LAW-2003 3 Regulatory-Framework-Legal-Issues-in-Business LECTURE NOTES PDF

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INSTRUCTIONAL MATERIALS FORLaw-Regulatory Framework &Legal Issues In BusinessCompiled by:ATTY. RITCHE I. ESPONILLAFacultyCollege of Accountancy and FinanceINTRODUCTION / OVERVIEWThis Instructional Material (IM) presents the laws on Labor; the SSS Law; Ease of Doing Business in the Philippines; S...

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INSTRUCTIONAL MATERIALS FOR

Law-20033 Regulatory Framework & Legal Issues In Business

Compiled by:

ATTY. RITCHE I. ESPONILLA Faculty College of Accountancy and Finance

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INTRODUCTION / OVERVIEW This Instructional Material (IM) presents the laws on Labor; the SSS Law; Ease of Doing Business in the Philippines; Secrecy of Bank of Deposits; Anti-Money Laundering Act; PDIC Law; Truth In Lending Act; Intellectual Property Code of the Philippines; E-Commerce Act; and the Data Privacy Act. Foremost is the labor laws that safeguards the welfare of the workingmen. At the same time, it gives the structure of the workplace and defines the responsibilities of every employee to better serve, on the other hand, the capital. The accompanying discussion on the SSS law gives insight as to the compulsory coverage of all employers which, at the end of the day, gives ample benefit to the employees when a time comes that they could not work either by reason of disability, sickness, separation and/or retirement from work. The Ease of doing Business in the Philippines gives insight as to the reforms undertaken to expedite business transactions with the government. The ultimate end of which is to obviate corruption. The discussions on the Secrecy of Bank Deposits, Anti-Money Laundering Act, PDIC law and the Truth in Lending Act provides the students the basic understanding the legal intricacies of banking system. They will know that while bank deposits cannot at anytime just be inquired into, at the same time, bank transactions cannot also be used to launder money. Likewise, students will further know that somehow, to the extent covered by the law, bank deposits are secured and are insured. The Intellectual Property Code of the Philippines will instruct the students that intellectual property refers to anything created by someone, including but not limited to inventions, literary works, items created by artists (e.g. artwork and musical pieces), symbols, designs, images, pictures, and even names that are used for commercial purposes. All these creations are protected by the law, ensuring that the people behind it are given due recognition or remuneration for their effort (https://www.full-suite.com/blog/beginners-guide-to-intellectual-property-lawsphilippines/). Intellectual property protection is critical to fostering innovation. Without protection of ideas, businesses and individuals would not reap the full benefits of their inventions and would focus less on research and development. Similarly, artists would not be fully compensated for their creations and cultural vitality would suffer as a result (https://www.stopfakes.gov/article?id=Why-is-Intellectual-Property-Important). While the E-Commerce Act provides recognition of the electronic transactions which importance is more highlighted today because of the advent of online activities and business transactions. Lastly, knowledge on the Data Privacy Act ensures ample protection for every information being gathered from individual. On the other hand, it outlines the responsibilities in the use, collection, sharing, and storage of data. The law imposes civil and criminal sanctions for unauthorised and improper collection and/or use of data including illegal access to it. At the end of this course, students will not only understand the basic concepts of the laws as herein discussed but will also be able to exercise critical thinking in ensuring that the laws serve the purpose they were enacted and are abreast with the demands of the changing times.

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TABLE OF CONTENTS Page Lesson 1. — Labor Code of the Philippines and other Social Legislation.

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Employer-Employee Relationship. Illustrative cases: i. DEALCO Farms vs. NLRC, GR No. 153192, Jan. 30, 2009 (“comboys”) ii. Jose Sonza vs. ABS-CBN, GR No. 138051, June 10, 2004 (talent)

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Working Conditions and Rest Periods. Hours of Work Illustrative cases: i. Seaman. — National Shipyard & Steel Corp vs. CIR and Malondras, G.R. No. L-17068, December 30, 1961. ii. Faculty. — University of Pangasinan Faculty Union vs. University of Pangasinan, G.R. No. L-63122, February 20, 1984. Meal periods. Night shift differential. Overtime work Undertime not offset by overtime. Emergency overtime work. Computation of additional compensation. Weekly rest periods. Right to weekly rest day. When employer may require work on a rest day. Compensation for rest day, Sunday or holiday work. Holidays, SIL and Service Charges. Right to holiday pay. Service Incentive Leave. Service charges.

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Wages. Definitions. Regional minimum wages. Prohibition against elimination or diminution of benefits. Payment by results. Payment of wages. — HOW? WHEN? WHERE? TO WHOM PAID? Solidary liability of employer with contractor or subcontractor. “labor-only” contracting? “Outsourcing”? Indirect employer. Posting of bond. Solidary liability. Prohibition regarding wages. Non-interference in disposal of wages. Wage deduction. ! Deposits for loss or damage. - Not allowed with exceptions.

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Limitations. Withholding of wages and kickbacks prohibited. Deduction to ensure employment. Retaliatory measures. False reporting. Leaves. Leaves Under Law: Service Incentive Leave (SIL) Solo Parents' Leave Maternity Leave Paternity Leave (R. A. 8187) Leaves under RA 9262 Leaves under RA 9710

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Post employment / Termination of employment. Security of tenure. Regular and casual employment. Probationary employment. Termination by employer. Just causes. Authorized causes. Termination by employee.

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References.

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Lesson 2. — The Social Security System (SSS) Act. Coverage. Effective Date of Coverage. Benefits available. Monthly Pension. Dependents’ Pension. Retirement Benefits. Death Benefits. Permanent Disability Benefits. Funeral Benefit. Sickness Benefit. Unemployment. Insurance or Involuntary Separation Benefits. Non-Transferability of Benefits. References. Exercises.

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Lesson 3. — The Ease of Doing Business and Efficient Government Service Delivery Act in the Philippines. Essential features of the law. Coverage. Zero-Contact Policy. Bigger accountability for receiving officers. Shorter processing times. Limiting the number of signatories to (at most) three people. Single unified business application form.

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Environmental and agricultural clearances, sanitary permits, and other local permits will be issued along with the business permit which shall be valid for one year. Business one-stop shop. Automatic Approval or Automatic Extension of License, Clearance, Permit, Certification or Authorization. References. Lesson 4. — Electronic and E-Commerce Act. Scope of the application of the law. Definition of terms. "Electronic Data Message”. ”Electronic Document”. "Electronic Signature”. Legal recognition and communication of electronic messages and documents. Legal Recognition of Electronic Data Messages. Legal Recognition of Electronic Documents. Legal Recognition of Electronic Signatures. Attribution of Electronic Data Message. Time of Dispatch of Electronic Data Messages or Electronic Documents. Time of Receipt of Electronic Data Messages or Electronic Documents. Electronic commerce in carriage of goods. Electronic transactions in government. References.

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Lesson 5. — Philippine Deposit Insurance Corporation (PDIC) Law. 25 What is the Philippine Deposit Insurance Corporation (PDIC)? What does the PDIC do? What is maximum deposit insurance coverage of PDIC? What are covered by the PDIC Deposit Insurance? Which banks are members of the PDIC? What specific risks to a bank does PDIC cover? Do you need to pay any insurance premium to the PDIC to be covered? What is NOT covered by the PDIC Deposit Insurance? What is my PDIC deposit insurance coverage if I have several types of accounts in a bank? If I have deposits in different banks, what is my PDIC deposit insurance coverage? How can I claim PDIC deposit insurance if my bank closes? References. 27 Exercises. 27 Lesson 6. — Truth in Lending Act. What is the policy behind the Truth in Lending Act? Who are covered under the Truth in Lending Act? In that definition, what is meant by “credit”? In the same definition, what is meant by a “finance charge”? What are the information required to be furnished to the debtor or borrower? When and how should these information be furnished to the debtor or borrower? What is the effect on the obligation in case of violations to the Truth in Lending Act? What are the penalties in case of violation? References.

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Lesson 7. — An Act Prohibiting Disclosure of or Inquiry into Deposits with any Banking Institution (“Bank Secrecy Law”). What are the covered deposits? What are the exceptions? What are the penal provisions for violating the bank secrecy law. References. Exercises.

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Lesson 8. — The Anti-Money Laundering Act of 2001, as amended by R. A. 10365. Rationale for Enacting the Law. History of the Act. Salient Features. What are the covered institutions? What is the Covered Transaction? What is the Suspicious Transaction? Freezing of Monetary Instrument or Property. Authority to Inquire into Bank Deposits. References. Exercises.

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Lesson 9. — Intellectual Property Code of the Philippines. State policy declaration: Effect on international conventions and on principle of reciprocity. Laws repealed. What are the intellectual property rights under the Intellectual Property Code? Copyright and related rights. Trademarks and service marks. Industrial designs and Layout Designs (Topographies) of Integrated Circuits. Patents. Government Agencies. The scheme of penalties for infringement has also been changed. References. Exercises.

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Lesson 10. — Data Privacy Act of 2012. Types of Information: Personal information. Sensitive Personal Information. Privileged information. Three (3) principles to be adhered to in the processing of data. Transparency. Legitimate Purpose. Proportionality. Rights of the Data Subjects. Penalty provisions. References. Exercises.

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Lesson 1. Presidential Decree No. 442 otherwise known as the “Labor Code of the Philippines” and other Social Legislations. Week: 1st Week to 4th week. Learning Objectives: 1. To understand the basic concepts of the law. 2. To know and understand the terminologies and definitions used in the law. 3. To know the rights and the corresponding obligations set out in the law. Learning Outcomes: 1. Students will know the concept of employer-employee relationship. 2. Students will know the minimum labor standards. 3. Students will understand the causes and the legal process of terminating employment. Methodology: On-Line Discussions: 1. Employer-Employee Relationship. — Foremost, in the discussion of the Labor Code is the determination of the existence of the employee-employer relationship. This is very important since if there is no employer-employee relation that exists between the parties the Labor Code finds no application. In determining whether employer-employee relationship exists, the four-fold test is followed, to wit: (1) the power to hire; (2) the payment of wages; (3) the power to dismiss: and (4) the power to control the employees’ conduct, or the so-called "control test.” Of the four, the power of control is the most important element. Illustrative cases: 1. DEALCO Farms vs. NLRC, GR No. 153192, Jan. 30, 2009 (“comboys”) Facts: Respondents Albert Caban (Caban) and Chiquito Bastida (Bastida) were hired by petitioner Dealco Farms as escorts or "comboys" for the transit of live cattle from General Santos City to Manila. Respondents’ work entailed tending to the cattle during transportation. It included feeding and frequently showering the cattle to prevent dehydration and to develop heat resistance. On the whole, respondents ensured that the cattle would be safe from harm or death caused by a cattle fight or any such similar incident. Upon arrival in Manila, the cattle are turned over to and received by the duly acknowledged buyers or customers of petitioner, at which point, respondents’ work ceases. Thereafter, respondents Caban and Bastida were replaced for no reason at all. Thus, they filed an illegal dismissal case against petitioner Delaco Farms. Issue: Were respondents employees of the petitioner? Decision: In resolving the issue, the four-fold test as to whether employer-employee relationship exists was applied: (1) the power to hire, (2) the payment of wages, (3) the power to dismiss, and (4) the power to control the employees’ conduct, or the so-called "control test”. Of the four, the power of control is the most important element. [Petitioner] admits having engaged the services of [respondents] as caretakers or "comboys" (convoys) though it qualifies that it was on a "per trip" or "per contract" basis. It also admits paying their remuneration of ₱1,500.00 per trip. It tacitly admits having terminated [respondents’] services when it said that [respondents] were among the group of escorts who were no longer accommodated due to the dePage 7 ! of 40 !

crease in volume of imports and shipments. [Petitioner] also undoubtedly exercised control and supervision over [respondents’] work as caretakers considering that the value of the cattle shipped runs into hundreds of thousands of pesos. The preparation of the cattle for shipment, manning and feeding them prior to and during transit, and making a report upon return to General Santos City to tally the records of the cattle shipped out versus cattle that actually reached Manila are certainly all in accordance with [petitioner’s] instructions. Thus, all the four elements in the determination of an employer-employee relationship being present, [x x x] [respondents] were, therefore, employees of [petitioner]. 2. Jose Sonza vs. ABS-CBN, GR No. 138051, June 10, 2004 (talent) Facts: Petitioner Jay Sonza signed an Agreement with respondent ABS-CBN with the Mel and Jay Management and Development Corporation (MJMDC) as talent for radio and television. Jay Sonza thereafter filed a complaint against ABS-CBN before the Department of Labor and Employment, National Capital Region in Quezon City complaining, among others, that ABSCBN did not pay his salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (“ESOP"). On the other hand, ABS-CBN contended that there is no employer-employee relationship existed between the parties. Issue: Whether there exists employer-employee relationship between Jay Sonza and ABS-CBN? Decision: In applying the four-fold test the Supreme Court held that there is no employeremployee relationship between Jay Sonza and ABS-CBN: A. Selection and Engagement of Employee - ABS-CBN engaged Sonza’s services to cohost its television and radio programs. However, the specific selection and hiring of Sonza, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If Sonza did not possess such unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with Sonza but would have hired him through its personnel department just like any other employee. In any event, the method of selecting and engaging Sonza does not conclusively determine his status. We must consider all the circumstances of the relationship, with the control test being the most important element. B. Payment of Wages - All the talent fees and benefits paid to Sonza were the result of negotiations that led to the Agreement. If Sonza were ABS-CBN's employee, there would be no need for the parties to stipulate on benefits such as "SSS, Medicare, x x x and 13th month pay” which the law automatically incorporates into every employer-employee contract. Whatever benefits Sonza enjoyed arose from contract and not because of an employer-employee relationship. C. Power of Dismissal - For violation of any provision of the Agreement, either party may terminate their relationship. Sonza failed to show that ABS-CBN could terminate his services on grounds other than breach of contract, such as retrenchment to prevent losses as provided under labor laws. D. Power of Control - Sonza contends that ABS-CBN exercised control over the means and methods of his work. SONZA's argument is misplaced. ABS-CBN engaged Sonza’s services specifically to co-host the “Mel & Jay” programs. ABS-CBN did not assign any other work to Sonza. To perform his work, Sonza only needed his skills and talent. How Sonza delivered his lines, appeared on television, and sounded on radio were outside ABS-CBN’s control. Sonza did not have to render eight hours of work per day. The Agreement required Sonza to attend only rehearsals and tapings of the shows, as well as pre- and post-production staff meetings. ABS-CBN could not dictate the contents of Sonza’s script. However, the Agreement prohibited Sonza from criticizing in his shows ABS-CBN or its interests. The clear implication is that Sonza had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests. 2. Working Conditions and Rest Periods. Page 8 ! of 40 !

2.1. Hours of Work Art. 82 - Entities not applicable. — The provisions of this Title shall apply to employees in all establishments and undertakings whether for profit or not, but not to [1] government employees, [2] managerial employees, [3] field personnel, [4] members of the family of the employer who are dependent on him for support, [5] domestic helpers, [6] persons in the personal service of another, and [7] workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. Art. 83 - Normal hours of work 8 hrs/6 days or 48 hours work week. 40 hour work week for health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week. ARTICLE 84. Hours worked. GENERAL RULE: “NO WORK NO PAY”; “A FAIR DAYS WAGE FOR A FAIR DAYS WORK”. Hours worked. — The following shall be considered as compensable hours worked: (a) All time during which an employee is required to be on duty or to be at the employer's premises or to be at a prescribed work place; and (b) All time during which an employee is suffered or permitted to work. Principles in determining hours worked. — The following general principles shall govern in determining whether the time spent by an employee is considered hours worked: (a) All hours are hours worked which the employee is required to give his employer, regardless of whether or not such hours are spent in productive labor or involve physical or mental exertion. (b) An employee need not leave the premises of the work place in order that his rest period shall not be counted, it being enough that he stops working, may rest completely and may leave his work place, to go elsewhere, whether within or outside the premises of his work place. (c) If the work performed was necessary, or it benefited the employer, or the employee could not abandon his work at the end of his normal working hours because he had no replacement, all time spent for such work shall be considered as hours worked, if the work was with the knowledge of his employer or immediate supervisor. (d) The time during which an employee is inactive by reason of interruptions in his work beyond his control shall be considered working time either if the imminence of the resumption of work requires the employee's presence at the place of work o...