Business Commerce: Legal and Regulatory Requirements

(source: https://www.universalclass.com/articles/business/business-commerce-legal-and-regulatory-
requirements.htm)
Legal Environment of Business
When commerce is transacted, several areas of business law are affected. Depending on the type of
business you manage, there could be many regulations and legal obligations you must comply with in
order to operate the company. Businesses can be impacted by statutes in different disciplines, such as
tax laws, material handling laws, and employment laws. Most businesses either have attorneys on staff
or retain firms to handle issues surrounding the law. As a manager, however, you may be required to
know some basic legal requirements.
Whether you are establishing a business organization, protecting proprietary information, shipping
products across state lines, or managing employees, certain business laws affect all companies. The
following areas cover companies in most industries:
ENVIRONMENTAL LAWS
http://afeo.org/wp-content/uploads/2018/09/EMB-Environmental-Laws-and-Regulation.pdf
RA 8749 (Clean Air Act of 1999)
RA 9275 (Philippine Clean Water Act)
PD 1586 (Environmental Impact Statement System)
RA 6969 (Toxic Substances and Hazardous Waste Control Act)
RA 9003 (Ecological Solid Waste Management Act)
RA 9512 (Environmental Education Act of(2008)
 PD 1586 (Environmental Impact Statement System)
 
ENVIRONMENTAL IMPACT ASSESSMENT (EIA) - is a PROCESS involving predicting and
evaluating the likely impacts of a project on the environment during construction, commissioning,
operation and abandonment.  Section 4 of PD 1586 provides that no person, partnership or corporation
shall undertake or operate any such declared environmentally critical project (ECP) or area (ECA)
without first securing an Environmental Compliance Certificate (ECC).
   
 Environmental Compliance Certificate (ECC) - is a document issued by the DENR/EMB after a
positive review of an ECC application, certifying that based on the representations of the proponent, the
proposed project or undertaking has complied with all the requirements of the EIS System and has
committed to implement its approved Environmental Management Plan, EMP to address the
environmental impacts.
 
 Content of an ECC:
 

1. Proponent's Information
2. List of conditions within EMB mandate
3. List of recommendation pertaining compliance/ satisfaction to concerned LGUs/
agencies/ stakeholders.
  
 ECC Vailidity:
 
ECC is valid through out the entire project lifetime provided:
1. There is no significant project expansion 2. There is no change in technology
2. There is no change in location
3. Project was implemented within five (5) years from the date of issuance
 
Certificate of Non-Coverage(CNC) - refers to the document issued by DENR stating that the proposed
project is not covered by the Philippine Environmental Impact Assessment System, therefore, the
proponent is not required to secure an ECC prior to commencement of operation.
The issuance of this certificate shall not exempt the grantee from compliance with applicable
environmental laws, rules and regulations including permitting requirements of other government
agencies.
  
 
CONSUMER PROTECTION LAWS
 https://www.dti.gov.ph/about/
DEPARTMENT OF TRADE AND INDUSTRY
The DTI is responsible for realizing the country’s goal of globally competitive and innovative
industry and services sector that contribute to inclusive growth and employment generation.
 
Pursuant to the Philippine Development Plan (PDP) 2017-2022, we shall endeavor to reduce
inequality and poverty by expanding economic opportunities in industry and services, and by
increasing the access particularly of micro, small and medium enterprises (MSMEs),
cooperatives and overseas Filipinos (OFs) to these opportunities. To attain these sector
outcomes by 2022, we need to:
 
1.
ncrease local and foreign direct investments
Increase competitiveness, innovativeness and resilience of industries and services
Improve access to finance, to production networks, and to markets
Enhance productivity, efficiency, and resilience
Ensure consumer access to safe and quality goods and services
 
These we accomplish through six major programs:
 
Exports and Investment Development Program
Industry Development Program
SME Development Program
Consumer Protection Program
Consumer Education and Advocacy Program
Good Governance Program
 
The following agencies are attached to the DTI:
 
Board of Investments
Bureau of Product Standards
Clark Development Corporation
 Design Center Philippines
Fair Trade Bureau
Intellectual Property Office of the Philippines
Philippine Economic Zone Authority (PEZA)
Philippine Trade Training Center
Small Business Corporation
Subic Bay Metropolitan Authority

Week 2 - interstate & commerce law, license and permits,

contracts
THE INTERSTATE COMMERCE ACT IS PASSED(U.S.A)
FEBRUARY 4, 1887
 
On February 4, 1887, both the Senate and House passed the Interstate Commerce Act, which applied
the Constitution’s “Commerce Clause”—granting Congress the power “to Regulate Commerce with
foreign Nations, and among the several States”—to regulating railroad rates. Small businesses and
farmers were protesting that the railroads charged them higher rates than larger corporations, and that
the railroads were also setting higher rates for short hauls than for long-distance hauls. Although the
railroads claimed economic justification for policies that favored big businesses, small shippers insisted
that the railroads were gouging them.
 
It took years for Congress to respond to these protests, due to members’ reluctance to have the
government interfere in any way with corporate policies. In 1874 legislation was introduced calling for a
federal railroad commission. The bill passed the House, but not the Senate. When Congress failed to act,
some states adopted their own railroad regulations. Those laws were struck down in 1886, when the
Supreme Court ruled in Wabash v. Illinois that the state of Illinois could not restrict the rates that the
Wabash Railroad was charging because its freight traffic moved between the states, and only the federal
government could regulate interstate commerce. Continued public anger over unfair railroad rates
prompted Illinois senator Shelby M. Cullom to hold the hearings that led to the enactment of the
Interstate Commerce Act.
 
That law limited railroads to rates that were “reasonable and just,” forbade rebates to high-volume
users, and made it illegal to charge higher rates for shorter hauls. To hear evidence and render decisions
on individual cases, the act created the Interstate Commerce Commission. This was the first federal
independent regulatory commission, and it served as a model for others that would follow, from the
Federal Trade Commission to the Securities and Exchange Commission and the Consumer Product Safety
Commission.
 
Evolving technology eventually made the purpose of the ICC obsolete, and in 1995 Congress abolished
the commission, transferring its remaining functions to the Surface Transportation Board. But while the
ICC has come and gone, its creation marked a significant turning point in federal policy. Before 1887,
Congress had applied the Commerce Clause only on a limited basis, usually to remove barriers that the
states tried to impose on interstate trade. The Interstate Commerce Act showed that Congress could
apply the Commerce Clause more expansively to national issues if they involved commerce across state
lines. After 1887, the national economy grew much more integrated, making almost all commerce
interstate and international. The nation rather than the Constitution had changed. That development
turned the Commerce Clause into a powerful legislative tool for addressing national problems.
 
 
STARTING A BUSINESS IN THE PHILIPPINES
The Philippine government promotes free enterprise and encourages investments. To raise Philippine
competitiveness, the government aggressively pursues measures and policies to facilitate ease of doing
business thereby encouraging more investments that will boost job generation and economic growth in
the countryside.
 
Sole proprietorship:
A sole proprietorship is an unincorporated business with only one owner who pays personal income tax on profits
earned.  Sole proprietorships are easy to establish and dismantle, due to a lack of government involvement,
making them popular with small business owners and contractors.
 
A sole proprietorship is very different from corporations and limited partnerships, in that no separate legal entity is
created. As a result, the business owner of a sole proprietorship is not exempt from liabilities incurred by the
entity.
 
For example, the debts of the sole proprietorship are also the debts of the owner. However, the profits of
the sole proprietorship are also the profits of the owner, as all profits flow directly to the business’s
owner. 
 
Partnership
There are several type of partnership, in a particular partnership business, all
partners share liabilities and profits equally, while in others, partners have limited
liability. There also is the so-called "silent partner," in which one party is not
involved in the day-to-day operations of the business.
A partnership is an arrangement between two or more people to oversee business
operations and share its profits and liabilities.
In a general partnership company, all members share both profits and liabilities.
Professionals like doctors and lawyers often form a limited liability partnership.
There may be tax benefits to a partnership compared to a corporation.
Corporation
A corporation is a legal entity that is separate and distinct from its owners. Corporations enjoy most of the
rights and responsibilities that individuals possess: they can enter contracts, loan and borrow money, sue
and be sued, hire employees, own assets, and pay taxes. Some refer to it as a "legal person."

A corporation is a legal entity that is separate and distinct from its owners. Corporations
enjoy most of the rights and responsibilities that individuals possess.
An important element of a corporation is limited liability, which means that shareholders
may take part in the profits through dividends and stock appreciation but are not
personally liable for the company's debts.
Corporations are not always for profit.
 
Cooperative
A cooperative (also known as co-operative, co-op, or coop) is "an autonomous association
of persons united voluntarily to meet their common economic, social, and cultural needs
and aspirations through a jointly-owned enterprise Cooperatives may include:
businesses owned and managed by the people who use their services (a consumer
cooperative)
organizations managed by the people who work there (worker cooperatives)
multi-stakeholder or hybrid cooperatives that share ownership between different
stakeholder groups. For example, care cooperatives where ownership is shared
between both care-givers and receivers. Stakeholders might also include non-profits or
investors.
second- and third-tier cooperatives whose members are other cooperatives
platform cooperatives that use a cooperatively owned and governed website, mobile app
or a protocol to facilitate the sale of goods and services.
 
https://ppp.gov.ph/wp-content/uploads/2014/01/Steps-in-Securing-Business-Permits.pdf
PERMITS & LICENCES
1. Company Name Registration: Business Name Registrations are under Department of Trade and
Industry (DTI) for Sole Proprietorships and registrations for partnerships and corporations are with the
Securities and Exchange Commission (SEC);
 
DTI: https://www.business.gov.ph/web/guest/bn-registration
 
 
SEC: https://www.sec.gov.ph/online-services/sec-company-registration-system/
 
 
 
https://attorney.org.ph/legal-news/28-the-essential-elements-of-contracts
CONTRACTS
 
 
Although a contract is just a piece of paper that you sign to seal the deal, you can still end up in court
due to misinterpretation. A poorly written contract is not necessarily the reason a person can face a
lawsuit. Even if your contract has been prepared by one of the biggest law firms in the country, it is still
not immune to criminal charges if the obligations that are stated have not been fulfilled. There are basic
elements in a contract, which need to be present before any deals can be made.
 
A contract refers to an agreement of two or more contracting parties on a particular venture whereby
one person binds himself, with respect to the other, to render services or give something.
 
The contract must not be obtained through undue influence, coercion, misrepresentation and fraud. As
a general rule, the party who has suffered due to breach of contract can claim money damages from the
other. The breaching party will also be ordered by the court to perform obligations that are stipulated in
the contract.  
 
Contracts cannot completed without the following requisites:
 
(1) Contracting parties' consent;
 
(2) subject matter of the contract; and
 
(3) the cause of the obligation.
 
The Basic Elements of Contracts
 
Consent
 
In general, when a consent is given, the contract is considered perfected. It can be deemed an oral
contract that binds both contracting parties. One person must have a definite offer and the other must
have an absolute acceptance of the offer.
 
Object of the Agreement
 
The subject matter refers to the object of the contract. If a thing is deemed outside the commerce of
man, it will not be accepted as the object of the contract. Contracts are made to transfer the rights of
property, render services and others. However, the object of the contract must not be contrary to law,
good customs, morals and public order.
 
Consideration
 
The cause of the contract will be based on the type of contracts. For instance, onerous contract's cause
is the promise of service or thing by the other person. Remunatory contract's cause is the benefit or
service, which is being remunerated. For contracts of pure beneficence, the cause is the benefactor's
liberality. The cause can only be defined based on the nature of the contract.
 
An oral contract may not suffice even if both parties have made an agreement. A written contract is a
strong proof that a deal or agreement has been made. It includes the necessary details that can be used
in court when the obligations have not been met.
 

Week 2 - Intellectual property, Financial Regulation, Bankruptcy

law
https://www.ipophil.gov.ph/intellectual-property-code-implementing-rules-and-regulations/
PHILIPPINE LAWS ON INTELLECTUAL PROPERTY
Intellectual property is an umbrella term for a set of intangible assets or assets that are
not physical in nature.
Intellectual property is owned and legally protected by a company from outside use or
implementation without consent.
Intellectual property can consist of many types of assets, including trademarks, patents
and copyrights.
R.A. 8293  An Act prescribing the Intellectual Property Code and establishing the Intellectual Property
Office, providing for its powers and functions, and for other purposes
 
R.A. 165 An Act  creating a patent office, prescribing its powers and duties, regulating the issuance of
patents, and appropriating funds therefore
 
R.A. 166 An Act to provide for the registration and protection of trade-marks, trade-names, and service
marks, defining unfair competition and false marking and providing remedies against the same, and for
other purposes
 
PRESIDENTIAL DECREE NO. 49 Decree on the protection of intellectual property
 
PATENT
A patent is the granting of a property right by a sovereign authority to an inventor. 
A patent provides the inventor exclusive rights to the patented process, design, or invention for a
certain period in exchange for a complete disclosure of the invention.
 
LAWS
 
R.A. 8293: The Intellectual Property Code, as amended by R.A.s 9150, 9502, and 10372
R.A. 9502: Universally Accessible Cheaper and Quality Medicines Act (2008)
 
RULES
 
The Revised Implementing Rules and Regulations (IRR) for Patents, Utility Models and Industrial
Designs  Recently amended by Memorandum Circular No. 17-013
Implementing Rules and Regulations of the Universally Accessible Cheaper and Quality Medicines Act of
2008
 
http://www.lexmundi.com/images/lexmundi/PDF/PG/BankFinance/Phillipines.pdf
http://www.165.gov.ph/regulations/laws.asp
BANKS AND FINANCIAL INSTITUTIONS SUPERVISION
The BSP is the specialized government agency that provides policy directions in the areas of money,
banking, and credit. It supervises the operations of banks and regulates the operation of finance
companies and non-bank financial institutions performing quasi-banking functions and those performing
similar functions. The fundamental roles of the BSP are: (a) as central monetary authority; (b) as banker
and adviser of the national government, and (c) as the banker of banks.
The BSP acts through the Monetary Board, which is composed of seven members, five of whom are
from the private sector and the other two from the government. The BSP Governor, the chief executive
of the BSP, acts through three Deputy Governors, one for each of the three sectors of the BSP – the
Monetary Stability Sector, the Supervision and Examination Sector, and the Resource Management
Sector.
 
1) Applicable laws and regulation. Provide a list of the main laws and regulations that refer to the
supervision and control of banks and financial institutions. Give a brief summary of the substance of
each of them.
The most pertinent banking laws in the Philippines are:
 
1. The New Central Bank Act (Rep. Act No. 7653) (the "BSP Law")
The BSP Law establishes the Bangko Sentral ng Pilipinas (“BSP”), its organizational set-up,
responsibilities, corporate authorities, key operational procedures, and special powers over banks. It
then defines the key roles of the BSP, namely: (a) as a central monetary authority with the sole power to
issue currency and legal tender and to regulate the supply of money and credit in the system; (b) as
government banker with the power to represent the national government in all dealings with
international financial institutions; and (c) as a central bank with regulatory and supervisory power over
all banks and financial institutions exercising quasi-banking functions.
 
     The General Banking Law of 2000 (Rep. Act No. 8791) ("GBL")
The GBL provides for the regulatory supervision of the BSP over all banks in the Philippines. It likewise
provides for the authority of the BSP and the organization, management, and administration of foreign
and local banks, quasi-banks, and trust entities, and other types of banks. Under the GBL, banks are
classified into commercial banks, universal banks, thrift banks, cooperative banks, Islamic banks, and
other classes as may be determined by the Monetary Board, with various powers and requirements for
each classification. In addition, the GBL also provides for the rules on deposits, loans and investments,
trust operations, placement under conservatorship, and cessation of banking business.
 
     Foreign Bank Liberalization Act (Rep. Act No. 7221) (“FBLA”
The FBLA provides for the different modes of entry by foreign banks into the Philippines. Under this Act,
foreign banks which are among the top 150 in the world or the top five in their country of origin are
allowed to invest in up to 60% of the voting stock of a Philippine bank or to establish branches with full
banking authority, provided they can only opt for one mode of entry, and provided that only 14 foreign
banks may establish branches with full banking authority.  At present, entry through the establishment
of branches is not available, at least until one of the 14 foreign bank branches gives up its branching
license.
 
     Thrift Banks Act (Rep. Act No. 7906)
The Thrift Banks Act provided for the creation of a new class of bank – the thrift bank – which are
savings and mortgage banks, stock savings and loan associations, and private development banks. Under
the Thrift Banks Act, thrift banks may exercise similar powers as those of a commercial bank, but with
prior approval of the Monetary Board for particular activities, such as: (a) opening of current accounts,
(b) engaging in trust, quasi-banking, and money market operations, (c) acting as collection agent for
government entities, (d) acting as official depository of national agencies where the thrift bank is
located, (e) issuing of mortgage and chattel mortgage certificates, and (f) investing in the equity of allied
undertakings. Since 17 March 2005, allowable foreign equity in thrift banks is down to 60% (from 100%)
of the voting stock.
 
     Investment Houses Law (Pres. Decree No. 129, as amended)
Corporations engaged in the underwriting of securities of other corporations are required to be licensed
as investment houses under the Investment Houses Law. Investment houses are also allowed to act as
financial consultant, investment adviser, portfolio manager, financial agent, and broker. Foreigners are
allowed to own up to 60% of the voting stock of an investment house. Universal banks are allowed to
perform the functions of an investment house on an in-house basis.
 
     Financing Company Act (Rep. Act No. 7906)
A corporation primarily engaged in extending credit facilities by direct lending, discounting or factoring
commercial papers or accounts receivable, buying and selling evidences of indebtedness, or financial
leasing is required to be licensed as a financing company under the Financing Company Act, unless the
corporation is a bank, investment house, insurance company, or other financial institution with a
secondary license. Foreigners are allowed to own up to 60% of the voting stock of a financing company.
 
     Secrecy of Bank Deposits Act (Rep. Act No. 1405, as amended)
This law prohibits the examination and inquiry into all bank deposits and investments in government
securities with Philippine banks by any person, government official, bureau, or office, and prohibits the
disclosure by any bank official or employee to any unauthorized person of any information concerning
the said deposits, subject to certain exceptions as discussed in Section 12 below.
 
     Anti-Money Laundering Act (Rep. Act No. 9160, as amended) (“AMLA”)
The AMLA criminalizes money laundering and identifies the predicate crimes from which money
laundering can arise. In order to prevent money laundering, the AMLA created the Anti-Money
Laundering Council (“AMLC”) and granted it such powers ranging from requiring reports from covered
institutions (including banks and other financial institutions), rule-making, prosecution, and actual
imposition of sanctions. In addition, the AMLA requires covered institutions to adopt Know-Your-
Customer guidelines and to report transactions involving at least PhP500,000 as well as suspicious
transactions to the AMLC.
 
     Foreign Currency Deposit Act (Rep. Act No. 6426, as amended, and Pres. Decree
No. 1035) (the “FCDU Law”)
By virtue of the FCDU Law, banks with a Foreign Currency Deposit Unit (“FCDU”) license are authorized
to accept foreign currency deposits, to issue certificates to evidence such deposits, to discount said
certificates, and to accept deposits as collateral for loans, while banks with an expanded FCDU license
are authorized to obtain foreign currency loans from and conduct foreign currency transactions with
non-residents, offshore banking units, and other depository banks with expanded FCDU licenses.
Interest earnings from such foreign currency deposits are granted absolute tax exemptions. It is also
provided that there shall be no restriction on the withdrawal or transfer by the depositor of his deposits,
except upon mutual agreement with the bank.
 
2) Entities/ Authorities in charge of the control and supervision. Purposes, powers and functions of each
of them – their organization and structure (i.e. public or private, independency or body of the
Government to which they belong, size, etc.)
A banking institution has a primary license (as a corporation) and a secondary license (as a bank or
quasi-bank). As a corporation, and especially if its shares are registered and listed in the stock exchange,
it is under the general supervision of the Securities and Exchange Commission (“SEC”). As a bank, it is
under the supervision of the BSP, which is its primary regulator.
 
SECURITIES AND EXCHANGE COMMISSION (SEC)
 
The SEC is the specialized government agency that exercises general supervision over corporations and
partnerships in general, including registered or publicly-listed corporations. It exercises the powers and
functions provided by the Securities Regulation Code of 2000 (“SRC”), the Corporation Code of the
Philippines, the Investment Houses Law, the Financing Company Act, Pres. Decree No. 902-A, among
others. Among its powers and functions specified in Section 5.1 of the Securities Regulation Code are (a)
to regulate, investigate, or supervise the activities of persons to ensure compliance with corporation and
securities laws; (b) to supervise, monitor, suspend, or take over the activities of exchanges, clearing
agencies, and other self- regulatory organizations; (c) to impose sanctions for violations of laws and the
rules, regulations, and orders issued pursuant thereto; and (d) to issue cease and desist orders to
prevent fraud or injury to the investing public; and (e) to compel the officers of any registered
corporation or association to call meetings of stockholders or members under its supervision.
 
The primary jurisdiction of the SEC over corporations which do not have secondary licenses that subject
them to the primary jurisdiction of the BSP or the Office of the Insurance Commissioner emanates from
its authority to enforce and implement the Corporation Code. The Commission has no jurisdiction over
corporations created by "special law" which are not registered with it.
 
https://val.law/remedies-for-insolvency-in-the-philippines/
REMEDIES FOR INSOLVENCY IN THE PHILIPPINES
 
Due to the outbreak of COVID-19 worldwide, and the imposition of the Enhanced Community
Quarantine and Stringent Social Distancing Measures over the entire island of Luzon, there has been a
severe disruption of economic activities.  Many establishments have been prevented to physically
operate and had to resort to finding means to handle their business activities remotely. Entrepreneurs
and businessmen across different industries have reported significant losses and cut backs, which have
resulted to a widespread and looming fear of bankruptcy.
 
In the event that this economic disruption will put juridical entities in a state of insolvency, below is a
summary of the remedies available under Philippine laws to address the same.
 
Under the Philippine laws, an entity is considered insolvent if it is generally unable to pay its liabilities as
they fall due in the ordinary course of business or has liabilities that are greater than its assets
 
For insolvent entities, the law offers two main reliefs: (1) Rehabilitation and (2) Liquidation. Both
remedies are made available to ensure or maintain certainty and predictability in commercial affairs,
preserve and maximize the value of the assets of debtors, recognize creditor rights and respect priority
of claims and ensure equitable treatment of creditors who are similarly situated.
 
For individual insolvent debtors, the law offers an additional relief of Suspension of Payments.
 
REHABILITATION
 
Rehabilitation aims to restore the debtor to a state of solvency or to its former healthy financial
condition through the adaptation of a Rehabilitation Plan showing that the continued operations is
economically feasible and its creditors can recover more if the debtor continues as a going concern
instead of it being immediately liquidated.
 
There are three main kinds of Rehabilitation Proceedings: (1) Court-Supervised, (2) Pre-Negotiated, and
(3) Out-of-Court or Informal Rehabilitation Proceedings. The main difference between these different
types is the level of involvement of the courts over the rehabilitation proceedings.
 
 
LIQUIDATION
 
The goal of a Liquidation Proceeding is to wind up the affairs of the entity and distribute its assets
among its creditors. It involves either the filing of a Petition for Liquidation or the failure or conversion
of a Rehabilitation Proceeding into a Liquidation Proceeding.
 
If filed by the Debtor (Voluntary Liquidation)
Debtor must show certificates attesting that resolutions for the filing of the Petition for Liquidation was
approved by at least a majority of the members of the board of directors present and stockholders
holding at least two-thirds (2/3) of the outstanding capital stock of the stock corporation.

If filed by the creditors (Involuntary Liquidation)

Applicants must be made up of three (3) or more creditors whose aggregate claims are: (1) at least One
Million Pesos (Php 1,000,000.00); or (2) At least twenty-five percent (25%) of the subscribed capital

Legal Environment of Business

When commerce is transacted, several areas of business law are affected. Depending on the type of
business you manage, there could be many regulations and legal obligations you must comply with in
order to operate the company. Businesses can be impacted by statutes in different disciplines, such as
tax laws, material handling laws, and employment laws. Most businesses either have attorneys on staff
or retain firms to handle issues surrounding the law. As a manager, however, you may be required to
know some basic legal requirements.
Whether you are establishing a business organization, protecting proprietary information, shipping
products across state lines, or managing employees, certain business laws affect all companies. The
following areas cover companies in most industries:

 tax laws;
 environmental laws;
 consumer protection laws;
 employment and labor laws;
 antitrust/fair competition laws;
 interstate commerce laws;
 license and permitting laws;
 contract laws;
 intellectual property laws;
 financial regulation laws;
 bankruptcy laws.
Now let us look at some key areas most business managers should be aware of.

Week 3 to 4.     10/19-30/2020
Employment Law
When employees are under a management or control structure, they are protected against offenses
committed by the company and provided rights as a consequence of employment. The following
sections provide an overview of protections for all employees.
Unfair Labor Practice (https://blr.dole.gov.ph/2014/12/11/unfair-labor-practice/)
1. What is unfair labor practice (ULP)?
ULPs are offenses committed by the employer or labor organization which violate the constitutional
right of workers and employees to self-organization. ULP acts are inimical to the legitimate interests of
both labor and management, disrupt industrial peace and hinder the promotion of healthy and stable
labor-management relations. (Art. 248 of the Labor Code, as amended)
2. What is the nature of ULP?
ULP is not only a violation of the civil rights of both labor and management, but also a criminal offense
against the State. Criminal ULP cases may be filed with the regular courts. No criminal prosecution may
be instituted, however, without a final judgment from the NLRC that an unfair labor practice was
committed.
3. What are some of the ULPs committed by an employer?
ULP by management are as follows:
1. a) Requiring as a condition of employment that a person or an employee shall
not join a labor organization or shall withdraw from one to which he belongs;
2. b) Contracting out services or functions being performed by union members
when such will interfere with, restrain, or coerce employees in the exercise of their right
to self-organization;
3. c) Discrimination as regards to wages, hours of work, and other terms and
conditions of employment in order to encourage or discourage membership in any labor
organization; and
4. d) Dismissal, discharge, prejudice or discrimination against an employee for
having given or being about to give testimony under the Labor Code. (Art. 248, 249 of
the Labor Code, as amended)
5. What are some ULPs committed by labor organizations?
A labor organization commits ULP by any of the following violations:
1. a) Restraint or coercion of employees in the exercise of their right to self-
organization: However, the labor organization shall have the right to prescribe its own
rules with respect to the acquisition or retention of membership; and
2. b) Causing or attempting to cause an employer to discriminate against an
employee, including discrimination against an employee with respect to whom
membership in such organization has been denied or terminating an employee on any
ground other than the usual terms and conditions under which membership or
continuation of membership is made available to other members.
3. What are ULPs committed by both employers and labor organizations?
ULPs by both management and labor organizations are as follows:
1. a) Interference, restraint, or coercion of employees in the exercise of their right
to self-organization;
 2. b) Violation of a collective bargaining agreement, when circumstances
warrant;Violation of CBA can be an ULP under the most extraordinary of circumstances.
One of the parties to the agreement must knowingly, deliberately, and willfully violate
the agreement. For example, a ULP occurred in a case where one of the parties to the
labor agreement announced that the agreement was no longer in effect (even though it
was), and that grievances would not be processed.
3. c) Initiating, dominating, assisting or otherwise interfering with the formation or
administration of any labor organization, including the giving of financial or other
support to it or its organizers or supporters;
4. d) Violation of the duty to bargain collectively; and
5. e) Payment by employer of negotiation or attorney’s fees and acceptance by the
union or its officers or agents as part of the settlement of any issue in collective
bargaining or any other dispute (Art. 248, 249 of the Labor Code, as amended).
Collective Bargaining (https://blr.dole.gov.ph/2014/12/11/collective-bargaining/)
1. What is Collective Bargaining?
It is a process where the parties agree to fix and administer terms and conditions of employment which
must not be below the minimum standards fixed by law, and set a mechanism for resolving their
grievances.
2.What is Collective Bargaining Agreement (CBA)?
It is a contract executed upon request of either the employer or the exclusive bargaining representative
of the employees incorporating the agreement reached after negotiations with respect to wages, hours
of work and all other terms and conditions of employment, including proposals for adjusting any
grievances or questions under such agreement.

discussions starts here on 10/21/2020

3.Is the ratification of the CBA by the majority of all the workers in the bargaining unit mandatory?
Yes. The agreement negotiated by the employees’ bargaining agent should be ratified or approved by
the majority of all the workers in the bargaining unit.
4.Is there any exception to the requirement of mandatory ratification by the majority of all the workers
in the bargaining unit?
Yes. Ratification of the CBA by the employees in the bargaining unit is not needed when the CBA is a
product of an arbitral award by appropriate government authority or by a voluntary arbitrator.
5.What constitutes CBA registration?
It is a process of determining whether the application for registration of a Collective Bargaining
Agreement complies with the Rules on CBA registration specifically Rule XVII of the Department Order
No. 40-03 or the Rules amending the Implementing Rules of Book V of the Labor Code of the Philippines.
https://blr.dole.gov.ph/wp-content/uploads/2019/11/D.O.-40-03-A-I-final-version.pdf
#9 to 14 below(where to file up to grounds for denial of cba registration)
6.What is the effect of the CBA registration?
The registration of the CBA will bar a certification election except within the last sixty days (freedom
period) before the expiration of the five-year CBA.
7.What is the lifetime of a CBA?
With respect to representation aspect, the CBA lasts for 5 years. However, not later than 3 years after
the execution of the CBA, the economic provisions shall be renegotiated.
8.What is the freedom period?
It refers to the last sixty days immediately preceding the expiration of the five-year CBA. A petition for
certification election may be filed during the freedom period.
9.Where to file the application for CBA registration?
The application for CBA registration shall be filed at the Regional Office that issued the certificate of
registration or certificate of creation of chartered local of the labor union-party to the agreement.
10.When to file the application for CBA registration?
The application for registration of the CBA shall be filed within thirty (30) days from the execution of
such CBA.
11.What are the requirements for CBA registration?
The following are the requirements for CBA registration (original and two (2) duplicate copies which
must be certified under oath by the representative of the employer and labor union concerned):
1. a) The Collective Bargaining Agreement;
2. b) A statement that the Collective Bargaining Agreement was posted in at least
two (2) conspicuous places in the establishment concerned for at least five (5) days
before its ratification; and
3. c) A statement that the Collective Bargaining Agreement was ratified by the
majority of the employees in the bargaining unit of the employer concerned.
12.Is registration fee required?
Yes. The certificate of CBA registration shall be issued by the DOLE Regional Office only upon payment of
the prescribed registration fee.
13.How long will it take to process the CBA registration?
The application for CBA registration shall be processed within one day from receipt thereof.
14.What is the ground for denial of the CBA registration?
Failure of the applicant to complete the requirements for CBA registration but such denial is without
prejudice for the filing of another application for registration.
 
https://blr.dole.gov.ph/2014/12/11/labor-code-of-the-philippines/
LABOR CODE OF THE PHILIPPINES
 
The Labor Code of the Philippines stands as the law governing employment practices and labor relations
in the Philippines. It was enacted on Labor day of 1974 by President Ferdinand Marcos, in the exercise of
his then extant legislative powers. It prescribes the rules for hiring and termination of private
employees; the conditions of work including maximum work hours and overtime; employee benefits
such as holiday pay, thirteenth month pay and retirement pay; and the guidelines in the organization
and membership in labor unions as well as in collective bargaining.
 
The Labor Code contains several provisions which are beneficial to labor. It prohibits termination from
employment of Private employees except for just or authorized causes as prescribed in Article 282 to
284 of the Code. The right to trade union is expressly recognized, as is the right of a union to insist on a
closed shop.
 

Art. 282. Termination by employer. An employer may terminate an employment for

any of the following causes:

1. Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
 
2. Gross and habitual neglect by the employee of his duties;
 
3. Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative;
 
4. Commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representatives; and
 
5. Other causes analogous to the foregoing.

Art. 283. Closure of establishment and reduction of personnel. The employer may

also terminate the employment of any employee due to the installation of labor-saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent
to at least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered one (1) whole year.
Art. 284. Disease as ground for termination. An employer may terminate the services
of an employee who has been found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial to his health as well as to the
health of his co-employees: Provided, That he is paid separation pay equivalent to at
least one (1) month salary or to one-half (1/2) month salary for every year of service,
whichever is greater, a fraction of at least six (6) months being considered as one (1)
whole year.

 
Strikes are also authorized for as long as they comply with the strict requirements under the Code, and
workers who organize or participate in illegal strikes may be subject to dismissal. Moreover, Philippine
jurisprudence has long applied a rule that any doubts in the interpretation of law, especially the Labor
Code, will be resolved in favor of labor and against management.
 
Preliminary Title - https://blr.dole.gov.ph/2014/12/11/preliminary-title/
 
PRESIDENTIAL DECREE NO. 442, AS AMENDED
A DECREE INSTITUTING A LABOR CODE THEREBY REVISING AND CONSOLIDATING LABOR AND SOCIAL
LAWS TO AFFORD PROTECTION TO LABOR, PROMOTE EMPLOYMENT AND HUMAN RESOURCES
DEVELOPMENT AND INSURE INDUSTRIAL PEACE BASED ON SOCIAL JUSTICE
 
Book I – Pre-Employment - https://blr.dole.gov.ph/2014/12/11/book-i-pre-employment/
PRE-EMPLOYMENT
 
To promote and maintain a state of full employment through improved manpower training, allocation
and utilization;
 
To protect every citizen desiring to work locally or overseas by securing for him the best possible terms
and conditions of employment;
 
To facilitate a free choice of available employment by persons seeking work in conformity with the
national interest;
 
To facilitate and regulate the movement of workers in conformity with the national interest;
 
To regulate the employment of aliens, including the establishment of a registration and/or work permit
system;
 
To strengthen the network of public employment offices and rationalize the participation of the private
sector in the recruitment and placement of workers, locally and overseas, to serve national
development objectives;
 
To insure careful selection of Filipino workers for overseas employment in order to protect the good
name of the Philippines abroad.
 
 
Book II – Human Resources Development Program - https://blr.dole.gov.ph/2014/12/11/book-ii-human-
resorces-development-program/
HUMAN RESOURCES DEVELOPMENT PROGRAM
 
 
Art. 43. Statement of objective. It is the objective of this Title to develop human resources, establish
training institutions, and formulate such plans and programs as will ensure efficient allocation,
development and utilization of the nation’s manpower and thereby promote employment and
accelerate economic and social growth.
 
Book III – Conditions of Employment - https://blr.dole.gov.ph/2014/12/11/book-iii-conditions-of-
employment/
CONDITIONS OF EMPLOYMENT
 
WORKING CONDITIONS AND REST PERIODS(HOURS OF WORK)
 
Art. 82. Coverage. The provisions of this Title shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, managerial employees, field
personnel, members of the family of the employer who are dependent on him for support, domestic
helpers, persons in the personal service of another, and workers who are paid by results as determined
by the Secretary of Labor in appropriate regulations.
 
As used herein, “managerial employees” refer to those whose primary duty consists of the management
of the establishment in which they are employed or of a department or subdivision thereof, and to
other officers or members of the managerial staff.
 
“Field personnel” shall refer to non-agricultural employees who regularly perform their duties away
from the principal place of business or branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty.
 
Art. 83. Normal hours of work. The normal hours of work of any employee shall not exceed eight (8)
hours a day.
 
Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for
eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies
of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case,
they shall be entitled to an additional compensation of at least thirty percent (30%) of their regular wage
for work on the sixth day. For purposes of this Article, “health personnel” shall include resident
physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel.
 
Art. 84. Hours worked. Hours worked shall include (a) all time during which an employee is required to
be on duty or to be at a prescribed workplace; and (b) all time during which an employee is suffered or
permitted to work.
 
Rest periods of short duration during working hours shall be counted as hours worked.
 
Art. 85. Meal periods. Subject to such regulations as the Secretary of Labor may prescribe, it shall be the
duty of every employer to give his employees not less than sixty (60) minutes time-off for their regular
meals.
 
Art. 86. Night shift differential. Every employee shall be paid a night shift differential of not less than ten
percent (10%) of his regular wage for each hour of work performed between ten o’clock in the evening
and six o’clock in the morning.
DISCUSSION ON 10/28/2020 STARS HERE
Art. 87. Overtime work. Work may be performed beyond eight (8) hours a day provided that the
employee is paid for the overtime work, an additional compensation equivalent to his regular wage plus
at least twenty-five percent (25%) thereof. Work performed beyond eight hours on a holiday or rest day
shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or
rest day plus at least thirty percent (30%) thereof.
 
 
Book IV – Health, Safety and Social Welfare - https://blr.dole.gov.ph/2014/12/11/book-iv-health-safety-
and-social-welfare-benefits/
 
HEALTH, SAFETY AND SOCIAL WELFARE BENEFITS
 
Art. 156. First-aid treatment. Every employer shall keep in his establishment such first-aid medicines and
equipment as the nature and conditions of work may require, in accordance with such regulations as the
Department of Labor and Employment shall prescribe.
 
The employer shall take steps for the training of a sufficient number of employees in first-aid treatment.
 
Art. 157. Emergency medical and dental services. It shall be the duty of every employer to furnish his
employees in any locality with free medical and dental attendance and facilities consisting of:
 
The services of a full-time registered nurse when the number of employees exceeds fifty (50) but not
more than two hundred (200) except when the employer does not maintain hazardous workplaces, in
which case, the services of a graduate first-aider shall be provided for the protection of workers, where
no registered nurse is available. The Secretary of Labor and Employment shall provide by appropriate
regulations, the services that shall be required where the number of employees does not exceed fifty
(50) and shall determine by appropriate order, hazardous workplaces for purposes of this Article;
 
The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic,
when the number of employees exceeds two hundred (200) but not more than three hundred (300);
and
 
The services of a full-time physician, dentist and a full-time registered nurse as well as a dental clinic and
an infirmary or emergency hospital with one bed capacity for every one hundred (100) employees when
the number of employees exceeds three hundred (300).
 
Book V – Labor Relations - https://blr.dole.gov.ph/2014/12/11/book-v-labor-relations/
LABOR RELATIONS
 
It is the policy of the State:
 
To promote and emphasize the primacy of free collective bargaining and negotiations, including
voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes;
 
To promote free trade unionism as an instrument for the enhancement of democracy and the
promotion of social justice and development;
 
To foster the free and voluntary organization of a strong and united labor movement;
 
To promote the enlightenment of workers concerning their rights and obligations as union members and
as employees;
 
To provide an adequate administrative machinery for the expeditious settlement of labor or industrial
disputes;
 
To ensure a stable but dynamic and just industrial peace; and
 
To ensure the participation of workers in decision and policy-making processes affecting their rights,
duties and welfare.
 
Book VI – Post Employment- https://blr.dole.gov.ph/2014/12/11/book-vi-post-employment/
POST EMPLOYMENT
 
TERMINATION OF EMPLOYMENT
 
Art. 278. Coverage. The provisions of this Title shall apply to all establishments or undertakings, whether
for profit or not.
 
Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his
actual reinstatement. (As amended by Section 34, Republic Act No. 6715, March 21, 1989)
 
Art. 280. Regular and casual employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed
for a specific project or undertaking the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or service to be performed is seasonal in
nature and the employment is for the duration of the season.
 
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such activity exists.
 
Art. 281. Probationary employment. Probationary employment shall not exceed six (6) months from the
date the employee started working, unless it is covered by an apprenticeship agreement stipulating a
longer period. The services of an employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall be considered a regular employee.
 
Book VII – Transitory Final Provisions - https://blr.dole.gov.ph/2014/12/11/book-vii-transitory-and-final-
provisions/
TRANSITORY AND FINAL PROVISIONS
 
PENAL PROVISIONS AND LIABILITIES
 
Art. 288. Penalties. Except as otherwise provided in this Code, or unless the acts complained of hinge 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 of not less than One Thousand Pesos (P1,000.00) nor more than Ten
Thousand Pesos (P10,000.00) or imprisonment of not less than three months nor more than three 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 Courts of First Instance. (As
amended by Section 3, Batas Pambansa Bilang 70)
 
Art. 289. Who are liable when committed by other than natural person. If the offense is committed by a
corporation, trust, firm, partnership, association or any other entity, the penalty shall be imposed upon
the guilty officer or officers of such corporation, trusti, firm, partnership, association or entity.
 
 
Employers’ guide on employees’ compensation program
http://ecc.gov.ph/wp-content/uploads/2016/11/Employers_Guide_on_ECP.pdf
 
Emloyees’ benefits in the Philippines
https://www.ecomparemo.com/info/heres-a-full-list-of-mandatory-benefits-for-regular-employees-in-
the-philippines/