and, if it remains unresolved after ten 93A: calendar days of
conciliation, shallbe referred to the appropriate branch of the
&ational Labor *elations /ommission 9&L*/:. 't shall be
mandatoryfor the &L*/ to conduct continuous hearings and decide
the dispute within twenty 96A: calendar days from thetime 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 anyincrease 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 inthe elimination or severe contraction of
intentional 7uantitative di!erences in wage or salary rates between
andamong employee groups in an establishment as to e!ectively
obliterate the distinctions embodied in such wagestructure based on
skills, length of service, or other logical bases of
di!erentiation.Labor /ode$%&'()S *)L+S'%,L+%+&T'&- T.+
LA($* /$0+($$1 T.*++/onditions of +mployment*)L+
D''2agesS+/T'$& 3. 0efnition of Terms. As used in this *ules
4p: " 2age 0istortion " means a situation where an increase in
prescribed wage rates results in the elimination orsevere
contraction of intentional 7uantitative di!erences in wage or
salary rates between and among employeegroups in an establishment
as to e!ectively obliterate the distinctions embodied in such wage
structure basedon skills, length of service, or other logical bases
of di!erentiation.8. 6o. 7-.24"., A*tober 2,, "-:40.
Thiscaseiscitedprominentlyinbasiccommentaries.And yet,counsel
forbothpartiesfailedtoconsider this. Thisdoes notspeak well of the
7uality of representation they rendered to their clients. This
controversy should have endedlongagohadeithercounsel
frstcheckedthevalidityof
theimplementingruleonwhichtheybasedtheircontentions./esar $dango
vs. &L*/ 9-.*. &o. 3@K@6A, Oune 3A, 6AA@, "irst 0ivision,
O. /arpioNZZZZZZZZZC. Res# 0ero(s 1. 8eekl- res# (a- %. E*erge!c-
res# (a- work Art. M3. *ight to weekly rest day.3.'t shallbe the
duty of every employer, whether operating for proft or not, to
provide each of hisemployees arest periodof not less
thantwenty#four 96@: consecutivehours after everysi59F:consecutive
normal work days. 6. The employer shall determine and schedule the
weekly rest day of his employees sub>ect to collectivebargaining
agreement and to such rules and regulations as the Secretary of
Labor and +mployment mayprovide. .owever, the employer shall
respect the preference of employees as to their weekly rest daywhen
such preference is based on religious grounds.Art. M6. 2hen
employer may re7uire work on a rest day . The employer may re7uire
his employees to work onany day86K3. 'ncaseof actual or
impendingemergencies causedby serious accident, fre, Iood,
typhoon,earth7uake, epidemic or other disaster or calamity to
prevent loss of life and property,or imminentdanger to public
safety< 6. 'n cases of urgent work to be performed on the
machinery, e7uipment, or installation, to avoid seriousloss which
the employer would otherwise su!er< =. 'n the event of abnormal
pressure of work due to special circumstances, where the employer
cannotordinarily be e5pected to resort to other measures< @. To
prevent loss or damage to perishable goods< E. 2here the nature
of the work re7uires continuous operations and the stoppage of work
may result inirreparable in>ury or loss to the employer< and
F. )nder other circumstances analogous or similar to the foregoing
as determined by the Secretary ofLabor and +mployment.Art. M=.
/ompensation for rest day, Sunday or holiday work.3. 2here an
employee is made or permitted to work on his scheduled rest day, he
shall be paid anadditional compensationof
atleastthirtypercent9=AG:ofhisregularwage. Anemployeeshall
beentitled to such additional compensation for work performed on
Sunday only when it is his establishedrest day.6. 2hen the nature
of the work of the employee is such that he has no regular workdays
and no regularrest days can be scheduled, he shall be paid an
additional compensation of at least thirty percent 9=AG:of his
regular wage for work performed on Sundays and holidays.=.2ork
performed on any special holiday shall be paid an additional
compensation of at least thirtypercent 9=AG: of the regular wage of
the employee. 2here such holiday work falls on the
employeeJsscheduled rest day, he shall be entitled to an additional
compensation of at least ffty per cent 9EAG: ofhis regular
[email protected] the collective bargaining agreement or other
applicable employment contract stipulates thepayment of a higher
premium pay than that prescribed under this Article, the employer
shall pay suchhigher rate.Labor /ode$%&'()S
*)L+S'%,L+%+&T'&- T.+ LA($* /$0+($$1 T.*++/onditions of
+mployment*)L+ '''2eekly *est ,eriodsS+/T'$& 3. -eneral
statement on coverage. 4 This *ule shall apply to all employers
whether operating forproft or not, including public utilities
operated by private persons.S+/T'$&6.
(usinessonSundays;.olidays. 4 All
establishmentsandenterprisesmayoperateor openforbusiness on Sundays
and holidays provided that the employees are given the weekly rest
day and the beneftsas provided in this *ule.S+/T'$& =. 2eekly
rest day. 4 +very employer shall give his employees a rest period
of not less than twenty#four 96@: consecutive hours after every si5
consecutive normal work days.S+/T'$& @. ,reference of employee.
4 The preference of the employee as to his weekly day of rest shall
berespected by theemployer if the same is basedon religious grounds
.The employeeshallmake knownhispreference to the employer in
writing at least seven 9K: days before the desired e!ectivity of
the initial rest dayso preferred.2here, however, the choice of the
employee as to his rest day based on religious grounds will
inevitably resultin serious pre>udice or obstruction to the
operations of the undertaking and the employer cannot normally
bee5pected to resort to other remedial measures, the employer may
so schedule the weekly rest day of his choicefor at least two 96:
days in a month.6CS+/T'$& E. Schedule of rest day. 4 9a: 2here
the weekly rest is given to all employees simultaneously,
theemployer shall make known such rest period by means of a written
notice posted conspicuously in the workplace at least one week
before it becomes e!ective.9b: 2here the rest period is not granted
to all employees simultaneously and collectively, the employer
shallmakeknowntotheemployeestheir respectiveschedulesof weeklyrest
throughwrittennoticespostedconspicuously in the work place at least
one week before they become e!ective.S+/T'$& F. 2hen work on
rest day authori?ed. 4 An employer may re7uire any of his employees
to work on hisscheduled rest day for the duration of the following
emergencies and e5ceptional conditions89a: 'ncaseof actual or
impendingemergencies causedbyserious accident, fre, Iood,
typhoon,earth7uake, epidemic or other disaster or calamity, to
prevent loss of life or property, or in cases of forcema>eure or
imminent danger to public safetyuahid ,igcaulan vs. Security and
/redit 'nvestigation, 'nc. 9-.*. &o. 3K=F@C, Oanuary 3F,
6A36,"irst 0ivision, O. 0el /astilloN%. Teac+ers& ,ece
workers& #aka-& seaso!al workers& seafarers $%&'()S
*)L+S'%,L+%+&T'&- T.+ LA($* /$0+($$1 T.*++/onditions of
+mployment*)L+ 'D.olidays with ,ayS+/T'$&C. .oliday
payofcertainemployees. 4 9a:,rivateschoolteachers,
includingfacultymembersofcollegesanduniversities,
maynotbepaidfortheregularholidaysduringsemestral vacations.
Theyshall,however, be paid for the regular holidays during
/hristmas vacationoying the beneft herein provided,
thoseen>oying vacation leave with pay of at least fve days and
those employed in establishments regularlyemploying less than ten
employees or in establishments e5empted from granting this beneft
by theSecretary of Labor and+mployment after
consideringtheviability or fnancial conditionof suchestablishment.
=. The grant of beneft in e5cess of that provided herein shall not
be made a sub>ect of arbitration or anycourt or administrative
action.Labor /ode$%&'()S *)L+S'%,L+%+&T'&- T.+ LA($*
/$0+($$1 T.*++/onditions of +mployment*)L+ DService 'ncentive
LeaveS+/T'$& 3. /overage. 4 This rule shall apply to all
employees e5cept89a: Thoseof thegovernmentandanyof itspolitical
subdivisions, includinggovernment#ownedandcontrolled
corporationsudicator in accordance with the rules and procedures
provided by law.Section 3C. Special Leave (enefts for 2omen. # A
woman employee having rendered continuousaggregate employment
service of at least si5 9F: months for the last twelve 936: months
shall beentitled to a special leave beneft of two 96: months with
full pay based on her gross monthlycompensation following surgery
caused by gynecological disorders.5. Servce C+arge Art. MF. Service
charges. All service charges collected by hotels, restaurants and
similar establishments shall bedistributed at the rate of
eighty#fve percent 9CEG: for all covered employees and ffteen
percent 93EG: formanagement. The share of the employees shall be
e7ually distributed among them. 'n case the service chargeis
abolished, the share of the covered employees shall be considered
integrated in their wages.Labor /ode@3$%&'()S
*)L+S'%,L+%+&T'&- T.+ LA($* /$0+($$1 T.*++/onditions of
+mployment*)L+ D'Service /hargesS+/T'$& 3. /overage. 4 This
rule shall apply only to establishments collecting service charges
such as hotels,restaurants, lodging houses, night clubs, cocktail
lounge, massage clinics, bars, casinos and gambling houses,and
similar enterprises, including those entities operating primarily
as private subsidiaries of the -overnment.S+/T'$& 6. +mployees
covered. 4 This rule shall apply to all employees of covered
employers, regardless oftheir positions, designations or employment
status, and irrespective of the method by which their wages arepaid
e5cept to managerial employees.As used herein, a "managerial
employee" shallmean one who is vested with powers or prerogatives
to laydown and e5ecute management policies and;or to hire,
transfer, suspend, lay#o!, recall, discharge, assign, ordiscipline
employees or to e!ectively recommend such managerial actions. All
employees not falling within thisdefnition shall be considered
rank#and#fle employees.S+/T'$&=. 0istributionof servicecharges.
4 All servicechargescollectedbycoveredemployersshall bedistributed
at the rate of CEG for the employees and 3EG for the management.
The CEG shall be distributede7ually among the covered employees.
The 3EG shallbe for the disposition by management to answer
forlosses and breakages and distribution to managerial employees at
the discretion of the management in thelatter case.S+/T'$&@.
"re7uencyofdistribution. 4 Thesharesreferredtohereinshall
bedistributedandpaidtotheemployees not less than once every two 96:
weeks or twice a month at intervals not e5ceeding si5teen
93F:days.S+/T'$& E. 'ntegration of service charges. 4 'n case
the service charges is abolished the share of coveredemployees
shall be considered integrated in their wages. The basis of the
amount to be integrated shall be theaverage monthly share of each
employee for the past twelve 936: months immediately preceding the
abolitionof withdrawal of such charges.S+/T'$& F. *elation to
agreements. 4 &othing in this *ule shall prevent the employer
and his employees fromentering into any agreement with terms more
favorable to the employees than those provided herein, or beused to
diminish any beneft granted to the employees under e5isting laws,
agreement and voluntary employerpractice.S+/T'$& K. This rule
shall be without pre>udice to e5isting, future collective
bargaining agreements.&othing in this rule shall be construed
to >ustify the reduction or diminution of any beneft being
en>oyed by anyemployee at the time of e!ectivity of this
rule.9Service /harge separate from right to +/$LA L+mergency /ost
of Living Allowance:Since0usit.otel
ise5plicitlymandatedbytheafore#7uotedstatutoryprovisiontopayitsemployeesandmanagement
theirrespectiveshares in the service charges collected,thehotel
cannot claimthatpaymentthereof to its C6 employees constitute
substantial compliance with the payment of +/$LA under 2$ &o.
M.)ndoubtedly,thehotel employeesJ
righttotheirsharesintheservicechargescollectedby0usit.otel
isdistinct andseparatefromtheir right to+/$LA<
gratifcationbythehotel of onedoesnot result inthesatisfaction of
the other. ,hilippine .oteliers, 'nc., 0usit .otel &ikko#%anila
vs. &)2.*A'& U 0usit .otel &ikko /hapter 9-.*.
&o.3C3MK6, August 6E, 6AAM, Third 0ivision, O.
/hico#&a?ario:9Service charge collected during the period of
preventive suspension:As regards theshareof
0amaleriointheservicecharges collectedduringtheperiodof his
preventivesuspension, the same form part of his earnings, and his
dismissal having been ad>udged to be illegal , he isentitled not
only to full backwages but also to other benefts, including a
>ust share in the service charges, to becomputed from the start
of his preventive suspension until his reinstatement.%aranaw .otels
and *esort /orporation vs. &L*/ 9-.*. &o. 36=CCA, "ebruary
6=, 6AAM, Third 0ivision, O.,urisima:3. T+r#ee!#+ 7o!#+ 0a-
@6,*+S'0+&T'AL 0+/*++ &$. CE3*+P)'*'&- ALL +%,L$H+*S T$
,AH T.+'* +%,L$H++S A 3=th#%$&T. ,AH
2.+*+AS, it is necessary to further protect the level of real
wages from the ravage of worldwideinIationect of
agreement.&othing herein shall prevent employers from giving
the benefts provided in the 0ecree to theiremployees who are
receiving more than $ne Thousand 9,3,AAA: ,esos a month or benefts
higherthan those provided by the 0ecree.Sec. F. Special feature of
beneft. # The benefts granted under this issuance shall not be
creditedas part of the regular wage of the employees for purposes
of determining overtime and premiumpay, fringebenefts, as well as
premiumcontributions totheState'nsurance"und, socialsecurity,
medicare and private welfare and retirement plans.Sec. K. +5emption
of 0istressed employers. # 0istressed employers shall 7ualify for
e5emptionfrom the re7uirement of the 0ecree upon prior
authori?ation by the Secretary of Labor. ,etitionsfor e5emptions
maybefledwithinthenearest regional ocehaving>urisdictionover
theemployer not later than Oanuary 3E, 3MKF. The regional oces
shall transmit the petitions to theSecretary of Labor within 6@
hours from receipt thereof.Sec. C. *eport of compliance. # +very
covered employer shall make a report of his compliancewith the
0ecree to the nearest regional labor oce not later than Oanuary 3E
of each year.The report shall conform substantially with the
following form8*+,$*T $& /$%,L'A&/+ 2'T. ,.0. &$. CE33.
&ame of establishment6. Address=. ,rincipal product or
business@. Total employmentE. Total number of workers beneftedF.
Amount granted per employeeK. Total amount of benefts grantedC.
&ame, position and tel. no. of person giving information Sec.
M. Ad>udicationof claims. # &on#payment of
thethirteenth#monthpayprovidedbythe0ecreeandtheserulesshall
betreatedasmoneyclaimscasesandshall beprocessedinaccordance with
the *ules 'mplementing the Labor /ode of the ,hilippines and the
*ules of the&ational Labor *elations /ommission.Sec. 3A.
,rohibitionagainst reductionor eliminationof benefts. #
&othinghereinshall beconstrued to authori?e any employer to
eliminate, or diminish in any way, supplements, or otheremployee
benefts or favorable practice being en>oyed by the employee at
the time ofpromulgation of this issuance.Sec. 33. Transitory
,rovision. # These rules and regulations shall take e!ect
immediately and forpurposes of the 3=th#month pay for 3MKE, the
same shall apply only to those who are employeesas of 0ecember 3F,
3MKE.@@%anila, ,hilippines, 66 0ecember 3MKE.,*+S'0+&T'AL
0+/*++ &$. CE3S),,L+%+&TA*H *)L+S A&0
*+-)LAT'$&S'%,L+%+&T'&- ,.0. &$. CE3
Toinsureuniformityintheinterpretation, applicationandenforcement
of theprovisions of,residential 0ecree&o.
CE3anditsimplementingregulations,
thefollowingclarifcationsarehereby made for the information and
guidance of all concerned83. /ontractors and Subcontractors,
including Security and 2atchman Agencies, are e5empt forthe year
3MKE sub>ect to the following conditions89a: that the contracts
of such enterprises were entered into before 0ecember 3F, 3MKE.8.
6o. ""0,.:, - 6ove9ber"--4, 2,: )+8A .2.0 and that claims for
backwages earned from the former employer cannot be fled againstthe
new owners of an enterprise. $)undowner Develop9ent +orpor(t&on
v. Dr&lon, >.8. 6o. :2,4", / De*e9ber"-:-, ":0 )+8A "4.0
&or is the new operator of a business liable for claims for
retirement pay of employees.$C&l&p&n(s %ort
)erv&*es, 'n*. v. 678+, >.8. 6o. :/02/, ," August "-:-, "!!
)+8A 20,.0 Thus the claim of privaterespondents should have been
fled instead in the intestate proceedings involving the estate of
*aul %artine? inaccordance with Sec. E, *ule CF, of the *ules of
/ourt which provides in part #&elly Acta %artine? vs. &L*/
9-.*. &o. 33K@ME, %ay 6M, 3MMK, "irst 0ivision, O.
(ellosillo:9%anagerial employees e5empt:(eing a managerial
employee, the petitioner is not entitled to 3=th month pay.,ursuant
to %emorandum $rder&o. 6C,
asimplementedbythe*evised-uidelineson'mplementationof
the3=th%onth,ayLawdated&ovember 3F, 3MCK, managerial employees
are e5empt from receiving such beneft without pre>udice to
thegrantingof other bonuses, inlieuof the3=thmonthpay, tomanagerial
employeesupontheemployerJsdiscretion 9.ouse of Sara Lee vs. *ey,
E=6 ,hil 363, 3@E L6AAFN:*olando 0S. Torres vs. *ural (ank of San
Ouan 'nc. 9-.*. &o. 3C@E6A, %arch 3=, 6A3=, "irst 0ivision,
O.*eyes:9%anagerial employee entitled, company policy:Anent the
/ABs ruling that respondent should be entitled to 3=th month pay,
2e clarify that the 3=th %onth ,ayLaw, which provides the rules on
the entitlement and computation of the 3=th month pay, cannot be
applied tohim because he is a managerial employee, and the law
applies only to rank# and#fle employees.(e that as itmay, although
he is not covered by the said law, records showed that he is
entitled to this beneft. .owever,the /ourt cannot make a proper
determination as to the e5act amount U either full or pro#rated
amount U of the3=th month pay, if any, that he would be entitled
to.Thus, reference should be made in consonance with thee5isting
company policy on the payment of the 3=th month pay vis#^#vis the
number of days that he actuallyworked.@F2uerth,hilippines, 'nc. vs.
*odanteHnson9-.*. &o. 3KEM=6, "ebruary3E, 6A36, Third0ivision,
O.,eralta:9/ompany practice or policy:2ith regard to the length of
time the company practice should have been e5ercised to constitute
voluntaryemployer practice which cannot be unilaterally withdrawn
by the employer, >urisprudence has not laid downany hard and
fast rule.'n the case of 0avao "ruits /orporation v. Associated
Labor )nions,$>.8. 6o. :.0!,, August 24, "--,, 22.)+8A ./20the
company practice of including in the computation of the 3=th#month
pay the maternity leavepay and cash e7uivalent of unused vacation
and sick leave lasted for si5 9F: years.2hile in Sevilla Trading v.
Semana,$>.8. 6o. ".24./, Apr&l 2:, 2004, 42: )+8A 2,-.0the
employer keptthepractice of including non#basic benefts such as
paid leaves for unused sick leave and vacation leave in
thecomputation of their 3=th#month pay for at least two 96:
years.'n all these cases, this /ourt held that the grant of these
benefts has ripened into company practice or policywhichcannot
beperemptorilywithdrawn. Thecommondenominator inthesecases appears
tobetheregularity and deliberateness of the grant of benefts over a
signifcant period of time.%etropolitan(ankandTrust /ompanyvs.
&L*/9-.*. &o. 3E6M6C, Oune3C, 6AAM, "irst 0ivision,
O.Leonardo#0e /astro:9/omputation:'t appears that public respondent
computed the 3=th month pay di!erential by multiplying the daily
wage rateby the number of days each private respondents worked in
petitioner school.This is incorrect.According to &o. @ 9a: of
the *evised -uidelines on the 'mplementation of the 3=th %onth Law
9,residential0ecree CE3: dated &ovember 3F, 3MCK, the 3=th
month pay of an individual is 9not less than: one#twelfth 93;36:of
the total basic salary earned by an employee within a calendar
year.%oreover, in&o. Fthereof, it is providedthat
anemployeewhohas resignedor whoseservices wereterminated at any
time before the time for payment of the 3=th month pay is entitled
to this monetary beneftin proportion to the length of time he
worked during the year, reckoned from the time he started working
duringthe calendar year up to the time of his resignation or
termination from the service. L'nternational SchoolofSpeech v.
&L*/, 6@6 S/*A =C6 L3MMEN.N"ollowingtheseguidelines,
theproportionate3=thmonthpayof privaterespondents (olosiYo,
0elorino,$serraos, *ebadulla, Aleria and 0aclag for the second half
of 3MCM should be computed by multiplying theirbasic monthly wage
at that time by K;36."or the year 3MMA, private respondents, e5cept
-olo, should be giventhe remaining half of the 3=th month pay."or
the year 3MM3, private respondents, e5cept *ebadulla, should
begiven the di!erential."or 3MM6, no di!erential is due to private
respondents since petitioner school paid all ofthem an amount over
and above their proportionate 3=th month pay.St. %ichael Academy
vs. &L*/ 9-.*. &o. 33ME36, Ouly 3=, 3MMC, Second 0ivision,
O. ,uno:9+mployerJs burden to prove payment:2ith respect to the
issue of unpaid salaries and 3=th month pay, the /ourt agrees with
the appellate court thatpetitionersJ evidence does not support
their contention of payment.2hen there is an allegation of
nonpayment of salaries and other monetary benefts, it is the
employerJs burdentoproveit payment toitsemployee.
TheemployerJsevidencemust show, withareasonabledegreeofcertainty,
that it paid and that the workers actually received the payment.
RThe reason for the rule is that thepertinent personnel fles,
payrolls, records, remittances andother similar documents 555arenot
inthepossession of the worker but LareN in the custody and absolute
control of the employer.TOA*L /onstruction vs. Simeon A. Atencio
9-.*. &o. 3KEMFM, August 3, 6A36, "irst 0ivision, O. 0el
/astillo:9TeacherJs overload not included in 3=th month pay
computation:%oreover, petitioner failed to refute private
respondentJs contention that the e5cess teaching load is paid bythe
hour while the regular teaching load is being paid on a monthly
basis and that the assignment of overloadis sub>ect to the
availability of teaching loads. This only goes to show that
overload pay is not integrated with ateacherJs basic salary for his
or her regular teaching load. 'n addition, overload varies from one
semester toanother as it is dependent upon the availability of
e5tra teaching loads. As such, it is not legally feasible
toconsider payments of such overload as part of a teacherJs regular
basic salary.Derily, overload pay may not beincluded as basis for
determining a teacherJs 3= th month pay.@KLetran /alamba "aculty
and +mployees Association vs. &L*/ 9-.*. &o. 3EF66E,
Oanuary 6M, 6AAC, Third0ivision, O. Austria#%artine?:H. Se,ara#o!
0a- 9Separation ,ay:'t may not be amiss to point out at this
>uncture that aside from Article 6C@ of the Labor /ode, the
award ofseparation pay is also authori?ed in the situations dealt
with in Article 6C= of the same /ode and under Section@ 9b:, *ule
', (ook D' of the 'mplementing *ules and *egulations of the said
/ode $3oo4 D', 8ule ', )e*t&on 4(b# G'n *(se the
est(bl&sh9ent where the e9ploee &s to be re&nst(ted h(s
*losed or *e(sed oper(t&ons or where h&sfor9er
pos&t&on no longer eH&sts (t the t&9e of
re&nst(te9ent for re(sons not (ttr&but(ble to the f(ult of
thee9ploer, the e9ploee sh(ll be ent&tled to sep(r(t&on p(
eIu&v(lent to (t le(st one 9onth s(l(r or to one9onth s(l(r for
ever e(r of serv&*e, wh&*hever &s h&gher, (
fr(*t&on of (t le(st s&H 9onths be&ng *ons&dered(s
one whole e(r.0 where there is illegal dismissal and reinstatement
is no longer feasible.*omeo Dillaruel vs. Heo .an -uan 9-.*.
&o. 3FM3M3, Oune 3, 6A33, Second 0ivision, O. ,eralta:Art. 6C6.
Termination by employer. An employer may terminate an employment
for any of the following causes83. Serious misconduct or willful
disobedience by the employee of the lawful orders of his employer
orrepresentative in connection with his work< 6. -ross and
habitual neglect by the employee of his duties< =. "raud or
willful breach by the employee of the trust reposed in him by his
employer or duly authori?edrepresentative< @. /ommissionof
acrimeor o!ensebytheemployeeagainst thepersonof hisemployer or
anyimmediate member of his family or his duly authori?ed
representatives< and E.$ther causes analogous to the
foregoing.Art. 6C=. /losure of establishment and reduction of
personnel. The employer may also terminate
theemploymentofanyemployeeduetotheinstallationof
labor#savingdevices, redundancy, retrenchmenttoprevent losses or
the closing or cessation of operation of the establishment or
undertaking unless the closing isfor the purpose of circumventing
the provisions of this Title, by serving a written notice on the
workers and the%inistryof Labor and+mployment at least one93:
monthbeforetheintendeddatethereof. 'ncaseoftermination due to the
installation of labor#saving devices or redundancy, the worker
a!ected thereby shall beentitled to a separation pay e7uivalent to
at least his one 93: month pay or to at least one 93: month pay
forevery year of service, whichever is higher. 'n case of
retrenchment to prevent losses and in cases of closures orcessation
of operations of establishment or undertaking not due to serious
business losses or fnancial reverses,the separation pay shall be
e7uivalent to one 93: month pay or at least one#half 93;6: month
pay for every yearof service, whichever is higher. A fraction of at
least si5 9F: months shall be considered one 93: whole year.Art.
6C@. 0isease as ground for termination. An employer may terminate
the services of an employee who
hasbeenfoundtobesu!eringfromanydiseaseandwhosecontinuedemploymentisprohibitedbylaworispre>udicial
to his health as well as to the health of his co#employees8
,rovided, That he is paidseparation paye7uivalenttoat least one93:
monthsalaryor toone#half 93;6: monthsalaryfor everyyear of
service,whichever is greater, a fraction of at least si5 9F: months
being considered as one 93: whole year.Labor /ode$%&'()S
*)L+S'%,L+%+&T'&- T.+ LA($* /$0+($$1 S'\,ost
+mploymentT'TL+ 'Termination of +mploymentA*T'/L+6CA. *egular
andcasual employment. 4Theprovisions of writtenagreement to the
contrarynotwithstanding and regardless of the oral agreements of
the parties, an employment shall be deemed to beregular where the
employee has been engaged to perform activities which are usually
necessary or desirable inthe usual business or trade of the
employer e5cept where the employment has been f5ed for a specifc
pro>ector undertaking, the completion or termination of which
has been determined at the time of the engagement ofthe employee or
where the work or service to be performed is seasonal in nature and
the employment is for theduration of the season.@CAn employment
shall be deemed to be casual if it is not covered by the preceding
paragraph8 ,rovided, Thatany employee who has rendered at least one
year of service, where the position no longer e5ists at the time
ofreinstatement for reasonsnot attributabletothefault of
theemployer, theemployeeshall beentitledtoseparationpaye7uivalent
toat leastone#monthsalaryor toone#monthsalaryfor everyyear of
service,whichever is higher, a fraction of at least si5 months
being considered as one whole year. 9Articles 6KC to 6CAand then
Section E, these are what appeared in the ocial version:90octrine
of strained relations< in lieu of reinstatement:)nder the
doctrine of strained relations, the payment of separation pay is
considered an acceptable alternativeto reinstatement when the
latter option is no longer desirable or viable.$n one hand, such
payment liberatesthe employee from what could be a highly
oppressive work environment. $n the other hand,it releases
theemployer from the grossly unpalatable obligation of maintaining
in its employ a worker it could no longer
trust.-oldenAce(uildersvs. OoseA. Talde9-.*. &o. 3CK6AA,
Oanuary6M, 6AAC, "irst 0ivision, O. /arpio%orales:< (ank of
Lubao, 'nc. vs. *ommelO. %anabat and &L*/ 9-.*. &o. 3CCK66,
"ebruary 3, 6A36,Second 0ivision, O. *eyes: 9&o separation pay
in case of resignation:*esignation is defned as the voluntary act
of an employee who fnds himself in a situation where he
believesthat personal reasons cannot be sacrifced in favor of the
e5igency of the service and he has no other choicebut to
disassociate himself from his employment.$D&r2en
)h&pp&ng +orpor(t&on v. 3(rr(Iu&o, >.8. 6o.
"!:"2!,Apr&l "/, 200-, .:. )+8A .4", .4:.0(y way of e5ception,
this /ourt has allowed grants of separation pay to stand as Ra
measure of social >usticeTwhere the employee is validly
dismissed for causes other than serious misconduct or those
reIecting on hismoral character. $+J+ 1r(d&ng, 'n*. v. 678+,
,"/ %h&l. ::!, :-, ("--.#0 .owever, thereis
noprovisionintheLabor /odewhichgrants
separationpaytovoluntarilyresigningemployees. 'n fact, the rule is
that an employee who voluntarily resigns from employmentis not
entitled toseparationpay, e5cept whenit is
stipulatedintheemployment contract or /(A, or it
issanctionedbyestablishedemployerpracticeorpolicy.$J&n(tu(n5&n&ng+orpor(t&onv.
678+, ,,.%h&l. "0-0, "0-,-"0-4("--!#0 'n the present case,
neither the abovementioned provisions of the Labor /ode and its
implementing rules andregulations nor the e5ceptions apply because
petitioner was not dismissed from his employment and there isno
evidence to show that payment of separation pay is stipulated in
his employment contract or sanctioned byestablished 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 /ode.*omeo Dillaruel vs. Heo .an -uan 9-.*.
&o. 3FM3M3, Oune 3, 6A33, Second 0ivision, O.
,eralta:9'nstances when granted< loyalty and long service:'t is
well to note that there is no provision in the Labor /ode that
grants separation pay to voluntarily resigningemployees. Separation
pay may be awarded only in cases when the termination of
employmentis due to 9a:installationof labor#savingdevices, 9b:
redundancy, 9c: retrenchment, 9d: closingor cessationof
businessoperations, 9e: diseaseof
anemployeeandhiscontinuedemployment ispre>udicial tohimself
orhisco#employees, or 9f: when an employee is illegally dismissed
but reinstatement is no longer feasible. 'n fact, therule is that
an employee who voluntarily resigns from employment is not entitled
to separation pay, e5ceptwhen it is stipulated in the employment
contract or collective bargaining agreement 9/(A:, or it is
sanctionedby established employer practice or policy.$J&n(tu(n
5&n&ng +orpor(t&on v. 6(t&on(l 7(bor
8el(t&ons+o99&ss&on, >.8. 6o. ""!,-4, Cebru(r 2",
"--!, 2/: )+8A /22, /2/0.ere, respondent was separated from his
employment not on the grounds mentioned above. &either wasthere
a stipulation in his employment contract or /(A or even a company
practice or policy that would grantseparation pay to employees who
voluntarily resigned. &evertheless, the labor tribunals as
wellas the /Aresolved to grant respondent his prayer for separation
pay, e5plaining that he deserved to receive the same asa gratuity
for his loyalty and long service to the company, not to mention the
representation of /aludac that hewould be given all the benefts due
him.2e agree. /learly, the primary consideration that impelled
respondent to tender his resignation letter was theassurance that
he would be paid his separation pay. 't is thus unlikely for
someone to >ust leave his employerfor whom he has worked for
twelve 936: years without any e5pectation of fnancialassistance.
This 2e canglean from respondentBs resignation letter stating8 R'
hope my resignation be granted and whatever help themanagement can
e5tend to me and my family, ' would highly appreciate it.T'n Alfaro
v. /ourt of Appeals, $>.8. 6o. "40:"2, August 2:, 200", ,/, )+8A
!--, :0"0 2e held that as a generalrule, separation pay need not be
paid to an employee who voluntarily resigns. .owever, an employer
who@Magreestoe5pendsuchbeneft asanincident of
theresignationshouldnot beallowedtorenegeonthefulfllment of such
commitment.ROT %arketing /orporation vs. /esar L. Taran 9-.*.
&o. 3F=M6@, Oune 3C, 6AAM, Third 0ivision, O.
,eralta:9Ac7uittal in 7ualifed theft< 'nstances when not
granted< long years of service:9Ac7uittal in 7ualifed theft:'n
&icolas v. &ationalLabor *elations /ommission,$,2!
%h&l. ::,, ::/-::! ("--/#.0we held that a criminalconviction is
not necessary to fnd >ust cause for employment termination.
$therwise stated, an employeeJsac7uittal in acriminal
case,especiallyonethatisgroundedonthee5istenceofreasonabledoubt,will
notpreclude a determination in a labor case that he is guilty of
acts inimical to the employerJs interests. $Derg(r( v.6(t&on(l
7(bor 8el(t&ons +o99&ss&on, ,4! %h&l. "/",
"!,-"!4("--!#K +hu( v. 6(t&on(l 7(bor
8el(t&ons+o99&ss&on, >.8. 6o. "0.!!., Cebru(r :,
"--,, 2": )+8A .4., .4:K )ee 5>> 5(r&ne )erv&*es,
'n*. v. 6(t&on(l7(bor 8el(t&ons +o99&ss&on, ,2:
%h&l. "04!, "0/: ("--/#.0/riminal cases re7uire proof beyond
reasonable doubt while labor disputes re7uire only substantial
evidence,which means such relevant evidence as a reasonable mind
might accept as ade7uate to >ustify a conclusion.$)ee %(tn(-(n
v. 6(t&on(l 7(bor 8el(t&ons +o99&ss&on, >.8. 6o.
-2:!:, 5(r*h /, "--2, 20! )+8A "0/K 'r&g(1elephone +o., 'n*. v.
6(t&on(l 7(bor 8el(t&ons +o99&ss&on, ,.0 %h&l.
24., 2., ("--:#.0 The evidence in this case was reviewed by the
appellate court and two labor tribunals endowed with e5pertiseon
the matter U the Labor Arbiter and the &L*/. They all found
substantial evidence to conclude that /aporhad been validly
dismissed for dishonesty or serious misconduct. 't is settled that
factual fndings of 7uasi#>udicial agenciesare
generallyaccordedrespect
andfnalitysolongasthesearesupportedbysubstantialevidence.
'ntheinstant case, wefndnocompellingreasontodoubt
thecommonfndingsof thethreereviewing bodies.9'nstances when
separation pay not granted:'n fact, in the recent case of Toyota
%otors ,hilippines, /orp. 2orkers Association 9T%,/2A: v.
&ational Labor*elations /ommission,$>.8. 6os. ".:!-:---,
A*tober "-, 200!, .,!)+8A"!", 2"--22,0weruledthatseparation pay
shall not be granted to all employees who are dismissed on any of
the four grounds provided inArticle 6C6 of the Labor /ode. Such
ruling was reiterated and further e5plained in /entral ,hilippines
(andag*etreaders, 'nc. v. 0iasnes $>.8. 6o. "/,/0!, Jul "4,
200:, ..: )+8A "-4, 20!.09long years of service:'ndeed, length of
service and a previously clean employment record cannot simply
erase the gravity of thebetrayal e5hibited by a malfeasant
employee.$)ee %h&l&pp&ne 7ong D&st(n*e 1elephone
+o9p(n v. 1he 7(te8o9eoC. 3olso, >.8. 6o. ".-!0", August "!,
200!, .,0)+8A..0, ./,-./4K +entr(l
%(ng(s&n(n=le*tr&*+ooper(t&ve, 'n*. v. 6(t&on(l
7(bor 8el(t&ons +o99&ss&on, supr(K
%h&l&pp&ne 7ong D&st(n*e 1elephone
+o9p(nv.6(t&on(l 7(bor8el(t&ons+o99&ss&on,supr(note
"2K ;n&ted)outhDo*4h(ndlers, 'n*. v.
6(t&on(l7(bor8el(t&ons +o99&ss&on, ,,. %h&l.
!/, :"-:2
("--!#.0Lengthofserviceisnotabargainingchipthatcansimplybestackedagainsttheemployer.Afterall,
anemployer#employeerelationshipissymbioticwherebothpartiesbeneftfrommutual
loyaltyanddedicatedservice.'f an employer had treated his employee
well, has accorded him fairness and ade7uate compensationas
determined by law, it is only fair to e5pect a long#time employee
to return such fairness with at least somerespect and honesty.*eno
"oods, 'nc. and;or Dicente 1hu vs. &L%#1atipunan, &enita
/apor 9-.*. &o. 3F@A3F, %arch 3E, 6A3A,Second 0ivision, O. 0el
/astillo:9/omputation of separation pay if reinstatement no longer
viable:2here reinstatement is no longer viable as an
option,separation pay e7uivalent to one 93: month salary forevery
year of service should be awarded as an alternative. This has been
the consistent ruling in the award ofseparation pay to illegally
dismissed employees in lieu of reinstatement. $D&vers&fed
)e*ur&t, 'n*. v. 3(ut&st(,>.8. 6o. ".22,4, Apr&l ".,
20"0, /": )+8A 2:-, 2-/00up Sound ,hils. vs. /A 9-.*. &o.
3FC=3K, &ovember 63, 6A33, Third 0ivision, O. ,eralta:9'n the
alternative with reinstatement< in con>unction with award
backwages:Thus, as an illegally or constructively dismissed
employee, respondent is entitled to8 93: either reinstatement,
ifviable, or separationpay, if reinstatement isnolonger viable<
and96: backwages.Thesetworeliefsareseparate and distinct from each
other and are awarded con>unctively. $)&e9ens v.
Do9&ngo, >.8. 6o. ".04::,Jul 2:, 200:, ./0 )+8A :/, "000EA'n
this case, since respondent was a probationary employee at the time
she was constructively dismissed bypetitioners, she is entitled to
separation pay and backwages. *einstatement of respondent is no
longer viableconsidering the circumstances.*obinsons -alleria vs.
'rene *. *anches 9-.*. &o. 3KKM=K, Oanuary 3M, 6A33, Second
0ivision, O. &achura:9+mployers can provide greater amount of
separation pay:Article 6C= of the Labor /ode provides only the
re7uired minimum amount of separation pay, which
employeesdismissedforanyoftheauthori?edcausesareentitledtoreceive.
+mployers, therefore, havetherighttocreate plans, providing for
separation pay in an amount over and above what is imposed by
Article 6C=. Thereis nothing therein that prohibits employers and
employees from contracting on the terms of employment, orfrom
entering into agreements on employee benefts, so long as they do
not violate the Labor /ode or anyother law, and are not contrary to
morals, good customs, public order, or public policy.%a. /oriuna /.
Oiao, et. al. vs. &L*/ 9-.*. &o. 3C6==3, April 3C, 6A36,
Second 0ivision, O. *eyes:I. Re#re*e!# 0a-a. Elg'l#- '. A*ou!# Art.
6CK. *etirement.Anyemployeemayberetireduponreachingtheretirement
ageestablishedinthecollective bargaining agreement or other
applicable employment contract.'n case of retirement, the employee
shall be entitled to receive such retirement benefts as he may have
earnedunder e5isting laws and any collective bargaining agreement
and other agreements8 ,rovided, however, Thatan employeeJs
retirement benefts under any collective bargaining and other
agreements shall not be less thanthose provided
therein.'ntheabsenceof aretirement planor agreement providingfor
retirement beneftsof employeesintheestablishment, an employee upon
reaching the age of si5ty 9FA: years or more, but not beyond
si5ty#fve 9FE:years which is hereby declared the compulsory
retirement age, who has served at least fve 9E: years in
thesaidestablishment, mayretireandshall
beentitledtoretirementpaye7uivalenttoatleastone#half93;6:month
salary for every year of service, a fraction of at least si5 9F:
months being considered as one whole year.)nless the parties
provide for broader inclusions, the term Sone#half 93;6: month
salaryJ shall mean ffteen 93E:days plus one#twelfth 93;36: of the
3=th month pay and the cash e7uivalent of not more than fve 9E:
days ofservice incentive leaves.*etail, service and agricultural
establishments or operations employing not more than ten 93A:
employees orworkers are e5empted from the coverage of this
provision.Diolation of this provision is hereby declared unlawful
and sub>ect to the penal provisions under Article 6CC ofthis
/ode.Labor /ode as amended by *A KF@3 &ew *etirement Law*)L+S
'%,L+%+&T'&- T.+ &+2*+T'*+%+&T LA29April 3,
3MM=:,ursuant to the provisions of Article 6CK of the Labor /ode as
amended by *epublic Act &o. KF@3,in relation to Article E of
the same /ode, *)L+ '' of (ook D' of the *ules 'mplementing the
Labor/ode is hereby issued, the full te5t of which shall read as
follows8 *)L+ ''*etirement (eneftsS+/T'$&3. -eneral
Statementon/overage.4This *uleshall applytoallemployeesintheprivate
sector, regardless of their position, designation or status and
irrespective of the methodby which their wages are paid, e5cept to
those specifcally e5empted under Section 6 hereof. Asused herein,
the term RActT shall refer to *epublic Act &o. KF@3 which took
e!ect on Oanuary K,3MM=. S+/T'$& 6. +5emptions. 4 This *ule
shall not apply to the following employees86.3 +mployees of the
&ational -overnment and its political subdivisions, including
-overnment#ownedand;orcontrolledcorporations, if
theyarecoveredbythe/ivil ServiceLawanditsregulations. E36.6
0omestic helpers and persons in the personal service of another.
90eleted by 0epartment$rder &o. 6A issued by Secretary %a.
&ieves *. /onfessor on %ay =3, 3MM@.: 6.= +mployees of retail,
service and agricultural establishment or operations
regularlyemploying not more than ten 93A: employees. As used in
this sub#section< 9a: R*etail establishmentT is one principally
engaged in the sale of goods to end#users forpersonal or household
use. 't shall lose its retail character 7ualifed for e5emption if
it isengaged in both retail and wholesale sale of goods. 9b:
RService establishmentT is one principally engaged in the sale of
service to individualsfor their own or household use and is
generally recogni?ed as such.9c:RAgricultural
establishment;operationsTreferstoanemployer
whichisengagedinRagricultureT. This terms refers to allfarming
activities in allits branches and includesamong others, the
cultivation and tillage of the soil, production, cultivation,
growing andharvesting of any agricultural or horticultural
commodities, dairying, raising of livestock orpoultry, the culture
of fsh and other a7uatic products in farms or ponds, and any
activitiesperformed by a farmer or on a farm as incident to or in
con>unction with such farmingoperations, but does not include
the manufactureand;or processing ofsugar,coconut,abaca, tobacco,
pineapple, a7uatic or other farm products. S+/T'$& =.
*etirement under /(A;contract. =.3 Any employee may retire or be
retired by his employer upon reaching the retirement ageestablished
in the collective bargaining agreement or other applicable
employment contract orretirement plansub>ect totheprovisionsof
SectionEhereof onthepayment of retirementbenefts. =.6'ncaseof
retirementunderthisSection, theemployeeshall
beentitledtoreceivesuchretirement benefts as he may have earned
under e5isting laws and any collective bargainingagreement and
other agreementsect tothepenalprovisions provided under Article 6CC
of the Labor /ode of the ,hilippines. S+/T'$&C.
*elationtoagreementsandregulations. 4&othinginthis*uleshall
>ustifyanemployer from withdrawing or reducing any benefts,
supplements or payments as provided ine5isting laws, individual or
collective agreements or employment practices or policies. All
rules and regulations, policy issuances or orders contrary to or
inconsistent with these rulesare hereby repealed or modifed
accordingly. S+/T'$& M. +!ectivity. 4 This *ule took e!ect on
Oanuary K, 3MM= when the Act went into force. 9S-0.: %A. &'+D+S
*. /$&"+S$* Secretary-)'0+L'&+S "$* T.+ +""+/T'D+
'%,L+%+&TAT'$& $" *.A. KF@3,T.+ *+T'*+%+&T ,AH LA2 A.
/overage *epublic Act&o. KF@3orthe*etirement,ayLaw shallapply
to all employees intheprivatesector, regardless of their position,
designation or status and irrespective of the method by whichtheir
wages are paid. They shall include part#time employees, employees
of service and other >obcontractors and domestic helpers or
persons in the ,ersonal service of another. E=The law does not
cover employees of retail, service and agricultural establishments
or operationsemploying not more than ten 93A: employees or workers
and employees of the &ational-overnment and its political
subdivisions, including -overnment#owned and;or
controlledcorporations, if they are covered by the /ivil Service
Law and its regulations. (. /omputation of *etirement ,ay
Acoveredemployeewhoretires pursuant to*AKF@3shall
beentitledtoretirement paye7uivalent to at least one#half 93;6:
month salary for every year of service, a fraction of at leastsi5
9F: months being considered as one whole year. The law is e5plicit
that Rone#half month salary shall mean ffteen 93E: days plus
one#twelfth 93;36:of the 3=th month pay and the cash e7uivalent of
not more than fve 9E: days service incentiveleavesT unless
theparties providefor broader inclusions. +vidently,
thelawe5pandedtheconcept of Rone#half month salaryT from the usual
one#month salary divided by two. 'n reckoning the length of
service, the period of employment with the same employer before
thee!ectivity date of the law on Oanuary K, 3MM= should be
included. /. Substitute *etirement ,lan Pualifed workers shall be
entitled to the retirement beneft under *A KF@3 in the absence of
anyindividual or collective agreement, company policy or practice.
'n case there is such anagreement,
policyorpracticeprovidingretirementbeneftwhichise7ual
orsuperiortothatwhich is provided in the Act, said agreement,
policy or practice will prevail. As provided in *A KK@6, a private
employer shall have the option to treat the coverage of the,A-#'('-
"und as a substitute retirement beneft for the employee concerned
within the purviewof the Labor /ode as amended< provided, such
option does not in any way contravene an e5istingcollective
bargaining agreement or other employment agreement. Thus, the
,A-#'('- "und canbe considered as a substitute retirement plan of
the company for its employees provided thatsuch scheme o!ers
benefts which are more than or at least e7ual to the benefts under
*A KF@3.'f said scheme provides less than what the employee is
entitled to under *A KF@3, the employeris liable to pay the
di!erence. 'f
boththeemployeeandtheemployercontributetoaretirementplan,
onlytheemployerJscontribution and its increments shall be
considered for full or partial compliance with the beneftunder *A
KF@3. $n the other hand, where the employee is the lone contributor
to the ,A-#'('-"und, the employer being e5empted from its coverage,
the employer is under obligation to givehis employee retirement
benefts under the Act. Adopted8 6@ $ctober 3MMF 9S-0.: L+$&A*0$
A. P)'S)%('&- Secretary9'ncluded in retirement
computation:Admittedly, petitioner worked for 3@ years for the bus
company which did not adopt any retirement scheme.+ven if
petitioner as bus conductor was paid on commission basis then,he
falls within the coverage of *.A.KF@3anditsimplementingrules.
AsthuscorrectlyruledbytheLaborArbiter,
petitionerJsretirementpayshould include the cash e7uivalent of the
E#day S'L and 3;36 of the 3=th month pay.*odolfo O. Serrano vs.
Severino Santos Transit 9-.*. &o. 3CKFMC, April M, 6A3A, Third
0ivision, O./arpio %orales9&ature of Article 6CK:)ndoubtedly,
under this provision, the retirement age is primarily determined by
the e5isting agreement oremployment contract.Absent such an
agreement, the retirement age shall be f5ed by law.The
above#citedlawmandates that thecompulsoryretirement ageis at
FEyears, whiletheminimumagefor optionalretirement is set at FA
years.%oreover, Article 6CK of the Labor /ode, as amended, applies
only to a situation where 93: there is no /(A
orotherapplicableemploymentcontractprovidingforretirementbeneftsforanemployee<
or96:thereisacollective bargaining agreement or other applicable
employment contract providing for retirement benefts foran
employee, but it is below the re7uirement set by law.The rationale
for the frst situation is to prevent the absurd situation where an
employee, deserving to receiveretirement benefts, is denied them
through the nefarious scheme of employers to deprive employees of
theE@beneftsduethemundere5istinglaborlaws.Therationaleforthesecondsituationistopreventprivatecontracts
from derogating from the public law.Amelia*. $busanvs.
,hilippine&ational (ank9-.*. &o. 3C33KC, Ouly6F, 6A3A,
Second0ivision, O.&achura: reiteratedin(ibiano/. +legirvs.
,hilippineAirlines, 'nc. 9-.*. &o. 3C3MME, Ouly3F, 6A36,Second
0ivision, O. *eyes:9,urpose of the amendment to Article
6CK:+mphasis must be placed on the fact that the purpose of the
amendment is not merely to establish precedencein application or
accord blanket priority to e5isting /(As in computing retirement
benefts. The determiningfactor in choosing which retirement scheme
to apply is still superiority in terms of benefts provided. Thus,
evenif there is an e5isting /(A but the same does not provide for
retirement benefts e7ual or superior to that whichis provided under
Article 6CK of the Labor /ode, the latter will apply. 'n this
manner, the employee can beassured of a reasonable amount of
retirement pay for his sustenance.(ibiano /. +legir vs. ,hilippine
Airlines, 'nc. 9-.*. &o. 3C3MME, Ouly 3F, 6A36, Second
0ivision, O. *eyes:c. Re#re*e!# 'e!e>#s of workers ,a( '-
resul#s E.= $ne#half month salary of employees who are paid by
results. 4 "or covered workers who are paid by resultsand do not
have a f5ed monthly rate,the basis for determination of the salary
for ffteen days shall be theiraverage daily salary 9A0S:,
sub>ect to the provisions of *ule D''#A, (ook ''' of the *ules
'mplementing the Labor/ode on the payment of wages of workers who
are paid by results. The A0S is the average salary for the
lasttwelve 936: months reckoned from the date of their retirement,
divided by the number of actual working days inthat particular
period.'mplementing *ules of *A KF@3 9&ew *etirement Law:(.
Re#re*e!# 'e!e>#s of ,ar#=#*e workers *epublic Act &o. KF@3
or the *etirement ,ay Law shall apply to all employees in the
private sector, regardlessof their position, designation or status
and irrespective of the method by which their wages are paid. They
shallinclude part#time employees, employees of service and other
>ob contractors and domestic helpers or personsin the ,ersonal
service of another.-uidelines for the e!ective implementation of *A
KF@3 9&ew *etirement Law:e. Taxa'l#- 2e also agree with
petitionerJs contention that, under the &'*/, the retirement
benefts of respondents are partof their gross income sub>ect to
ta5es. Section 6C 9b: 9K: 9A: of the &'*/ of 3MCF L&ow
Section =6 9(: 9F: 9a: ofthe &'*/ of 3MMKNThus, for the
retirement benefts to be e5empt from the withholding ta5, the
ta5payer is burdened to prove theconcurrence of the following
elements8 93: a reasonable private beneft plan is maintained by the
employer< 96:the retiring ocial or employee has been in the
service of the same employer for at least 3A years< 9=:
theretiring ocial or employee is not less than EA years of age at
the time of his retirement< and 9@: the benefthad been availed
of only once.'ntercontinental (roadcasting/orporation9'(/:vs.
&oemi (. Amarilla9-.*. &o. 3F6KKE, $ctober6K,6AAF, Second
0ivision, O. /alle>o Sr.:, reiterated in %a. 'sabel T. Santos
vs. Servier ,hilippines, 'nc. and&L*/ 9-.*. &o. 3FF=KK,
&ovember 6C, 6AAC, Third 0ivision, O.
&achura:ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZO. 2omen 2orkers a.
,rovisions against discrimination b. Stipulation against marriage
Art. 3=F. Stipulationagainst marriage.'t shall beunlawful for
anemployer tore7uireas
aconditionofemploymentorcontinuationofemploymentthatawomanemployeeshall
notgetmarried, ortostipulatee5pressly or tacitly that upon getting
married, a woman employee shall be deemed resigned or separated, or
toactually dismiss, discharge, discriminate or otherwise
pre>udice a woman employee merely by reason of
hermarriage.9discriminatory chauvinism:EEThe >udgment of the
/ourt of Appeals in -ualberto, et al. vs. %arindu7ue %ining V
'ndustrial /orporation L/A#-.*. &o. E6KE=#*, Oune 6C, 3MKCN
considered as void a policy of the same nature.'n said case,
respondent, indismissing from the service the complainant, invoked
a policy of the frm to consider female employees in
thepro>ectitwasundertakingasseparatedthemomenttheygetmarriedduetolackoffacilitiesformarriedwomen.*espondent
further claimed that complainant was employed in the pro>ect
with an oral understandingthather services would be terminated when
she gets married. (randing the policy ofthe employer as ane5ampleof
RdiscriminatorychauvinismTtantamounttodenyinge7ual
employmentopportunitiestowomensimply on account of their se5, the
appellate court struck down said employer policy as unlawful in
view of itsrepugnance to the /ivil /ode, ,residential 0ecree
&o. 3@C and the /onstitution.,hilippine Telegraph and Telephone
/ompany vs. &L*/ 9-.*. &o. 33CMKC, %ay 6=, 3MMK, Second
0ivision,O. *egaladoNc. ,rohibited acts d. Anti#Se5ual .arassment
Act 9*.A. &o. KCKK: 1. +mployment of %inors 9Labor /ode and
*.A. &o. KFKC, *.A. &o. M6=3: L. .ousehelpers 9Labor /ode
as amended by *.A. &o. KFEE, AnAct 'ncreasing the %inimum2age
of.ousehelpers< see also U .ousehold Service under the /ivil
/ode: %. +mployment of .omeworkers &. Apprentices and Learners
$. ,ersons with disability 9*.A. &o. K6KK, as amended by *.A.
&o. M@@6: a. 0efnition b. *ights of persons with disability c.
,rohibition on discrimination against persons with disability d.
'ncentives for employers EF
