As held in the case of Filipinas Pre-fabricated Building (FILSYSTEMS), INC VS. FELIPE A. CRUZ, JR., [GR No. 153832, March 18, 2005], a project employee is one whose “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 services to be performed is seasonal in nature and the employment is for the duration of the season.”
According to Department (of Labor and Employment) Order No. 19, [April 1, 1993] Series of 1993, the following are considered indicators of project employment:
(a) The duration of the specific/identified undertaking for which the worker is engaged is reasonably determinable.
(b) Such duration, as well as the specific work/service to be performed, is defined in an employment agreement and is made clear to the employee at the time of hiring.
(c) The work/service performed by the employee is in connection with the particular project/undertaking for which he is engaged.
(d) The employee, while not employed and awaiting engagement, is free to offer his services to any other employer.
(e) The termination of his employment in the particular project/undertaking is reported to the Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from work, using the prescribed form on employees’ terminations/dismissals/suspensions.
(f) An undertaking in the employment contract by the employer to pay completion bonus to the project employee as practiced by most construction companies.
In D.M. Consunji, Inc. v. NLRC,[ 348 SCRA 441, 447, December 18, 2000,] The Supreme Court has ruled that “the length of service of a project employee is not the controlling test of employment tenure but whether or not ‘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.’”
It is also worthy to note Clause 3.3(a) of Department Order No. 19, which states:
“Project employees whose aggregate period of continuous employment in a construction company is at least one year shall be considered regular employees, in the absence of a “day certain” agreed upon by the parties for the termination of their relationship. Project employees who have become regular shall be entitled to separation pay.
A “day” as used herein, is understood to be that which must necessarily come, although is may not be known exactly when. This means that where the final completion of a project or phase thereof is in fact determinable and the expected completion is made known to the employee, such project employee may not be considered regular, notwithstanding the one-year duration of employment in the project or phase thereof or the one-year duration of two or more employments in the same project or phase of the object.
Considering the above facts and circumstances, what are the rights of a project employee under labor laws if he has been illegally dismissed?
Well settled is the rule that the burden of proving that an employee was lawfully dismissed lies with the employer. Thus employers who hire project employees are mandated to state the actual basis for the project employees’ dismissal.
Section 3.2 of Department Order No. 19, Series of 1993 states that: “Project employees are not entitled to separation pay if their services are terminated as a result of the completion of the project or any phase thereof in which they are employed. Likewise, project employees whose services are terminated because they have no more to do or their services are no longer needed in the particular phase of the project are not by law entitled to separation pay.”
The rights of an illegally dismissed project employee is based only in the current project contract where he was illegally terminated. If the employer fails to prove that the project was already completed, there is a presumption that the services of the project employee has been terminated with no valid cause prior to the expiration of the period of his project employment. In such a case, the illegally dismissed project employee is entitled to reinstatement with full backwages, inclusive of allowances and other benefits. If the project has already been completed during the pendency of the labor suit, the project employee can no longer be reinstated. Instead, he shall be entitled to the payment of his salary and other benefits corresponding to the unexpired portion of his employment, specifically from the time of the termination of his employment, until the date of completion of the project.
Thursday, January 13, 2011
Labor Legislation related to the tourism and hospitality industry in the Philippines
One must look into applicable related literature that serves as a foundation for seeking the best labor practices in the tourism-oriented sector. In the Philippines, let us review the different labor legislation affecting the hospitality and tourism industry.
A) The 1987 Constitution
The 1987 Constitution provides an explicit provision for labor.
Labor, whether local or overseas, organized or not organized, shall be given constitutional protection. The right to strike, although already a part of the right to self-organization, is specifically mentioned. The right to a living wage is expressly stated. A wage is a living wage if it is adequate to sustain a worker and his family in dignity.
The State shall promote shared responsibility between workers and employers. Thus, the workers shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. In this regard, the law may provide for consultations with workers or their unions. The union which is the collective bargaining agent may be represented in the governing body of an enterprise whose opinion voicing that of the union he represents may be taken into account by management.
The recognition by the State of the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments as well as to expansion and growth may be considered a sequel to the rule that the principle of shared responsibility between workers and employers must be promoted by the State. The words “just share in the fruits of production” should not cover only basic salaries and other employment benefits but may also cover profit-sharing.
The State also protects the rights of the working women by assuring them safe and healthful conditions of work and opportunities to maximize their full potential in the service of the nation.
B) Benefits, Privileges, Policies Affecting Employees
Minimum Wage
By virtue of Republic Act No. 6727 (Wage Rationalization Act), the determination of minimum wage rates are now within the function of the Regional Tripartite and Productivity Board. The concept of “minimum wage” means more than setting a floor wage to upgrade existing wages. “Minimum wages” underlies the effort of the State to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their families; to affirm labor as a primary social economic force.
Collective Bargaining
This means conferring promptly and in good faith for negotiating agreements with respect to wages, hours of work, etc. and entering into written contracts, (called Collective Bargaining Agreement or CBA) adjustment of grievances, etc. The provisions commonly found in collective bargaining agreements are: 1) Enumeration or reservation of management rights; 2) Union recognition and security; 3) Wage and fringe benefits and their administration; 4) Physical working conditions; 5) Selected personnel management and plant operation practices; 6) Grievance and arbitration; 7) Duration of contract.
Labor Management Council
Under Article 255 of the Labor Code, it reserves the right of an individual employee or group of employees (unionized or non-unionized) to present grievances to their employer at any time, with or without collective bargaining, with or without exclusive bargaining representatives. The Department of Labor and Employment promotes the formation of Labor Management Councils (LMC) in organized and unorganized establishments. An LMC, either as council or committee, can serve as a forum where management and employees may air their concerns, short of collective bargaining. It is largely a communication mechanism which includes prevention or resolution of disputes. Harnessed to the fullest and given the sincerity, confidence and maturity of both sides, LMC can effectively secure industrial peace, provided it maintains its integrity. In fact, an LMC can be so effective it can make a labor union unnecessary. Labor Management Councils require that employee representatives should be elected by the employees, not hand-picked by management.
Maternity and Paternity Leaves
Maternity leave benefits are covered under Republic Act No. 8282 (May 1, 1997), also known as the Social Security Act of 1997. Under said law, a female member (need not be married) who has paid at least three (3) monthly contributions in the 12-month period immediately preceding the semester of her childbirth or miscarriage shall be paid a daily maternity benefit equivalent to 100% of her average daily salary credit for 60 days or 78 days in case of caesarian delivery, subject to the following conditions:
(a) That the employee shall have notified her employer of her pregnancy, and the probable date of her childbirth, which notice shall be transmitted to the SSS in accordance with its rules and regulations;
(b) The full payment shall be advanced by the employer within 30 days from the filing of the maternity leave application;
(c) That payment of daily maternity benefits shall be a bar to the recovery of sickness benefits provided under this Act for the same period for which daily maternity benefits have been received.
(d) That the maternity benefits provided under this Act shall be paid only for the first four (4) deliveries or miscarriages;
(e) That the SSS shall immediately reimburse the employer of 100% of the amount of maternity benefits advanced upon receipt of satisfactory proof of such payment and legality thereof; and
(f) That if an employee member should give birth or suffer miscarriage without the required contributions having been remitted for her by her employer to the SSS, or without the latter being previously notified by the employer of the time of pregnancy, the employer shall pay to the SSS damages equivalent to the benefits which said employee member would otherwise have been entitled to.
On the other hand, Republic Act No. 8187, also known as the Paternity Leave Act of 1996 governs the granting of paternity leave benefits to every married male employee. Under the said law, every married male employee in the private and public sector shall be entitled to a paternity leave of seven (7) days with full pay for the first four (4) deliveries of the legitimate spouses with whom he is cohabiting. The following conditions must be met in order to avail of paternity leave benefits:
(i) He is an employee at the time of delivery of his child;
(ii) He is cohabiting with his legitimate spouse at the time she gives birth or suffers a miscarriage;
(iii) He has applied for paternity leave in accordance with the Implementing Rules;
(iv) His wife has given birth or suffered a miscarriage.
Republic Act No. 8972 otherwise known as the Solo Parents’ Welfare Act of 2000 governs the granting of leave privileges to solo parents. In addition to leave privileges under existing laws, parental leave of not more than seven (7) days every year shall be granted to any solo parent employee who has rendered service for at least one (1) year.
Service Charges
The rule of service charges applies only to establishments collecting service charges such as hotels, restaurants, lodging houses, night clubs, cocktail lounge, massage clinics, bars, casinos, gambling houses and similar enterprises, including those entities operating primarily as private subsidiaries of the Government. All service charges collected by hotels, restaurants, and similar establishments shall be distributed at the rate of 85% percent for all covered employees and 15% percent for management. The share of employees shall be equally distributed among them. The 15% shall be for the disposition by management to answer for losses and breakages and distribution to managerial employees at the discretion of management in the latter case.
Employment Contracts
An employment contract is that by virtue of which one person (employee) binds himself with respect to another (employer) to place at the service of the latter his own efforts in work, and the latter in turn agrees to pay him a compensation proportional to the time or to the quantity of work done.
The concept of “employment contract” is regulated under the provisions of the Labor Code of the Philippines, Civil Code of the Philippines and other special laws. Execution of employment contracts are in line with the characteristics of autonomy of contracts wherein parties are free to stipulate terms and provisions in a contract, as long as these terms and provisions are not contrary to law, morals, good customs, public order and public policy. An employment contract is impressed with public interest. Hence other considerations of moral and social character have to be reckoned with to promote industrial peace and in keeping with social justice. Whenever there is doubt in the interpretation of any labor or employment contracts, the same shall be construed in favor of the safety and decent living for the laborer.
Legally speaking, a contract of employment is consensual in nature which does not require additional formalities for its validity. However, the current practice in labor intensive industries like the tourism industry is to utilize express written employment contracts, clearly understood and voluntarily agreed by the parties to protect the interest of both capital and labor. This is true especially for employees under a probationary, project, casual and fixed-term employment wherein the standards, scope and duration of the employment must be express, clearly understood and voluntarily agreed by the parties. It is a fair assumption to say that normal employees would comply with norms if they are properly and sufficiently informed. This communication process increases the extent of knowledge of each employee, expands the span of understanding of each employee and enhances the level of acceptance by each employee.
Death Benefits
Under the Social Security Law, upon the death of a member who has paid at least 36 monthly contributions prior to the semester of death, his primary beneficiaries shall be entitled to the monthly pension: Provided, that if he has no primary beneficiaries, his secondary beneficiaries shall be entitled to a lump sum benefit equivalent to 36 times the monthly pension. If he has not paid the required 36 monthly contributions, his primary and secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the monthly pension times the number of monthly contributions paid to the SSS or 12 times the monthly pension, whichever is higher. A funeral grant equivalent to P12,000 shall be paid, in cash, or in kind, to help defray the cost of funeral expenses upon the death of a member, including permanently totally disabled member or retiree.
In case of work-related deaths, beneficiaries will receive death benefits under the Employees Compensation and State Insurance Fund, in addition to the benefits under the SSS Law. Accordingly, the amount under the Employees Compensation Fund shall be the amount equivalent to his monthly benefit, plus ten percent thereof for each dependent child, but not exceeding five. The Employees Compensation Commission has increased the funeral benefits to P10,000.
Health Benefits
This includes sickness, medical and hospitalization benefits. Under the Social Security Law, a member who has paid at least 3 monthly contributions in the 12-month period immediately preceding the semester of sickness or injury and is confined more than three (3) days in a hospital or elsewhere with the approval of the SSS, shall be paid a daily sickness benefit equivalent to 90% of his average daily salary credit.
In case of work-related sickness, the covered employee will be entitled to medical services, appliances and supplies, in addition to the benefits under the SSS Law.
Retirement
Under Article 287 of the Labor Code, as amended by Republic Act No. 7641, also known as The New Retirement Law, any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In the absence of a retirement plan or agreement providing for retirement benefits of employees in establishments, an employee upon reaching the age of 60 years or more, but not beyond 65 years which is hereby declared the compulsory retirement age, who has served at least 5 years in the said establishment, may retire and shall be entitled to a retirement pay equivalent to at least ½ month salary for every year of service, a fraction of at least 6 months being considered as one whole year.
SSS, PhilHealth, Employees’ Compensation Commission, and Pag-Ibig
Employees in the private sector are covered under the SSS Law wherein the mission is to promote and perfect a sound and viable tax exempt social security system suitable to the needs of the people which shall provide meaningful protection to members and their beneficiaries against hazards of disability, sickness, maternity, old age, death and other contingencies resulting in loss of income or financial burden.
PhilHealth assumed the responsibility of administering the former Medicare program for private sector employees, with its landmark transfer from the Social Security System (April 1998). With this transfer came the turnover of the health insurance funds, initially totaling P14 billion from the SSS. The amount covers employee and employers' shares in the medical care program. The benefit package includes the following categories of personal health services
Inpatient hospital care:
• Room and board;
• Services of health care professionals;
• Diagnostic, laboratory, and other medical examination services;
• Use of surgical or medical equipment and facilities;
• Prescription drugs and biologicals, subject to the limitations stated in Section 37 of RA 7875; and
• Inpatient education packages.
Outpatient care:
• Services of health care professionals;
• Diagnostic, laboratory, and other medical examination services;
• Personal preventive services;
• Prescription drugs and biologicals, subject to limitations described in Section 37 of RA 7875; and
• Emergency and transfer services
An employee may also recover from the Employees Compensation and State Insurance Fund in case of work-related disabilities.
According to Republic Act 7742 which was fully implemented on January 1, 1995, membership to the Pag-IBIG Fund shall be mandatory for all employees covered by the Social Security System (SSS). This mandatory coverage extends to expatriates whose age is up to 60 years old and who are compulsorily covered by the SSS. In the absence of an explicit exemption from SSS coverage, the said expatriate, upon assumption of office, shall be compulsorily covered by the Fund. Some of the benefits under the Pag-IBIG program are the housing loan, calamity loan, and a provident savings program.
Termination of Employment
It is the constitutional right of workers to security of tenure and their right to be protected against dismissal except for just and authorized cause and without prejudice to the requirement of notice under Article 283 of the Labor Code. Due process in termination disputes is the heart of security of tenure and is personal to the employee.
The following are the standards of due process for termination of employment under Article 282 of the Labor Code:
(a) A written notice served on the employee specifying the ground and grounds for termination, and giving to said employee reasonable opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given the opportunity to respond to the charges, present his evidence, or rebut the evidence presented against him; and
(c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify the termination. In case of termination, the foregoing notices shall be served on the employee’s last known address.
For termination of employment as based on authorized causes under Article 283 of the Labor Code, the requirements of due process shall be deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the Department of Labor at least 30 days before the effectivity of the termination specifying the grounds for termination.
If the termination is brought about by the completion of the contract or phase thereof, no prior notice is required. If the termination is brought about by the failure of an employee to meet the standards of the employer in the case of probationary employment, it shall be sufficient that a written notice is served the employee within a reasonable time from the effective date of termination.
Under Article 282 of the Labor Code, the following are considered just causes for termination:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
(b) Gross or habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed by him by his employer or duly authorized representative;
(d) 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 representative; and
(e) Other causes analogous to the foregoing.
A) The 1987 Constitution
The 1987 Constitution provides an explicit provision for labor.
Labor, whether local or overseas, organized or not organized, shall be given constitutional protection. The right to strike, although already a part of the right to self-organization, is specifically mentioned. The right to a living wage is expressly stated. A wage is a living wage if it is adequate to sustain a worker and his family in dignity.
The State shall promote shared responsibility between workers and employers. Thus, the workers shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. In this regard, the law may provide for consultations with workers or their unions. The union which is the collective bargaining agent may be represented in the governing body of an enterprise whose opinion voicing that of the union he represents may be taken into account by management.
The recognition by the State of the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments as well as to expansion and growth may be considered a sequel to the rule that the principle of shared responsibility between workers and employers must be promoted by the State. The words “just share in the fruits of production” should not cover only basic salaries and other employment benefits but may also cover profit-sharing.
The State also protects the rights of the working women by assuring them safe and healthful conditions of work and opportunities to maximize their full potential in the service of the nation.
B) Benefits, Privileges, Policies Affecting Employees
Minimum Wage
By virtue of Republic Act No. 6727 (Wage Rationalization Act), the determination of minimum wage rates are now within the function of the Regional Tripartite and Productivity Board. The concept of “minimum wage” means more than setting a floor wage to upgrade existing wages. “Minimum wages” underlies the effort of the State to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their families; to affirm labor as a primary social economic force.
Collective Bargaining
This means conferring promptly and in good faith for negotiating agreements with respect to wages, hours of work, etc. and entering into written contracts, (called Collective Bargaining Agreement or CBA) adjustment of grievances, etc. The provisions commonly found in collective bargaining agreements are: 1) Enumeration or reservation of management rights; 2) Union recognition and security; 3) Wage and fringe benefits and their administration; 4) Physical working conditions; 5) Selected personnel management and plant operation practices; 6) Grievance and arbitration; 7) Duration of contract.
Labor Management Council
Under Article 255 of the Labor Code, it reserves the right of an individual employee or group of employees (unionized or non-unionized) to present grievances to their employer at any time, with or without collective bargaining, with or without exclusive bargaining representatives. The Department of Labor and Employment promotes the formation of Labor Management Councils (LMC) in organized and unorganized establishments. An LMC, either as council or committee, can serve as a forum where management and employees may air their concerns, short of collective bargaining. It is largely a communication mechanism which includes prevention or resolution of disputes. Harnessed to the fullest and given the sincerity, confidence and maturity of both sides, LMC can effectively secure industrial peace, provided it maintains its integrity. In fact, an LMC can be so effective it can make a labor union unnecessary. Labor Management Councils require that employee representatives should be elected by the employees, not hand-picked by management.
Maternity and Paternity Leaves
Maternity leave benefits are covered under Republic Act No. 8282 (May 1, 1997), also known as the Social Security Act of 1997. Under said law, a female member (need not be married) who has paid at least three (3) monthly contributions in the 12-month period immediately preceding the semester of her childbirth or miscarriage shall be paid a daily maternity benefit equivalent to 100% of her average daily salary credit for 60 days or 78 days in case of caesarian delivery, subject to the following conditions:
(a) That the employee shall have notified her employer of her pregnancy, and the probable date of her childbirth, which notice shall be transmitted to the SSS in accordance with its rules and regulations;
(b) The full payment shall be advanced by the employer within 30 days from the filing of the maternity leave application;
(c) That payment of daily maternity benefits shall be a bar to the recovery of sickness benefits provided under this Act for the same period for which daily maternity benefits have been received.
(d) That the maternity benefits provided under this Act shall be paid only for the first four (4) deliveries or miscarriages;
(e) That the SSS shall immediately reimburse the employer of 100% of the amount of maternity benefits advanced upon receipt of satisfactory proof of such payment and legality thereof; and
(f) That if an employee member should give birth or suffer miscarriage without the required contributions having been remitted for her by her employer to the SSS, or without the latter being previously notified by the employer of the time of pregnancy, the employer shall pay to the SSS damages equivalent to the benefits which said employee member would otherwise have been entitled to.
On the other hand, Republic Act No. 8187, also known as the Paternity Leave Act of 1996 governs the granting of paternity leave benefits to every married male employee. Under the said law, every married male employee in the private and public sector shall be entitled to a paternity leave of seven (7) days with full pay for the first four (4) deliveries of the legitimate spouses with whom he is cohabiting. The following conditions must be met in order to avail of paternity leave benefits:
(i) He is an employee at the time of delivery of his child;
(ii) He is cohabiting with his legitimate spouse at the time she gives birth or suffers a miscarriage;
(iii) He has applied for paternity leave in accordance with the Implementing Rules;
(iv) His wife has given birth or suffered a miscarriage.
Republic Act No. 8972 otherwise known as the Solo Parents’ Welfare Act of 2000 governs the granting of leave privileges to solo parents. In addition to leave privileges under existing laws, parental leave of not more than seven (7) days every year shall be granted to any solo parent employee who has rendered service for at least one (1) year.
Service Charges
The rule of service charges applies only to establishments collecting service charges such as hotels, restaurants, lodging houses, night clubs, cocktail lounge, massage clinics, bars, casinos, gambling houses and similar enterprises, including those entities operating primarily as private subsidiaries of the Government. All service charges collected by hotels, restaurants, and similar establishments shall be distributed at the rate of 85% percent for all covered employees and 15% percent for management. The share of employees shall be equally distributed among them. The 15% shall be for the disposition by management to answer for losses and breakages and distribution to managerial employees at the discretion of management in the latter case.
Employment Contracts
An employment contract is that by virtue of which one person (employee) binds himself with respect to another (employer) to place at the service of the latter his own efforts in work, and the latter in turn agrees to pay him a compensation proportional to the time or to the quantity of work done.
The concept of “employment contract” is regulated under the provisions of the Labor Code of the Philippines, Civil Code of the Philippines and other special laws. Execution of employment contracts are in line with the characteristics of autonomy of contracts wherein parties are free to stipulate terms and provisions in a contract, as long as these terms and provisions are not contrary to law, morals, good customs, public order and public policy. An employment contract is impressed with public interest. Hence other considerations of moral and social character have to be reckoned with to promote industrial peace and in keeping with social justice. Whenever there is doubt in the interpretation of any labor or employment contracts, the same shall be construed in favor of the safety and decent living for the laborer.
Legally speaking, a contract of employment is consensual in nature which does not require additional formalities for its validity. However, the current practice in labor intensive industries like the tourism industry is to utilize express written employment contracts, clearly understood and voluntarily agreed by the parties to protect the interest of both capital and labor. This is true especially for employees under a probationary, project, casual and fixed-term employment wherein the standards, scope and duration of the employment must be express, clearly understood and voluntarily agreed by the parties. It is a fair assumption to say that normal employees would comply with norms if they are properly and sufficiently informed. This communication process increases the extent of knowledge of each employee, expands the span of understanding of each employee and enhances the level of acceptance by each employee.
Death Benefits
Under the Social Security Law, upon the death of a member who has paid at least 36 monthly contributions prior to the semester of death, his primary beneficiaries shall be entitled to the monthly pension: Provided, that if he has no primary beneficiaries, his secondary beneficiaries shall be entitled to a lump sum benefit equivalent to 36 times the monthly pension. If he has not paid the required 36 monthly contributions, his primary and secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the monthly pension times the number of monthly contributions paid to the SSS or 12 times the monthly pension, whichever is higher. A funeral grant equivalent to P12,000 shall be paid, in cash, or in kind, to help defray the cost of funeral expenses upon the death of a member, including permanently totally disabled member or retiree.
In case of work-related deaths, beneficiaries will receive death benefits under the Employees Compensation and State Insurance Fund, in addition to the benefits under the SSS Law. Accordingly, the amount under the Employees Compensation Fund shall be the amount equivalent to his monthly benefit, plus ten percent thereof for each dependent child, but not exceeding five. The Employees Compensation Commission has increased the funeral benefits to P10,000.
Health Benefits
This includes sickness, medical and hospitalization benefits. Under the Social Security Law, a member who has paid at least 3 monthly contributions in the 12-month period immediately preceding the semester of sickness or injury and is confined more than three (3) days in a hospital or elsewhere with the approval of the SSS, shall be paid a daily sickness benefit equivalent to 90% of his average daily salary credit.
In case of work-related sickness, the covered employee will be entitled to medical services, appliances and supplies, in addition to the benefits under the SSS Law.
Retirement
Under Article 287 of the Labor Code, as amended by Republic Act No. 7641, also known as The New Retirement Law, any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In the absence of a retirement plan or agreement providing for retirement benefits of employees in establishments, an employee upon reaching the age of 60 years or more, but not beyond 65 years which is hereby declared the compulsory retirement age, who has served at least 5 years in the said establishment, may retire and shall be entitled to a retirement pay equivalent to at least ½ month salary for every year of service, a fraction of at least 6 months being considered as one whole year.
SSS, PhilHealth, Employees’ Compensation Commission, and Pag-Ibig
Employees in the private sector are covered under the SSS Law wherein the mission is to promote and perfect a sound and viable tax exempt social security system suitable to the needs of the people which shall provide meaningful protection to members and their beneficiaries against hazards of disability, sickness, maternity, old age, death and other contingencies resulting in loss of income or financial burden.
PhilHealth assumed the responsibility of administering the former Medicare program for private sector employees, with its landmark transfer from the Social Security System (April 1998). With this transfer came the turnover of the health insurance funds, initially totaling P14 billion from the SSS. The amount covers employee and employers' shares in the medical care program. The benefit package includes the following categories of personal health services
Inpatient hospital care:
• Room and board;
• Services of health care professionals;
• Diagnostic, laboratory, and other medical examination services;
• Use of surgical or medical equipment and facilities;
• Prescription drugs and biologicals, subject to the limitations stated in Section 37 of RA 7875; and
• Inpatient education packages.
Outpatient care:
• Services of health care professionals;
• Diagnostic, laboratory, and other medical examination services;
• Personal preventive services;
• Prescription drugs and biologicals, subject to limitations described in Section 37 of RA 7875; and
• Emergency and transfer services
An employee may also recover from the Employees Compensation and State Insurance Fund in case of work-related disabilities.
According to Republic Act 7742 which was fully implemented on January 1, 1995, membership to the Pag-IBIG Fund shall be mandatory for all employees covered by the Social Security System (SSS). This mandatory coverage extends to expatriates whose age is up to 60 years old and who are compulsorily covered by the SSS. In the absence of an explicit exemption from SSS coverage, the said expatriate, upon assumption of office, shall be compulsorily covered by the Fund. Some of the benefits under the Pag-IBIG program are the housing loan, calamity loan, and a provident savings program.
Termination of Employment
It is the constitutional right of workers to security of tenure and their right to be protected against dismissal except for just and authorized cause and without prejudice to the requirement of notice under Article 283 of the Labor Code. Due process in termination disputes is the heart of security of tenure and is personal to the employee.
The following are the standards of due process for termination of employment under Article 282 of the Labor Code:
(a) A written notice served on the employee specifying the ground and grounds for termination, and giving to said employee reasonable opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given the opportunity to respond to the charges, present his evidence, or rebut the evidence presented against him; and
(c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify the termination. In case of termination, the foregoing notices shall be served on the employee’s last known address.
For termination of employment as based on authorized causes under Article 283 of the Labor Code, the requirements of due process shall be deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the Department of Labor at least 30 days before the effectivity of the termination specifying the grounds for termination.
If the termination is brought about by the completion of the contract or phase thereof, no prior notice is required. If the termination is brought about by the failure of an employee to meet the standards of the employer in the case of probationary employment, it shall be sufficient that a written notice is served the employee within a reasonable time from the effective date of termination.
Under Article 282 of the Labor Code, the following are considered just causes for termination:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
(b) Gross or habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed by him by his employer or duly authorized representative;
(d) 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 representative; and
(e) Other causes analogous to the foregoing.
Monday, January 10, 2011
Transferring Real Property in the Philippines
Let us start an article which involves payment of taxes. For transferring real property, one must pay Capital Gains Tax, Documentary Stamp Tax and Transfer Tax.
For the Sale of real property subject to Capital Gains Tax, the following are the documentary requirements at the Bureau of Internal Revenue:
1) Tax Identification numbers of both the buyer and seller. In case the seller is both husband and wife, the Tax Identification numbers of both must be presented.
2) Notarized Deed of Absolute Sale/Document of Transfer.
3) Certified True Copy of the latest Tax Declaration issued by the Local Assessor's Office for land and improvement applicable to the taxable transaction.
4) Certified True Copy of the Transfer Certificate of Title, Condominium Certificate of Title, or Original Certificate of Title. The original Owner's copy shall be presented for purposes of ocular comparison.
5) Official Receipt together with the duly validated tax return as proof of payment.
6) Acknowledged Receipt of the consideration by the Seller.
7) Sworn Declaration of No Improvement by at least one (1) of the transferees or Certificate of NO IMPROVEMENT issued by the Assessor's Office, if applicable.
8) Location plan/ vicinity map if the zonal value cannot be readily determined from the documents submitted.
For purposes of payment of transfer taxes and registration fees, the following are the documentary requirements:
1) Certified True Copy of the latest Tax Declaration issued by the Local Assessor's Office for land and improvement applicable to the taxable transaction.
2) Certificate of Real Property Tax clearance issued by the Local Treasurer's Office.
3) Certificate Allowing Registration from the Bureau of Internal Revenue.
4) Certificate of Capital Gains Tax clearance and Documentary Stamp Tax clearance issued by the Bureau of Internal Revenue.
5) Original Owner's Duplicate of the Transfer Certificate of Title for purposes of surrendering the same to the Register of Deeds.
6) Original copy of the Deed of Sale stamped by the proper government unit concerned that the corresponding Capital Gains Tax, Documentary Stamp Tax and transfer taxes have been paid.
7) Official Receipt for the payment of transfer tax with the corresponding endorsement for registration by the Local Treasurer's Office as proof of payment.
Finally, once the Register of Deeds issues a new Transfer Certificate of Title (TCT), the Local Assessor's Office should be provided photocopies of the following documents, all of which should come from the Office of the Register of Deeds, so that a new Tax Declaration shall be issued in favor of the new owner:
1) Transfer Certificate of Title issued in the name of the new owner;
2) Proof of payment of transfer tax;
3) BIR's Certificate Authorizing Registration;
4) Deed of Absolute Sale with "stamped" proof of payment of Capital Gains Tax, Documentary Stamp Tax and Transfer Tax.
For everyone's information.
For the Sale of real property subject to Capital Gains Tax, the following are the documentary requirements at the Bureau of Internal Revenue:
1) Tax Identification numbers of both the buyer and seller. In case the seller is both husband and wife, the Tax Identification numbers of both must be presented.
2) Notarized Deed of Absolute Sale/Document of Transfer.
3) Certified True Copy of the latest Tax Declaration issued by the Local Assessor's Office for land and improvement applicable to the taxable transaction.
4) Certified True Copy of the Transfer Certificate of Title, Condominium Certificate of Title, or Original Certificate of Title. The original Owner's copy shall be presented for purposes of ocular comparison.
5) Official Receipt together with the duly validated tax return as proof of payment.
6) Acknowledged Receipt of the consideration by the Seller.
7) Sworn Declaration of No Improvement by at least one (1) of the transferees or Certificate of NO IMPROVEMENT issued by the Assessor's Office, if applicable.
8) Location plan/ vicinity map if the zonal value cannot be readily determined from the documents submitted.
For purposes of payment of transfer taxes and registration fees, the following are the documentary requirements:
1) Certified True Copy of the latest Tax Declaration issued by the Local Assessor's Office for land and improvement applicable to the taxable transaction.
2) Certificate of Real Property Tax clearance issued by the Local Treasurer's Office.
3) Certificate Allowing Registration from the Bureau of Internal Revenue.
4) Certificate of Capital Gains Tax clearance and Documentary Stamp Tax clearance issued by the Bureau of Internal Revenue.
5) Original Owner's Duplicate of the Transfer Certificate of Title for purposes of surrendering the same to the Register of Deeds.
6) Original copy of the Deed of Sale stamped by the proper government unit concerned that the corresponding Capital Gains Tax, Documentary Stamp Tax and transfer taxes have been paid.
7) Official Receipt for the payment of transfer tax with the corresponding endorsement for registration by the Local Treasurer's Office as proof of payment.
Finally, once the Register of Deeds issues a new Transfer Certificate of Title (TCT), the Local Assessor's Office should be provided photocopies of the following documents, all of which should come from the Office of the Register of Deeds, so that a new Tax Declaration shall be issued in favor of the new owner:
1) Transfer Certificate of Title issued in the name of the new owner;
2) Proof of payment of transfer tax;
3) BIR's Certificate Authorizing Registration;
4) Deed of Absolute Sale with "stamped" proof of payment of Capital Gains Tax, Documentary Stamp Tax and Transfer Tax.
For everyone's information.
Sunday, December 19, 2010
Witness Protection, Security and Benefit Act (Republic Act 6981)
When the Supreme Court of the Philippines acquitted Hubert Webb and six others on the Vizconde massacre, I cannot help but analyze on what can possibly happen to those witnesses who testified in court regarding the Vizconde Massacre and admitted to the Witness Protection Program under Republic Act 6981.
Should the legislative department subsequently compel the Witnesses involved to shed light on what they have testified to determine whether or not perjury has been committed? Scrutinizing Section 4 of Republic Act 6981 would reveal the powers of the Legislative Department in case of legislative investigations in aid of legislation. However, the specific provision only applies in cases where the Witness has not yet been admitted to the Witness Protection Program and a necessary recommendation by the legislative department shall be required for purposes of admission of the Witness under said Witness Protection Program.
Who has the authority to terminate protection of a Witness under the Witness Protection Program? Section 15 of RA 6981 states: "No Witness shall be exempt from prosecution for perjury or contempt committed while giving testimony or producing evidence under compulsion pursuant to this Act. x x x. The procedure prescribed under Rule 71 of the Rules of Court shall be followed in contempt proceedings but the penalty to be imposed shall not be less than one (1) month but not more than one (1) year imprisonment." Accordingly, witnesses covered under the Witness Protection Program must be convicted of perjury or contempt, of which our judicial courts have the authority to determine the same.
The Department of Justice has the power to implement and enforce RA 6981. Accordingly, substantial breach of the Memorandum Agreement by the Witness under the Witness Protection Program shall be a ground for termination of the protection. In other words, the Secretary of Justice has the authority to terminate the protection of Witnesses covered under the Witness Protection Program, provided that there is a finding of substantial breach of the Memorandum of Agreement covered under the Program.
Under Section 5 of RA 6981, before a person is provided protection under the Program, he shall first execute a memorandum of agreement which shall set forth his responsibilities including:
(a) to testify before and provide information to all appropriate law enforcement officials concerning all appropriate proceedings in connection with or arising from the activities involved in the offense charged;
(b) to avoid the commission of the crime;
(c) to take all necessary precautions to avoid detection by others of the facts concerning the protection provided him;
(d) to comply with legal obligations and civil judgments against him;
(e) to cooperate with respect to all reasonable requests of officers and employees of the Government who are providing protection; and
(f) to regularly inform the appropriate program official of his current activities and address.
Violation of the Memorandum of Agreement in conjunction with Section 5 of RA 6981 should be supported by substantial evidence to that effect.
Should the legislative department subsequently compel the Witnesses involved to shed light on what they have testified to determine whether or not perjury has been committed? Scrutinizing Section 4 of Republic Act 6981 would reveal the powers of the Legislative Department in case of legislative investigations in aid of legislation. However, the specific provision only applies in cases where the Witness has not yet been admitted to the Witness Protection Program and a necessary recommendation by the legislative department shall be required for purposes of admission of the Witness under said Witness Protection Program.
Who has the authority to terminate protection of a Witness under the Witness Protection Program? Section 15 of RA 6981 states: "No Witness shall be exempt from prosecution for perjury or contempt committed while giving testimony or producing evidence under compulsion pursuant to this Act. x x x. The procedure prescribed under Rule 71 of the Rules of Court shall be followed in contempt proceedings but the penalty to be imposed shall not be less than one (1) month but not more than one (1) year imprisonment." Accordingly, witnesses covered under the Witness Protection Program must be convicted of perjury or contempt, of which our judicial courts have the authority to determine the same.
The Department of Justice has the power to implement and enforce RA 6981. Accordingly, substantial breach of the Memorandum Agreement by the Witness under the Witness Protection Program shall be a ground for termination of the protection. In other words, the Secretary of Justice has the authority to terminate the protection of Witnesses covered under the Witness Protection Program, provided that there is a finding of substantial breach of the Memorandum of Agreement covered under the Program.
Under Section 5 of RA 6981, before a person is provided protection under the Program, he shall first execute a memorandum of agreement which shall set forth his responsibilities including:
(a) to testify before and provide information to all appropriate law enforcement officials concerning all appropriate proceedings in connection with or arising from the activities involved in the offense charged;
(b) to avoid the commission of the crime;
(c) to take all necessary precautions to avoid detection by others of the facts concerning the protection provided him;
(d) to comply with legal obligations and civil judgments against him;
(e) to cooperate with respect to all reasonable requests of officers and employees of the Government who are providing protection; and
(f) to regularly inform the appropriate program official of his current activities and address.
Violation of the Memorandum of Agreement in conjunction with Section 5 of RA 6981 should be supported by substantial evidence to that effect.
Philippine Insurance Law (Insurable Interest in Group Insurance)
Any person so related to another either by contract or commercial relation may lawfully procure insurance on the other’s life. Thus, an employer may insure the life of the employee and vice versa.
The primary aim of group insurance is to provide the employer with a means of procuring insurance protection for his employees and their families at the lowest possible cost, and in so doing, the employer creates goodwill with his employees, enables the employees to carry a larger amount of insurance, and helps to attract and hold a permanent class of employees.
A group insurance is essentially a single insurance contract that provides coverage for many individuals. It provides life or health insurance coverage for the employees of the employer. In order to validly claim benefits from the group insurance, employees must be actively at work and must have completed a specified period of continuous employment, otherwise, the insurable interest ceases. Generally, group insurance have non-forfeiture clauses, except for term insurance (provides protection for a limited period, i.e. 5, 10, 15 years). If an employee’s group insurance terminates because he leaves the employer, the employee has the privilege of converting the group insurance within one month following the termination of employment into any standard form of insurance, except for a term insurance.
Application of the Law
Case: On June 9, 2005, Mr. John Bartolome insured the life of his best friend Noel Lim under the group insurance of Mr. Bartolome’s travel agency called Lucky Charm Travel Agency, designating himself as the irrevocable beneficiary. Other than being his best friend, John Bartolome is not related to Noel Lim. On July 10, 2007, after the lapse of more than two years, Noel Lim dies. Is John Bartolome entitled to the proceeds of the policy, considering that all premiums have been paid and considering further that no misrepresentation or concealment material to the risk has been employed?
Legal Opinion: No, because the policy is void and unenforceable unless the person who procures it has an insurable interest in the life of the insured. An insurable interest must be present either in the person taking out the insurance or the beneficiary. Being best friends does not automatically create an insurable interest. There must be an actual expectation of pecuniary benefit to sustain an insurance (i.e. a corporation has an insurable interest in the life of a key man, such as an officer of the firm). In the instant case, John Bartolome has no insurable interest in the life of Noel Lim.
References:
The Law on Insurance by Hector de Leon, 1994 Edition.
Pineda et al. vs. Hon. Court of Appeals et al., G.R. No. 105562, September 27, 1993.
New Insurance Reviewer, by Cesario P. Tiopianco, 1986 Edition.
The primary aim of group insurance is to provide the employer with a means of procuring insurance protection for his employees and their families at the lowest possible cost, and in so doing, the employer creates goodwill with his employees, enables the employees to carry a larger amount of insurance, and helps to attract and hold a permanent class of employees.
A group insurance is essentially a single insurance contract that provides coverage for many individuals. It provides life or health insurance coverage for the employees of the employer. In order to validly claim benefits from the group insurance, employees must be actively at work and must have completed a specified period of continuous employment, otherwise, the insurable interest ceases. Generally, group insurance have non-forfeiture clauses, except for term insurance (provides protection for a limited period, i.e. 5, 10, 15 years). If an employee’s group insurance terminates because he leaves the employer, the employee has the privilege of converting the group insurance within one month following the termination of employment into any standard form of insurance, except for a term insurance.
Application of the Law
Case: On June 9, 2005, Mr. John Bartolome insured the life of his best friend Noel Lim under the group insurance of Mr. Bartolome’s travel agency called Lucky Charm Travel Agency, designating himself as the irrevocable beneficiary. Other than being his best friend, John Bartolome is not related to Noel Lim. On July 10, 2007, after the lapse of more than two years, Noel Lim dies. Is John Bartolome entitled to the proceeds of the policy, considering that all premiums have been paid and considering further that no misrepresentation or concealment material to the risk has been employed?
Legal Opinion: No, because the policy is void and unenforceable unless the person who procures it has an insurable interest in the life of the insured. An insurable interest must be present either in the person taking out the insurance or the beneficiary. Being best friends does not automatically create an insurable interest. There must be an actual expectation of pecuniary benefit to sustain an insurance (i.e. a corporation has an insurable interest in the life of a key man, such as an officer of the firm). In the instant case, John Bartolome has no insurable interest in the life of Noel Lim.
References:
The Law on Insurance by Hector de Leon, 1994 Edition.
Pineda et al. vs. Hon. Court of Appeals et al., G.R. No. 105562, September 27, 1993.
New Insurance Reviewer, by Cesario P. Tiopianco, 1986 Edition.
Philippine Insurance Law
The Law
A “Contract of Insurance” is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event.
Discussion of the Law
The essential elements of an insurance contract are:
(a) Insurable interest;
(b) Existence of risk;
(c) Assumption of such risk by the insurer;
(d) Said assumption being part of a general scheme to distribute actual losses among those bearing similar risks;
(e) Payment of premium.
Application of the Law
Case: American-Fortune Life and General Insurance Co., Inc. (Am-Fortune) issued Fire Insurance Policy No. 136171 in favor of Mr. John Michael Roxas on his five-star hotel building in Makati City, together with all its effects therein. The insurance was for P8M covering the period from 23 January 2008 to 23 January 2009. On 23 January 2008, of the total premium of P10,000 Mr. Roxas only paid P5,000.00 thus leaving a considerable balance unpaid.
On 8 March 2008, the insured building was completely destroyed by fire. On March 10, 2008 Mr. Roxas paid the balance of the premium. On the same day, Mr. Roxas filed with Am-Fortune a claim on the fire insurance policy.
Am-Fortune denied the claim of Mr. Roxas, for the premium has not yet been fully paid in violation of Policy Condition No. 2 of the Contract which states:
1. ‘This policy of insurance witnesseth, that only after payment to the Company in accordance with Policy Condition No. 2 of the total premiums by the insured as stipulated above for the period aforementioned for insuring against Loss or Damage by Fire or Lightning as herein appears, the Property herein described x x x
2. This policy including any renewal thereof and/or any endorsement thereon is not in force until the premium has been fully paid to and duly receipted by the Company in the manner provided herein.
Any supplementary agreement seeking to amend this condition prepared by agent, broker or Company official, shall be deemed invalid and of no effect.’
Is Mr. Roxas entitled to claim under the fire insurance policy?
Legal Opinion:
No, Mr. Roxas is not entitled to claim under the fire insurance policy. This is fully supported by Section 77 of the Insurance Code which provides –
Sec. 77. An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of a life or an industrial life policy whenever the grace period provision applies.
The rule that contracts of insurance will be construed in favor of the insured and most strongly against the insurer should not be permitted to have the effect of making a plain agreement ambiguous and then construe it in favor of the insured. In addition, it is elemental law that the payment of premium is requisite to keep the policy of insurance in force. If the premium is not paid in the manner prescribed in the policy as intended by the parties the policy is ineffective. Partial payment even when accepted as a partial payment will not keep the policy alive even for such fractional part of the year as the part payment bears to the whole payment.
References:
P.D. 1460, Insurance Code
3 Basic Commercial Laws with Introductory Features by Jose N. Nolledo, 1995 Edition.
Sps. Tibay et al. vs. Court of Appeals et al., G.R. No. 119655, May 24, 1996.
A “Contract of Insurance” is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event.
Discussion of the Law
The essential elements of an insurance contract are:
(a) Insurable interest;
(b) Existence of risk;
(c) Assumption of such risk by the insurer;
(d) Said assumption being part of a general scheme to distribute actual losses among those bearing similar risks;
(e) Payment of premium.
Application of the Law
Case: American-Fortune Life and General Insurance Co., Inc. (Am-Fortune) issued Fire Insurance Policy No. 136171 in favor of Mr. John Michael Roxas on his five-star hotel building in Makati City, together with all its effects therein. The insurance was for P8M covering the period from 23 January 2008 to 23 January 2009. On 23 January 2008, of the total premium of P10,000 Mr. Roxas only paid P5,000.00 thus leaving a considerable balance unpaid.
On 8 March 2008, the insured building was completely destroyed by fire. On March 10, 2008 Mr. Roxas paid the balance of the premium. On the same day, Mr. Roxas filed with Am-Fortune a claim on the fire insurance policy.
Am-Fortune denied the claim of Mr. Roxas, for the premium has not yet been fully paid in violation of Policy Condition No. 2 of the Contract which states:
1. ‘This policy of insurance witnesseth, that only after payment to the Company in accordance with Policy Condition No. 2 of the total premiums by the insured as stipulated above for the period aforementioned for insuring against Loss or Damage by Fire or Lightning as herein appears, the Property herein described x x x
2. This policy including any renewal thereof and/or any endorsement thereon is not in force until the premium has been fully paid to and duly receipted by the Company in the manner provided herein.
Any supplementary agreement seeking to amend this condition prepared by agent, broker or Company official, shall be deemed invalid and of no effect.’
Is Mr. Roxas entitled to claim under the fire insurance policy?
Legal Opinion:
No, Mr. Roxas is not entitled to claim under the fire insurance policy. This is fully supported by Section 77 of the Insurance Code which provides –
Sec. 77. An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of a life or an industrial life policy whenever the grace period provision applies.
The rule that contracts of insurance will be construed in favor of the insured and most strongly against the insurer should not be permitted to have the effect of making a plain agreement ambiguous and then construe it in favor of the insured. In addition, it is elemental law that the payment of premium is requisite to keep the policy of insurance in force. If the premium is not paid in the manner prescribed in the policy as intended by the parties the policy is ineffective. Partial payment even when accepted as a partial payment will not keep the policy alive even for such fractional part of the year as the part payment bears to the whole payment.
References:
P.D. 1460, Insurance Code
3 Basic Commercial Laws with Introductory Features by Jose N. Nolledo, 1995 Edition.
Sps. Tibay et al. vs. Court of Appeals et al., G.R. No. 119655, May 24, 1996.
The Barangay Micro Business Enterprise Law, Philippines
Micro business enterprises and start-up companies in the Philippines might find the BMBE Law useful. If your start up company has total assets not exceeding 3 million pesos, registration under the BMBE Law may prove to be a helpful incentive for your company to be exempted from the minimum wage law and payment of income tax. All you need is to pay a registration fee of only P1,000.00 to the proper local government unit where you intend to put up your start-up company.
The Law
The Barangay Micro Business Enterprises (BMBEs) Act of 2002 (R.A. 9178, July 22, 2002) was enacted to hasten the country’s economic development by encouraging the formation and growth of barangay micro business enterprises which effectively serve as seedbeds of Filipino entrepreneurial talents, and integrating those in the informal sector with the mainstream economy, through the rationalization of bureaucratic restrictions, the active intervention of the government specially in the local level, and the granting of incentives and benefits to generate much-needed employment and alleviate poverty.
“Barangay Micro Business Enterprise," hereinafter referred to as BMBE, refers to any business entity or enterprise engaged in the production, processing or manufacturing of products or commodities, including agro-processing, trading and services, whose total assets including those arising from loans but exclusive of the land on which the particular business entity's office, plant and equipment are situated, shall not be more than Three Million Pesos (P3,000,000).
Any person, natural or juridical, or cooperative, or association, having the qualifications of a Barangay Micro Business Enterprise as defined may apply for registration as BMBE.
Procedure for Registration
The following are the procedures when applying for registration as BMBE:
a. an applicant for BMBE shall go to the Office of the Municipal or City Treasurer where the business is located;
b. the applicant shall accomplish BMBE Form 01 in triplicate and submit to the Office of the Municipal or City Treasurer;
c. the Municipal or City Treasurer evaluates the application. Application shall be processed within fifteen (15) working days upon submission of complete documents. Otherwise, the BMBEs shall be deemed registered; and
d. a registered BMBE shall be issued a Certificate of Authority (CA) as proof of registration, which will be effective for a period of two (2) years, renewable for a period of two (2) years for every renewal.
All BMBEs shall be exempted from income tax for income arising from the operation of the enterprise. The Local Government Units (LGUs) are encouraged either to reduce the amount of local taxes, fees and charges imposed or to exempt the BMBE from local taxes, fees and charges.
The BMBEs shall be exempt from the coverage of the Minimum Wage Law: Provided, That all employees covered under the Act shall be entitled to the same benefits given to any regular employee such as social security and healthcare benefits.
Application of the Law
Case: Mrs. Nenita Naidas wishes to put up a resort in the City of Muntinlupa under the name “Nitz Garden and Swimming Pool.” She has a capital of P2.5M for the construction of the swimming pool and other improvements therein. She wants to legally put up her business without going through expensive registration fees and subsequent expenses for labor benefits. Does her business qualify for the BMBE Law?
Legal Opinion: Yes, it is definitely advisable for Mrs. Naidas to register as a Barangay Micro Business Enterprise (BMBE). Under the Barangay Micro Business Enterprises (BMBEs) Act of 2002 (R.A. 9178, July 22, 2002), a registered BMBE shall be exempted from income tax for income arising from the operation of the enterprise. In addition, a registered BMBE shall also be exempted from the coverage of the Minimum Wage Law. In this regard, registration shall be valid for and renewable every two years. A registration fee not exceeding P1,000.00 shall be paid to the local government unit concerned.
Reference:
Department Administrative Order No. 01, Series of 2003, Implementing Rules and Regulations of R.A. 9178, Otherwise Known as the “Barangay Micro Business Enterprises (BMBEs) Act of 2002.”
The Law
The Barangay Micro Business Enterprises (BMBEs) Act of 2002 (R.A. 9178, July 22, 2002) was enacted to hasten the country’s economic development by encouraging the formation and growth of barangay micro business enterprises which effectively serve as seedbeds of Filipino entrepreneurial talents, and integrating those in the informal sector with the mainstream economy, through the rationalization of bureaucratic restrictions, the active intervention of the government specially in the local level, and the granting of incentives and benefits to generate much-needed employment and alleviate poverty.
“Barangay Micro Business Enterprise," hereinafter referred to as BMBE, refers to any business entity or enterprise engaged in the production, processing or manufacturing of products or commodities, including agro-processing, trading and services, whose total assets including those arising from loans but exclusive of the land on which the particular business entity's office, plant and equipment are situated, shall not be more than Three Million Pesos (P3,000,000).
Any person, natural or juridical, or cooperative, or association, having the qualifications of a Barangay Micro Business Enterprise as defined may apply for registration as BMBE.
Procedure for Registration
The following are the procedures when applying for registration as BMBE:
a. an applicant for BMBE shall go to the Office of the Municipal or City Treasurer where the business is located;
b. the applicant shall accomplish BMBE Form 01 in triplicate and submit to the Office of the Municipal or City Treasurer;
c. the Municipal or City Treasurer evaluates the application. Application shall be processed within fifteen (15) working days upon submission of complete documents. Otherwise, the BMBEs shall be deemed registered; and
d. a registered BMBE shall be issued a Certificate of Authority (CA) as proof of registration, which will be effective for a period of two (2) years, renewable for a period of two (2) years for every renewal.
All BMBEs shall be exempted from income tax for income arising from the operation of the enterprise. The Local Government Units (LGUs) are encouraged either to reduce the amount of local taxes, fees and charges imposed or to exempt the BMBE from local taxes, fees and charges.
The BMBEs shall be exempt from the coverage of the Minimum Wage Law: Provided, That all employees covered under the Act shall be entitled to the same benefits given to any regular employee such as social security and healthcare benefits.
Application of the Law
Case: Mrs. Nenita Naidas wishes to put up a resort in the City of Muntinlupa under the name “Nitz Garden and Swimming Pool.” She has a capital of P2.5M for the construction of the swimming pool and other improvements therein. She wants to legally put up her business without going through expensive registration fees and subsequent expenses for labor benefits. Does her business qualify for the BMBE Law?
Legal Opinion: Yes, it is definitely advisable for Mrs. Naidas to register as a Barangay Micro Business Enterprise (BMBE). Under the Barangay Micro Business Enterprises (BMBEs) Act of 2002 (R.A. 9178, July 22, 2002), a registered BMBE shall be exempted from income tax for income arising from the operation of the enterprise. In addition, a registered BMBE shall also be exempted from the coverage of the Minimum Wage Law. In this regard, registration shall be valid for and renewable every two years. A registration fee not exceeding P1,000.00 shall be paid to the local government unit concerned.
Reference:
Department Administrative Order No. 01, Series of 2003, Implementing Rules and Regulations of R.A. 9178, Otherwise Known as the “Barangay Micro Business Enterprises (BMBEs) Act of 2002.”
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