I.
GENERAL CONCEPTS
SOCIAL JUSTICE (Definition)
CALALANG V. WILLIAMS: Social justice is
"neither communism, nor despotism, nor
atomism, nor anarchy," but the humanization
of laws and the equalization of social and
economic forces by the State so that justice in
its rational and objectively secular conception
may at least be approximated. Social justice
means the promotion of the welfare of all the
people, the adoption by the Government of
measures calculated to insure economic
stability of all the competent elements of
society, through the maintenance of a proper
economic and social equilibrium in the
interrelations of the members of the
community, constitutionally, through the
adoption of measures legally justifiable, or
extra-constitutionally, through the exercise of
powers underlying the existence of all
governments on the time-honored principle of
salus populi est suprema lex. Social justice,
therefore, must be founded on the recognition
of the necessity of interdependence among
divers and diverse units of a society and of the
protection that should be equally and evenly
extended to all groups as a combined force in
our social and economic life, consistent with
the fundamental and paramount objective of
the state of promoting the health, comfort, and
quiet of all persons, and of bringing about "the
greatest good to the greatest number."
SOCIAL JUSTICE (Application)
PLDT V. NLRC: An employee dismissed for
cause is entitled to neither reinstatement nor
backwages and is not allowed any relief at all
because his dismissal is in accordance with
law. Exceptions exist however, in light of the
mandate of social justice, such as when an
employee is validly dismissed for other cases
other than serious misconduct or those which
reflect upon his moral character and granted
separation pay.
This policy is not intended as a condonation of
the offense but as mere mitigation of the
penalty and compassion for those who have
erred.
company practice, the employee must prove by
SECURITY BANK V. SINGSON: As an
exception, case law instructs that in certain
circumstances, the grant of separation pay or
financial assistance to a legally dismissed
employee has been allowed as a measure of
social justice or on grounds of equity. This
requires that the dismissal (a) was not for
serious misconduct; and (b) does not reflect on
the moral character of the employee or would
involve moral turpitude.
PAL V. NLRC: The grant of separation pay as
a matter of equity to a validly dismissed
employee is not contingent on whether the
ground for dismissal is expressly under Article
282(a) but whether the ground relied upon is
akin to serious misconduct or involves willful or
wrongful intent on the part of the employee.
PNOC V. BUENVIAJE: (1) Separation pay or
financial assistance may also be granted to a
legally terminated employee as an act of social
justice and equity when the circumstances so
warrant. (2) Moral damages may be awarded
to a terminated employee when bad faith
attends such dismissal. Exemplary damages,
on the other hand, may also be granted when
the dismissal of the employee was done in a
wanton, oppressive or malevolent manner.
COMPANY PRACTICE
VERGARA V. COCA-COLA: (1) The principle
of non-diminution of benefits is actually
founded on the Constitutional mandate to
protect the rights of workers, to promote their
welfare, and to afford them full protection.
There is diminution of benefits when the
following requisites are present: (a) the grant
or benefit is founded on a policy or has ripened
into a practice over a long period of time; (b)
the practice is consistent and deliberate; (c)
the practice is not due to error in the
construction or application of a doubtful or
difficult question of law; and (d) the diminution
or discontinuance is done unilaterally by the
employer. (2) To be considered as a regular
substantial evidence that the giving of the
benefit is done over a long period of time, and
that it has been made consistently and
deliberately.19Jurisprudence has not laid down
any hard-and-fast rule as to the length of time
that company practice should have been
exercised in order to constitute voluntary
employer practice.20 The common denominator
in previously decided cases appears to be the
regularity and deliberateness of the grant of
benefits over a significant period of time.21 It
requires an indubitable showing that the
employer agreed to continue giving the benefit
knowing fully well that the employees are not
covered by any provision of the law or
agreement requiring payment thereof.22 In
sum, the benefit must be characterized by
regularity, voluntary and deliberate intent of
the employer to grant the benefit over a
considerable period of time. Accordingly, an
isolated act of granting retirement benefits
cannot be considered a regular company
practice.
CENTRAL AZUCARERA V. CAT LABOR
UNION:
Article 100 of the Labor Code, otherwise known
as the Non-Diminution Rule, mandates that
benefits given to employees cannot be taken
back or reduced unilaterally by the employer
because the benefit has become part of the
employment contract, written or
unwritten. [18] The rule against diminution of
benefits applies if it is shown that the grant of
the benefit is based on an express policy or has
ripened into a practice over a long period of
time and that the practice is consistent and
deliberate. Nevertheless, the rule will not apply
if the practice is due to error in the
construction or application of a doubtful or
difficult question of law. But even in cases of
error, it should be shown that the correction is
done soon after discovery of the error. (2) The
term "basic salary" of an employee for the
purpose of computing the 13th-month pay was
interpreted to include all remuneration or
earnings paid by the employer for services
rendered, but does not include allowances and
monetary benefits which are not integrated as
part of the regular or basic salary, such as the
cash equivalent of unused vacation and sick
leave credits, overtime, premium, night
differential and holiday pay, and cost-of-living
allowances. However, these salary-related
benefits should be included as part of the basic
salary in the computation of the 13th-month
pay if, by individual or collective agreement,
company practice or policy, the same are
treated as part of the basic salary of the
employees. Thus, the practice of petitioner in
giving 13th-month pay based on the employees'
gross annual earnings which included the basic
monthly salary, premium pay for work on rest
days and special holidays, night shift
differential pay and holiday pay continued for
almost thirty (30) years and has ripened into a
company policy or practice which cannot be
unilaterally withdrawn.
CONTRACTS
NATE CASKET V. ARANGO: In termination
cases, the burden of proving just and valid
cause for dismissing an employee from his
employment rests upon the employer, and the
latter's failure to do so would result in a finding
that the dismissal is unjustified. The law, in
defining their contractual relationship, does so,
not necessarily or exclusively upon the terms
of their written or oral contract, but also on the
basis of the nature of the work of employees
who had been called upon to perform.
SAMONTE V. LASALLE: (1) The Labor Code
classifies regular employees into two kinds (a)
those "engaged to perform activities which are
usually necessary or desirable in the usual
business or trade of the employer"; and (b)
casual employees who have "rendered at least
one year of service, whether such service is
continuous or broken. On more than one
occasion, we recognised certain workers to be
independent contractors: individuals with
unique skills and talents that set them apart
from ordinary employees.10 We found them to
be independent contractors because of these
unique skills and talents and the lack of control
over the means and methods in the
performance of their work. In some instances,
doctors and other medical professional may fall
into this independent contractor category,
legitimately providing medical professional
services. Nevertheless, as the Sanitation Code
required educational institutions to hire
medical professionals, these doctors and
dentists were performing activities necessary in
their business and are therefore regular
employees. (2) The ruling provided by the
Brent case serves as an exception in
determining the nature of employment: while
there are employment contracts where a "fixed
term is an essential and natural appurtenance"
such as overseas employment contracts and
officers in educational institutions, both parties
must be on equal footing and neither must
exercise moral dominance over the other.
Simply, a fixed-term employment is allowable
under the Labor Code only if the term was
voluntarily and knowingly entered into by the
parties who must have dealt with each other
on equal terms not one exercising moral
dominance over the other.
Accordingly, the nomenclature of the contract
involved does not determine the relationship
between the parties. The repeated renewals of
individuals performing necessary work
established that these medical professionals
were regular employees.
EE-ER RELATIONSHIP (Four Fold Test)
BAZAR V. RUIZOL: The existence of an
employee-employer relationship is a question
of fact and may be determined by the four-fold
test: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employer's
power to control the employee with respect to
the means and. method by which the work is
to be accomplished.
ROYALE V. ALCANTARA: Not every form of
control that a hiring party imposes on the hired
party is indicative of employee-employer
relationship. Rules and regulations that merely
serve as guidelines towards the achievement of
a mutually desired result without dictating the
means and methods of accomplishing it do not
establish employer-employee relationship.
Moreover, the payment of wages was also
absent in this instance, as the respondent
merely received commissions.
EE-ER RELATIONSHIP (Economic
Dependence Test)
FRANCISCO V. NLRC: (1) In this jurisdiction,
there has been no uniform test to determine
the existence of an employer-employee
relation. Generally, courts have relied on the
so-called right of control test where the person
for whom the services are performed reserves
a right to control not only the end to be
achieved but also the means to be used in
reaching such end. In addition to the standard
of right-of-control, the existing economic
conditions prevailing between the parties, like
the inclusion of the employee in the payrolls,
can help in determining the existence of an
employer-employee relationship.
However, in certain cases the control test is
not sufficient to give a complete picture of the
relationship between the parties, owing to the
complexity of such a relationship where several
positions have been held by the worker. There
are instances when, aside from the employers
power to control the employee with respect to
the means and methods by which the work is
to be accomplished, economic realities of the
employment relations help provide a
comprehensive analysis of the true
classification of the individual, whether as
employee, independent contractor, corporate
officer or some other capacity.
The better approach would therefore be to
adopt a two-tiered test involving: (1) the
putative employers power to control the
employee with respect to the means and
methods by which the work is to be
accomplished; and (2) the underlying economic
realities of the activity or relationship. This
two-tiered test would provide us with a
framework of analysis, which would take into
consideration the totality of circumstances
surrounding the true nature of the relationship
between the parties. This is especially
appropriate in this case where there is no
written agreement or terms of reference to
base the relationship on; and due to the
complexity of the relationship based on the
various positions and responsibilities given to
the worker over the period of the latter’s
employment.
Thus, the determination of the relationship
between employer and employee depends
upon the circumstances of the whole economic
activity,[22] such as: (1) the extent to which the
services performed are an integral part of the
employers business; (2) the extent of the
workers investment in equipment and facilities;
(3) the nature and degree of control exercised
by the employer; (4) the workers opportunity
for profit and loss; (5) the amount of initiative,
skill, judgment or foresight required for the
success of the claimed independent enterprise;
(6) the permanency and duration of the
relationship between the worker and the
employer; and (7) the degree of dependency of
the worker upon the employer for his
continued employment in that line of business.
VALEROSO V. SKYCABLE: In the present
case, there is a written contract, i.e., the Sales
Agency Agreement, which served as the
primary evidence of the nature of the parties'
relationship. In this duly executed and signed
agreement, petitioners and respondent
unequivocally agreed that petitioners' services
were to be engaged on an agency basis as
sales account executives and that no
employer-employee relationship is created but
an independent contractorship. It is therefore
clear that the intention at the time of the
signing of the agreement is not to be bound by
an employer-employee relationship. At any
rate, even if we are to apply the two-tiered test
pronounced in the Francisco case, there can
still be no employer-employee relationship
since, as discussed, the element of control is
already absent.
WHO DETERMINES
PEOPLE’S BROADCASTING V. SECRETARY
OF LABOR: The determination of the existence
of an employer-employee relationship by the
DOLE must be respected. The expanded
visitorial and enforcement power of the DOLE
granted by RA 7730 would be rendered
nugatory if the alleged employer could, by the
simple expedient of disputing the employer-
employee relationship, force the referral of the
matter to the NLRC. The Court issued the
declaration that at least a prima facie showing
of the absence of an employer-employee
relationship be made to oust the DOLE of
jurisdiction. But it is precisely the DOLE that
will be faced with that evidence, and it is the
DOLE that will weigh it, to see if the same does
successfully refute the existence of an
employer-employee relationship.
If the DOLE makes a finding that there is an
existing employer-employee relationship, it
takes cognizance of the matter, to the
exclusion of the NLRC. The DOLE would have
no jurisdiction only if the employer-employee
relationship has already been terminated, or it
appears, upon review, that no employer-
employee relationship existed in the first place.
This is not to say that the determination by the
DOLE is beyond question or review. Suffice it
to say, there are judicial remedies such as a
petition for certiorari under Rule 65 that may
be availed of, should a party wish to dispute
the findings of the DOLE.
It must also be remembered that the power of
the DOLE to determine the existence of an
employer-employee relationship need not
necessarily result in an affirmative finding.The
DOLE may well make the determination that no
employer-employee relationship exists, thus
divesting itself of jurisdiction over the case. It
must not be precluded from being able to
reach its own conclusions, not by the parties,
and certainly not by this Court.
SOUTH COTABATO V. STO. TOMAS: The
DOLE has the authority to rule on the existence
of an employer-employee relationship between
the parties, considering that the existence of
an employer-employee relationship is a
condition sine qua non for the exercise of its
visitorial power.
Nevertheless, it must be emphasized that
without an employer-employee relationship, or
if one has already been terminated, the
Secretary of Labor is without jurisdiction to
determine if violations of labor standards
provision had in fact been committed,24 and to
direct employers to comply with their alleged
violations of labor standards
In determining the existence of an employer-
employee relationship, Bombo Radyo specifies
the guidelines or indicators used by
courts, i.e. (1) the selection and engagement
of the employee; (2) the payment of wages;
(3) the power of dismissal; and (4) the
employer's power to control the employee's
conduct. The DOLE Secretary, or his or her
representatives, can utilize the same test, even
in the course of inspection, making use of the
same evidence that would have been
presented before the
NLRC.26ChanRoblesVirtualawlibrary
As can be gleaned from the above-quoted
Order, the Regional Director merely noted the
discovery of violations of labor standards
provisions in the course of inspection of the
DXCP premises. No such categorical
determination was made on the existence of an
employer-employee relationship utilizing any of
the guidelines set forth. In a word, the
Regional Director had presumed, not
demonstrated, the existence of the
relationship. Of particular note is the DOLE'S
failure to show that petitioners, thus, exercised
control over private respondents' conduct in
the workplace. The power of the employee to
control the work of the employee, or the
control test, is considered the most significant
determinant of the existence of an employer-
employee relationship.
MANAGEMENT PREROGATIVES
(Definition)
SAN MIGUEL V. NLRC: An employer has the
prerogative to prescribe reasonable rules and
regulations necessary for the proper conduct of
its business, to provide certain disciplinary
measures in order to implement said rules and
to assure that the same would be complied
with.[35] An employer enjoys a wide latitude of
discretion in the promulgation of policies, rules
and regulations on work-related activities of
the employees.[36] It is axiomatic that
appropriate disciplinary sanction is within the
purview of management imposition.[37] Thus,
in the implementation of its rules and policies,
the employer has the choice to do so strictly or
not, since this is inherent in its right to control
and manage its business
effectively. Consequently, management has
the prerogative to impose sanctions lighter
than those specifically prescribed by its rules,
or to condone completely the violations of its
erring employees. Of course, this prerogative
must be exercised free of grave abuse of
discretion, bearing in mind the requirements of
justice and fair play.
TRANSFER;PROMOTION AND DEMOTION
CHATEAU ROYALE V. BALBA: In the
resolution of whether the transfer of the
respondents from one area of operation to
another was valid, finding a balance between
the scope and limitation of the exercise of
management prerogative and the employees'
right to security of tenure is necessary. In this
case of constructive dismissal, the burden of
proof lies in the petitioner as the employer to
prove that the transfer of the employee from
one area of operation to another was for a
valid and legitimate ground, like genuine
business necessity. As such, the petitioners
had duly established the (a) sudden
resignation of its Manila employees; (b) the
corresponding increases in pay; (c) the consent
of the employees themselves. Accordingly, the
transfer was reasonable and not oppressive.
JULIE’S BAKESHOP V. ARNAIZ: [D]emotion
involves a situation in which an employee is
relegated to a subordinate or less important
position constituting a reduction to a lower
grade or rank, with a corresponding decrease
in duties and responsibilities, and usually
accompanied by a decrease in salary.[32] When
there is a demotion in rank and/or a diminution
in pay; when a clear discrimination,
insensibility or disdain by an employer
becomes unbearable to the employee; or when
continued employment is rendered impossible,
unreasonable or unlikely, the transfer of an
employee may constitute constructive
dismissal. The “transfer” of the employee from
chief baker to utility and security personnel,
following allegations of sabotage, amounted to
constructive dismissal.
ENDICO V. QUANTUM
FOODS: Reassignments made by
management pending investigation of
violations of company policies and procedures
allegedly committed by an employee fall within
the ambit of management prerogative.[36The
decision of Quantum Foods to transfer Endico
pending investigation was a valid exercise of
management prerogative to discipline its
employees. The transfer, while incidental to
the charges against Endico, was not meant as
a penalty, but rather as a preventive measure
to avoid further loss of sales and the
destruction of Quantum Foods image and
goodwill. It was not designed to be the
culmination of the then on-going administrative
investigation against Endico.
Neither was there any demotion in rank or any
diminution of Endicos salary, privileges and
other benefits. Endico was being transferred to
the head office as area sales manager, the
same position Endico held in Cebu.[37] There
was also no proof that the transfer involved a
diminution of Endicos salary, privileges and
other benefits.
COMPANY POLICIES
MIRANT V. CARO: It is beyond debate that
petitioner corporation’s enforcement of its Anti-
Drugs Policy is an exercise of its management
prerogative. Nevertheless, managerial
prerogatives are subject to limitations provided
by law, collective bargaining agreements, and
the general principles of fair play and
justice.46 In the exercise of its management
prerogative, an employer must therefore
ensure that the policies, rules and regulations
on work-related activities of the employees
must always be fair and reasonable and the
corresponding penalties, when prescribed,
commensurate to the offense involved and to
the degree of the infraction.47 The Anti-Drugs
Policy of Mirant fell short of these
requirements. First, the term “unjust refusal”
was ambiguous and was not clearly defined. In
addition, the penalty of termination meted out
for a “first-time unjustified refusal” was
oppressive.
EMPLOYMENT RESTRICTIONS
BY COMPETITOR
RIVERA V. SOLIDBANK: Respondent, as
employer, is burdened to establish that a
restrictive covenant barring an employee from
accepting a competitive employment
after retirement or resignation is not an
unreasonable or oppressive, or in undue or
unreasonable restraint of trade, thus,
unenforceable for being repugnant to public
policy. There are two principal grounds on
which the doctrine is founded that a contract in
restraint of trade is void as against public
policy. One is, the injury to the public by being
deprived of the restricted party’s industry; and
the other is, the injury to the party himself by
being precluded from pursuing his occupation, former employees who may retire and obtain MARRIAGE (BONA FIDE OCCUPATIONAL
and thus being prevented from supporting retirement or pension benefits and, at the QUALIFICATION)
himself and his family. same time, engage in competitive DUNCAN V. GLAXO-WELLCOME: The
employment. prohibition against personal or marital
relationships with employees of competitor
Thus, in determining whether the contract is
In this instance, the agreement was so broad companies upon Glaxos employees is
reasonable or not, the trial court should
that there was no automatic of forfeiture of reasonable under the circumstances because
consider the following factors: (a) whether the
retirement benefits. Even upon the assumption relationships of that nature might compromise
covenant protects a legitimate business
that the clause was valid, there still exists the the interests of the company. In laying down
interest of the employer; (b) whether the
burden of proving that the employee had the assailed company policy, Glaxo only aims
covenant creates an undue burden on the
violated the same. to protect its interests against the possibility
employee; (c) whether the covenant is
that a competitor company will gain access to
injurious to the public welfare; (d) whether the
EMPLOYMENT BY RELATIVES its secrets and procedures.
time and territorial limitations contained in the
UNITED KIMBERLY CLARK EMPLOYEES
covenant are reasonable; and (e) whether the
UNION V. UNITED KIMBERLY CLARK: The That Glaxo possesses the right to protect its
restraint is reasonable from the standpoint of
VA ignored the plain language of the 1997 CBA economic interests cannot be denied. No less
public policy.
of the parties, as well as the Guidelines issued than the Constitution recognizes the right of
by respondent. He capriciously based his enterprises to adopt and enforce such a policy
There is a distinction between restrictive
resolution on the respondent’s practice of to protect its right to reasonable returns on
covenants barring an employee to accept a
hiring which, however, by agreement of investments and to expansion and
post-employment competitive employment or
petitioner and respondent, was discontinued. growth.[20] Indeed, while our laws endeavor to
restraint on trade in employment contracts and
Respondent issued said Guidelines in light of give life to the constitutional policy on social
restraints on post-retirement competitive
the ruling of this Court in Kimberly Clark justice and the protection of labor, it does not
employment in pension and retirement plans
Philippines v. Lorredo. Respondent saw it mean that every labor dispute will be decided
either incorporated in employment contracts or
imperative to do away with its practice of in favor of the workers. The law also
in collective bargaining agreements between
accommodating recommendees who were recognizes that management has rights which
the employer and the union of employees, or
mere high school graduates, and to require are also entitled to respect and enforcement in
separate from said contracts or collective
higher employment standards for them. the interest of fair play
bargaining agreements which provide that an
By agreement of the parties, the
employee who accepts post retirement
implementation of the Guidelines was deferred The challenged company policy does not
competitive employment will forfeit retirement
until January 1, 1997, unless revoked or violate the equal protection clause of the
and other benefits or will be obliged to
amended by the 1997 CBA. Petitioner proposed Constitution as petitioners erroneously
restitute the same to the employer. The
that the practice of hiring recommendees of suggest. It is a settled principle that the
strong weight of authority is that
retired/resigned, deceased or disabled commands of the equal protection clause are
forfeitures for engaging in subsequent
employees who were union members, who addressed only to the state or those acting
competitive employment included in
were at least high school graduates, be under color of its authority.[24] Corollarily, it
pension and retirement plans are valid
included in their CBA, but respondent did not has been held in a long array of U.S. Supreme
even though unrestricted in time or
agree. Hence, Article XX, Section 1 of the 1997 Court decisions that the equal protection clause
geography. The reasoning behind this
CBA of the parties remained intact. There was erects no shield against merely private
conclusion is that the forfeiture, unlike
thus no more legal bar for respondent to conduct, however, discriminatory or
the restraint included in the employment
implement the November 7, 1995 Guidelines. wrongful.[25] The only exception occurs when
contract, is not a prohibition on the
By executing the 1997 CBA, in its present the state[26] in any of its manifestations or
employees engaging in competitive work
form, petitioner is bound by the terms and actions has been found to have become
but is merely a denial of the right to
conditions therein set forth. The same is a valid entwined or involved in the wrongful private
participate in the retirement plan if he
exercise of management prerogatives. conduct.[27] Obviously, however, the exception
does so engage. A post-retirement
is not present in this case. Significantly, the
competitive employment restriction is designed
company actually enforced the policy after
to protect the employer against competition by
repeated requests to the employee to comply
with the policy. Indeed, the application of the
policy was made in an impartial and even-
handed manner, with due regard for the lot of
the employee.
In any event, from the wordings of the
contractual provision and the policy in its
employee handbook, it is clear that Glaxo does
not impose an absolute prohibition against
relationships between its employees and those
of competitor companies. Its employees are
free to cultivate relationships with and marry
persons of their own choosing. What the
company merely seeks to avoid is a conflict of
interest between the employee and the
company that may arise out of such
relationships. As succinctly explained by the
appellate court, thus:
The policy being questioned is not a policy
against marriage. An employee of the company
remains free to marry anyone of his or her
choosing. The policy is not aimed at restricting
a personal prerogative that belongs only to the
individual. However, an employees personal
decision does not detract the employer from
exercising management prerogatives to ensure
maximum profit and business success.
Lastly, Tecson was aware of that restriction
when he signed his employment contract and
when he entered into a relationship with
Bettsy. Since Tecson knowingly and voluntarily
entered into a contract of employment with
Glaxo, the stipulations therein have the force
of law between them and, thus, should be
complied with in good faith.[29] He is therefore
estopped from questioning said policy.
CAPIN-CAPIZ V. BRENT: (1) The
determination of whether a conduct is
disgraceful or immoral involves a two-step
process: first, a consideration of the totality of
the circumstances surrounding the conduct;
and second, an assessment of the said
circumstances vis-a-vis the prevailing norms of
conduct, i.e., what the society generally
considers moral and respectable.
The foregoing circumstances, however, do not
readily equate to disgraceful and immoral
conduct. Brent's Policy Manual and Employee's
Manual of Policies do not define what
constitutes immorality; it simply
stated immorality as a ground for disciplinary
action. Instead, Brent erroneously relied on the
standard dictionary definition of fornication as
a form of illicit relation and proceeded to
conclude that Cadiz's acts fell under such
classification, thus constituting immorality.39
Jurisprudence has already set the standard of
morality with which an act should be gauged -
it is public and secular, not religious.40 Whether
a conduct is considered disgraceful or immoral
should be made in accordance with the
prevailing norms of conduct, which, as stated
in Leus, refer to those conducts which are
proscribed because they are detrimental to
conditions upon which depend the
existence and progress of human society.
The fact that a particular act does not conform
to the traditional moral views of a certain
sectarian institution is not sufficient reason to
qualify such act as immoral unless it, likewise,
does not conform to public and secular
standards. More importantly, there must
be substantial evidence to establish that
premarital sexual relations and pregnancy out
of wedlock is considered disgraceful or
immoral. 41
(2) Republic Act No. 9710 or the Magna Carta
of Women51 protects women against
discrimination in all matters relating to
marriage and family relations, including
the right to choose freely a spouse and to
enter into marriage only with their free
and full consent.52
Weighed against these safeguards, it becomes
apparent that Brent's condition is coercive,
oppressive and discriminatory. There is no
rhyme or reason for it. It forces Cadiz to marry
for economic reasons and deprives her of the
freedom to choose her status, which is a
privilege that inheres in her as an intangible
and inalienable right.53 While a marriage or no-
marriage qualification may be justified as a
"bona fide occupational qualification," Brent
must prove two factors necessitating its
imposition, viz: (1) that the employment
qualification is reasonably related to the
essential operation of the job involved;
and (2) that there is a factual basis for
believing that all or substantially all persons
meeting the qualification would be unable to
properly perform the duties of the job.54 Brent
has not shown the presence of neither of these
factors. Perforce, the Court cannot uphold the
validity of said condition.
Given the foregoing, Cadiz, therefore, is
entitled to reinstatement without loss of
seniority rights, and payment of backwages
computed from the time compensation was
withheld up to the date of actual
reinstatement.
STAR PAPER V. SIMBOL: (1) There are two
theories of employment discrimination:
the disparate treatment and the disparate
impact. Under the disparate treatment
analysis, the plaintiff must prove that an
employment policy is discriminatory on its
face. No-spouse employment policies requiring
an employee of a particular sex to either quit,
transfer, or be fired are facially discriminatory.
For example, an employment policy prohibiting
the employer from hiring wives of male
employees, but not husbands of female
employees, is discriminatory on its face.[22]
On the other hand, to establish disparate
impact, the complainants must prove that a
facially neutral policy has a disproportionate
effect on a particular class. For example,
although most employment policies do not
expressly indicate which spouse will be
required to transfer or leave the company, the
policy often disproportionately affects one
sex.[23]
The courts narrowly[25] interpreting marital
status to refer only to a person's status as
married, single, divorced, or widowed reason
that if the legislature intended a broader
definition it would have either chosen different
language or specified its intent. They hold that
the relevant inquiry is if one is married rather
than to whom one is married. They construe
marital status discrimination to include only
whether a person is single, married, divorced,
or widowed and not the identity, occupation,
and place of employment of one's spouse.
These courts have upheld the questioned
policies and ruled that they did not violate the
marital status discrimination provision of their
respective state statutes.
The courts that have broadly[26] construed the
term marital status rule that it encompassed
the identity, occupation and employment of
one's spouse. They strike down the no-spouse
employment policies based on the broad
legislative intent of the state statute. They
reason that the no-spouse employment policy
violate the marital status provision because it
arbitrarily discriminates against all spouses of
present employees without regard to the actual
effect on the individual's qualifications or work
performance.[27] These courts also find the no-
spouse employment policy invalid for failure of
the employer to present any evidence
of business necessity other than the general
perception that spouses in the same workplace
might adversely affect the business.[28] They
hold that the absence of such a bona fide
occupational qualification[29] invalidates a
rule denying employment to one spouse due to
the current employment of the other spouse in
the same office.[30] Thus, they rule that unless
the employer can prove that the reasonable
demands of the business require a distinction
based on marital status and there is no better
available or acceptable policy which would
better accomplish the business purpose, an
employer may not discriminate against an
employee based on the identity of the
employees spouse.[31] This is known as
the bona fide occupational qualification
exception.
We note that since the finding of a bona fide
occupational qualification justifies an
employers no-spouse rule, the exception is
interpreted strictly and narrowly by these state
courts. There must be a compelling business
necessity for which no alternative exists other
than the discriminatory practice.[32] To justify a
bona fide occupational qualification, the
employer must prove two factors: (1) that the
employment qualification is reasonably related
to the essential operation of the job involved;
and, (2) that there is a factual basis for
believing that all or substantially all persons
meeting the qualification would be unable to
properly perform the duties of the job.[33]
(2) It is significant to note that in the case at
bar, respondents were hired after they were
found fit for the job, but were asked to resign
when they married a co-employee. Petitioners
failed to show how the marriage of Simbol,
then a Sheeting Machine Operator, to
Alma Dayrit, then an employee of the
Repacking Section, could be detrimental to its
business operations. Neither did petitioners
explain how this detriment will happen in the
case of Wilfreda Comia, then a Production
Helper in the Selecting Department, who
married Howard Comia, then a helper in the
cutter-machine. The policy is premised on the
mere fear that employees married to each
other will be less efficient. If we uphold the
questioned rule without valid justification, the
employer can create policies based on an
unproven presumption of a perceived danger
at the expense of an employees right to
security of tenure.
Petitioners contend that their policy will apply
only when one employee marries a co-
employee, but they are free to marry persons
other than co-employees. The questioned
policy may not facially violate Article 136 of the
Labor Code but it creates a disproportionate
effect and under the disparate impact theory,
the only way it could pass judicial scrutiny is a
showing that it is reasonable despite the
discriminatory, albeit disproportionate, effect.
The failure of petitioners to prove a legitimate
business concern in imposing the questioned
policy cannot prejudice the employees right to
be free from arbitrary discrimination based
upon stereotypes of married persons working
together in one company.[40]
PILTEL V. NLRC: It is recognized that
regulation of manpower by the company falls
within the so-called management prerogatives,
which prescriptions encompass the matter of
hiring, supervision of workers, work
assignments, working methods and
assignments, as well as regulations on the
transfer of employees, lay-off of workers, and
the discipline, dismissal, and recall of
employees.[19] As put in a case, an employer is
free to regulate, according to his discretion and
best business judgment, all aspects of
employment, from hiring to firing, except in
cases of unlawful discrimination or those which
may be provided by law.[20]
In the case at bar, petitioners policy of not
accepting or considering as disqualified from
work any woman worker who contracts
marriage runs afoul of the test of, and the right
against, discrimination, afforded all women
workers by our labor laws and by no less than
the Constitution. Contrary to petitioners
assertion that it dismissed private respondent
from employment on account of her
dishonesty, the record discloses clearly that
her ties with the company were dissolved
principally because of the companys policy that
married women are not qualified for
employment in PT&T, and not merely because
of her supposed acts of dishonesty.
Verily, private respondents act of concealing
the true nature of her status from PT&T could
not be properly characterized as willful or in
bad faith as she was moved to act the way she
did mainly because she wanted to retain a
permanent job in a stable company. In other
words, she was practically forced by that very
same illegal company policy into
misrepresenting her civil status for fear of
being disqualified from work. While loss of
confidence is a just cause for termination of
employment, it should not be simulated.[24] It
must rest on an actual breach of duty
committed by the employee and not on the
employer’s caprices.[25] Furthermore, it should
never be used as a subterfuge for causes which
are improper, illegal, or unjustified.[26]
QUITCLAIMS/WAIVERS/COMPROMISE
CONTENTS
EDI V. NLRC: Not all waivers and quitclaims
are invalid as against public policy. If the
agreement was voluntarily entered into and
represents a reasonable settlement, it is
binding on the parties and may not later be
disowned simply because of a change of mind.
It is only where there is clear proof that the
waiver was wangled from an unsuspecting or
gullible person, or the terms of settlement are
unconscionable on its face, that the law will
step in to annul the questionable transaction.
But where it is shown that the person making
the waiver did so voluntarily, with full
understanding of what he was doing, and
the consideration for the quitclaim is
credible and reasonable, the transaction
must be recognized as a valid and binding
undertaking.
VALID AND BINDING
PNB V. DALMACIO: (1) One of the authorized
causes14 for the dismissal of an employee is
redundancy.15 It exists when the service
capability of the workforce is in excess of what
is reasonably needed to meet the demands of
the business enterprise.16 A position is
redundant when it is superfluous, and
superfluity of a position or positions could be
the result of a number of factors, such as the
overhiring of workers, a decrease in the
volume of business or the dropping of a
particular line or service previously
manufactured or undertaken by the
enterprise.17 Time and again, it has been ruled
that an employer has no legal obligation to
keep more employees than are necessary for
the operation of its business.18 For the
implementation of a redundancy program to be
valid, however, the employer must comply with
the following requisites: (1) written notice
served on both the employees and the
Department of Labor and Employment (DOLE)
at least one month prior to the intended date
of termination of employment; (2) payment of
separation pay equivalent to at least one
month pay for every year of service; (3) good
faith in abolishing the redundant
positions; and (4) fair and reasonable
criteria in ascertaining what positions are
to be declared redundant and accordingly
abolished,19 taking into consideration such
factors as (a) preferred status; (b) efficiency;
and (c) seniority, among others.20
(2) Generally, deeds of release, waiver or·
quitclaims cannot bar employees from
demanding benefits to which they are legally
entitled or from contesting the legality of their
dismissal since quitclaims are looked upon with
disfavor and are frowned upon as contrary to
public policy.25 Where, however, the person
making the waiver has done so voluntarily,
with a full understanding thereof, and the
consideration for the quitclaim is credible and
reasonable, the transaction must be recognized
as being a valid and binding undertaking.26
The requisites for a valid quitclaim are: (1)
that there was no fraud or deceit on the part of
any of the parties; (2) that the consideration
for the quitclaim is credible and reasonable;
and (3) that the contract is not contrary to law,
public order, public policy, morals or good
customs or prejudicial to a third person with a
right recognized by law.2
ILADAN V. LA SUERTE: (1) It is a settled
jurisprudence that it is incumbent upon an
employee to prove that his resignation is not
voluntary.
(2) An affidavit of waiver duly
acknowledged before a notary public is a
public document which cannot be impugned
by mere self-serving allegations. Proof of an
irregularity in its execution is absolutely
essential. The Agreement likewise bears the
signature of the conciliator-mediator. Thus,
the signatures of these officials sufficiently
prove that the employee was duly assisted
when she signed the waiver and settlement.
Concededly, the presumption of regularity of
official acts may be rebutted by affirmative
evidence of irregularity or failure to perform
a duty.28 In this case, no such evidence was
presented.
Besides, "[t]he Court has ruled that a waiver
or quitclaim is a valid and binding
agreement between the parties, provided
that it constitutes a credible and reasonable
settlement, and that the one accomplishing
it has done so voluntarily and with a full
understanding of its import."29
GENERALLY FROWED UPON
HERNANDEZ V. CROSSWORLD: Hidden
behind these documents appears to be a
convenient ploy to deprive petitioner of all his
rights to claim indemnity from respondents
under all possible causes of action and in all
available fora, and effectively for nothing in
return or exchange - because in the event that
the NLRC ruling is reversed, then petitioner
must return what he received, thus leaving him
with the proverbial empty bag. This is
fundamentally unfair, and goes against public
policy.
As a rule, quitclaims and waivers or releases
are looked upon with disfavor and frowned
upon as contrary to public policy.They are
thus ineffective to bar claims for the full
measure of a worker's legal rights, particularly
when the following conditions are applicable:
1) where there is clear proof that the waiver
was wangled from cm unsuspecting or gullible
person, or (2) where the terms of settlement
are unconscionable on their face.
HANSEATIC V. BALLON: (1) Before a seaman
can claim medical and disability benefits, he
must undergo a post-employment medical
examination that has two requisites: first, it is
done by a company-designated physician, and
second, within three working days upon the
seafarer's return.33 The post-employment
medical examination is obligatory in nature and
may only be excused in a number of
exceptional circumstances. The rationale for
the rule is that reporting the illness or injury
within three days from repatriation fairly
makes it easier for a physician to determine
the cause of the illness or injury. Ascertaining
the real cause of the illness or injury beyond
the period may prove difficult. To ignore the
rule might set a precedent with negative
repercussions, like opening floodgates to a
limitless number of seafarers claiming disability
benefits, or causing unfairness to the employer
who would have difficulty determining the
cause of a claimant's illness because of the
passage of time. The employer would then
have no protection against unrelated disability
claims.
(2) Permanent disability is the inability of a
worker to perform his job for more than 120
days, regardless of whether or not he loses the
use of any part of his body. Total disability, on
the other hand, means the disablement of an
employee to earn wages in the same kind of
work of similar nature that he was trained for,
or accustomed to perform, or any kind of work
which a person of his mentality and
attainments could do.38
The general rule provides that the company-
designated physician must issue a final medical
assessment on the seafarer's disability grading
within a period of 120 days. As an exception,
however, the period may be extended to 240
days if there is a sufficient justification such as
when the seafarer required further medical
treatment or when the seafarer was
uncooperative.
The medical certificate issued was beyond the
120 period and the petitioner, in turn, failed to
establish a ground to extend the same.
Accordingly, respondent was incapacitated to
perform his livelihood.
Moreover, subsequent employment does not
negate the claim of permanent disability. The
law does not require that the illness should be
incurable. What is important is that he was
unable to perform his customary work for more
than 120 days which constitutes permanent
total disability.
(3) Quitclaims executed by the employees are,
thus, commonly frowned upon as contrary to
public policy and ineffective to bar claims for
the full measure of the worker's legal rights,
considering the economic disadvantage of the
employee and the inevitable pressure upon him
by financial necessity. Thus, it is never enough
to assert that the parties have voluntarily
entered into such a quitclaim. There are other
requisites to be met, such as: (a) that there
was no fraud or deceit on the part of any of the
parties; (b) that the consideration of the
quitclaim is credible and reasonable; and (c)
that the contract is not contrary to law, public
order, public policy, morals or good customs,
or prejudicial to a third person with a right
recognized by law.42
II. LABOR STANDARDS
LABOR CODE
RULE MAKING AND SCOPE
PAGPALAIN HAULER V. TRAJANO: (1)
Under Article 8 of the Civil Code, [j]udicial
decisions applying or interpreting the laws or
the Constitution shall form a part of the legal
system of the Philippines. This does not mean,
however, that courts can create law.The courts
exist for interpreting the law, not for enacting
it. To allow otherwise would be violative of the
principle of separation of powers, inasmuch as
the sole function of our courts is to apply or
interpret the laws, particularly where gaps
or lacunae exist or where ambiguities becloud
issues, but it will not arrogate unto itself the
task of legislating.
Consequently, Progressive and Protection Tech
nology are not to be deemed as laws on the
registration of unions. They merely interpret
and apply the implementing rules of the Labor
Code as to registration of unions.It is this
interpretation that forms part of the legal
system of the Philippines, for the interpretation
placed upon the written law by a competent
court has the force of
law.[6] Progressive and Protection Technology,
however, applied and interpreted the then
existing Book V of the Omnibus Rules
Implementing the Labor Code. Since Book V of
the Omnibus Rules, as amended by
Department Order No. 9, no longer requires a
local or chapter to submit books of accounts as
a prerequisite for registration, the doctrines
enunciated in the above-mentioned cases, with
respect to books of account, are already passe
and therefore, no longer applicable. Hence,
Pagpalain cannot insist that ILO-PHILS comply
with the requirements prescribed in said
rulings, for the current implementing rules
have deleted the same.
(2) Neither can Pagpalain contend that
Department Order No. 9 is an invalid exercise
of rule-making power by the Secretary of
Labor. For an administrative order to be valid,
it must (i) be issued on the authority of law
and (ii) it must not be contrary to the law and
Constitution.[7]
Department Order No. 9 has been issued on
authority of law. Under the law, the Secretary
is authorized to promulgate rules and
regulations to implement the Labor
Code. Specifically, Article 5 of the Labor Code
provides that [t]he Department of Labor and
other government agencies charged with the
administration and enforcement of this Code or
any of its parts shall promulgate the necessary
implementing rules and regulations.

PASE V. DRILON: Neither is there merit in the
contention that Department Order No. 1
constitutes an invalid exercise of legislative
power. It is true that police power is the
domain of the legislature, but it does not mean
that such an authority may not be lawfully
delegated. As we have mentioned, the Labor
Code itself vests the Department of Labor and
Employment with rulemaking powers in the
enforcement whereof.
It is admitted that Department Order No. 1 is
in the nature of a police power measure. The
only question is whether or not it is valid under
the Constitution.
The concept of police power is well-established
in this jurisdiction. It has been defined as the
"state authority to enact legislation that may
interfere with personal liberty or property in
order to promote the general welfare." 5 As
defined, it consists of (1) an imposition of
restraint upon liberty or property, (2) in order
to foster the common good. It is not capable of
an exact definition but has been, purposely,
veiled in general terms to underscore its all-
comprehensive embrace.
RECRUITMENT AND PLACEMENT
SEAFDEC V. NLRC: Petitioner Southeast Asian
Fisheries Development Center-Aquaculture
Department (SEAFDEC-AQD) is an
international agency beyond the jurisdiction of
public respondent NLRC.
Being an intergovernmental organization,
SEAFDEC including its Departments (AQD),
enjoys functional independence and freedom
from control of the state in whose territory its
office is located.
POSTIGO V. PHILIPPINE TUBERCULOSIS
SOCIETY: There are two classes of
corporations recognized by the 1987
Constitution. The first refers to private
corporations created under a general law; the
second refers to government-owned or
controlled corporations created by special
charters. We also reiterated that under Section
14 of the Corporation Code, [a]ll corporations
organized under this Code shall file with the
Securities and Exchange Commission articles of
incorporation
The respondent was incorporated on March 11,
1960 as a non-profit, benevolent and non-
stock corporation under the Corporation
Code.[20] Having been created under the
general corporation law instead of a special
charter, we hold that the respondent is a
private and not a governmental corporation.
From the foregoing, it is clear to us that the
petitioners are employees in the private sector,
hence entitled to the benefits of Rep. Act No.
7641.
Even assuming that by virtue of their
compulsory inclusion in the GSIS, the
petitioners became employees in the public
sector, they are still entitled to the benefits of
Rep. Act No. 7641 since they are not covered
by the Civil Service Law and its regulations.
HIDALGO V. REPUBLIC: PD No. 807
categorically described the scope of the civil
service as embracing every branch, agency,
subdivision, and instrumentality of the
government, including every government-
owned or controlled corporations whether
performing governmental or proprietary
function;[22] and construed an agency to mean
any bureau, office, commission, administration,
board, committee, institute, corporation,
whether performing governmental or
proprietary function, or any other unit of the
National Government, as well as provincial, city
or municipal government, except as otherwise
provided.[23]
Subsequently, Executive Order (EO) No.
180[24] defined government employees as all
employees of all branches, subdivisions,
instrumentalities, and agencies of the
Government, including government-owned or
controlled corporations with original
charters.[25] It provided that the Civil Service
and labor laws shall be followed in the
resolution of complaints, grievances and cases
involving government employees.[
The historical background of its creation and
establishment indicates that AFPCES is an
agency (performing a proprietary function and
therefore not immune from suit) under the
direct control and supervision of the AFP as it
was established to take charge of the
operations and management of all commissary
facilities in military establishments all over the
country. By clear implication of law, all AFPCES
personnel should therefore be classified as
government employees and any appointment,
promotion, discipline and termination of its
civilian staff should be governed by appropriate
civil service laws and procedures.
However, AFPCES committed acts which
created an impression upon petitioners that
they fall within the coverage of pertinent labor
laws and not the civil service law. First, since
the start of their employment and until their
unceremonious indefinite suspension from
work, AFPCES have enrolled petitioners to the
SSS, the primary governmental agency
engaged in providing social security benefits to
employees of the private sector, instead of the
Government Service Insurance System (GSIS)
as mandated by Commonwealth Act No.
186.[29] AFPCES even remitted its
corresponding employers share to petitioners
SSS contributions. Such practice has been
continuously observed by the AFPCES in the
span of more than three (3) decades.
Second, the hiring, appointment and discipline
of AFPCES employees never went through the
proper procedure as required by pertinent civil
service laws and regulations.
This notwithstanding, since it cannot be denied
that petitioners are government employees,
the proper body that has jurisdiction to hear
the case is the CSC. Such fact cannot be
negated by the failure of respondents to follow
appropriate civil service rules in the hiring,
appointment, discipline and dismissal of
petitioners. Neither can it be denied by the fact
that respondents chose to enroll petitioners in
the SSS instead of the GSIS. Such
considerations cannot be used against the CSC
to deprive it of its jurisdiction. It is not the
absence or presence of the required
appointment from the CSC, or the membership
of an employee in the SSS or in the GSIS that
determine the status of the position of an
employee. We agree with the opinion of the
AFP Judge Advocate General that it is the
regulation or the law creating the Service that
determines the position of the employee.[31]
JUCO V. NLRC: The National Housing
Corporation is a government owned
corporation organized in 1959 in accordance
with Executive Order No. 399, otherwise
known as the Uniform Charter of Government
Corporation, dated January 1, 1959. Its shares
of stock are and have been one hundred
percent (100%) owned by the Government
from its incorporation under Act 1459, the
former corporation law. The government
entities that own its shares of stock are the
Government Service Insurance System, the
Social Security System, the Development Bank
of the Philippines, the National Investment and
Development Corporation and the Peoples
Homesite and Housing Corporation.[13]
rule now is that the Civil Service now covers
only government-owned or controlled
corporations with original charters.[15] Having
been incorporated under the Corporation Law,
its relations with its personnel are governed by
the Labor Code and come under the jurisdiction
of the National Labor Relations Commission.
PNOC V. LEOGARDO: Thus, under the
present state of the law, the test in
determining whether a government-owned or
controlled corporation is subject to the Civil
Service Law is the manner of its creation such
that government corporations created by
special charter are subject to its provisions
while those incorporated under the general
Corporation Law are not within its coverage.
The PNOC-EDC having been incorporated under
the general Corporation Law, is a government-
owned or controlled corporation whose
employees are subject to the provisions of the
Labor Code. This is apparently the intendment
in the NASECO case notwithstanding the fact
that the NASECO therein was a subsidiary of
the PNB, a government-owned corporation.

Considering the fact that the NHA had been

incorporated under act 1459, the former
corporation law, it is but correct to say that it
is a government-owned or controlled
corporation whose employees are subject to
the provisions of the Labor Code.

Thus, the NLRC erred in dismissing petitioners

complaint for lack of jurisdiction because the
ILLEGAL RECRUITMENT
PROHIBITED ACTS
PERT V. VINUYA: (1) The agency and its
principal, committed flagrant violations of
the law on overseas employment, as well as
basic norms of decency and fair play in an
employment relationship, pushing the
respondents to look for a better
employment and, ultimately, to resign from
their jobs.
The following violations were committed: (a)
Contract Substitution- as shown by the
quitclaims and waivers of the workers, their
monthly salaries were decreased by 50 AED,
an act prohibited by law; (b) Breach of
Contract- while they were promised suitable
housing and standard working conditions,
their oppressive hours of work, alongside
their distant and inferior housing quarters
contravened the agreement of the parties.
(2) Based on the aforementioned facts, the
workers were forced to resign and were
“constructively dismissed”. A constructive
dismissal or discharge is "a quitting because
continued employment is rendered
impossible, unreasonable or unlikely, as, an
offer involving a demotion in rank and a
diminution in pay.
In addition, the resignation letters drafted
by respondents were at the very least
suspect, as they were from a “standard
form” used by the principal and as such,
lacking the voluntary participation required
from the former.
(3) The compromise agreements executed
before the POEA did not foreclose the
workers claims with the NLRC. The uniform
insubstantial amount meant for each of the
signatories gives credence to the contention
of the respondents that the settlement
merely resolved their claims for airfare
refund.
(4) Lastly, case law had already allowed the
retroactive application of 2009 Serrano
ruling, making the contention of petitioners
the same decision is inapplicable since the
complaint was commenced in 2007
untenable.
Their secondary argument that RA 10022
which lapsed into law and further amended
the Migrant Workers and Overseas Filipinos
Act restored the disputed subject clause also
fails to persuade. As a general rule, laws
have no retroactive effect, unless the
contrary is provided. In addition, RA 10022-
which restored a provision already deemed
unconstitutional- cannot be given
retroactive effect as it would impair the
rights of migrant workers and overseas
Filipinos that had already accrued since the
Serrano ruling.
PARTIES LIABLE
STO TOMAS V. SALAC: The liability of
corporate directors and officers is not
automatic. To make them jointly and solidarily
liable with their company, there must be a
finding that they were remiss in directing the
affairs of that company, such as sponsoring or
tolerating the conduct of illegal activities.
ELEMENTS
PEOPLE V. PANIS: The proviso was intended
neither to impose a condition on the basic rule
nor to provide an exception thereto but merely
to create a presumption. The presumption is
that the individual or entity is engaged in
recruitment and placement whenever he or it is
dealing with two or more persons to whom, in
consideration of a fee, an offer or promise of
employment is made in the course of the
"canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring (of)
workers.
The number of persons dealt with is not an
essential ingredient of the act of recruitment
and placement of workers. Any of the acts
mentioned in the basic rule in Article 13(b) will
constitute recruitment and placement even if
only one prospective worker is involved. The
proviso merely lays down a rule of evidence
that where a fee is collected in consideration of
a promise or offer of employment to two or
more prospective workers, the individual or
entity dealing with them shall be deemed to be
engaged in the act of recruitment and
placement. The words "shall be deemed"
create that presumption.
SIMPLE IR
PEOPLE V. SISON: (1) Illegal recruitment is
"committed by persons who, without authority
from the government, give the impression that
they have the power to send workers abroad
for employment purposes."
Illegal recruitment may be undertaken by
either non-license or license holders. Non-
license holders are liable by the simple act of
engaging in recruitment and placement
activities, while license holders may also be
held liable for committing the acts prohibited
under Section 6 of RA 8042.
Under RA 8042, a non-licensee or non-holder
of authority commits illegal recruitment for
overseas employment in two ways: (a) by any
act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring
workers, and includes referring, contract
services, promising or advertising for
employment abroad, whether for profit or not;
or (b) by undertaking any of the acts
enumerated under Section 6 of RA 8042.
To prove illegal recruitment, it must be shown
that "the accused gave the complainants the
distinct impression that she had the power or
ability to deploy the complainants abroad in a
manner that they were convinced to part with
their money for that end.
(2) Illegal recruitment committed by a
syndicate, as in the present case, has the
following elements: (a) the offender does not
have the valid license or authority required by
law to engage in recruitment and placement of
workers; (b) the offender undertakes any of
the "recruitment and placement" activities
defined in Article 13(b) of the Labor Code, or
engages in any of the prohibited practices
enumerated under now Section 6 of RA 8042;
and (c) the illegal recruitment is "carried out
by a group of three or more persons conspiring
and/or confederating with one another in
carrying out any unlawful or illegal transaction,
enterprise or scheme."44 In the third element,
it "is not essential that there be actual proof
that all the conspirators took a direct part in
every act. It is sufficient that they acted in
concert pursuant to the same objective."
Since it was proven that the three accused
were acting in concert and conspired with one
another, their illegal recruitment activity is
considered done by a syndicate, making the
offense illegal recruitment involving economic
sabotage.
(3) It is settled that a person who commits
illegal recruitment may be charged and
convicted separately of illegal recruitment
under the Labor Code and estafa under par.
2(a) of Art. 315 of the Revised Penal Code. The
offense of illegal recruitment is malum
prohibitum where the criminal intent of the
accused is not necessary for conviction, while
estafa is malum in se where the criminal intent
of the accused is crucial for conviction.
Conviction for offenses under the Labor Code
does not bar conviction for offenses punishable
by other laws. Conversely, conviction for estafa
under par. 2(a) of Art. 315 of the Revised
Penal Code does not bar a conviction for illegal
recruitment under the Labor Code. It follows
that one's acquittal of the crime of estafa will
not necessarily result in his acquittal of the
crime of illegal recruitment in large scale,
and vice versa.
IR INVOLVING ECONOMIC SABOTAGE
PEOPLE V. ABELLANOSA: (1) Any act of
canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring workers and
includes referring contract services, promising
or advertising for employment abroad, whether
for profit or not, when undertaken by a non-
licensee on non-holder of authority
contemplated under Article 13(f) of Presidential
Decree No. 442, as amended, otherwise known
as the Labor Code of the Philippines: Provided,
that any such non-licensee or non-holder who,
in any manner offers or promises for a fee
employment abroad to two or more persons
shall be deemed so engaged. It shall likewise
include the following acts, whether committed
by any person, whether a non-licensee, non-
holder, licensee or holder of authority:
xxx
(m) Failure to reimburse expenses incurred by
the worker in connection with his
documentation and processing for purposes of
deployment in cases where the deployment
does not actually take place without the
worker’s fault Illegal recruitment when
committed by a syndicate or in large scale shall
be considered an offense involving economic
sabotage.
Illegal recruitment is deemed committed in
large scale if committed against three or more
persons individually or as a group.
The prosecution was able to establish that
appellant was engaged in illegal recruitment in
large scale. It was proved that appellant was a
non-licensee or non-holder of authority to
recruit workers for deployment abroad; she
offered or promised employment abroad to
private complainants; she received monies
from private complainants purportedly as
placement or processing fees; that private
complainants were not actually deployed to
Brunei; that despite demands, appellant failed
to reimburse or refund to private complainants
their monies; and that appellant committed
these prohibited acts against three or more
persons, individually or as a group.
ESTAFA
DAVID V. MARQUEZ: (1) In criminal cases,
venue determines jurisdiction. It is a
fundamental rule that for jurisdiction to be
acquired by courts in criminal cases, the
offense should have been committed or any
one of its essential ingredients took place
within the territorial jurisdiction of the court.
Territorial jurisdiction in criminal cases is the
territory where the court has jurisdiction to
take cognizance or to try the offense allegedly
committed therein by the accused.
Nevertheless, Sec. 9 of RA 8042, however,
fixed an alternative venue from that provided
in Section 15(a) of the Rules of Criminal
Procedure, i.e., a criminal action arising from
illegal recruitment may also be filed where the
offended party actually resides at the time of
the commission of the offense and that the
court where the criminal action is first filed
shall acquire jurisdiction to the exclusion of
other court.
Likewise, with the case of Estafa arising from
such illegal recruitment activities, the outright
dismissal thereof due to lack of jurisdiction was
not proper, considering that as per the
allegations in the Information, the same was
within the jurisdiction of Manila. During the
preliminary investigation of the cases,
respondent even presented evidence that some
of the essential elements of the crime were
committed within Manila, such as the payment
of processing and/or placement fees,
considering that these were deposited in
certain banks located in Manila. 68 Thus, it
bears stressing that the trial court should have
proceeded to take cognizance of the case, and
if during the trial it was proven that the offense
was committed somewhere else, that is the
time that the trial court should dismiss the
case for want of jurisdiction. 69 Undoubtedly,
such erroneous outright dismissal of the case is
a nullity for want of due process.
MIGRANT WORKERS
COMMENCEMENT OF RELATIONSHIP
ABOSTA SHIP V. HILARIO: The contract was
already perfected on the date of its execution,
which occurred when petitioner and respondent
agreed on the object and the cause, as well as
on the rest of the terms and conditions therein.
Naturally, contemporaneous with the perfection
of the employment contract was the birth of
certain rights and obligations, a breach of
which may give rise to a cause of action
against the erring party.16 Also, the POEA
Standard Contract must be recognized and
respected. Thus, neither the manning agent
nor the employer can simply prevent a seafarer
from being deployed without a valid reason.
SANTIAGO V. C.F. SHARP: A distinction must
be made between the perfection of the
employment contract and the commencement
of the employer
employee relationship. The perfection of the
contract, which in this case coincided with the
date of execution thereof, occurred when
petitioner and respondent agreed on the object
and the cause, as well as the rest of the terms
and conditions therein. The commencement of
the employer-employee relationship, as earlier
discussed, would have taken place had
petitioner been actually deployed from the
point of hire. Thus, even before the start of
any employer-employee relationship,
contemporaneous with the perfection of the
employment contract was the birth of certain
rights and obligations, the breach of which may
give rise to a cause of action against the erring
party. Thus, if the reverse had happened, that
is the seafarer failed or refused to be deployed
as agreed upon, he would be liable for
damages.
Moreover, while the POEA Standard Contract
must be recognized and respected, neither the
manning agent nor the employer can simply
prevent a seafarer from being
deployed without a valid reason.
MONEY CLAIMS
SERRANO V. GALLANT: (1) In sum, prior to
R.A. No. 8042, OFWs and local workers with
fixed-term employment who were illegally
discharged were treated alike in terms of the
computation of their money claims: they were
uniformly entitled to their salaries for the
entire unexpired portions of their
contracts. But with the enactment of R.A. No.
8042, specifically the adoption of the subject
clause, illegally dismissed OFWs with an
unexpired portion of one year or more in their
employment contract have since been
differently treated in that their money claims
are subject to a 3-month cap, whereas no such
limitation is imposed on local workers with
fixed-term employment. The Court concludes
that the subject clause contains a suspect
classification in that, in the computation
of the monetary benefits of fixed-term
employees who are illegally discharged, it
imposes a 3-month cap on the claim of
OFWs with an unexpired portion of one
year or more in their contracts, but none
on the claims of other OFWs or local
workers with fixed-term employment. The
subject clause singles out one
classification of OFWs and burdens it with
a peculiar disadvantage.
There being a suspect classification involving a
vulnerable sector protected by the
Constitution, the Court now subjects the
classification to a strict judicial scrutiny, and
determines whether it serves a compelling
state interest through the least restrictive
means.
The subject clause does not state or imply any
definitive governmental purpose; and it is for
that precise reason that the clause violates not
just petitioner's right to equal protection, but
also her right to substantive due process under
Section 1,137 Article III of the Constitution.
(2) The word salaries in Section 10(5) does not
include overtime and leave pay. For seafarers
like petitioner, DOLE Department Order No. 33,
series 1996, provides a Standard Employment
Contract of Seafarers, in which salary is
understood as the basic wage, exclusive of
overtime, leave pay and other bonuses;
whereas overtime pay is compensation for all
work "performed" in excess of the regular eight
hours, and holiday pay is compensation for any
work "performed" on designated rest days and
holidays.
By the foregoing definition alone, there is no
basis for the automatic inclusion of overtime
and holiday pay in the computation of
petitioner's monetary award, unless there is
evidence that he performed work during those
periods.
SAMEER OVERSEAS V. CABILES: (1) Well-
established is the rule that lex loci
contractus (the law of the place where the
contract is made) governs in this
jurisdiction. There is no question that the
contract of employment in this case was
perfected here in the Philippines.
Therefore, the Labor Code, its
implementing rules and regulations, and
other laws affecting labor apply in this
case. Furthermore, settled is the rule that the
courts of the forum will not enforce any foreign
claim obnoxious to the forum’s public policy.
Here in the Philippines, employment
agreements are more than contractual in
nature. The Constitution itself, in Article XIII,
Section 3, guarantees the special protection of
workers.
(2) In the hierarchy of laws, the Constitution
is supreme. No branch or office of the
government may exercise its powers in any
manner inconsistent with the Constitution,
regardless of the existence of any law that
supports such exercise. The Constitution
cannot be trumped by any other law. All
laws must be read in light of the
Constitution. Any law that is inconsistent
with it is a nullity.
Thus, when a law or a provision of law is
null because it is inconsistent with the
Constitution, the nullity cannot be cured by
reincorporation or reenactment of the same
or a similar law or provision. A law or
provision of law that was already declared
unconstitutional remains as such unless
circumstances have so changed as to
warrant a reverse conclusion.
We reiterate our finding in Serrano v.
Gallant Maritime that limiting wages
that should be recovered by an illegally
dismissed overseas worker to three
months is both a violation of due
process and the equal protection
clauses of the Constitution.
LIABILITY OF PRINCIPAL/AGENT;
THEORY OF IMPUTED KNOWLEDGE:
SEALANES V. DELATORRE: (1)
The liability of the principal/employer and
the recruitment/placement agency for any
and all claims under this section shall be
joint and several. This provision shall be
incorporated in the contract for overseas
employment and shall be a condition
precedent for its approval.
In addition, every applicant for license to
operate a seafarer’s manning agency shall,
in the case of a corporation or partnership,
submit a written application together with,
among others, a verified undertaking by
officers, directors and partners that they will
be jointly and severally liable with the
company over claims arising from employer-
employee relationship.
APQ V. CASENAS: (1) Employment contracts
of seafarers on board foreign ocean-going
vessels are not ordinary contracts. They are
regulated and an imprimatur by the State is
necessary. While the seafarer and his employer
are governed by their mutual agreement, the
POEA Rules and Regulations require that the
POEA-SEC be integrated in every seafarer’s
contract.15 In this case, there is no dispute that
Caseñas’ employment contract was duly
approved by the POEA and that it incorporated
the provisions of the POEA-SEC.
R.A. No. 8042 explicitly prohibits the
substitution or alteration to the prejudice of the
worker, of employment contracts already
approved and verified by the Department of
Labor and Employment (DOLE) from the time
of actual signing thereof by the parties up to
and including the period of the expiration of
the same without the approval of the DOLE. A
subsequently executed side agreement of an
overseas contract worker with her foreign
employer which reduced his salary below the
amount approved by the POEA is void because
it is against our existing laws, morals and
public policy. The said side agreement cannot
supersede her standard employment contract
approved by the POEA.
(2) In a nutshell, there are three (3)
requirements necessary for the complete
termination of the employment contract : (a)
termination due to expiration or other
reasons/causes; (b) signing off from the
vessel; and (c) arrival at the point of hire. In
this case, there was no clear showing that
Caseñas signed off from the vessel upon the
expiration of his employment contract.
BECMEN V. CUARESMA: (1) Under Republic
Act No. 8042 (R.A. 8042), or the Migrant
Workers and Overseas Filipinos Act of
1995,[22] the State shall, at all times, uphold
the dignity of its citizens whether in country or
overseas, in general, and Filipino migrant
workers, in particular.[23] The State shall
provide adequate and timely social, economic
and legal services to Filipino migrant
workers.[24] The rights and interest
of distressed[25] overseas Filipinos, in general,
and Filipino migrant workers, in particular,
documented or undocumented, are adequately
protected and safeguarded.[26]
Becmen and White Falcon, as licensed local
recruitment agencies, miserably failed to abide
by the provisions of R.A. 8042. Recruitment
agencies are expected to extend assistance to
their deployed OFWs, especially those in
distress.
(2) Private employment agencies are held
jointly and severally liable with the foreign-
based employer for any violation of the
recruitment agreement or contract of
employment. This joint and solidary liability
imposed by law against recruitment agencies
and foreign employers is meant to assure the
aggrieved worker of immediate and sufficient
payment of what is due him.[37] If the
recruitment/placement agency is a juridical
being, the corporate officers and directors and
partners as the case may be, shall themselves
be jointly and solidarily liable with the
corporation or partnership for the aforesaid
claims and damages.
SUNACE V. NLRC: The theory of imputed
knowledge ascribes the knowledge of the
agent, Sunace, to the principal, employer
Xiong, not the other way around.[23] The
knowledge of the principal-foreign employer
cannot, therefore, be imputed to its agent
Sunace.
There being no substantial proof that Sunace
knew of and consented to be bound under the
2-year employment contract extension, it
cannot be said to be privy thereto. As such, it
and its owner cannot be held solidarily liable
for any of Divina’s claims arising from the 2-
year employment extension.

Furthermore, as Sunace correctly points out,
there was an implied revocation of its agency
relationship with its foreign principal when,
after the termination of the original
employment contract, the foreign principal
directly negotiated with Divina and entered into
a new and separate employment contract in
Taiwan. Article 1924 of the New Civil Code
reading
“The agency is revoked if the principal directly
manages the business entrusted to the agent,
dealing directly with third persons”.
APPRENTICE (Requirements/Effects of an
invalid agreement)
CENTURY V. CA: (1) Under Article 279[22] of
the Labor Code, an employer may terminate
the services of an employee for just
causes[23] or for authorized
causes.[24] Furthermore, under Article
277(b)[25] of the Labor Code, the employer
must send the employee who is about to be
terminated, a written notice stating the causes
for termination and must give the employee
the opportunity to be heard and to defend
himself. Thus, to constitute valid dismissal
from employment, two requisites must concur:
(1) the dismissal must be for a just or
authorized cause; and (2) the employee must
be afforded an opportunity to be heard and to
defend himself.[26]
The employer has the burden of proving that
the termination was for a valid or authorized
cause.[28] Petitioner failed to substantiate its
claim that respondent was terminated for valid
reasons.. It was likewise not shown that
petitioner ever apprised Palad of the
performance standards set by the company.
When the alleged valid cause for the
termination of employment is not clearly
proven, as in this case, the law considers the
matter a case of illegal dismissal.[29]
Furthermore, Palad was not accorded due
process. Even if petitioner did conduct a
performance evaluation on Palad, petitioner the opportunity to be heard, their dismissal
failed to warn Palad of her alleged poor was illegal under the law.
performance. The records are bereft of
evidence to show that petitioner ever gave Even if the Court recognized the company’s
Palad the opportunity to explain and defend need to train its employees through
herself. Clearly, the two requisites for a valid apprenticeship, only the first apprenticeship
dismissal are lacking in this case. agreement can be considered for that purpose.
With the expiration of the first agreement and
(2) The Labor Code defines an apprentice as a the retention of the employees, Atlanta had,
worker who is covered by a written recognized the completion of their training and
apprenticeship agreement with an employer. In their acquisition of a regular employee status.
turn, RA 7796 emphasizes TESDA’s approval of To foist upon them the second apprenticeship
the apprenticeship program as a pre-requisite agreement for a second skill which was not
for the hiring of apprentices. Absent such even mentioned in the agreement itself,[59] is a
approval and registration, the employee hired violation of the Labor Codes implementing
shall be deemed regular. rules[60] and is an act manifestly unfair to the
employees.
In this case, the apprenticeship agreement was
entered into between the parties before
petitioner filed its apprenticeship program with
the TESDA for approval. Petitioner and Palad
executed the apprenticeship agreement on 17
July 1997 wherein it was stated that the
training would start on 17 July 1997 and would
end approximately in December 1997.[17] On
25 July 1997, petitioner submitted for approval
its apprenticeship program, which the TESDA
subsequently approved on 26 September
1997.[18] Clearly, the apprenticeship agreement
was enforced even before the TESDA approved
petitioner’s apprenticeship program. Thus, the
apprenticeship agreement is void because it
lacked prior approval from the TESDA.
ATLANTA V. SEBOLINO: The fact that the
respondents had already been rendering
service prior to their apprentice agreements
renders the same irrelevant. The four had been
performing tasks that are usually necessary
and desirable in petitioner’s usual business or
trade as manufacturer of plastic building
materials.[57] These tasks and their nature
characterized the four as regular employees
under Article 280 of the Labor Code. Thus,
when they were dismissed without just or
authorized cause, without notice, and without