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NORMAL WORK WEEK
Article 91. Right to weekly rest day.

(a) 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 24 consecutive hours after every 6 consecutive normal work
days.
(b) 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 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.
Section 2. Business on Sundays/Holidays. Rule III, Book III

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 due them under the law.
 The rest day need not be a Sunday, because the Blue Sunday Law no longer finds application in the
present.
Section 3. Weekly rest day. Rule III, Book III

Every employer shall give his employees a rest period of not less than twenty-four (24) hours after
every six consecutive normal work days.
Section 4. Preference of employee. Rule III, Book III

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 employees as to their 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 their choice for at least two (2) days in a month.
COMPRESSED WORK WEEK
While as a general rule the right to overtime pay cannot be waived under existing laws, the compressed
workweek arrangement may be imposed if the following conditions are met:
1. The employees voluntarily agree to work 9 hours a day from Monday to Friday;
2. That there will not be any diminution whatsoever in the monthly or weekly take home pay and fringe
benefits of the employees;
3. The value of the benefits that will accrue to the employees under the proposed work schedule is more
than or at least commensurate with or equal to the one-hour overtime pay that is due them during
the weekdays based on the employee’s qualifications;
4. The one-hour overtime pay of the employees will become due and demandable if ever they are
permitted or made to work on any Saturday during the effectivity of the new working time
arrangement, since the agreement between the management is that there will be no Saturday work in
exchange for longer workday during weekdays;
5. The work of the employees does not involve strenuous physical exertion and that they are provided
with adequate rest periods or coffee breaks in the morning and afternoon;
6. The effectivity of the proposed working time arrangement shall be of temporary duration as
determined by the SOLE.
 This was from an Explanatory Bulletin dates August 20, 1984 of the Director of the Bureau of Working
Conditions, citing the opinion of the Acting Minister of Labor and Employment on the letter-query of
Hydro-Resources Contractors Corporation.
 This came about not so long ago when our country was suffering an energy crisis and power supply was
always interrupted.
 The payment of overtime pay is actually waived under a compressed workweek arrangement, which is
valid if the conditions provided under the rules are complied with. This arrangement is the exception to
Labor Law Review (2001-2002) – CUA
C. Ang, Apalisok, Blanco, Ferrolino, Reynes, Jr. et al.
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the general rule that overtime pay cannot be waived. If however during any day in the compressed
workweek is asked to work beyond the agreed 9 hours, or when he is made to work on a Saturday, the
employer should pay the employee overtime pay.
The Labor Code does not provide for a compressed workweek. This is only an agreement between the
employer and the employee. In such an agreement, the employees agree to perform work 9 hours a day for 5
days instead of the normal work period of 8 hours a day for 6 days in a week. The overtime rendered for each
day is normally compensable with Overtime pay. However, in this arrangement, the employees waive their
right to Overtime pay, in lieu of a longer weekend.
In practice, employer and employee should agree. The employee writes a letter petition containing the
following:
1) Request for a compressed workweek.
2) In effect thereto, they will render work for 9 hours a day for 5 days thereby extending their rest
day into 2 days.
3) Implied in this agreement are
a) Should the employer require them to work on their scheduled rest day, employer
shall pay them Overtime already rendered during their 5 working days as well as
Premium Pay for working during their rest day;
b) There will be no diminution of benefit as a result of this agreement.
4) Employees are given the leeway to revert to their normal workweek. This agreement is dependent
on the discretion of the employees to revert to the normal workweek.
 Note that this agreement on the compressed workweek will depend on the willingness of the employees.
Lagatic vs. NLRC

285 SCRA 262
Employees can waive their overtime pay as a result of a shortened workweek. In this case, there
was compressed workweek but the court is not admitting to its legality.
Petitioner Romeo Lagatic was employed by Cityland, first as a probationary sales agent, and later
on as a marketing specialist. He was tasked with soliciting sales for the company, with the corresponding
duties of accepting call-ins, referrals, and making client calls and cold calls. COLD CALLS refer to the
practice of prospecting for clients through the telephone directory. Cityland, believing that the same is
effective and cost-efficient method of finding clients, requires all its marketing specialists to make cold calls.
The number of cold calls depends on the sales generated by each: more sales means less cold calls.
Likewise, in order to access cold calls made by the sales staff, as well as to determine the results thereof,
Cityland requires the submission of daily progress reports on the same.
Cityland issued a written reprimand to petitioner for his failure to submit cold call reports.
Petitioner was required to explain his inaction, with a warning that further non-compliance would result in
his termination from the company.
Petitioner failed to show his entitlement to overtime and rest day pay due, to the lack of
sufficient evidence as to the number of days and hours when he rendered overtime and rest day work.
Entitlement to overtime pay must first be established by proof that said overtime work was actually
performed, before an employee may avail of said benefit. To support his allegations, petitioner submitted in
evidence minutes of meetings wherein he was assigned to work on weekends and holidays at Cityland’s
housing projects. Suffice it to say that said minutes do not prove that petitioner actually worked on said
dates. It is a basic rule in evidence that each party must prove his affirmative allegations. This petitioner
failed to do.
(Please see related discussion of this case under Prohibition against Offsetting, infra)
OVERTIME WORK
Article 83. Normal Hours of Work.

The normal hours of work of any employee shall not exceed 8 hours a day.
XXX
Can the employer validly require his employees to work longer than 8 hours a day? Say 10 a day?
NO. Labor Code says in Article 83 that the normal hours of work shall not exceed 8 hours a day.
However, should they be engaged to perform work in excess of that required by law, employer is mandated to
pay the overtime pay.

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Article 87. Overtime Work.

Work may be performed beyond 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 25% thereof. Work performed
beyond 8 hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the
first 8 hours on a holiday or rest day plus at least 30% thereof.
Section 8. Overtime Pay. Rule I, Book III

Any employee covered by this Rule who is permitted or required to work beyond 8 hours on ordinary
working days shall be paid an additional compensation for the overtime work in an amount equivalent to his
regular wage plus at least 25% thereof.
Regular wage + At least 25% of the Regular Wage = Overtime Pay
Section 9. Premium and Overtime Pay for Holiday and Rest Day Work. Rule I, Book III
(a) Except employees referred to under the exceptions, 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 a
premium pay of not less than 30% of his minimum wage;
For work performed in excess of 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 8 hours on a special holiday or rest day plus at least 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 the Rule.
(c) The payment of additional compensation for work performed on regular holidays shall be governed
by Rule IV Book III [Holiday with Pay].
 A normal work day can be shorter than 8 hours, like say, 5 hours because the Labor Code is worded X X X
not to exceed eight (8) hours.
Can ER be compelled to pay OT if work is rendered by an employee beyond the 5 hour working
time?
NO. Labor Code says Overtime is an additional compensation required by law for work rendered in
excess of 8 hours in a day. However, if the ER decides to pay for the overtime work rendered, this is valid.
There is no legal prohibition.
OVERTIME COMPENSATION – Overtime compensation is additional pay for service or work rendered in
excess of 8 hours a day by employees or laborers in employment covered by the 8-hour Labor Law and not
exempt from its requirements. It is computed by multiplying the overtime hourly rate by the number of hours
worked in excess of 8 hours.
REGULAR WAGE for the purposes of computing overtime and other additional remuneration shall include the
cash wage only, without deduction on account of facilities provided by the employer.
Reason for the Overtime Pay

There can be no other reason that a worker is made to work longer than is commensurate with his
agreed compensation for the statutorily fixed or voluntarily agreed hours of labor he is supposed to. When he
thus spends additional time for his work, he puts in more physical and mental effort and he is delayed in going
home to his family and to enjoy the comforts of his home. The reason why employers are discouraged to
require employees to work overtime is the human factor.
There are establishments operating more than 8 hrs a day. Can the ER validly compel them to
work beyond the 8 hour period?
Generally, NO. For exceptions see Rule I, Section 10 on Compulsory Overtime Work.
Section 10. Compulsory Overtime Work. Rule I, Book III

In any of the following cases, an employer may require any of his employees to work beyond 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
the National Assembly or the Chief Executive;

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(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 machineries, 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 8 th hour is necessary to prevent
serious obstruction or prejudice to the business or operations of the employer;
(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.
Article 88. Overtime not offset by Undertime.

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) [Hours of Work].
 If the employee worked overtime and on the following day he worked under time, his under time work
cannot be offset by his overtime work. The reason is fairness. If the employee works for less than 8
hours, he will be paid by the employer only for the corresponding number of hours he had actually
worked.
 Overtime pay if not paid is not only illegal. It is also contrary to public policy. The employer cannot use
the overtime of the employee to offset the under time because payment of overtime pay is mandatory.
The employer may either deduct the under time from the wage of the employee, or charge it to the
employee’s leave of absence depending on how many times the employee has worked under time. These
approaches are not in the Labor Code but may be found in company policy.
Prohibition against Offsetting

The obligation to pay overtime compensation is MANDATORY. An employer cannot evade payment of
overtime rendered on one day by offsetting it with undertime incurred on another day. Equally objectionable is
the practice of offsetting overtime with undertime and at the same time charging said undertime to the
accrued leave of the employee. For under such method, the employee is made to pa twice for his undertime
because his leave is reduced to that extent while he was made to pay for it with work beyond the regular
working hours. The proper method should be to deduct the undertime from the accrued leave but
pay the overtime to which the employee is entitled. (NAWASA vs. NWSA Consolidated Unions, 11
SCRA 766).
Lagatic vs. NLRC

285 SCRA 262
With respect to petitioner’s claims for overtime pay, rest day pay and holiday premiums, Cityland
maintains that Saturday and Sunday call-ins were voluntary activities on the part of sales personnel who
wanted to realize more sales and thereby earn more commissions. It is their contention that sales personnel
were clamoring for the “privilege” to attend Saturday and Sunday call-ins, as well as to entertain walk-in
clients at project sites during weekends, that Cityland had to stagger the schedule of sales employees to
give everyone a chance to do so. Put simultaneously, Cityland claims that the same were optional because
call-ins and walk-ins were not scheduled every weekend. If there really were a clamor on the part of sales
staff ro “voluntarily” work on weekends, so much so that Cityland needed to schedule them, how come no
call-ins or walk-ins were scheduled on some weekends?
In addition to the above, the Labor Arbiter and the NLRC sanctioned respondents practice of
offsetting rest day or holiday work with equivalent time o regular workdays on the ground that the same is
authorized by Department Order 21, Series of 1990. As correctly pointed out by petitioner, said DO was
misapplied in this case. The DO involves the shortening of the workweek from 6 days to 5 days but
with prolonged hours on those 5 days. Under this scheme, non-payment of overtime premiums was
allowed in exchange for longer weekends for employees. In the instant case, petitioner’s workweek was
never compressed. Instead, he claims payment for work over and above his normal 5 ½ days of work in
a week. Applying by analogy the principle that overtime cannot be offset by undertime, to allow
offsetting woutld prejudice the worker. He would be deprived of the additional pay for the rest
day work he has rendered and which is utilized to offset his equivalent time off on regular
workdays. To allow Cityland to do so would be to circumvent the law on payment of premiums for the rest
day and holiday work.

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 In the same way or by analogy, it is not valid for an employer to offset a regular work day from that of a
regular holiday. Because the employee will be deprived of additional compensation of the premium rate
on working on a holiday.
Example: ER tells you November 30 is a regular working day, I will give you a day-off on December 3.
He cannot do that because of the non-diminution clause.
HOURS WORKED
Article 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.
What is the reason why we should know this?

So that we will know when to start counting the normal hours of work.
This is also a prerequisite in determining compensation.
Can an employer validly require the employee to work before and after the 8 hours of work? Is
this valid?
Yes. These are what we call the preliminary and postliminary work.
Preliminary and Postliminary activities are deemed performed during working hours, where such
activities are:
1) Controlled and required by the employer.
2) Pursued necessarily and primarily for the employer’s benefit.
 The 60-minute meal period required by law is not compensable. This period is primarily devoted for the
personal interests of the employees. Hence, the Principle of NO WORK NO PAY applies.
 The employee can devote this period for personal needs. In fact he may go out or opt to stay within his
work premises.
 If during such meal period, an employee is permitted or required to work, that will be considered as hours
of work.
So what is the criteria to consider rest period as hours work?

See Art. 84, Labor Code.
Section 3. Hours Worked. Rule I, Book III

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 workplace; and
(b) All time during which an employee is suffered or permitted to work.
Section 4. Principles in Determining Hours Worked. Rule I, Book III

1. 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;
2. An employee need not leave the premises of the workplace in order that his rest period shall be
counted, it being enough that he stops working, may rest completely and may leave his workplace to go
elsewhere, whether within or outside the premises of his workplace;
3. If the work performed was necessary, or it benefited the employer, or the employee cannot abandon his
work at the end of his normal working hours because he has 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;
4. 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
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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.
 So, if an employee cannot rest completely during his rest periods, that will be considered as hours worked
for as long as it was for the benefit of the employer.
What about those who work aboard ship or vessels? Will you consider the whole time they are
aboard the vessel hours worked?
NO, because of the nature of their work. They are always on board the ship. Their hours of worked
will depend upon what they are doing. If it is for the benefit of the employer, it will be considered as hours
worked.
In the case of Luzon Stevedoring Co. Inc. vs. Luzon Marine Department Union, 101 Phil.
257, where it was held:
“For purposes of this case, we do not need to set for seamen a criterion different from that applied to
laborers on land, for under the provisions of the above quoted section, the only thing to be done is to
determine the meaning of the term ‘working place’ used therein. As we understand this term, a laborer
need not leave the premises of the factory, shop or boat in order that his rest period shall not be counted, it
being enough that he ‘cease to work’, may rest completely and leave or may leave at will the spot where he
actually stays while working, to go somewhere else, whether within or outside the premises of the said
factory, shop or boat. If these requisites are complied with, the period of such rest shall NOT be counted.”
Cagampan vs. NLRC

195 SCRA 533
Petitioners have conveniently adopted the view that the “guaranteed or fixed overtime pay of 30%
of the basic salary per month” embodied in their employment contract should be awarded to them as part
of a “package benefit.” They have theorized that even without sufficient evidence of actual rendition of
overtime work, they would automatically be entitled to overtime pay. Their theory is erroneous for being
illogical and unrealistic. Their thinking even runs counter to the intention behind the provision. The contract
provision means that the fixed overtime pay of 30% would be the basis for computing the overtime pay if
and when overtime work would be rendered. Simply stated, the rendition of overtime work and the
submission of sufficient proof that said work was actually performed are conditions to be satisfied before a
seaman could be entitled to overtime pay which should be computed on the basis of 30% of the basic
monthly salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to
such benefit must first be established. Realistically speaking, a seaman, by the very nature of his job, stays
on board a ship or vessel beyond the regular 8-hour work schedule. For the employer to give him overtime
pay for the extra hours when he might be sleeping or attending to his personal chores or even just lulling
away his time would be extremely unfair and unreasonable.
We already resolved the question of OVERTIME PAY OF A WORKER ABOARD A VESSEL in the case
of National Shipyards and Steel Corporation vs. CIR, 3 SCRA 890:
“We cannot agree with the Court below that the respondent should be paid overtime compensation
for every hour in excess of the regular working hours that he was on board his vessel or barge each day,
irrespective of whether or not he actually put in work during those hours. Seamen are required to stay on
board their vessels by the very nature of their duties, and it is for this reason that, in addition to their
regular compensation, they are given free living quarters and subsistence allowance when required to be on
board. It could not have been the purpose of our law to require their employers to pay them overtime even
when they are not actually working; otherwise, every sailor on board a vessel would be entitled to overtime
for 16 hours each day, even if he spent all those hours resting or sleeping in his bunk, after his regular tour
of duty. The criterion in determining whether or not seamen are entitled to overtime pay is not, whether
they were on board and cannot leave the ship beyond the regular 8-working hours a day, but whether they
actually rendered service in excess of said number of hours.
Stolt-Nielsen vs. NLRC

258 SCRA 643
Private respondent Meynardo J. Hernandez was hired by petitioner Stolt-Nielsen Marine Services
(Philippines), Inc. as radio officer on board M/T Stolt Condor for a period of 10 months. He boarded the
vessel on January 20, 1990.
On April 26, 1990, the ship captain ordered private respondent to carry the baggage of crew
member Lito Loveria who was being repatriated. He refused to obey the order out of fear in view of the
utterance of said crew member “Makakasaksak ako” and also because he did not perceive such task as one
of his duties as radio officer. As a result of such refusal, private respondent was ordered to disembark and
was himself repatriated. He was paid his salaries and wages only up to May 16, 1990.
The Court agrees that by virtue of the CBA and POEZ Standard Contract provisions, private
respondent is indeed bound to obey the lawful commands of the captain of the ship, but only as long as

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these pertain to his duties. The order to carry the luggage of a crew member, while being lawful, is not part
of the duties of a radio officer.
On the award of overtime pay, the NLRC in its assailed resolution states:
“Anent the overtime pay, complainant alleged that he is entitled thereto as the same is a fixed
overtime pay. The respondents failed to controvert said allegations. In short, the complainant’s claim was
for overtime pay was undisputed and for this reason, the grant of this claim must be upheld.”
Petitioner cites the case of Cagampan and his argument is well taken. A close scrutiny of the
computation of the monetary award shows that the award for overtime was for the remaining 6 months and
3 days of private respondent’s contract at which time he was no longer rendering services as he has already
been repatriated. In light of the decision in Cagampan, said award for overtime should be, as it is hereby,
disallowed for being unjustified.
WORK INTERRUPTION
Section 4, Rule I, Book III

(d) The time during which an employee is inactive by reason of interruptions in his work beyond his
control shall be considered 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.
Power interruptions or brownouts

Brownouts of short duration but not exceeding 20 minutes are considered as hours worked, whether
used productively by the employees or not.
Reason: The imminence of the resumption of work requires the employee’s presence at the place of
work and the time is too short for the employees to utilize it effectively and gainfully for his own interest.
 Note: this was not discussed but is relatively important.

Brownouts exceeding 20 minutes will not be treated as hours worked is any of the following
conditions are present:
(a) The employees can leave their workplace to go elsewhere within or without the work premises;
or
(b) The employee can use the time effectively for their own interest.
In either case, the employer can extend the working hours beyond the regular schedule to
compensate the loss of productive man-hours without being liable for overtime pay.
Industrial enterprises with 1 or 2 work shifts may adopt any of the work shifts prescribed for
enterprises with 3 work shifts to prevent serious loss or damage to materials, machineries or equipment that
may result in case of power interruptions (Policy Instructions #36).
Section 5. WAITING TIME. Rule I, Book III

(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 work at his home or with company officials where
he may be reached is not working while on call.
 Examples of employees in which waiting is an integral part of their job

1. Driver
2. Sales lady
3. Barbers
4. Workers of massage parlors
5. Standby crew of airline companies
6. Co-pilots
7. Laboratory technicians
 Art. 84 speaks of two definition of hours work in relation to waiting time. So even if drivers are doing
nothing, or even if the sales ladies are just sitting doing nothing, for as long as they are required to be on
duty or to be at a specified workplace, then the time spent during such period is considered as hours
worked.

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Pan-American World Airways Employees vs. Pan-American World Airways,

1 SCRA 527, GR L-16275, February 23, 1961
STATEMENT OF THE JURISDICTIONAL RULE ON CLAIM FOR OVERTIME PAY. — Where the
claimants, at the time of the filing of the petition, were still in the service of the employer, or, having been
separated from service, should also ask for reinstatement, the claim must be brought before the Court of
Industrial Relations; otherwise, such claim should be brought before the regular courts. (NASSCO, vs. CIR,
et al., 107 Phil., 1006; 58 Off. Gaz., [36] 5875; PRISCO vs. CIR, et al., 102 Phil., 515; Board of Liquidation,
et al., vs. CIR, 108 Phil., 330; Ajax-International Corp. vs. Seguritan, 109 Phil., 815, Sampaguita Pictures,
Inc., et al. vs. CIR, 109 Phil., 818).
WHEN MEAL PERIOD CONSIDERED OVERTIME WORK. — Where during the so-called meal period,
the laborers are required to stand by for emergency work, or where said meals hour is not one of complete
rest, such period is considered overtime.
COMPENSATION BY CIR'S EXAMINING DIVISION NOT UNDUE DELEGATION OF JUDICIAL
FUNCTION; LACK OF SPECIFIC AMOUNT OF OVERTIME PAY IN DECISION DOES NOT MAKE IT
INCOMPLETE. — Computation of overtime pay involves, at the most, a mechanical act, and its being
computed by the Chief, Examining Division of the CIR, is not undue delegation of its judicial functions; the
lack of a specific amount of overtime pay in the decision does not render it incomplete.
Section 6. Lectures, Meetings and Training Programs. Rule I, Book III

Attendance at lectures, meetings, training programs and other similar activities shall NOT be counted
as working time if ALL the following conditions are met:
(c) Attendance is outside of the employee’s working hours;
(d) Attendance is in fact voluntary;
(e) The employee does not perform any productive work during such attendance
There are certain personnel who are exempt from enjoying labor standards benefits.
By express provision of the law, this is the coverage of Book III on Condition of Employment, Title I
on Working Conditions and Rest Periods – Hours of Work. The Chapters under this Title are as follows:
Chapter 1 - Hours of Work

Chapter 2 - Weekly Rest Periods
Chapter 3 - Holidays, Service Incentive Leave, Service Charges
Article 82. Coverage

The provisions of this Article 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 who are dependent on him for support, domestic helpers, persons in the personal service of another,
and workers who are paid by result 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.
Labor Standards Benefits covered under Art. 82:

(a) Night Shift Differential;
(b) Overtime pay;
(c) Holiday pay;
(d) Service Incentive Leave; and
(e) Service Charges
Employees not covered by this provision:
1. Government Employees – whether employed by the national government or any of its political
subdivisions, including those employed in government-owned and –controlled corporations
REASON: They are governed by different set of laws, which are the Civil Service Law, the
Administrative Code, and by their respective charters. If a government-owned or –controlled

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corporation has been incorporated, they are governed by the Corporation Code and are consequently
covered by the Labor Code.
2. Managerial Employees and members of the Managerial Staffs
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 subdivision thereof; [formulate policies]
2. They customarily and regularly direct the work of two or more employees therein; [execute
management policies]
3. They have the authority to hire and fire employees of lower rank, or their suggestions and
recommendations to hiring and firing and as to the promotion or any other change of status of
other employees, are given particular weight. [impose disciplinary actions]
REASON: Managerial employees are not usually employed and paid by the hour. Their compensation
is determined by their special training, experience or knowledge, which require the exercise of
discretion and independent judgment; or perform work related to management policies and general
business operations along specialized or technical lines.
Officers or members of the 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
the employer;
2. Customarily and regularly exercise discretion and independent judgment;
3. They:
i. Regularly and directly assist a proprietor or general managerial employee whose primary
duty consists of the management of the establishment in which he is employed or a
subdivision thereof;
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.
4. They do not devote more than 20% of their hours worked in a workweek to activities, which are
not directly and closely related to the performance of the work prescribed in the above-
mentioned 1, 2 and 3.
REASON: They may be considered managerial employees as well. Thus, it would not be feasible to
provide a fixed hourly rate of pay or maximum hours of work like managerial employees as previously
mentioned.
3. Field Personnels
If they:
(a) Regularly perform their duties away from the principal or branch office or place of business
of the employer; and
(b) Whose actual hours of work in the field cannot be determined with reasonable certainty.
REASON: These workers perform their jobs away from the employer’s place of business, and therefore
not subject to the personal supervision of their employer. His employer has no way of knowing the
exact number of hours he is working in a day, like medical representatives and field salesmen. Their
hours of work cannot be determined with reasonable certainty.
Union of Filipro Employees vs. Vicar

205 SCRA 200
The labor dispute stems from the exclusion of sales personnel from the holiday pay award.
Respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the NLRC a petition for declaratory
relief seeking a ruling on its rights and obligations respecting claims of its monthly paid employees for
holiday pay in the light of the Court’s decision in Chartered Bank Employees Association vs. Ople, 138
SCRA 273.
Whether or not Nestle’s sales personnel are entitled to holiday pay.
Petitioner insists that respondent’s sales personnel are not field personnel under Article 82 of the
Labor Code. Respondent company controverts this assertion.
Under Article 82, field personnel are not entitled to holiday pay, said article defines FIELD
PERSONNEL as “non-agricultural employees who regularly perform their duties away from the

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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.”
It is undisputed that these sales personnel start their field-work at 8 am after having reported to
the office and come back to the office at 4 pm if they are Makati-based.
The petitioner maintains that the period between 8 am to 4 or 4:30 pm comprises the sales
personnel’s working hours which can be determined with reasonable certainty.
The court does not agree.
The law requires that the actual hours of work in the field be reasonably ascertained. The company
has not way of determining whether or not these sales personnel, even if theu report to the office
before 8 am prior to field work and come back at 4:30 pm, rally spend the hours in between in actual
field work.
Mercidar Fishing Corp. vs. NLRC

297 SCRA 445
Private respondent had been employed as a “bodegero” or ship’s quartermaster on February 12,
1988. he complained that he has been constructively dismissed by petitioner when the latter refuse
him assignments aboard its boats after he has reported to work on May 28, 1990.
Private respondent alleged that he had been sick and thus allowed to go on leave for 1 month but
when he reported to work at the end of such period with a health clearance, he was told to come
back another time as he could not be reinstated immediately. Thereafter, petitioner refused to give
him work.
Petitioner on the other hand, alleged that it was private respondent who actually abandoned his
work.
Petitioner contends that NLRC palpably erred in ruling and sustaining the view that fishing crew
members, like Fermin Agao, Jr., cannot be classified as field personnel under Article 82 of the Labor
Code.
The petition has not merit.
Petitioner argues essentially that since the work of private respondent is performed away from its
principal place of business, it has not way of verifying his actual hours of work on the vessel. It
contends that the private respondent and other fishermen in its employ should be classified as “field
personnel” who have no statutory right to service incentive leave pay.
This case cited the case of Union of Filipro Employees.
In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen
employed by petitioner have no choice but to remain on board its vessel. Although they perform non-
agricultural work away from petitioner’s business offices, the fact remains that throughout the
duration of their work, they are under the effective control and supervision of petitioner through the
vessel’s patron or master as the NLRC correctly held.
4. Members of the family who are dependent upon him for support
REASON: The employer has already taken care of the sustenance, clothing, medical attendance or
education of the particular members of his family. Note that this category refers to husband and wife,
parents and children, other descendants and ascendants, brothers and sisters whether in the full or
half blood. It does not include in-laws because they do not pertain to the same family. Also keep in
mind that the family must be dependent upon the employer for support.
5. Household helpers
6. Persons in the personal service of another
Domestic servants and persons in the personal service of another if they perform such
services in the employer’s home which are usually necessary and 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 the employer’s household.
REASON: They are already provided with living quarters, food, and extra clothing such that all
in all, it would exceed the statutory minimum wage. Also because the nature of the work plus the fact
that they are not employed in a business undertaking.
7. Workers paid by results
Including those who are paid by piece-work, takay, pakiao, or task basis, and other non-time
work if their output rates are in accordance with the standards under Section 8 Rule VII Book III of
these Regulations, or where such rates have been fixed by the SOLE in accordance with the aforesaid
section.
REASON: They are not paid on an hourly basis but in their output. Their pay is dependent
upon the work done regardless of the time spent or employed in doing the work. Moreover, they are
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governed by specific contracts. Their output should be fixed in accordance with Section 8 Rule VII
Book III of the Omnibus Rules, which provide that they shall receive not less than the applicable
statutory wage rates prescribed by law for the normal working hours which shall not exceed 8 hours a
day, or a proportion thereof for work less than the normal working hours.
Classification of workers paid by result

1. Piece Rate
2. Job or task base.
Lambo vs. NLRC

GR 111042, October 26, 1999
Where SC gave the correct classification of workers paid by results.
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents
J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked
from 8am to 7pm daily, including Sundays and holidays. As in the case of the other 100 employees of
private respondents, petitioners were paid on a piece-work basis, according to the style of suits they
made. Regardless of the number of pieces they finished in a day, they were each given a daily pay of at
least P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal
and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive
leave pay, separation pay, 13th month pay, and attorney’s fees.
After hearing, Labor Arbiter found private respondents guilty of illegal dismissal.
On appeal by private respondents, the NLRC reversed the decision of the Labor Arbiter. The NLRC
held petitioners guilty of abandonment of work and accordingly dismissed their claims except that for 13 th
month pay.
The decision of the NLRC is SET ASIDE and another one is rendered ordering private respondents
to pay petitioners the total amount of P181,102.40.
TWO CATEGORIES OF EMPLOYEES PAID BY RESULTS. – There are 2 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 in 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.
THE MERE FACT THAT PETITIONERS WERE PAID IN A PIECE-RATE BASIS DOES NOT NEGATE
THEIR STATUS AS REGULAR EMPLOYEES OF PRIVATE RESPONDENTS. – In this case, private
respondents exercised control over the work of petitioners. As tailors, petitioners worked in the company’s
premises from 8am to 7pam daily, including Sundays and holidays. The mere fact that petitioners were
paid in a piece-rate basis does not negate their status as regular employees of private respondents. The
term “WAGE” is broadly defined in Article 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 price 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.
FACTORS THAT SHOW THAT PETITIONERS ALTHOUGH PIECE-RATE WORKERS, WERE

REGULAR EMPLOYEES OF PRIVATE RESPONDENTS. –
(1) Within the contemplation of Article 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;
(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 1 year.
NOT ALL QUITCLAIMS ARE PER SE INVALID OR AGAINST PUBLIC POLICY; EXCEPTIONS. – To
be sure, not all quitclaims are per se invalid or against public policy. But those
(1) Where there is clear proof that the waiver was wrangled from an unsuspecting or gullible person
or
(2) Where the terms of settlement are unconscionable on their face are invalid.

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In these cases, the law will step in to annul the questionable transaction. However, considering
that the Labor Arbiter had given the petitioner Lambo a total award of P94,719.20, the amount of
P10,000 to cover any and all monetary claims is clearly unconscionable. As we have held in another case,
the subordinate position of the individual employee vis-à-vis management renders him especially
vulnerable to its blandishments, importunings, and even intimidations, and results in his improvidently
waiving benefits too which he is clearly entitled. Thus, quitclaims, waivers or releases are looked upon
with disfavor for being contrary to public policy and are ineffective to bar claims for the full measure of
the workers’ legal rights. An employee who is merely constrained to accept the wages paid to him is not
precluded from recovering the difference between the amount he actually received and that amount
which he should have received.
OVERTIME PAY vs. PREMIUM PAY
OVERTIME PAY – Additional compensation required by law for work performed in excess of 8 hours in a day.
PREMIUM PAY – Additional compensation required by law for work performed during non-working days not
exceeding 8 hours such as rest days, holidays.
 Premium Pay is an additional compensation given to a covered employee for working on a holiday
or rest day within the first 8 hours.
 Premium Pay is an additional compensation other than and added to the regular wage or basic
salary. It should not be included or considered in the computation of the 13 th month pay.
 With respect to employees paid on a monthly basis, the first 100% (of the 130%) corresponding to
the regular remuneration, may or may not be included in the monthly salary. If it is, then the
employee is entitled to collect only the premium of 30%. If it is, then the employee has the right to
receive the entire 130%. However, Sunday is a regular workday unless it is his established rest
day.
Premium pay for work within 8 hours on a

- Special or rest day: plus 30% of basic daily rate
- Rest day falling on special day: plus 50% of basic daily rate
- Rest day falling on a regular holiday: plus 30% of 200% of basic daily rate. Mathematically, it is
260% of basic daily rate
Overtime Pay
- Ordinary days: plus 25% of the basic hourly rate
- Special days, rest days and holidays: plus 30% of the regular hourly rate on said days.

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HOLIDAY PAY
Article 94. Right to Holiday Pay.
(a) Every worker shall be paid his regular daily wage during regular holidays except in retail and
service establishments regularly employing less than 10 workers;
(b) 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;
(c) As used in this Article, “Holiday” includes:
New Year’s Day 12th of June
Maundy Thursday Last Sunday of August (National Heroes’ Day)
Good Friday 30th of November (Bonifacio Day)
9 of April
th
25th of December (Christmas Day)
1 of May
st
30th of December (Rizal Day)
EXECUTIVE ORDER 203

(June 30, 1987 by President Corazon C. Aquino)
“Providing a List of Regular Holidays and Special Days to be
observed throughout the Philippines and for other Purposes”
Regular Holidays (10)
New Year’s Day - January 01

Maundy Thursday - Movable date
Good Friday - Movable date
Araw ng Kagitingan
(or Bataan and Corregidor Day - April 09
Labor Day - May 01
Independence Day - June 12
National Heroes’ Day - Last day of August
Bonifacio Day - November 30
Christmas Day - December 25
Rizal Day - December 30
Nationwide Special Days (2)
All Saints’ Day - November 01

Last day of the year - December 31
“Henceforth, the terms Legal or Regular Holiday and Special Holiday as used in laws, orders, rules and regulations
or other issuance shall now be referred to as Regular Holiday and Special Holiday, respectively.
Is the ER required to pay the EE Holiday pay?

Yes, it is mandated by Article 94. Right to holiday pay. – (a) Every worker shall be paid his regular
daily wage during regular holidays, except in retail and service establishments regularly employing less than
10 workers
When we speak of Holiday, how many kinds are there?

As per EO 203, there are two kinds of Holidays: Regular and Special Holidays. The employer cannot declare
his own holiday. The Local Government Units may however declare its own holiday. There are 10 Regular
and 2 Special Holidays. In effect, there are 52 Rest Days in a year.
By the term “Holiday Pay”, what is being referred to?

Holiday Pay refers to working on a Regular Holiday. When the employee does not work on a special holiday,
he does not receive compensation. In order for him to be compensated, he has to render service on that
particular special day. His compensation is equivalent to 30% of his regular wage. The principle of “No Work,
No Pay” applies to Special Days.
Holiday pay is a premium given to an employee during regular holidays. The purpose of holiday pay is to
prevent diminution of the monthly income on account of work interruptions. It is primarily aimed to benefit
daily-paid workers, whose income is circumscribed by the “No Work, No Pay” Principle.

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Does the law provide what are the Regular Holidays?

Yes, Article 94 (c), Labor Code. This provision has been superceded by Executive Order No. 203
providing for a list of regular holidays and special days to be observed.
Regular Holiday
If unworked, the Labor Code sanctions payment of 100%.
If worked, the premium pay is 200%. This is what is referred to as DOUBLE COMPENSATION.
Special Day
If unworked, the Labor Code does not provide for payment.
This follows the principle of NO WORK NO PAY as lodged in the famous principle of a FAIR DAY’S
WAGE FOR A FAIR DAYS’S LABOR.
Cases: FAIR DAY’S WAGE FOR A FAIR DAYS’S LABOR.
Caltex Refinery vs. Brillantes

279 SCRA 218
The employer granted wage increase but the employees demanded a wage increase equivalent to
that of the increase granted by another employer (Shell) to its employees. They alleged that Caltex is
similarly situated with Shell, therefore, CALTEX should grant an increase equal to what is given by Shell to
its employees.
RULING: The alleged “similarity” in the situation of Caltex and Shell cannot be considered a valid
ground for a demand of wage increase, in the absence of a showing that the 2 companies are also similar
in “substantial aspects”. The wage should be commensurate to the work done. Employees have the right
to demand salary increase; but it is also cogent that they should also be able to justify an increase in
wages.
FAIR DAY’S WAGE FOR A FAIR DAY’S WORK.
The age-old general rule governing relations between labor and capital or management and
employee is “a fair day’s wage for a fair day’s work.” If no work is performed by the employee, there can
be no wage or pay unless of course the laborer was ready, willing and able to work but was locked out,
dismissed or suspended or otherwise illegally prevented from working.
SSS vs. SSS Supervisor’s Union

117 SCRA 749
This petition seeks to review on Certiorari the orders of respondent court of industrial relations on
the issue of whether or not petitioner SSS may be held liable for the payment of wages of members of
respondent union who admittedly did not work during the strike declared in 1968 by the rank-and-file
union.
The age-old rule governing the relation between labor and capital or management and employee is
that of a “fair days wage for a fair day’s labor” if there is no work performed by the employee there
can be no wage or pay, unless of course the laborer was able, willing and ready to work, but was illegally
locked out, dismissed or suspended.
Where the failure of workers to work was not due to the employer’s fault, burden of economic loss
suffered by them should not be shifted to the employer and each party must bear his own loss.
In this case, the failure of work on the part of the member of the respondent’s union was due to
circumstances not attributable to themselves, but neither should the burden of economic loss suffered by
them be shifted to their employers (SSS) which was equally faultless, considering that the situation was
not a direct consequence of the employer’s lockout or unfair labor practice. Under the circumstances,
each party must bear the loss
Aklan Electric Cooperative vs. NLRC

GR 121439 Jan. 25, 2000
The sole issue for determination is whether or not public respondent NLRC committed grave abuse
of discretion amounting to excess or want of jurisdiction when it reversed the findings of the Labor Arbiter
that private respondents-employees refused to work under the lawful orders of the petitioner AKELCO
management (which was to report to work to the new temporary office premises in another location);
hence they are covered by the "no work, no pay" principle and are thus not entitled to the claim for
unpaid wages from June 16, 1992 to March 18, 1993.
The age-old rule governing the relation between labor and capital, or management and employee
of a "fair day’s wage for a fair day’s labor" remains as the basic factor in determining employees’ wages.

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If there is no work performed by the employee there can be no wage or pay unless, of course, the
laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed, or
otherwise illegally prevented from working, a situation which we find is not present in the instant case.
It would neither be fair nor just to allow private respondents to recover something they have not
earned and could not have earned because they did not render services at the Kalibo office during the
stated period.
Counterpart principle of Fair Day’s Wage for Fair Day’s Labor

EQUAL PAY FOR EQUAL WORK.
Cases: EQUAL PAY FOR EQUAL WORK.
Prubankers vs. Prudential Bank

302 SCRA 74
"On November 18, 1993, the Regional Tripartite Wages and Productivity Board of Region V issued
Wage Order No. RB 05-03 which provided for a Cost of Living Allowance (COLA) to workers in the private
sector who ha[d] rendered service for at least three (3) months before its effectivity, and for the same
period [t]hereafter, in the following categories: SEVENTEEN PESOS AND FIFTY CENTAVOS (P17.50) in the
cities of Naga and Legaspi; FIFTEEN PESOS AND FIFTY CENTAVOS (P15.50) in the municipalities of
Tabaco, Daraga, Pili and the city of Iriga; and TEN PESOS (P10.00) for all other areas in the Bicol Region.
"Subsequently on November 23, 1993, the Regional Tripartite Wages and Productivity Board of
Region VII issued Wage Order No. RB VII-03, which directed the integration of the COLA mandated
pursuant to Wage Order No. RO VII-02-A into the basic pay of all workers. It also established an increase
in the minimum wage rates for all workers and employees in the private sector as follows: by Ten Pesos
(P10.00) in the cities of Cebu, Mandaue and Lapulapu; Five Pesos (P5.00) in the municipalities of
Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga and the cities of Davao, Toledo,
Dumaguete, Bais, Canlaon, and Tagbilaran.
"The petitioner then granted a COLA of P17.50 to its employees at its Naga Branch, the only
branch covered by Wage Order No. RB 5-03, and integrated the P150.00 per month COLA into the basic
pay of its rank-and-file employees at its Cebu, Mabolo and P. del Rosario branches, the branches covered
by Wage Order No. RB VII-03.
"On June 7, 1994, respondent Prubankers Association wrote the petitioner requesting that the
Labor Management Committee be immediately convened to discuss and resolve the alleged wage
distortion created in the salary structure upon the implementation of the said wage orders. Respondent
Association then demanded in the Labor Management Committee meetings that the petitioner extend the
application of the wage orders to its employees outside Regions V and VII, claiming that the regional
implementation of the said orders created a wage distortion in the wage rates of petitioner's employees
nationwide. As the grievance could not be settled in the said meetings, the parties agreed to submit the
matter to voluntary arbitration. The Arbitration Committee formed for that purpose was composed of the
following: public respondent Froilan M. Bacungan as Chairman, with Attys. Domingo T. Anonuevo and
Emerico O. de Guzman as members. The issue presented before the Committee was whether or not the
bank's separate and regional implementation of Wage Order No. 5-03 at its Naga Branch and Wage Order
No. VII-03 at its Cebu, Mabolo and P. del Rosario branches, created a wage distortion in the bank
nationwide.
"The Arbitration Committee on June 18, 1996 rendered the questioned decision."
Equal Pay for Equal Work
Petitioner also avers that the implementation of the Wage Order in only one region violates the
equal-pay-for-equal-work principle. This is not correct. At the risk of being repetitive, we stress that RA
6727 mandates that wages in every region must be set by the particular wage board of that region, based
on the prevailing situation therein. Necessarily, the wages in different regions will not be uniform. Thus,
under RA 6727, the minimum wage in Region 1 may be different from that in Region 13, because the
socioeconomic conditions in the two regions are different.
International School Alliance of Educators vs. Quisumbing

GR 128845 June 1, 2000
Receiving salaries less than their counterparts hired abroad, the local-hires of private respondent
School, mostly Filipinos, cry discrimination. We agree. That the local-hires are paid more than their
colleagues in other schools is, of course, beside the point. The point is that employees should be given
equal pay for work of equal value. That is a principle long honored in this jurisdiction. That is a principle
that rests on fundamental notions of justice. That is the principle we uphold today. Private respondent
International School, Inc. (the School, for short), pursuant to Presidential Decree 732, is a domestic
educational institution established primarily for dependents of foreign diplomatic personnel and other
temporary residents.
To enable the School to continue carrying out its educational program and improve its standard of
instruction, Section 2(c) of the same decree authorizes the School to

 72
employ its own teaching and management personnel selected by it either locally or abroad, from
Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and
regulations attending their employment, except laws that have been or will be enacted for the protection
of employees.
Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying
the same into two: (1) foreign-hires and (2) local-hires.
The School grants foreign-hires certain benefits not accorded local-hires. These include housing,
transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a
salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference on two
"significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor"
and (b) limited tenure. The School explains:
A foreign-hire would necessarily have to uproot himself from his home country, leave his family
and friends, and take the risk of deviating from a promising career path-all for the purpose of pursuing his
profession as an educator, but this time in a foreign land. The new foreign hire is faced with economic
realities: decent abode for oneself and/or for one's family, effective means of transportation, allowance
for the education of one's children, adequate insurance against illness and death, and of course the
primary benefit of a basic salary/retirement compensation.
Because of a limited tenure, the foreign hire is confronted again with the same economic reality
after his term: that he will eventually and inevitably return to his home country where he will have to
confront the uncertainty of obtaining suitable employment after a long period in a foreign land.
The compensation scheme is simply the School's adaptive measure to remain competitive on an
international level in terms of attracting competent professionals in the field of international education.
When negotiations for a new collective bargaining agreement were held on June 1995, petitioner
International School Alliance of Educators, "a legitimate labor union and the collective bargaining
representative of all faculty members” of the School, contested the difference in salary rates between
foreign and local-hires. This issue, as well as the question of whether foreign-hires should be included in
the appropriate bargaining unit, eventually caused a deadlock between the parties.
The Acting Secretary of Labor found that these non-Filipino local-hires received the same benefits
as the Filipino local-hires:
The compensation package given to local-hires has been shown to apply to all, regardless of race.
Truth to tell, there are foreigners who have been hired locally and who are paid equally as Filipino local
hires.
The Acting Secretary upheld the point-of-hire classification for the distinction in salary rates:
The principle "equal pay for equal work" does not find application in the present case. The
international character of the School requires the hiring of foreign personnel to deal with different
nationalities and different cultures, among the student population.
We also take cognizance of the existence of a system of salaries and benefits accorded to foreign
hired personnel which system is universally recognized. We agree that certain amenities have to be
provided to these people in order to entice them to render their services in the Philippines and in the
process remain competitive in the international market.
Furthermore, we took note of the fact that foreign hires have limited contract of employment
unlike the local hires who enjoy security of tenure. To apply parity therefore, in wages and other benefits
would also require parity in other terms and conditions of employment which include the employment
contract.
We cannot agree.
That public policy abhors inequality and discrimination is beyond contention. Our Constitution and
laws reflect the policy against these evils. The Constitution in the Article on Social Justice and Human
Rights exhorts Congress to "give highest priority to the enactment of measures that protect and enhance
the right of all people to human dignity, reduce social, economic, and political inequalities." The very
broad Article 19 of the Civil Code requires every person, "in the exercise of his rights and in the
performance of his duties, [to] act with justice, give everyone his due, and observe honesty and good
faith."
International law, which springs from general principles of law, likewise proscribes discrimination.
General principles of law include principles of equity, i.e., the general principles of fairness and justice,
based on the test of what is reasonable.
In the workplace, where the relations between capital and labor are often skewed in favor of
capital, inequality and discrimination by the employer are all the more reprehensible.
The Constitution specifically provides that labor is entitled to "humane conditions of work." These
conditions are not restricted to the physical workplace - the factory, the office or the field - but include as
well the manner by which employers treat their employees.
The Constitution also directs the State to promote "equality of employment opportunities for all."
Similarly, the Labor Code provides that the State shall "ensure equal work opportunities regardless of sex,
race or creed." It would be an affront to both the spirit and letter of these provisions if the State, in spite
of its primordial obligation to promote and ensure equal employment opportunities, closes its eyes to
unequal and discriminatory terms and conditions of employment. Discrimination, particularly in terms
of wages, is frowned upon by the Labor Code. Article 135, for example, prohibits and penalizes the
payment of lesser compensation to a female employee as against a male employee for work of equal
value. Article 248 declares it an unfair labor practice for an employer to discriminate in regard to wages
in order to encourage or discourage membership in any labor organization.
The School contends that petitioner has not adduced evidence that local-hires perform work equal
to that of foreign-hires. The Court finds this argument a little cavalier. If an employer accords employees
the same position and rank, the presumption is that these employees perform equal work. This

 73
presumption is borne by logic and human experience. If the employer pays one employee less than the
rest, it is not for that employee to explain why he receives less or why the others receive more. That
would be adding insult to injury. The employer has discriminated against that employee; it is for the
employer to explain why the employee is treated unfairly.
The employer in this case has failed to discharge this burden. There is no evidence here that
foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have similar
functions and responsibilities, which they perform under similar working conditions.
The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the
distinction in salary rates without violating the principle of equal work for equal pay.
"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for services
performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is the "[c]onsideration paid
at regular intervals for the rendering of services." In Songco v. National Labor Relations C ommission,
we said that:
"salary" means a recompense or consideration made to a person for his pains or industry in
another man's business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of
the Roman soldier, it carries with it the fundamental idea of compensation for services rendered.
(Emphasis supplied.)
While we recognize the need of the School to attract foreign-hires, salaries should not be used as
an enticement to the prejudice of local-hires. The local-hires perform the same services as foreign-hires
and they ought to be paid the same salaries as the latter. For the same reason, the "dislocation factor"
and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in salary rates.
The dislocation factor and limited tenure affecting foreign-hires are adequately compensated by certain
benefits accorded them which are not enjoyed by local-hires, such as housing, transportation, shipping
costs, taxes and home leave travel allowances.
The Constitution enjoins the State to "protect the rights of workers and promote their welfare," "to
afford labor full protection." The State, therefore, has the right and duty to regulate the relations between
labor and capital. These relations are not merely contractual but are so impressed with public interest that
labor contracts, collective bargaining agreements included, must yield to the common good. Should such
contracts contain stipulations that are contrary to public policy, courts will not hesitate to strike down
these stipulations.
In this case, we find the point-of-hire classification employed by respondent School to justify the
distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There is no
reasonable distinction between the services rendered by foreign-hires and local-hires. The practice of the
School of according higher salaries to foreign-hires contravenes public policy and, certainly, does not
deserve the sympathy of this Court.
 If your scheduled rest day is Sunday and you are not required to work, you are not entitled to any pay.
On the principle of No work no pay.
 If your scheduled rest day is Sunday and you are required to work, you would be entitled to pay.
Article 93. Compensation for rest day and Sunday or Holiday work.
(a) Where an employee is made or permitted to work on his scheduled rest day, he shall be
paid an additional compensation of at least 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.
(b) 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 30% of his regular wage for work performed on Sundays and holidays.
(c) Work performed on any special holiday shall be paid an additional compensation of at least
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
50% of his regular wage.
(d) 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.
What do you call that pay made during the first 8 hours?
Premium Pay.
 If on your scheduled rest day, a regular holiday falls, and you did not work on that day, you are entitled to
compensation.

 74
You are entitled to what?

Holiday pay because the law says that even if you did not work on a holiday, an employee is entitled
to holiday premium pay.
Section 4. Compensation for holiday work. Rule IV, Book III

Any employee who is permitted or suffered to work on any regular holiday, not exceeding 8 hours,
shall be paid at least 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.
 If it is your scheduled restday, and it falls on a regular holiday, and you work during said restday, you are
entitled to 100% equivalent to your basic wage for the first 8 hours of work. Since it is a regular holiday,
you will be entitled to another 100%. Since you work during your scheduled restday, you will be entitled
to a 30% premium pay. All in all it will 100% + 100% + 30%. Mathematically, it will be 260%.
Formula:
[ 100% + 100%] x 30% = 260%
basic daily wage Holiday Pay for work on rest day
Section 5. Overtime pay for holiday work. Rule IV, Book III
For work performed in excess of 8 hours on a regular holiday, an employee shall be paid an additional
compensation for the overtime work equivalent to his rate for the first 8 hours on such holiday work
plus at least 30% thereof.
Where the regular holiday work exceeding 8 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.
There are 2 regular holidays falling on the same day.

This happened way back in 1993 where April 9 (Araw ng Kagitingan) also fell on Good Friday.
 If you do not render work, you are entitled to compensation of 200%.
 If you render work, you are entitled to compensation of 300% for the first 8 hours.
There are 2 regular holidays falling on a rest day.

300% for work rendered during Regular Holiday
30% for Restday
330% Total.
Mathematically, this translates to 390%.
 Note: Do not think of any other combination, as these are the only possible combination.
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 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.
Instance when an employee will not be entitled to holiday pay

Section 6. Absences. Rule IV, Book III
(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 immediately preceding a
regular holiday may not be paid the required holiday pay if he has not worked on such regular
holiday;
 75
(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 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.
 Employers in retail and service establishments not employing more than 10 employees are exempt from
paying holiday pay.
Section 1. Coverage. Rule IV, Book III

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 10 workers;
(c) Domestic helpers and persons in the personal service of another;
(d) Managerial employees
(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.
NIGHT SHIFT DIFFERENTIAL
Article 86. Night Shift Differential.

Every employee shall be paid a night shift differential of not less than 10% of his regular wage for
each hour of work performed between 10 o’clock in the evening and 6 o’clock in the morning.
NIGHT SHIFT DIFFERENTIAL - 10% OF basic Daily rate in addition to OT whenever applicable.
Section 1. Coverage. Rule II, Book III

This Rule shall apply to all employees, except:
(a) Those employed in the government and any of the political subdivisions including government-owned
and –controlled corporations;
(b) Those of retail and service establishments regularly employing not more than 5 workers;
(c) Domestic helpers and persons in the personal service of another;
(d) Managerial employees;
(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. Rule II, Book III

An employee shall be paid night shift differential of NOT LESS THAN 10% of his regular wage for each
hour of work performed between 10 o’clock in the evening and 6 o’clock in the morning.
Section 3. Additional Compensation. Rule II, Book III

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 25% and an additional amount of no less than
10% of such overtime rate for each hour of work performed betweem 10pm to 6 am.

 76
Regular wage + at least 25% of the regular wage + At least 10% of

such overtime rate for each
hour of work performed between
10pm to 6am
Section 4. Additional Compensation on Scheduled Rest Day or Special Holiday. Rule II, Book III
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 30% and an additional amount of not less than 10% of such premium pay rate for each
hour of work performed.
Regular wage + at least 30% of the regular wage + at least 10% of

such premium pay for each
hour of work performed
Section 5. Additional Compensation on Regular Holidays. Rule II, Book III

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 10% of such premium rate
for each hour of work performed.
Regular wage + at least 10% of such premium rate for each hour of work
performed
 Night work generally has many inconveniences on the part of the employee, and it is but just that he
should be properly compensated for working under such inconveniences. Night work deprives the laborer
the complete and uninterrupted sleep that he deserves and moments of leisure and relaxation for spiritual
and cultural expansion. Also, there is danger involved, as when the employee can only go home in the
wee hours of the morning or late at night, as the case may be.
 In arriving at the night shift differential pay, one must know how to compute the hourly rate. It may
happen that the worker need not complete the 8-hour graveyard shift. So if for instance his shift runs
from 10pm to 2am, then only 4 hours should be entitled to a night shift differential pay.
Article 130. NIGHT WORK PROHIBITION

No woman, regardless of age, shall be employed or permitted or suffered to work, with or without
compensation:
1) In any industrial undertaking or branch thereof between 10 at night and 6 in the morning of the
following day; or
2) In any commercial or non-industrial undertaking or branch thereof, other than agricultural, between
midnight and 6 in the morning of the following day; or
3) In any agricultural undertaking at nighttime unless she is given a period of rest of not less than 9
consecutive hours.
Article 131. EXCEPTIONS

The prohibitions prescribed by the preceding article shall not apply in any of the following cases:
1. In cases of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquake, epidemic, or other disasters or calamity, to prevent loss of life or property, or in case of
force majeure or imminent danger to public safety;
2. In case of urgent work to be performed on machineries, equipment or installations, to avoid serious
loss which the employer would otherwise suffer;
3. Where the work is necessary to prevent serious loss of perishable goods;
4. Where the woman employee holds a responsible position of managerial or technical nature, or where
the woman employee has been engaged to provide health and welfare service;
5. Where the nature of the work requires the manual skill and dexterity of women workers and the same
cannot be performed with equal efficiency by male workers, or [where the employment of women is
the established practice in the enterprises concerned on the date these rules become effective]; and
6. Where the women employees are immediate members of the family operating the establishment or
undertaking;
7. Other analogous cases as determined by the Secretary of Labor.

 77
Article 138. CLASSIFICATION OF CERTAIN WOMEN WORKERS

Any woman who is permitted or suffered to work with or without compensation in any night club,
cocktail lounge, massage clinic, bar, or similar establishment under effective control and supervision of the
employer for a substantial period of time as determined by the Secretary of Labor and Employment, shall be
considered an employee in such establishments for purposes of labor and social legislation
SERVICE INCENTIVE LEAVE
Article 95. Right to service incentive leave.

(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive of five days with pay.
(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those
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 after considering the viability or
financial condition of such establishment.
(c) The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or
any court of administrative action.
Section 1. Coverage. Rule V, Book III

This rule shall apply to all employees except:
(a) Those of the government and any of its political subdivisions, including government-owned or –
controlled corporations;
(b) Domestic helpers and persons in the personal service of another;
(c) Managerial employees;
(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 in 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 5 days; and
(g) Those employed in establishments regularly employing less than 10 employees.
Section 2. Right to Service Incentive Leave. Rule V, Book III

Every employee who has rendered at least 1 year of service shall be entitled to a yearly service
incentive leave of 5 days with pay.
Section 3. Definition of certain terms. Rule V, Book III

AT LEAST 1 YEAR OF SERVICE – service within 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 1 year.
 This is similar to Vacation Leave with pay in a sense that during those days an employee is not
required to work but is still paid during such period of absence.
 The Labor Code does not require the employer to provide Vacation leave with pay.
 The Labor Code does not limit an employer from giving a Vacation leave with pay.
 So, it possible that an employer may grant vacation leave with pay to its Employees.
When they so provide, are they still obliged to give the Service Incentive Leave?
No more, provided that the Vacation Leave with pay given to the employees is equivalent to the
Service Incentive Leave required by law.

 78
 Regarding sick leave with pay, the Labor Code does not require the employer to give such to its
employees. But the employer may give it voluntarily.
When can the Service Incentive Leave be availed of by the employee? What particular month of
the year?
Service Incentive Leave can be availed of at anytime in a given year. Availment thereof is lodged with
the employees’ choice subject to the approval by the employer, so as not to interrupt business operation.
Differentiate Service Incentive Leave from Vacation Leave
Service Incentive Leave Vacation Leave

Provided under the law (Article 95, LC). Is not provided under the law.
Matter of right. Not a matter of right.
Convertible to cash if not used. On the other hand, it is upon the employer to
decide whether or not to convert unused vacation
leave of his employees to cash. Once granted, the
employer has absolute right to regulate it with
respect to forfeiture or convertibility to cash.
Cannot be waived. It can be waived.
As a requirement, at least 1 year of service is needed On the other hand, the requirements to be entitled
to be entitled to service incentive leave. to vacation leave may differ, depending upon the
policy or practice of the company or the employer.
Usually given to employees who have become
regular or permanently employed.
Purposes: Purpose:
(a) For the benefit and welfare of the employee To afford to a laborer a chance to get a much
(working is always stressful, hence the needed rest to replenish his worn out energies and
provision relieves the worker from his job for a acquire a new vitality to enable him to efficiently
maximum of 5 days upon the condition that he perform his duties and not merely to give him
has worked for at least 1 year). additional salary or bounty.
(b) A way of showing, on the part of the employer,
to his workers his appreciation for their loyalty
to the company (continued service).
Assuming that Service Incentive Leave is not availed of by the EE, will that be forfeited?
No because the Labor Code provides that it is commutable to its cash equivalent.
 When not availed of during a given year, the Labor Code says that it shall be given at the end of the year.
So if not availed of, the SIL can be commuted to cash. This can be demandable by an employee assuming
that the employer does not provide any vacation leave with pay of 5 days.
Section 5. Treatment of Benefit. Rule V, Book III

The service incentive leave shall be commutable to its money equivalent if not used or exhausted at
the end of the year.
Cases: Service Incentive Leave
Fernandez vs. NLRC

285 SCRA 175
Supreme Court reiterated that the employees may avail service incentive leave after rendering 1
year of service.
Supreme Court emphasized that the Labor Code does not prohibit the commutation of service
incentive leave to cash, unlike a vacation leave with pay. Since this vacation leave is not statutorily given,
this cannot be commutable to cash. When not availed of by the employee at any given year, this

 79
(vacation leave) may be forfeited by the employer unless the same employer provides that the same may
be commutable.
If the employer does not grant service incentive leave, he violates the law. If not availed by the
employee, the service incentive leave may be converted to cash. If unpaid or outstanding, it accumulates
and becomes a money claim.
Sobrepena vs. CA
280 SCRA 476
Upon retirement of the petitioner, he asked for the commutation of his unused vacation leave
credits. Under the company policy only employees who have not used their vacation leave because they
were not allowed by the company to go on vacation due to work requirement, may commute their unused
vacation leave. The petitioner has not shown that he was not allowed to enjoy his vacation leave.
Issue is whether Vacation Leave is commutable to cash or not.
Supreme Court held that commutation of Vacation Leave with pay is a prerogative of the ER and
the ER is given the leeway to impose the conditions thereof because this is not a standard required
imposed by law.
RULING: In the grant of vacation leave privileges to employees, the employer is given the lee-way
to impose conditions on the entitlement to and commutation of the same, as the grant of vacation leave
is not a standard of law, but a prerogative of management.
Is the petitioner in this case upon retirement as president of the respondent Pacific
Memorial Plans, Inc. entitled to cash commutations of unused vacation leave benefits?
In the grant of vacation leaves privileges to employees, the employer is given the leeway to
impose conditions on the entitlement to and commutation of the same, as the grant of vacation leave is
not a standard of law, but a prerogative of management. The purpose of vacation leave is to afford a
laborer a chance to get a much needed rest to replenish his worn out energies and acquire new vitality to
enable him to efficiently perform his duties, and not merely to give him additional salary or bounty. This
privilege must be demanded in its opportune time and if he allows the years go by in silence, he waives it.
It becomes a mere concession or act of grace of the employer. [The company policy in this case was
upheld by the Court. The policy provided for only one instance wherein an employee may be allowed to
have his unused vacation leave commuted into cash and that is when that employee is not allowed by the
company to enjoy his vacation leave, thus giving the employee the option either to encash the unused
leave or to carry it over to the next year.]
SERVICE CHARGES
Article 96. Service charges.

All service charges collected by hotels, restaurants and similar establishments shall be distributed at
the rate of 85% for all covered employees and 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.
Imposed by what kind of establishment?

(a) Hotels,
(b) Restaurants and
(c) Similar establishments
 Service Charges are not similar to the Service Incentive Leave. While both are special labor standards
benefits, service charges are ‘special’ because the grant of service charges applies to purely service
establishments.
Section 1. Coverage. Rule VI, Book III

This rule shall apply only to establishments collecting service charges such as
(a) Hotels,
(b) Restaurants,
(c) Lodging houses,
(d) Night clubs,
(e) Cocktail lounge,
(f) Massage clinics,
(g) Bars
(h) Casinos and gambling houses, and
(i) Similar establishments, including those entities operating primarily as private subsidiaries of the
government.
 80
Section 2. Employees Covered. Rule VI, Book III

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 the powers or
prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall,
discharge, assign, discipline employees or to effectively recommend such managerial actions. All employees
not falling within this definition shall be considered as rank-and-file employees.
Section 3. Distribution of Service Charges. Rule VI, Book III

All service charges collected by covered employees 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 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. Rule VI, Book III

The shares referred to herein shall be distributed and paid to the employees not less than once every
2 weeks or twice a month at intervals not exceeding 16 days.
Section 5. Permanency of Service Charges. Rule VI, Book III

In case the service charge 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 12 months immediately preceding the abolition or withdrawals of such charges.
Section 6. Relation to Agreements. Rule VI, Book III

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. Rule VI, Book III

This rule shall be without prejudice to existing and future collective bargaining agreements. Nothing
in this rule shall be construed to justify the reduction or diminution of any benefit being enjoyed by the
employee at the time of effectivity of this Rule.
 The implementing rules provide that in case the service charge is abolished, the share of the 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 or withdrawal of such charges.
Salazar vs. NLRC

256 SCRA 273
Labor standards benefits are not required to those as mentioned in Article 82. If given to those
who are not entitled thereto, it may be taken from them especially if it was not consistent, deliberate, in
disregard what the employer thought what the employee was entitled to.
Petitioner was a construction project engineer. His services were pre-terminated. Is
he entitled to overtime pay for work which he has rendered beyond 8 hours for the period he
worked for the employer?
No, he is not entitled to overtime pay. Petitioner was a managerial employee and therefore
exempt from the payment of overtime pay, premium pay for holidays and rest days and service incentive
leave pay under the law. In his original complaint, petitioner stated that the nature of his work is
“supervisory engineering”. Although petitioner cannot strictly be classified as a managerial employee
under Article 82 of the Labor Code, nonetheless he is still not entitled to payment of the aforestated
benefits because he falls squarely under another exempt category – officers or members of the
managerial staff. Even if petitioner had already been receiving overtime pay, that does not automatically
denote that he is entitled thereto. It is well and good that he is given overtime pay for overtime services,
but that does not translate into a right on his part to demand payment.
National Sugar Refineries Corporation vs. NLRC

220 SCRA 452
Petitioner owns a corporation fully owned by the government which operates 3 sugar
refineries in the country. One day, petitioner implemented a JEP or Job Evaluation Program
affecting all employees from rank-and-file to department heads. All positions were re-
evaluated and all employees including the members of the respondent union were granted
 81
salary adjustments and increases in benefits commensurate to their actual duties and
functions. Before the JEP, the members of the respondent union were treated in the same
manner as rank-and-file employees and entitled to overtime pay, rest day, and holiday pay.
But with the implementation of the JEP, the members of the respondent union were
considered managerial staff for purposes of compensation and benefits, they enjoyed a 50%
increase in their basic pay, an increased COLA and an allowance for holiday or rest day work.
Two years after JEP implementation, the members of the union filed a case against petitioner
for payment of overtime, rest say and holiday pay invoking Article 100 on Non-diminution of
Benefits. Are they correct?
NO. The Supreme Court found creditable merit for the petitioner. The members of the
respondent union are supervisory employees as defined in Article 212(m) of the Labor Code. But for
purposes of determining whether they are entitled to overtime pay, rest day pay and holiday pay, said
employees should be considered as “officers and members of the managerial staff” as defined under
Article 82, Book III of the Labor Code and amplified in Section 2 Rule I Book III of the Rules
Implementing the Labor Code. Perforce, they are not entitled to the mentioned benefits. The distinction
made by the NLRC on the basis of whether or not the union members are managerial employees, to
determine the latter’s entitlement to the questioned benefits, is misplaced and inappropriate. It is
admitted that that these union members are supervisory employees and this is one instance where
nomenclatures or titles of their jobs conform with the nature of their functions. Hence, to distinguish
them from a managerial employee as defined in Article 82 or 212(m) of the Labor Code, is puerile and
inefficacious. The controversy actually involved here seeks a determination of whether or not these
supervisory employees ought to be considered as officers and members of the managerial staff. The
distinction therefore should have been made along that line and its corresponding conceptual criteria.
The payment of the benefits to the employees did not ripen into a contractual obligation. Prior to the
JEP, they could not be categorically classified as officers and members of the managerial staff considering
that they were treated merely on the same level as rank-and-file. Consequently, the payment thereof
could not be constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn by
the petitioner. To be considered as such, it should have been practiced over a long period of time, and
must be shown to have been consistent and deliberate. The test requires a showing that the employer
agreed to continue giving the benefits knowing fully well that said employees are not covered by the law
requiring payment thereof. In the case at bar, respondent union failed to establish that petitioner has
been motivated or is wont to give these benefits out of pure generosity.
Quebec, Sr. vs. NLRC

301 SCRA 627
Petitioner owns a transportation company. Private respondent [Antonio Quebec],

brother of the petitioner was hired by the company as inspector and liaison officer. He was
thereafter dismissed. Another private respondent [Pamfilo Pombo] was likewise hired by the
company as driver-mechanic and co-manager of Antonio Quebec. He was likewise dismissed.
Are they entitled to 13th month pay, overtime pay and service incentive leave?
No they are not entitled to any of the above-mentioned benefits. Inasmuch as they have
admitted in their affidavits that they exercised managerial or supervisory powers in their jobs, they cannot
avail of those benefits. This case is a reiteration of SALAZAR VS NLRC that although the employees in
this case were not strictly be classified as managerial employees under Article 82 of the Labor Code and
Section 2(b) Rule I Book III of the Omnibus Rules, they are still not entitled because they fall squarely
under another exempt category – “officers and members of the managerial staff” as defined under
Section 2(c) Rule I Book III of the Rules.

 82
DIFFERENT METHODS OF FIXING COMPENSATION
Significance
These methods of fixing employee’s compensation are significant because many labor standard
provisions provide for exceptions or reduces the rate of benefits for employees who are being paid according
to a particular method such as those paid on straight commission, or by the job or by the results. The
foregoing discussion is premised on the fact that an employer-employee relationship exists and that the only
difference lies in the method by which the employee’s compensation is fixed.
1. Compensation based on Time Spent

a. monthly paid
b. daily paid
2. Payment on a task or job basis
3. Payment based on piece-rate basis
4. Commission basis
5. Boundary System
1. Compensation based on Time Spent
a. monthly paid - are those employees who are paid all the days of the year
Under the Worker’s Statutory Handbook, monthly-paid employees refer to those who are paid
every day of the month, including unworked rest days, special days and regular holidays. Their
salary is for 30 days.
Applicable daily rate x 365

---------------------------------------- = Equivalent monthly rate
12
There are 365 days in the year, and you are paid every day of the year, you are a monthly
paid employee. Short of that, you are a daily paid employee
b. daily paid - are those that are paid only for days actually worked
According to the Workers’ Statutory Handbook, daily paid employees refer to those who are
paid on the days they actually worked, except unworked regular holidays when they are paid their
basic wage, is they are present or on leave with pay on the working day before the regular holiday.
 Daily-paid employees (DPE’S) are paid according to the number of hours worked each day.
They may be paid a monthly sum, yet they are daily-paid, not monthly-paid employees.
Examples of Daily Paid Employees are:

salesladies,
bank tellers,
service crew of fastfood chains.
 The advantages of paying employees daily are:

1. If the employee does not work on a particular day, like on his rest day or on special
days, the employer does not have to pay him. The “Principle of No Work No Pay” so
dictates.
2. If there is a decrease in the demand, the employer may require his employees not to
report for work on certain days, or where there has been a work slowdown. Thus,
one does not have to pay them, on the same working principle of “No Work, No Pay”.
2. Payment on a task or job basis
An employee is considered paid according to job or task basis when a flat or fixed sum is paid for
each particular job or task completed, without regard to the number of hours actually spent in the
performance or completion of the work.
Example: The paving or asphalting of roads per kilometer

In mass housing projects, per house or per unit constructed or completed
Digging of ditches per cubic meter

 83
 Note that the payment of compensation according to job or task basis should not be confused with
independent contractorship. The former is merely a method of fixing compensation and does not assure
the existence of an employment relationship. The fact that an employee is paid in such manner merely
describes the method by which his compensation is paid, and does not describe the existence of an
employer-employee relationship.
At what instances can you pay an employee on a job or task basis?

One cannot just pay his employees according to this method because the workers would then be
considered workers by result, exempting them from certain labor standards benefits. Whereas, if he
would be paid daily (time spent), he would be entitled to such benefits.
Requisites:
1. The work must be susceptible of being segregated into standardized and distinct units, each known
as a “task” or “job”;
o Example, in the paving of roads by kilometer, you spend quite an effort in making a kilometer
of paved roads. The succeeding units by kilometer, can be said as tasks or jobs.
2. The nature of the job or task is such that the expenditure of time, materials and efforts for each is
substantially the same as for any other;
o Here, there are the same number of workers and materials per unit of work and the employee
is paid depending upon the nature of the work done.
Cases: Payment By Result
Pulp and Paper vs. NLRC

279 SCRA 408
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 RTWPB.
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 non-time work.” The same statutory provision also states that the wage rates
should be based, preferably
o On time and motion studies, or
o Those arrived at in consultation with representatives of workers’ and employees’
organizations.
In the absence of such prescribed wage rates for piece-rate workers, the ordinary minimum
wages rates prescribed by the RTWPB should apply. This is in compliance with Section 8 of the Rules
Implementing Wage Order NCR-02 and NCR-02-A – the prevailing wage order at the time of dismissal
of private respondent.
Labor Congress of The Philippines vs. NLRC

290 SCRA 509
As to holiday pay, premium pay, 13 th month pay and service incentive leave which the
Labor Arbiter failed to rule on but which the petitioners prayed for in their complaint, we hold that
petitioners are so entitled to these benefits.
3 Factors lead us to conclude that petitioners, although piece-rate workers, were
regular employees of private respondents:
1. As to the nature of petitioners’ tasks, their job of repacking snack food was necessary or
desirable in the usual business of private respondents, who were engaged in the
manufacture and selling of such food products;
2. Petitioners worked for private respondents throughout the year, their employment not having
been dependent on a specific project or season; and
3. The length of time that petitioners worked for private respondents.
Thus, while the petitioners’ mode of compensation was on a “per piece basis,” the status and
nature of their employment was that of regular employees.
As to overtime pay, the rules, however, are different. According to Section 2(e), Rule I, Book
III, workers who are paid by results including those who are paid on piece-work, takay, pakiao, or task
basis, if their output rates are in accordance with the standards prescribed under Section 8, Rule VII,
Book III, or where such rates have been fixed by the Secretary of Labor in accordance with the
aforementioned section, are not entitled to receive overtime pay.
Here, private respondents did not allege adherence to the standards set forth in Section 8 nor with
the rates prescribed by the SOLE. As such, petitioners are beyond the ambit of exempted persons and
are therefore entitled to overtime pay.

 84
San Miguel Jeepney Services vs. NLRC

265 SCRA 35
Public respondent had found that the private respondents – drivers, dispatchers and mechanic – to
be regular employees, and, petitioners yielded to said ruling, terming it “tinged with reason and
authority.” But even if they had not conceded thus, it is obvious that public respondent is correct.
The rationale for this ruling is simply that the complainants/private respondents were
unarguably performing work necessary and desirable in the business of SMJS. Without the
services rendered by private respondents, petitioners could not have conducted their business of
providing transportation services within the naval base. This plus the fact that private respondents had
each rendered from 2 to 8 years of service cause them to come squarely within the ambit of Article
280 of the Labor Code; beyond dispute, they were not only employees, but regular employees, as
correctly held by public respondent.
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. Rather, “the
primary standard, x x x, of determining a regular (as against casual) employment is the reasonable
connection between the particular activity performed by the employee in relation to the usual business
or trade of the employer. The TEST is whether the former is usually necessary or desirable in the usual
business or trade of the employer. The connection can be determined by considering the nature of the
work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if
the employee has been performing the job for at least 1 year, even if the performance is not
continuous or merely intermittent, the law deems the repeated and continuing need for its performance
as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the
employment is also considered regular, but only with respect to such activity and while such activity
exists.”
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 can be considered as 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.
Villuga vs. NLRC

225 SCRA 537
The respondent Commissioner is in error. The mere fact that petitioners were paid on a piece-rate
basis is no argument that herein petitioners were not employees. The term “wage” has been broadly
defined in Article 97 as remuneration or earnings, capable of being expressed in terms of money
whether fixed or ascertained on a time, task, piece or commission basis x x x.
The facts of this case indicate that payment by the piece is just a method of compensation and
does not define the essence of the relations. That petitioners were allowed to perform their work at
home does not likewise imply absence of control and supervision. The control test calls merely for the
existence of a right to control the manner of doing the work, not the actual exercise of the right.
Tailors and similar workers hired in the tailoring department although paid weekly wages or piece-
work basis are employees not independent contractors.
3. Payment based on piece-rate basis
A worker is said to be paid his compensation according to piece-rate basis when he is 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.
An employer can pay his employees according to piece-rate basis only in the following
circumstances:
1. The finished products are things, articles or commodities that are physically distinct or fungible such
that one unit is much like any other in value and physical qualities;
2. The labor contributed by each employee or worker to a particular process or phase of production is
determinable and separable from that contributed by the others;
3. The value of the labor input in any particular stage is standard. The worth is the same regardless
of which particular employee or worker does it.

 85
 Distinguished from job or task basis, in piecework, each unit or piece is completed or performed by
one worker alone. In job or task basis, two or more workers cooperate and work together to perform the
job or task.
 Distinguished from time spent, the earnings in both are fairly certain, because they are paid upon
completion of the period in time spent, and upon completion of the task or unit in case of payment by
result. In time spent, the effort, regardless of the outcome or result, must be paid or compensated. In
piecework or payment by result, acceptable and completed outputs are required as a basis of
payment. Hence, the payment of wages is geared towards not merely to the effort, but likewise to the
results of such effort. The workers in payment by result are paid according to the units produced or the
resultant output, regardless of the time spent.
 In the case of Pulp and Paper, Inc. vs. NLRC, the Supreme Court said that in the absence of wage
rates based on time-and-motion studies determined by the SOLE or submitted by the employer to the
SOLE for his approval, the wage rates for piece-rate workers must be based on the applicable daily
minimum wage rate determined by the Regional Tripartite Wages and Productivity Board. Furthermore,
the Labor Code provides:
Article 101. Payment by Results

The Secretary of Labor shall regulate the payment of wages by results, including
pakiao, piecework and other non-time work, in order to ensure the payment of fair and
reasonable wage rates, preferable through time-and-motion studies, a consultation with
representatives from workers’ and employers’ organizations.
Also, the Rules clearly state: [Section 8, Rule VII, Book III]
Section 8. Payment by Results

(a) On petition of any interested party, or upon its initiative, the Department of Labor
and Employment shall use all available devices, including the use of time-and-
motion studies and consultations with representatives of employers’ and workers’
organizations, to determine whether the employees in any industry or enterprise
are being compensated in accordance with the minimum wage requirements of this
Rule.
(b) The basis for the establishment of rates for piece, output or contract work shall be
performance of an ordinary worker of minimum skill or ability.
(c) An ordinary worker of minimum skill or ability is the average worker of the lowest
producing group representing 50% of the total number of employees engaged in
similar employment in a particular establishment, excluding learners, apprentices
and handicapped workers employed therein.
(d) Where the output rates established by the employer does not conform with the
standards prescribed herein, or with the rates prescribed by the DOLE in an
appropriate order, the employees shall be entitled to receive under such prescribed
standards or rates and that actually paid them by employer.
4. Commission basis
Workers who are paid on commission basis are those who are paid a percentage of the money
received in a sale or other transaction paid to the agent responsible for the business.
 If you are a worker paid on a commission basis, there may or may not be an employer-employee
relationship. The Four-Fold Test must be used to determine if there really is such relationship.
Remember that the methods of fixing compensation do not automatically imply or guarantee that there
exists an employer-employee relationship between the laborer and the person who he works for. The
Test is the determinant.
 Common examples would be insurance agents or sales agents who are paid a certain percentage of
their gross sales. There are also those who are paid purely on a commission basis. These workers are
not entitled to 13th month pay as they are expressly exempt therefrom, like barbers and taxicab drivers.
 There are no hard and fast rules in determining whether or not an employee is paid on a commission
basis. Moreover, the regularity or irregularity of an employment does not affect the method of fixing his
compensation. There are different criteria in determining whether or not they are regular workers.
 Commissions are intended to spur effort and efficiency, since compensation is payable only on the
resultant proceeds.
 86
COMMISSION – is the recompense compensation or reward of an agent, salesman, executor, trustee,

receiver, factor, broker or bailee when the same is calculated as a percentage on the amount of his
transactions or on the profit to the principal.
 The mere fact that the employees were paid on commission basis does not mean affect or change
their status are 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 but the
reasonable connection between the particular activity performed by the employee in relation to the usual
business or trade of the employer. This was what the Supreme Court said in the case of San Miguel
Jeepney Service vs. NLRC. Employees in this case, 23 of them, worked for SMJS who had a contract
with the US Naval Base Facility. They were to provide transportation services to the personnel of the
facility. The contract expired and the employer refused to renew it. Employees said that they are entitled
to security of tenure. The LA said they weren’t because of the fact that they are paid on purely
commission basis. The Supreme Court ruled in favor of the employees and said that they are entitled to
security of tenure and their services may be terminated only for causes provided by law. Moreover, being
regular employees, they are likewise entitled to the protection of minimum wage statutes.
5. Boundary System
The personnel of public utility vehicles pay a fixed charge per day or a fraction thereof to the
employer and then take, as their earnings, the excess of the gross proceeds for the day over the
“boundary fee” and the expenditures for running the vehicle.

 87
THIRTEENTH MONTH PAY LAW

(PD 851: Requiring All Employers To Pay Their Employees 13th Month Pay)
Whereas:
1. It is necessary to further protect the level of real wages from the ravage of world-wide inflation;
2. There has been no increase in the legal minimum wage rates since 1970;
3. 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.
Before Memorandum Order 28 by President Corazon Aquino:
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 the employment, a 13 th month pay not later
than December 24 of every year.
After Memorandum Order 28:
Section 1.
All employers are hereby required to pay all their rank-and-file employees a 13 th month pay not
later than December 24 of every year.
 The salary ceiling of P1,000 has already been removed by Memorandum Order 28.
 All rank-and-file employees are now entitled to a 13 th month pay regardless of the amount of the basic
salary they receive in a month, if their employers are not otherwise exempted from the application of PD
851. Such employees are entitled to the benefits regardless of their designation or employment status,
and irrespective of the method by which they are paid, provided that they have worked for at least one
month during a calendar year.
13TH MONTH PAY – shall mean one-twelfth (1/12) of the basic salary of an employee within a calendar
year.
BASIC SALARY – shall include ALL remunerations and earnings paid by an employer to an employee for
services rendered, but may NOT INCLUDE:
 Cost of living allowances granted pursuant to PD 525 or LOI 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].
 13th month pay are paid to rank and file employees.
Rank-and-file employees
The Labor Code distinguishes a rank and file employee from a managerial employee. It provides
that a managerial employee is one who is vested with the powers and 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 are considered rank-and-file employees.
Amount and Payment of the 13th month pay

The minimum 13th month pay required by law shall not be less than 1/12 of the total basic
salary earned by an employee within a calendar year. The required 13th month pay shall be paid
not later than December 24 of each year.
An employer however may give to his employees ½ of the 13 th month pay before the opening of
the regular school year and the other ½ not later than December 24 of every year.
The frequency of payment of this monetary benefit may be the subject of agreement between the
employer and the recognized collective bargaining agent of the employees.
Employers covered
PD 851 shall apply to all employers, except to:
1. 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;

 88
2. Employers already paying their employees a 13 th month pay or more in a calendar year or “its
equivalent” [at the time of issuance];
 “Its equivalent” shall include Christmas bonus, mid-year bonus, cash bonuses, and
other payments amounting to not less than 1/12 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 the required 1/12 of the employee’s basic salary, the
employer shall pay the difference.
3. Employers of household helpers and persons in the personal service of another in relation to such
workers;
4. Employers of those who are paid on purely commission basis, boundary or task basis, and those who
are paid in a fixed amount for performing specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on a piece rate basis in which case, the
employer shall grant 13th month pay to such workers.
 “Workers on a piece-rate basis” are those who are paid a standard amount of
money for every piece or unit of work that is more or less regularly replicated, without
regard to the time spent in producing the same.
 Therefore, workers paid by result are not entitled to 13th month pay.
 Note that when we speak of piece rate basis, it is simply a method with which an
employee’s wages are paid. What is determinative is the existence of an employer-
employee relationship through the four-fold test, especially the control test.
There may be instances when these employees paid on a piece rate basis may not be
employees of the employer. But if their work is supervised not only with respect to
the method but also as to the result, they shall be classified as employees of the
employer.
 In the case of Villuga vs. NLRC the Supreme Court explained, “payment by the
piece is just a method of compensation and does not define the essence of an
employment relationship.” That petitioners were allowed to work at home does not
likewise imply absence or control and/or supervision. The control test calls merely for
the existence of the employer’s right to control the manner of doing the work, not
the actual exercise of the right. They are entitled to 13th month pay.
Note that before the amendment, Distressed Employers were excluded from paying their employees 13 th
month pay.
Quebec, Sr. vs. NLRC, 301SCRA 627

Reiterates that 13th month shall be paid to all rank and file employees
For purposes of 13th month pay, there are only 2 kinds of employees:
1. Managerial
2. Rank and file
 If an employee has rendered at least one month of service during the calendar year, you are entitled to
13th month pay
 Note: Those who are paid on a piece rate basis are an exception to an exception
Therefore, not all employers of those who are PAID BY RESULTS are exempted from 13 th-month pay.
Covered under the law are those that are paid on a piece-rate basis
Kinds of Workers who are paid by results:

(a) Those whose time and performance is supervised by the employer and
(b) Those whose time and performance is unsupervised by the employer.
Villuga vs. NLRC

225 SCRA 537
Are piece-work employers entitled to thirteenth month pay?

The employees are sewers, repairmen and ironers
HELD: employers just like tailors who are paid on a piece-rate basis are entitled to 13 th-month pay
The respondent Commissioner is in error. The mere fact that petitioners were paid on a piece-rate
basis is no argument that herein petitioners were not employees. The term “wage” has been broadly defined
in Article 97 as remuneration or earnings, capable of being expressed in terms of money whether fixed or
ascertained on a time, task, piece or commission basis x x x.
 89
The facts of this case indicate that payment by the piece is just a method of compensation and
does not define the essence of the relations. That petitioners were allowed to perform their work at home
does not likewise imply absence of control and supervision. The control test calls merely for the existence of a
right to control the manner of doing the work, not the actual exercise of the right.
Tailors and similar workers hired in the tailoring department although paid weekly wages or piece-
work basis are employees not independent contractors.
Are barbers and manicurists entitled to 13th-month pay?

Yes. They are not excluded from the coverage. They are employees. They are not independent
contractors or managerial employees especially since the law provides that those who are paid on a piece
rate basis are entitled to 13th-month pay (Case: Corporal Sr. vs. NLRC 341 SCRA 669)
How much is the MIMIMUM 13th month pay?

1/12 of the total basic salary EARNED during the calendar year (it is possible that the employee
had absences)
BASIC SALARY – rate of pay for a standard work period exclusive of other payment such as overtime and
other bonuses (therefore, supplements are not included for purposes of computing the 13 th-month pay)
Boie-Takeda Chemicals vs. Dela Serna

228 SCRA 329
Whether or not the commission should be included in the computation of the 13 th month pay. It
turned out that the commission was more that the fixed salary paid to the employee.
HELD: The commission paid to the medical representatives where more in the nature of productivity
or incentive bonus
There was a finding in one of the inspections of petitioner’s premises that it has not been
including the commissions earned by its medical representatives in the computation of their 13 th
month pay. Employer-petitioner says commissions should not be included in the computation
because the law speaks of regular or basic salary and thus excludes all other remunerations not
part of the regular salary. Is he correct?
Yes, commissions do not form part of the “basic salary”. In remunerative schemes consisting of a
fixed or guaranteed wage is patently the “basic salary” for this is what the employee receives for a standard
work period. Commissions are given for extra efforts exerted in consummating sales or other related
transactions. They are, as such, additional pay, which the Supreme Court has made clear do not form part of
the “basic salary”.
Philippine Duplicators vs. NLRC
Whether or not the commission should be included in the computation of the 13 th month pay. It
turned out that the commission was less than the fixed salary paid to the employee.
HELD: The commission is part of basic salary
The order of the Labor Arbiter directed the petitioner to pay 13 th month pay to private
respondents computed on the basis of heir fixed wage plus their sales commissions. The
Supreme Court upheld said decision. Could this decision reversed or abandoned the BOIE-
TAKEDA ruling?
NO. The salesmen’s commissions, comprising a pre-determined percent of the selling price of the
goods sold by each salesman, were properly included in the term “basic salary” for purposes of computing
their 13th month pay. The 3rd division of the Supreme Court correctly held that the sales commissions were
part of the basic salary structure of Philippine Duplicators’ employees-salesmen. These commissions were not
overtime payments nor profit-sharing payments, nor any other fringe benefit. In BOIE-TAKEDA (BT), the so-
called commissions paid to or received by medical representatives of BT were excluded from the term “basic
salary” because these were paid to the employees as “productivity bonuses”. These payments were
characterized as additional monetary benefits not properly included in the term “ basic salary” in computing
their 13th month pay. Productivity bonuses are generally tied to the productivity or capacity for revenue
production of a corporation. Such bonuses have no clear, direct or necessary relation to the amount of work
actually done by each employee. A bonus is an amount granted and paid ex gratia to the employees. Its
payment constitutes an act of enlightened generosity and self-interest on the part of the employer rather than
as a demandable or enforceable obligation.
Phil. Agricultural Commercial And Industrial Workers Union vs. NLRC

247 SCRA 256
This case involved drivers and bus conductors of a bus company who are paid on a commission basis
on top of their guaranteed basic minimum pay
Should the commission be included in the computation of 13th month pay?

 90
HELD: Yes. They are not paid purely on commission and the fixed salary of eight hours of work is
more than the commission
Petitioner instituted a claim against the employer VALLACAR TRANSIT for the payment of the
13th month pay in behalf of the drivers and conductors of the employer. The employer said that
the drivers and conductors are compensated on a purely commission basis so they are not
entitled to 13th month pay pursuant to the exempting provisions of the implementing rules of the
13th Month Pay Law. The CBA also prohibited the drivers and conductors paid purely on
commission from receiving 13th month pay. Who is correct?
The petitioner in this case is correct. Every employee receiving a commission in addition to a fixed or
guaranteed wage or salary is entitled to 13th month pay. For purposes of entitling rank-and-file employees a
13th month pay, it is immaterial whether the employees concerned are paid a guaranteed wage plus
commission or commission with a guaranteed wage inasmuch as the bottom line is that they receive a
guaranteed wage. This is correctly construed by Explanatory Bulletin 86-12 by the then MOLE. What is
controlling is not the label attached to the remuneration but the nature of the remuneration and the purpose
for which the 13th month pay was given: to alleviate the plight of the working masses who are receiving low
wages. In sum, the 13 th month pay of the drivers and conductors who are paid a fixed or guaranteed wage in
case their commissions be less than the statutory minimum, and commissions only in case where the same is
over and above the statutory minimum, must be equivalent to 1/12 of their earnings during the calendar year.
If the employer fails to pay, what is the remedy of the employee?

The employee can sue the employer for non-payment of the 13 th month pay. This is in the nature
of a money claim.
If employee retired or was terminated for cause?

The retired or terminated (for cause) employee is still entitled to 13 th month pay. The employer
cannot forfeit it. There is no forfeiture clause in the law.
The law provides:

An employee who has resigned or whose services are terminated at any time before the time of
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 form the time he started working during the calendar year up to the time of
his resignation or termination from service. Thus, if he worked from January up to September, his
proportionate 13th month pay should be equivalent of 1/12 of his total basic salary he earned during
that period.
The payment of the 13th month pay may be demanded by the employee upon the cessation of
employer-employee relationship.
This is consistent with the principle of equity as the employer can require the employee to clear
himself of all benefits due him from the termination of the relationship.

 91
PATERNITY LEAVE ACT of 1996

(RA 8187, June 11, 1996)
- Refers to the benefits granted to a married male employee allowing him not to report for work for 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 nursing of the newly born child.
Entitlement:
Notwithstanding any law, rules and regulations to the contrary, any married male employee in the public
and private sectors shall be entitled to a paternity leave of 7 days with full pay for the first 4
deliveries of the legitimate spouse with whom he is cohabiting.
What are the male employee’s benefits under RA 8187?

1. 7 calendar days paternity leave.
2. The pay shall consist of his basic salary, all allowances and other monetary benefits.
 Unlike Service incentive leave, Paternity Leave is NOT commutable to cash. In the event that the paternity
leave benefit is not availed of, said leave shall not be convertible to cash. Note that the purpose is to lend
support to his wife during her period of recovery and/or nursing of the newly-born child. The conversion of
the leave into money would defeat the very purpose of the law.
Penal Sanction
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 P25,000 or
imprisonment of not less than 30 days nor more than 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 therefore.
Conditions for Entitlement

3. He is employed at the time of delivery of the child;
4. He is cohabiting with his spouse at the time she gives birth or suffers a miscarriage;
5. He has notified the employer of the pregnancy of his wife and her expected date of delivery
subject;
6. His wife has given birth, suffered an abortion [unintentional]
 Note that as of date (November 26, 2001), there is NO JURISPRUDENCE YET regarding paternity leave.
How is notification by the qualified male employee made?

Section 4. Notification.
As soon as the married male employee learns that his spouse is pregnant:
1.He shall inform his employer of such pregnancy and the expected date of delivery within a reasonable
period of time;
2.He shall accomplish a Paternity Notification Form to be provided by the employer and submit the
same to the latter, together with the copy of his marriage contract, or where not applicable, any
proof of marriage. [This notification requirement shall not apply in cases of miscarriage or
abortion.]
3.Any employee who has availed of the paternity leave 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 the actual date of childbirth, miscarriage or abortion as the case may be.
Availment of Paternity Leave by a Male (papa) Employee:

Revised Implementing Rules and Regulations (March 13, 1997)
Section 5. Availment
Paternity leave benefits shall be granted to the qualified employee after delivery by his wife,
without prejudice to an employer allowing an employee to avail of the benefit before or during the
delivery, provided that the total number of days shall not exceed seven (7) days for each delivery.

 92
Would it include miscarriage? Intentional abortion?

It includes miscarriage which covers spontaneous abortion but not intentional abortion.
 The 7 days refer to calendar days and not to working days.
Are existing benefits credited to the benefits under RA 8187?

Where a male employee is already enjoying the paternity leave benefits by reason of contract, company policy
or collective bargaining agreement, the following rules shall apply:
1. If the existing paternity leave benefit is greater than the benefit herein provided, the greater benefit
shall prevail;
2. If the existing paternity leave is less than that provided herein, such existing benefit shall be adjusted
to the extent of the difference.
However, when a contract, company policy or collective bargaining agreement provides for an emergency or
contingency leave without specific provisions on paternity leave, the paternity leave provided by law shall
apply.
Employee under RA 8187

Employee refers to any person who performs services for an employer and receives compensation therefore,
provided an employer-employee relationship exists between them.
Delivery – refers to childbirth, miscarriage, or abortion.
Spouse – refers to the lawful wife. For this purpose, ‘lawful wife’ refers to a woman who is legally married to
the male employee concerned.
Cohabiting – refers to the obligation of the husband and wife to live together.

 93
RETIREMENT PAY LAW

(RA 7641)
An amendment of article 287
EFFECTIVITY DATE: JANUARY 7, 1993
It is a social legislation, it has a retroactive effect, if you are qualified under the law.
This was amended by RA 7641 on January 7, 1993 by Senator Ernesto Herrera. Article 287 of the Labor Code
does not purport to impose any obligation on the part of the employer to set up a retirement scheme over and
above those under existing law. Prior to RA 7641, there were no retirement benefits afforded to a retiring
employee if there is none under the Collective Bargaining Agreement.
The law on retirement pay was again amended by RA 8558. It was an act amending Article 287 of the Labor
Code by reducing the retirement age of underground mine workers from 60 years old to 50 years old.
Article 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 the 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 60 years or more, but not beyond 65 years
which is hereby declared the compulsory retirement age, who has served at least 5 years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half monthly
salary for every year of service; a fraction of at least 6 months being considered as one whole year.
Unless the parties provide for broader inclusions, the term “one-half monthly salary” shall mean 15
days plus one-half of the 13 th month pay and the cash equivalent of not more than 5 days of service
incentive leaves.
An underground mining employee upon reaching the age of 50 years or more, but not beyond 60
years which is hereby declared the compulsory retirement age for underground mine workers who has
served at least 5 years as underground mine worker, may retire and shall be entitled to all the retirement
benefits provided under this Article.
Retail, service and agricultural establishments or operations employing not more than 10 employees
or workers are exempt from the coverage of this provision.
Violation of this provision is hereby declared unlawful and subject to the penal provisions provided
under Article 288 of the Code.
Nothing in this Article shall deprive any employee of benefits to which he may be entitled under
existing laws or company policies and practices.
Requisites:
1. He must be an employee at the time of the effectivity of the law.
2. Compliance with the requirement for eligibility under the law:
optional retirement – 60 years with 5 years of service
compulsory retirement – 65 years with no requirement of years of service
Retirement pay under the law

½ month salary for every year of service
15 days +
5 days SIL +
2.5 days (1/12 of 13th month pay)
----------
22.5 days
Thus, this includes the following:

15 days
1/12 of the 13th month pay
cash equivalent of not more than 5 days service incentive leave

 94
 The retirement pay has a broader inclusion than the usual separation pay.
 Note that the Labor Code does not provide for a forfeiture provision in case an employee at the time of
just dismissal is also qualified to receive retirement law. It is obligatory and mandatory as long as the
employee is qualified. This is a labor standard benefit and it must be construed in favor of the employee,
in the absence of a forfeiture clause. This is on a case to case basis.
Is there a group of employees whose retirement age is below that of 60?

Undeground mining employees. Under Republic Act 8558, approved in 1998.
Optional retirement age: 50 years, 5 years of service
Compulsory retirement – 60 years of age
Exempted under the law

(1) Employees of the National Government and its political subdivisions, including government-
owned and controlled corporations, if they are covered by the Covil Service Law and its
regulations;
(2) Employees of retail, service and agricultural establishments or operations regularly employing
not more than 10 employees.
 Note that domestic helpers and persons in the personal service of another were deleted by Department
Order 20 from the enumeration of those exempted under the law.
Labor Advisory on Retirement Pay Law (October 24, 1996)
A. Coverage
RA 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 the part-time employees, employees of service and other job contractors and domestic helpers or
persons in the personal service of another.
Penal sanction for violation of Article 287, as amended

Article 288. Penalties
Except as otherwise provided in this Code, or unless the acts complained of hinges on a question of
interpretation or implementation of ambiguous provisions of an existing collective bargaining agreement, any
violation of the provisions of this Code declared to be unlawful or penal in nature shall be punished with a fine
not less P1,000 nor more than P10,000 or imprisonment of not less than 3 months nor more than 3 years, or
both such fine and imprisonment at the discretion of the Court.
In addition to such penalty, any alien found guilty shall be summarily deported upon completion of
service of sentence.
Any provision of law to the contrary notwithstanding, any criminal offense punished in this Code shall
be under the concurrent jurisdiction of the Municipal or City Courts and the Regional Trial Courts.
Upon acceptance of employment, a contractual employment is established. If a retirement

package is lower than the retirement pay law, which shall govern?
The Collective Bargaining Agreement (CBA) will govern, but the employer must pay for the difference.
May the employer stipulate a lower retirement age?

Yes. Article 287 applies only in the absence of a retirement plan or a CBA stipulating a retirement
benefit, such retirement plan should not be less than what is provided for by law
Pantranco North Express vs. NLRC

259 SCRA 161
The CBA provided that the employee could be retired after 25 years of service
Is it valid?
HELD: It is valid because it allows an employee to retire at an early retirement age
Cabcaban vs. NLRC

GR 120256, August 18, 1997
On March 16, 1993, Hermito Cabcaban, then 63 years old, filed a complaint for retirement benefits
under Republic Act 7641 against Hda. Corazon de Jesus and/or Teodora Cabillo de Guia. Complainant

 95
alleged that he worked at the 50-hectare hacienda, owned by Teodora Cabillo de Guia at Bais, Negros
Oriental, from 1962 to July 1991, 1 performing such jobs as clearing the plantation, planting, weeding,
fertilizing, cutting cane points, canal digging, harvesting/loading, "depol," "gahit," and gathering coconuts.
Respondents moved to dismiss the complaint on the following grounds: first, that complainant's
cause of action had already prescribed; and second, that complainant is also one of the complainants in
RAB-VII-06-0110-92-D, 2 a case for illegal dismissal and reinstatement against the same respondents
pending before another Labor Arbiter.
Respondents, likewise, argued that assuming complainant's action had not prescribed, he still
would not be entitled to any retirement benefits since he was only 48 years old when he was separated
from employment in 1978, well below the 60-year old retirement age prescribed by the Labor Code.
It does not appear that complainant filed any opposition to respondents' appeal.
On June 30, 1994, the NLRC rendered a Decision dismissing the complaint for lack of merit.
On August 29, 1994, complainant filed a Motion for Reconsideration before the NLRC. He pointed
out that in the same Application for Retirement Benefit adduced by respondents, complainant's employer,
Teodora C. de Guia, certified complainant's exact date of separation to be February 28, 1991.
Prior to its amendment, Article 287 of the Labor Code provided as follows:
ART. 287. Retirement. — Any employee may be retired upon reaching the retirement age
established in the Collective Bargaining Agreement or other applicable employment contract.
have earned under existing laws and any collective bargaining or other agreements.
In Llora Motors, Inc. vs. Drilon, we interpreted the provisions of the above article to mean that:
. . . Article 287 not itself purport to impose any obligation upon employers to set up a retirement scheme for
their employees over and above that already established under existing laws. In other words, Article 287 recognizes
that existing laws already provide for a scheme by which retirement benefits may be earned or accrue [sic] in favor of
employees, as part of a broader social security system that provides not only for retirement benefits but also death and
funeral benefits, permanent disability benefits, sickness and maternity leave benefits.
As a consequence of our ruling in the above case, Congress enacted Republic Act 7641, amending
Article 287 of the Labor Code to read as follows:
ART. 287. Retirement. — Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
have earned under existing laws and any collective agreement and other agreements: Provided, however,
That an employee's retirement benefits under any collective bargaining and other agreements shall not be
less that those provided herein.
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.
R.A. 7641 took effect on January 7, 1993. Nevertheless, we did not hesitate to give retroactive
effect to said law in Oro Enterprises, supra, as follows:
RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection
measure and as a curative statute that — absent a retirement plan devised by, an agreement with, or a
voluntary grant from, an employer — can respond, in part at least, to the financial well-being of workers
during their twilight years soon following their life of labor. There should be little doubt about the fact that
the law can apply to labor contracts still existing at the time the statute has taken effect, and that its
benefits can be reckoned not only from the date of the law's enactment but retroactively to the time said
employment contracts have started. . . .
Republic Act 7641 took effect on 07 January 1993, while the appeal of private respondent was till
pending consideration by the NLRC. Still for determination at the time was, among other things, the issue of
whether or not private respondent has, in fact, been effectively retired.
The case of Oro Enterprises, however, does not find application in the instant petition. In CJC
Trading, Inc. vs. National Labor Relations Commission, we enumerated the requirements for the
proper application of Oro Enterprises, as follows:
. . . We read Oro Enterprises as holding that R.A. No. 7641 may be given effect where (1) the
claimant for retirement benefits was still the employee of the employer at the time the statute took effect;
and (2) the claimant was in compliance with the requirements for eligibility under the statute for such
retirement benefits.
The above requisites have not been met in the case at bar.

 96
First, although petitioner's complaint was filed after R.A. 7641 took effect, his application for
retirement benefits with SSS indubitably shows that petitioner was separated from private respondent's
employ on December 31, 1978.
Petitioner's bare and — as noted earlier inconsistent allegations that he was employed by private
respondent through the early 1990s cannot prevail over private respondent's evidence showing that he was
separated from employment in 1978 way before R.A. 7641 took effect in 1993.
Second, petitioner has not shown any employment contract or collective bargaining agreement
which entitles him to retirement benefits. Moreover, his application for retirement benefits states that he
was born in 1930, and thus, only forty-eight (48) years of age when he was separated from private
respondent's employ in 1978. The same document shows that petitioner was employed by private
respondent for a mere four and a half (4½) years, from July 1973 to December 31, 1978. Clearly then,
petitioner is not qualified to an award of retirement pay under Article 287, as amended.
Article 287, as amended, therefore cannot be applied retroactively to favor petitioner.
Neither can petitioner avail of retirement benefits under the old Article 287. As stated earlier,
petitioner has not shown the existence of any collective bargaining agreement or employment contract
which entitles him to such benefits.
Producers Bank vs. NLRC

GR 118069, November 16, 1998
Prefatorily, at the time the instant controversy started, petitioner was placed by the then Central
Bank of the Philippines (now Bangko Sentral ng Pilipinas) under a conservator for the purpose of protecting
its assets. It appears that when the private respondents sought the implementation of Section I Article XI of
the CBA regarding the retirement plan and Section 4, Article X thereof, pertaining to uniform allowance, the
acting conservator of the petitioner expressed her objection to such plan, resulting in an impasse between
the petitioner bank and the private respondent union. The deadlock continued for at least six months when
the private respondent, to resolve the issue, decided to file a case against the petitioner for unfair labor
practice and for flagrant violation of the CBA provisions.
As stated earlier, the Labor Arbiter dismissed private respondent's complaint, on this premise:
"Considering that the Bank is under conservatorship program under which the bank is under the
rule of a conservator, the latter is under no compulsion to implement the resolutions issued by the LMRC. If
he finds that the enforcement of the resolutions would not redound for the best interest of the Bank in
accordance with the conservatorship program, he may not be faulted by such inaction or action."
Petitioner asserts since the employees have retired, as a consequence of which no employee-
employer relationship exists anymore between it and the employees, private respondent no longer had the
personality to file the complaint for them.
Petitioner's contention is untenable. Retirement results from a voluntary agreement between the
employer and the employee whereby the latter after reaching a certain age agrees to sever his employment
with the former. The very essence of retirement is the termination of the employer-employee relationship.
Hence, the retirement of an employee does not, in itself, affect his employment status especially
when it involves all rights and benefits due to him, since these must be protected as though there had been
no interruption of service. It must be borne in mind that the retirement scheme was part of the employment
package and the benefits to be derived therefrom constituted, as it were, a continuing consideration for
services rendered, as well as an effective inducement for remaining with the corporation. It is intended to
help the employee enjoy the remaining years of his life, releasing him from the burden of worrying for his
financial support, and are a form of reward for his loyalty.
When the retired employees were requesting that their retirement benefits be granted, they were
not pleading for generosity but were merely demanding that their rights, as embodied in the CBA, be
recognized. Thus, when an employee has retired but his benefits under the law or the CBA have not yet
been given, he still retains, for the purpose of prosecuting his claims, the status of an employee entitled to
the protection of the Labor Code, one of which is the protection of the labor union. In Esso Philippines,
Inc. v. Malayang Manggagawa sa Esso (MME) , we recognized that while the individual complainants
are the real party in interest in issues involving monetary claims and benefits, the union, however, is not
denied its right to sue on behalf of its members, thus:
"We see no legal impediments to considering this particular matter of retirement benefits to be
within the ambit of Our consistent holding that when it comes to individual benefits accruing to members of
a union from a favorable final judgment of any court, the members themselves become the real parties in
interest and it is for them, rather than for the union, to accept or reject individually the fruits of the
litigation. In the case at bar, the representations of the MME which may result in prejudice to the interests
of any of its individual members in the final judgment being sought to be executed should yield to the
individual decisions of the said members themselves, who are free to choose whichever position suits their
conscience."
Martinez vs. NLRC

GR 118743, October 12, 1998
The employer and employee agreed to change the date of retirement. In consideration, the
employer gave the employee something in return.
The SC said this is valid.

 97
It appears that on June 10, 1977, respondent GMCR, Inc. employed petitioner as assistant credit
and collection manager. At the inception of petitioner's employment, respondent company made it clear that
employees who were not eligible for membership in the bargaining unit and, therefore, not entitled to the
benefits under the collective bargaining agreement, would be paid benefits which were at least equivalent
to, if not higher than, those provided in the collective bargaining agreement.
On September 22, 1981, respondent company promoted petitioner to credit and collection
manager, a position he held until the day of his retirement.
In the course of his employment, petitioner received annual salary increases based on merit and/or
performance. Although the annual salary increases were not given on the exact due dates, they were
retroactively applied to the start of the evaluation period.
However, much to his surprise, petitioner received no salary increase for the period immediately
prior to his retirement. While two (2) of his subordinates were given salary increases of twenty-two percent
(22%) and twenty-one percent (21%) for the period from September 16, 1990 to September 16, 1991, he
was not given a performance evaluation and consequently not granted any salary increase.
Petitioner was examined by Dr. Florencio A. Chavez, the company physician and a pulmonary and
cardiology specialist, and found to be suffering from a "severe restrictive and obstructive pulmonary defect
with no reversible component." He was advised to rest for 120 days. Petitioner took the physician's advice
and went on sick leave from March 1 until July 15, 1992.
In a letter, dated April 10, 1992, to respondent Mark Anthony Javier, president of respondent
company, petitioner applied for optional retirement benefits under the collective bargaining agreement. He
stated that since he would have been in the service of the company for fifteen years on June 10, 1992, he
wished to retire effective July 16, 1992, on which date "the long term sick leave availment as per advice by
the company's physician shall have expired."
Petitioner contends that under the collective bargaining agreement, the option to retire is granted
to retiring employees and not to the company and, therefore, private respondents cannot vary the effective
date of his retirement. On the other hand, private respondents deny that petitioner can claim the benefits of
the collective bargaining agreement considering that he is a managerial employee.
Thus, the question is whether petitioner, who is a managerial employee, can claim retirement
benefits under the collective bargaining agreement, Art. XXIX of which provides:
Section 1. An employee shall be entitled to a retirement benefit plan under the following
conditions:
(a) an employee may retire at his option any time after such employee shall have attained
the age of Fifty Years (50) and whose term of service is ten (10) years or more; and an employee may
retire at his option upon completing twenty-five (25) years of service.
(b) The employee must retire under this plan at the time such employee attains the age of
Sixty-Five (65).
The Labor Code provides:

Article 245. Ineligibility of managerial employees to join any labor organization; right of
supervisory employees. — Managerial employees are not eligible to join, assist or form any labor
organization. Supervisory employees shall not be eligible for membership in a labor organization of the
rank-and-file employees but may join, assist or form separate labor organizations of their own.
As we recently held in United Pepsi-Cola Supervisory Union (UPSU) v. Laguesma :
. . . [T]here is a rational basis for prohibiting managerial employees from forming or joining labor
organizations. As Justice Davide, Jr., himself a constitutional commissioner, said in his ponencia in Philips
Industrial Development, Inc. v. NLRC:
In the first place, all these employees, with the exception of the service engineers and the sales
force personnel, are confidential employees. Their classification as such is not seriously disputed by PEO-
FFW; the five (5) previous CBAs between PIDI and PEO-FFW explicitly considered them as confidential
employees. By the very nature of their functions, they assist and act in a confidential capacity to, or have
access to confidential matters of, persons who exercise managerial functions in the field of labor relations.
As such, the rationale behind the ineligibility of managerial employees to form, assist or join a labor union
equally applies to them.
In Bulletin Publishing Co. Inc. v. Hon. Augusto Sanchez, this Court elaborated on this rationale,
thus:
". . . The rationale for this inhibition has been stated to be, because if these managerial employees
would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in
view of evident conflict of interests. The Union can also become company-dominated with the presence of
managerial employees in Union membership."
To be sure, the Court in Philips Industrial was dealing with the right of confidential employees to
organize. But the same reason for denying them the right to organize justifies even more the ban on
managerial employees from forming unions. After all, those who qualify as top or middle managers are
executives who receive from their employers information that not only is confidential but also is not
generally available to the public, or to their competitors, or to other employees. It is hardly necessary to
point out that to say that the first sentence of Art. 245 is unconstitutional would be to contradict the
decision in that case.
Accordingly, managerial employees cannot, in the absence of an agreement to the contrary, be

allowed to share in the concessions obtained by the labor union through collective negotiation. Otherwise,
they would be exposed to the temptation of colluding with the union during the negotiations to the
detriment of the employer.

 98
However, there is nothing to prevent the employer from granting benefits to managerial employees
equal to or higher than those afforded to union members There can be no conflict of interest where the
employer himself voluntarily agrees to grant such benefits to managerial employees. In the case at bar, at
the beginning of petitioner's employment, he was told that those who are not covered by me CBA would
nevertheless be entitled to benefits which would be, if not higher, at least equivalent to those provided in
the CBA.. That private respondents made such a promise to petitioner is not denied by them.
Petitioner assented to change the date of his retirement from July 16, 1992 to April 30,
1992 in consideration of obtaining an advance payment of P100,000.00 on his retirement pay.
Such agreement is valid. As has been held:
Not all waiver and quitclaims are invalid as against public policy. If the agreement was voluntarily
entered into and represents a reasonable settlement, it is binding on the parties and may not later be
disowned simply because of a change of mind. It is only where there is clear proof that the waiver was
wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face,
that the law will step in to annul the questionable transaction. But where it is shown that the person making
the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the
quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking.
The fact that respondent company still paid petitioner salaries after July 16, 1992 does not detract
from the fact that petitioner voluntarily agreed to advance the date of his retirement. Neither is petitioner's
entitlement to a long term sick leave which he claims was yet to expire on July 16, 1992 a reason for
holding the new date of his retirement invalid. By changing the date of his retirement from July 16, 1992 to
April 30, 1992 in exchange for an advance of P100,000.00 on his retirement pay, petitioner waived his right
to insist on July 16, 1992 as the effective date of his retirement.
The option in optional retirements rests upon the employee
Capili vs. NLRC

G.R. No. 120802. June 17, 1997
THE OPTION TO RETIRE UPON REACHING THE AGE OF, 60 BECOMES THE EXCLUSIVE
PREROGATIVE OF THE EMPLOYEE; EXCEPTION. — It is clear from Policy Instruction No. 25 promulgated on
1 June 1977 by the Secretary of Labor that in the absence of a collective bargaining agreement or company
policy providing for a retirement plan, the option to retire at age 60 could be exercised by either the
employee or the employer. This power of the employer no longer exists under R.A. No. 7641, which
unequivocally provides that the option to retire upon reaching the age of 60 years or more but not beyond
65 is the exclusive prerogative of the employee if there is no provision on retirement in a collective
bargaining agreement or any other agreement or if the employer has no retirement plan.
WHEN AN EMPLOYEE MAYBE DEEMED TO HAVE OPTED TO RETIRE; CASE AT BAR. — By his
acceptance of retirement benefits the petitioner is deemed to have opted to retire under the third paragraph
of Article 287 of the Labor Code, as amended by R.A. No. 7641. Thereunder he could choose to retire upon
reaching the age of 60 years, provided it is before reaching 65 years, which is the compulsory age of
retirement. Also worth noting is his statement that he "had long and unjustly been denied of his retirement
benefits since August 18, 1993." Elsewise stated, he was entitled to retirement benefits as early as 18
August 1993 but was denied thereof without justifiable reason. This could only mean that he has already
acceded to his retirement, effective on such date — when he reached the age of 60 years.
Requisites of retirement.
CJC Trading vs. NLRC
246 SCRA 724
Private respondents Ricardo Ausan, Jr. and Ernesto Alanan were employed by petitioner since 1983
and 1978, respectively, as truck drivers and were paid on a "per trip or task basis." They filed separate
complaints on 23 August 1992 and 15 September 1992, respectively, against petitioner CJC Trading,
Incorporated and/or Ms. Celia J. Carlos for illegal dismissal and non-payment of premium pay for holiday
and rest day, service incentive leave pay and thirteenth month pay. These cases were consolidated.
The award of separation pay is authorized in the situations dealt with in articles 283 and 284 of the
Labor Code, and as well as in cases where there is illegal dismissal and reinstatement is no longer feasible
under Section 4(b), Rule I, Book VI of the Implementing Rules and Regulations of the Labor Code.
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.
The instant case, however, does not fall under any of the above mentioned instances. The facts, as
found by the NLRC, show that private respondents had informed petitioner that they intended to quit their
jobs and this decision was arrived at by private respondents on their own volition. We find no reason and
petitioner has shown none, for departing from the rule that this Court is bound by the findings of fact of the
NLRC, there being no showing that the latter had gravely abused their discretion or otherwise acted without
or in excess of its jurisdiction. There was no dismissal of private respondents by petitioner here. Neither,
upon the other hand, can this be considered a case of abandonment as petitioner claims because the
elements of abandonment are not present. Rather, we have before us a case of voluntary resignation.

 99
An employee who voluntarily resigns is not entitled to separation pay unless otherwise stipulated in
an employment contract or collective bargaining agreement, or sanctioned by established employer practice
or policy. The Labor Code is devoid of any provision which grants separation pay to employees who
voluntarily resign. Neither was there anything in the record that shows that, in the instant case, there is a
collective bargaining agreement or any other agreement or established company policy concerning the
payment of separation pay to employees who resign.
The Court notes that private respondents, in their motion for reconsideration from the NLRC's 29
November 1993 decision prayed for an award of termination pay. Considering that private respondents were
close to the age of sixty (60) at the time they stopped working for petitioner and that they had been in the
employ of petitioner for several years, the Court, taking the view most favorable to private respondents,
considers that this could be deemed to be in effect a prayer for the grant of retirement benefits.
The above amended law took effect on 7 January 1993 and was applied by the Court in the case of
Oro Enterprises, Inc. vs. National Labor Relations Commission where a sixty-five (65) year old
employee filed a claim for retirement pay with her employer in September 1990. A few days later, a
complaint was filed with the Office of the Labor Arbiter, which complaint was eventually resolved by the
Labor Arbiter with an award of retirement benefits in favor of the employee. During the pendency of the
appeal (which involved determination of the issue whether or not the employer-employee relationship
between petitioner and private respondent had persisted or whether it had terminated by resignation of the
employee) in the NLRC, R.A. No. 7641 took effect. The new statute was used a basis by the NLRC for the
grant of retirement benefits to the employee — i.e., service rendered before the effectivity of the statute
was taken into account — and the decision of the NLRC was upheld by this Court. We read Oro
Enterprises as holding that R.A. No. 7641 may be given effect where
(1) the claimant for retirement benefits was still the employee of the employer at the time the
statute took effect; and
(2) the claimant was in compliance with the requirements for eligibility under the statute for such
In the instant case, the complaints of private respondents were still being resolved on the labor
arbiter level when R.A. No. 7641 took effect. However, it was quite clear, and both the Labor Arbiter and
the NLRC so held, that private respondents had ceased to be employees of petitioner, by reason of
voluntary resignation, before the statute went into effect. Moreover, it appears that private respondents did
not qualify for the benefits of R.A. No. 7641 under the terms of this law itself. The Court notes that when
private respondents filed their complaints more than one (1) year after they had been allegedly illegally
dismissed, respondent Ausan, Jr. was fifty-seven (57) years old while respondent Alanan was sixty (60)
years old. That would make Ausan, Jr. fifty-five (55) years old and Alanan fifty-eight (58) years old at the
time their services with petitioner were ended by their resignation. Since the record does not show any
retirement plan or collective bargaining agreement providing for retirement benefits to petitioner's
employees, the applicable retirement benefits to petitioner's employees, the applicable retirement age is the
optional retirement age of sixty (60) years according to Article 287, which would qualify the retiree to
retirement benefits equivalent to one-half (1/2) month's salary for every year of service. Unfortunately, at
the time private respondent stopped working for petitioner, they had not yet reached the age of sixty (60)
years.
We stress, however, that there is nothing to prevent petitioners from voluntarily giving private
respondents some financial assistance on an ex gratia basis.
JV Angeles Construction vs. NLRC

GR 126888, April 14, 1999
Private respondent Pedro Santos was employed in 1969, as a carpenter, by the petitioner, J. V.
Angeles Construction Corporation (Corporation). In 1973, he was promoted to the position of foreman which
he held until his retirement in February 1992 when he was sixty-two (62) years old.
On October 25, 1993, he brought a complaint for retirement benefits and service incentive leave
pay before the NLRC, National Capital Region Arbitration Branch, against the corporation. After the parties
failed to reach an amicable settlement during the conciliatory proceedings of the case, they were required to
submit their respective position papers.
Petitioner's appeal filed with the NLRC on August 14, 1995, assailed the said ruling of the Labor
Arbiter granting retirement benefits to the herein private respondent, by giving Rep. Act. No. 7641
(Retirement Pay Law) a retroactive application although respondent Pedro Santos had retired almost a year
prior to the effectivity of said law on January 7, 1993. It is petitioner's submission that what is applicable is
the ruling laid down in Llora Motors, Inc. v. Drilon wherein the Court held that in the absence of a
collective bargaining agreement or other employment contract, there is no obligation on the part of the
employer to set up a retirement scheme over and above that already established under existing laws. Since
Santos has been receiving his retirement benefits from the Social Security System (SSS), he cannot anymore
ask for additional benefits from his employer in the absence of company practice, policy or contract granting
such benefits.
On May 31, 1996, the Third Division of the NLRC came out with the questioned decision, upholding
the Labor Arbiter's grant of retirement benefits to Pedro Santos.
The petition is impressed with merit.

 100
The pertinent law is Article 287 of the Labor Code, as amended by R. A. 7641.
In Oro Enterprises, Inc. v. NLRC, the court held that R.A. 7641 can be applied retroactively.
"R.A. 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection
employment contracts have started. . . " (emphasis supplied)
In CJC Trading, Inc. v. NLRC , the aforecited doctrine was elaborated upon by enumerating the
circumstances which must concur before the law could be given retroactive effect, to wit:
(1) the claimant for retirement benefits was still the employee of the employer at the time the
statute took effect; and
(2) the claimant has complied with the requirements for eligibility under the statute for such
In the recent case of Philippine Scout Veterans Security and Investigation Agency, et al.
v. NLRC, et al., the Court had occasion to apply the Oro and CJC rulings. In the said case, private
respondent Mariano Federico resigned as a security guard of the security agency on September 16, 1991.
Thereafter, he sought alternative reliefs from his employer, such as termination pay corresponding to his
years of service or retirement benefits. PSVSIA rejected his claim for termination pay on the ground that he
had voluntarily resigned. The alternative claim for retirement benefits was likewise denied because there
was no collective or individual agreement providing for retirement benefits. When subject claims were
formally brought to the Labor Arbiter, the latter sustained the stand of petitioners but directed them to pay
the respondent the previously offered financial assistance in the amount of P10,000.00. The NLRC reversed
the said judgment by giving a retroactive application to the provisions of R.A. 7641.
When it was elevated to this Court on certiorari, the court found that although respondent Federico
had reached the minimum retirement age under the statute, he was no longer an employee of petitioner
PSVSIA when the law took effect. R.A. 7641 could not be applied retroactively in his favor in the absence of
the first circumstance. Consequently, he could not seek the beneficial provisions of the law and must settle
for the petitioners' offer of financial assistance.
In the case under scrutiny, private respondent Santos retired and ceased to be an employee of
petitioner on February 1992, eleven (11) months before the effectivity of R.A. 7641, and he brought his
complaint on October 23, 1993, nine (9) months after the law's effectivity. It is thus decisively clear that the
provisions of R.A. 7641 could not be given retroactive effect in his favor. Consequently, the NLRC erred in
upholding the Labor Arbiter's award of retirement benefits to private respondent.
Oro Enterprise vs. NLRC

238 SCRA 105
In this petition for certiorari, Oro Enterprises, Inc., seeks a reversal of the 22nd March 1993
decision and 29th May 1993 order of respondent National Labor Relations Commission (NLRC) directing
petitioner to pay private respondent Loreto Cecilio retirement pay in the amount of P61,500.00.
Private respondent was first employed by petitioner in August of 1949. After working continuously
with the company for forty one (41) years, private respondent manifested, on 03 September 1990, her
intention to retire from work by filing with petitioner a "Claim for Retirement Pay."
In her claim, private respondent pleaded that "the retirement pay she (was) receiving from the
Social Security System in the total sum of five hundred pesos (P500.00) a month could hardly (suffice to)
meet her daily subsistence. . ."
On 15 September 1990, petitioner wrote private respondent, informing her that it was in no
financial position to give her any retirement benefit apart from the retirement pay she was already receiving
from the Social Security System ("SSS"). Nonetheless, she was offered a house and lot located in San Jose,
del Monte, Bulacan, in accordance with a "plan" which was then still being conceived by the company
president for retiring employees. The offer did not materialize, nor did the proposed company plan come
into being, for one reason or another.
During the pendency of the appeal, or on 07 January 1993, Republic Act ("R.A.") No. 7641 took
effect.
At the time private respondent supposedly ceased to work with petitioner, Article 287 of the Labor
Code, then in force, provided:
"Art. 287. Retirement — Any employee maybe retired upon reaching the retirement age
"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 or other agreement."
Rule 1, Book VI, of the Implementing Rules of the Labor Code, in turn, expressed:
"Sec. 13.Retirement. — In the absence of any collective bargaining agreement or other applicable
agreement concerning terms and conditions of employment which provides for retirement at an older age,
an employee maybe retired upon reaching the age of sixty (60) years.
"Sec. 14.Retirement benefits. — (a) An employee who is retired pursuant to a bonafide retirement
plan or in accordance with the applicable individual or collective agreement or established employer policy

 101
shall be entitled to all the retirement benefits provided therein or to termination pay equivalent at least to
one-half month salary for every year of service, whichever is higher, a fraction of at least six (6) months
being considered as one whole year."
Private respondent, sustained by the Labor Arbiter, posits that there being no collective bargaining
agreement ("CBA") that granted retirement benefits, conformably with Section 14 of the Implementing
Rules aforequoted, she should be entitled to a "termination pay equivalent at least to one-half month salary
for every year of service . . . ."
This particular issue has long been put to rest. In Llora Motors, Inc., vs. Drilon, 179 SCRA 175,
Mr. Justice Florentino P. Feliciano, speaking for the Court in an eruditely written ponencia, explained:
Section 14 (a) refers to 'termination pay equivalent to at least one-half (1/2) month for every year
of service' while Section 14 (b) mentions 'termination pay to which the employee would have been entitled
had there been no such retirement fund' as well as 'termination pay the employee is entitled to receive.' It
should be recalled that Sections 13 and 14 are found in Implementing Rule I which deals with both
'termination of employment' and 'retirement.' It is important to keep the two (2) concepts of 'termination
pay' and 'retirement benefits' separate and distinct from each other. Termination pay or separation pay is
required to be paid by an employer in particular situations identified by the Labor Code itself or by
Implementing Rule I. Termination pay where properly due and payable under some applicable provision of
the Labor Code or under Section 4 (b) of Implementing Rule I, must be paid whether or not an additional
retirement plan has been set up under an agreement with the employer or under an 'established employer
policy.'
"What needs to be stressed, however, is that Section 14 of Implementing Rule I, like Article 287 of
the Labor Code, does not purport to require 'termination pay' to be paid to an employee who may want to
retire but for whom no additional retirement plan had been set up prior agreement with the employer.
Thus, Section 14 itself speaks of an employee 'who is retired pursuant to a bona-fide retirement plan or in
accordance with the applicable individual or collective agreement or established employer policy.' What
Section 14 of Implementing Rule I may be seen to be saying is that where termination pay is otherwise
payable to an employee under an applicable provision of the Labor Code, and an additional or consensual
retirement plan exists, then payments under such retirement plan may be credited against the termination
pay that is due, subject, however, to certain conditions. These conditions are: (a) that payments under the
additional retirement plan cannot have the effect of reducing the amount of termination pay due and
payable to less than one-half (1/2) month's salary for every year of service and (b) the employee cannot be
made to contribute to the termination pay that he is entitled to receive under some provision of the Labor
Code; in other words, the employee is entitled to the full amount of his termination pay plus at least the
return of his own contributions to the additional retirement plan.
It then goes without saying, applying Llora Motors, that the beneficial provisions of Section 14 of
Implementative Rules cannot properly be invoked by private respondent.
Instead, the pivotal issue, in our view, is whether or not R.A. 7641 can favorably apply to private
respondent's case.
RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection
employment contracts have started.
Republic Act 7641 took effect on 07 January 1993, while the appeal of private respondent was still
pending consideration by the NLRC. Still for determination at the time was, among other things, the issue of
whether or not private respondent has, in fact, been effectively retired.
Petitioner asserts that private respondent has never reported for work after the rejection of her
application for retirement benefits. This claim is denied by private respondent, who avers that she did report
for work again but that petitioner has refused to accept her on the ground of abandonment of duty.
Philippines Scout Veterans Security and Investigation Agency vs. NLRC

271 SCRA 209
MARIANO FEDERICO, private respondent, had been working with petitioners Philippine Scout
Veterans Security and Investigation Agency and/or Severo Santiago as a security guard for twenty-three
(23) years. On 16 September 1991 Federico, then already sixty (60) years old, tendered his so-called "letter
of resignation" citing as his reasons physical disability to perform his duties and desire to spend the rest of
his life in the province. It seems that the letter did not strictly refer to "resignation" but "withdrawal from
occupation" because thereafter he sought alternative reliefs from petitioners, namely, termination pay
corresponding to his years of service, or retirement benefits.
Petitioners rejected the claim for termination pay contending that respondent Federico voluntarily
resigned. The claim for retirement benefits met the same fate there being no collective or individual
agreement providing therefor.
On 4 December 1991 respondent Federico brought his grievance to the Labor Arbiter. However,
the latter sustained the stand of petitioners. Hence on 25 August 1992 he ruled against Federico.
Nevertheless, the termination of the proceedings did not leave respondent empty-handed. The Labor Arbiter

 102
directed petitioners to pay respondent P10,000.00, the amount they previously offered him, as financial
assistance.
The question to be resolved is whether Art. 287 of the Labor Code as amended by R.A. 7641 may
be applied retroactively to the complaint filed on 4 December 1991 by respondent Mariano Federico.
Petitioners argue that the amendment introduced by R.A. 7641 applies to employees of the private
sector who retired beginning 7 January 1993, the date of its effectivity, and onwards. In the present case
therefore respondent Federico, who filed his complaint two (2) years prior to the effectivity of the law,
cannot seek refuge in the provision. Besides, this Court in Llora Motors, Inc. v. Drilon was faced with the
same controversy. Its ruling thereon is now judicial precedent.
The Office of the Solicitor General contends that the matter of giving retroactive effect to social
legislation has long been settled in the leading case of Allied Investigation Bureau, Inc. v. Ople.
In Allied, private respondent had been an employee of petitioner since 1953. In 1976, having
reached the age of sixty (60) years, he submitted to petitioner an application for retirement benefits which
was subsequently approved although there was then no collective bargaining agreement or employer policy
establishing an additional retirement plan for its employees. Controversy arose with respect to the method
of computing the amount of retirement benefits. Instead of basing the amount upon private respondent's
actual period of employment (from 1953 up to 1976), petitioner computed such amount starting with the
date of the effectivity of the Labor Code (1 November 1974) up to 1976. The Labor Arbiter, the NLRC and
the then Minister of Labor were one in the view that the computation should be on the basis of the length of
service. This Court sustained the computation of public respondents since it found the comment of the
Solicitor General in support thereof persuasive —
. . . in the computation thereof, public respondents acted judiciously in reckoning the retirement
pay from the time private respondent started working with petitioner since respondent employee's
application for retirement benefits and the company's approval of the same make express mention of
Sections 13 and 14, Rule 1, Book VI of the Implementing Rules and Regulations of the Labor Code as the
basis for retirement pay. Section 14 (a) of said rule provides that an employee who is retired pursuant to a
bona fide retirement plan or in accordance with the applicable individual or collective agreement or
established employer policy shall be entitled to all the retirement benefits provided therein or to termination
pay equivalent to at least one-half month salary for every year of service, whichever is higher, a fraction of
at least six (6) months being considered as one whole year . . . This position taken by public respondents
squares with the principle that social legislation should be interpreted in favor of workers in the light of the
Constitutional mandate that the State shall afford protection to labor.
Quite differently, in Llora Motors, we set aside the grant of retirement benefits because of the
absence of a collective bargaining agreement or other contractual basis or any established employer policy
that contemplated said grant. Private respondent invoked Allied but we found the reliance thereon
misplaced because —
. . . while Allied had no collective bargaining agreement or similar employment contract
establishing a plan under which employees could retire, its approval of (private respondent's) application,
although unilateral and possibly ad hoc, supplied the necessary consensual basis. In the instant case,
(petitioner) consistently resisted the demand for separation pay or retirement benefits by private
respondent . . .
As between Llora which is invoked by petitioners and Allied which is invoked by the Solicitor
General, we could have applied the former because of similarity in factual milieu except that we have to
take into account the amendment of Art. 287 by R.A. 7641 on 7 January 1993 or during the pendency of the
proceedings before the NLRC. As amended, Art. 287 now pertinently provides —
Art. 287. Retirement. — Any employee may be retired upon reaching the retirement age
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 herein.
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 (½) month salary for every year of service, a fraction of at least six (6) months being considered
as one whole year . . . (emphasis on amendment supplied).
Under the amendment, respondent Federico appears to be entitled to retirement pay. But can he
avail himself of this provision considering that it took effect subsequent to his filing of the complaint? This
brings to mind the principle reiterated in Allied that police power legislation intended to promote public
welfare applies to existing contracts and can therefore be given retroactive effect. Actually, the case at
bench no longer presents a novel issue. We have ruled in Oro Enterprises, Inc. v. NLRC that R.A. 7641
can indeed be applied retroactively. Private respondent in that case, after working continuously with the
company for forty-one (41) years, manifested her intention to retire from work by filing with petitioner a
claim for retirement pay which was however denied. The Labor Arbiter granted her claim. During the
pendency of the appeal, R.A. 7641 took effect and on that basis the NLRC affirmed the subject decision with
modification.

 103
Returning to the present case, although the second circumstance exists, respondent Federico
severed his employment relationship with petitioners when he tendered his "letter of resignation" on 16
September 1991 or prior to the effectivity of R.A. 7641. In fact, the issue before public respondents was not
the existence of employee-employer relationship between the parties; rather, considering the cessation of
his service, whether he was entitled to monetary awards. On the authority of CJC, private respondent
therefore cannot seek the beneficial provision of R.A. 7641 and must settle for the financial assistance of
P10,000.00 offered by petitioners and directed to be released to him by the Labor Arbiter.
Brion vs. South Philippine Union Mission of 7th Day Adventist, 307 SCRA 497

 104
SOLO PARENTS WELFARE ACT of 2000

(RA 8972: An Act Providing for Benefits and Privileges to Solo Parents
and their Children, Appropriating Funds therefore and for other purposes)
No rules yet, so we have to be contented with the salient features of the law.
Parental leave of not more than 7 working days every year to any solo parent who has rendered at least one
year of service. It is in addition to the other benefits under the law.
Solo parent
Examples:
1.A woman who gives birth as a result of rape is considered as a solo parent.
2. Parent left solo because of death of spouse
3. Parent left solo because of conviction or detention for at least one year
4. Parent left solo with the responsibility left of parenthood because of legal separation, abandoned spouses,
left with custody of child
5. Parent left solo because of declaration of nullity or annulment of marriage
Flexible Working 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.
Additional (those regarded as salient -  kaye)
Section 2. Declaration of Policy.

It is the policy of the State to
o promote the family as the foundation of the nation,
o strengthen its solidarity and
o 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
(a) Department of Social Welfare and Development (DSWD)
(b) Department of Heath (DOH)
(c) Department of Education, Culture and Sports (DECS)
(d) Department of Interior and Local Government (DILG)
(e) Commission on Higher Education (CHED)
(f) Technical Education and Skills Development Authority (TESDA)
(g) National Housing Authority (NHA)
(h) Department of Labor and Employment (DOLE)
(i) Other related government and non-government agencies
Section 3. Definition of Terms.
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 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 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 1 year;

 105
(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 written 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 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.
CHILDREN – refer to those living with and dependent upon the solo parent for support who are:
(a) Unmarried,
(b) Unemployed, and
(c) Not more than 18 years of age, or
(d) Even over 18 years but are incapable of self-support because of mental and/or physical
defect/disability.
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 209, as amended, otherwise known as the “Family
Code of the Philippines.”
PARENTAL LEAVE – leave benefits granted to a solo parent to enable him/her to perform parental duties
and responsibilities where physical presence is required.
FLEXIBLE WORKING SCHEDULE – supra
Section 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 (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.
Section 5. Comprehensive Package of Social Development and Welfare Services.

-- 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 in the implementation of the comprehensive
package of social development and welfare services for solo parents and their families.
(Please see law for enumeration – not at all important)
Section 6. Flexible Work Schedule.

The employer shall provide for a flexible working schedule for solo parents:
Provided, That the same shall not affect individual and company productivity:
Provided, further, That any employer may request exemption from the above requirements from the
DOLE on certain meritorious grounds.
Section 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.
Section 8. Parental Leave.

In addition to leave privileges under existing laws, parental leave of not more than 7 working
days every year shall be granted to any solo parent employee who has rendered service of at least 1 year.

 106
Section 9. Educational Benefits.

The DECS, CHED, and TESDA shall provide the following benefits and privileges:
(1) Scholarship programs for qualifies solo parents and their children in institutions of
basic, tertiary and technical/skills education; and
(2) Nonformal 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.
Section 10. Housing Benefits.

Solo parents shall be given allocation in housing project 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.
Section 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).


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 57

NORMAL WORK WEEK

Article 91. Right to weekly rest day.

Section 2. Business on Sundays/Holidays. Rule III, Book III

Section 3. Weekly rest day. Rule III, Book III

Section 4. Preference of employee. Rule III, Book III

COMPRESSED WORK WEEK

Lagatic vs. NLRC

Article 83. Normal Hours of Work.

Labor Law Review (2001-2002) – CUA

Article 87. Overtime Work.

Section 8. Overtime Pay. Rule I, Book III

Regular wage + At least 25% of the Regular Wage = Overtime Pay

Reason for the Overtime Pay

Section 10. Compulsory Overtime Work. Rule I, Book III

Labor Law Review (2001-2002) – CUA

Article 88. Overtime not offset by Undertime.

Prohibition against Offsetting

Lagatic vs. NLRC

Labor Law Review (2001-2002) – CUA

Article 84. Hours worked.

What is the reason why we should know this?

So what is the criteria to consider rest period as hours work?

Section 3. Hours Worked. Rule I, Book III

Section 4. Principles in Determining Hours Worked. Rule I, Book III

Cagampan vs. NLRC

Stolt-Nielsen vs. NLRC

Labor Law Review (2001-2002) – CUA

Section 4, Rule I, Book III

Power interruptions or brownouts

 Note: this was not discussed but is relatively important.

Section 5. WAITING TIME. Rule I, Book III

 Examples of employees in which waiting is an integral part of their job

Labor Law Review (2001-2002) – CUA

Pan-American World Airways Employees vs. Pan-American World Airways,

Section 6. Lectures, Meetings and Training Programs. Rule I, Book III

Chapter 1 - Hours of Work

Article 82. Coverage

Labor Standards Benefits covered under Art. 82:

Employees not covered by this provision:

Labor Law Review (2001-2002) – CUA

2. Managerial Employees and members of the Managerial Staffs

Managerial employees if they meet all of the following conditions:

Union of Filipro Employees vs. Vicar

Labor Law Review (2001-2002) – CUA

Mercidar Fishing Corp. vs. NLRC

6. Persons in the personal service of another

7. Workers paid by results

Classification of workers paid by result

Lambo vs. NLRC

FACTORS THAT SHOW THAT PETITIONERS ALTHOUGH PIECE-RATE WORKERS, WERE

Labor Law Review (2001-2002) – CUA

OVERTIME PAY vs. PREMIUM PAY

Premium pay for work within 8 hours on a

Labor Law Review (2001-2002) – CUA

Article 94. Right to Holiday Pay.

EXECUTIVE ORDER 203

Regular Holidays (10)

New Year’s Day - January 01