13th Month Pay Law the employer is deemed to be compliant with the

13th Month Pay Law. (7:26) credit of such

Who are entitled to 13th Month Pay? payment of anytime the bonus is given – mid-year
bonus, Christmas bonus, etc. – for as long as it is
Only employees in the private sector. In the case equivalent to the 13th month pay as contemplated
of Alliance of Government Workers v. Minister in P.D. 851, then such payment may be credited.
of Labor and Employment, government
employees are not entitled, are not contemplated As mentioned by the Supreme Court in those
under the 13th Month Pay Law. cases, the law does not intend to actually impose
additional burden on the part of any employer who
Second, you might have the misconception that is already paying additional month’s pay to the
supervisors and managers are entitled as a matter employees.
of law to 13th Month Pay. They are not. Only rank
and file employees per law are entitled to 13th How is 13th Month Pay computed and what is
month pay. the composition of the 13th Month Pay?

Are all supervisors and managers accorded 13th month pay only contemplates base pay - 1/12
with 13th Month Pay? of the base pay, so basically 1 month’s base pay.
Anything that is not enumerated in the base pay
They have the cause of the liberality and ought not to be taken to account for purposes of
generosity of the employer, not because it is the 13th month pay.
mandated by law.
What are examples of those?
When should the 13th Month Pay be paid?
Sick leave equivalent to sick leave credits,
Like for example now we are approaching the equivalent to (8:38) credits, equivalent to
Christmas season, it should be paid to the maternity leave credits – all those with peso value.
employees in the private sector on or before Will you include it, will you take it into account
December 24. It is really intended to afford the for purposes of computing 13th month pay? NO,
employees in the private sector an additional it’s just the base pay and anything that is
month’s pay (Pls double check 5:58 if I heard him enumerated in the base pay.
right) the law itself says by way of repeal but for
some, we still give Christmas bonus. Take note class of the cases of Philippine
Duplicators, Inc. v. NLRC and Boie-Takeda v.
May an equivalent bonus granted by the De la Serna on whether or not commissions are
employer be credited as 13th Month Pay? included in the computation of 13th month pay. In
this particular case of Philippine Duplicators Inc,
Take a look at the case of Producers Bank of the Supreme Court said that because the provisions
Philippines v. NLRC where the Supreme Court are based on the effort of the sales people versus
also cited the cases of Manila Banking the base in Boie-Takeda where it is placed not
Corporation v. NLRC and Traders Royal Bank really on the effort but on the profit, profit made
v. NLRC. by business, it is only when the commissions are
effort-based just like in the case of Philippine
The answer is yes. An equivalent bonus granted by Duplicators, that commissions are considered part
the employer may be credited as 13th month pay. and parcel of base pay, and part and parcel of the
In those cases, the Supreme Court said the 13th 13th month pay. In Boie-Takeda v. De la Serna,
Month Pay Law was not intended to impose an since it is profit share, it is not definitely anchored
additional burden on the part of the employers, and based on the efforts exerted by the sales
such that if it is already granting the bonus employees, but based on the profit derived by the
equivalent to 1/12 - because 13th month pay is company in its business, then the Supreme Court
equivalent to 1/12 of your base pay per year - then said, those commissions are not to be factored and
not to be considered for purposes of computing What does that mean to you?
13th month pay.
If there is anything on retirement in the
Does an employee who has resigned from his employment contract of the employee, or if there
employment or who has been terminated from is anything in the CBA where the employee is part
his employment receive or be entitled to 13th of the bargaining unit, then that CBA or that
Month Pay? employment contract will govern. In the absence
of that, that is the only time the Retirement Pay
Yes. Even if the termination is for authorized Law in Article 302 will apply.
cause, and even if the termination is by virtue of
voluntary resignation, employee is entitled to 13th And what does Article 302 say?
month pay, however, that 13th month pay will be
proportionately paid based on the actual The retirement may be had by the employee upon
attendance of the employee. reaching the age of 60 with at least 5 years of
service. That is the optional retirement
Like for example, the employee resigns sometime qualification. However, the mandatory retirement
in June, mid-year, so that will be 6/12, that’s ½ so qualification is the age of 65. The 5-year service
you will have to apply ½ from the 1 month’s base qualification applies only to the 60 years of age. It
pay of the employee’s wages. does not apply to the 65 years of age. So, kung 65
ka na, definitely, mandatory retirement
Are government employees entitled to 13th qualification will apply. Kung 60 ka na, you can
Month Pay? retire optional basis but you must have rendered at
least 5 years of service under this law. Kaya nga
They are not. That’s settled in the case of Alliance sinasabi ko sa inyo, in the absence of a CBA or
of Government Workers v. Minister of Labor and employment contract. Kung merong employment
Employment. That is the reason why they are contract or CBA - that will prevail.
getting their Christmas bonus of Php 5,000. That is
not in the basis of PD 851. That is on the basis of What is the retirement benefit embodied under
corporations by the government for government the law?
employees.
15 days-pay or ½ month’s salary plus 1/12 of the
Those who are purely paid by commission, 13th month pay and 5 days of Service Incentive
boundary of tax basis or fixed amount for specific Leave. That totals to 22.5 month’s pay for every
allocation are excluded from entitlement to 13th year of service. How did you arrive at 22? 15+5 =
month pay. However, piece rate workers are 20, 1/12 of 13th month pay is 2.5 so 15+5+2.5 =
entitled to 13th month Pay. 22.5.

Retirement Pay Law Now, take note class of the very important
landmark decision of the Supreme Court on
This is now enshrined in Article 302 of the Labor retirement pay in Jaculbe v. Siliman University.
Code, as renumbered, formerly Article 287 of the We will again discuss this when we reach Labor
former Labor Code. Relations but since we are in the discussion of
labor standards benefits, it is best that you know it
What is the retirement age? because it might be given in the Departmental
Examinations (!!!)
Note class the qualification in the provision. In the
absence of an applicable Collective Bargaining In Jaculbe v. Siliman University, the Supreme
Agreement or anything in the employment Court said that if there is no CBA, no employment
contract, this is what will govern. The Retirement contract, if there is anything that will change the
Pay Law is what will govern. qualification requirement in terms of optional
retirement - that has to have consent of the
employee. Otherwise, the employee is not bound 10. OTHER IMPORTANT LABOR
by such retirement provision. PROVISIONS

What happened in this case? B. Contracting Arrangement

In this case, the employee was 57 years old but she Who are the parties in a contracting
had rendered already 35 years of service. Yung relationship?
retirement ng Siliman says, you will be
automatically retired upon reaching the age of 60 What are the relevant laws that govern their
OR if you have rendered at the very least 35 years relationship? Are there any regulations that
of service. So pinare-retire itong teacher. Sabi govern contractual relationship?
nung teacher, “Huwag naman po. Gusto kong
makapagtrabaho”, because she was just 57. Can you define Labor-Only Contracting and
“Hindi po ba pwedeng until 60? Dahil gusto ko pa how is it different from Job Contracting?
pong magtrabaho.” Pinilit ng university, she was
retired, so she filed for illegal dismissal. If a company outsources a function or activity
Supreme Court in this case made the which is directly related to its business, or a
comparison with the case of Pantranco v. NLRC. function or activity usually necessary or
Pantranco expressly provided in the CBA yung desirable to its business, does that
kanilang early retirement feature. Dito, (referring automatically make the arrangement a Labor-
to the Jaculba case) there is nothing. And so, Only Contracting arrangement?
Supreme Court said in this case that companies
cannot just unilaterally establish as policy (Nganga me sa recit, Sir is talking about Endo.
something that will accelerate the retirement of an C R I N G E)
employee without his or her consent. Meaning to
say, you cannot accelerate the retirement of an
employee by deviating from the provision of the What do you mean by independent business?
Retirement Pay Law without the consent of the
employees. Ang sinasabi ng Supreme Court dito, (“Kukuha ko na ba siya ng tubig?” – Questin,
hindi sinasabi ng Supreme Court na hindi 2016)
pwedeng mag takda ang employer ng early
retirement or optional retirement qualification.
Hindi niya sinasabi yun. Ang sinasabi lang ng [Sir goes back to the previous question re:
Supreme Court is if and when the employer sets a outsourcing]
qualification that a requirement for early
retirement or optional requirement earlier or in a So class, there is nothing wrong in outsourcing a
more accelerated fashion than what is provided by function even if it is directly related to the
law, it has to bear the consent of the employees. business of the principal. Alam niyo, ang decisions
Kung walang consent, just like here, kasi dito ang ng Supreme Court (…) vacillating (please check
provision ng retirement policy ng Siliman, ‘upon 39:43) in terms of the use of ‘directly related to
employment you shall automatically become a the business of the principal usually necessary and
member of the retirement plan.’ Automatic, desirable to the business of the principal’. Merong
walang (20:37) decisions na sinasabi “directly related” or may
So sabi sa Jaculbe, kailangan merong nagsasabing “usually necessary and desirable”
consent if ever you will (…) an accelerated but in any which way, nothing is proscribed,
requirement of an employee based on the nothing is wrong with outsourcing such function
retirement pay. Okay? So take note of that case, provided, the contractor has substantial capital in
Jaculbe vs. Siliman Univeristy. the form of tools, equipment and (Can’t
understand the word around 40:24) as prescribed
by DO 18-A, Php 3 Million for corporations and
partnerships, and net worth of the same amount for
individuals or single proprietors. Again class, there is nothing that prevents
outsourcing of functions necessary and desirable
Second, they do not exercise control over the to the business.
employees. Ang masama kasi, kapag nag contract-
out yung isang kumpanya, and then there’s merely We know what Labor-Only Contracting is, we
a supply of manpower by a LOC, it is not really a know what Job Contracting is. Pag-usapan natin
supply of service katulad nung sa case of Tabas v. ngayon yung liabilities and consequences.
CMC. What did the California Manufacturing
need? They wanted people to do promo If there is Labor-Only Contracting, what is the
merchandising. Ang ginawa ni Levi, manpower implication or consequence?
services – merely supply the manpower. Who
exercises control? CMC. Therefore, there’s merely So the principal really becomes liable. So parang
a supply of manpower and therefore, this is a case nagkakaroon ng identification of the personalities
of Labor-Only Contracting. between that of the employer and that of the
contractor in labor-only contracting. It is as if,
Class, take note of the D.O. No. 1 Series of 2012 based on jurisprudence, it is the principal who had
of the DOLE clarifying the applicability of D.O. employed the employees of the contractor. So, yun
18-A to business process outsourcing and ang essence ng implication ng labor-only
construction investing. Ang sinabi dito, BPOs are contracting.
out of the coverage of D.O. 18-A. So far as the
construction investing is concerned, what governs What about in Job Contracting, what is the
is D.O. No. 19 and D.O. No. 13, pero hindi rin sila consequence?
papatak sa D.O. 18-A. But if you come to think of
it, yung ginagawa ng BPO, mas (can’t understand What is the liability of the Principal in case of
the word he said around 43:14) nila kasama sa Job Contracting?
coverage ng D.O. 18-A. This is something that is
consistent with this. Why? Because what they’re What is the liability of the Principal vis-à-vis
doing is really legitimate job contracting, hindi contractor?
labor-only contracting. Why? Because tatawag
yung kliyente, “Kailangan naming ng customer Jointly – You cannot proceed against anyone of
service.” Ang gagawin nung Convergys, they will the debtor for the whole of the debt. You
hire – because Convergys will virtually be the will only be proceeding against a
contractor – maghi-hire sila ng tao, magt-train particular debtor to the extent of a portion
sila ng tao at ang supervision is with the – of the petition, or portion of the debt.
(Kinuha mo na ng tubig si Sir) Ang gagawin ng
Convergys, sila yung maghi-hire, sila yung magt- Joint and Several – Solidary. You can proceed
train based on the specs prescribed by the client, against the obligors, against anyone of
sila rin ang magus-supervise, at dun din sa them, for the totality of the obligation
kanilang premises. So that is legitimate job without prejudice to the debtors and
contracting. Why? Because they are supplying obligors asking for reimbursement from
service. Hindi katulad nung sa CMC, sabi ni the other obligors or debtors.
CMC, “Kailangan ko ng promo merchandisers”
“O sige, padalan kita ng 20, o kung ilan man.” Ano ang liability ng principal at ng contractor?
Tatapon na nila yun sa supermarket where these Is it joint, or is it joint and several?
people will be in charge with- magsasalansan sila
ng – kaya nga pag naririnig niyo sa mga So solidary ang kanilang liability. For what?
supermarket yung mga ‘diser’ ‘diser’ Minimum standard benefits and minimum wages.
(merchandiser) – these are the contractual people.
So, yun ang kaibahan ng supplying manpower and
supplying service.
What is the doctrine established in the case of unfair labor practice is a criminal act, it is not
Rosewood Processing v. NLRC? merely just a violation of labor standards. It is
penal in character. So everything that a contractor
Remember class, we are talking here of legitimate does which is punitive in character, and because it
job contracting. Kasi yung labor-only contracting, is the contractor, as Mr. Canada mentioned, who is
settled na yun. Ang implication nun is that it is as responsible for the employees, who exercises the
if the principal is the employer of the contractor’s power of control over the employees, that being
employees. the basis for the employer-employee relationship,
if they are contractor’s employees then it should
Eto, legitimate job contracting. Ang sabi ni Mr. solely be the contractor who should bear the
Mansibang, solidary liability in so far as minimum liability for such action.
wage and benefits granted under the Labor Code.
Solidary yung principal with the contractor. Iba yun sa failure to provide minimum standard
benefits under the Labor Code, where the liability
Halimbawa, di ba sabi natin legitimate job of the principal and that of the contractor is
contracting, supply of service. Ang contractor solidary.
mismo yung nagma-manage ng mga empleyado.
Halimbawa, nagkaroon ng union busting in the Pero kung meron mga actions ang contractor
organization because the contractor is trying to which are punitive in character, then definitely,
bust the union. Pagkatapos may finding ng unfair that is solely the contractor’s liability. (Not the
labor practice. actual word used, hindi ko gets sinabi niya pls) It
is not something to withhold the principal or the
Is that something that you can hold the employer liable for. So that is the doctrine in
principal solidary liable with the contractor? Rosewood Processing v. NLRC.

In so far as that unfair labor practice is What are the rights of contractual employees?
concerned, what is the liability of the contractor
vis-à-vis the principal? What do you notice from the rights of
contractual employees?
Sabi ni Mr. Mansibang, it is no different from the
liability of the contractor and the principal for It is the same as the rights of the regular
minimum standard benefits, which is solidary. Yun employees. Kaya nga ngayon class kung
ang sabi niya. So dito, kung merong ULP, solidary mapapansin ninyo dun sa pag-uusap tungkol sa
din ang principal with the contractor. Endo, ang sinuggest ni Secretary Ramon Lopez ng
DTI, win-win situation daw na gawin na lang is
What is your position? that, i-provide ang benefits sa mga contractual
employees. When you say provide them with
What is the doctrine established in Rosewood benefits, provide them with the minimum standard
Processing v. NLRC? benefits under the Labor Code. What are those?
Minimum Wage, SSS, PhilHealth, Employee’s
Because that is where the answer lies, and that is Compensation, etc. And basta nap-provide yun,
a decided case of the Supreme Court. So, if it is a then the Contracting Arrangement should be legal.
decided case by the Supreme Court, by Doctrine of
Incorporation, it will form part of the legal system, Bakit yan ang suggestion ni Secretary Lopez?
and it may become laws of the land. Kasi, na-realize nila na imposible talagang
tanggalin mo yung sabihin mo na totally walang
Class, in the case of Rosewood Processing v. Endo in the sense na lahat regular employees.
NLRC, anything that the contractor does which is Kasi ang thinking nila ngayon, kapag sinabi mong
punitive in character, like for example unfair labor end of Endo, dapat lahat regular na empleyado ng
practice, because if you will study unfair labor kumpanya. Yan ang thinking nila, yan ang
practice in the next semester, you will learn that kanilang supposition - na lahat regular status. But
how can you do that? Number one, merong spike benepisyo, merong minimum wage, merong SSS,
sa business. There are times when business so on and so forth” Sabi niya, win-win yan — it
demands, lalo na ngayong Christmas season, serves both the interest of the employers and the
meron naman na pagkatapos ng Pasko, babagsak employees. Pinatagal nila ng pinatagal yan, so
ang demand. What are you going to have use for sabi ng labor groups, "Ayaw namin, gusto namin
all of those people (1:07:50 RIP to my English and absolutely. Gusto namin, lahat regular. Ayaw
listening comprehension. But I think he meant na namin ng mga may seasonal, project." Paano mo
ano pa ang use ng mga tao na yun) kung lahat yan gagawin yun?
regular? Ang mangyayari niyan is that, kung ire-
regular mo lahat yan, at some point in time in the You know, the big issue here is how you are gonna
business, we’ll have to terminate them, also from come up with a regulation that is consistent with
the basis of authorized causes, and that will really the current Labor Code that we have. Eh yung
be expensive for the employers. Why? Because if Labor Code mo naman, hindi naman pwedeng
you terminate them on the basis of authorized palitan ng DOLE. Legislation yan eh. Under Art. 5
causes, for example retrenchment – kasi sobra ang of the Labor Code, ino-authorize lang ang SOLE
dami ng tao eh, wala ng demand – what are you to come up with rules and regulations
going to pay? implementing the Labor Code. Hindi naman
pwedeng i-change ni Sec. Bello ang ating Labor
Management of an organization is similar to Code (LC). Mag-i-issue lang siya ng rules and
management of a household. Bakit ka kukuha ng regulations implementing the LC. But how are you
sangkaterba na kasambahay kung ang gonna contend with provisions in the LC such as
pangangailangan sa bahay mo ay ganitong that of Art. 280 before, defining regular and
gawain lang? Kung magagawa ng isang casual employment, project employment. Yung
kasambahay, kukuha ka pa ba ng tatlong case ni Brent v. Zamora na fixed term
kasambahay? Hindi, di ba? Ngayon, kung merong employment. How are you gonna contend with
spike o meron kang darating na mga bisita na that? All of those will have to be thrown into the
galing Amerika, kailangan marami sila garbage bin if you are going to come up with rules
(kasambahay), siguro kukuha ka pansamantala ng and regulations na totally lahat regular. Kaya
isang kasambahay para tumulong. Pero pag nung kampanya pa lang, hindi ko na alam kung
nakaalis na yung mga bisita mo, pag wala ng paano nila gagawin yan. That's why they are in a
demand para sa mga gawain sa bahay, ano ang bind now. They are saying that they can't issue the
gagawin mo dun sa isa o dalawang additional na rules and regulations. I don't know how they are
kasambahay? going to issue the rules and regulations. I don't
know how significant those rules and regulations
Ganun din yun sa organization. May usual is gonna be vis-a-vis the LC. Because paano nila
demand during Christmas season, ang laki ng ico-contravene ang provisions ng LC. What Sec.
spike, kailangan ka mag manufacture ng Lopez is suggesting was, to me, to my mind, really
maraming goods, kailangan maraming tumao dun a very good suggestion. I-ensure mo na lang na
sa stores mo, that’s the time kukuha ka ng tao. But meron silang benepisyo, diba. Para walang mga
what are you going to do with them later? So, employer na mang-aabuso ng mga manggagawa
those are business realities you cannot escape. kasi lahat naman sila may benepisyo. Pero don't
Anong gagawin nila, what do they expect? Ire- go to the extent of hiring and making blah blah
regular mo lahat yan, tapos later on ite-terminate (pls check 1:13:26) the LC on their suggestion that
mo? It’s certainly going to be a nightmare for everyone should be regular. Hindi ko alam paano
employers kaya sabi ni Secretary Lopez, “let’s maaachieve. Do you understand the point? Ang
maintain the current legislation, current daming business realities niyan eh. Sabi nga natin,
regulation, rather than termination. I-ensure na it is enshrined in the LC. Katulad halimbawa yung
lang natin na lahat ng mga taong yan, whether sinasabi ko sa inyo sa Nestlé.
you are engaged for the season, whether you are
engaged for a project, whether you are engaged Sa Nestlé, nag mamanufacture kami ng cereals ng
for a fixed term employment, eh merong mga bata. From time to time we will need people.
Kaya nga ang ginawa namin by way of employing It is a rebuttable presumption. Obviously, he will
the wives, we had the wives of our employees for also have to register diba. It only establishes a
the job. Kinuha namin yung mga asa-asawa ng presumption but that presumption may be rebutted
mga empleyeado. Tuwang tuwa yunng mga by proof by the contractor that he is a legitimate
emoleyado namin kaya bumait bait yung mga job contractor. Of course, he must register himself
empleyado namin. Bukod sa trabaho nila sa with the DOLE.
Nestlé, yung mga asa-asawa, ang ginawa namin
taga-balat ng saging. Kasi wala eh, hindi mo ma- So those are the important points in LOC.
mechanize yung taga balat ng saging. Tone-
tonelada yun, tone-toneladang binabalatan na Ano break muna tayo?
saging. Pag nakapagbalat na sila ng sobrang (HAHAHAAHAHAHAHAHAHAHAA p l s )
daming saging, which will be enough to supply the (relevant ito)
production line, tapos na sila. Lalabas na yun ng
planta pero bayad sila. Are you telling me that all What is the so-called worker's preference?
of those people gagawing regular employees ng
Nestlé? Eh papano kung wala nang saging na So what is the doctrine here as pronounced in
babalatan? Anong babalatan mo? Papabalatan the case of DBP v. NLRC?
mo yung mga trabahante dun diba. Balatan nila
yung mga asawa nila dun. (LOL GAGO) Okay? So You have taken up Obligations and Contracts,
that is the reality of the situation. right? The concurrence and preference of
credit, right? What do you understand in that?
So that is the difference between the liability of
labor-only contracting (LOC) and job contracting What is contemplated in the situation where the
(JC). Take note of that distinction in the liability. concurrence and preference of credits
application?
So sabi natin, the rights of contractual employees
are the same as regular employees. And there is Art. 2241 and 2242 of Civil Code— you read the
virtually no difference. provision. (Oh basahin daw natin sabi ni sir)

What is the effect of non-registration of Art. 2241 refers to movable property which is the
contractors with the DOLE? provision on the settlement of credits affecting
movable properties.
By the way class, dun sa D.O. 18-A, makikita
ninyo may sample – may attachment dun na Annex Art. 2242 refers to specific immovable properties.
A, Annex B. Yung Annex A yung sample ng
computation ng mga ibabayad ninyo sa So what is contemplated by concurrence and
contractual employee. Usually yan 10% admin fee preference of credits? There is what? Why is
over and above what you should pay your the matte of concurrence and preference of
contractual employees. In Annex B is the sample credit important or relevant?
contract — service agreement between contractor
and that of the principal. So kailangan if you have So it contemplates a situation where there is a
a contracting arrangement, you should comply number of obligations by the debtor/obligor and
with that particular annex. these obligations are to be met first when they fall
due and the obligor/debtor foresees that he won’t
So they will be presumed as a LOC. actually satisfy or fulfill all of the obligations as
they fall due which will result to insolvency or
When you say presumed, is that rebuttable? bankruptcy.
May the contractor prove that it is engaged in
legitimate job contracting? Kaya nga kung yung debtor/obligor nakakabayad
at nakikita niya na mababayaran naman niya yung
pagkakautang, then there is no really relevance for
the concurrence and preference of credit. The Now, what is the implication of Art 110?
reason why there is a provision in the law on
concurrence and preference of credit is so that in The implication of Art. 110 is that workers do get
those eventuality when precisely the preference to be paid wages and other monetary
debtor/obligor foresees that he cannot fulfill these benefits that company owes them. However, the
obligations as they fall due, then the law provides big qualification is that there should be judicial
for the manner whereby the obligations are to be declaration of bankruptcy, or liquidation. It
settled which are preferred credits, and after cannot be extrajudicial.
settlement of preferred credits which are credits
that will concur along with the other credits then it What was the ruling in thr case of Barayoga v.
will be paid proportionately. APT?

Kaya nga concurrence and preference of credits. Those (DBP and Barayoga) are very important
Preferred, preference — yun yung mga unang cases on the topic.
babayaran. Kung naubos na yung assets ng
debtor/obligor, wala na. Pero halimbawa after What are the two very important issues that
settling all the preferred credits meron pang natira, have been resolved by the Supreme Court in
then what will happen now will be concurrence. Barayoga?
Concurrence meaning to say that all the other
remaining credits will concur and will be paid [Sinulat niya sa board]
proportionately on the basis of the assets 1. Successor Employer Rule
remaining. Kaya concurrence and preference of 2. Lien v. Preference
credits.
Which is superior based on the case of
That is the reason why it is very important that Barayoga and the case of DBP?
when you are a creditor of the debtor/obligor who
has become insolvent or who has filed for Actually in Barayoga, the case of DBP was also
bankruptcy, and you know of this proceeding, you cited.
must file a claim where the petition for bankruptcy
or insolvency has been filed because that is where What are the facts of the case?
the concurrence and preference of credits will be
determined. Otherwise, kung hindi kayo mag file If there is a mortgage, there is a credit or loan.
ng claim then forever keep your peace. Yung Hindi ka naman pwedeng mag-prenda — tagalog
pagkakautang sa inyo as creditor will no longer be ng mortgage ay prenda — nang wala kang
paid because the first and foremost test in pagkakautang.
concurrence and preference of credit is for the
court to inventory all of the obligations – all of the Saang loan? To whom the loans were owed?
claims against the debtor/obligor. Kung hind kayo Kaninong loan?
mag file nun, sabi ko nga, forever hold your peace
kasi you will no longer be paid for the obligation. PNB (not DBP). Pinaghahalo halo mo nagiging
After all of the obligation has been dealt with, then chopseuy, nagugutom ako eh.
that’s the time the court, sitting as an insolvency (HAHAHA shuta gusto ko tuloy ng chopseuy na
court, will make a determination which credits are may little shrimps and quail egg)
preferred based on Arts. 2241, 2242, 2243 and
2244, and make a determination which credits are What happened here?
preferred then settle them. Whatever will be the
remaining properties of the debtor/obligor, that PNB had its credit taken over by APT for
will be subject to concurrence of all the other preservation purposes. Hinawakan ng APT. Nung
creditors. nasa APT na, anong nangyari? Pumapasok na
yung mga claims nung mga empleyado ng
BISUDECO so dinemanda nila yung APT – sabi
nila, APT being the successor of PNB, then APT
should be made liable dun sa mga pagkakautang Yes, by all means. Pero walang
ng BISUDECO sa mga empleyado. At the same obligation. Hindi obligado yung
time, yung mga pagkakautang ng BISUDECO sa successor employer na i-retain
PNB, may mga covered na mortgage, secured by niya yung mga empleyado.
mortgage. So the issues arose. First, whether or
not APT may be held liable by the claims of the Kung may CBA, yung previous
employees by virtue of the fact that it has taken employer and the employees, is
over PNB who is a creditor of BISUDECO. And at there an obligation on the part
the same time, whether or not the mortgage lien of the successor employer to
will be paid ahead or is it going to be the workers' honor the provisions of the
unpaid wages and monetary benefits that will be CBA?
paid first. So those are the issues.
There is also none.
Tinake over kasi ni APT si BISUDECO diba. Oh
ano ngayon ang sabi ng Supreme Court dun? Is 2. To honor the provisions of the
APT liable as the successor employer? No. CBA.

Class, I will say it now and I hope you will What are the exceptions?
remember it because this is something that will
occur time and again whether in your Labor 1. If there is express agreement in
Standards or in your Labor Relations: the purchase or sale of assets that
the successor employer is
Successor employer rule as ruled in Sundowner assuming all of the rights and
Corp. v. Drilon, when there is: obligations of the predecessor
employer.
A. Purchase of stocks
- Purchaser merely steps into the shoes Yan ang tinatawag sa Corporate
of the seller. Therefore, if it merely Law na sale which is lock, stock
steps into the shoes of the seller then it and barrel. Lock, stock and barrel
assumes all of the rights and meaning all the rights and
obligations of the seller. Kasi obligations are taken over by the
nagsusubstitute lang siya dun, he successor employer. So pag
merely steps into the shoes. That is a mayron kayong narinig sale of
basic provision of the Corporation assets lock, stock and barrel,
Code of the Philippines Iba yung meaning to say all of the rights
purchase of assets. and obligations of the predecessor
employer have been assumed by
B. Purchase of assets the successor employer. In which
- Binili yung negosyo – what is the case if they have been assumed,
successor employer rule? then the successor employer will
have the obligation to retain the
There is no obligation on the part of employees, will have the
the successor employer: obligation to honor the CBA.
Parang hindi iba sa merely
1. To hire or retain the employees stepping into the shoes of the
of the previous employer. So predecessor er. No difference at
wala siyang obligasyon. all kung by express agreement

But can the successor employer 2. Piercing the veil of corporate

decide to hire? fiction
 support of the current business.
The liability of the corporation is Yung other entity na yun, yun ang
distinct from the liability of the magru-run ng negosyo. Kung
directors, officers of the good faith purchase of assets,
corporation. principle of separate juridical
personality shall apply. Pero
Hindi pwedeng yung liability ng kapag inimbestigahan mo yung
corporation will be automatically articles of incorporation, articles
be the liability of the of partnership, registration as
incorporators, directors, officers single proprietorship to the DTI,
because a corporation has a aba ay siya rin ang may-ari nung
personality distinct from the negosyo na tinayo then obviously
persons who run the corporation. it was with intent of committing
Kaya hindi pwedeng magkaroon fraudulent act against the
ng identity of liability ang employees. Ayaw lang mag CBA,
corporation and people who run. in which case kahit sabihin mong
yung current company si ABC
HOWEVER, when it comes to Co., yung isa si XYZ Co. — the
purchase of assets and there is bad veil of XYZ Co. will be pierced
faith, fraud, intent to commit a and it will be liable to hire the
crime or in any way an intent to employees and honor the CBA.
commit a wrong by the employer,
then the Principle Of Piercing The Ms. President, sira ba yung aircon niyo? Parang
Veil Of Corporate Fiction will nakikita ko na si Lucifer eh. Mainit. (wtf talaga
apply. lagi na lang me. I just realized na during Labor,
hindi lang ako student, tagapagsilbi din ako ni
(General rule – Doctrine of Tito Roland)
Separate Juridical Personality
Exception – Principle of Piercing So sa case ni Barayoga, ang sabi ng Supreme
the Veil of Corporate Fiction) Court, APT is definitely not liable to the
employees because it merely took over as a mere
Anong sinasabi ng Principle of transferee of whatever credit PNB has on
Piercing the Veil of Corporate BISUDECO. So it was really a take over on the
Fiction? assets and therefore sabi ng SC, the basic rule of
successor employer will apply – there is no bad
Diba sabi natin distinct ang faith so piercing the veil of corporate fiction will
personality ng corporation sa also not apply.
people who run it? In piercing the
veil, you pierce the veil ng nagdi- Was there an agreement for APT to assume all
distinguish nun and they will be rights and obligations on the employees?
considered as one and the same.
Wala eh, so sabi the general rule on successor
For example, may CBA. May employer will apply.
kumpanya with a number of
employees. Ayaw na niyang mag What was the ruling on lien and worker’s
CBA ulit dahil dagdag gastos yan, preference?
bawas kita. Ang gagawin niya, Dito may mga utang ang BISUDECO na may
isasara niya kunyari yung mortgage. Yung mga mortgage na yun attaches to
kumpanya, there is going to be the property.
another company who would
purchase the machine, equipment,
Which is superior? The lien which attached to will govern, unless it is unconscionable. In fact in
the property by virtue of the mortgage or the case of Ortiz, sabi ng SC dyan, if Atty. Ortiz
worker’s preference by virtue of Art. 110? really wanted to collect on the attorney’s fees for
the services he rendered, he is not without any
Sabi ng SC it is still the mortgage, the lien. It is recourse. He can file an independent action to
not the workers’ unpaid wages. The worker’s enforce his right to collect for the attorney’s fees
preference on wages and unpaid benefits, which he is entitled to.
SC said, does not attach to the prop, it is not by
any means a special credit. The lien attaches to the In the book of Atty. Azucena, he mentioned about
property; therefore, when there is liquidation of the principle of quantum meruit.
the properties, the lien will have to be first settled
and the worker’s preference will have to take the What is quantum meruit?
backseat.
For whatever services the attorney has rendered,
Yun ang ruling in both DBP and Barayoga. he shall receive what he deserves that is separate
and distinct from the attorney’s fees contemplated
Attorney's fees in Art. 111.

What are the two concepts of attorney’s fees? Apprentices, Learners, Handicapped Workers
And what is contemplated under Art. 111?
Night work for women is now allowed. Take note
1. Ordinary of D.O. No. 119, series of 2012.
2. Extraordinary (D.O. No. 119-12 – Rules Implementing R.A. No.
10151)
Take note of the cases I gave you.
What is considered an apprenticeable
Ortiz v. San Miguel occupation? Highly technical.
- Where the lawyer was denied his claim of
attorney’s fees, and precisely where the SC For purposes of apprenticeship, please do
made the distinction between the ordinary TESDA Act.
concept and extraordinary concept of
attorney’s fees. TESDA is tasked to accredit apprenticeship
programs. It is the training arm of DOLE.
How much is the maximum?
10% Dual Tech Training System (R.A. No. 7686) – two
roles:
Attorney’s fees in the form of damages. This 1. In-plant training
applies in cases when there is unlawful 2. Theoretical training
withholding of wages and monetary benefits.
Purpose?
Kaya nga kapag tumingin kayo ng decision ng
NLRC, you will note, especially kapag may money To provide a ready and full of trained and skilled
claim and there is award of money claim manpower.
especially backwages, there is almost always the
award of attorney’s fees which is 10% of the total TESDA is alongside schools. Malakas sa dual tech
amount of claim awarded. That is precisely the is Don Bosco. Nagta-tie up yan sa schools and
extraordinary concept of attorney’s fees in the companies.
form of damages.

Yung rendering of services, separate and apart

yun kung ano yung kontrata nila then that is what
So what is the difference (between
apprenticeship and learnership)?

Class, take note that you cannot just launch on

your own an apprenticeship program.

What is the danger?

Must be approved and registered with the TESDA.

Otherwise, the employee may be deemed to be a
regular employee because he will be doing tasks
usually necessary and desirable to the business of
the employer kasi highly technical na. Kung wala
kang apprenticeship program duly approved by
the TESDA — there is a decided case: Nitto
Enterprises v. NLRC, and R. Capili

One more thing why you have to have it approved

by the TESDA. So you can enjoy tax deduction
because there is a portion of the expense that you
will incur for running the program, that you will
deduct. Without such approval by the TESDA, you
cannot validly claim tax deduction. Basic principle
in tax is taxation is the rule, tax exemption is the
exception. So kailangan yan ma-approve ng
TESDA.

Handicapped workers
- You cannot discriminate against persons
with disability, unless there is business
necessity that you get a full abled bodied
person for a certain position. But if you are
just discriminating against them, that is
proscribed by law.