COMLAWS

Sales, Agency, Labor and other Commercial Laws

LABOR LAW (Labor Code of the Philippines)

INSTRUCTIONS: Make a power point presentation of your answers to the given questions below. You will
be graded on the correctness of your answers and the presentation of your answers. Due date is on June
4, 2021 to be submitted thru email at [email protected]

WAGE

1. What is basic wage?

"Basic Wage" means all remuneration or earnings paid by an employer to a worker for services
rendered on normal working days and hours but does not include cost-of-living allowances,
profit sharing payments, premium payments, 13th month pay or other monetary benefits which
are not considered as part of or integrated into the regular salary of the workers on the dale the
Act became effective. (RA 6727)

2. What is statutory minimum wage?

"Statutory -Minimum Wage" is the lowest wage rate fixed by law that an employer can pay his
workers. (RA 6727)

3. Who are excluded from the coverage of the Title on Wages of the Labor Code?
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. (ART. 82, Book III Conditions of
employment)

4. May an employer make any deduction from the wages of his employees? NO

ART. 113. Wage deduction. - No employer, in his own behalf or in behalf of any person, shall make any deduction
from the wages of his employees, except:

(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the
employer for the amount paid by him as premium on the insurance;

(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the
employer or authorized in writing by the individual worker concerned; and

(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and
Employment.

5. What is a wage distortion?

"Wage Distortion" means a situation where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service, or other logical
bases of differentiation. (RA 6727)

6. What are the elements of wage distortion?

The elements of Wage Distortion had been clearly established in the case of Prubankers Association vs. Prudential
Bank and Trusts Co. GR # 131247, January 25, 1999.

a. Existing hierarchy of positions with corresponding salary rates

b. Signifi cant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a
higher one
c. Elimination of the distinction between the two levels
d. Existence of the distortion in the same region of the country
7. Is diminution of benefits allowed? YES
Under the principle of non-diminution of benefits, a company practice favorable to the employees that had ripened into
benefits and supplements cannot be reduced, diminished, discontinued or eliminated by the employer. The Supreme
Court in the case of Ricardo E. Vergara Jr. vs Coca-Cola Bottlers Philippines Inc. (GR 176985, April 1, 2013), through
Chief Justice Diosdado Peralta expounded on the principle of non-diminution of benefits, to wit::

8. What is the basis of the principle of non-diminution of benefits?

“Generally, employees have a vested right over existing benefits voluntarily granted to them by their employer. Thus,
any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or
eliminated by the employer. The principle of non-diminution of benefits is actually founded on the Constitutional
mandate to protect the rights of workers, to promote their welfare, and to afford them full protection. In turn, said
mandate is the basis of Article 4 of the Labor Code which states that “all doubts in the implementation and
interpretation of this Code, including its implementing rules and regulations, shall be rendered in favor of labor.

9. What are the exceptions to the non-diminution rule?

When the practice is due to error in the construction or application of a doubtful or difficult question of law. The error,
however, must be corrected immediately after its discovery. (GR 176985, April 1, 2013)

10. What are the requisites of diminution of benefits?

“There is diminution of benefits when the following requisites are present: (1) the grant or benefit is founded on a
policy or has ripened into a practice over a long period of time; (2) the practice is consistent and deliberate; (3) the
practice is not due to error in the construction or application of a doubtful or difficult question of law; and (4) the
diminution or discontinuance is done unilaterally by the employer. (GR 176985, April 1, 2013)

LEAVES
1. What is service leave incentive (SIL) pay?
Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of
five days with pay. (ART 95, PD# 442)

2. Who are not qualified to avail SIL?

This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation
leave with pay of at least five days and those employed in establishments regularly employing less than ten
employees or in establishments exempted from granting this benefit by the Secretary of Labor and Employment after
considering the viability or financial condition of such establishment. (ART 95, PD# 442)

3. What is a maternity leave benefit?

Every employer shall grant to any pregnant woman employee who has rendered an aggregate service of at least six
(6) months for the last twelve (12) months, maternity leave of at least two (2) weeks prior to the expected date of
delivery and another four (4) weeks after normal delivery or abortion with full pay based on her regular or average
weekly wages. The employer may require from any woman employee applying for maternity leave the production of a
medical certificate stating that delivery will probably take place within two weeks. (ART 133, PD# 442)

4. What are the conditions to be entitled to maternity leave for female workers in the private sector?
The maternity leave shall be extended without pay on account of illness medically certified to arise out of the
pregnancy, delivery, abortion or miscarriage, which renders the woman unfit for work, unless she has earned unused
leave credits from which such extended leave may be charged.

The maternity leave provided in this Article shall be paid by the employer only for the first four (4) deliveries by a
woman employee after the effectivity of this Code. (ART 133, PD# 442)

5. What is paternity leave?

Paternity Leave refers to the benefits granted to a married male employee allowing him not to report for work for
seven (7) days but continues to earn the compensation therefor, on the condition that his spouse has delivered a
child or suffered a miscarriage for purposes of enabling him to effectively lend support to his wife in her period of
recovery and/or in the nursing of the newly-born child. (RA 8187: Paternity Leave Act of 1996)

6. What are the conditions to be entitled to paternity leave?

Every married male employee in the private and public sectors shall be entitled to a paternity leave of seven (7) days
with full pay for the first four (4) deliveries of the legitimate spouse with whom he is cohabiting. The male employee
applying for paternity leave shall notify his employer of the pregnancy of his legitimate spouse and the expected date
of such delivery. For purposes, of this Act, delivery shall include childbirth or any miscarriage. ((RA 8187: Paternity
Leave Act of 1996)

7. Who are qualified to avail parental leave or solo parent leave? ? RA# 8972 "THE SOLO PARENTS' WELFARE ACT
OF 2000"

Sec. 4. Criteria for Support. - Any solo parent whose income in the place of domicile falls below the poverty threshold
as set by the National Economic and Development Authority (NEDA) and subject to the assessment of the DSWD
worker in the area shall be eligible for assistance:

Provided, however, That any solo parent whose income is above the poverty threshold shall enjoy the benefits
mentioned in Sections 6, 7 and 8 of this Act.

8. Who can and what are the requirements in order to avail the leave for victims of violence against women and their
children? RA# 8972 "THE SOLO PARENTS' WELFARE ACT OF 2000"

Sec. 3. Definition of Terms

(a) "Solo parent" - any individual who falls under any of the following categories:
(1) A woman who gives birth as a result of rape and other crimes against chastity even without a final conviction
of the offender: Provided, That the mother keeps and raises the child;
(2) Parent left solo or alone with the responsibility of parenthood due to death of spouse;
(3) Parent left solo or alone with the responsibility of parenthood while the spouse is detained or is serving
sentence for a criminal conviction for at least one (1) year;
(4) Parent left solo or alone with the responsibility of parenthood due to physical and/or mental incapacity of
spouse as certified by a public medical practitioner;
(5) Parent left solo or alone with the responsibility of parenthood due to legal separation or de facto separation
from spouse for at least one (1) year, as long as he/she is entrusted with the custody of the children;
(6) Parent left solo or alone with the responsibility of parenthood due to declaration of nullity or annulment of
marriage as decreed by a court or by a church as long as he/she is entrusted with the custody of the children;
(7) Parent left solo or alone with the responsibility of parenthood due to abandonment of spouse for at least one
(1) year;
(8) Unmarried mother/father who has preferred to keep and rear her/his child/children instead of having others
care for them or give them up to a welfare institution;
(9) Any other person who solely provides parental care and support to a child or children;
(10) Any family member who assumes the responsibility of head of family as a result of the death, abandonment,
disappearance or prolonged absence of the parents or solo parent.

A change in the status or circumstance of the parent claiming benefits under this Act,
such that he/she is no longer left alone with the responsibility of parenthood, shall
terminate his/her eligibility for these benefits.

SPECIAL GROUPS OF EMPLOYEES

1. What are the different acts of discrimination against women workers? RA# 6725 (AN ACT STRENGTHENING THE
PROHIBITION ON DISCRIMINATION AGAINST WOMEN WITH RESPECT TO TERMS AND CONDITIONS OF
EMPLOYMENT, AMENDING FOR THE PURPOSE ARTICLE ONE HUNDRED THIRTY-FIVE OF THE
LABOR CODE, AS AMENDED.)

"The following are acts of discrimination:

"(a) Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a
female employee as against a male employee, for work of equal value; and

"(b) Favoring a male employee over a female employee with respect to promotion,
training opportunities, study and scholarship grants solely on account of their sexes.

"Criminal liability for the willful commission of any unlawful act as provided in this article
or any violation of the rules and regulations issued pursuant to Section 2 hereof shall be
penalized as provided in Articles 288 and 289 of this Code: Provided, That the
institution of any criminal action under this provision shall not bar the aggrieved
employee from filing an entirely separate and distinct action for money claims, which
may include claims for damages and other affirmative reliefs. The actions hereby
authorized shall proceed independently of each other."
2. When is sexual harassment committed in a wok-related or employment environment? RA 7877: Anti-Sexual
Harassment Act of 1995

Sec. 3
Work, Education or Training -Related, Sexual Harassment Defined. – Work, education or training-related sexual
harassment is committed by an employer, employee, manager, supervisor, agent of the employer, teacher, instructor,
professor, coach, trainor, or any other person who, having authority, influence or moral ascendancy over another in a
work or training or education environment, demands, requests or otherwise requires any sexual favor from the other,
regardless of whether the demand, request or requirement for submission is accepted by the object of said Act.

(a) In a work-related or employment environment, sexual harassment is committed when:

(1) The sexual favor is made as a condition in the hiring or in the employment, re-employment or continued
employment of said individual, or in granting said individual favorable compensation, terms of conditions, promotions,
or privileges; or the refusal to grant the sexual favor results in limiting, segregating or classifying the employee which
in any way would discriminate, deprive ordiminish employment opportunities or otherwise adversely affect said
employee;

(2) The above acts would impair the employee’s rights or privileges under existing labor laws; or

(3) The above acts would result in an intimidating, hostile, or offensive environment for the employee.

(b) In an education or training environment, sexual harassment is committed:

(1) Against one who is under the care, custody or supervision of the offender;

(2) Against one whose education, training, apprenticeship or tutorship is entrusted to the offender;

(3) When the sexual favor is made a condition to the giving of a passing grade, or the granting of honors and
scholarships, or the payment of a stipend, allowance or other benefits, privileges, or consideration; or

(4) When the sexual advances result in an intimidating, hostile or offensive environment for the student, trainee or
apprentice.

Any person who directs or induces another to commit any act of sexual harassment as herein defined, or who
cooperates in the commission thereof by another without which it would not have been committed, shall also be held
liable under this Act.

POST EMPLOYMENT

EMPLOYER-EMPLOYEE RELATIONSHIP

1. What are the kinds of tests to determine employer-employee relationship?

To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the four-fold
test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal;
and (4) the power to control the employee's conduct, or the so-called "control test." Of these four, the last one is the
most important. The so-called "control test" is commonly regarded as the most crucial and determinative indicator of
the presence or absence of an employer-employee relationship. Under the control test, an employer-employee
relationship exists where the person for whom the services are performed reserves the right to control not only the end
achieved, but also the manner and means to be used in reaching that end. (G.R. No. 169510 )

2. What is the four-fold test? the control test? The two-tiered test?
FOUR FOLD TEST
a) the selection and engagement of the employee;
b) the payment of wages;
c) the power of dismissal;
d) the employer's power to control the employee with respect to the means and methods by which the work is to be
accomplished. It is the so-called "control test" that is the most important element.

-Absent the power to control the employee with respect to the means and methods by which his work was to be
accomplished, there is no employer-employee relationship between the parties.
(Philippine Global Communications, Inc. vs De Vera, GR No. 157214, June 7, 2005)

TWO-TIERED APPROACH; THE ECONOMIC DEPENDENCE TEST

1) the putative employer's power to control the employee with respect to the means and methods by which the work is
to be accomplished; and 2) the underlying economic realities of the activity or relationship.

Economic Realities Test

When a worker possesses one attribute of an employee and others of an independent contractor, which make him fall
within an intermediate area, he may be classified under the category of an employee when the economic facts of the
relation make it more nearly one of the employment than one of the independent business enterprise with respect to
the ends sought to be accomplished. (Sunripe Coconut Products Co., Inc. vs CIR, etc., GR No. L-2009, April 30,
1949)

Broader Economic Reality Test

The determination of the relationship between employer and employee depends upon the circumstances of the whole
economic activity, such as:
1) the extent to which the services performed are an integral part of the employer's business;
2) the extent of the worker's investment in equipment and facilities;
3) the nature and degree of control exercised by the employer;
4) the worker's opportunity for profit and loss;
5) the amount of initiative, skill, judgment, or foresight required for the success of the claimed independent enterprise;
6) the permanency and duration of the relationship between the worker and the employer;
7) the degree of dependency of the worker upon the employer for his continued employment in that line of business
(The Labor Code with Comments and Cases Book I by CA Azucena, 2010 ed.)

3. What are the kinds of employment?

In the Philippines, the following are the recognized types of employment: (1) regular; (2) casual; (3) project; (4)
seasonal; (5) fixed-term; and (6) probationary.

Regular and Casual Employment

Pursuant to Article 280 of the Labor Code of the Philippines (“Labor Code”), the primary standard that determines
regular employment is the reasonable connection between the particular activity performed by the employee and the
usual business or trade of the employer; the emphasis is on the necessity or desirability of the employee’s activity.
Thus, when the employee performs activities considered necessary and desirable to the overall business scheme of
the employer, the law regards the employee as regular.

In addition, the Labor Code also considers as regular employment a casual arrangement when the casual employee’s
engagement has lasted for at least one year, regardless of the engagement’s continuity. The controlling test in this
arrangement is the length of time during which the employee is engaged. (See Universal Robina v. Acibo, G.R. No.
186439, 15 January 2014)

Project Employment

Project employment contemplates an arrangement whereby “the employment has been fixed for a specific project or
undertaking whose completion or termination has been determined at the time of the engagement of the employee.”
(Article 280, Labor Code of the Philippines)

Since the employee’s services are coterminous with the project, the services of the project employees are legally and
automatically terminated upon the end or completion of the project.

Seasonal Employment

Seasonal employment applies “where the work or service to be performed is seasonal in nature and the employment
is for the duration of the season.” (Article 280, Labor Code of the Philippines)

Season employees may also be considered regular employees, thus: “[f]arm workers generally fall under the definition
of seasonal employees. We have consistently held that seasonal employees may be considered as regular
employees. Regular seasonal employees are those called to work from time to time. The nature of their relationship
with the employer is such that during the off-season, they are temporarily laid off; but reemployed during the summer
season or when their services may be needed. They are in regular employment because of the nature of their job,and
not because of the length of time they have worked.” (Gapayao v. Fulo, et al., G.R. No. 193493, 13 June 2013)

Fixed-Term Employment

Fixed-term employment is valid when: (a) the fixed period of employment was knowingly and voluntarily agreed upon
by the employer and employee without any force, duress, or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his consent; or (b) it satisfactorily appears that the employer
and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former
or the latter. (See Caparoso, et al. v. Court of Appeals, G.R. No. 155505, 15 February 2007)

Probationary Employment

Probationary employment exists when the employee, upon his engagement is made to undergo a trial period where
the employee determines his fitness to qualify for regular employment, based on reasonable standards made known
to him at the time of engagement. The employer shall make known to the employee the standards under which he will
qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at
that time, he shall be deemed a regular employee. (See Section 6(d), Implementing Rules of Book VI, Rule VII-A of
the Labor Code)

Generally, probationary employment shall not exceed six (6) months from the date the employee started working.
(See Article 281, Labor Code)

TERMINATION BY EMPLOYER
4. What are the just causes for the termination of employment?
According to Article 282 of the Labor Code, an employer can terminate an employee for just causes, which could be
any of the following:

> serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
> gross and habitual neglect by the employee of his duties;
> fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representatives;
> 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
> other similar causes.

5. What are the authorized causes for the termination of employment?

Employers can also terminate an employee based on authorized causes like business and health reasons. Art. 283 of
the Labor Code states that an employee can be terminated due to business reasons such as:

> installation of labor-saving devices;

> redundancy;
> retrenchment (reduction of costs) to prevent losses; or
> the closing or cessation of operation.

TERMINATION BY EMPLOYEE
6. How can an employee terminate his employment?
This type of termination is strengthened by the provisions of Art. 285 of the Labor Code which recognizes two kinds of
termination an employee can initiate – without just cause and with just cause.

7. What is required for resignation to be effective? (Art. 285 of the Labor Code)

If the resignation is without just cause, the employee must give a one (1) month advance written notice for resignation
(commonly referred to as a “resignation letter”) to the employer to enable them to look for a replacement and prevent
work disruption. If the employee fails to provide a resignation letter, he or she runs the risk of incurring liability for
damages.

If the resignation is with just cause, however, the employee need not serve a resignation notice. Art. 285 indicates the
just causes for resignation as follows:

> serious insult to the honor and person of the employee;

> inhuman and unbearable treatment accorded the employee by the employer or his representative;
> crime committed against the person of the employee or any immediate members of the employee’s family; and
> other similar causes.

RELIEFS FROM ILLEGAL DISMISSAL

8. What are the reliefs for illegal dismissal? (G.R. No. 190944)
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs provided
are separate and distinct.1âwphi1 In instances where reinstatement is no longer feasible because of strained relations
between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is
entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages.

MONEY CLAIMS ARISING FROM EMPLOYER-EMPLOYEE RELATIONSHIP

9. What are considered as money claims and when should it be filed?

A monetary claim is a claim requiring the debtor to reimburse, return or restore an amount of money or make any
other payment in respect of an amount of money.

Art 291 (Labor Code Law Of The Philippines, Book VII)

Money claims. All money claims arising from employer-employee relations accruing during the effectivity of this Code
shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred.
All money claims accruing prior to the effectivity of this Code shall be filed with the appropriate entities established
under this Code within one (1) year from the date of effectivity, and shall be processed or determined in accordance
with the implementing rules and regulations of the Code; otherwise, they shall be forever barred.

RETIREMENT
10. What is retirement and its coverage from service under the Labor Code?

Retirement
It is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby
the latter after reaching a certain age agrees and/or consents to sever his employment with the former (Soberano v.
Secretary of Labor, G.R. No. L-43753-56 and G.R. No.L-50991, August 29, 1980; Ariola v. Philex Mining Corp, 446
SCRA 152).

Persons covered by retirement benefit

All Employees in the private sector:

1. Regardless of their position, designation or status; and

2. Irrespective of the method by which their wages are paid (IRR, Book VI, Rule II, Sec.1).

Prepared by:

Atty. Mathniya S. Ali