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TitleDisini Labor Notes
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1.01 Labor Law Defined

LABOR LAW: law governing the rights and duties of the employer and the
employee with respect to the terms and conditions of employment, and with
respect to labor disputes arising from collective bargaining respecting such
terms and conditions

1.02 Law Classification (3 Branches)

LABOR STANDARDS LAW: sets out the minimum terms, conditions and
benefits of employment that employers must provide or comply with and to
which employees are entitled as a matter of legal right.

Labor standards, as defined by jurisprudence, are the minimum
requirements prescribed by existing laws, rules and regulations relating to
wages, hours of work, cost-f-living allowance, and other monetary and
welfare benefits, including occupational, safety and health standards
(Maternity Children’s Hospital v Secretary of Labor, GR No. 78909, June 30,

LABOR RELATIONS LAW: defined the status, rights and duties, and the
institutional mechanisms, that govern the individual and collective
interactions of employers, employees or their representatives.

WELFARE LAWS (SOCIAL LEGISLATION): laws that provide particular
kinds of protection or benefits to society or segments thereof in furtherance
of social justice.

*SOCIAL JUSTICE: the aim, reason and justification of labor laws.

Cases (Labor Standards)
Batong Buhay Goldmines, Inc. v De La Serna (312 SCRA 22)
Labor standards refers to the minimum requirements prescribed by existing
laws, rules and regulations relating to wages, hours of work, cost of living
allowance and other monetary and welfare benefits, including occupational,
safety and health standards. Labor standards cases are governed by Article
128(b) of the Labor Code.

Peñaranda v Baganga Plywood Corp. (489 SCRA 94)
Article 82 of the Labor Code exempts managerial employees from the
coverage of labor standards. Labor standards provide the working
conditions of employees, including entitlement to overtime pay and

premium pay for working on rest days. Under this provision, managerial
employees are “those whose primary duty consists of the management of
the establishment in which they are employed or of a department or

1.03 Basis for Enactment of Labor Law


ART. II. SEC. 5: “The maintenance of peace and order, the protection of
life, liberty and property and promotion of the general welfare are
essential for the enjoyment by all the people of the blessings of democracy.”

ART. II, SEC. 18: “The State affirms labor as a primary social
economic force. It shall protect the rights of workers and promote their

ART. XIII, SEC. 1: “The Congress shall give highest priority to the
enactment of measures that protect and enhance the right of all the people
to human dignity, reduce social, economic and political inequalities, and
remove cultural inequities by equitably diffusing wealth and political power
for the common good.

To this end, the State shall regulate the acquisition, ownership, use and
disposition of property and its increments.”

Cases (Police Power)
CMS Estate, Inc. v SSS (132 SCRA 106)
The SSS Law implements the general welfare mandate of the Constitution
and constitutes a legitimate exercise of the police power of the State, to
which the principle of non-impairment of the obligation of contract is not a
proper defense. It was enacted pursuant to the policy of the government “to
develop, establish gradually and perfect a social security system which shall
be suitable to the needs of the people throughout the Philippines, and shall
provide protection against the hazards of disability, sickness, old age and
death (Sec. 2)

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1.04 Sources of Law

A. Labor Code and Related Special Legislation (including
Implementing Rules)

Mariveles Shipyard Corp. v CA (415 SCRA 573)
Petitioner cannot evade its liability by claiming that it had religiously paid
the compensation of guards as stipulated under the contract with the
security agency. Labor standards are enacted by the legislature to alleviate
the plight of workers whose wages barely meet the spiraling costs of their
basic needs. Labor laws are considered written in every contract.
Stipulations in violation thereof are considered null. Similarly, legislated
wage increases are deemed amendments to the contract. Thus, employers
cannot hide behind their contracts in order to evade their (or their
contractors’ or subcontractors’) liability for noncompliance with the statutory
minimum wage.

B. Contract (Civil Code)

ART. 1305: “A contract is a meeting of minds between two persons
whereby one binds himself, with respect to the other, to give something or
to render some service.”

ART. 1306: “The contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they
are not contrary to law, morals, good customs, public order or public

Kasapian ng Malayang Manggagawa s a Coca - Cola v CA (487 SCRA
The MOA, being a contract freely entered into by the parties, now
constitutes as the law between them, and the interpretation of its contents
purely involves an evaluation of the law as applied to the facts herein.

C. Collective Bargaining Agreement

BOOK 5, RULE I, SEC. 1 (J): CBA “refers to the contract between a
legitimate labor union and the employer concerning wages, hours of work,
and all other terms and conditions of employment in a bargaining unit.”

DOLE Phils., v Pawis ng Makabayang Obrero (395 SCRA 112)
The CBA is the norm of conduct between the parties and compliance
therewith is mandated by the express policy of the law.

D. Past Practices (Company Practices)


1. Freely, voluntarily and continuously given within a considerable
length of time

2. Not just a single instance (not granted only once)
3. Should have been done over a long period of time and must be

shown to have been consistent and deliberate
4. Not be by reason of a strict legal or contractual obligation, but by

reason of an act of liberality on the part of the employer

Arco Metal Products Co. v Samahan (554 SCRA 111)
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had
adopted a policy of freely, voluntarily and consistently granting full benefits
to its employees regardless of the length of service rendered. True, there
were only a total of seven employees who benefited from such a practice,
but it was an established practice nonetheless. Jurisprudence has not laid
down any rule specifying a minimum number of years within which a
company practice must be exercised in order to constitute voluntary
company practice. Thus, it can be six (6) years, three (3) years, or even as
short as two (2) years. Petitioner cannot shirk away from its responsibility
by merely claiming that it was a mistake or an error, supported only by an
affidavit of its manufacturing group head.

McLeod v NLRC (512 SCRA 222)
That at one time PMI reimbursed McLeod for his and his wife’s plane tickets
in a vacation to London could not be deemed as an established practice
considering that it happened only once. To be considered a "regular
practice," the giving of the benefits should have been done over a long
period, and must be shown to have been consistent and deliberate.

Davao Fruits Corporation v Associated Labor Union (225 SCRA 562)
The Supplementary Rules and Regulations put to rest all remaining doubts
as to the computation of the 13th months pay. Yet, DFC freely, voluntarily
and continuously computed and paid the 13th month pay including its items,
which were supposed to be excluded, payments for sick/vacation/maternity
leave; premiums for work done on rest days and special holidays; and pay
for regular holidays.

Samahang Manggagawa etc v NLRC (295 SCRA 171)
No benefits or privileges previously enjoyed by petitioner union and the
other employees were withdrawn as a result of the manner by which private
respondent implemented the wage orders. Granted that private respondent
had granted an across-the-board increase pursuant to Republic Act No.
6727, that single instance may not be considered an established company

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appropriate regulations to be issued by the Secretary of Labor or as
stipulated in a collective bargaining agreement.

Full Payment
Lopez Sugar Corp v Franco, 458 SCRA 515 (2005)
In Asian Alcohol Corporation v. National Labor Relations Commission,
the Court ruled that redundancy exists when the service capability of the
work force is in excess of what is reasonably needed to meet the
demands on the enterprise. The Court proceeded to expound, as

A redundant position is one rendered superfluous by any number of
factors, such as over-hiring of workers, decreased volume of
business, dropping of a particular product line previously
manufactured by the company or phasing out of a service activity
priorly undertaken by the business. Under these conditions, the
employer has no legal obligation to keep in its payroll more
employees than are necessary for the operation of its business.

Contrary to the petitioner’s claim, the employer must comply with the
following requisites to ensure the validity of the implementation of a
redundancy program: (1) a written notice served on both the employees
and the Department of Labor and Employment at least one month prior
to the intended date of retrenchment; (2) payment of separation pay
equivalent to at least one month pay or at least one month pay
for every year of service, whichever is higher; (3) good faith in
abolishing the redundant positions; and (4) fair and reasonable criteria
in ascertaining what positions are to be declared redundant and
accordingly abolished.

G&M (Phil.) Inc. v Batomalaque, 461 SCRA 111 (2005)
Well-settled is the rule that in cases of non-payment and underpayment
of salaries and wages, the employer has the burden of proof to show
that the worker/employee has been paid all his salaries and wages since
it has in its possession the proof of payment such as payrolls and/or
vouchers (Sambalonay vs. Jose Cuevas, NLRC No. RB IV – 186447,
February 13, 1980) and in the absence of proof to the contrary, it is
deemed that no payment has been made.

On repeated occasions, this Court ruled that the debtor has the burden
of showing with legal certainty that the obligation has been discharged
by payment. To discharge means to extinguish an obligation, and in
contract law discharge occurs either when the parties have performed
their obligations in the contract, or when an event the conduct of the
parties, or the operation of law releases the parties from performing.
Thus, a party who alleges that an obligation has been extinguished must
prove facts or acts giving rise to the extinction.

The fact of underpayment does not shift the burden of evidence to the
plaintiff-herein respondent because partial payment does not extinguish
the obligation. Only when the debtor introduces evidence that the
obligation has been extinguished does the burden of evidence shift to
the creditor who is then under a duty of producing evidence to show
why payment does not extinguish the obligation.

P.I. Manufacturing v P.I. Manufacturing etc., 545 SCRA 613
Contrary to petitioner’s stance, the increase resulting from any wage
distortion caused by the implementation of Republic Act 6640 is not
waivable. As held in the case of Pure Foods Corporation vs. National
Labor Relations Commission, et al.:

"Generally, quitclaims by laborers are frowned upon as contrary to
public policy and are held to be ineffective to bar recovery for the
full measure of the worker’s rights. The reason for the rule is that
the employer and the employee do not stand on the same footing."

Moreover, Section 8 of the Rules Implementing RA 6640 states:

No wage increase shall be credited as compliance with the increase
prescribed herein unless expressly provided under valid individual
written/collective agreements; and provided further that such wage
increase was granted in anticipation of the legislated wage increase
under the act. But such increases shall not include anniversary wage
increases provided in collective bargaining agreements.

Likewise, Article 1419 of the Civil Code mandates that:

When the law sets, or authorizes the setting of a minimum wage for
laborers, and a contract is agreed upon by which a laborer accepts a
lower wage, he shall be entitled to recover the deficiency.

Thus, notwithstanding the stipulation provided under Section 2 of the
Company and Supervisors and Foremen Contract, we find the members
of private respondent union entitled to the increase of their basic pay
due to wage distortion by reason of the implementation of RA 6640.

Payroll Payment
Phil. Global Communications Inc. v De Vera, 459 SCRA 260
Deeply embedded in our jurisprudence is the rule that courts may not
construe a statute that is free from doubt. Where the law is clear and
unambiguous, it must be taken to mean exactly what it says, and courts
have no choice but to see to it that the mandate is obeyed. As it is,
Article 157 of the Labor Code clearly and unequivocally allows
employers in non-hazardous establishments to engage “on retained

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basis” the service of a dentist or physician. Nowhere does the law
provide that the physician or dentist so engaged thereby becomes a
regular employee. The very phrase that they may be engaged “on
retained basis”, revolts against the idea that this engagement gives rise
to an employer-employee relationship.

Chavez v NLRC, 448 SCRA 478 (2005)
Moreover, under the Rules Implementing the Labor Code, every
employer is required to pay his employees by means of payroll. The
payroll should show, among other things, the employee’s rate of pay,
deductions made, and the amount actually paid to the employee.
Interestingly, the respondents did not present the payroll to support
their claim that the petitioner was not their employee, raising
speculations whether this omission proves that its presentation would be
adverse to their case.

Cash Wage
Congson v NLRC, 243 SCRA 260 (1995)
Undoubtedly, petitioner's practice of paying the private respondents the
minimum wage by means of legal tender combined with tuna liver and
intestines runs counter to the above-cited provision of the Labor Code.
The fact that said method of paying the minimum wage was not only
agreed upon by both parties in the employment agreement, but even
expressly requested by private respondents, does not shield petitioner.
Article 102 of the Labor Code is clear. Wages shall be paid only by
means of legal tender. The only instance when an employer is permitted
to pay wages informs other than legal tender, that is, by checks or
money order, is when the circumstances prescribed in the second
paragraph of Article 102 are present.

Payroll Entries
Kar Asia Inc v Corono, 437 SCRA 184 (2004)
Moreover, the affidavits of Ermina Daray and Cristita Arana, whose
verity we find no reason to suspect, confirmed the truthfulness of the
entries in the payrolls and affirmed the receipt by the respondents of
their full compensation. Entries in the payroll, being entries in the
course of business, enjoy the presumption of regularity under Rule 130,
Section 43 of the Rules of Court. It is therefore incumbent upon the
respondents to adduce clear and convincing evidence in support of their
claim. Unfortunately, respondents’ naked assertions without proof in
corroboration will not suffice to overcome the disputable presumption.

9.04 Time Payment

SEC. 103: Wages shall be paid at least once every two (2) weeks or
twice a month at intervals not exceeding sixteen (16) days. If on
account of force majeure or circumstances beyond the employers
control, payment of wages on or within the time herein provided cannot
be made, the employer shall pay the wages immediately after such force
majeure or circumstances have ceased. No employer shall make
payment with less frequency than once a month.

The payment of wages of employees engaged to perform a task which
cannot be completed in two (2) weeks shall be subject to the following
conditions, in the absence of a collective bargaining agreement or
arbitration award:
(1) That payments are made at intervals not exceeding sixteen (16)

days, in proportion to the amount of work completed;
(2) That final settlement is made upon completion of the work.

9.05 Place Payment

• General Rule: At or near the place of undertaking
• Exceptions:

o When payment cannot be effected at or near the place of
work by reason of the deterioration of peace and order
conditions, or by reason of actual or impending emergencies
caused by fire, flood, epidemic, or other calamity rendering
payment thereat impossible;

o When the employer provides free transportation to the
employees back and forth; and

o Under any analogous circumstances, provided that the time
spent by the employees in collecting their wages shall be
considered as compensable hours worked.

• Prohibited Places:
o Bar, night or day club, drinking establishment
o Massage clinic
o Dance hall
o Other similar places or in places where games are played

with stakes of money or things representing money
o EXCEPT: in case of persons employed in said places

SEC. 104: Payment of wages shall be made at or near the place of
undertaking, except as otherwise provided by such regulations as the
Secretary of Labor and Employment may prescribe under conditions to
ensure greater protection of wages.

Labor Advisory Payment of Salary Thru ATM (DOLE 1996)
Payment thru ATM is allowed provided the following conditions are met:

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Gamogamo v PNOC Shipping and Transport Corp, 381 SCRA 742
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.

Lopez v National Steel Corp, 423 SCRA 109 ( 2004 )
While it is axiomatic that retirement laws are liberally construed in favor of
the persons intended to be benefited, however, such interpretation cannot
be made in this case in light of the clear lack of consensual and statutory
basis of the grant of retirement benefits to petitioner.

Sa lomon v Assn of Internation al Shipping Lines, 457 SCRA 254
While it is axiomatic that retirement laws are liberally construed in favor of
the persons intended to be benefited, however, such interpretation
cannot be made in this case in light of the clear lack of consensual
and statutory basis of the grant of retirement benefits to petitioner.

MAI Phils. Inc v NLRC, 151 SCRA 196 (1988)
Yet a third serious mistake, amounting to grave abuse of discretion, too,
may be ascribed to the Commission; and that is, its refusal, or neglect to
consider the fact-again quite plain from the record and to which MAI had
adverted more than once-that the matter of Nolasco's reinstatement had
become moot and academic at the time that he filed his second action
before the labor arbiters' office against MAI on August 16, 1982; for as of
that day, he had already reached the age of 60 years, which is the
retirement age fixed by the Labor Code.

Producers Bank of the Phils v NLRC, 298 SCRA 517 (1998)
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.

Reyes v NLRC, 529 SCRA 487 (2007)
The article provides for two types of retirement: (a) compulsory and (b)
optional. The first takes place at age 65, while the second is primarily
determined by the collective bargaining agreement or other employment
contract or employer’s retirement plan. In the absence of any provision on
optional retirement in a collective bargaining agreement, other employment
contract, or employer’s retirement plan, an employee may optionally retire
upon reaching the age of 60 years or more, but not beyond 65 years,
provided he has served at least five years in the establishment concerned.

Brion v South Phil. Union Mission of the Seventh Day Adventist
Church, 307 SCRA 497 (1999)
Again, it has been held that "pension and retirement plans create a
contractual obligation in which the promise to pay benefits is made in
consideration of the continued faithful service of the employee for the
requisite period. In other words, before a right to retirement benefits or
pension vests in an employee, he must have met the stated conditions of
eligibility with respect to the nature of employment, age, and length of
service. This is a condition precedent to his acquisition of rights thereunder.

We rule that the conditions of eligibility for retirement must be met at the
time of retirement at which juncture the right to retirement benefits or
pension, if the employee is eligible, vests in him.

Ground Termination
Cainta Catholic School v Cainta Catholic School Employees Union,
489 SCRA 468 (2006)
Retirement is a different specie of termination of employment from dismissal
for just or authorized causes under Articles 282 and 283 of the Labor Code.
While in all three cases, the employee to be terminated may be unwilling to
part from service, there are eminently higher standards to be met by the
employer validly exercising the prerogative to dismiss for just or authorized
causes. In those two instances, it is indispensable that the employer
establish the existence of just or authorized causes for dismissal as spelled
out in the Labor Code. Retirement, on the other hand, 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.

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15.02 Accrual of Benefits

Cruz v Phil. Global Communications, Inc, 430 SCRA 185 (2004)
Thus, petitioners are entitled only to either the separation pay provided
under Article 283 of the Labor Code, as amended, or retirement benefits
prescribed by the Retirement Plan, whichever is higher.

The employees’ right to payment of retirement benefits and/or separation
pay is governed by the Retirement Plan of the parties. Under the
Retirement Plan before us, petitioners are not entitled to both
separation pay and retirement benefits.

Llora Motors Inc v Drilon, 179 SCRA 175 (1989)
Examination of Article 287 above shows that entitlement to retirement
benefits may accrue either (a) under existing laws or (b) under a collective
bargaining agreement or other employment contract. It is at once apparent
that Article 287 does 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 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 benefits and maternity leave benefits. As is commonplace
knowledge, the Social Security Act provides for retirement benefits which
essentially consist of the right to receive a monthly pension for the rest of
the covered employee's life provided that: (1) such employee had paid at
least one hundred twenty (120) monthly contributions prior to retirement;
and (2) has reached the age of sixty (60) years (if his salary is less than
P300.00 a month) or 65 years. The retirement scheme here 'established is
compulsory and contributory in character on the part of both the employer
and the employee, backed up by criminal sanctions and administered by a
large and elaborate bureaucracy.

15.03 Private Plan

Employer Obligation
GVM Security and Protective Agency v NLRC, 224 SCRA 734 (1993)
As stressed in Llora Motors, Inc., Article 287 does not in 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, like the Social Security Act.

15.04 Benefits and Gratuity
Sta. Catalina College v NLRC, 416 SCRA 233 (2004)
Gratuity pay x x x is paid to the beneficiary for the past services or favor
rendered purely out of the generosity of the giver or grantor. Gratuity,
therefore, is not intended to pay a worker for actual services rendered or for
actual performance. It is a money benefit or bounty given to the worker,
the purpose of which is to reward employees who have rendered
satisfactory service to the company.


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