Labor 1 Reviewer - Daway PDF

LAW 113 LABOR | PROF.
DAWAY 1

LAW 113
LABOR STANDARDS LAW
PROF. PATRICIA R.P. SALVADOR DAWAY

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

LAW 113 LABOR | PROF. DAWAY 2

This reviewer is a compilation of the UP Law C2016 notes, additional notes from Ma’am Daway’s class, Azucena’s
annotations, and new digests from this year’s outline.
All provisions in the boxes are from the NEW Labor Code unless otherwise indicated.


I. Introduction to Labor Law SOURCE OF LABOR LAWS
- Labor Code (PD 442, as amended) and its Implementing Rules
1. LABOR: Concept and Regulations
- Omnibus Rules
a. In its general sense - Special Laws (ex. SSS Law, GSIS Law, etc.)
LABOR LABOR STANDARDS LAW

- Labor is physical toil, though it does not necessarily include - The least terms and conditions of employment that employers
the application of skill must comply with and to which employees are entitled as a
matter of legal right
- Thus, there is skilled and unskilled labor
- Minimum requirements prescribed by existing laws, rules and
b. In its technical sense regulations relating to wages, hours of work, cost-of-living
allowance and other monetary and welfare benefits, including
occupational, safety and health standards
Art. 13 (a) Definitions – (a) "Worker" means any member of the
labor force, whether employed or unemployed.
LABOR RELATIONS LAW
- Labor is the workforce
- The status, rights and duties, and the institutional mechanisms
- It includes the unemployed as long as they are potential that govern the individual and collective interactions, of
workers employers, employees or their representatives
- It also includes professionals
- Those considered members of the working force: Filipino Labor Standards vis-à-vis Labor Relations
citizens, aged 15 and up - Labor standards as the material or the substance to be
processed while labor relations is the mechanism that
SKILL processes the substance
- Familiar knowledge of any art or science, united with readiness
and dexterity in execution or performance or in the SOCIAL LEGISLATION
application of the art or science to practical purposes - Laws that provide particular kinds of protection or benefits to
society or segments thereof in furtherance of social justice
WORK - Labor laws are necessarily social legislation, but not all social
- Covers all forms of physical or mental exertion, or both legislation are labor laws
combined, for the attainment of some object other than - It is a broader concept, and labor laws is narrower
recreation or amusement per se
b. Inherent inequality in the employer-employee
EMPLOYEE relations
- Salaried person working for another who controls or
supervises the means, manner or method of doing the work Legend Hotel v. Hernani Realuyo
FACTS:
2. LABOR LAW : ISSUE/S:
a. Definition (Azucena) HELD:

- Statutes, regulations and jurisprudence governing the
relations between capital and labor, by providing for certain
employment standards and a legal framework for c.1. Justification: Social Justice
negotiating, adjusting and administering those standards
and other incidents of employment Art. II, Sec. 10, CON87 The State shall promote social justice
in all phases of national development.
FUNCTIONS OF LABOR LAW
- Sets minimum terms and conditions that all employees,
Art. XIII, Sec. 1, CON87 The Congress shall give highest
employers and other participants in the industry must follow
priority to the enactment of measures that protect and enhance
- Creates institutional mechanisms that facilitate labor relations
the right of all the people to human dignity, reduce social,
(ex. NLRC)
economic, and political inequalities, and remove cultural
- Addresses contingencies that arise in labor relations
inequities by equitably diffusing wealth and political power for


the common good. See also: Ha Yuan Restaurant v. NLRC
FACTS:
To this end, the State shall regulate the acquisition, ownership,
use, and disposition of property and its increments. ISSUE/S:
HELD:
Art. XIII, Sec. 2, CON87 The promotion of social justice shall
include the commitment to create economic opportunities
based on freedom of initiative and self-reliance.
c.2. Foundation or basis: Police Power of the State
Art. XIII, Sec. 3, CON87 The State shall afford full protection
St. Luke’s Med. Center Employee’s Association-AFW (SLMCEA-
to labor, local and overseas, organized and unorganized, and
AFW) and Maribel Santos v. NLRC
promote full employment and equality of employment
FACTS:
opportunities for all.
It shall guarantee the rights of all workers to self-organization,
ISSUE/S:
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law.
HELD:
They shall be entitled to security of tenure, humane conditions of
work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as
c.3. Ultimate goal: Industrial Peace
may be provided by law.
Art. XIII, Sec. 3(3), CON87 The State shall promote the
The State shall promote the principle of shared responsibility
principle of shared responsibility between workers and
between workers and employers and the preferential use of
employers and the preferential use of voluntary modes in
voluntary modes in settling disputes, including conciliation, and
settling disputes, including conciliation, and shall enforce their
shall enforce their mutual compliance therewith to foster
mutual compliance therewith to foster industrial peace.
industrial peace.
Calalang v. Williams
The State shall regulate the relations between workers and
employers, recognizing the right of labor to its just share in the FACTS:
fruits of production and the right of enterprises to reasonable
ISSUE/S:
returns to investments, and to expansion and growth.
HELD:
SOCIAL JUSTICE
- Promotion of welfare of all the people by government
adopting measures calculated to ensure economic stability
c.4. Management prerogative/state regulation
c.1.1. When to/not to tilt the scales of justice as a measure of

Art. II, Sec. 20, CON87 The State recognizes the
equity and compassionate social justice
indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments.
Jerome Daabay v. Coca-Cola Bottlers Phil. Inc
FACTS:
Art. XIII, Sec. 3(3), CON87 The State shall promote the
ISSUE/S: principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in
HELD: settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.
See also: Ma. Wenelita Tirazona v. Phil. EDS Techno-Service Inc. Art. XIII, Sec. 3(4), CON87 The State shall regulate the
FACTS: relations between workers and employers, recognizing the right
of labor to its just share in the fruits of production and the right
ISSUE/S: of enterprises to reasonable returns to investments, and to
expansion and growth.
HELD:


MANAGEMENT PREROGATIVES HELD:
- Pursued in order to promote the enterprise
- Must be implemented in good faith and not in circumvention of
worker’s rights c.6. Balancing of Interests
LIMITATIONS ON MANAGEMENT PREROGATIVE Art. XIII, Sec. 3(3), CON87 The State shall promote the
- Must be done humanely and considerately principle of shared responsibility between workers and
- Sanctions must be commensurate with the violations employers and the preferential use of voluntary modes in
- Must give due regard to a worker’s number of years in service settling disputes, including conciliation, and shall enforce their
as well as their record during such service mutual compliance therewith to foster industrial peace.
Ernesto Ymbong v. ABS-CBN Broadcasting Corp.

Art. XIII, Sec. 3(4), CON87 The State shall regulate the
FACTS: relations between workers and employers, recognizing the right
of labor to its just share in the fruits of production and the right
ISSUE/S:
of enterprises to reasonable returns to investments, and to
expansion and growth.
HELD:
Elizabeth Gagui v. Simeon Dejero and Teodoro Permejo

FACTS:
Negros Slashers, Inc. v. Alvin Teng
FACTS:
ISSUE/S:
ISSUE/S:
HELD:
HELD:
See also: Hotel Enterprises of the Phil., Inc. v. Samahan ng mga

Manggagawa sa Hyatt (NUWHRAIN)
c.4.1. Social Justice vis-à-vis Management prerogative
FACTS:
The Coca-Cola Export Corp. v. Clarita Gacayan

ISSUE/S:
FACTS:
HELD:
ISSUE/S:
HELD:
3. Classification
a. Labor Standards
c.4.2. Limitation on Management prerogative
b. Labor Relations
Nathaniel Dongon v. Rapid Movers and Forwarders Co., Inc.
FACTS:
c. Welfare Legislation
ISSUE/S:
HELD: 4. Basis
a. Economic Basis
c.5. Specific Rights of the Employer
b. Legal Basis
International School Manila v. ISAE x x x Evangeline Santos
FACTS: b. 1. 1987 Constitution: State Mandate to Afford Full Protection
to Labor/to Guarantee Workers’ Seven (7) Cardinal Rights
ISSUE/S:
Art. II, Sec. 5, CON87 The maintenance of peace and order,


the protection of life, liberty, and property, and promotion of the party shall have been duly convicted.
general welfare are essential for the enjoyment by all the people
of the blessings of democracy. Art. XIII, Sec. 1, CON87 The Congress shall give highest
priority to the enactment of measures that protect and enhance
Art. II, Sec. 9, CON87 The State shall promote a just and the right of all the people to human dignity, reduce social,
dynamic social order that will ensure the prosperity and economic, and political inequalities, and remove cultural
independence of the nation and free the people from poverty inequities by equitably diffusing wealth and political power for
through policies that provide adequate social services, promote the common good.
full employment, a rising standard of living, and an improved
quality of life for all. To this end, the State shall regulate the acquisition, ownership,
use, and disposition of property and its increments.
Art. II, Sec. 10, CON87 The State shall promote social justice
in all phases of national development. Art. XIII, Sec. 2, CON87 The promotion of social justice shall
include the commitment to create economic opportunities
Art. II, Sec. 11, CON87 The State values the dignity of every based on freedom of initiative and self-reliance.
human person and guarantees full respect for human rights.
Art. II, Sec. 13, CON87 The State recognizes the vital role of to labor, local and overseas, organized and unorganized, and
the youth in nation-building and shall promote and protect their promote full employment and equality of employment
physical, moral, spiritual, intellectual, and social well-being. It opportunities for all.
shall inculcate in the youth patriotism and nationalism, and
encourage their involvement in public and civic affairs. It shall guarantee the rights of all workers to self-organization,
activities, including the right to strike in accordance with law.
Art. II, Sec. 14, CON87 The State recognizes the role of
women in nation-building, and shall ensure the fundamental
work, and a living wage. They shall also participate in policy and
equality before the law of women and men.
decision-making processes affecting their rights and benefits as
may be provided by law.
Art. II, Sec. 18, CON87 The State affirms labor as a primary
social economic force. It shall protect the rights of workers and The State shall promote the principle of shared responsibility
promote their welfare. between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation, and
Art. II, Sec. 20, CON87 The State recognizes the shall enforce their mutual compliance therewith to foster
indispensable role of the private sector, encourages private industrial peace.
enterprise, and provides incentives to needed investments.
Art. III, Sec. 1, CON87 No person shall be deprived of life, employers, recognizing the right of labor to its just share in the
liberty, or property without due process of law, nor shall any fruits of production and the right of enterprises to reasonable
person be denied the equal protection of the laws. returns to investments, and to expansion and growth.
Art. III, Sec. 4, CON87 No law shall be passed abridging the Art. XIII, Sec. 14, CON87 The State shall protect working
freedom of speech, of expression, or of the press, or the right of women by providing safe and healthful working conditions,
the people peaceably to assemble and petition the government taking into account their maternal functions, and such facilities
for redress of grievances. and opportunities that will enhance their welfare and enable
them to realize their full potential in the service of the nation.
Art. III, Sec. 8, CON87 The right of the people, including

those employed in the public and private sectors, to form See also:
unions, associations, or societies for purposes not contrary to law
shall not be abridged. Art. XIII, Sec. 6, CON35 The State shall afford protection to
labor, especially to working women and minors, and shall
regulate the relations between landowner and tenant, and
Art. III, Sec. 18(2), CON87 No involuntary servitude in any
between labor and capital in industry and in agriculture. The
form shall exist except as a punishment for a crime whereof the
State may provide for compulsory arbitration.


assure the rights of workers to self-organization, collective
Art. II, Sec. 6, CON73 The State shall promote social justice bargaining, security of tenure, and just and humane conditions
to ensure the dignity, welfare, and security of all the people. of work.
Towards this end, the State shall regulate the acquisition,
ownership, use, enjoyment, and disposition of private property, Art. XIII, Sec. 3(2), CON87 It shall guarantee the rights of all
and equitably diffuse property ownership and profits. workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the
Art. II, Sec. 9, CON73 The State shall afford protection to right to strike in accordance with law. They shall be entitled to
labor, promote full employment and equality in employment, security of tenure, humane conditions of work, and a living wage.
ensure equal work opportunities regardless of sex, race, or They shall also participate in policy and decision-making
creed, and regulate the relations between workers and processes affecting their rights and benefits as may be provided
employers. The State shall assure the rights of workers to self- by law.
organization, collective bargaining, security of tenure, and just
and humane conditions of work. The State may provide for Innodata Philippines, Inc. v. Quejada-Lopez
compulsory arbitration. FACTS:
Diamond Taxi v. Felipe Llamas, Jr. ISSUE/S:

FACTS:
HELD:
ISSUE/S:
HELD: b. 1.3. Right to Humane Conditions of Work
Art. 3 Declaration of Basic Policy – The State shall afford

See also: PNB v. Cabansag protection to labor, promote full employment, ensure equal
FACTS: work opportunities regardless of sex, race or creed and regulate
the relations between workers and employers. The State shall
ISSUE/S: assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions
HELD: of work.
Art. XIII, Sec. 3(2), CON87 It shall guarantee the rights of all
b. 1.1. Overarching Right to Human Dignity
workers to self-organization, collective bargaining and
Art. II, Sec. 11, CON87 The State values the dignity of every right to strike in accordance with law. They shall be entitled to
human person and guarantees full respect for human rights. security of tenure, humane conditions of work, and a living wage.
They shall also participate in policy and decision-making
Art. XIII, Sec. 1, CON87 The Congress shall give highest processes affecting their rights and benefits as may be provided
priority to the enactment of measures that protect and enhance by law.
the right of all the people to human dignity, reduce social,
economic, and political inequalities, and remove cultural International School Alliance of Educators v. Hon. Quisumbing
inequities by equitably diffusing wealth and political power for FACTS:
the common good.
ISSUE/S:
To this end, the State shall regulate the acquisition, ownership,
use, and disposition of property and its increments. HELD:
b. 1.2. Right to Security of Tenure

b. 1.4. Right to a Living wage
Art. 3 Declaration of Basic Policy – The State shall afford
protection to labor, promote full employment, ensure equal Art. XIII, Sec. 3(2), CON87 It shall guarantee the rights of all
work opportunities regardless of sex, race or creed and regulate workers to self-organization, collective bargaining and
the relations between workers and employers. The State shall negotiations, and peaceful concerted activities, including the


right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. b. 2.2. Relations between labor and capital, not merely
They shall also participate in policy and decision-making contractual/impressed with public interest
processes affecting their rights and benefits as may be provided
by law. Art. 1700, NCC The relations between capital and labor are
not merely contractual. They are so impressed with public
Art. XV, Sec. 1, CON87 The State recognizes the Filipino interest that labor contracts must yield to the common good.
family as the foundation of the nation. Accordingly, it shall Therefore, such contracts are subject to the special laws on labor
strengthen its solidarity and actively promote its total unions, collective bargaining, strikes and lockouts, closed shop,
development. wages, working conditions, hours of labor and similar subjects.
Art. XV, Sec. 3(3), CON87 The right of the family to a family Art. 1701, NCC Neither capital nor labor shall act oppressively
living wage and income against the other, or impair the interest or convenience of the
public.
b. 1.5. Right to participate in policy and decision-making
processes affecting their rights and benefits Art. 19, NCC Every person must, in the exercise of his rights
and in the performance of his duties, act with justice, give
Art. XIII, Sec. 3(2), CON87 It shall guarantee the rights of all everyone his due, and observe honesty and good faith.
workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the Art. 20, NCC Every person who, contrary to law, wilfully or
right to strike in accordance with law. They shall be entitled to negligently causes damage to another, shall indemnify the latter
security of tenure, humane conditions of work, and a living wage. for the same.
They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided Art. 21, NCC Any person who wilfully causes loss or injury to
by law. another in a manner that is contrary to morals, good customs or
public policy shall compensate the latter for the damage.
b. 1.6. Three Rights Pertaining to Labor Relations: (a) Rights to
Self-organization, (b) Collective Bargaining and Negotiations Innodata Philippines, Inc. v. Quejada-Lopez
and (c) Peaceful Concerted Activities Including the Right to FACTS:
Strike in Accordance with Law
ISSUE/S:
Art. XIII, Sec. 3(2), CON87 It shall guarantee the rights of all
workers to self-organization, collective bargaining and HELD:
right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. b. 3. Labor Code (P.D. No. 442) and Omnibus Rules
They shall also participate in policy and decision-making Implementing the Labor Code
processes affecting their rights and benefits as may be provided
by law. b. 4. International Conventions, Recommendations
b. 2. Civil Code Art. II, Sec. 2, CON87 The Philippines renounces war as an
instrument of national policy, adopts the generally accepted
b. 2.1. Contract as the law between the parties/freedom of principles of international law as part of the law of the land and
contract adheres to the policy of peace, equality, justice, freedom,
cooperation, and amity with all nations.
Maynilad Water Supervisors Association v. Maynilad Water
Services, Inc. International School Alliance of Educators v. Hon. Quisumbing
FACTS: FACTS:
ISSUE/S: ISSUE/S:
HELD: HELD:


IBP, the Personnel Management Association of the
b. 5. Jurisprudence (added by Ma’am in class) Philippines, the NEDA, and various trade union centers
- Underwent seven times of drafting and redrafting;
5. The Labor Code of the Philippines subsequently ratified by a National Tripartite Congress on
- The Labor Code is a set of substantive and procedural laws April 28, 1973, then submitted to the President on May 1, 1973
that prescribe the principal rights and responsibilities of - May 1, 1974, it was signed into law as PD 442
employers, employees and other industrial participants, as - President said it would take effect after 6 months, but months
well as the role of Government, in employment and related of silence followed
activities, so as to institute social justice. - The Code resurfaced with extensive changes through PD 570-
- Lays down fundamental rights and correlative obligations of A, and that decree was made public, signed, and declared to
employers and employees to each other, such as those about take effect that same day – Nov. 1, 1974
work days and work hours, wage and wage production, validity
of dismissal as well as the processes of unionization and b. Name of Decree
collective bargaining; substantive rights are enforceable
through procedures in the Code Art. 1 Name of Decree – This Decree shall be known as the
- It is NOT one-sided; not meant to protect a sector to oppress “Labor Code of the Philippines.”
another
- Has to protect interests of both employees and employers c. Date of Effectivity
- John Dunlop (Harvard) says there are 3 actors in any industrial
relations system: employers, employees, and government Art. 2 Date of Effectivity – This Code shall take effect six (6)
agencies; The Labor Code, which embodies our industrial law, months after its promulgation.
deals with the concerns of the 3
- The context of the Labor Code is societal: the problem d. Declaration of Basic Policy
arising from inequality and scarcity in natural or processed
resources; its objective is socio-economic: the well-being of Art. 3 Declaration of Basic Policy – The State shall afford
the people protection to labor, promote full employment, ensure equal
- The Labor Code and labor laws are instruments of socio- work opportunities regardless of sex, race or creed and regulate
economic development the relations between workers and employers. The State shall
- Studying the Labor Code requires a liberal dose of social assure the rights of workers to self-organization, collective
awareness particularly of the problems of the working people; bargaining, security of tenure, and just and humane conditions
it should be studied not as a cold and lifeless set of rules, but of work.
as dynamic humanistic prescriptions for achieving a decent
quality of life—decent for both the rich and the poor Labor Laws and Social Economic Goals
- Students should be guided “not only by what is legal but by - Issues—employment, protection to labor, labor-management
what is moral, not only by what is permissible but by what is relations—are social issues
equitable.” - These issues are concerns of labor laws because labor laws are
devices for social equity
a. Brief History
- Art. 3 is not a statement of goals but a statement of policy
- Began in 1968 under the leadership of the then Minister of
directions towards the goals
Labor, Mr. Blas F. Ople (“Father of the Labor Code”
- Goals of the national economy (Art.XII, Sec. 1, CON87):
- Objectives:
more equitable distribution of opportunities, income, and
1) Consolidate the existing pieces of labor legislation (around
wealth; a sustained increase in the amount of goods and
60); and services produced by the nation for the benefit of the people
2) To reorient them [laws] to the needs of economic
- National economy needs to expand productivity as the key to
development and justice
raising the quality of life for all
- Aim was in line with the prescription of the Comprehensive
- Labor laws are a significant factor in a nation’s economy
Employment Strategy Mission of the International Labor
- The needs, the faults, and the goals of the economy cannot be
Organization (Ranis Report) that the elevation of real wages,
ignored in formulating the labor laws
incomes and living standards was a function of employment
- The Idea of Law: Any attempt by law to regulate restrictive
generation and economic expansion
practices by industry and trade unions is likely to prove
- Project gathered contributions from: Dept. of Labor, Dept. of
unconstructive if the inquiries and evidence of economists and
Industry and the Board of Investments, UP Law Center, the
sociologists are disregarded


shield him from abuses brought about by the necessity for
Interdependence survival
- The declaration of basic policy hardly mentions employers, but
it should not be deduced that the basic policy is to favor labor Justice, the Intention of the Law
to prejudice capital - Protection to labor and resolution of doubts in favor of labor
- Both sectors need each other; they are interdependent cannot be pursued to the point of committing a miscarriage of
- The basic policy is to balance or to coordinate the rights and justice
interests of both workers and employers - Justice belongs to every one
- Art. 3 should be viewed in the perspective of the 1987 - Art. 4 cannot be taken to have superceded Art. 10, NCC: “In
Constitution, which recognizes shared responsibility of case of doubt in the interpretation or application of laws, it is
employers and workers presumed that the lawmaking body intended right and justice
to prevail.”
e. Construction in favor of Labor - Justice, not expedience, is the higher end of the law; the law
does not favor favoritism amounting to injustice
Art. 4 Construction in Favor of Labor – All doubts in the
implementation and interpretation of the provisions of this Management Rights, Broadly
Code, including its implementing rules and regulations, shall be - Management also has its own rights which, as such, are
resolved in favor of labor. entitled to respect and enforcement in the interest of simple
fair play
Art. 1702, NCC In case of doubt, all labor legislation and all - Favoritism has not blinded the Court to the rule that justice is
labor contracts shall be construed in favor of the safety and in every case for the deserving
decent living for the laborer. - Sec. of Labor is duly mandated to equally protect and respect
not only the laborer or worker’s side but also the management
Interpretation and Construction and/or employer’s side
- Management prerogatives are subject to limitations provided
Laborer’s Welfare; Liberal Approach by:
- In interpreting the LC and the IRR, the working man’s welfare 1) Law
should be the primordial and paramount consideration 2) Contract or collective bargaining agreements
- This kind of interpretation gives meaning to the liberal and 3) General principles of fair play and justice
compassionate spirit of the law
Right to ROI
- Policy is to extend the decree’s applicability to a greater
number of employees, in consonance with the State’s avowed - Employer has the right to return on investments and to make
policy to give maximum aid to the protection of labor profit
- Supreme Court adopts the liberal approach which favors the - Nothing dirty about profit – it is profit that creates jobs and
exercise of labor rights improves the workers’ lot
- Constitution: The State shall regulate the relations between
Concern for Lowly Worker workers and employers, recognizing the right of labor to its
- Supreme Court reaffirms its concern for the lowly worker who, just share in the fruits of production and the right of
often at his employer’s mercy, must look up to the law for his enterprises to reasonable returns on investments, and to
protection expansion and growth
- Law regards him with tenderness and always with faith and - To bridge the gap, the balance in favor of the workingman
hope in his capacity to help in shaping the nation’s future should be tilted without being blind to the concomitant right
of the employer to the protection of his property
- He deserves abiding respect
Right to Prescribe Rules

Reason for According Greater Protection to Employees
- Employers have the right to make reasonable rules and
- No doubt that the employer stands on higher footing than the
regulations for the government of their employees; the rule
employee because:
becomes a part of the contract of employment
1) There is greater supply than demand for labor
2) The need for employment by labor comes from vital, and - Company policies and regulations are, unless shown to be
even desperate, necessity grossly oppressive or contrary to law, generally binding and
valid on the parties
- The law must protect labor, at least to the extent of raising
him to equal footing in bargaining relations with capital and to
Right to Select Employees


- Employer has a right to select his employees and to decide 6. General Manager: transfer was not a demotion since he was
when to engage them holding the position of Disconnection Head only by mere
- Has a right under the law to full freedom in employing any designation and not by appointment
person free to accept employment from him at a wage and 7. Virgilio was effectively transferred; he eventually stopped
under conditions agreeable to them reporting for work
- He may refuse to employ whomever he may wish and he has 8. He filed a complaint for constructive dismissal before the LA
the right to prescribe the terms upon which he will consent to 9. LA: [Monesco did not submit position paper]
the relationship - Virgilio’s position paper:
- The state has no right to interfere in a private employment and o Transfer was constructive dismissal
stipulate the terms of the services to be rendered; it cannot o Transfer was unnecessary as the sub-office was not
interfere with the liberty of contract with respect to labor undermanned [certification by Teodoro Ortiz, head
except in the exercise of police power of disconnection crew]
o Transfer was a demotion from his position which he
- General right to make a contract is protected by the due
had occupied for almost 10 months; he should be
process clause of the Constitution
considered regular in that position
- Employer and employee have an equality of right guaranteed
o Transfer was made only in retaliation for his having
by the Constitution; if employer can compel the employee to
executed the affidavit
work against the latter’s will, this is servitude; if the employee
o General Manager and Subrado guilty of bad faith;
can compel the employer to give him work against the
he was son-in-law of competitor in recent election
employer’s will, this is oppression
for directorship in the electric cooperative
- DECISION: Transfer constituted illegal constructive
Right to Transfer or Discharge Employees
dismissal; no sufficient reason for transfer and the same
- Employer has the perfect right to transfer, reduce or lay off
was calculated to rid him of his employment after he
personnel in order to minimize expenses and to insure the
executed the affidavit
stability of the business, and even to close the business
10. NLRC:
- This is upheld even in the present era of multifarious reforms - Moresco: invoked the liberal application of the rules
in the relationship of capital and labor, provided the transfer and prayed for the NLRC to admit its evidence on
or dismissal is not abused but is done in good faith and is due appeal
to causes beyond control o Denied that Virgilio’s transfer was done in retaliation
o Transfer was in response to request of area manager
Misamis Oriental II Electric Service Cooperative v. Virgilio of Gingoog sub-office for additional personnel in
Cagalawan order to attain the collection quota
FACTS: - Virgilio: Moresco cannot present any evidence for the
1. 1993 – Moresco II hired Virgilio as a Disconnection Linemen first time on appeal without giving any valid reason;
on a probationary basis raises suspicion that the document was fabricated
2. 1994 – He was then appointed to the same post on a o [prayed for reinstatement as Disconnection Lineman
permanent basis and not as a Collector]
3. 2001 – He was designated as Acting Head of the - DECISION: Transfer was not constructive dismissal;
disconnection crew in Area III sub-office of Moresco II in evidence was admitted and found credible; upheld the
Balingasag, Misamis Oriental right of Monesco to transfer Virgilio in the exercise of
4. 2002 – General Manager of Moresco transferred him to Area sound business judgment
I sub-office in Gingoog City, Misamis Oriental as a member 11. CA: reinstated decision of LA
of the disconnection crew. Transfer was said to be done “in 12. Monesco MR: insists that it may present evidence for the
exigency of service” first time on appeal; NLRC not precluded from admitting
5. Virgilio: assailed the transfer; he was demoted from his the same because technical rules are not binding in Labor
position as head of the disconnection crew to a mere cases à denied; Virgilio reinstated as Disconnection
member thereof Lineman
- Inconvenient and prejudicial to him, and would entail
additional travel expenses to and from work ISSUE/S:
- Sought clarification on what kind of exigency exists 1. WON Monesco’s belated submission of evidence should be
- Alleged that he was transferred because he executed allowed
an affidavit to support a co-worker who filed an illegal 2. WON Virgilio was constructively dismissed
dismissal complaint 3. WON Ke-e and Subado should be personally liable


HELD: 6. NLRC: reversed. DOLE reports stating that Dansart had
1. No. While, NLRC is not precluded, any delay in submission been complying with all mandatory wage increase and other
should be adequately explained and proved. monetary benefits should be given proper respect
- Belated submission without any valid explanation casts 7. Jean MR à denied
doubt on its credibility. 8. CA: reinstated LA’s ruling
- When Virgilio sought clarification, General Manager 9. Dansart MR à denied.
could have easily produced the letter-request
- Employer’s prerogative: transfer an employee for valid ISSUE/S:
reasons and according to the requirement of business, WON DOLE certifications should be considered sufficient proof
provided that transfer does not result in demotion in that Dansart paid Jean proper wages and all other monetary
rank or diminution of salary, benefits and other benefits to which she was entitled
privileges
- Evidence submitted by Virgilio did not sufficiently HELD: NO
prove that transfer entails demotion in rank (as he did - Dansart is still liable.
not have tenurial security over it) and that it resulted to - The burden of proving payment of monetary claims rests in
diminution in pay the employer because the employee is not in possession of
- Evidence submitted by Monesco is also not sufficient the pertinent records (payrolls, personal files, remittances,
to show that transfer was for a legitimate cause etc) that will show otherwise.
o Letter-request not enough - Any doubt arising from the evaluation of evidence as
o Should have submitted financial documents to between the employer and employee must be resolved in
prove losses favor of the latter.
- When there is doubt between the evidence - Certifications from the DOLE stated that there are no
submitted by the employer and employee, the pending labor cases against Dansart filed before said office
scales of justice must be tilted in favor of the à does not cover cases filed with NLRC
employee. This is consistent with the rule that - Order issued by DOLE in 2000: Dansart has committed
an employer’s cause could only succeed on violations of underpayment of overtime pay, underpayment
the strength of its own evidence and not on of 13th month pay, underpayment of 5 days Service Incentive
the weakness of the employee’s evidence. Leave pay, and underpayment of nightshift differential pay
- Monesco cannot rely on the weakness of Ortiz’s - In the same Order, DOLE held that since Dansart paid
certification in order to give more credit to its own backwages to 297 guards, the inspection is considered
evidence closed and terminated
2. Yes, Virgilio was constructively dismissed. - The DOLE reports for 2001, and 2002 were only based on
3. Bad faith not proven. Cannot be presumed from the reports submitted by Dansart
mere fact that Subado was opponent of Virgilio’s - These cannot conclusively prove that it had not violations
father-in-law - No proof that Jean was one of the 297 guards paid
backwages
See also: Dansart Security Force & Allied Services Co. v. SG Jean
Bagoy f. Labor Arbiter’s Jurisdiction over labor cases
FACTS:
1. Jean Bagoy was a security guard hired by Dansart to guard Art. 217 (now 223) Jurisdiction of the Labor Arbiters and the
the establishments of its various clients. Commission – (a) Except as otherwise provided under this Code,
2. Jean was allegedly caught sleeping on the job and incurred the Labor Arbiters shall have original and exclusive jurisdiction to
absences without leave for which she was given notices of hear and decide, within thirty (30) calendar days after the
disciplinary action. submission of the case by the parties for decision without
3. J filed a complaint for underpayment and constructive extension, even in the absence of stenographic notes, the
dismissal. following cases involving all workers, whether agricultural or non-
4. Dansart argued that Jean was the one who abandoned her agricultural:
job and presented several reports from DOLE that they have
complied with the payment of backwages for all their 1. Unfair labor practice cases;
guards. 2. Termination disputes;
5. LA: ruled in favor of Jean with regard to her money claim. 3. If accompanied with a claim for reinstatement, those cases
[did not rule on the issue of illegal dismissal as this was not that workers may file involving wages, rates of pay, hours of
included in her complaint] work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of


damages arising from the employer-employee relations; other forms of damages.
5. Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and The liability of the principal/employer and the
lockouts; and recruitment/placement agency for any and all claims under this
6. Except claims for Employees Compensation, Social section shall be joint and several. This provision shall be
Security, Medicare and maternity benefits, all other claims incorporated in the contract for overseas employment and shall
arising from employer-employee relations, including those be a condition precedent for its approval. The performance
of persons in domestic or household service, involving an bond to be filed by the recruitment/placement agency, as
amount exceeding five thousand pesos (P5,000.00) provided by law, shall be answerable for all money claims or
regardless of whether accompanied with a claim for damages that may be awarded to the workers. If the
reinstatement. recruitment/placement agency is a juridical being, the corporate
officers and directors and partners as the case may be, shall
(b) The Commission shall have exclusive appellate jurisdiction themselves be jointly and solidarily liable with the corporation or
over all cases decided by Labor Arbiters. partnership for the aforesaid claims and damages.
(c) Cases arising from the interpretation or implementation of Such liabilities shall continue during the entire period or duration
collective bargaining agreements and those arising from the of the employment contract and shall not be affected by any
interpretation or enforcement of company personnel policies substitution, amendment or modification made locally or in a
shall be disposed of by the Labor Arbiter by referring the same foreign country of the said contract.
to the grievance machinery and voluntary arbitration as may be
provided in said agreements. (As amended by Sec. 9, Rep. Act Any compromise/amicable settlement or voluntary agreement
No. 6715, March 21, 1989) on money claims inclusive of damages under this section shall be
paid within four (4) months from the approval of the settlement
Original & Exclusive Appellate by the appropriate authority.
1. Unfair labor practices 1. All cases decided by
2. Termination disputes Labor Arbiters In case of termination of overseas employment without just, valid
3. Wages, rates of pay, 2. Interpretation of or authorized cause as defined by law or contract, the workers
hours of work and other collective bargaining shall be entitled to the full reimbursement of his placement fee
terms and conditions of agreements with interest of twelve percent (12%) per annum, plus his salaries
employment with claim 3. Enforcement of company for the unexpired portion of his employment contract or for
for reinstatement personnel policies three (3) months for every year of the unexpired term, whichever
4. Actual, moral, exemplary, is less.
and other damages from
ER-EE relationship Non-compliance with the mandatory periods for resolutions of
5. Violation of 264 and cases provided under this section shall subject the responsible
legality of strikes and officials to any or all of the following penalties:
lockouts (a) The salary of any such official who fails to render his decision
- Benefits from ER-EE or resolutions within the prescribed period shall be, or caused to
except be, withheld until the said official complies therewith;
compensation, SSS, (b) Suspension for not more than ninety (90) days; or
Medicare, Maternity (c) Dismissal from the service with disqualifications to hold any
- Includes those is appointive public office for five (5) years.
domestic or
household service Provided, however, that the penalties herein provided shall be
without prejudice to any liability which any such official may have
incurred under other existing laws or rules and regulations as a
RA 8042, Sec. 10 Money Claims – Notwithstanding any consequence of violating the provisions of this paragraph.
provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the Ma. Marcedes Barba v. Liceo de Cagayan University
original and exclusive jurisdiction to hear and decide, within FACTS:
ninety (90) calendar days after filing of the complaint, the claims 1. Dr. Mercedes was the Dean of the College of Physical
arising out of an employer-employee relationship or by virtue of Therapy of Liceo de Cagayan University, Inc.
any law or contract involving Filipino workers for overseas 2. She stated working as school physician for the school in
deployment including claims for actual, moral, exemplary and 1993 until 1994.


3. She was chosen to be the recipient of a scholarship grant to 17. LA: Dr. Mercedes was not constructively dismissed, she was
pursue three-year residency training in Veterans Memorial not entitled to separation pay, and her assignment as full-
Medical Center. Scholarship contract provides that after the time professor in the College of Nursing was not a
scholarship, she shall serve the school in whatever position demotion tantamount to constructive dismissal
the school desires related to the scholar’s studies for a 18. NLRC: Reversed. Constructive dismissal. She was demoted
period of not less than 10 years when she was assigned as a professor in the College of
4. 1997 – After her studies, she continued to work for the Nursing because there are functions and obligations and
school and was appointed as Acting Dean of College of certain allowances and benefits given to a College of Dean
Physical therapy and Doctor-in-Charge of the Rehabilitation but not to an ordinary professor
Clinic; renewed as Doctor-in-Charge and appointed as 19. School appealed NLRC’s decision; filed a Supplemental
Dean in 2002 Petition raising for the first time the issue of lack of
5. In 2003-2004 – College of Physical Therapy suffered a jurisdiction of the LA and NLRC over the case
dramatic decline in number of enrollees [1,121 – 29 – 20] - School: College Dean is a corporate officer under its
6. As a result, the College of Physical Therapy was closed in by-laws ; her appointment, compensation, duties and
2005 functions were approved by the BOD
7. Dr. Mercedes went on leave without pay starting Apr. 9, - Jurisdiction over the case is with the regular courts and
2005 not with the labor tribunals
8. Apr. 27 – received a letter instructing her to report back to 20. CA: reversed NLRC resolution and reinstated decision of LA
work à receive her teaching load and assignment as full- - Did not find merit in Supplemental Position
time faculty member of the College of Nursing for school o School’s by-laws provide that there shall be a
year 2005-2006 College Director; such is a corporate officer.
9. Dr. Mercedes: she had not committed to teach in the Position of College Dean is not the same. By-laws
College of Nursing, and her employment was not provide for only one College Director. Deans could
dependent on teaching load; she requested for the not be the College Director contemplated by its By-
processing of her separation benefits; she did not report to laws as they were merely authorized to appoint one
the Acting Dean of Nursing o Appointment as Dean also mentioned that her
10. June 1 – followed up her request, but school insisted she appointment shall be subject to the Labor Code
report back to work, otherwise she will be dismissed from [not Corp Code]
employment on the ground of abandonment - No constructive dismissal nor has Dr. Mercedes
11. Dr. Mercedes: Teaching in the College of Nursing is in no abandoned her work
way related to her scholarship and training in the field of o Transfer amounts to constructive dismissal when
rehabilitation medicine. Coercing her to become a faculty the transfer is unreasonable, unlikely, inconvenient,
member from her position as Dean is a great demotion impossible, or prejudicial to the employee, or it
which amounts to constructive dismissal involves a demotion in rank or diminution of salary
12. June 21: Dr. Mercedes was told to report for work and teach and other benefits
on or before June 23, or she will dismissed on the ground of o She was never demoted and her transfer, being a
abandonment consequence of the closure of the College of
13. June 22: Dr. Mercedes filed complaint before the LA for Physical Therapy, was valid.
illegal dismissal, payment of separation pay and retirement o Her term was only for 3 years. In 2005, her term
benefits; alleged that her transfer is a demotion amounting expired, hence no demotion or dismissal, cannot
to a constructive dismissal claim benefits
14. June 24: Dr. Magdale (VP of Acad Affairs) ordered her to - Issue of lack of Jurisdiction
report for work since she was still bound by the Scholarship o Estopped; never raised issue before the LA and
Contract to serve for 2 more years NLRC; actively participated in the proceedings
15. June 28: Dr. Magdale sent a notice of termination on the MR: CA held that College Dean is a corporate officer and
ground of abandonment therefore labor tribunals had no jurisdiction
16. School on LA case: she was not terminated and that it was
only her appointment as Dean that expired due to the ISSUE/S:
closure of said college. 1. Whether Dr. Mercedes was an employee or a corporate
- Not a constructive dismissal since the transfer was officer
without loss of seniority rights and without diminution 2. WON LA and NLRC had jurisdiction
of pay 3. WON there was constructive dismissal
- She was bound by the Scholarship Contract to serve
until 2007 HELD:


1. Dr. Mercedes was an employee; LA and NLRC has
jurisdiction 2. Yes, LA and NLRC has jurisdiction
- Matling Industrial and Commercial Corporation v. Coros: - Art. 217 (a) (2): “Arbiters shall have original and
Sec. 26, Corp. Code: A position must be expressly exclusive jurisdiction to hear and decide the following
mentioned in the By-Laws in order to be considered as a cases:
corporate office. Creation of an office pursuant to a By-Law 2. Termination disputes
enabling provision is not enough to make a position - Agree with CA: respondent is stopped
corporate.
o By-laws: four officers specifically mentioned – 3. Dr. Mercedes was not constructively dismissed.
president, VP, secretary, and treasurer. College Dean - Her appointment in 2001 was only for three years,
is not among the Corporate Officers mentioned unless sooner revoked for valid cause or causes
- Corporate officers are elected by the directors or - The closure of the College is a just cause for a valid
stockholders. Dr. Mercedes was not directly elected nor revocation of appointment
appointed by the BOD to any corporate office but her - Her subsequent assignment to teach in the College of
appointment was merely approved by the board. This Nursing was justified as it is still related to her
approval did not make her a corporate officer scholarship studies in physical therapy
o Appointive officials under the by-laws are not - Transfer not tantamount to demotion as it was a valid
corporate officers under the contemplation of the law transfer; not unreasonable, inconvenient, or prejudicial;
- Matling Industrial and Commercial Corporation v. Coros: assignment was undertaken to accommodate her and
The Board may create appointive positions other than the the closing of the College she was Dean of
positions of corporate Officers, but the persons occupying
such positions are not considered as corporate officers See also: LA Del Valle, Jr. v. Sheriff Dy
within the meaning of Sec. 25 of the Corporation Code and FACTS:
are not empowered to exercise the functions of the 1. There was a final and executory judgment against Big Mak
corporate officers Burger where a writ of execution was issued.
- She is also not the College Director 2. The sheriff levied sacks of flour and suger to pay for the
o Nowhere in her appointment letter was it stated that monetary award granted by the Labor Arbiter. Dy, the
she was designated as the College Director, or that owner of company, filed a civil case before RTC for
she was to assume functions of a College Director injunction and damages.
o School’s lone surviving incorporating director: no
College Director has ever been appointed ISSUE/S:
o If university gave its many Deans the rank of College WON RTC has jurisdiction?
Director, then it exceeded the authority given to it
because only one College Director is authorized to HELD: NO
be appointed - The case is within the jurisdiction of the LA. When Dy
o A College Director is directly appointed by the BOD; challenged the validity of the writ of execution, he also
a College Dean is appointed by the President and challenged the validity of the LA decision. Trial courts have
approval of the BOD no jurisdiction to act on labor cases or various incidents
- She was an employee. (Applying 4-fold test) arising therefrom.
o Appointed to her position as Dean by the Univ - The nature of an action and the subject matter thereof, as
Pres. [selection and engagement of employee] well as which court or agency of the government has
o Paid a salary of P32,500 plus transpo allowance jurisdiction over the same, are determined by the material
[payment of wages] allegations of the complaint in relation to the law involved
o School had power of control over her as one of and the character of reliefs prayed for, whether or not the
its deans [power to control employee with complainant is entitled to any or all of such reliefs
respect to the means and methods by which
the work is to be accomplished] See also: Ma. Ana Tamonte & Edilberto Tamonte v. Hongkong &
o It was Univ Pres. Who informed her that her Shanghai Banking Corp. Ltd., et.al.
services as Dean was terminated and she was FACTS:
directed to report to the College of Nursing 1. Ana Tamonte Is a regular employee at HSBC.
[power of dismissal] 2. She took a housing loan from HSBCSR which was secured
- Thus, being an employee, her complaint for by a real estate mortgage and is payable by automatic
illegal/constructive dismissal was properly within the payroll reduction.
jurisdiction of the Labor Arbiter under the NLRC


3. When a labor dispute arose which culminated in a strike; enforcement of their orders, except in cases where the employer
Ana and a number of employees were dismissed for contests the findings of the labor employment and enforcement
abandoning their work. officer and raises issues supported by documentary proofs which
4. When HSBCSRP demanded payment for their loan, Ana and were not considered in the course of inspection. (As amended
her husband could not pay and the mortgage was by Republic Act No. 7730, June 2, 1994).
foreclosed.
5. The spouses claim that the cause of foreclosure was not the An order issued by the duly authorized representative of the
non-payment but Ana’s termination. Hence, the Illegal Secretary of Labor and Employment under this Article may be
Dismissal complaint must first be resolved before SBC SRP appealed to the latter. In case said order involves a monetary
may validly recall the loan benefits and demand immediate award, an appeal by the employer may be perfected only upon
full payment; auction sale premature the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Secretary of Labor and
ISSUE/S: Employment in the amount equivalent to the monetary award in
WON this is a labor dispute the order appealed from. (As amended by Republic Act No.
7730, June 2, 1994)
HELD: NO
- The spouses’ contention has no basis. (c.) The Secretary of Labor and Employment may likewise order
- They received the demand letters but still failed to pay the stoppage of work or suspension of operations of any unit or
amortizations. department of an establishment when non-compliance with the
- The Court cited Nestle vs. NLRC where Nestle demanded law or implementing rules and regulations poses grave and
for payment of amortizations and car loans. imminent danger to the health and safety of workers in the
- The Court held that this is not a labor dispute as it involves workplace. Within twenty-four hours, a hearing shall be
debtor-creditor relations rather than employee-employer conducted to determine whether an order for the stoppage of
relations. work or suspension of operations shall be lifted or not. In case
- Petitioners were already in default, thus, foreclosure was the violation is attributable to the fault of the employer, he shall
resorted to pay the employees concerned their salaries or wages during the
- HSBC was only enforcing a civil obligation under the period of such stoppage of work or suspension of operation.
mortgage contract.
- There is no labor aspect involved in the enforcement of (d.) It shall be unlawful for any person or entity to obstruct,
petitioners’ obligation impede, delay or otherwise render ineffective the orders of the
Secretary of Labor and Employment or his duly authorized
f. 1. DOLE v. NLRC jurisdiction representatives issued pursuant to the authority granted under
this Article, and no inferior court or entity shall issue temporary
Art. 128 Visitorial and enforcement power – (a.) The Secretary or permanent injunction or restraining order or otherwise
of Labor and Employment or his duly authorized representatives, assume jurisdiction over any case involving the enforcement
including labor regulation officers, shall have access to orders issued in accordance with this Article.
employer’s records and premises at any time of the day or night
whenever work is being undertaken therein, and the right to (e.) Any government employee found guilty of violation of, or
copy therefrom, to question any employee and investigate any abuse of authority, under this Article shall, after appropriate
fact, condition or matter which may be necessary to determine administrative investigation, be subject to summary dismissal
violations or which may aid in the enforcement of this Code and from the service.
of any labor law, wage order or rules and regulations issued
pursuant thereto. (f.) The Secretary of Labor and Employment may, by appropriate
regulations, require employers to keep and maintain such
(b.) Notwithstanding the provisions of Articles 129 and 217 of this employment records as may be necessary in aid of his visitorial
Code to the contrary, and in cases where the relationship of and enforcement powers under this Code.
employer-employee still exists, the Secretary of Labor and
Employment or his duly authorized representatives shall have the Regional Administration and Enforcement of Labor
power to issue compliance orders to give effect to the labor Laws
standards provisions of this Code and other labor legislation - The Department of Labor and Employment is the primary
based on the findings of labor employment and enforcement policy, programming, coordinating and administrative entity of
officers or industrial safety engineers made in the course of the government
inspection. The Secretary or his duly authorized representatives - It has the primary responsibility for:
shall issue writs of execution to the appropriate authority for the


1) The promotion of gainful employment opportunities and - Intention of RA 7730 is to broaden the extent and heighten
the optimization of the development and utilization of the the effectiveness of the enforcement power of the regional
country’s resources; director
2) The advancement of workers’ welfare by providing for just - A SC decision in 2009 said that determining the existence of
and humane working conditions and terms of employment; employer-employee relationship “should be comprehensive
3) The maintenance of industrial peace by promoting and intensive and therefore better left to the specialized
harmonious, equitable, and stable employment relations that quasi-judicial body that is the NLRC”
assure equal protection for the rights of all concerned parties o i.e., the NLRC Labor Arbiter, not the DOLE Regional
- The DOLE is authorized to operate and maintain regional Director, is the proper competent authority to say whether
offices, which serve as the operational arms—the front line one is an employee or not
action officers—of the Department o Best resolved by the quasi-judicial body, which is the NLRC,
rather than an administrative official of the executive branch
The Enforcement Framework; D.O. No. 57-04 o The regional director (a higher official than a labor
- DOLE issued D.O. No. 57-04, the Labor Standards inspector) is “not the right person to judge existence of
Enforcement Framework, with 3 approaches: employer-employee relationship” because it often becomes
1) Self-assessment – a voluntary compliance mode applicable a “battle of evidence”
to and encouraged in establishments with at least 200 workers
and, regardless of number of workers, to unionized firms with Later Decision: DOLE Director has Quasi-Judicial Power
CBAs - In Jethro Intelligence & Security Corp. and Yakult Phil. V. Hon.
2) Inspection – undertaken by DOLE inspectors in workplaces Sec. of Labor and Employment: recognized the quasi-judicial
with 10 to 199 workers; priority is given to those workplaces power of the Secretary of Labor or the Regional Director
that are subjects of complaints or where accidents and o It said that the SOLE, under Art. 106 of the Labor Code, as
illnesses are imminent, or work hazards exist; construction sites amended, exercises quasi-judicial power, at least to the
and places where women and children work also prioritized extent necessary to determine violations of labor standards
3) Providing advisory services – to establishments with less provisions of the Code and other labor legislations
than 10 workers and those registered as BMBEs (barangay o He/she or the Regional Directors can issue compliance
microbusiness enterprises), and they are given assistance to orders and writs of execution for the enforcement thereof
improve their productivity
- DOLE may delegate to local government units the conduct of Bombo Radyo Revisited and Modified in 2012
technical safety inspection, required by Art. 165 - The DOLE has the authority to determine the existence of an
- Labor standards violations unearthed through self-assessment employer-employee relationship, “subject to judicial review,
or inspection, or related cases, are to be disposed of in not review by the NLRC”
accordance with Art. 128, 129, 162, (now 168), and 165 (now - “The DOLE must have the power to determine whether or not
171) an employer-employee relationship exists, and from there, to
decide whether or not to issue compliance orders, in
Scope of Visitorial-Enforcement Power Under Article accordance with Art. 128 (b) of the Labor Code, as amended
128 by RA 7730”
- It is broad enough to cover any fact, condition or matter - “This is not to say that the determination by the DOLE is
related to the enforcement not only of the Labor Code but of beyond question or review … there are judicial remedies such
any labor law as a petition for certiorari under Rule 65”
- It is unlimited by the amount of monetary liability involved - “The power of the DOLE to determine the existence of an
o Such liability may be enforced through an order or writ of employer-employee relationship need not necessarily result in
execution an affirmative finding;” “[it] may well make the determination
- RA 7730: jurisdictional limitations imposed by Art. 129 on that no employer-employee relationship exists, thus divesting
visitorial and enforcement powers of the Regional Office itself of jurisdiction over the case. It must not be precluded
under Art. 128 have been repealed from being able to reach its own conclusions”
o The SOLE and his duly authorized representative, are now - Under Art. 128(b), as amended by RA 7730, the DOLE is fully
authorized to issue compliance orders to give effect to the empowered to make a determination as to the existence of an
labor standards provisions of this Code employer-employee relationship in the exercise of its visitorial
o It is unrestricted by the jurisdictional amount of P5,000 and enforcement power, subject to judicial review, not review
provided under Art. 129 and Art. 217 by the NLRC.
Who Determines the Existence of Employer-Employee Work Relationship Still Existing

Relationship: The Bombo Radyo Rulings


- For the Regional Director to exercise the enforcement power amount exceeding five thousand pesos (P5,000.00)
under Art. 128(b), the work relationship between the regardless of whether accompanied with a claim for
complaining workers and the alleged employer must be reinstatement.
existing at the time the complaint (formal or informal) is
presented (b.) The Commission shall have exclusive appellate jurisdiction
- Where one of several complainants alleges illegal dismissal, over all cases decided by Labor Arbiters.
his allegation deprives the regional director of jurisdiction as
the dismissal complaint will fall under the Labor Arbiter’s (c.) Cases arising from the interpretation or implementation of
jurisdiction, according to Art. 217 (224 as renumbered) collective bargaining agreements and those arising from the
- But the Regional Director retains jurisdiction over his other interpretation or enforcement of company personnel policies
complaints and those of the other complainants about shall be disposed of by the Labor Arbiter by referring the same
underpayment of wages and other violations of labor laws, to the grievance machinery and voluntary arbitration as may be
regardless of the amount involved under Art. 128(b) provided in said agreements. (As amended by Section 9,
Republic Act No. 6715, March 21, 1989)
Subjects of Enforcement
- The Regional Director, in cases where employer-employee Kapisanan ng Pangkaunlaran ng Kababaihang Potrero, Inc. v.
relationship still exists, has the power to order and administer, Remedios Barrero, et.al.
after due notice and hearing, compliance with the labor FACTS:
standards provisions of the Labor Code and other legislation 1. KPKPI is a non-stock, non-profit, social service oriented
- In those cases where the employer contests the findings of the corporation.
labor standards and welfare officers and raises issues which 2. It was tapped by Technology and Livelihood Resource
cannot be resolved without considering evidentiary matters Center to participate in its microlending program and was
that are not verifiable in the normal course of inspection, the granted a loan for microfinance
regional director must endorse the case to the appropriation 3. KPKPI hired respondents for its KPKPI Mile program
arbitration branch (labor-arbiter) of the NLRC for adjudication - Remedios, Lilibeth, Drandrev, Frederick, and Marites
- The visitorial enforcement power is thorough and piercing; it 4. Respondents filed complaint before the DOLE for
extends even to issues not formally included in the complaint underpayment of wages, non-payment of labor standard
- A regional director is plainly without the authority to declare benefits (legal/special holiday pay, 13th month pay, service
an order or law unconstitutional and his duty is merely to incentive leave pay) and for non-coverage with the SSS and
enforce the law which stands valid Home Development Mutual Fund
5. During its pendency, the respondents were terminated
Art. 217 (now 223) Jurisdiction of the Labor Arbiters and the prompting them to file an Illegal Dismissal Complaint with
Commission – (a.) Except as otherwise provided under this prayer for reinstatement and payment of money claims
Code, the Labor Arbiters shall have original and exclusive before the NLRC
jurisdiction to hear and decide, within thirty (30) calendar days 6. KPKPI’s position paper:
after the submission of the case by the parties for decision - Respondents were not employees; only volunteers
without extension, even in the absence of stenographic notes, who received allowances and reimbursements hence,
the following cases involving all workers, whether agricultural or not entitled to recover money claims
non-agricultural: - Respondents committed forum shopping when they
filed the NLRC CASE during the pendency of the
1. Unfair labor practice cases; DOLE CASE
2. Termination disputes; 7. Respondents reply:
3. If accompanied with a claim for reinstatement, those cases - They were employees under the control of KPKPI
that workers may file involving wages, rates of pay, hours of (evidence: copy of office memo respecting the rules
work and other terms and conditions of employment; on absences of all its employees)
4. Claims for actual, moral, exemplary and other forms of - Denied forum shopping; no identity of claim: DOLE
damages arising from the employer- employee relations; CASE referred only to money claims and that it had
5. Cases arising from any violation of Article 264 of this Code, already been withdrawn, while NLRC CASE involves
including questions involving the legality of strikes and the complaint for illegal dismissal with money claims
lockouts; and 8. LA: No forum shopping à subsequent dismissal affected
6. Except claims for Employees Compensation, Social jurisdiction of DOLE since illegal dismissal cases are beyond
Security, Medicare and maternity benefits, all other claims its jurisdiction. Case for money claims pending before the
arising from employer-employee relations, including those DOLE had to be consolidated with the illegal dismissal case
of persons in domestic or household service, involving an before the NLRC


- Respondents were employees entitled to their money food on December 23, 2000, but the opening date was
claims again postponed to December 28, 2000.
9. NLRC: Set aside LA’s ruling and dismissed complaint. 6. Julietes did not cancel the request for delivery of the
Respondents guilty of forum shopping products.
10. CA: CA affirmed. Nonetheless, it declared that the ends of 7. December 23, 2000: 450 packs of Chickenjoy were delivered
justice would be better served if respondents would be and petitioners placed them in the freezer.
given opportunity to be heard on their complaint for illegal 8. December 26, 2000: Julietes thawed the 450 packs of
dismissal Chickenjoy (ten pieces in each pack), or 4,500 pieces
of Chickenjoy, in time for the branch opening on December
ISSUE/S: 28, 2000.
WON respondents were guilty of forum shopping 9. The shelf life of the Chickenjoy is 25 days from the time it is
marinated; and, once thawed, it should be served on the
HELD: NO third day. Its shelf life cannot go beyond three days from
- Forum shopping: when one party repetitively avails of thawing.
several judicial remedies in different courts, simultaneously 10. After that, the remaining Chickenjoy products are no longer
or successively, all substantially founded on the same served. Within the period provided for in the company
transactions and the same essential facts and circumstances, policy, valid Chickenjoy rejects are usually returned to the
and all raising substantially the same issues either pending commissary, while rejects which are unreturnable are wasted
in, or already resolved adversely, by some other court. For and disposed of properly.
the purpose of creating the possibility of conflicting 11. The sales targets of the new store of for the first and second
decisions being rendered by different for a upon the same day were not reached.
issues 12. Sometime in January 2001, Julietes attempted to return 150
- There is no identity of causes of action: pieces of Chickenjoy rejects to the commissary, but the
o DOLE CASE: violations of labor standard provisions driver of the commissary refused to accept them due to its
where an ER-EE relationship exists discoloration and deteriorated condition, and for fear
o NLRC CASE: propriety of respondents’ dismissal that the rejects may be charged against him.
- Labor Code provides for these two separate remedies 13. Thus, the Chickenjoy rejects were returned to the freezer.
- At the time the DOLE CASE was instituted, respondents’ 14. During the first week of March 2001, the team of petitioners
only cause of action was KPKPI’s violation of labor standard had a meeting on what to do with the stored Chickenjoy
laws which falls within the jurisdiction of DOLE rejects. They decided to soak and clean the Chickenjoy
- It was only after the same was filed that respondents were rejects in soda water and segregate the valid rejects from
dismissed, prompting the filing of the illegal dismissal the wastes.
complaint, which is within NLRC’s jurisdiction 15. April 2, 2001: Julietes was transferred to Jollibee Shell South
- Art. 217: termination cases à Labor arbiters; Power to Luzon Tollway branch in Alabang, Muntinlupa.
inspect the employer’s record to determine and compel 16. She failed to make the proper indorsement as regards the
compliance with labor standard laws à Secretary of Labor total undisposed Chickenjoy rejects as the area manager
directed her to report immediately to her new assignment.
f. 2. Labor dispute v. civil dispute 17. May 3, 2001: the area manager, Divina Evangelista visited
the subject Jollibee branch at Festival Mall. Evangelista told
Cecilia Manese v. Jolibee Foods Corp. Cecilia to dispose of the Chickenjoy rejects, but the latter
FACTS: replied that they be allowed to find a way to return them to
1. Petitioners Cecilia Manese, Julietes Cruz and Eufemio the Commissary.
Peñano were managerial employees of respondent Jollibee 18. May 8, 2001: Evangelista required petitioners Julietes
Foods Corporation (Jollibee). and Cecilia to submit an incident report on the Chickenjoy
2. Petitioners were part of the team tasked to open a new rejects.
Jollibee branch at Festival Mall, Level 4, in Alabang, 19. May 10, 2001: a corporate audit was conducted to spot
Muntinlupa City on December 12, 2000. check the waste products. According to the audit,
3. In preparation for the opening of the new branch, petitioner 2,130pieces of Chickenjoy rejects were declared wastage.
Julietes requested the commissary for the delivery of the 20. May 15, 2001: Evangelista issued a memorandum with a
product called “Chickenjoy”. charge sheet requiring petitioners to explain in writing within 48
4. However, the opening of the store was postponed several hours from receipt why they should not be meted
times. the appropriate penalty under the respondent company's
5. When the opening was rescheduled to December 24, 2000, Code of Discipline for extremely serious misconduct, gross
Julietes made another requisition for the delivery of the negligence, product tampering, fraud or falsification of


company records and insubordination in connection with the Court of Appeals (CA) via a petition for certiorari under
their findings that 2,130 pieces of Chickenjoy rejects were Rule65 of the Rules of Court.
kept inside the walk-in freezer, which could cause product 29. CA: rendered a Decision affirming the Resolutions of
contamination and threat to food safety. the NLRC with modification. The CA found that (1) Julietes
21. The petitioners and other store managers submitted their was legally dismissed in accordance with Article 282,
respective letters of explanation. par. (c) of the Labor Code; and (2) Jollibee is liable for
22. Thereafter, respondent’s Investigating Committee the payment of Cecilia’s unpaid salary for the
conducted an administrative hearing on the incident. period of June 1-15, 2001, sick leave for the period of
Subsequently, the Investigating Committee sent petitioners May 16-31, 2001, and cooperative savings.
Julietes, Cecilia and Eufemio each received a Memorandum 30. Petitioners' motion for reconsideration was denied by the
on its administrative findings and decision, notifying each of CA. Hence, petitioners filed the present petition
their termination from employment due to loss of trust and
confidence. ISSUE/S:
23. Thereafter, petitioners filed a Complaint against 1. WON CA erred in reversing the decision of NLRC and
respondents for illegal dismissal. adjudging Julietes as legally dismissed
24. LA: rendered a Decision dismissing the complaints for illegal 2. Whether the CA erred in its appreciation of facts when it
dismissal of complainants Cecilia and Eufemio for want of affirmed their (Cecilia and Eufemio) dismissal on the ground
merit. of loss of trust and confidence when the records show that
- However, the complaint for illegal dismissal filed by they were dismissed based on the allegation of causing
Julietes was resolved in her favor, against Jollibee. product contamination and gross negligence.
- Jollibee was held liable for separation pay instead of 3. WON Cecilia is entitled to her money claims
reinstatement.
- The LA stated that at the time the incident was HELD:
discovered on May 3, 2001, Julietes was no longer 1. Yes. Failure to file a timely appeal by respondents caused
working at Jollibee Festival Mall, Level 4, as she was the LA’s ruling to become final and executory hence, can no
already transferred to a different Jollibee branch on longer be modified
April 2, 2001. - Respondents did not appeal from the decision of the
- Thus, the LA held that Julietes could not be held liable LA who ruled that the dismissal of petitioner Julietes
therefor; hence, her dismissal was illegal. was illegal.
- Further, the LA held that petitioner Cecilia was not - Respondents only filed an Opposition to Appeal,
entitled to her money claims [particularly unpaid which prayed for the reversal of the Labor Arbiter’s
salary, sick leave for the period from May 16-31, orders declaring as illegal the dismissal of Julietes and
2001, cooperative savings, maternity benefit, mid-year directing payment of her separation pay.
bonus and retirement pay]. - The NLRC stated that respondents' opposition could
o The LA took note of respondents' argument have been treated as an appeal, but it was filed only in
alleging that such benefits due her were not given October, way beyond the ten-day reglementary
because of a car loan given by the company which period
still has an outstanding balance. - Although the NLRC found that Julietes was legally
o Even after computing the amount due her vis-a- dismissed, it stated that it was constrained to affirm
vis the car loan balance, she would still owe a the findings and award of separation pay granted to
balance of P14,262.76. Julietes by the Labor Arbiter, since respondents failed
25. Petitioners appealed the Decision of the LA to the NLRC. to interpose a timely appeal.
Respondents filed an Opposition to Appeal on October - Hence, the NLRC affirmed the decision of the Labor
10,2003. Arbiter in toto. Mere existence of a basis for the
26. NLRC: dismissed the appeal and affirmed the LA’s loss of trust and confidence justifies the
Decision in toto dismissal of a managerial employee.
27. However, the NLRC held that the Labor Arbiter erred in - SC: CA exceeded its jurisdiction when it adjudged that
ruling that Julietes was illegally dismissed as it found that Julietes was legally dismissed, as respondents DID
she committed the offenses. Nevertheless, respondent’s NOT appeal from the decision of the Labor Arbiter
failed to interpose a timely appeal so NLRC is constrained who ruled that she was illegally dismissed
to affirm the findings and award separation pay to Julietes. - Failure to appeal from the decision of the LA renders
28. Petitioners' motion for reconsideration was denied by the the decision on the illegal dismissal FINAL and
NLRC. Petitioners appealed the Resolutions of the NLRC to EXECUTORY


2. No. The mere existence of a basis for the loss of trust and o Otherwise, Jollibee can file a civil case for the
confidence justifies the dismissal of the managerial payment of the balance or for the return of the
employee because when an employee accepts a promotion car
to a managerial position or to an office requiring full trust o The legal remedy of Jollibee is civil in nature,
and confidence, such employee gives up some of the rigid arising from contractual obligation.
guaranties available to ordinary workers
- Infractions, which if committed by others would be See also: Marietta Portillo v. Rudolf Lietz, Inc.
overlooked or condoned or penalties mitigated, may FACTS:
be visited with more severe disciplinary action 1. Marietta was hired Rudolf Lietz, Inc.
- Proof beyond reasonable doubt is not required 2. Terms and conditions of contract: provided that Marietta
provided there is a valid reason for the loss of trust was not to engage in any other gainful employment by
and confidence, such as when the employer has a [her]self or with any other company either directly or
reasonable ground to believe that the managerial indirectly without written consent of [Lietz Inc.]” and “a
employee concerned is responsible for the purported breach of which will render [Marietta]liable to [Lietz Inc.] for
misconduct and the nature of his participation renders liquidated damages.”
him unworthy of the trust and confidence demanded 3. On her tenth (10th) year of service with Lietz
by his position Inc., Marietta was promoted to Sales Representative.
- However, the right of the management to dismiss 4. In this regard, she signed another letter agreement
must be balanced against the managerial employee’s containing a "Goodwill Clause:" on the termination of your
right to security of tenure which is not one of the employment by act of either you or [LietzInc.], and for a
guaranties he gives up period of three (3) years thereafter, you shall not engage
- This Court has consistently ruled that managerial directly or indirectly as employee, manager, proprietor, or
employees enjoy security of tenure and, although the solicitor for yourself or others in a similar or competitive
standards for their dismissal are less stringent, the loss business or the same character of work which you were
of trust and confidence must be substantial and employed by [Lietz Inc.] to do and perform. Should you
founded on clearly established facts sufficient to breach this good will clause of this Contract, you shall pay
warrant the managerial employee’s separation from [Lietz Inc.] as liquidated damages the amount of 100% of
the company your gross compensation over the last 12 months, it being
- Substantial evidence is of critical importance and the agreed that this sum is reasonable and just .
burden rests on the employer to prove it 5. Three (3) years thereafter , Marietta resigned from Lietz Inc.
- SC: The acts and omissions in the respective During her exit interview, she declared that she intended to
memorandum with notice of termination of Julietes engage in business a rice dealership, selling rice in
and Eufemio were grounded on gross negligence wholesale.
and/or loss of trust and confidence. The LA, NLRC and 6. Lietz Inc. accepted her resignation and reminded her of the
CA all found that the dismissal of Cecilia and Eufemio "Goodwill Clause" in the last letter agreement she had
was justified, and the Court finds no reason to disturb signed.
the findings that the dismissal from employment due 7. Subsequently, Lietz Inc. learned that she had been hired by
to loss of trust and confidence is valid Ed Keller Philippines, Limited to head its Pharma Raw
3. Yes. She is entitled to it. Material Department. Ed Keller Limited is purportedly
- Cecilia had already earned the same, except for the a direct competitor of Lietz Inc.
maternity leave. 8. Meanwhile, Marietta’s demands from Lietz Inc. for the
- Her unpaid balance on her car loan cannot be set off payment of her remaining salaries and commissions
against the monetary benefits due her went unheeded.
- The Court has held in Nestlé Philippines, Inc. v. 9. On 14 September 2005, she filed a complaint with the NLRC
NLRC: that the employer's demand for payment of for non-payment of 1½ months’ salary, two (2)months’
the employees' amortization on their car loans, or, in commission, 13th month pay, plus moral, exemplary and
the alternative, the return of the cars to the employer, actual damages and attorney’s fees.
is not a labor, but a civil, dispute. It involves debtor- 10. In its position paper, Lietz Inc. admitted liability
creditor relations, rather than employee-employer for Marietta’s money claims in the total amount of
relations. P110,662.16.
o Cecilia has an obligation to pay the balance on 11. However, Lietz Inc. raised the defense of legal
the car loan to Jollibee. compensation: Marietta’s money claims should be offset
o If she cannot afford to pay the balance, she can against her liability to Lietz Inc. for liquidated damages in
return the car to Jollibee.


the amount of ₱869,633.09 for Marietta’s alleged breach of - At bottom, we considered that the stipulation referred to
the "Goodwill Clause" post-employment relations of the parties.
12. LA: granted Marietta’s complaint, ordering Lietz, Inc. to
pay Marietta the amount of Php110,662.16 f. 3. Labor dispute v. intra-corporate dispute
13. NLRC: affirmed the ruling of the Labor Arbiter. The motion
for reconsideration was denied by NLRC. Raul Cosare v. Broadcom Asia, Inc.
14. Lietz Inc. filed a petition for certiorari before the Court of FACTS:
Appeals, alleging grave abuse of discretion in the labor 1. April 1993: Raul was employed as a salesman by Dante
tribunals’ rulings. Arevalo, who was in the business of selling broadcast
15. The CA initially affirmed the labor tribunals, but on motion equipment needed by television networks and production
for reconsideration, modified its previous decision. houses
16. While upholding the monetary award in favor of Marietta in 2. Dec 2000: Arevalo set up the company Broadcom, and Raul
the aggregate sum of ₱110,662.16, the CA allowed legal was named an incorporator – he was assigned 100 shares of
compensation or set-off of such award of monetary claims stock with a value of P1 per share, and was to position of
by her liability to Lietz Inc. for liquidated damages arising Assistant Vice President for Sales and Head of Technical
from her violation of the "Goodwill Clause" Coordination, with monthly basic net salary and average
17. Marietta’s motion for reconsideration was denied. commissions of P18,000 and P37,000, respectively
3. 2003: Alex Abiog was appointed as Broadcom’s VP for
ISSUE/S: Sales, thus became Raul’s immediate superior
WON Marietta’s money claims for unpaid salaries may be offset 4. 2009 – Raul sent Dante Arevalo a confidential memo,
against Lietz Inc.’s claim for liquidated damages. informing him of anomalies which were allegedly being
committed by Alex [failed to report to work on time, leaves
HELD: NO office on the pretext of client visits, advised clients to
- Paragraph 4 of Article 217 of the Labor Code appears to purchase camera units from its competitor, under-the-table
have caused the reliance by the CA on the "causal dealings, expressed complaints and disgust over
connection between Marietta’s monetary claims against uncompetitive salaries]
respondents and the latter’s claim from liquidated damages 5. Dante Arevalo failed to act on the accusations
against the former." 6. Raul alleged that he was instead called for a meeting by
- Art. 217. Jurisdiction of Labor Arbiters and the Commission. Dante Arevalo wherein he was asked to tender his
(a) Except as otherwise provided under this code, the resignation in exchange for “financial assistance” in the
Arbiters shall have original and exclusive jurisdiction to hear amount of P300,000. – Raul refused to comply, as signified
and decide, within thirty (30) calendar days after the in a letter he sent to Dante
submission of the case by the parties for decision without 7. He then received a memo from Roselyn Villareal,
extension, even in the absence of stenographic notes, the Broadcom’s Manager for Finance and Administration,
following case involving all workers, whether agricultural or charging him of serious misconduct and willful breach of
non-agricultural: x x x x trust
4. Claims for actual, moral, exemplary and other forms of - Persuaded clients to purchase equipment from
damages arising from the employer-employee relations; competitors
(Underscoring supplied) - Company vehicle assigned to him was found
- Evidently, the CA is convinced that the claim for liquidated abandoned, inoperable and in very bad condition
damages emanates from the "Goodwill Clause” of the - Failed to submit regular sales report
employment contract and, therefore, is a claim for damages - Frequently absent/tardy without explanation
arising from the employer-employee relations." - Remiss in the performance of his duties as Sales
- A non-compete clause, as in the "Goodwill Clause" referred officer; have not recorded any sales for the past
to in the present case, with a stipulation that a violation immediate 12 months
thereof makes the employee liable to his former employer 8. Raul was given 48 hours within which to present his
for liquidated damages, refers to post-employment relations explanation
of the parties. 9. He was suspended from having access to any and all
- Article 217, paragraph 4 does not automatically cover all company files/records and use of company assets
disputes between an employer and its employee(s). We 10. He was precluded from reporting to work on Mar. 31, 2009
noted that the cause of action was within the realm of Civil 11. Apr. 1, 2009 – Raul totally barred from entering the company
Law, thus, jurisdiction over the controversy belongs to the premises
regular courts. 12. Apr. 2, 2009 – attempted to furnish his reply to the
accusations, but Broadcom refused due to late filing


13. Raul filed complaint for constructive illegal dismissal; also 1. No. LA has the original jurisdiction over the subject
claimed that he was illegally suspended as he placed no controversy
serious and imminent threat to the life or property of his - Intra-corporate controversy pertain to disputes that
employer and co-employees involve any of the ff. relationships:
14. Broadcom: Raul was neither illegally suspended nor o Between corp, partnership, association and the
dismissed. He abandoned employment by continually failing public
to report for work beginning April 1, 2009, prompting them o Corp, partnership or association and the State
to accuse him of absence without leave (franchise, permit, license)
15. LA: Dismissed. Raul failed to establish that he was o Corp, partnership or association and its
dismissed, constructively or otherwise. What he did was to stockholders, partners, members or officers
pre-empt Broadcom’s action regarding the charges against o Among stockholders, partners or associates
him by filing the complaint just a day after he submitted his themselves
explanation; he also failed to substantiate by documentary - Jurisprudence qualifies that when the dispute involves
evidence his allegations of illegal suspension and non- a charge of illegal dismissal, action may fall under the
payment of allowances and commissions jurisdiction of the LAs (which has original jurisdiction
16. NLRC: Reversed. Broadcom guilty of constructive illegal over termination disputes)
dismissal. - The mere fact that Raul was a stockholder and an
- He was constructively dismissed when he was asked officer of Broadcom failed to necessarily make the
to resign from employment. case intra-corporate
- The fact that Raul was suspended from using the - In Matling Industrial and Commercial Corporation v.
assets of Broadcom was inconsistent with Coros, the Court distinguished between a “regular
Broadcom’s allegation that Raul abandoned his work employee” and a “corporate officer” for purposes of
- Exemplary damages P100,000 were awarded given establishing the true nature of a dispute or complaint
that the termination of employment was effected in for illegal dismissal and determining which body has
bad faith jurisdiction over it. Succinctly, it was explained that
- MR denied “[t]he determination of whether the dismissed officer
17. Appealed with the CA. During pendency, Broadcom raised was a regular employee or corporate officer unravels
a new argument: the case involved an intra-corporate the conundrum” of whether a complaint for illegal
controversy which was within the jurisdiction of the dismissal is cognizable by the LA or by the RTC. “In
RTC, instead of the LA. The case involved a case of the regular employee, the LA has jurisdiction;
complaint against a corporation, filed by a otherwise, the RTC exercises the legal authority to
stockholder, who, at the same time, was a adjudicate.
corporate officer. - Raul was not a corporate officer
18. CA: Granted Broadcom’s petition; dismissed the complaint o Two requisites that must concur in order for an
for lack of jurisdiction individual to be considered a corporate officer: (1)
- Case involved an intra-corporate controversy which the creation of the position is under the
was within the exclusive jurisdiction of the RTC (PD corporation’s charter or by-laws; (2) the election of
902-A) the officer is by the directors or stockholders
- Records show that Raul was indeed a stockholder, and o It is only when the officer claiming to be illegally
was listed as one of its directors dismissed is classified as such corporate officer that
- He held the position of AVP for Sales which was listed the issue is deemed intra-corporate
as a corporate office (generally, Pres, VP, Sec or o The only corporate officers and thus offices created
Treasurer are regarded as principal or executive under the by-laws are: President, VP, Treasurer,
officers of a corporation, but the BOD of Broadcom is Secretary
allowed to appoint other officers as deemed o Although a blanket authority (provided in their by-
necessary) laws) provides for the Board’s appointment of such
other officers as it may deem necessary, Broadcom
ISSUE/S: failed to establish that the position of AVP for Sales
1. WON case was an intra-corporate dispute that was within was created by virtue of an act of the Board, and
the original jurisdiction of the RTC and not of the Las that Raul was specifically elected or appointed to
2. WON Raul was constructively and illegally dismissed such position by the directors
o Marc II Marketing Inc. v. Joson: an enabling clause
HELD: cannot make such position a corporate office. BOD
has no power to create other corporate offices


without first amending the corporate by-laws so as insensibility towards Raul, resorted to by
to include the newly created corporate office; to Broadcom to deny him of the opportunity to fully
allow the creation of a corporate officer position by explain his defenses and retain his employment.
a simple inclusion in the corporate by-laws of an o In King of Kings Transport, Inc. v. Mamac, the
enabling clause can result in the circumvention of stanrds to be observed: 1) The first written notice
that constitutionally well-protected right of every with the specific causes or grounds; 2) Reasonable
employee to security of tenure opportunity means every kind of assistance to
- The mere fact that he was a stockholder does not enable them to prepare adequately for defense
necessarily make the action intra-corporate (period of at least 5 calendar days from receipt of
o Not all conflicts between stockholders and notice); 3) Notice should contain a detailed
corporation are classified as intra-corporate. narration of facts and circumstances that will serve
o In determining the existence of intra-corp dispute, as basis for the charge; 4) Notice should mention
the status or relationship of the parties and the which company rules are violated or which among
nature of the question that is the subject of the the grounds under Art. 282 are being charged
controversy must be taken into account o RESPS were resolute on severance of working
o Pending dispute relates to Raul’s rights and relationship; no further investigation and final
obligations as a regular officer of Broadcom, and disposition appeared to have been made [after
not as a stockholder being given memo of charges, he was asked to
o Controversy test in Reyes v. Hon. RTC: the tender resignation] which negated their claim that
controversy must not only be rooted in the they actually intended to look into the matter
existence of an intra-corporate relationship, but - Clear intent to find fault in Raul was manifested by the
must pertain to the enforcement of the parties’ accusation that he abandoned his post, signified by his
correlative rights and obligations under the Corp failure to report to work or file a leave of absence
Code and the internal and intra-corporate beginning April 1, 2009
regulatory rules of the corporation. If the o Records show that Dante placed Raul under
relationship and its incidents are merely incidental suspension beginning March 30
to the controversy or if there will still be conflict o The charge of abandonment is also inconsistent
even if the relationship does not exist, then no with suspension
intra-corporate controversy exists. o “Abandonment is the deliberate and unjustified
2. Raul was constructively and illegally dismissed refusal of an employee to resume his
- Constructive dismissal occurs when there is cessation employment. To constitute abandonment of work,
of work because continued employment is rendered two elements must concur: ‘(1) the employee must
impossible, unreasonable, or unlikely as when there is have failed to report for work or must have been
a demotion in rank or diminution in pay, or when a absent without valid or justifiable reason; and (2)
clear discrimination, insensibility, or disdain by an there must have been a clear intention on the part
employer becomes unbearable to the employee of the employee to sever the employer- employee
leaving the latter with no other option but to quit relationship manifested by some overt act.’
- Dimangan v. Dacworks United, Incorp.: The test is o Raul’s failure to report to work was neither
whether a reasonable person in the employee’s voluntary nor indicative of an intention to sever his
position would have felt compelled to give up his employment
position under the circumstances. It is an act o It was illogical to require him to report for work,
amounting to dismissal but is made to appear as if it and imputing fault when he failed to do so after
were not. Constructive dismissal is therefor a dismissal he was specifically denied access to all the
in disguise. The law recognizes and resolves this company’s assets
situation in favor of employees in order to protect their - Reinstatement or separation pay, backwages,
rights and interests from the coercive acts of the exemplary damages (bad faith)
employer.
- Evident from the acts of Broadcom that it rejected g. Technical rules, not binding
Raul’s continued involvement with the company
o Refused to accept explanation, evidence that he Art. 221 (now 227) Technical rules not binding and prior resort
was denied opportunity to be heard prior to any to amicable settlement – In any proceeding before the
decision on the termination of his employment Commission or any of the Labor Arbiters, the rules of evidence
o The 48-hour period given was a flaw to explain, prevailing in courts of law or equity shall not be controlling and it
which signified the discrimination, disdain and is the spirit and intention of this Code that the Commission and


its members and the Labor Arbiters shall use every and all giving him theimpression that they knew him; (3) he did
reasonable means to ascertain the facts in each case speedily not call the attention of his superiors because he was not in
and objectively and without regard to technicalities of law or a position to do so as he was a mere lineman; and (4) he was
procedure, all in the interest of due process. In any proceeding just following instructions in connection with his work and
before the Commission or any Labor Arbiter, the parties may be had no control in the disposition of company supplies and
represented by legal counsel but it shall be the duty of the materials.
Chairman, any Presiding Commissioner or Commissioner or any 14. He maintained that his mere presence at the scene of the
Labor Arbiter to exercise complete control of the proceedings at incident was not sufficient to hold him liable as
all stages. a conspirator.
15. Despite Gala’s explanation, Meralco proceeded with the
Manila Electric Company v. Jan Carlo Gal investigation and eventually terminated his employment on
FACTS: July 27, 2006. Gala responded by filing an illegal dismissal
1. Jan Carlo Gala was employed by Meralco as a complaint against Meralco
probationary lineman 16. LA: Dismissed complaint. Carlo’s participation in the
2. Barely four months on the job, Carlo was pilferage rendered him unqualified to become a regular
dismissed for alleged complicity in pilferages employee
of Meralco’s electrical supplies, particularly, for the incident 17. NLRC: Reversed, No concrete proof of complicity;
which took place on May 25, 2006. reinstatement only until the end of probationary period
3. On that day, Carlo and other Meralco workers were 18. CA: affirmed. Carlo was illegally dismissed. Reinstatement
instructed to replace a worn-out electrical pole at the with full back wages and benefits
Pacheco Subdivision in Valenzuela City. Carlo and the other 19. Carlo asks for denial of petition
linemen were directed to join Truck No. 1891, under - Procedural defects of the petition:
the supervision of Foreman Nemecio Hipolito. o the Verification and Certification, Secretary’s
4. When they arrived at the worksite, Carlo and the other Certificate, and Affidavit of Service (submitted by
workers saw that Truck No. 1837, supervised by Zuñiga, was Meralco) do not contain the details of the
already there. Community or Residence Tax Certificates of
5. The linemen of Truck No. 1837 were already at affiants, in violation of Sec. 6 of Commonwealth
work. Gala and the other members of the crew Act no 465
of Truck No. 1891 were instructed to help in the digging of o Lawyers who signed the petition failed to
a hole for the pole to be installed. indicate their updated Mandatory Continuing
6. While the Meralco crew was at work, one Noberto “Bing” Legal Education certificate numbers
Llanes, a non-Meralco employee, arrived.
7. He appeared to be known to the Meralco foremen as they ISSUE/S:
were seen conversing with him. Llanes boarded the trucks, 1. WON petition should be dismissed on procedural grounds
without being stopped, and took out what were later found 2. WON Carlo was illegally dismissed
as electrical supplies.
8. Aside from Carlo, the foremen and the other linemen who HELD:
were at the worksite when the pilferage happened 1. No.
were later charged with misconduct and - It is the spirit and intention of labor legislation that LAs
dishonesty for their involvement in the incident. shall use every reasonable means to ascertain the facts
9. Unknown to Carlo and the rest of the crew, a Meralco in each case speedily and objectively, without regard to
surveillance task force was monitoring their activities and technicalities of law or procedure, provided due
recording everything with a Sony video camera. process is duly observed.
10. The task force was composed of Joseph Aguilar, - In keeping with this policy and in the interest of
Ariel Dola and Frederick Riano. substantial justice, the court deems it proper to give
11. Meralco called for an investigation of the incident due course to the petition, especially in view of the
and asked Gala to explain. conflict between the findings of the LA and the NLRC
12. Gala denied involvement in the pilferage, contending and CA
that even if his superiors might have committed - SS Ventures International Inc. v. SS Ventures Labor
a wrongdoing, he had no participation in what they did. Union: the application of technical rules of
13. He claimed that: (1) he was at some distance away from the procedure in labor cases may be relaxed to
trucks when the pilferage happened; (2) he did not have an serve the demands of substantial justice
inkling that an illegal activity was taking place
since his supervisors were conversing with Llanes, 2. No.


- Contrary to the conclusions of the CA and the NLRC, 2. Thereafter, ITC commenced operation of the plywood plant
there is substantial evidence supporting Meralco’s and hired 387 workers.
position that Carlo had become unfit to continue 3. March 16, 1990: ITC notified the Department of Labor and
his employment with the company. Employment (DOLE) and its workers that effective March 19,
- He was found to have failed to meet the standards 1990 it will undergo a “no plant operation” due to lack of
expected of him to become a regular employee and raw materials and will resume only after it can secure logs
this failure was mainly due to his “undeniable for milling.
knowledge, if not participation, in the pilferage 4. Meanwhile, IPGC notified ITC of the expiration of the lease
activities done by their group, all to the prejudice of the contract in August 1990 and its intention not to renew the
Company’s interests.” same.
- As a probationary employee, his overall job 5. June 26, 1990, ITC notified the DOLE and its workers of the
performance and his behavior were being monitored plant‘s shutdown due to the non-renewal of anti-pollution
and measured in accordance with the standards (i.e., permit that expired in April 1990.
the terms and conditions) laid down in his probationary 6. This fact and the alleged lack of logs for milling constrained
employment agreement. ITC to lay off all its workers until further notice.
- Under paragraph 8 of the agreement, he was subject 7. This was followed by a final notice of closure or cessation of
to strict compliance with, and non-violation of the business operations on August 17, 1990 with an advice for
Company Code on Employee Discipline, Safety Code, all the workers to collect the benefits due them under the
rules and regulations and existing policies. law and CBA.
- Par. 10 required him to observe at all times the 8. October 15, 1990: IPGC took over the plywood plant after it
highest degree of transparency, selflessness and was issued a Wood Processing Plant Permit No. WPR-1004-
integrity in the performance of his duties and responsi 081791-042, which included the anti-pollution permit, by the
bilities, free from any form of conflict or contradicting Department of Environment and Natural Resources (DENR)
with his own personal interest. coincidentally on the same day the ITC ceased operation
- For one working at the scene who had seen or who had of the plant.
shown familiarity with Llanes (a non-Meralco employee), 9. This prompted Virgilio Ababon, et al. to file a complaint
not to have known the reason for his presence is to against ITC and IPGC for illegal dismissal, unfair labor
disregard the obvious, or at least the very suspicious. practice and damages.
- The totality of the circumstances obtaining in the case - They alleged, among others, that the cessation of
convinces us that Carlo could not but have knowledge ITC‘s operation was intended to bust the union and
of the pilferage of company electrical supplies on May that both corporations are one and the same entity
25, 2006; he was complicit in its commission, if not by being controlled by one owner.
direct participation, certainly, by his inaction while it 10. LA: refused to pierce the veil of corporate fiction for lack of
was being perpetrated and by not reporting the evidence to prove that it was used to perpetrate fraud or
incident to company authorities. illegal act; upheld validity of closure; ordered ITC to pay
- Thus, we find substantial evidence to support separation pay
the conclusion that he does not deserve to remain in 11. NLRC [1993 Decision]: Reversed. Ordered reinstatement of
Meralco’s employ as a regular employee. employees
- He violated his probationary employment agreement, 12. ITC and IPGC fled MR à dismissed, filed out of time [3 days
especially the requirement for him “to observe at all late]
times the highest degree of transparency, selflessness 13. ITC and IPGC then filed a Petition for Relief from Resolution,
and integrity in the performance of their duties and which was treated as a second MR by the NLRC à
responsibilities.” He failed to qualify as a regular dismissed
employee. 14. ITC and IPGC then filed a Notice of Appeal with the SC; and
a Second Petition for Relief with the NLRC
g. 1. Liberality in application of rules 15. SC: Dismissed Notice of Appeal à wrong mode of appeal
from the NLRC decision
Industrial Timber Corp. v. Ababon 16. NLRC [1995 Decision]: Granted Second Petition for
FACTS: Relief; reinstated decision of LA, closure valid.
1. Industrial Plywood Group Corporation (IPGC) is the owner of 17. CA: set aside the 1995 Decision of NLRC, reinstated its 1993
a plywood plant located at Agusan, Pequeño, Butuan City, Decision à reinstatement of employees [NLRC 1993
leased to Industrial Timber Corporation (ITC) on August 30, decision has become final and executory, 1995 decision
1985 for a period of five years. rendered without jurisdiction]


18. ITC & IPGC: CA erred in reversing the 1995 Decision of (a) service of a written notice to the employees and
NLRC for the reason that its 1995 Decision had become to the DOLE at least one month before the
immutable for their failure to file MR within the intended date thereof;
Reglementary period. (b) the cessation of business must be bona fide in
- CA should have relaxed the rules of technicality in the character; and
paramount interest of justice; after all, the delay was (c) payment to the employees of termination pay
only for 3 days amounting to one month pay or at least one-half
month pay for every year of service, whichever is
ISSUE/S: higher.
1. WON circumstances surrounding the case warrant liberality - ITC actually underwent “no plant operation” since
in the application of technical rules and procedure March 1990 due to lack of log supply.
2. WON Virgilio, et al. were illegally dismissed due to the - Since then several subsequent incidents prevented
closure of ITC‘s business; and whether they are entitled to respondent ITC to resume its business operations e.g.
separation pay, backwages, and other monetary awards. expiration and non-renewal of the wood processing
plant permit, anti-pollution permit, and the lease
HELD: contract on the plywood plant.
1. Yes. - Without the raw materials respondent ITC has nothing
- Ordinarily, once a judgment has become final and to produce.
executory, it can no longer be disturbed, altered, or - Without the permits it cannot lawfully operate
modified the plant.
- Exception: where facts and circumstances transpire - And without the contract of lease respondent ITC has
which render its execution impossible or unjust and it no option but to cease operation and turn over the
therefore becomes necessary, in the interest of justice, plant to the lessor.
to direct modification in order to harmonize the - Having established that ITC‘s closure of the plywood
disposition with the prevailing circumstances plant was done in good faith and that it was due to
- Substantial justice is best served by allowing the causes beyond its control, the conclusion is inevitable
Petition for Relief despite procedural defect of filing that said closure is valid.
the MR three days late, for to rule otherwise, a greater - Consequently, Virgilio, et al. could not have been
injustice would be done to ITC by ordering it to illegally dismissed to be entitled to full backwages.
reinstate the employees to their former positions that - SC found it no longer necessary to discuss the issue
no longer exist due to valid and legitimate cessation regarding the computation of their backwages.
of business and pay huge judgment award - However, they are entitled to separation pay equivalent
- Art. 218, LC: NLRC may, in the exercise of its appellate to one month pay or at least one-half month pay for
powers, correct, amend, or waive any error, defect or every year of service, whichever is higher.
irregularity whether in substance or in form - Although the closure was done in good faith and for
- Art. 221, LC: the rules of evidence prevailing in courts valid reasons, The Supreme Court find that ITC did not
of law or equity shall not be controlling and it is the comply with the notice requirement.
spirit and intention of this Code that the Commission - While an employer is under no obligation to conduct
and its members and the LAs shall use every and all hearings before effecting termination of employment
reasonable means to ascertain the facts in each case due to authorized cause, however, the law requires that
speedily and objectively and without regard to it must notify the DOLE and its employees at least one
technicalities of law or procedure, all in the interest of month before the intended date of closure. In the case
due process. at bar, ITC notified its employees and the DOLE of the
- Reglementary period in Sec. 14, Rule VII, New Rules of ‘no plant operation‘ on March 16, 1990 due to lack of
Procedure of NLRC (10 days from receipt of order, raw materials.
reso, decision) à should not be interpreted as to - This was followed by a ‘shut down‘ notice dated June
sacrifice substantial justice to technicality 26, 1990 due to the expiration of the anti-pollution
o Real purpose is to avoid unreasonable delay in permit. However, this shutdown was only temporary as
the administration of justice; not to defeat it ITC assured its employees that they could return to
2. No. work once the renewal is acted upon by the DENR.
- Under Article 283 of the Labor Code, three - On August 17, 1990, the ITC sent its employees a final
requirements are necessary for a valid cessation of notice of closure or cessation of business operations to
business operations: take effect on the same day it was released.


- This falls short of the notice requirement for termination for a loan; even if it was, it is still unauthorized and
of employment due to authorized cause considering prohibited by company rules
that the DOLE was not furnished and the notice should 7. Ligaya: appealed to NLRC; RTC acquitted her of the charge
have been furnished both the employees and the DOLE 8. NLRC: affirmed LA. Acquittal has no bearing on the illegal
at least one month before the intended date of closure. dismissal case; there was still an infraction of company’s
- In Agabon v. National Labor Relations Commission and Code of Conduct
Jaka Food Processing Corporation v. Pacot, the Court 9. MR à denied.
sustained the dismissals for just cause under Article 282 10. CA: dismissed petition for failure to indicate in the
and for authorized cause under Article 283 of the Labor petition the actual addresses of the parties and to
Code, respectively, despite non-compliance with the state in the Verification and Certification of non-
statutory requirement of notice and hearing. forum shopping that there were no other pending
- The grounds for the dismissals in those cases, namely, cases between parties at the time of filing
neglect of duty and retrenchment, remained valid 11. MR: Ligaya explained that her petition substantially
because the non-compliance with the notice and complied with rules because it indicated that the parties
hearing requirement in the Labor Code did not may be served with notices through their respective
undermine the validity of the grounds for the counsels whose addresses were specifically mentioned
dismissals. therein.
- Indeed, to invalidate a dismissal merely because of - She submitted a revised Verification and
a procedural defect creates absurdity and runs counter Certification of non-forum shopping indicating
to public interest. Where the dismissal is based on an the complete addresses and of their counsels
authorized cause under Article 283 of the Labor Code 11. MR à denied.
but the employer failed to comply with the notice
requirement, the sanction should be stiff as the ISSUE/S:
dismissal process was initiated by the employer‘s WON had substantially complied with rules so as to warrant
exercise of his management prerogative, as opposed to liberality in its application
a dismissal based on a just cause under Article 282 with
the same procedural infirmity where the sanction to be HELD: YES
imposed upon the employer should be tempered as - Rules of procedure should be relaxed when there is
the dismissal process was, in effect, initiated by an act substantial compliance and subsequent compliance
imputable to the employee. - Ligaya failed to indicate the actual addresses of the parties
(as required by Sec. 3, Rule 46, ROC)
g. 2. Substantial compliance with the Rules - However, she clearly mentioned that the parties may be
served notices through their counsels whose addresses were
Ma. Ligaya Santos v. Litton Mills Inc. clearly specified
FACTS: - The mention of the parties’ respective counsel’s addresses
1. Ligaya was employed as clerk in the Plant Administration constitutes substantial compliance with requirements
and Services Department of Litton Mills (manufacturer of - Sopport: Sec. 2, Rule 13, ROC à “if any party has appeared
textile materials) by counsel, service upon him shall be made upon his
2. A criminal complaint for robbery/extortion was filed against counsel or one of them, unless service upon the party
Ligaya for alleged unauthorized arrangement with a waste himself is required by the Court
buyer à demanding money from a certain Leonardo every - Moreover, in the MR, she fully complied when she indicated
time he purchases scrap and sludge oil, and threatening to therein the actual addresses of parties
withhold the release of purchased materials by delaying the - There was also substantial compliance as regards the
release of official delivery receipt and gate pass if he would Verification and Certification of non-forum shopping à she
not comply rectified the deficiency in her MR
3. Ligaya: It is not within her power to intimidate or threaten - Subsequent and substantial compliance may call for the
any buyer regarding the release of company’s waste items. relaxation of the rules of procedure
The money he was demanding from Leonardo was payment - A relaxation of rigid application of rules shall be done to
for debts owed to her by Leonardo’s wife offer full opportunity for parties to ventilate their causes and
4. Letter of Termination à violation of company’s Code of defenses in order to promote rather than frustrate the ends
Conduct for Employee Discipline of justice
5. Ligaya filed for complaint for Illegal Dismissal - Merits à remanded to CA
6. LA: dismissed complaint. There was just cause for dismissal;
not convinced that money received by Ligaya was payment h. Rule-making/Limitation


deducted from the P2.00/day increase provided for by PD
Art. 5 Rules and regulations – The Department of Labor and 1123
other government agencies charged with the administration and
enforcement of this Code or any of its parts shall promulgate the ISSUE/S:
necessary implementing rules and regulations. Such rules and WON the inclusion of the provision in the IRR providing that
regulations shall become effective fifteen (15) days after “those paying less than P60 shall only pay the difference,” is
announcement of their adoption in newspapers of general within the rule-making authority of Secretary of Labor
circulation.
HELD: NO
Rules and Regulations to Implement the Code - The Sec. of Labor exceeded in his authority when he added
- The DOLE shall make rules and regulations to implement the another exemption to the law other than those stated in it.
code; these shall have the force of law and are entitled to - The exemption should only pertain to the distressed
great respect employers.
- Department Order No. 1, Series of 1988, providing for - The inclusion of this exemption is contrary to the spirit and
“Guidelines Governing the Temporary Suspension of intent of PD 1123 which is to protect the wages against
Employment of Filipino Domestic and Household Workers” inflation
does not constitute an invalid exercise of legislative power - LA failed to consider that the workers belong to the lowest
- The police power is the domain of legislature, but it does not income group, and that what the workers obtained through
mean that such an authority may not be lawfully delegated a CBA should be protected and not deducted from the
- Art. 5 vests the DOLE with the rule-making powers in the decreed additional P60.00 monthly living allowance
enforcement thereof - To sustain respondent employer’s claim that the negotiated
wage increase should be credited against and deducted
When Invalid from the decreed cost of living allowance would be to nullify
- It is void if it is in excess of its rule-making authority the wage increase granted and enjoyed by the workers
- Ex. Rules and Regulations implement Art. 94 limited the under the CBA
entitlement to holiday pay to daily-paid employees only - PD 1123 did not authorize such credit and deduction
(excluding monthly-paid employees) but the law itself states - Philippine Apparel Workers Union Case: “All doubts un the
that “every worker” shall be entitled à Null and void implementation and interpretation of the provisions of this
- An administrative interpretation which takes away a benefit Code, including the IRR, shall be resolved in favor of labor”
granted in the law is ultra vires, that is, beyond one’s power
i. Applicability
Kapisanang Manggagawang Pinagyakap v. NLRC & Franklin
Baker Co. of the Phil. Art. 6 Applicability – All rights and benefits granted to workers
FACTS: under this Code shall, except as may otherwise be provided
1. A CBA was entered between KMP and Franklin Baker Co. herein, apply alike to all workers, whether agricultural or non-
that the employees would be having a P1.33 daily wage agricultural. (As amended by Presidential Decree No. 570-A,
increase November 1, 1974)
2. A month after, PD 1123 was issued, giving an across-the-
board increase of P60 (or P2.00 daily living allowance) in Art. 276 Government employees – The terms and conditions of
emergency allowance with the exemption to distressed employment of all government employees, including employees
employers. of government-owned and controlled corporations, shall be
3. To implement PD 1123, Secretary of Labor was granted governed by the Civil Service Law, rules and regulations. Their
authority to issue rules and regulations. Sec. 4 provided that salaries shall be standardized by the National Assembly as
distressed employers, whether public or private may be provided for in the New Constitution. However, there shall be no
exempted while in such condition in the interest of reduction of existing wages, benefits and other terms and
development and employment conditions of employment being enjoyed by them at the time of
4. The Secretary of Labor, in the IRR it issued, exempted not the adoption of this Code.
only distressed employers, but also those who have granted
additional allowance under PD 525, at least P60 monthly
Article IX-B, Sec. 2 (1), CON87 The civil service embraces
wage increase,, further providing that those who paid less
all branches, subdivisions, instrumentalities, and agencies of the
than this amount shall pay the difference Government, including government-owned or controlled
5. The LA relied on the Labor Department’s IRR thereby
corporations with original charters.
making the P1.33/day increase granted by the CBA be
Applicability to Government Corporations


- Ruling now is that the Labor Code applies to a government
corporation incorporated under the Corporation Code PNOC Energy Development Corp. v. NLRC
- In the 1985 ruling of National Housing Corporation v. Juco, FACTS:
the SC laid down the doctrine that employers of GOCCs, 1. In June 1985, Danilo Mercado (clerk, shipping clerk) was
whether chartered by Congress or formed under the general dismissed by Phil. National Oil Company-Energy
Corporation Law, were governed by the Civil Service Law, not Development Corporation (PNOC-EDC) due to serious acts
the Labor Code à this doctrine is now OBSOLETE as it has of dishonesty allegedly committed by Danilo.
been supplanted by the 1987 Constitution: [Misappropriation of company funds, bought supplies for
o “The Civil Services embraces all branches, subdivisions, less than the agreed amount and then appropriated the
instrumentalities and agencies of the government, including excess; did not report discounts obtained, etc.]
government-owned or controlled corporations with original 2. Danilo then filed a complaint for illegal dismissal against
charters.” PNOC-EDC.
- Under the present state of the law, the test in determining 3. PNOC-EDC filed a motion to dismiss on the ground that the
whether a government-owned or controlled corporation is LA and/or the NLRC has no jurisdiction over PNOC-EDC
subject to the Civil Service Law is the manner of its creation because it is a subsidiary of the Philippine National Oil
o Government corporations created by Congress are subject Company (PNOC), a government owned or controlled
to Civil Service rules, while those incorporated under the corporation, and as a subsidiary, it is also a GOCC and as
general Corporation Law are covered by the Labor Code such, the proper forum for Danilo’s suit is the Civil Service
Commission.
PNOC-EDC, FTI, NHA 4. LA: ruled in favor of Danilo
- PNOC-EDC (Philipine National Oil Corp. Energy Development 5. NLRC: affirmed.
Corp) is incorporated under the general Corporation Law, and
is a GOCC, so its employees are subject to the Labor Code ISSUE/S:
- FTI (Food Terminal, Inc. is a GOCC without original charter, so WON matters of employment affecting PNOC-EDC, a GOCC,
the DOLE and not the Civil Service Commission has are within the jurisdiction of the LA and NLRC
jurisdiction over the dispute arising from employment with FTI;
terms and conditions of employment are governed by the HELD: YES
Labor Code and not by the Civil Service Rules and Regulations - The issue in this case has been decided already in the case
- The NHA (National Housing Corp.) was incorporated under of PNOC-EDC vs Leogardo.
Act 1459, the former corporation law, is a GOCC whose - It is true that PNOC is a GOCC and that PNOC-EDC, being
employees are subject to the provisions of the Labor Code; it a subsidiary of PNOC, is likewise a GOCC.
is within the jurisdiction of the DOLE, it being a GOCC without - It is also true that under the 1973 Constitution, all GOCCs
an original charter are under the jurisdiction of the CSC.
- The workers or employees of the NHC (now NHA) have the - However, this has been supplanted by 1987 Constitution as
right to form unions or employees’ organizations it now provides:
o The Civil Service embraces all branches, subdivisions,
Non-Applicability to Government Agencies instrumentalities and agencies of the
- “Agency” or “instrumentality” are synonymous; either of them Government, including government-owned or
is a means by which a government acts, or by which a certain controlled corporations with original
government act or function is performed charters. (Article IX-B, Section 2 [1])
- “Instrumentality” contemplates an authority to which the state - Hence, the above provision sets the rule that the mere fact
delegates government power for the performance of a state that a corporation is a GOCC does not automatically place it
function under the CSC.
- Under this provision, the test in determining whether a
Applicability Without Employer-Employee Relationship GOCC is subject to the Civil Service Law is the manner of
- The Labor Code may apply even if the parties are not its creation such that government corporations
employers and employees of each other created by special charter are subject to its
- It is not correct to say that employment relationship is a pre- provisions while those incorporated under the
condition to the applicability of the Code general Corporation Law are not within its
- Employment benefits (overtime pay, or rest day premium) is an coverage.
issue where employment relationship is an essential element - In the case at bar, PNOC-EDC, even though it is a GOCC,
- The Labor Code applies with or without employment was incorporated under the general Corporation Law – it
relationship between the disputants, depending on the kind of does not have its own charter, hence, it is under the
issue involved jurisdiction of the LA and NLRC


- Even though the facts of this case occurred while the 1973 were not considered in the course of inspection. (As amended
Constitution was still in force, the provisions of the 1987 by Republic Act No. 7730, June 2, 1994).
Constitution regarding the legal matters [procedural aspect]
are applicable because it is the law in force at the time of An order issued by the duly authorized representative of the
the decision. Secretary of Labor and Employment under this Article may be
appealed to the latter. In case said order involves a monetary
j. Enforcement and Sanctions award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable
Art. 217 Jurisdiction of the Labor Arbiters and the Commission bonding company duly accredited by the Secretary of Labor and
– (a.) Except as otherwise provided under this Code, the Labor Employment in the amount equivalent to the monetary award in
Arbiters shall have original and exclusive jurisdiction to hear and the order appealed from. (As amended by Republic Act No.
decide, within thirty (30) calendar days after the submission of 7730, June 2, 1994)
the case by the parties for decision without extension, even in
the absence of stenographic notes, the following cases involving (c.) The Secretary of Labor and Employment may likewise order
all workers, whether agricultural or non-agricultural: stoppage of work or suspension of operations of any unit or
department of an establishment when non-compliance with the
2. Termination disputes; law or implementing rules and regulations poses grave and
3. If accompanied with a claim for reinstatement, those cases imminent danger to the health and safety of workers in the
that workers may file involving wages, rates of pay, hours of workplace. Within twenty-four hours, a hearing shall be
work and other terms and conditions of employment; conducted to determine whether an order for the stoppage of
4. Claims for actual, moral, exemplary and other forms of work or suspension of operations shall be lifted or not. In case
damages arising from the employer- employee relations; the violation is attributable to the fault of the employer, he shall
6. Except claims for Employees Compensation, Social pay the employees concerned their salaries or wages during the
Security, Medicare and maternity benefits, all other claims period of such stoppage of work or suspension of operation.
arising from employer-employee relations, including those
of persons in domestic or household service, involving an (d.) It shall be unlawful for any person or entity to obstruct,
amount exceeding five thousand pesos (P5,000.00) impede, delay or otherwise render ineffective the orders of the
regardless of whether accompanied with a claim for Secretary of Labor and Employment or his duly authorized
reinstatement. representatives issued pursuant to the authority granted under
this Article, and no inferior court or entity shall issue temporary
Art. 128 Visitorial and enforcement power – (a.) The Secretary or permanent injunction or restraining order or otherwise
of Labor and Employment or his duly authorized representatives, assume jurisdiction over any case involving the enforcement
including labor regulation officers, shall have access to orders issued in accordance with this Article.
employer’s records and premises at any time of the day or night
whenever work is being undertaken therein, and the right to (e.) Any government employee found guilty of violation of, or
copy therefrom, to question any employee and investigate any abuse of authority, under this Article shall, after appropriate
fact, condition or matter which may be necessary to determine administrative investigation, be subject to summary dismissal
violations or which may aid in the enforcement of this Code and from the service.
of any labor law, wage order or rules and regulations issued
pursuant thereto. (f.) The Secretary of Labor and Employment may, by appropriate
regulations, require employers to keep and maintain such
(b.) Notwithstanding the provisions of Articles 129 and 217 of this employment records as may be necessary in aid of his visitorial
Code to the contrary, and in cases where the relationship of and enforcement powers under this Code.
employer-employee still exists, the Secretary of Labor and
Employment or his duly authorized representatives shall have the Art. 129 Recovery of wages, simple money claims and other
power to issue compliance orders to give effect to the labor benefits – Upon complaint of any interested party, the Regional
standards provisions of this Code and other labor legislation Director of the Department of Labor and Employment or any of
based on the findings of labor employment and enforcement the duly authorized hearing officers of the Department is
officers or industrial safety engineers made in the course of empowered, through summary proceeding and after due notice,
inspection. The Secretary or his duly authorized representatives to hear and decide any matter involving the recovery of wages
shall issue writs of execution to the appropriate authority for the and other monetary claims and benefits, including legal interest,
enforcement of their orders, except in cases where the employer owing to an employee or person employed in domestic or
contests the findings of the labor employment and enforcement household service or househelper under this Code, arising from
officer and raises issues supported by documentary proofs which employer-employee relations: Provided, That such complaint


does not include a claim for reinstatement: Provided further, cause of action accrued; otherwise they shall be forever barred.
That the aggregate money claims of each employee or
househelper does not exceed Five thousand pesos (P5,000.00). All money claims accruing prior to the effectivity of this Code
The Regional Director or hearing officer shall decide or resolve shall be filed with the appropriate entities established under this
the complaint within thirty (30) calendar days from the date of Code within one (1) year from the date of effectivity, and shall be
the filing of the same. Any sum thus recovered on behalf of any processed or determined in accordance with the implementing
employee or househelper pursuant to this Article shall be held in rules and regulations of the Code; otherwise, they shall be
a special deposit account by, and shall be paid on order of, the forever barred.
Secretary of Labor and Employment or the Regional Director
directly to the employee or househelper concerned. Any such Workmen’s compensation claims accruing prior to the effectivity
sum not paid to the employee or househelper because he of this Code and during the period from November 1, 1974 up to
cannot be located after diligent and reasonable effort to locate December 31, 1974, shall be filed with the appropriate regional
him within a period of three (3) years, shall be held as a special offices of the Department of Labor not later than March 31, 1975;
fund of the Department of Labor and Employment to be used otherwise, they shall forever be barred. The claims shall be
exclusively for the amelioration and benefit of workers. processed and adjudicated in accordance with the law and rules
at the time their causes of action accrued.
Art. 288 Penalties – Except as otherwise provided in this Code, Art. 292 Institution of money claims – Money claims specified in
or unless the acts complained of hinge on a question of the immediately preceding Article shall be filed before the
interpretation or implementation of ambiguous provisions of an appropriate entity independently of the criminal action that may
existing collective bargaining agreement, any violation of the be instituted in the proper courts.
provisions of this Code declared to be unlawful or penal in
nature shall be punished with a fine of not less than One Pending the final determination of the merits of money claims
Thousand Pesos (P1,000.00) nor more than Ten Thousand Pesos filed with the appropriate entity, no civil action arising from the
(P10,000.00) or imprisonment of not less than three months nor same cause of action shall be filed with any court. This provision
more than three years, or both such fine and imprisonment at shall not apply to employees compensation case which shall be
the discretion of the court. processed and determined strictly in accordance with the
pertinent provisions of this Code.
In addition to such penalty, any alien found guilty shall be
summarily deported upon completion of service of sentence. See also:
Any provision of law to the contrary notwithstanding, any
criminal offense punished in this Code, shall be under the Article III, Sec. 11, CON87 Free access to the courts and
concurrent jurisdiction of the Municipal or City Courts and the quasi-judicial bodies and adequate legal assistance shall not be
Courts of First Instance. (As amended by Section 3, Batas denied to any person by reason of poverty.
Pambansa Bilang 70)
Article III, Sec. 16, CON87 All persons shall have the right to
Art. 289 Who are liable when committed by other than natural a speedy disposition of their cases before all judicial, quasi-
person – If the offense is committed by a corporation, trust, firm, judicial, or administrative bodies.
partnership, association or any other entity, the penalty shall be
imposed upon the guilty officer or officers of such corporation,
trust, firm, partnership, association or entity.
6. W ork Relationship
Art. 290 Offenses – Offenses penalized under this Code and a. Definition: Employer and Employee
the rules and regulations issued pursuant thereto shall prescribe
in three (3) years. Art. 97 Definitions – As used in this Title:
All unfair labor practice arising from Book V shall be filed with (a.) "Person" means an individual, partnership, association,
the appropriate agency within one (1) year from accrual of such corporation, business trust, legal representatives, or any
unfair labor practice; otherwise, they shall be forever barred.
organized group of persons.
Art. 291 Money claims – All money claims arising from (b.) "Employer" includes any person acting directly or indirectly
employer-employee relations accruing during the effectivity of in the interest of an employer in relation to an employee and
this Code shall be filed within three (3) years from the time the shall include the government and all its branches, subdivisions


and instrumentalities, all government-owned or controlled Relationship
corporations and institutions, as well as non- profit private
institutions, or organizations.
(c.) "Employee" includes any individual employed by an

employer.
Art. 167 (now 173) Definition of terms – As used in this Title,

unless the context indicates otherwise:
(f.) "Employer" means any person, natural or juridical, employing

the services of the employee.
(g.) "Employee" means any person compulsorily covered by the

GSIS under Commonwealth Act Numbered One hundred
Employer and Employee, Defined (Azucena, Art. 82)
eighty-six, as amended, including the members of the Armed
Forces of the Philippines, and any person employed as casual, - The Labor Code itself only offers a very tautological and
emergency, temporary, substitute or contractual, or any person circumlocutory definition of the terms ‘employer’ and
‘employee,’ as provided in Articles 97, 173 (167), and 219 (212).
compulsorily covered by the SSS under Republic Act Numbered
o The Social Securities Law (RA 1161) offers a more
Eleven hundred sixty-one, as amended.
substantive meaning:
§ Employer – any person, natural, or juridical, domestic or
Art. 212 (now 218) Definitions –
foreign, who carries on in the Phlippines any trade,
business, industry, undertaking or activity of any kind and
(e.) "Employer" includes any person acting in the interest of an
uses the services of another person who is under his
employer, directly or indirectly. The term shall not include any
order as regards the employment
labor organization or any of its officers or agents except when
§ Employee – any person who performs services for an
acting as employer.
employer which either or both mental and physical
efforts are used and who receives compensation for
(f.) "Employee" includes any person in the employ of an
such services, where there is an employer-employee
employer. The term shall not be limited to the employees of a
relationship
particular employer, unless the Code so explicitly states. It shall
include any individual whose work has ceased as a result of or in
connection with any current labor dispute or because of any
b. Employer-Employee Relationship
unfair labor practice if he has not obtained any other
substantially equivalent and regular employment.
b. 1. Factors/Tests
- Definition includes those who have ceased to be employees
as a consequence of a labor dispute Four-fold Test (Azucena, Art. 82)
- Cessation of work due to a strike or lockout, or to dismissal or - Checks for the presence of four elements to determine
suspension constituting unfair labors practice does not itself whether an employer-employee relationship exists. The four
affect the “employee” status elements are:
- Upon reinstatement of an employee whose dismissal was due o The selection and engagement of the employee by the
to an unfair labor practice, he is entitled to backwages employer
o The payment of wages by employer to employee
o The power of dismissal on the part of the employer
o The power of control on the part of the employer with
respect to the means and methods by which the work is to
be accomplished by the employee.
Employer
- Of the four elements, it is the power of control that is the most
important element; absent such power, there is NO employer-
employee relationship. It is sometimes referred to as the
‘control test.’
Employer-
Worker Contractor Employee

Art. 106
“Labor only” relationship


- Titles are considered weak indicators of whether there is an d. In 1990, his employment was interrupted with no reason;
employer-employee relationship; it is better determined using he was told to resume work in two months
the presence of control and certain economic parameters. e. After two months, he reported back to work
o For example, even if one is given the designation of Branch f. Despite being employed for 18 years, Jesus was
Manager, the title alone does not make him an employee; dismissed on Jan. 1, 2002 without lawful cause
an employer must have control over his work, among others. g. Reason of mgt.: company not doing well financially; he
- Note that in proving control, one only needs to prove the will be called back to work only if they need his services
existence of such power of control and not necessarily its h. Jesus waited for a year; SEIRI never called
exercise. Stated differently, it only needs to be shown that the i. Hence, complaint
employer has the power of control; there is no need to cite a 5. SEIRI’s allegations:
specific instance of the exercise of the said power of control. a. They never hired Jesus
- The Four-fold Test is regarded as the conventional or the b. They incorporated only in 1986 (hence, they could not
traditional test employed by the courts in determining the have hired Jesus in 1984)
existence of an employer-employee relationship. c. Jesus worked for SEIRI’s FURNITURE SUPPLIERS
d. Their business operations were suspended from last
Two-tiered Approach: The Economic Dependence Test quarter of 1989 to August 1992
(Azucena, Art. 82) e. Jesus wasn’t in the list of employees submitted to the SSS
- The constant use of the Four-fold Test notwithstanding, the 6. Jesus’ evidence: (used by LA, examined by the SC)
Court recognized in Sevilla v. CA that there it is not the only a. Affidavits executed by 5 employees of SEIRI, attesting
test available, when it took cognizance of the existing that Jesus was their co-worker (worked for SEIRI for
conditions between parties, apart from determining whether almost 20 years), that they are under the employ of Estan
there was the power of control present. Eslao Agbay, the one directly paying them and holding
- It held that there are times when the control test alone would absolute control of all aspects of employment
not be sufficient and that a two-tiered approach is more 7. SEIRI’s evidence (examined by the SC)
appropriate. a. Employment Reports to SSS – Jesus not included in list of
- The two-tiered approach involved two points of analysis: employees
o Control test, and b. Certifications of Mayol and Apondar (Suppliers)
o The underlying economic realities of the activity or i. Mayol: Jesus is a rattan factory worker and he was
purported relationship; whether the employee was working for me as a rattan pole sizing/classifier from
dependent on the alleged employer for his continued 1997 to 1998, and again in 1999 as sizing machine
employment in that line of business operator; services are not regular
- The Economic Dependence Test has been employed in ii. Apondar: Jesus was working for me but was never
several past decision of the Court. regular
o An early use of such an approach was done in the case of c. Payroll sheets – Jesus not included
Sunripe Coconut Products v. CIR in 1949 d. Affidavit of company treasurer – SEIRI started business in
o However, there have also been cases in which the Court 1986, purely on export trading; operations ceased in
rejected its use, as it did in the case of Investment Planning 1989, then resumed in 1992 and undertook only little of
v. SSS in 1967 and also in SSS v. CA in 1969. manufacturing; company never hired any workers for
o Now, the Court has once again adopted its use in Sevilla v. varnishing and pole sizing because it bought the same
CA (1988). from various suppliers; SEIRI never hired Jesus
e. Affidavit of Vicente, brother of Jesus
South East International Rattan, Inc. v. JJ Coming i. Jesus worked for Mayol as a round core maker in 1982
FACTS: to 1986
1. South East International Rattan, Inc. (SEIRI) is a domestic ii. Thereafter, they worked at Okay Okay Yard on a
corporation engaged in business of manufacturing and “pakiao” basis
exporting furniture to various countries. iii. In 1989, they worked for Eleuterio Agbay then
2. Estanislao Agbay → President of SEIRI returned to Okay Okay yard in 1991, again on
3. Jesus Coming → filed complaint for illegal dismissal “pakiao” basis
4. Jesus allegations: iv. In 1993, they joined Dodoy Luna as classifier
a. He was hired by SEIRI as Sizing Machine Operator on v. In 1996, Jesus rested
March 17, 1984 vi. In 1997, Jesus replaced Vicente as classifier in Rattan
b. Worked from 8 am to 5 pm Traders owned by Mayol; Jesus left at the end of the
c. Initially, his compensation was on “pakiao” basis but in year
1984, it was fixed at P150 per day


vii. In 1999, Jesus was taken back by Mayol as sizing 2. WON dismissal was illegal
machine operator; work was off and on basis, not
regular HELD: YES and YES
viii. Currently they are working for Apondar, supplier of 1. YES, ER-EE relationship exists
SEIRI, but also on “pakiao” basis; Jesus was working - Four-fold test to ascertain existence of an ER-EE relationship:
at his pleasure (1) Selection and engagement of employee
8. LA → Jesus is a regular employee of SEIRI; termination illegal (2) Payment of wages
a. Jesus was performing work that is usually necessary and (3) Power of dismissal
desirable to the rattan furniture business (4) Power to control or “control test”
b. SEIRI’s failure to include Jesus in report to SSS is not - Substantial evidence is sufficient → SC gave more weight to
conclusive proof that Jesus is not their employee evidence presented by Jesus
c. Did not give weight to Vicente’s affidavit/statement that - The fact that worker was not reported as an employee to SSS is
Jesus is not SEIRI’s employee, but that of Faustino not conclusive proof of absence of ER-EE relationship.
Apondar Otherwise, employer would be rewarded for his failure to
d. Not convinced that Faustino Apondar is an independent perform his obligation [Tan v. Lagrama]
contractor who has a contractual relationship with SEIRI - Absence of Jesus’ name on payroll does not negate existence
9. NLRC → reversed. of ER-EE relationship
a. Jesus could not have been hired in 1984; SEIRI was - For a payroll to be utilized to disprove the employment of a
incorporated in 1986 and was engaged purely on buying person, it must contain a true and complete list of the employee.
and exporting hence no manufacturing employees were - Payrolls do not cover the entire 18 year period
hired - Certification by Mayol and Apondar: Jesus worked for Mayol in
b. Jesus failed to present a single payslip, voucher, or a 1997, 1998, and 1999 but was never regular; Jesus worked for
copy of company payroll showing that he rendered Apondar since 1999 as sideline and was also never regular →
service these do not negate Jesus’ regular employment with SEIRI
c. Jesus does not appear in report to SSS, and payrolls - In effect, petitioners suggest that respondent was employed by
d. Gave weight to certifications of Mayol and Apondar, both SEIRI’s suppliers, Mayol and Apondar but no competent proof
suppliers of finished Rattan furniture, that Jesus first was presented as to the latter’s status as independent
worked with Allan Mayol and later with Faustino Apondar; contractors.
and affidavit of Vicente (detailed and forthright) - No competent proof that Mayol and Apondar were
10. CA → reinstated LA’s ruling; there is ER-EE relationship; independent contractors with contractual relationship with SEIRI
termination illegal - Petitioners admitted that 5 affiants were their former
a. Gave more credence to 5 employees of SEIRI employees who were “disgruntled workers of SEIRI” with an axe
b. Payrolls were only from 1999 to 2000 and SSS to grind, but when the CA reversed the NLRC ruling, they
employment report, not the entire 18 years when Jesus changed their theory by denying the employment relationship
claimed to have worked for SEIRI with the 5
c. Names of 5 affiants likewise do not appear in the - Their admission that the 5 were former employees is binding
aforesaid documents apparent that SEIRI willfully upon them
retained a portion of the payroll - They claim that Jesus was the employee of suppliers Mayol and
d. “Control test” satisfied Apondar, but did not submit proof that Mayol and Apondar
i. Jesus was required to work within company premises were independent contractors
ii. Obliged to report every day of the week; tasked to - SC: SEIRI failed to discharge the burden of proving their
perform the same job affirmative allegation
iii. Working for definite hours of work, from 8 am to 5 pm - No showing that 5 affiants were motivated by malice, bad faith,
iv. Mode of payment was under the discretion of SEIRI; and ill-motive in supporting Jesus
initially pakiao basis, then on daily basis - In any controversy between a laborer and his master, DOUBTS
v. SEIRI implemented company rules and regulations reasonably arising from evidence are resolved in favor of the
vi. President of SEIRI directly paid Jesus’ salaries and laborer
controlled all aspects of his employment - Jesus enjoys the right to security of tenure under Art. 279 LC
vii. Jesus rendered work necessary and desirable in the and may only be dismissed for a just or authorized cause,
business of SEIRI otherwise the dismissal becomes illegal
11. MR denied 2. YES, dismissal was illegal
- Existence of ER-EE having been established, termination was
ISSUE/S: illegal as it was done with no just cause
1. WON ER-EE relationship exists


- Entitled to reinstatement without loss of seniority rights and 9. Cesar raised the defense that Wilmer was not his employee
other privileges; backwages; if reinstatement not possible, but only a partner in an informal partnership (under Art.
separation pay as an alternative 1767) for his daughter’s album
a. Since they agreed to contribute money, property or
Cesar C. Lirio doing business as Celkor Ad Sonicmix v. Wilmer D. industry to a common fund with the intention of dividing
Genovia profits among themselves
FACTS: b. Cesar had no control over the time and manner by which
1. Aug. 15, 2001: Wilmer hired as a studio manager in Cesar’s Wilmer composed or arranged the songs
studio (Celkor Ad Sonicmix Recording Studio) 10. LA → ER-EE Relationship exists and there was illegal
a. His task is to manage and operate Celkor and to promote dismissal. Damages + commission granted
the studio’s services. a. Cesar’s denial of the relationship cannot overcome
b. Salary is P7,000 monthly with a commission of P100/hr (as Wilmer’s positive assertion and documentary evidence
recording technician) whenever a client is using the studio proving Cesar hired Wilmer
c. Reports to work from 9 AM – 6 PM, Monday to Friday. He 11. NLRC → LA reversed. No ER-EE relationship
also works half-days on Saturday a. Wilmer failed to prove his employment tale with
d. Employees render overtime work, but Cesar never kept a substantial evidence
daily time record to avoid paying overtime pay b. Wilmer was able to prove he received gross pay less
2. Cesar came to him with an offer for him to help him produce deduction and net pay, with corresponding Certification
an album for his 15-year old daughter, Celine, as the of Correctness
composer. In exchange, Cesar promised him that he will draft 12. CA → reinstated the LA decision but removed award of
a contract regarding his compensation as the composer of damages and commission
the album. Cesar clarified however that it should be done in
his spare time as Wilmer should focus on his actual job. ISSUE/S:
Wilmer started working on the album, afterward. 1. WON there was a partnership agreement (as Cesar alleges)
a. Add’l services would be to compose and arrange musical 2. WON there existed an ER-EE relationship
scores only
b. Technical aspect (digital editing, mixing, sound HELD:
engineering) would be done in his capacity as studio 1. NO, no partnership agreement
manager, for which he was paid on a monthly basis - Wilmer presented documentary evidence; Cesar merely
c. Wilmer began working on the album alleged without proof by way of any document their alleged
3. Sept. 2001: Wilmer reminded Cesar of the compensation, partnership agreement
and Cesar assured him of due compensation - CA agreed with LA that Cesar failed to substantiate his claim
4. Mid-Nov. 2001: Wilmer finished the compositions and that he had a partnership with Wilmer
musical arrangements (lead and back-up vocals in 10 songs - LA: “Respondent Lirio’s so-called existence of a partnership
already recorded and completed) agreement was not substantiated and his assertion thereto, in
5. Dec. 2001-Jan. 2002: Wilmer worked as studio manager the face of complainant’s evidence, constitute but a self-
(digital editing, mixing, sound engineering) serving assertion, without probative value, a mere invention to
6. While he was still not yet compensated, the album was justify the illegal dismissal.”
completed and received airplay in the radio. (Feb. 2002) - SC: Based on LA’s finding and the doctrine that “if doubt
7. Feb. 26, 2002: When Wilmer tried to claim his compensation exists between the evidence presented by the employer and
as was promised, Cesar refused (bec Wilmer was a nobody the employee, the scales of justice must be tilted in favor of
who had proven nothing yet, and that he should be thankful the latter,” the CA reversed the NLRC resolution; despite the
he was given a job to feed his family) and told him that he CA being remiss in not stating it in definite terms, it is implied
should be satisfied with a certain amount (20% of net profit) that the CA found that NLRC gravely abused its discretion in
which would also be deducted from the salary he was finding that no ER-EE relationship existed
receiving. Wilmer refused and insisted on the original - SC: Cesar failed to prove that the relationship was a
agreement. partnership; the payroll showed deductions from wages for
8. Cesar refused and instead verbally terminated on Mar. 14, absence from work, w/c negates Cesar’s claim that the wages
2002, Wilmer from his work. Wilmer filed for illegal dismissal paid were advances for work in the partnership
and prayed for reinstatement or in lieu thereof, separation 2. YES, there was an ER-EE relationship
pay, and back wages, presented the Payroll (certified correct - Before a case for illegal dismissal can prosper, it must first be
by Cesar) established that an ER-EE relationship existed
- Elements to determine employment relationship:
1. The selection and engagement of the employee;


2. The payment of wages; distributes winnings after deducting arriba (commission
3. The power of dismissal; and for cockpit), earns P2K per week (P8K per month)
4. The employer’s power to control the employee’s b. Sentenciador (Dubrick): oversees proper gaffing of
conduct (most impt element) – not only as to the fighting cocks, determines their physical condition and
result, but also as to the means and methods capabilities to continue the fight, declares the result,
- No particular form of evidence is required to prove the earns P3.5K per week (P14K per month)
existence of an ER-EE relationship; any competent and relevant c. Work every T, W, S, Su, 1PM to 12MN; both issued
evidence will suffice employees’ identification cards
- Documentary evidence of Wilmer: 1) “Payroll” document, 2. Nov. 14, 2003: Both denied entry, informed of the
certified correct by Cesar, showing Wilmer receiving monthly termination of their services
salary of P7K, and 2) Copies of petty cash vouchers showing 3. Marticio and Dubrick filed a complaint for illegal dismissal
amounts received and signed for in payrolls 4. LA: They were regular employees bec they performed work
- Applying the four-fold test, an ER-EE relationship existed necessary and indispensable to usual trade or business of
between Cesar and Wilmer: respondents; they were illegally dismissed
• Selection: Cesar hired Wilmer as the Studio Manager 5. NLRC: No employer-employee relationship bec RESPs have
• Wages: Wilmer presented documentation (payroll) that he no part in selection & engagement of PETs, no separate
was receiving P7,000 monthly salary individual contract
• Dismissal: Cesar exercised this when he illegally and 6. CA: Referees and bet-takers in a cockfight need that kind of
verbally dismissed Wilmer after their argument over expertise; they are akin to independent contractors; no
Wilmer’s compensation for his work on the album. employer-employee relationship
• Control: While there was no exact instance where it was
exercised, what is only needed to be proven is that such ISSUE/S:
power of control existed. In this case, Cesar admitted in his WON an employer-employee relationship exists
position paper that he agreed to help Wilmer learn how to
use the recording equipment in the studio. The Court HELD: NO; No illegal dismissal
notes that this is indicative of Cesar’s power of control. - It is evident that petitioners are NOT employees of
- SC: Evidence shows existence of ER-EE relationship, and in respondents, since their relationship fails to pass muster the
termination cases, the burden is upon the employer to show by four-fold test of employment:
substantial evidence that the termination was for lawful cause • The selection and engagement of the employee;
and validly made • The payment of wages
- (Art. 277(b) LC) puts the burden on the employer, whether • The power of dismissal
employer admits dismissal or not; for dismissal to be valid: • The power to control the employee’s conduct, which is the
a. The dismissal must be for a valid cause; and most important element
b. The employee must be afforded due process - SC: As found by both NLRC and CA:
1. The notice to apprise the employee of the particular acts • Respondents had no part in petitioners’ selection and
or omissions for which his dismissal is sought, which is the management
equivalent of a charge; and • Petitioners’ compensation was paid out of the arriba (which is
2. The notice informing the employee of his dismissal, to be a percentage deducted from the total bets), not by
issued after the employee has been given reasonable petitioners
opportunity to answer and to be heard on his defense • (SC: no power to do so)
- While Wilmer was able to present documentary evidence to • Petitioners performed their functions as masiador and
support his allegation, Cesar only has an unsubstantiated claim sentenciador free from the direction and control of
of having an informal partnership. Weighed against Wilmer’s respondents
evidence, Cesar’s defense is untenable. - Petitioners relied mainly on their “expertise that is
characteristic of the cockfight gambling,” and were never given
See also: Marticio Semblante and Dubrick Pilar v. CA, Gallera de by respondents any tool needed for the performance of their
Mandaue work
FACTS: - Respondents, not being their employers, could never have
1. Marticio Semblante and Dubrick Pilar assert they were hired dismissed, legally or illegally, since they were without power or
by spouses Vicente and Maria Luisa Loot, owners of Gallera prerogative to do so in the first place
de Mandaue (cockpit), as the official masiador and
sentenciador, respectively, in 1993
a. Masiador (Marticio): calls and takes bets from gamecock b. 1.1 Control test v. Economic reality test
owners and other bettors, orders start of cockfight,


Orozco v. Fifth Division 2. WON there existed an ER-EE relationship between the
FACTS: parties (W a newspaper columnist is an employee of the
1. Mar. 1990: PDI engaged the services of Wilhelmina Orozco newspaper w/c publishes the column)
to write a weekly column for its Lifestyle section
a. She initially received a compensation of P250 per HELD:
published column but this was eventually raised to P300 1. MOOT, PDI complied with the posting of the bond
b. She submits her articles weekly, except during her six- - While the posting of a cash or surety bond is jurisdictional and
month stint in NYC where she still tried to send articles is a condition sine qua non to the perfection of an appeal,
via mail. there are recognized exceptions
2. Nov. 7, 1992: Wilhelmina’s column appeared in PDI for the - While the requirements must be strictly followed, the law does
last time admit of exceptions; technicality should not be allowed to
a. Lita, Wilhelmina’s editor, informed her that her articles stand in the way of equitably and completely resolving the
would no longer be published (for no reason at all) as she rights and obligations of the parties
was advised by the PDI EIC Letty Magsanoc that she 2. NO; no illegal dismissal
would no longer like to publish Wilhelmina’s work. - Existence of an ER-EE relationship is essentially a question of
b. Lita advised her to talk to Letty herself. fact, and factual findings of quasi-judicial agencies like the NLRC
c. Letty informed her that it was PDI Chaiperson Eugenia are accorded respect and finality if supported by substantial
Apostol who wanted to stop the publication of her evidence
column as there were too many Lifestyle columnists - CA’s findings in conflict with the LA and NLRC, so SC must
already and that her work failed to meet the standards of make its own examination
PDI. The column was terminated - The four-fold test:
d. PDI claims that in June 1991, Letty met with the Lifestyle 1. The selection and engagement of the employee;
section editor to discuss how to improve it, and they 2. The payment of wages;
agreed to cut down the number of columnists by keeping 3. The power of dismissal;
only those whose columns were well-written (Wilhelmina’s 4. The employer’s power to control the employee’s conduct
column failed to improve, continued to be superficially (most impt)
and poorly written, failed to meet standards) - Applying the four-fold test, there is no ER-EE relationship that
3. Wilhelmina filed for illegal dismissal, backwages and moral existed between the parties (test: whether the employee, not
damages against the PDI before the NLRC only as to the work done, but also as to the means and methods
4. LA in favor of Wilhelmina→ she was an employee, there was by which the same is accomplished
illegal dismissal • Absent is the most crucial element: the power of control
a. PDI had control over how Wilhelmina accomplished her • While Wilhelmina cites certain limitations that PDI imposes
work upon her work (e.g., when to submit, the length of the
b. This power of control (not verbal or oral) is evidenced by article, etc.), these are NOT manifestations of the power of
the fact that PDI had the prerogative to reject any article control but rather inherent limitations in the newspaper
submitted (may choose not publish Wilhelmina’s work on business (inherent conditions as to time, space, and
the newspaper) discipline)
5. NLRC → upheld the LA decision (PDI failed to perfect its • Apart from these limitations, Wilhelmina was free to choose
appeal under Art. 223 LC, due to non-filing of cash or surety what write and how to apply her creativity.
bond; PDI exercised control over Wilhelmina’s work) • Wilhelmina has not shown that PDI dictated how she was to
6. CA → reversed both the LA and NLRC; facts failed to write or produce her articles each week (she was free to
measure up to the control test, no illegal dismissal write her column in the manner and style accustomed and
a. PDI never considered Wilhelmina as a regular employee, to use whatever search method she deemed suitable
which she admitted • As a columnist, Wilhelmina was very much different from a
b. There was no employment contract between the two regular beat reporter, whose work is closely limited and
c. Wilhelmina did not have to report regularly for work, as monitored by the employer, PDI.
evidenced by her 6-month stay in NYC, without PDI’s - Court has also used the economic reality test – the
approval economic realities prevailing within the activity or between the
parties are examined, taking into consideration the totality of
ISSUE/S: circumstances surrounding the true nature of the relationship
1. WON the failure to post a cash or surety bond, in violation o Wilhelmina’s main occupation is not as a columnist for PDI
of Art. 223 LC, should have rendered a dismissal of the case but as a women’s right advocate working in various
women’s organizations (she also contributes articles to


other publications) à Not true that she was dependent on Evidence: Identification Card, Vouchers, SSS Registration,
PDI for her continued employment in PDI’s line of business Memorandum (Azucena, Art. 82)
o SC: Inevitable conclusion is that Wilhelmina was not an - In administrative and quasi-judicial proceedings, substantial
employee, but an independent contractor engaged to do evidence is enough basis for there to be a judgment that an
independent work employer-employee relationship exists.
- SC: No inflexible rule to determine if a person is an employee - Any competent and relevant evidence to prove the existence
or an independent contractor; characterization of the of the relationship may be admitted; there is no particular
relationship must be based on the particular circumstances on form of evidence required.
each case; here, there are several factors (but the right to - In this regard, an identification card (ID) is acceptable as
control is the dominant factor in determining whether one evidence. It identifies the holder thereof as a bona fide
is an employee or an independent contractor: employee of the firm that issued it.
o In our jurisdiction, the Court has held that an independent - Appointment letters or employment contracts, payrolls,
contractor is one who carries on a distinct and organization charts, personnel lists, as well as the testimony of
independent business and undertakes to perform the job, the co-employees are also admissible as evidence of the
work, or service on one’s own account and under one’s relationship alleged.
own responsibility according to one’s manner and method, - Also, a claim of employer-employee relationship, which the
free from the control and direction of the principal in all employer does not deny, is deemed admitted.
matters connected; - Absence in the payroll, however, does NOT disprove the
o Sonza v. ABS-CBN: Sonza hired by ABS due to his unique existence of a relationship, as the Court recognizes that the
skills not possessed by ordinary employees, which was employer may easily erase the name of the employee from
indicative, though not conclusive, of an independent such a list. For it to be utilized to disprove the existence of the
contractual relationship alleged relationship, the payroll must contain a true and
o Sonza: As to the payment of wages, Sonza’s talent fees complete list of employees.
were the result of negotiations between him and ABS.
o Sonza: As to the power of dismissal, Court found that the Mode of Compensation: Not a Test of Employment Status
terms of Sonza’s engagement were dictated by the (Azucena, Art 82)
contract he entered into with ABS-CBN and the same - The mode of how an employee is compensated is not a
contract provided that either party may terminate the definitive test to determine the presence or absence of an
contract in case of breach by the other employer-employee relationship.
o All the foregoing are not determinative of an employer- o For example, while an employee is paid on a ‘per piece
employee relationship; power of control most impt produced’ basis, it may very well be that the status and
- Re power of control, Court found that in performing his work, nature of the individual is a regular employee.
Sonza only needed his skills and talent – how he delivered his
lines, appeared on TV, and sounded on radio were outside ABS- Relationship Determined by Law and Not by Contract (Azucena,
CBN’s control Art. 82)
- Instant case presents a parallel to Sonza - The law itself determines whether there is an employer-
o Wilhelmina was engaged as a columnist for her talent, skill, employee relationship.
experience, and unique viewpoint - This cannot be negated by the fact that the management or
o How she used her qualifications in writing her column was employment contract is denominated differently.
not subject to dictation by PDI o For example, while the contract is entitled “Contract for
o Respondent PDI was not involved in the actual Lease of Services,” if its contents depict an employer-
performance that produced the finished product employee relationship, such fact will prevail over the name
o PDI only reserved the right to shorten Wilhelmina’s column of the contract.
- Also applying the economic reality/dependency test, PDI is not
the only media outfit for which she writes. She has other Bernard A. Tenazas, et al v. VR Villegas Taxi Transport
advocacies and has also written several articles for other FACTS:
publications. Wilhelmina, therefore, is not economically 1. Bernard (Bernie) Tenazas, Jaime Francisco, and Isidro
dependent on PDI. Endraca filed complaint for illegal dismissal against R.
- PDI did not supply Wilhelmina with the tootls and Villegas Taxi Transport and/or Romualdo and Andy
instrumentalities 2. Bernie’s allegations:
PDI was not employer, it cannot be held guilty of illegal dismissal - Taxi unit assigned to him was sideswiped by another
vehicle, causing dent on left fender
b. 1.2. Evidence of Employee Status - Cost of repair: P500


- Upon reporting incident to employers à scolded; told -‐ Since complaint is one of actual dismissal, complainants
to leave as he was fired; was threatened with physical must present overt acts such as formal investigations,
harm should he return to company’s premises issuance of show cause memos or termination memos
- Reported for work the next day but was told he cannot 8. NLRC: REVERSED
drive anymore because he was fired -‐ Additional pieces of evidence sufficed to establish ER-EE
3. Jaime’s allegations: relationship and their illegal dismissal
- His dismissal was due to employer’s suspicion that he -‐ Possible that the Motion to Admit Additional Evidence
was organizing a labor union did not reached LA because decision was drafted even
- He was instantaneously fired, without benefit of before submission of evidence
procedural due process 9. Employers’ MR à denied
4. Isidro’s allegations: 10. CA: AFFIRMED with MODIFICATION
- Dismissal was because he fell short on the required -‐ Agreed that Bernie and Isidro were employees, but ruled
boundary for his taxi unit otherwise in the case of Jaime for failing to establish ER-
- This was because he brought the unit to repair shop EE relationship
and paid for P700 for replacement parts -‐ Although substantial evidence is not a function of
- Informed employers quantity but rather quality, peculiar environmental
- His license was then confiscated and was told to settle circumstances if the case demand that something more
deficiency before license will be returned should have been proffered; such as: inclusion in
- He was no longer allowed to drive company payroll
5. Employers’ allegations: -‐ Bernie and Isidro could not have abandoned
- Admitted that Bernie and Isidro were its employees employment à complaint filed soon after alleged
o Bernie – regular driver dismissal; hence negates abandonment
o Isidro – spare driver -‐ Separation pay cannot be awarded since employers
o Denied that Jaime was an employee; he never drove offered reinstatement
any taxi unit
- Bernie was never terminated ISSUE/S:
o Taxi unit assigned to him was due for repair 1. WON complainants were illegally dismissed
o He was advised to wait for further notice; when the 2. WON separation pay should be awarded to Bernie and
unit was ready for release, Bernie failed to report for Isidro
work
- Isidro, as a spare driver, was allowed to drive a taxi unit HELD:
whenever their regular driver is unavailable 1. Only Bernie and Isidro were illegally dismissed; Jaime failed
o However, he stopped reporting for work to prove existence of ER-EE relationship
o He was never terminated -‐ In labor cases, quantum of proof necessary is
o Employers expressed willingness to accommodate SUBSTANTIAL EVIDENCE à such amount of
him should he wish to work as a spare driver relevant evidence which a reasonable mind might
6. Petitioners discovered new evidence that will substantiate accept as adequate to justify a conclusion
their allegations à filed Motion to Admit Additional -‐ Jaimie failed to present any proof substantial enough
Evidence to establish ER-EE relationship
-‐ Joint affidavit of petitioners o Failed to present documentary evidence:
-‐ Affidavit of good faith of Aloney, co-worker attendance logbook, payroll, SSS, etc.
-‐ Pictures of petitioners wearing company shirts o Could have presented testimonial evidence showing
-‐ Bernie’s record of SSS contributions respondents’ exercise of control over the means and
7. LA: No illegal dismissal methods by which he performs work
-‐ As regards Jaime: o [another taxi company claimed to be his employer;
o Employers denied existence of ER-EE relationship— respondents herein denied his employment; hence,
burden of proof shifts to him to prove existence imperative that he present more evidence]
o Failed to adduce evidence such as: employment -‐ Opulencia Ice Plant & Storage v. NLRC: no particular
contract, company ID, SSS, and the like form of evidence required to prove existence of ER-EE
-‐ As regards Isidro: relationship. Any competent and relevant evidence
o Only a spare driver (so… employment not regular) may be admitted
o Offered him reinstatement but he refused o Ratio: if only documentary evidence would be
-‐ As regards Bernie: required, no scheming employer would ever be
o He was not fired but failed to report for work brought before the bar of justice, as no employer


would wish to come out with any trace of illegality o That Bitoy was not their employee, and there was no
he has authored considering that it should take illegal dismissal
much weightier proof to invalidate a written o Evidence: Agreement with Milmar Hauling Services
instrument (the contracted hauler) and copies of
2. No. They should be reinstated, as strained relations did not acknowledgment receipts evidencing payment to
exist Javier – “daily manpower (pakyaw/piece rate pay)”
-‐ An illegally dismissed employee is entitled to two 4. LA: Dismissed, Bitoy failed to present proof he was a regular
reliefs: (1) backwages and (2) reinstatement employee of Fly Ace
-‐ When reinstatement no longer feasible because of - He has no ID nor any document showing he received
strained relations, separation pay is granted benefits accorded to regular employees
-‐ Doctrine of strained relations: reinstatement would - Bitoy was contracted on “pakiao” basis because Fly
result to an atmosphere of antipathy and antagonism Ace has a regular hauler to deliver its products
would be generated as to adversely affect efficiency - Claim for underpayment of salaries unfounded; payroll
and productivity of employee concerns presented had Bitoy’s signature, which, despite not
-‐ Strained relations must be demonstrated as a fact, being uniform, appeared to be his true signature
adequately supported by evidence 5. NLRC: Favored Bitoy
- LA wrong because it immediately concluded Bitoy as
b. 2. Burden of proving employer-employee relationship vis-à-vis not a regular employee simply because he failed to
burden of proving illegality of dismissal present proof
- Existence of ER-EE: Employee has the burden of proof - That a pakyaw-basis arrangement did not preclude the
- Illegal dismissal: Employer has the burden of proof existence of employer-employee relationship because
payment is a method of compensation, it does not
Bitoy Javier v. Fly Ace Corporation define the essence of the relation – “It is a mere
FACTS: method of computing compensation, not a basis for
1. Since 2007, Danilo ‘Bitoy’ Javier was an employee of Fly Ace determining the existence or absence of an employer-
- Performed various tasks, such as cleaning and arranging employee relationship.”
the canned items before their delivery, except in - Just because the work done was not directly related to
instances when he would be ordered to accompany the the trade or business or the work was considered as
company's delivery vehicles, as pahinante “extra,” it does not follow that Bitoy is a job contractor,
- Reported for work M to S from 7AM to 5PM rather than an employee
- He wasn’t issued an ID and payslips - There was sufficient basis on the existence of an ER-EE
2. May 6, 2008: He was no longer allowed to enter the relationship
premises, upon instruction of Mr. Ong, his superior o There was a reasonable connection between the
- As he was begging the security guard to let him enter, activity performed (as pahinante) in relation to the
he saw Mr. Ong, whom he approached and asked why business or trade of the employer (importation, sales,
he was being barred from entering delivery of groceries)
- “Tanungin mo anak mo” – Mr. Ong o Not an independent contractor because he could not
- Bitoy discovered that Mr. Ong had been courting his exercise judgment in the delivery of products, he was
daughter Annalyn; that Annalyn tried to talk to Mr. Ong only a “helper”
and convince him to spare Bitoy from trouble, but he - Bitoy is entitled to security of tenure; Fly Ace did not
refused; that Mr. Ong then fired Bitoy present proof for a valid cause of termination, so it is
3. May 23, 2008: Bitoy filed a complaint with the NLRC for liable for illegal dismissal, backwages, and separation
underpayment of salaries and other labor standard benefits pay
- His evidence: affidavit of Bengie Valenzuela, who 6. CA: Annulled the NLRC, reinstated the LA
alleged that Bitoy was a stevedore or pahinante of Fly - In an illegal dismissal case, the onus probandi rests on
Ace from Sept. 2007 to Jan. 2008 the employer; however, before an illegal dismissal case
- Fly Ace said it was in the business of importation and can prosper, an ER-EE relationship must first be
sales of groceries established
o That Bitoy was contracted by Mr. Ong as extra helper - Incumbent upon Bitoy to prove he is an employee, but
on a pakyaw basis for 5-6 times a month, whenever he failed to discharge this burden
the vehicle of its contracted hauler, Milmar Hauling - Bitoy’s failure to present salary vouchers, playslips or
Services, was unavailable; other pieces of evidence to bolster his contention
o Rate was P300 (increased to P325) - The facts alleged by Bitoy did NOT pass the “control
o That on April 30, they no longer needed his services test”


o He contracted work outside the premises he was indeed an employee against which he claims
o He was not required to observe definite hours illegal dismissal
o He was not required to report daily - In sum, the rule of thumb remains: the onus probandi
o He was free to accept work elsewhere falls on petitioner to establish or substantiate such
7. Appeal to the SC claim by the requisite quantum of evidence.32
"Whoever claims entitlement to the benefits provided
ISSUE/S: by law should establish his or her right thereto . . . ." –
1. WON Bitoy is a regular employee Bitoy failed to adduce substantial evidence as basis for
2. WON he is entitled to his monetary claims the grant of relief
- All Bitoy presented were self-serving statements
HELD: showing his activities as employee, but failed to pass
1. NO, he is not a regular employee; affirmed CA the substantiality requirement (as concluded also by the
- Bitoy: Fly Ace has nothing to substantiate that he was LA and the CA), from which the SC sees no reason to
engaged on a pakyaw basis; and assuming he was hird depart
on pakyaw basis, it does not preclude his regular o Affidavit of Bengie Valenzuela that Bitoy presented
employment; acknowledgement receipts with his was insufficient because all it provided was that he
signature do not show true nature of employment would frequently see Bitoy at the workplace where he
(relied on Chavez v. NLRC) (Bengie) was a stevedore
o His tasks as pahinante are related to Fly Air’s business o SC: Mere presence falls short of proving employment
o He was subject to the control and supervision of the - SC: The burden is on Bitoy to pass the control test
company (reported M to S, 7AM to 5PM) o Bitoy was not able to persuade the Court that the
o List of deliverable goods prepared by Fly Ace – Bitoy elements exist (no competent proof that he was a
was subject to compliance with company rules regular employee, that Fly Ace paid wages as an
o He was illegally dismissed by Fly Ace employee, that Fly Ace could dictate what his
- Fly Ace: Bitoy had no substantial evidence to prove ER- conduct wuld be while at work)
EE relationship - SC: Fly Ace does not dispute having contracted Javier
o Despite having Milmar Hauling under service and paid him on a "per trip" rate as a stevedore, albeit
contract, they contracted Bitoy as an extra helper or on a pakyaw basis.
pahinante, on a mere “per trip basis” o They presented documentary proof –
o Bitoy and the company driver would have the vehicle acknowledgment receipts
and products in their custody, and when they left 2. Moot. No need to resolve the second issue.
company premises, they use their own means,
method, best judgment and discretion (i.e., no 3. Obiter: "payment by the piece is just a method of
control by Fly Ace) compensation and does not define the essence of
o Claims of employment by Bitoy are BASELESS, and the relation."
nothing was presented to substantiate this - Payment on a piece-rate basis does not negate regular
o Lopez v. Bodega City: In an illegal dismissal case, the employment. "The term 'wage' is broadly defined in
burden of proof is upon the complainant w ho claims Article 97 of the Labor Code as remuneration or
to be an employee. It is essential that an employer- earnings, capable of being expressed in terms of
employee relationship be proved by substantial money whether fixed or ascertained on a time, task,
evidence piece or commission basis
o Bitoy merely offers factual assertions, unsupported by - Payment by the piece is just a method of compensation
proof and does not define the essence of the relations
o Bitoy was not subject to Fly Ace’s control, he
performed his work outside the premises, he was not Disposition: Petition is DENIED.
made to report at regular work hours, he was free to
leave any time b. 3. Piercing the corporate veil
- SC: Evoked equity jurisdiction to examine the factual
issues Timoteo H. Sarona v. NLRC
- The LA and CA found that Bitoy’s claim of employment FACTS:
is wanting and deficient; the Court is constrained to 1. Timoteo – hired by Sceptre as security guard in 1976
agree 2. 2003 – he was asked by Sceptre’s Operation Manager to
- Bitoy needs to show by substantial evidence (Sec. submit resignation letter as the same was required for
10, Rule VII, New Rules of Procedure of the NLRC) that applying for a position at Royale


-‐ was also asked to fill out Royale’s employment 14. CA: refused to pierce; evidence not sufficient
application form -‐ No common ownership of both Royale and Sceptre
3. After a while, he was assigned at Highlight Metal Craft, Inc. and Roso or his heirs has no control or complete
from July 29, 2003 to Aug. 8, 2003 domination of Royale’s business
4. Thereafter, he was transferred to Wide Wide World
Express, Inc. (WWWE) ISSUE/S:
5. While assigned in Highlight Metal, he used patches and 1. WON Royale’s corporate fiction should be pierced for the
agency clothes of Sceptre and it was only in WWWE that he purpose of compelling it to recognize Tim’s length of service
started using those of Royale with Sceptre and for holding it liable for the benefits that have
6. In September 2003, he was informed that his assignment at accrued to him arising fromhis employment with Sceptre
WWWE Inc. was withdrawn because Royale has been 2. WON his salary should be limited for 3 months
allegedly replaced by another security agency which he
later discovered to be untrue. HELD:
7. He was again assigned to Royale for a short period 1. Yes. Royale is a continuation or successor of Sceptre
8. He was informed by Security Officer of Royale that he -‐ Corporate veil may be pierced when the corporation is
would no longer be given any assignment per the just an alter ego of a person or another corporation.
instructions of AIDA SABALONES-TAN, general manager For reasons of public policy and in the interest of
of Sceptre justice, corporate veil will justifiably pierced only when
9. Tim filed complaint for Illegal Dismissal it becomes a shield for fraud, illegality or inequity
-‐ He prayed for the piercing of the veil of corporate committed against third persons
entity of Royale -‐ Doctrine applies in three basic areas:
-‐ It was using the very same office of Sceptre 1) Defeat of public convenience as when the
-‐ all officers and staff of Sceptre are now the same corporate fiction is used as a vehicle for evasion of
officers and staff of Royale an existing obligation
-‐ all properties of Sceptre are now being owned by 2) Fraud cases or when the corporate entity is used
Royale to justify a wrong, protect fraud, or defend a crime
-‐ Hence, his separation pay should be computed in 3) Alter ego cases where corporation is merely a
consideration of his tenure with Sceptre and Royale, farce since it is a mere alter ego, or where the
and not only for the 1 month he was employed by corporation is so organized and controlled and its
Royale affairs are so conducted as to make it an
10. Royale claimed that he abandoned his work instrumentality of another corporation
11. LA: Illegal Dismissal; immediate filing of complaint negated -‐ AIDA SABALONES exercised control and supervision
allegation of abandonment over the affairs of both SCEPTRE and ROYALE
-‐ Refused to pierce Royale’s corporate veil for purposes -‐ Roso assigned his license to operate Sceptre to Aida
of factoring Tim’s length of service with Sceptre in in 1999
computing his separation pay -‐ Thereafter, Aida caused the registration of the
o Corporate veil cannot be pierced absent clear and business name “Sceptre Security & Detective Agency”
convincing evidence that Sceptre an Royale share under her name with DTI
the same stockholders and incorporators and that -‐ In Royale, she had a hand in its management and
Sceptre has complete control and dominion over operation and possesses control and supervision of its
the finances and business affairs of Royale employees
o Sceptre is a single proprietorship; no separate -‐ Aida was the one who dismissed him → testament of
personality; estate of owner Roso SABALONES her control over Royale’s affairs
should have been impleaded -‐ It was clear from the manner in which Tim was
o Also, Roso does not appear in the Articles of transferred to Royale that they intended to deprive
Incorporation of Royale him of his security of tenure
12. NLRC: Affirmed LA that Tim was illegally dismissed o Resignation letter for Sceptre purportedly as a
(lowered award of backwages) requirement for continued employment
-‐ with respect to the refusal of LA to factor in his length o Was only employed with Royale for a short period
of service in Sceptre, NLRC did not reconsider and was subsequently dismissed
-‐ TIM should have appealed the LA decision and not -‐ Sceptre and Royale have the same plrincipal place of
seek a relief by merely fling a reply to Respondent’s business
appeal memorandum -‐ The two also share the same officers and employees
13. Tim elevated NLRC decision to CA


-‐ Tim was still using Sceptre uniform while he was may require the contractor or subcontractor to furnish a bond
employed by Royale equal to the cost of labor under contract, on condition that the
-‐ Tim cannot be deemed to have changed employers as bond will answer for the wages due the employees should the
Royale and Sceptre are one and the same. His contractor or subcontractor, as the case may be, fail to pay the
separation pay should be computed from the date he same.
was hired by Sceptre in April 1976 until the finality of
this decision
Art. 109 Solidary liability - The provisions of existing laws to the
2. 2. Royale liable for backwages which should be computed
contrary notwithstanding, every employer or indirect employer
from his dismissal on Oct. 1, 2003 until finality of this shall be held responsible with his contractor or subcontractor for
decision
any violation of any provision of this Code. For purposes of
determining the extent of their civil liability under this Chapter,
they shall be considered as direct employers.
c. Independent Contractor and Labor-only Contractor
3 PARTIES INVOLVED:
Art. 106 Contractor or subcontractor - Whenever an employer
1. Principal - any employer who puts out or farms out a job,
enters into a contract with another person for the performance service or work to a contractor/subcontractor.
of the former’s work, the employees of the contractor and of the
2. Contractor or subcontractor – any person or entity
latter’s subcontractor, if any, shall be paid in accordance with the
engaged in a legitimate contracting or subcontracting
provisions of this Code.
arrangement.
3. Contractual employee – one employed by a contractor to
In the event that the contractor or subcontractor fails to pay the perform or complete a job work or service pursuant to an
wages of his employees in accordance with this Code, the
arrangement between the latter and the principal.
employer shall be jointly and severally liable with his contractor
performed under the contract, in the same manner and extent
General rule: No employer-employee relationship between the
that he is liable to employees directly employed by him. principal and contractual employee.
The Secretary of Labor and Employment may, by appropriate

Exception: If the contracting arrangement is not legitimate –
regulations, restrict or prohibit the contracting-out of labor to
labor-only contracting or contravene public policy.
protect the rights of workers established under this Code. In so
In labor-only contracting, there is only a representative to recruit
prohibiting or restricting, he may make appropriate distinctions or place people to be employed, supervised and paid by
between labor-only contracting and job contracting as well as
another, who is the employer.
differentiations within these types of contracting and determine
who among the parties involved shall be considered the
Commitment of the contractor is not to do and deliver a job,
employer for purposes of this Code, to prevent any violation or work or service but merely to find and supple people.
circumvention of any provision of this Code.
Why prohibited: attempt to evade the obligations of an
employer.
There is "labor-only" contracting where the person supplying
workers to an employer does not have substantial capital or
ESSENTIAL ELEMENT:
investment in the form of tools, equipment, machineries, work 1. Arrangement is merely to recruit, supply or place workers to
premises, among others, and the workers recruited and placed
perform a job, work or service for a principal.
by such person are performing activities which are directly
related to the principal business of such employer. In such cases,
Confirming elements:
the person or intermediary shall be considered merely as an 2. Lack of substantial capital or investment and performance of
agent of the employer who shall be responsible to the workers in
activities directly related to the principal’s main business
the same manner and extent as if the latter were directly
employed by him.
3. Contractor does not exercise control over the performance of
the employees
Art. 107 Indirect employer – The provisions of the immediately
preceding article shall likewise apply to any person, partnership, “Substantial capital or investment” - refers to capital stocks and
association or corporation which, not being an employer, subscribed capitalization in the case of corporations, tools,
contracts with an independent contractor for the performance of equipment, implements machineries and work premises,
any work, task, job or project. actually and directly used by the contractor or subcontractor in
the performance or completion of the job, work or service
Art. 108 Posting of bond - An employer or indirect employer contracted out.


arrangement is covered by a written contract.
Law does not require BOTH substantial capital and investment in "(b) "Contractor or subcontractor" refers to any person or entity
the form of tools, equipment, machineries, etc. It is sufficient that engaged in a legitimate contracting or subcontracting arrangement as
substantial capital be proved. defined in paragraph (d) hereof.
"(c) "Contractual employee" includes one employed by a contractor or
- P3 million in paid-up capital stocks/shares for corporations,
subcontractor to perform or complete a job, work or service pursuant to
partnerships, or cooperatives.
an arrangement between the latter and a principal as defined in
- P3 million net worth for a single proprietorship. paragraph (d) hereof. The term excludes employees of the contractor or
subcontractor engaged to perform a job, work or service not within the
“Right to control” – refers to the right reserved to the person scope of the contract between the latter and a principal.
for whom the service of the contractual workers are performed, "(d) "Contracting" or "subcontracting" refers to an arrangement
to determine not only the end to be achieved but also the whereby a principal agrees to put out or farm out with a contractor or
manners and means to be used in reaching that end. subcontractor the performance or completion of a specific job, work or
service within a definite or predetermined period, regardless of whether
such job, work or service is to be performed or completed within or
D.O. No. 10, 1997 incorp. In Rule VIII-A, Bk. III, Omnibus
outside the premises of the principal as hereinafter qualified.
Rules.
"Subject to the provisions of Sections 6, 7 and 8 of this Rule, contracting
or subcontracting shall be legitimate if the following circumstances
ARTICLE I. There is hereby issued a new Rule implementing Articles 106
concur:
to 109 of Book III of the Labor Code, to be known as Rule VIII-A, Book III
"(i) The contractor or subcontractor carries on a distinct and
of the Implementing Rules, as follows:
independent business and undertakes to perform the job, work or
service on its own account and under its own responsibility, according to
Rule VIII-A
its own manner and method, and free from the control and direction of
Section 1. Guiding Principles. - This Rule is being issued in recognition of
the principal in all matters connected with the performance of the work
the following guiding principles:
except as to the results thereof;
(a) Contracting and subcontracting arrangements are expressly allowed
"(ii) The contractor or subcontractor has substantial capital or
by law, but may be subject to regulations consistent wit the promotion of
investment; and
employment, protection of workers' welfare and enhancement of
"(iii) The agreement between the principal and contractor or
industrial peace and rights of workers to self-organization and collective
subcontractor assures the contractual employees' entitlement to all labor
bargaining; for this reason, labor-only contracting as defined herein shall
and occupational safety and health standards, free exercise of the right
be prohibited.
to self-organization, security of tenure, and social and welfare benefits.
(b) Contractors and subcontractors as well as their employees, are
"(e) "Substantial capital or investment" refers to the adequacy of
entitled to all the rights and privileges, and are subject to all the duties
resources actually and directly used by the contractor or subcontractor in
and responsibilities which the Labor Code, as amended, attaches to
the performance or completion of the job, work or service contracted
every employee-employer relationship;
out. It may refer to capital stocks and subscribed capitalization in the
"(c) Flexibility for the purpose of increasing efficiency and streamlining
case of corporations, tools, equipment, implement, machineries,
operations is essential for every business to grow in an atmosphere of
uniforms, protective gear, or safety devices actually used in the
free competition; however, any form of flexibility intended to circumvent
performance of the job, work or service contracted out. It likewise
or evade workers' rights shall in no case be countenanced; and
includes operating costs, administrative costs such as training and
"(d) The establishment of an effective labor market information system is
overhead costs, and such expenses as are necessary to enable the
indispensable in the formulation of policies, strategies and programs for
contractor or subcontractor to exercise control, supervision or direction
human resource development supportive of and responsive to the needs
over its employees in all aspects of performing or completing the job,
of workers and enterprises.
service or work contracted out. The phrase, however, excludes all capital
and investment the contractor or subcontractor may have which are not
"Section 2. Coverage. - This Rule shall apply to all parties of contracting
actually and directly used in the conduct of its business, or any gratuitous
and subcontracting arrangements where employee-employer
assistance, financial or otherwise, it may have received from the principal.
relationship exists.
"(f) "Labor-only contracting" prohibited under this Rule is an
arrangement where the contractor or subcontractor merely recruits,
"Section 3. Parties. - A contracting or subcontracting arrangement
supplies or places workers to perform a job, work or service for a
involves a trilateral relationship under which there is a contract for a
principal and the following elements are present:
specific job, service, or work between the principal and the contractor or
"(i) The contractor or subcontractor does not have substantial capital or
subcontractor, and a contract of employment between the contractor or
investment to actually perform the job, work or service under its own
subcontractor and its workers. Therefore, the parties to a contracting or
account and responsibility; and
subcontracting arrangement shall be the principal, the contractor or
"(ii) The employees recruited, supplied or placed by such contractor or
subcontractor, and the workers engaged by the latter. The principal and
subcontractor are performing activities which are directly related to the
the contractor or subcontractor may be a natural or juridical person.
main business of the principal.
"(g) "In-house agency" refers to a contractor or subcontractor engaged
"Section 4. Definition of Terms. - As used in this Rule, the following shall
in the supply of labor which;
mean:
"(i) Is owned, managed or controlled by the principal; and
"(a) "Principal" refers to any employer who puts out or farms out a job,
"(ii) Operates solely for the principal owning, managing or controlling it.
service, or work to a contractor or subcontractor, whether or not the
"(h) "Bureau" refers to the Bureau of Local Employment of the


Department of Labor and Employment. "Regional Office" refers to the "(i) In addition to this assigned functions, requiring the contractual
offices of the Department established in each of the regions. employee to perform functions which are currently being performed by
the regular employees of the principal or of the contractor or
"Section 5. Term or duration of contractual employment. - Subject to the subcontractor;
provisions of sections 6, 7 and 8 hereof, the term or duration of "(ii) Requiring him to sign, as a precondition to employment or
contractual employment shall be coextensive with the term or duration continued employment, an antedated resignation letter; a blank payroll;
of the contract between the principal and contractor or subcontractor. a waiver of labor standards including minimum wages and social or
However, where the contract is divisible into phases such that welfare benefits; or a quitclaim releasing the principal, contractor or
substantially different skills are required for each phase, the term or subcontractor from any liability as to payment of future claims; and
duration of the contractual employment may be made coextensive with "(iii) Requiring him to sign a contract fixing the period of employment to
each phase. a term shorter than the term of the contract between the principal and
"For purposes of this Rule, he phrase "substantially different skills" refer the contractor or subcontractor, unless the latter contract is divisible into
to those skills the acquisition of which requires specialized knowledge or phases for which substantially different skills are required and this is
training. made known to the employee at the time of engagement;
"(e) Contracting out of a job, work or service through an in-house agency
"Section 6. Permissible contracting or subcontracting. - Subject to the as defined herein;
conditions set forth in Section 3 (d) and (e) and Section 5 hereof, the "(f) Contracting out of a job, work or service directly related to the
principal may engage the services of a contractor or subcontractor for business or operation of the principal by reason of a strike or lockout
the performance of any of the following; whether actual or imminent; and
"(a) Works or services temporarily or occasionally needed to meet "(g) Contracting out of job, work or service when not justified by the
abnormal increase in the demand of products or services, provided that exigencies of the business and the same results in the reduction or
the normal production capacity or regular workforce of the principal splitting of the bargaining unit.
cannot reasonably cope with such demands;
"(b) Works or services temporarily or occasionally needed by the "Section 8. Unfair Labor Practice. - Contracting out of a job, work or
principal for undertakings requiring expert or highly technical personnel service being performed by union members when such will interfere with,
to improve the management or operations of an enterprise; restrain or coerce employees in the exercise of their rights to self-
"(c) Services temporarily needed for the introduction or promotion of organization shall be unlawful and shall constitute unfair labor practice.
new products, only for the duration of the introductory or promotional
period; "Section 9. Contract between contractor or subcontractor and
"(d) Works or services not directly related or not integral to the main contractual employee. - Notwithstanding oral or written stipulations to
business or operation of the principal, including casual work, janitorial, the contrary, the contract between the contractor or subcontractor and
security, landscaping, and messengerial services, and work not related to the contractual employee shall include the following terms and
manufacturing processes in manufacturing establishments; conditions:
"(e) Services involving the public display of manufacturers' products "(a) The specific description of the job, work or service to be performed
which do not involve the act of selling or issuance of receipts or invoices; by the contractual employee;
"(f) Specialized works involving the use of some particular, unusual or "(b) The place of work and terms and conditions of employment,
peculiar skills, expertise, tools or equipment the performance of which is including a statement of the wage rate applicable to the individual
beyond the competence of the regular workforce or production capacity contractual employee; and
of the principal; and "(c) The term or duration of employment, which shall be coextensive with
"(g) Unless a reliever system is in place among the regular workforce, the contract between the principal and contractor or subcontractor, or
substitute services for absent regular employees, provided that the with the specific phase for which the contractual employee is engaged,
period of service shall be coextensive with the period of absence and the as the case may be.
same is made clear to the substitute employee at the time of The contractor or subcontractor shall inform the contractual employee of
engagement. The phrase "absent regular employees" includes those the foregoing terms and conditions on or before the first day of his
who are serving suspensions or other disciplinary measures not employment.
amounting to termination of employment meted out by the principal,
but excludes those on strike where all the formal requisites for the "Section 10. Duty to produce copy of contract. - The contractor or
legality of the strike have been prima facie complied with based on the subcontractor shall submit a copy of its contract with the principal to the
records filed with the National Conciliation and Mediation Board. Regional Office of the Department of Labor and Employment (DOLE). It
shall be accompanied by a statement of the number of employees
"Section 7. Prohibitions. - The following are hereby declared prohibited covered by the contract and, where appropriate, a description of the
for being contrary to law or public policy; phases of the contract and the number of employees covered in each
"(a) Labor-only contracting; phase. The contractor or subcontractor shall be under an obligation to
"(b) Contracting out of work which will either displace employees of the produce the original copy of the same in the ordinary course of
principal from their jobs or reduce their regular work hours; inspection or when directed to do so by the Regional Director or his
"(c) Contracting out of work with a "cabo" as defined in Section 1 (ii), authorized representative.
Rule I, Book V of these Rules; "The copy of the contract between the contractual employee and the
"(d) Taking undue advantage of the economic situation of lack of contractor or subcontractor need not be filed with DOLE. However, the
bargaining strength of the contractual employee, or undermining his contractor or subcontractor shall make the same available for inspection
security of tenure or basic rights, or circumventing the provisions of by the Regional Director or his authorized representative.
regular employment, in any of the following instances: "Further, a copy of the contract between the contractual employee and


the contractor or subcontractor shall be furnished the certified
bargaining agent, if there is any. "Section 16. Enforcement against performance bond. - In enforcing the
provisions of Sections 13, 14 and 15, the Regional Director shall first
"Section 11. Rights of a contractual employee. - The contractual proceed against the performance bond, if any has been put up by the
employee shall be entitled to all the rights and privileges due a regular contractor or subcontractor, to the extent that such bond may cover
employee, including but not limited to the right to working conditions claims of the contractual employee. In case the bond is insufficient, the
and standards, service incentive leave, rest days, overtimes and holidays, Regional Director shall proceed directly against the principal.
health, safety and social and welfare benefits, self-organization and "Nothing herein shall restrict the right of the principal from filing an
collective bargaining and security of tenure. action for reimbursement or damages against the contractor or
"In cases of termination of employment prior to the expiration of the subcontractor in the appropriate courts.
contract between the principal and the contractor or subcontractor, the
right of the contractual employee to separation pay or other related "Section 17. Effect of existence of labor-only contracting. - In case of
benefits shall be governed by the applicable laws and jurisprudence on declaration by the competent authority that a contractual employee is
termination of employment. Where the termination results from covered by a labor-only contracting arrangement, he shall be considered
expiration of the contract between the principal and the contractor or part of the bargaining unit of the principal.
subcontractor, or whom the completion of the phase of the job, work or
service for which the contractual employee is engaged, the latter shall "Section 18. Effect of expiration of contract; manpower pool. - Where
not be entitled to separation pay. However, this shall be without the contract between the principal and the contractor or subcontractor
prejudice to completion bonuses or other emoluments, including has expired, and the latter remains in business as a contractor or
retirement pay as may be provided by law or in the contract between the subcontractor, the employee-employer relationship between the latter
principal and the contractor or subcontractor. and its contractual employees shall not be automatically terminated, but
shall remain suspended for a period of six months, unless a longer
"Section 12. Employee-employer relationship. - Except in cases provided period is set by the contractor or subcontractor. During this period, such
for in Sections 13, 14, 15 and 17, the contractor or subcontractor shall be employees shall become part of a manpower pool of the contractor or
considered the employer of the contractual employee for purposes of subcontractor. If the contractor or subcontractor is unable to renew the
enforcing the provisions of the Code. original contract or enter into a new and similar contract requiring the
skills of the employees in the pool within the six-month period, or if the
"Section 13. When principal is deemed jointly and severally liable. - contractual employee subsequently finds employment elsewhere, the
When the contractor or subcontractor fails to pay the wages of its employee-employer relationship shall be deemed terminated and the
contractual employees, the principal shall be jointly and severally liable employee concerned shall be taken out of the pool.
with the contractor or subcontractor to such contractual employees to "The foregoing paragraph shall also apply where the contract between
the extent of the work performed under the contract, in the same the contractor or subcontractor and the contractual employee has
manner and extent that the principal is liable to its direct employees. expired by reason of the completion of the phase of the contract for
which the latter was engaged.
"Section 14. When principal is deemed employer who is solidarily liable. "It shall be understood, however, that all rights and privileges which the
-The principal shall be deemed as the direct employer of the contractual employee may derived out of the employer-employee relationship shall
employees and, therefore, solidarily liable with the contractor or be suspended while he is part of the pool.
subcontractor for whatever monetary claims the contractual employees
may have against the former, in the following cases: "Section 19. Registry of contractors or subcontractors. - There is hereby
"(a) When the contractor or subcontractor is not enrolled in the registry established a registry of contractors and subcontractors in the Regional
of the Regional Office of the Bureau, or it has been delisted therefrom, Offices and in the Bureau, for purposes of establishing an effective labor
or its contract with the principal has not been renewed; market information and monitoring system on activities which are subject
"(b) When the contractor or subcontractor is found committing any of to contracting or subcontracting arrangements. Registration under this
the prohibited activities enumerated in Section 7 of this Rule; section shall not be synonymous with licensing, the latter being a
"(c) When the contractor or subcontractor is declared guilty of unfair precondition for acquiring legal personality or engaging in business.
labor practice as specified in Section 8 of this Rule; and
"(d) When a violation of the relevant provisions of the Code has been "Section 20. Requirements for registration. - A contractor or
established by the Regional Director in the exercise of his enforcement subcontractor shall be enrolled in the registry of contractors and
powers. subcontractors upon completion of an application form to be provided
by the DOLE. The application shall state:
"Section 15. Other instances of solidary liability. - In cases not covered by "(a) The name and business address of the applicant and the area or
the last two preceding sections, the principal shall also be deemed areas where it seeks to operation;
solidarily liable with the contractor or subcontractor to the extent of "(b) The names and addresses of its officers, if the applicant is a
accrued claims and benefits which the latter may owe to its contractual corporation or partnership;
employees in the following instances: "(c) The nature of the applicant's business and the industry or industries
"(a) When the certificate of registration, license or business permit of the where the applicant seeks to operate;
contractor or subcontractor is cancelled, revoked or not renewed by the "(d) The list of actual contracts, if any; and
competent authority; or "(e) The capitalization and other assets of the applicants which are
"(b) When the contract between the principal and the contractor or actually and directly used in its operations.
subcontractor is preterminated for reasons nor attributable to the fault of "The application shall be supported by:
the contractor or subcontractor. "(a) A certified copy of the certificate of registration of firm or business


name from the Securities and Exchange Commission (SEC) or Secretary of Labor and Employment inconsistent with the provisions of
Department of Trade and Industry (DTI) or from the DOLE if the this Rule are hereby superseded. Contracting or subcontracting
applicant is a union; and arrangements in the construction industry, however, shall continue to be
"(b) A certified copy of the license or business permit issued by the local governed by Department Order No. 19, series of 1993, as well as the
government unit or units where the contractor or subcontractor applicable provisions of this Rule."
operates.
"The application shall be verified and shall include an undertaking that
D.O. No. 03-01, SS May 2001
the contractor or subcontractor shall abide by all applicable labor laws
and regulations.
Pursuant to Articles 5 and 106 of the LC, as amended, the
following are hereby issued:
"Section 21. Filing and processing of applications. - The application and
its supporting documents shall be filed in triplicate in the Regional Office Sec. 1. Revocation of D.O. No. 10. Department Order No. 10,
where the applicant principally operates. No application for registration Series of 1997, otherwise known as the rules implementing
shall be accepted unless all the foregoing requirements are complied Articles 106 to 109 of Book III of the LC, is hereby revoked
with. The contractor or subcontractor shall be deemed registered upon effective immediately.
payment of a registration fee of One hundred pesos (P100.00) to the
Regional Office.
"Where all the supporting documents have been submitted, the
Sec. 2. Prohibition against labor-only contracting. Labor-only
Regional Office shall deny or approve the application within seven (7) contracting is hereby declared prohibited. There is labor-only
working days after its filing. In case of inaction of the Regional Office contracting where the contractor or subcontractor merely
beyond this period, the application shall be deemed provisionally recruits, supplies or places workers to perform a job, work, or
approved subject, however, to the payment of the registration fee. service for a principal, and the following elements are present:
"Upon registration, the Regional Office shall return one set of the duly- b. The contractor or subcontractor does not have
stamped application documents to the applicant, retain one set for its
substantial capital or investment to actually
file, and transmit the remaining set to the Bureau. The Bureau shall
perform the hob, work or service under its own
devise the necessary forms for the expeditious processing of all
applications for registration.
account and responsibility; and
c. The employees recruited, supplied or placed
"Section 22. Annual reporting. - The contractor or subcontractor shall by such contractor or subcontractor are
submit in triplicate its annual report in such forms as may be prescribed performing activities which are directly related
by the DOLE to the appropriate Regional Office. The report shall to the main business of the principal.
include:
"(a) A list of contracts entered into during the subject reporting period;
Sec. 3. Non-impairment of existing contracts; Non-diminution of
and
benefits. Subject to the provisions of Articles 106 to 109 of the
"(b) A certification from the Social Security System (SSS) and the Home
Development Mutual Fund (HDMF) that the contractor or subcontractor
LC, as amended, the applicable provisions of the CC and
has been making the monthly remittances due its contractual employees existing jurisprudence, nothing herein shall impair the rights or
during the subject reporting period. diminish the benefits enjoyed by parties to existing contracting
"The obligation to submit an annual report shall coincide with the or subcontracting arrangements.
anniversary date of registration of the contractor or subcontractor. The
Regional Office shall return one set of the duly-stamped report to the Sec. 4. Effectivity. This Order shall be effective 15 days after
contractor or subcontractor, retain one set for its file, and transmit the
publication xxx. Such new guidelines shall be formulated upon
remaining set to the Bureau within five (5) days from receipt thereof.
prior consultations with all sectors concerned, particularly the
"Section 23. Delisting of registered contractor or subcontractor. - The
Tripartite Industrial Peace Council (TIPC) xxx.
Regional Director shall, upon due notice, motu proprio cancel the
registration of a contractor or subcontractor if it fails to comply with the INDEPENDENT LABOR-ONLY
reporting requirements for three consecutive years, or upon the CONTRACTOR CONTRACTOR
cessation of a business of the latter. Has sufficient substantial Has NO substantial capital OR
"Subject to administrative due process, the contractor or subcontractor
capital OR investment in investment in the form of
shall be delisted from the registry if it is found to have committed the
prohibited activities or has been declared guilty of unfair labor practice
machinery, tools or equipment machinery, tools or equipment
as enumerated in Sections 7 and 8 hereof, or has falsified the directly or intended to be
requirements for registration it submitted to the Regional Office. related to the job contracted
Carries an independent Has no independent business
"Section 24. All existing contractors or subcontractors as defined herein business different from the
shall register with the Regional Office within one hundred twenty (120) employer’s
days from the effectivity of this Rule. In case of failure to register within
Undertakes to perform the job Performs activities directly
this prescribed period, the provisions of this Rule shall apply.
under its own account and related to the main business of
"Section 25. Supersession. - All rules and regulations issued by the responsibility, FREE from the the principal


principal’s control except only workers engaged by the contractor to accomplish the job, work
as to the results of the work or service.
NO EE-EE Relationship except Principal treated as direct
when the contractor or employer of the person D.O. 18-A-11, Sec. 5 Trilateral relationship in contracting
subcontractor fails to pay the recruited in all instances arrangements; Solidary liability - In legitimate contracting or
employees’ wages. (contractor is deemed agent of subcontracting arrangement there exists:
the principal)
LIMITED liability (principal Principal’s liability extends to a. An ER-EE relationship between the contractor and the
solidarily liable with contractor all rights, duties and liabilities employees it engaged to perform the specific job, work or
or subcontractor only when under labor standard laws service being contracted; and
latter fails to comply with including the right to self- b. A contractual relationship between the principal and the
requirements as to unpaid organization contractor as governed by the provisions of the CC.
wages and other labor
standards violations In the event of any violation of any provision of the LC, including
Permissible Prohibited the failure to pay wages, there exists a solidary liability on the
part of the principal and the contractor for purposes of enforcing
the provisions of the LC and other special legislation, to the
c. 1. Guiding principles extent of the work performed under the employment contract.
D.O. 18-A-11, Sec. 1 Guiding principles – Contracting However, the principal shall be deemed the direct employer of
and subcontracting arrangements are expressly allowed by law the contractor’s employee in cases where there is a finding by a
and are subject to regulations for the promotion of employment competent authority of labor-only contracting, or commission of
and the observance of the rights of workers to just and humane prohibited activities as provided in Sec. 7, or violation of either
conditions of work, security of tenure, self-organization and Sections 8 or 9 hereof.
collective bargaining. Labor-only contracting as defined herein
shall be prohibited. c. 3.1. Contracting
D.O. 18-A-11, Sec. 3(c) “Contracting” or “Subcontracting” -

c. 2. Coverage refers to an arrangement whereby a principal agrees to put out
or farm out with a contractor the performance or completion of a
D.O. 18-A-11, Sec. 2 Coverage - These Rules shall apply to specific job, work or service within a definite or predetermined
all parties of contracting and subcontracting arrangements period, regardless of whether such job, work or service is to be
where ER-EE relationships exist. It shall also apply to performed or completed within or outside the premises of the
cooperatives engaging in contracting or subcontracting principal.
arrangements.
Phil. Bank of Communications v. NLRC
Contractors and subcontractors referred to in these Rules are FACTS:
prohibited from engaging in recruitment and placement 1. Principal: Phil. Bank of Communications (PBC)
activities as defined in Art. 13(b) of LC, whether for local or Contractor: Corporate Executive Search Inc. (CESI)
overseas employment. Labor/Worker: Ricardo Orpiada
2. Jan 1976: PBC and CESI entered into a letter agreement
under which CESI undertook to provide PBC with
c. 3. Trilateral Relationship Temporary Services consisting “temporary services” of
eleven messenger. The rate agreed upon was that PBC
D.O. 18-A-11, Sec. 3 (m) “Trilateral Relationship” - refers to would pay a daily wage of P18 per messenger. While the
the relationship in a contracting or subcontracting arrangement contract recognized Jan 1976 as the commencement of the
where there is a contract for a specific job, work or service contract, it did NOT specify any date for the expiration of
between the principal and the contractor, and a contract of this arrangement. Attached to the letter agreement was a
employment between the contractor and its workers. There are list including Ricardo’s name.
three parties involved in these arrangements: the principal who 3. Thus Ricardo rendered service to the bank.
decides to farm out job, work or service to a contractor; the -‐ He worked inside the bank’s premises, along with the
contractor who has the capacity to independently undertake the other assigned messengers.
performance of the job, work or service; and the contractual -‐ While the letter agreement stated Jan 1976 as the
commencement of the contract, CESI admitted that

Ricardo was already working for PBC as early as June 9 (2): that the worker is engaged to perform activies
1975 which are directly related to the principal business
4. Oct 1976: PBC requested CESI to withdraw Ricardo from or operations of the employer. Ricardo was doing
his assignment to the bank, for the reason that “his services the job of a messenger which is a necessary activity
were no longer needed” in banking operations, and even more so, he was
5. Ricardo filed suit at DOLE (formerly the Ministry of Labor) doing it inside PBC’s premises and not CESI
against PBC for, inter alia, illegal dismissal. However, the -‐ As there CESI was a “labor only” contractor, the effect
Office of the Regional Director dismissed his complaint as is that PBC shall be considered as the direct employer
Ricardo failed to show the existence of an ER-EE of Ricardo, and not CESI.
relationship between him and PBC. 2. There was illegal dismissal.
6. Nevertheless, Ricardo’s case was taken for compulsory -‐ The ER-EE relationship exists.
arbitration. CESI and PBC maintained that there was no ER- -‐ Ricardo was already working for PBC for more than a
EE relationship between the latter and Ricardo. year. While the letter agreement commenced on Jan
7. LA: There was Illegal Dismissal; reinstatement for Ricardo. 1976, he was already working at PBC since June 1975
PBC and CESI appealed to the NLRC. (as admitted by CESI). At the time of his termination
8. NLRC (six years later, for no apparent reason): LA decision on Oct 1976, he was already a regular employee
affirmed but reduced the award of backwages to only two (because 1 year has already passed).
years. -‐ Being a regular employee, he must be validly
terminated under the just causes enumerated in Art.
ISSUE/S: 280 of the Labor Code.
1. WON there was an ER-EE relationship between PBC and -‐ PBC supplied no valid cause; hence, it was illegal
Ricardo dismissal.
2. WON there was an illegal dismissal of Ricardo
San Miguel Corp v. Semillano
HELD: FACTS:
1. ER-EE relationship exists. 1. Principal: San Miguel Corp. (SMC)
-‐ The Court, applying the Four-Fold Test got mixed and Worker’s Cooperative: Alilgilan Multi-purpose Cooperative
inconclusive results: (AMPCO)
o PBC exercised the power of selection (PBC Workers: Vicente Semillano et al
accepted Ricardo’s assignment to them) and the 2. AMPCO hired Vicente et al. on different dates in December
most important power of control (Ricardo was 1991 and 1994 to work in SMC’s Bottling Plant, segregating
working inside the premises of the bank and so was bottles, removing dirt therefrom, filing them in designated
under the same control that the bank had over places, loading and unloading the bottles to and from the
regular employees) delivery trucks, and performing ad-hoc tasks. They worked
o However, the PBC did NOT exercise/exhibit the in SMC premises using SMC’s equipment for more than 6
other two elements: wages (PBC remitted the months.
agreed rate to CESI and in turn, they were the ones 3. Subsequently, SMC entered into a Contract of Services
to give the wage to Ricardo) and the power of with AMPCO designating the latter as the employer of
dismissal (PBC merely requested the withdrawal of Vicente, et al. As a result, Vicente et al. failed to claim the
Ricardo from his assignment to PBC; it was CESI rights and benefits ordinarily accorded a regular employee
who eventually terminated him after they withdrew of SMC. In fact, they were not paid their 13th month pay.
him) On June 6, 1995, they were not allowed to enter the
-‐ The Court then had to look into PBC and CESI’s premises of SMC. The project manager of AMPCO, Merlyn
relationship to determine the existence of ER-EE Polidario, told them to wait for further instructions from the
relationship; was CESI a valid job contractor or a SMC’s supervisor. Vicente et al. waited for one month,
“labor only” contractor? unfortunately, they never heard a word from SMC.
o CESI was a “labor only” contractor. 4. Consequently, Vicente et al. filed a complaint for illegal
o While they claim that CESI had the required capital dismissal with the Labor Arbiter against AMPCO, Merlyn V.
or investment in the form of office equipment, the Polidario, SMC and Rufino I. Yatar (SMC Plant Manager).
undertaking given by CESI to PBC lacked specificity They alleged that they were assigned to perform activities
(i.e., termed as only as “temporary services” in the necessary and desirable in the usual business of SMC; that
letter agreement) they were under the control and supervision of SMC
o The arrangement also fit squarely into one of the personnel and have worked for more than 6 months in the
enumerations of “labor only” contracting in Section company, and as such should be considered regular


employees of SMC; that SMC utilized AMPCO to make it There is job contracting permissible under the Code if
appear that the latter was their employer, so that SMC may the following conditions are met:
evade the responsibility of paying the benefits due them o The contractor carries on an independent business
under the law; that AMPCO and SMC failed to give their and undertakes the contract work on his own
13th month pay; and that they were illegally dismissed account under his own responsibility according to
when they were suddenly prevented from entering the his own manner and method, free from the control
SMC premises. and direction of his employer or principal in all
5. SMC contends that it is not the employer of complainants, matters connected with the performance of the
AMPCO being an independent contractor that directly paid work except as to the results thereof; and
the salaries and remitted the SSS contributions of the o The contractor has substantial capital or investment
complainants. They also assailed the jurisdiction of the in the form of tools, equipment, machineries, work
Labor Arbiter contending that the instant dispute is intra- premises, and other materials which are necessary in
cooperative in nature falling within the jurisdiction of the the conduct of his business.
Arbitration Committee of the Cooperative Development -‐ Sec. 9. Labor-only contracting. – (a) Any person who
Authority. undertakes to supply workers to an employer shall be
6. LA: Judgment in favor of the complainants, who are deemed to be engaged in labor-only contracting
declared regular employees of SMC. where such person:
7. NLRC: First they affirmed the LA with modifications, but o Does not have substantial capital or investment in
upon MR by the petitioner, they reversed their earlier ruling the form of tools, equipment, machineries, work
and absolved SMC, holding that AMPCO is the employer premises and other materials; and
and should be the one liable. o The workers recruited and placed by such persons
-‐ In holding that AMPCO was an independent are performing activities which are directly related
contractor, NLRC was of the view that the law only to the principal business or operations of the
required substantial capital or investment. Since employer in which workers are habitually employed.
AMPCO had “substantial capital of nearly one (1) xx
million” then it qualified as an independent -‐ Meanwhile, Section 5 of Department Order No. 18-02
contractor. of the Rules Implementing Articles 106 to 109 of the
-‐ The NLRC added that even under the control test, Labor Code further provides that:
AMPCO would be the real employer of the o “Substantial capital or investment” refers to capital
respondents, since it had assumed the entire charge stocks and subscribed capitalization in the case of
and control of respondents’ services. corporations, tools, equipment, implements,
8. CA: NLRC reversed, LA decision reinstated. The CA also machineries and work premises, actually and directly
used the control test, but unlike the NLRC, it found that: used by the contractor or subcontractor in the
-‐ (i) SMC had the power of control over respondent, as performance or completion of the job work or
SMC personnel supervised respondents’ performance service contracted out.
of loading and unloading of beer bottles, o The "right to control" shall refer to the right
-‐ (ii) SMC had the power of dismissal, as respondents reserved to the person for whom the services of the
were refused entry by SMC to its premises and were contractual workers are performed, to determine
instructed by the AMPCO manager “to wait for further not only the end to be achieved, but also the
instructions from SMC’s supervisor.” manner and means to be used in reaching that
-‐ The CA added that AMPCO was a labor-only end.”
contractor since “a capital of nearly one million pesos” -‐ The test to determine the existence of independent
was insufficient for it to qualify as an independent contractorship is whether or not the one claiming to
contractor. be an independent contractor has contracted to do
the work according to his own methods and without
ISSUE/S: being subject to the control of the employer, except
1. WON AMPCO is a legitimate job contractor (NO) only as to the results of the work. To establish this type
of contractorship, the following criteria are normally
HELD: considered: whether or not the contractor is carrying
1. No. It is only a labor-only contractor on an independent business; the nature and extent of
-‐ DOLE Department Order No. 10, Series of 1997, the work; the skill required; the term and duration of
defines “job contracting” and “labor-only the relationship; the right to assign the performance of
contracting” as follows: Sec. 8. Job contracting. – a specified piece of work; the control and supervision
of the work to another; the employer's power with


respect to the hiring, firing and payment of the character of AMPCO’s business, that is, whether as
contractor's workers; the control of the premises; the labor-only contractor, or job contractor. AMPCO’s
duty to supply the premises, tools, appliances, character should be measured in terms of, and
materials, and labor; and the mode, manner and terms determined by, the criteria set by statute. Neither can
of payment. SMC rely either on AMPCO’s Certificate of
-‐ From the above provisions of law and criteria, it can Registration as an Independent Contractor issued by
readily be seen that AMPCO is a labor-only contractor the proper Regional Office of the DOLE to prove its
and not an independent contractor as established by claim. It is not conclusive evidence of such status, but
the following facts: is merely something that would prevent the rise of the
o Petitioner’s averment that AMPCO had total assets legal presumption of being a mere labor-only
amounting to P932,599.22 and income of contractor. In distinguishing between permissible job
P2,777,603.46 in 1994 was squarely debunked by the contracting and prohibited labor-only contracting, the
LA who found that despite its income, AMPCO also totality of the facts and the surrounding circumstances
had operating expenses for said year of of the case are to be considered.
P2,718,315.33, which led to a net income of -‐ Obiter: Anent SMC’s argument that labor tribunals
P59,288.13, and a cash on hand of P22,154.80; had no jurisdiction because Vicente et al. is a member
o There is nothing in AMPCO’s list of fixed assets, of AMPCO, suffice it to say that they filed the case
machineries, tools, and equipment which it could precisely with the belief that SMC was their employer
have used, actually and directly, in the performance and that their case fell under the Labor Code. Also,
or completion of its contracted job, work or service since the Court already ruled that SMC was indeed
with SMC as in fact, AMPCO’s main business activity their employer, this contention of SMC also doesn’t
is trading, maintaining a store catering to members hold.
and the public;
o Neither SMC nor AMPCO showed that the latter c. 4. Parties
had clients other than the former, which strongly
militates against the idea that AMPCO is an D.O. 18-A-11, Sec. 3(m) “Trilateral Relationship” - refers to
independent contractor; the relationship in a contracting or subcontracting arrangement
o There was failure to prove that AMPCO took “entire where there is a contract for a specific job, work or service
charge, control and supervision of the work and between the principal and the contractor, and a contract of
service agreed upon” with SMC; employment between the contractor and its workers. There are
o The fact that, Merlyn Polidario, AMPCO’s project three parties involved in these arrangements: the principal who
manager, even told respondents to “wait for further decides to farm out job, work or service to a contractor; the
instructions from the SMC’s supervisor” after they contractor who has the capacity to independently undertake the
were prevented from entering petitioner SMC’s performance of the job, work or service; and the contractual
premises strongly dispels the idea that AMPCO workers engaged by the contractor to accomplish the job, work
wielded “exclusive discretion in the discharge” of or service.
Vicente et al.; and
o Vicente et al., in having the task of segregating and c. 4.1. Principal
cleaning bottles, performed activities which were
directly related to petitioner’s main line of business, D.O. 18-A-11, Sec. 3(h) “Principal” - refers to any employer,
which is to manufacture and market beer products.
whether a person or entity, including government agencies and
-‐ As an effect of being a labor-only contractor, which is
government-owned and controlled-corporations, who/which
prohibited by law, AMPCO shall be considered merely
puts our or farms out a job, service or work to a contractor.
as an agent or intermediary of the employer who shall
be responsible to the workers in the same manner and
c. 4.2. Contractor
extent as if the latter were directly employed by him
(D.O. 10-97, Sec.9). The employer in this case is SMC.
D.O. 18-A-11, Sec. 3(d) “Contractor” - refers to any person
-‐ Despite the fact that the service contract between
or entity, including a cooperative, engaged in a legitimate
AMPCO and SMC contain stipulations which are
contracting or subcontracting arrangement providing either
earmarks of independent contractorship, they do not
services, skilled workers, temporary workers, or a combination of
make it legally so. The language of a contract is
services to a principal under a Service Agreement.
neither determinative nor conclusive of the
relationship between the parties. SMC and AMPCO
cannot dictate, by a declaration in a contract, the c. 4.3. Contractor’s employee


D.O. 18-A-11, Sec. 3(e) “Contractor’s employee” - includes 3. No exercise of right to control the performance of the work
one employed by a contractor to perform or complete a job,
work, or service pursuant to a Service Agreement with a Requisites of Legitimate Contracting
principal. 1. Registered in accordance with rules
2. Distinct and independent business
It shall also refer to regular employees of the contractor whose 3. Sufficient capital
functions are not dependent on the performance or completion 4. Service agreement
of a specific job, work or service within a definite period of time,
i.e., administrative staff. Polyfoam-RGC International Corp. v. Edgardo Concepcion
FACTS:
c. 5. Legitimate contracting or subcontracting: 4 Conditions 1. Ed Concepcion – hired by Polyfoam as an “all around”
factory worker (worked for 6 years)
D.O. 18-A-11, Sec. 4 Legitimate Contracting or 2. One day, he discovered that his time card was not in the
rack
Subcontracting - Contracting or subcontracting shall be
3. Supervisor: management decided to dismiss him due to
legitimate if all the following circumstances concur:
infraction of company rules
(a) The contractor must be registered in accordance with these 4. Ed requested to be readmitted, but request remain
Rules and carries a distinct and independent business and unheeded
5. He filed complaint for Illegal Dismissal
undertakes to perform the job, work or service on its own
6. Precilla Gramaje → Filed Motion for Intervention claiming
responsibility, according to its own manner and method, and
free from control and direction of the principal in all matters to be the real employer of Ed →granted
connected with the performance of the work except as to the 7. Polyfoam and Natividad Cheng (President) Position Paper:
results thereof; -‐ NLRC no jurisdiction because Ed was not their
emoloyee
(b) The contractor has substantial capital and/or investment; and -‐ Money claims had already prescribed
8. Precilla’s Position Paper
-‐ PA Precilla Employment Services (PAGES) is a
(c) The Service Agreement ensures compliance with all the rights
and benefits under Labor Laws. legitimate job contractor who provided some
manpower needs of Polyfoam
-‐ Ed was hired as a packer and assigned to Polyfoam
c. 6. Elements of Labor-only contracting
-‐ Ed was not dismissed, rather he stopped reporting for
work
D.O. 18-A-11, Sec. 6 Prohibition against labor-only
9. LA: Illegal Dismissal; Polyfoam and PAGES solidarily liable
contracting. Labor-only contracting is hereby declared
for money claims
prohibited. For this purpose, labor only contracting shall refer to
-‐ Solidary liability because: Precilla was not enrolled as
an arrangement where:
private employment agency in the registry of Regional
(a) The contractor does not have substantial capital or
Office of DOLE
investments in the form of tools, equipment, machineries, work
-‐ Considering also that Ed performed a job directly
premises, among others, and the employees recruited and
related to the business of Polyfoam
placed are performing activities which are usually necessary or
10. 10. NLRC: MODIFIED; Precilla is the employer and there
desirable to the operation of the company, or directly related to
was no illegal dismissal
the main business of the principal within a definite or
-‐ Exonerated Polyfoam from liability
predetermined period, regardless of whether such job, work or
-‐ Precillla was an independent contractor who
service is to be performed or completed within or outside the
contracted packaging aspect of the finished foam
premises of the principal; or
products of Polyfoam
(b) The contractor does not exercise the right to control over the
-‐ Her employees were assigned to Polyfoam but
performance of the work of the employee.
remained under her control and supervision
-‐ Precilla paid Ed’s wages and benefits and reported
Elements of Labor-Only Contracting: him to the SSS as a covered employee
1. No substantial capital or investments -‐ PAGES has its own office equipment, tools, and
- Tools, equipment, machineries, work premises substantial capital
2. Work done by employee is either -‐ No illegal dismissal; Ed was not notified that he was
- Necessary or desirable in the operation of the being dismissed; he stopped reporting for work
company; or 11. CA: Reinstated LA decision
- Directly related to main business of the principal

-‐ Precilla not a legitimate job contractor but only a performance of the work except as PRINCIPAL WORK) -
“labor-only” contractor. She failed to present to the results thereof; The employees
necessary evidence: 2. (SUBSTANTIAL CAPITAL) recruited, supplied or
o Audited Financial Statement showing its financial - The contractor or subcontractor placed by such
standing and ownership of equipment, machineries, has substantial capital or investment; contractor or
and tools necessary for her business and subcontractor are
o Contract with Polyfoam 3. (ASSURED LABOR RIGHTS) performing activities
o License purportedly issued by DOLE appeared to The agreement between the which are directly related
be spurious principal and contractor or to the main business of
o Precilla not registered with DOLE as private subcontractor assures the the principal.
recruitment agency contractual employees entitlement
o She presented only one SSS Quarterly Collection list to all labor and occupational safety
→ doubtful authenticity and health standards, free exercise
-‐ PAGES was just a scheme designed to evade the of the right to self-organization,
obligation inherent in ER-EE relationship security of tenure, and social and
welfare benefits.
-‐ Test of independent contractorship / permissible
ISSUE/S: contracting: The test of independent contractorship is
1. WON Precilla is a Labor-Only Contractor (YES) “whether one claiming to be an independent
2. WON there is an ER-EE relationship between Ed and contractor has contracted to do the work according to
Polyfoam (YES) his own methods and without being subject to the
3. WON Ed was illegally dismissed (YES) control of the employer, except only as to the results
of the work.”
-‐ Presumption is that the contractor is a labor-only
HELD: contractor. Contractor has the burden of proving
1. Yes otherwise, as the employee cannot be expected to
-‐ Court distinguished between Permissible prove a negative fact (i.e. that the contractor does not
Contracting/Independent Contractorship and Labor- have substantial capital). Here, Precilla was unable to
Only Contracting overcome this presumption.
Permissible Contracting/ Labor-only -‐ Applying said principles to Precilla, the SC declared
Independent Contractorship Contracting the ff:
DEFINITION: DEFINITION: o Precilla has no substantial capital or investment.
An arrangement whereby a principal An arrangement where • While she claimed to have been the one to furnish
agrees to put out or farm out to a the contractor or Polyfoam packing equipment and machineries,
contractor or subcontractor the subcontractor merely and that she had her own office with her own staff
performance or completion of a recruits, supplies or • HOWEVER, neither Precilla nor Polyfoam
specific job, work or service within a places workers to presented evidence showing Precilla’s ownership
definite or predetermined period, perform a job, work or of the equipment and machineries
regardless of whether such job, work service for a principal. • Considering that these tools and machineries are
or service is to be performed or found in Polyfoam’s premises, the presumption is
completed within or outside the that they are owned by Polyfoam.
premises of the principal. • No showing that Precilla had clients other than
ELEMENTS: ELEMENTS: Polyfoam
1. (INDEPENDENCE) 1. (NO SUBSTANTIAL o Precilla does not maintain an independent business
- The contractor or subcontractor CAPITAL) or undertake the perdormance of its service contract
carries on a distinct and - The contractor or according to its own manner and method, free from
independent business and subcontractor does not the control and supervision of Polyfoam.
undertakes to perform the job, work have substantial capital • In fact, Ed was provided Polyfoam’s “Mga
or service on its own account and or investment to actually Alituntunin at Karampatang Parusa”, which
under its own responsibility perform the job, work or embodied Polyfoam’s rule on attendance,
according to its own manner and service under its own cleanliness, health, etc.
method, and free from the control account and • Ed worked at Polyfoam’s premises for six years.
and direction of the principal in all responsibility; and • While Polyfoam’s supervisor Abadia submitted an
matters connected with the 2. (DIRECT TO affidavit stating that she was not in charge of Ed’s


work supervision, Precilla herself was unable to 3. June 1999: the workers filed suit at the DOLE for labor-only
establish that she was the one in-charge of Ed’s contracting and non-payment of minimum wages and
supervision. overtime pay.
-‐ While an independent contractor would be -‐ In lieu of their filing of suit, PASAKA imposed
considered as the real employer of Ed, a labor-only suspensions on the workers. Eventually, PASAKA filed
contractor would be a mere agent of the principal memoranda, alleging that the workers’ actions were
company, Polyfoam. Since principals and agents are acts injurious to the interests of the cooperative.
considered as one juridical entity, liability attaches to -‐ The workers’, in their reply, explained that they were
them both. That is, Polyfoam and Precilla are solidarily merely pursuing their remedies against Norkis.
liable. 4. The workers received another memoranda from PASAKA,
2. Yes which now charged them with serious misconduct and
-‐ A finding that a contractor is a labor-only contractor is willful disobedience, gross and habitual neglect of duties,
equivalent to declaring that there is an ER-EE incurring absences without filing leave of absence, loitering
relationship between the principal and employees of on company time. As a result, they were suspended for 15
supposed contractor days.
-‐ Precilla is considered as a mere agent of the principal 5. The 15-day suspension was renewed for another 15 days.
-‐ The two are solidarily liable for the claims of Ed 6. Oct 1999: After the lapse of the suspension, the workers
3. Yes were informed by PASAKA that they were being reassigned
-‐ There was no abandonment; Ed was illegally to Porta Coeli as washers of multicab vehicles. As a result,
dismissed the workers amended their complaint to one of illegal
-‐ Ed was not afforded due process and was terminated dismissal, inter alia. However, both Norkis and PASAKA
without any just cause maintained that they were not employees of Norkis.
7. (June 2000) LA: Complaint dismissed
Norkis Trading v. Joaquin Buenavista, et al -‐ There was no ER-EE relationship between Norkis and
FACTS: workers
1. Principal: Norkis Trading (Norkis) -‐ The LA took the position of PASAKA and upheld the
Worker’s Cooperative: Panaghiusa sa Kauswagan Multi- suspension imposed due to the infractions committed
purpose Cooperative (PASAKA) by the workers.
Labor/Workers: Joaquin Buenavista, Henry Fabroa, Ricardo -‐ The LA also did NOT consider the offer of transfer to
Cape, Bertuldo Tulod, Willy Dondoyano and Glen Villariasa Porta Coeli as dismissal
2. The workers were hired by Norkis, who was engaged in the 8. In the meantime, the workers also sought relief from the
manufacturing and marketing of Yamaha motorcycles and DOLE.
multi-purpose vehicles. -‐ August 2000: DOLE Regional Dir. Melencio Balanag
-‐ They all joined the company from a span of Jan 1993 – released an Order finding that PASAKA was a labor-
Nov 1994 only contractor and in turn, the workers were
-‐ They were working as skilled workers assigned in the employees of Norkis who where illegally dismissed.
operation of industrial welding machines owned and -‐ The NLRC was informed of this Order.
used by Norkis. -‐ Feb 2002 and Oct 2002: Then DOLE Sec. Patricia Sto.
-‐ However, they were NOT treated as regular Tomas affirmed the Augusto 2000 Order of Dir.
employees by Norkis; they were considered as Balanag
members of the worker’s cooperative, PASAKA, whom -‐ The CA affirmed these aforementioned Orders of the
in turn, Norkis considered as an independent Regional Director and DOLE Secretary in May 2007.
contractor. The SC also affirmed it in its Dec 2007 and April 2008
-‐ The materials and supplies used in their worked came Resolutions, when it was raised.
from Norkis 9. (April 2002) NLRC: LA affirmed
-‐ Norkis supervised their work via Norkis’ own leadmen 10. (May 2007) CA: Reversed both LA and NLRC.
and Production Supervisor.
-‐ The salary of the workers were paid inside Norkis and ISSUE/S:
that they were given to them by the accounting 1. WON the findings of the LA and NLRC should be accorded
division of Norkis. finality
-‐ By 1999, they still have not attained regular status and 2. WON Norkis was the employer of the workers
was made to appear as PASAKA’s employee and not 3. WON there was illegal dismissal of the workers
Norkis’ 4. WON there was res judicata applies in the current case


HELD: c. 7. Other prohibitions
1. No. The CA may reverse both LA and NLRC.
-‐ The findings of both the LA and NLRC are accorded D.O. 18-A-11, Sec. 7 Other Prohibitions - Notwithstanding
great respect and even finality by the Courts, as a Section 6 of these Rules, the following are hereby declared
general rule. prohibited for being contrary to law or public policy:
-‐ However, this is not an absolute; if these were arrived
at arbitrarily or with no basis in evidence, then the A. Contracting out of jobs, works or services when not done in
Courts may review the evidence on record and grant good faith and not justified by the exigencies of the business
the petition for certiorari if it is found that there is no such as the following:
factual basis for the findings, that being a case of (1) Contracting out of jobs, works or services when the same
grave abuse of discretion. results in the termination or reduction of regular employees and
-‐ It was already known the NLRC how the DOLE reduction of work hours or reduction or splitting of the
Regional Director and the DOLE Secretary decided bargaining unit.
the matter; it should have taken cognizance of their
rulings. (2) Contracting out of work with a “Cabo”.
2. Norkis is the employer.
-‐ The existence of the ER-EE relationship rested on the (3) Taking undue advantage of the economic situation or lack of
question of whether PASAKA was a valid job bargaining strength of the contractor’s employees, or
contractor or was only a labor-only contractor. undermining their security of tenure or basic rights, or
-‐ PASAKA is a mere labor-only contractor. circumventing the provisions of regular employment, in any of
o The elements for labor-only contracting were the following instances:
present: a) PASAKA did not have the substantial (i) Requiring them to perform functions which are currently being
capital or investment requirement to actually performed by the regular employees of the principal; and
perform a job on its own capacity, and b) the
workers performed activities which are directly (ii) Requiring them to sign, as a precondition to employment or
related to the main business of the principal continued employment, an antedated resignation letter; a blank
o It was also Norkis who supervised and paid the payroll; a waiver of labor standards including minimum wages
salaries of the workers, as noted by Dir. Balanag in and social or welfare benefits; or a quitclaim releasing the
his August 2000 Order principal, contractor or from any liability as to payment of future
-‐ As an effect, Norkis shall be considered as the true claims.
and direct employers of the workers. (4) Contracting out of a job, work or service through an in-house
3. There was actual illegal dismissal of the workers. agency.
-‐ Porta Coeli was a distinct and separate entity from
Norkis. It being Norkis’ sister company is of no matter. (5) Contracting out of a job, work or service that is necessary or
A change from their assignment from Norkis to Porta desirable or directly related to the business or operation of the
will necessarily sever the ER-EE relationship between principal by reason of a strike or lockout whether actual or
Norkis and the workers. imminent.
-‐ The workers were considered skilled workers in Norkis
but if transferred to Porta, they will simply be utility (6) Contracting out of a job, work or service being performed by
workers. This amounted to demotion. union members when such will interfere with, restrain or coerce
-‐ Norkis also gave them no other option apart from employees in the exercise of their rights to self-organization as
being reassigned. provided in Art. 248 (c) of the Labor Code, as amended.
-‐ Their dismissal was not under any of the authorized
causes under Art. 280, hence, illegal. (7) Repeated hiring of employees under an employment contract
4. Res judicata, in the concept of conclusiveness of judgment, of short duration or under a Service Agreement of short duration
applies. with the same or different contractors, which circumvents the
-‐ All the same parties were involved: Norkis, PASAKA Labor Code provisions on Security of Tenure.
and the workers.
-‐ The same question of law was tackled: whether Norkis (8) Requiring employees under a subcontracting arrangement to
was the employer of the workers. sign a contract fixing the period of employment to a term
-‐ Since the SC has already ruled on the matter (in its shorter than the term of the Service Agreement, unless the
Dec 2007 and Apr 2008 Resolutions) with finality and is contract is divisible into phases for which substantially different
now precluded from reopening a similar case. skills are required and this is made known to the employee at
the time of engagement.


(9) Refusal to provide a copy of the Service Agreement and the (f) The description of the phases of the contract, including the
employment contracts between the contractor and the number of employees covered in each phase, where
employees deployed to work in the bargaining unit of the appropriate; and
principal’s certified bargaining agent to the sole and exclusive
bargaining agent (SEBA). (g) Proof of compliance with substantial capital requirement as
defined in Section 3(l) of these Rules.
(10) Engaging or maintaining by the principal of subcontracted
employees in excess of those provided for in the applicable The application shall be supported by:
Collective Bargaining Agreement (CBA) or as set by the Industry
Tripartite Council (ITC). (a) A certified true copy of a certificate of registration of firm or
B. Contracting out of jobs, works or services analogous to the business name from the Securities and Exchange Commission
above when not done in good faith and not justified by the (SEC), Department of Trade and Industry (DTI), Cooperative
exigencies of the business. Development Authority (CDA), or from the DOLE if the applicant
is a labor organization;
c. 8. Registration of contractors (b) A certified true copy of the license or business permit issued
by the local government unit or units where the contractor
D.O. 18-A-11, Sec. 14 Mandatory Registration and Registry of operates;
Legitimate Contractors. Consistent with the authority of the
Secretary of Labor and Employment to restrict or prohibit the (c) A certified listing, with proof of ownership or lease contract,
contracting out of labor to protect the rights of workers, it shall of facilities, tools, equipment, premises implements, machineries
be mandatory for all persons or entities, including cooperatives, and work premises, that are actually and directly used by the
acting as contractors, to register with the Regional Office of the contractor in the performance or completion of the job, work or
Department of Labor and Employment (DOLE) where it service contracted out. In addition, the applicant shall submit a
principally operates. photo of the office building and premises where it holds office;
Failure to register shall give rise to the presumption that the (d) A copy of audited financial statements if the applicant is a
contractor is engaged in labor-only contracting. corporation, partnership, cooperative or a labor organization, or
copy of the latest ITR if the applicant is a sole proprietorship;
Accordingly, the registration system governing contracting and
arrangements and implemented by the Regional Offices of the
DOLE is hereby established, with the Bureau of Working (e) A sworn disclosure that the registrant, its officers and owners
Conditions (BWC) as the central registry. or principal stockholders or any one of them, has not been
operating or previously operating as a contractor under a
different business name or entity or with pending cases of
D.O. 18-A-11, Sec. 15 Requirements for registration. The
violations of these Rules and/or labor standards, or with a
application for registration as a contractor shall be filed at the
cancelled registration. In case any of the foregoing has a
DOLE Regional Office in the region where it seeks to principally
pending case, a copy of the complaint and the latest status of
operate. The applicant shall provide in the application form the
the case shall be attached.
following information:
The application shall be verified. It shall include a DOLE

(a) The name and business address of the applicant and the
certification of attendance to orientation seminar on these Rules
areas where it seeks to operate;
and an undertaking that the contractor shall abide by all
applicable labor laws and regulations.
(b) The names and addresses of officers, if the applicant is a
corporation, partnership, cooperative or a labor organization;
(c) The nature of the applicant’s business and the industry or MANDATORY REGISTRATION OF CONTRACTORS
industries where the applicant seeks to operate; Venue Regional office where it
principally operates
(d) The number of regular workers and the total workforce; Central Registry: Bureau of
Working Conditions (BWC)
(e) The list of clients, if any, the number of personnel assigned to Requirements Sec. 15, LC
each client, if any, and the services provided to the client; Effect of failure to register Presumption of labor-only


contracting that they were reassigned to another
principal necessarily ends such
responsibility
c. 8.1. Bureau of Working Conditions (BWC)/central registry Rationale The joint and several liability of the
employer or principal was enacted to
D.O. 18-A-11, Sec. 14 (3) Accordingly, the registration ensure compliance with the provisions of
system governing contracting arrangements and implemented the Code, principally those on statutory
by the Regional Offices of the DOLE is hereby established, with minimum wage. The contractor or
the Bureau of Working Conditions (BWC) as the central registry. subcontractor is made liable by virtue of
his or her status as a direct employer,
c. 8.2. Effect of Non-compliance and the principal as the indirect
employer of the contractor's employees.
This liability facilitates, if not guarantees,
D.O. 18-A-11, Sec. 14 (2) Failure to register shall give rise to
payment of the workers' compensation,
the presumption that the contractor is engaged in labor-only
thus, giving the workers ample
contracting.
protection as mandated by the 1987
Constitution. This is not unduly
c. 9. Solidary Liability of Indirect Employer/Direct Employer
burdensome to the employer. Should
the indirect employer be constrained to
D.O. 18-A-11, Sec. 5 (2) In the event of any violation of any
pay the workers, it can recover whatever
provision of the Labor Code, including the failure to pay wages,
amount it had paid in accordance with
there exists a solidary liability on the part of the principal and the
the terms of the service contract
contractor for purposes of enforcing the provisions of the Labor
between itself and the contractor.
Code and other social legislation, to the extent of the work
performed under the employment contract.
Benigno M. Vigilla, et al v. Phil. College of Criminology
D.O. 18-A-11, Sec. 27 Effects of finding of labor-only FACTS:
contracting and/or violation of Secs. 7. 8 or 9 of the Rules - A 1. Principal: Phil. College of Criminology (PCCr)
finding by competent authority of labor-only contracting shall Contractor: Metropolitan Building Services Inc. (MBMSI)
render the principal jointly and severally liable with the Workers: Benigno Vigilla et al
contractor to the latter's employees, in the same manner and 2. Workers were janitors, janitresses and supervisor under the
extent that the principal is liable to employees directly hired by Maintenance Dept. of PCCr, under the control and
him/her, as provided in Article 106 of the Labor Code, as supervision of Atty. Florante Seril (PCCr’s Senior VP for
amended. Administration).
A finding of commission of any of the prohibited activities in Sec. -‐ However, Atty. Florante clarified with them that they
7, or violation of either Secs. 8 or 9 hereof shall render the were not direct employees of PCCr rather, that they
principal the direct employer of the employees of the contractor were under MBMSI of which Atty. Florante himself was
or subcontractor, pursuant to Article 109 of the Labor Code, as the President and Gen. Manager.
amended. 3. PCCr discovered that the Certificate of Incorporation of
MBMSI had been revoked as of July 2, 2003. On March 16,
2009, PCCr terminated relationship with MBMSI, resulting
LIABILITY OF INDIRECT AND DIRECT EMPLOYER in the dismissal of the petitioners.
Direct Employer The direct employer (contractor) is 4. In complaints for illegal dismissal, petitioners alleged PCCr,
always solidarily liable with its employee not MBMSI, was their employer because (a) MBMSI’s
Indirect Employer The indirect employer (principal) is only certification had been revoked; (b) PCCr had direct control
liable if there exists a labor-only over MBMSI’s operations; (c) there was no contract
contracting relationship between an between MBMSI and PCCr; and (d) the selection and hiring
indirect and direct Employer, which is of employees were undertaken by PCCr.
determined only by a competent 5. PCCr and Bautista contended that (a) PCCr could not have
authority illegally dismissed the complainants because it was not
The indirect employer’s liability to the their direct employer; (b) MBMSI was the one who had
contractor’s employees extends only to complete and direct control over the complainants; and (c)
the period during which they were PCCr had a contractual agreement with MBMSI, thus,
working for the petitioner, and the fact making the latter their direct employer.


6. PCCr submitted to LA releases, waivers and quitclaims in -‐ Section 19 of Department Order No. 18-02 issued by
favor of MBMSI executed by the complainants to prove the Department of Labor and Employment(DOLE):
that they were employees of MBMSI and not PCCr. The principal shall be deemed as the direct employer
7. LA: PCCr was the employer. of the contractual employees and therefore, solidarily
-‐ MBMSI was a mere adjunct or alter ego/labor-only liable with the contractor or subcontractor for
contractor; whatever monetary claims the contractual employees
-‐ the complainants were regular employees of PCCr; may have against the former in the case of violations
-‐ PCCr/Bautista were in bad faith in dismissing the as provided for in Sections 5 (Labor-Only contracting)
complainants. PCCr was actually the one which -‐ In light of these conclusions, the Court holds that the
exercised control over the means and methods of the releases, waivers and quitclaims executed by
work of the petitioners, thru Atty. Seril, who was petitioners in favor of MBMSI redounded to the
acting, throughout the time in his capacity as Senior respondents’ benefit. The liabilities of the respondents
Vice President for Administration of PCCr, not in any to petitioners are now deemed extinguished.
way as president of MBMSI.
8. NLRC: LA reversed.
9. CA: NLRC affirmed. See also: Superior Packaging Corp v. Arnel Balagsay
FACTS:
ISSUE/S: 1. The petitioner engaged the services of Lancer to provide
1. WON releases, waivers, and quitclaims are valid (YES) reliever services to its business, which involves the
2. WON labor-only contractor is solidarily liable with employer manufacture and sale of commercial and industrial
(YES) corrugated boxes.
2. According to petitioner, the respondents were engaged for
four (4) months from February to June 1998 and their tasks
HELD: included loading, unloading and segregation of corrugated
1. Yes. Releases, waivers and quitclaims are valid. boxes.
-‐ It was only after the NLRC’s declaration in its February 3. Respondents filed a complaint against the petitioner and
11, 2011 Resolution that the claims of petitioners had its President, Lux for underpayment of wages, non-payment
been settled amicably by virtue of the releases, of premium pay for worked rest, overtime pay and non-
waivers and quitclaims, that petitioners denied having payment of salary.
executed any of these instruments. 4. Pursuant to the said complaint, DOLE conducted an
-‐ This passiveness and inconsistency of petitioners will inspection of the petitioners premises and found several
not pass the scrutiny of this Court. Moreover, mere violations:
unsubstantiated allegations of lack of voluntariness in -‐ (1) non-presentation of payrolls and daily time records;
executing the documents will not suffice to overcome -‐ (2) non-submission of annual report of safety
the presumption of authenticity and due execution of organization;
a duly notarized document. -‐ (3) medical and accident/illness reports;
2. Yes. -‐ (4) non-registration of establishment under Rule 1020
-‐ If a labor-only contractor is solidarily liable with the of Occupational and Health Standards;
employer, then the releases, waivers and quitclaims in -‐ (5) no trained first aide.
favor of MBMSI will redound to the benefit of PCCr. 5. Since petitioner failed to appear in the summary
On the other hand, if a labor-only contractor is not investigation, an Order was issued in favor of the
solidarily liable with the employer, the latter being respondents. Petitioners were ordered to pay respondents
directly liable, then the releases, waivers and their total claims amounted to P840,463.38.
quitclaims in favor of MBMSI will not extinguish the 6. Petitioners filed a MR on the ground that respondents are
liability of PCCr. not its employees but of Lancer and that they pay Lancer in
-‐ As correctly pointed out by the respondents, the basis lump sum for the services rendered. DOLE denied MR and
of the solidary liability of the principal with those ruled that petitioner failed to support its claim that the
engaged in labor-only contracting is the last respondents are not its employees.
paragraph of Article 106 of the Labor Code, which in -‐ And even if they were able to prove such, they still
part provides: “In such cases [labor-only contracting], cannot escape liability as Section13 of the Department
the person or intermediary shall be considered merely Order No. 10, Series of 1997, makes a principal jointly
as an agent of the employer who shall be responsible and severally liable with the contractor to contractual
to the workers in the same manner and extent as if the employees to the extent of the work performed when
latter were directly employed by him.” the contractor fails to pay its employees wages.


-‐ It also failed to produce a written service contract with the
ISSUE/S: Principal employer
WON Superior Packaging Corporation (petitioner) may be held -‐ It is engage in labor-only contracting
solidarily liable with Lancer Staffing & Services Network, Inc. -‐ Therefore, there is ER-EE relationship between principal and
(Lancer) for respondents unpaid money claims (YES) contractual employees making the principal solidarily liable
for all the claims of the employees
HELD:
Yes, they are solidarily liable. See also: Eparwa Security and Janitorial Services Inc. v. Liceo de
-‐ It was the consistent conclusion of the DOLE and the CA Cagayan University
that Lancer was not an independent contractor but was FACTS:
engaged in "labor-only contracting"; hence, the 1. Principal: Liceo de Cagayan University (LCDU)
petitioner was considered an indirect employer of Contractor: Eparwa Security and Janitorial Services
respondents and liable to the latter for their (Eparwa)
unpaid money claims. Workers: 11 security guards
o At the time of the respondents employment in 1998, the 2. Eparwa and LCDU, through representatives, entered into a
applicable regulation was DOLE Department Order No. Contract for Security Services. An important provision of
10, Series of 1997.25Ï‚rÎ½ll Under said Department Order, the contract states the following:
labor-only contracting was defined as follows: -‐ “5. …LCDU agrees to pay Eparwa FIVE THOUSAND
o Sec. 9. Labor-only contracting. (a) Any person who PESOS ONLY (P5,000) per guard a month, payable
undertakes to supply workers to an employer shall be within fifteen (15) days after Eparwa presents its service
deemed to be engaged in labor-only contracting where invoice. Eparwa shall furnish LCDU a monthly copy of
such person: the SSS contribution of guards and monthly payroll of
each guard assigned at LCDU’s premises on a monthly
(1) Does not have substantial capital or investment in the basis.”
form of tools, equipment, machineries, work premises and 3. Eparwa allocated the contracted amount of P5,000 per
other materials; and security per guard per month in the following manner:
Basic Pay P3,409.31
(2) The workers recruited and placed by such persons are Night Differential Pay P113.64
performing activities which are directly related to the 13th Month Pay P284.10
principal business or operations of the employer in which 5-day Incentive Leave P43.54
workers are habitually employed. Uniform Allowance P50.00
-‐ Labor-only contracting is prohibited and the person acting Employer’s SSS, Medicare, ECC P224.80
as contractor shall be considered merely as an agent or Contribution
intermediary of the employer who shall be responsible to Agency Share P420.53
the workers in the same manner and extent as if the latter VAT P454.59
were directly employed by him.
Total P5,000
-‐ A finding that a contractor is a "labor-only" contractor is
4. Dec 21, 1998: 11 security guards of Eparwa assigned to
equivalent to declaring that there is an employer-employee
LCDU (for the period of Dec 1, 1997 to Nov 30, 1998) filed a
relationship between the principal and the employees of the
complaint at the NLRC against both Eparwa and LCDU for
supposed contractor, and the "labor only" contractor is
underpayment of salary, holiday pay, 13th month pay, rest
considered as a mere agent of the principal, the real
day, service incentive leaves, night shift differential,
employer. The former becomes solidarily liable for
overtime pay, along with a prayer for attorney’s fees.
all the rightful claims of the employees. The
-‐ LCDU made a cross-claim that Eparwa should
petitioner therefore, being the principal employer
reimburse LCDU for any payment it may be required
and Lancer, being the labor-only contractor, are
to make to the workers
solidarily liable for respondents unpaid money
5. LA: Guards entitled to wage differentials and premiums for
claims.
holiday and rest day work (claims for 13th month pay,
-‐ The ratio of Lancer’s authorized capital stock of P400,000 as
service incentive pa and night shift were denied).
against its subscribed and paid-up capital stock of P25,000
-‐ Eparwa and LCDU are solidarily liable, pursuant to
shows that it has no substantial capital investment to
Article 109.
maintain day-to-day operations
-‐ Eparwa should reimburse LCDU for whatever amount
-‐ The nature of its work was directly related to the principal’s
the latter pays to the guards
business
-‐ Eparwa to pay LCDU P20,000 and for the guards,
P5,000 each as moral and exemplary damages


6. LCDU appealed insofar as the propriety of the awarded o But, in able for Eparwa to comply with the Wage
amount in that guards not similarly situated were granted Order, the contract between it and LCDU must be
uniform awards and that the bases for the computation of amended, specifically the consideration (the amount
the awards were not included. that LCDU pays Eparwa), in order that Eparwa may
7. Eparwa appealed as well, insofar as being held liable, as make the payment of the increased wages.
well as the awarded cross-claims in favor of LCDU. -‐ However, the Contract for Security Services have
8. NLRC: Guards still entitled to the wage differentials and already expired at this point, (like in the Eagle Security
premiums for holiday + rest day work. case) and therefore, not subject for amendment of the
-‐ Eparwa and LCDU still solidarily liable consideration anymore.
-‐ However, the order for Eparwa to reimburse LCDU -‐ LCDU’s ultimate liability comes into play because of
was set aside. this expired contract: while it has no privity of contract
-‐ Awards were also recomputed according ot the actual with the guards, it is still solidarily liable with Eparwa.
dates worked by the security guards Since the consideration cannot be adjusted anymore,
9. Both Eparwa and LCDU again questioned the decision and Eparwa may just claim reimbursement for the payment
filed for partial motions for reconsideration. it makes to the guards. However, LCDU cannot ask for
-‐ LCDU questions the setting aside of the order for reimbursement from Eparwa.
Eparwa to reimburse the former
-‐ Eparwa, on the other hand, prayed that it should be
the one to be reimbursed by LCDU for any payments c. 10. Prohibitions
made by it.
-‐ The NLRC granted Eparwa’s partial MR and held that c. 10.a. Against labor-only contracting
while there is solidary liability, LCDU is the one who is
ultimately liable D.O. 18-A-11, Sec. 6 Prohibition against labor-only
-‐ LCDU filed with the CA a petition for certiorari contracting. Labor-only contracting is hereby declared
10. CA: Petition granted. LA decision reinstated prohibited. For this purpose, labor only contracting shall refer to
-‐ Eparwa’s MR of this decision was denied, hence the an arrangement where:
petition
(a) The contractor does not have substantial capital or
ISSUE/S: investments in the form of tools, equipment, machineries, work
1. WON LCDU is, alone, ultimately liable to the security premises, among others, and the employees recruited and
guards for the wage differentials and other premiums (YES) placed are performing activities which are usually necessary or
desirable to the operation of the company, or directly related to
HELD: the main business of the principal within a definite or
1. Yes. LCDU is ultimately liable. It is also liable to predetermined period, regardless of whether such job, work or
reimburse Eparwa for the amount it spends to pay service is to be performed or completed within or outside the
the guards. premises of the principal; or
-‐ The Court noted that the current case’s facts are
congruent with its earlier ruling in Eagle Security (b) The contractor does not exercise the right to control over the
Agency v. NLRC, which calls for its application to the performance of the work of the employee.
current case.
-‐ While there is solidary liability between the principal c. 10.b. Other prohibitions
and contractor, it does not preclude the right of the
one who paid to be reimbursed by his co-debtor.
D.O. 18-A-11, Sec. 7 Other Prohibitions - Notwithstanding
-‐ Essentially, the ruling is a Wage Order that mandates Section 6 of these Rules, the following are hereby declared
the payment of the increase in the wages of the
prohibited for being contrary to law or public policy:
workers (the wage differentials). This shall be borne by
the principal (LCDU in this case).
A. Contracting out of jobs, works or services when not done in
o However, this does NOT mean that LCDU itself will
good faith and not justified by the exigencies of the business
pay the mandated increase in wage directly to the such as the following:
security guards. There is no privity of contract
(1) Contracting out of jobs, works or services when the same
between LCDU and the guards; it only exists
results in the termination or reduction of regular employees and
between Eparwa and the guards.
reduction of work hours or reduction or splitting of the
-‐ Hence, the primary recourse of the guards is against bargaining unit.
Eparwa.


(2) Contracting out of work with a “Cabo”. above when not done in good faith and not justified by the
exigencies of the business.
(3) Taking undue advantage of the economic situation or lack of
bargaining strength of the contractor’s employees, or c. 11. Effects of finding of LOC and/or any violation
undermining their security of tenure or basic rights, or
circumventing the provisions of regular employment, in any of
the following instances: 7. Employment Contract
(i) Requiring them to perform functions which are currently being Global Resource for Outsourced Workers (GROW) Inc., v.
performed by the regular employees of the principal; and Abraham C. Velasco & Nanette T. Velasco
FACTS:
(ii) Requiring them to sign, as a precondition to employment or 1. Global Resource for Outsourced Workers (GROW), Inc. is a
continued employment, an antedated resignation letter; a blank domestic corporation engaged in the placement of workers
payroll; a waiver of labor standards including minimum wages for overseas deployment; Eusebio Tanco is the President
and social or welfare benefits; or a quitclaim releasing the 2. JAN 2008: Respondents Abraham and Nanette Velasco
principal, contractor or from any liability as to payment of future were hired by MS Retail, through GROW, as Circus
claims. Performer and Circus Performer-Assistant at MS Retail’s
Store in Kuwait
(4) Contracting out of a job, work or service through an in-house -‐ Their employment contracts stated that Abraham and
agency. Nanette were entitled to the following monthly
salaries and had the following work schedule:
(5) Contracting out of a job, work or service that is necessary or o Abraham (KD 650 or $2,303.92); Nanette (KD 150
desirable or directly related to the business or operation of the or $531.87)
principal by reason of a strike or lockout whether actual or o 4 shows/day; 6 days/week; 48 hours/month
imminent. -‐ It was also stipulated that MS Retail may determine
the hours of work assigned “from time to time in
(6) Contracting out of a job, work or service being performed by accordance with the general and particular
union members when such will interfere with, restrain or coerce requirements of the operation” of MS Retail
employees in the exercise of their rights to self-organization as -‐ When respondents are not actually performing shows,
provided in Art. 248 (c) of the Labor Code, as amended. they may be asked to carry out duties as the business
may require
(7) Repeated hiring of employees under an employment contract 3. FEB. 22, 2008: Velascos arrived in Kuwait, and were made
of short duration or under a Service Agreement of short duration to perform after a brief orientation
with the same or different contractors, which circumvents the -‐ They met with the store manager and brought up the
Labor Code provisions on Security of Tenure. work hours and show schedules in the employment
contract
(8) Requiring employees under a subcontracting arrangement to -‐ Were informed that the work hours of “48hrs/mo” was
sign a contract fixing the period of employment to a term a typographical error because the correct number of
shorter than the term of the Service Agreement, unless the working hours was 48 hours per week, to which they
contract is divisible into phases for which substantially different complied
skills are required and this is made known to the employee at 4. AUG. 26, 2008: Velascos went to Thailand on approved
the time of engagement. vacation leave
5. SEPT. 2, 2008: Abraham sent an email to Mr. Joseph San
(9) Refusal to provide a copy of the Service Agreement and the Juan, HR Coordinator of MS Retail, saying they couldn’t
employment contracts between the contractor and the return to work because of the political protests in Thailand,
employees deployed to work in the bargaining unit of the but that they had rebooked their return flight for Sept. 10
principal’s certified bargaining agent to the sole and exclusive 6. Instead of returning to Kuwait, they went home to the
bargaining agent (SEBA). Philippines on Sept. 9
7. SEPT. 17, 2008: Mr. San Juan emailed the Velascos asking
(10) Engaging or maintaining by the principal of subcontracted for their definite date of return, and warned them that if
employees in excess of those provided for in the applicable they do not immediately return to work before the end of
Collective Bargaining Agreement (CBA) or as set by the Industry the month, they will be dismissed from employment for
Tripartite Council (ITC). cause
B. Contracting out of jobs, works or services analogous to the


-‐ In his email, he said, “When are you coming back to without justifiable reason indicated an animus to no
Kuwait? This extension is not acceptable anymore, all longer go back to their work in Kuwait
your extended days will be considered as leave -‐ Velascos filed an MR à Denied
without pay and this is our final warning to both of -‐ Petition for certiorari to the CA
you.” (relevant to issue on notice later) 12. JAN. 31, 2011: CA held that while Velascos were validly
-‐ Velascos ignored the email terminated, the petitioners failed to comply with the
8. SEPT. 23, 2008: MS Retail terminated their employment twin-notice rule: 1) first informing respondents of the
effective Sept. 23 charge and affording them an opportunity to be heard;
-‐ Pursuant to Kuwait Private Labour Law Article 55: then 2) subsequently advising them of their termination
-‐ “The employer has the right to terminate the labourer -‐ CA held petitioners liable for nominal damages and
without notice and indemnity in the following cases: (c) attorney’s fees
If he has been absent from duty for more that [sic] -‐ CA found Velascos entitled to overtime pay for work
seven consecutive days without any legal reason.” rendered in excess of 48 hours per month
9. Unknown to MS Retail, on Sept. 15, 2008, the Velascos filed 13. Appeal under Rule 45 to review the decision of the CA
a labor case for constructive dismissal, breach of contract,
and payment of the remaining portion of their contracts, ISSUE/S:
damages and attorney’s fees 1. WON the CA erred in granting overtime pay considering
-‐ Contrary to the terms of their contract, they were that its denial was not appealed by the Velascos (YES)
made to work for at least 8 hours a day, or 48 hours a 2. WON the CA erred in awarding nominal damages and
week, without overtime pay attorney’s fees (NO)
-‐ They were also assigned work not related to their task -‐ WON the Velascos were terminated for just cause
as circus performers (YES)
-‐ They were deemed to have been constructively -‐ If so, WON due process was observed in terminating
dismissed, warranting payment of the unexpired them (NO)
portion of their contract 3. What is the nature of the liability of the petitioners (JOINT
10. APR. 8, 2009: Labor Arbiter granted the Velascos’ claim; AND SEVERAL)
found that the Velascos were constructively dismissed from
service without just cause HELD:
-‐ Debunked the petitioners’ defense that the Velascos’ 1. Court held: YES, the CA should not have granted
abandoned their work à LA said that this was shown overtime pay.
by the immediate filing of the complaint for illegal -‐ PET: Failure to appeal the ruling of the LA denying the
dismissal claim for overtime pay rendered it final and binding
-‐ LA ordered GROW and MS Retail to pay the -‐ In Bahia Shipping Services, Inc. v. Chua, the Court held
respondents, making them jointly and severally liable that “when strict adherence to such technical rule will
-‐ LA dismissed the Velascos’ claim for overtime because impair a substantive right, such as that of an illegally
a typographical error was committed in the number of dismissed employee to monetary compensation as
working hours à LA observed that “it is a known provided by law, then equity dictates that the Court
practice that employees work for a regular 8 hours a set aside the rule.”
day and 48 hours for 6 days work” -‐ SC: Although Velascos were dismissed for cause,
-‐ Petitioners appealed to the NLRC; Velascos did not depriving them of overtime pay, IF rightly due, would
appeal the denial of their claim for overtime pay amount to an impairment of substantive rights, so it
11. OCT. 30, 2009: NLRC 2nd Div. dismissed the complaint for was proper for the CA to have passed upon the matter
constructive/illegal dismissal on the ground of of overtime pay
abandonment -‐ As a general rule, factual findings may not be reviewed
-‐ NLRC found no basis to sustain the charge of on appeal, subject to several exceptions, such as when
constructive dismissal premised on the act of imposing there is a conflict between the factual findings of the
a greater number of working hours different from the CA and the NLRC (present in this case)
stipulations in the contract à It affirmed the standard -‐ PET: 48 hours per month work is a mere typographical
practice of party entertainers in MS Retail, rendering error, the true intention was 48 hours per week
an average of 8 hours a day or 48 hours for 1 week, as -‐ SC: Court agrees.
well as the LA’s finding of typographical error o Obligations arising from contracts, like an
-‐ NLRC gave credence to the claim of abandonment employment contract, have the force of law
and held that the respondents continuing absence between the contracting parties and should be
complied with in good faith.


o When the terms of the contract are clear and leave (Sept. 23, 2008), it failed to furnish them with a written
no doubt as to the intention of the contracting notice of the charges, denying them a reasonable
parties, the literal meaning of its stipulations opportunity to explain their side
governs. -‐ SC: Failure to observe due process did not invalidate
o When the contract is vague and ambiguous, as in the dismissal but it rendered petitioners liable for
the case at bar, it is the Court’s duty to determine nominal damages
the real intention of the contracting parties o Under CC, nominal damages are adjudicated in
considering the contemporaneous and order that a right of the plaintiff, which has been
subsequent acts of the latter. violated or invaded, may be vindicated or
-‐ The Velascos agreed to render 4 shows per day, with recognized, and not for the purpose of
an est. performance time of 30 mins. They were also indemnifying the plaintiff for loss suffered
given time to prepare before and rest after. Normally, o Proper to award P30K as nominal damages
they would consume 2 hours per show, and if they o Proper to award P30K as attorney’s fees (bec labor
were required to render 4 shows per day, they had to cases take much time to litigate and require
work for at least 8 hours per day. Since it is a 6-day special dedication and expertise on the part of
work week, the inevitable conclusion is that they were counsel)
required to work for at least 48 hours per week. 3. They are jointly and severally liable/solidarily
-‐ They were also properly apprised of the error in the liable.
contracts, and despite ample opportunity (more than -‐ The CA only ordered MS Retail to pay, but Sec. 10 of
half a year) to air out the misgivings, they did nothing RA 8042 (The Migrant Workers and Overseas Filipinos
à they carried out their work for more than half the Act of 1995), as amended by RA 10022) provides for
entire duration the solidary liability of the principal and the
o Since they only raised the complaint before the recruitment agency
LA, it was just a mere afterthought o Covering “claims for actual, moral, exemplary, and
o SC: Evaluating the terms, it reveals that the true other forms of damage,” “the liability of the
intention was for respondents to perform 48 hours principal/employer and the
per week, not per month; in case of a conflict recruitment/placement agency for any and all
between the text of a contract and the intent of claims under this section shall be joint and
the parties, the latter prevails (intention is the soul several.” And “if the recruitment/placement
of a contract) agency is a juridical being, the corporate officers
2. Court held: NO, the CA was correct in awarding and directors and partners … shall themselves be
nominal damages because while the Velascos jointly and solidarily liable with the corporation or
were terminated for just cause, due process was partnership for the aforesaid claims and
not observed in doing so. damages.”
-‐ It is unassailed that the respondents abandoned their
work when they failed to resume their duties without II. Labor Standards Law
valid reason after their leave of absence, and the CA
correctly ruled that the termination was with just cause 1. Employment Policies, Recruitment and
-‐ Petitioners, however, are not absolved from liability
Placement of W orkers, and Agencies
-‐ Book V, Rule XIV of the Omnibus Rules Implementing
the Labor Code outlines the procedure for termination
a. Employment Policies
of employment that the employer must follow to be
totally free from liability
State is to protect local and overseas workers.
o Employer must first have sufficient ground for the
-‐ As soon as practicable, send only skilledOFWs
termination
-‐ (Possession of skills = most effective tool of empowerment)
o Employer must comply with procedural due
-‐ Does not promote OFW as means of economic growth
process by giving two notices:
-‐ Must depend on the assurance that dignity and rights of
§ Notice of the intention to dismiss, indicating
OFW not be compromised of violated
the acts or omissions complained of, coupled
with an opportunity for the employees to
Will deploy OFW only in countries where rights of
answer and rebut the charges;
OFW are protected:
§ Notice of the decision to dismiss
1. With existing labor and social laws protecting rights of
-‐ MS Retail failed in complying with the procedural due
migrant workers
process; while it notified Velascos of their dismissal
2. Signatory to multilateral conventions and declarations


3. With bilateral agreement or arrangement with gov’t migrant workers to the national economy through their foreign
4. With positive and concrete measures to protect rights exchange remittances, the State does not promote overseas
employment as a means to sustain economic growth and
May terminate or impose a ban on deployment achieve national development. The existence of the overseas
- RA 8042 also applicable to local workers employment program rests solely on the assurance that the
dignity and fundamental human rights and freedoms of the
Art. 3 Declaration of basic policy – The State shall afford Filipino citizens shall not, at any time, be compromised or
protection to labor, promote full employment, ensure equal violated. The State, therefore, shall continuously create local
work opportunities regardless of sex, race or creed and regulate employment opportunities and promote the equitable
the relations between workers and employers. The State shall distribution of wealth and the benefits of development
assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions (g). The State recognizes that the most effective tool for
of work. empowerment is the possession of skills by migrant workers. The
government shall provide them free and accessible skills
Art. 12 Statement of objectives – It is the policy of the State: development and enhancement programs. Pursuant to this and
(a) To promote and maintain a state of full employment through as soon as practicable, the government shall deploy and/or allow
improved manpower training, allocation and utilization the deployment only of skilled Filipino workers
(f) To strengthen the network of public employment offices and
rationalize the participation of the private sector in the RA 8042 as amended, Sec. 4 Deployment of Migrant
recruitment and placement of workers, locally and overseas, to Workers – The State shall allow the deployment of overseas
serve national development objectives Filipino workers only in countries where the rights of Filipino
migrant workers are protected. The government recognizes any
Art II, Sec. 9, CON87 The State shall promote a just and of the following as a guarantee on the part of the receiving
dynamic social order that will ensure the prosperity and country for the protection of the rights of overseas Filipino
independence of the nation and free the people from poverty workers:
through policies that provide adequate social services, promote
full employment. a. It has existing labor and social laws protecting the rights of
workers, including migrant workers;
b. It is a signatory to and/or a ratifier of multilateral conventions,
declarations or resolutions relating to the protection of workers,
including migrant workers; and
c. It has concluded a bilateral agreement or arrangement with
opportunities for all..
the government on the protection of the rights of overseas
Filipino Workers:
RA 8042 as amended, Sec. 2
Provided, That the receiving country is taking positive, concrete
(a). In the pursuit of an independent foreign policy and while measures to protect the rights of migrant workers in furtherance
considering national sovereignty, territorial integrity, national of any of the guarantees under subparagraphs (a), (b) and (c)
interest and the right to self-determination paramount in its hereof. In the absence of a clear showing that any of the
relations with other states, the State shall, at all times, uphold aforementioned guarantees exists in the country of destination
the dignity of its citizens whether in country or overseas, in of the migrant workers, no permit for deployment shall be issued
general, and Filipino migrant workers, in particular, continuously by the Philippine Overseas Employment Administration (POEA).
monitor international conventions, adopt/be signatory to and The members of the POEA Governing Board who actually voted
ratify those that guarantee protection to our migrant workers, in favor of an order allowing the deployment of migrant workers
and endeavor to enter into bilateral agreements with countries without any of the aforementioned guarantees shall suffer the
hosting overseas Filipino workers. penalties of removal or dismissal from service with
disqualification to hold any appointive public office for five (5)
(b). The State shall afford full protection to labor, local and years,
overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all. Further, the government official or employee responsible for the
Towards this end, the State shall provide adequate and timely issuance of the permit or for allowing the deployment of migrant
social, economic and legal services to Filipino migrant workers. workers in violation of this section and in direct contravention of
an order by the POEA Governing Board prohibiting deployment
(c). While recognizing the significant contribution of Filipino shall be meted the same penalties in this section.


workers from the Philippines. The Saudi market has arguably the
For this purpose, the Department of Foreign Affairs, through its strongest impact in the Philippine overseas employment
foreign posts, shall issue a certification to the POEA, specifying - Asia’s newly industrialized countries (NICs) are now starting to
therein the pertinent provisions of the receiving country's become potentially huge labor markets for Filipinos.
labor/social law, or the convention/declaration/resolution, or the
bilateral agreement/arrangement which protect the rights of LEGISLATIVE HISTORY OF OVERSEAS EMPLOYMENT
migrant workers. The State shall also allow the deployment of - Act No. 2480 – first law passed related to overseas
overseas Filipino workers to vessels navigating the foreign seas employment. It provided rules for licensing as well as welfare
or to installations located offshore or on high seas whose regulations.
owners/employers are compliant with international laws and - PD 442 (Labor Code) – provided stricter governmental
standards that protect the rights of migrant workers. The State regulation of overseas employment. It introduced agencies such
shall likewise allow the deployment of overseas Filipino workers as the Overseas Employment Development Board (OEDB) and
to companies and contractors with international operations: the National Seamen Board (NSB) for a more systematic
management of the overseas employment program
Provided, That they are compliant with standards, conditions and - EO 797 – streamlined the structure by combining OEDB, and
requirements, as embodied in the employment contracts NSB into a single structure: the POEA.
prescribed by the POEA and in accordance with internationally- - EO 247 – also known as the POEA Reorganization Act, it was
accepted standards. passed after the EDSA revolution to be more responsive to the
calls for a better delivery of services. It strengthened the worker’s
protection and also imposed tighter regulations.
RA 8042 as amended, Sec. 5 Termination or Ban on
- RA 8042 – the Migrant Workers and Overseas Filipinos Act of
Deployment – Notwithstanding the provisions of Section 4
hereof, in pursuit of the national interest or when public welfare 1995. Is the current law that established a higher standard of
protection and welfare for the OFWs, their families and OFWs in
so requires, the POEA Governing Board, after consultation with
distress
the Department of Foreign Affairs, may, at any time, terminate or
- RA 10022 – amended some provisions of RA 8042 and
impose a ban on the deployment of migrant workers.
improved the standard set in 8042.
- To pursue its responsibility to promote employment

OVERSEAS EMPLOYMENT POLICY
opportunities, the DOLE carries out programs for local and
- OFWs are classified by DOLE either as land-based or sea-
overseas employment
based.
o The Bureau of Local Employment (BLE) handles the
o - Land-based – contract workers engaged in offshore
effective allocation of manpower resources in local
activities whose occupation requires that majority of his
employment.
working hours are spent on land. They constitute the great
o The Philippine Overseas Employment Administration
majority of OFWs.
(POEA), on the other hand, is charged with the
o Sea-based – contract workers employed in a vessel
management of overseas employment
engaged in maritime navigation
- Selective Deployment is also now employed, meaning there
HISTORY OF OVERSEAS EMPLOYMENT
are certain requirements that a host country has to meet before
- Labor migration in the Philippines began in the 1900s when
an OFW can be authorized to go there.
Hawaii underwent a severe manpower shortage. 200 Filipinos
o Existence of labor and social laws protecting the rights of
were the initial contingent there. However, more Filipinos
workers, including migrant workers
followed until 70% of the plantation labor bwere comprised of
o Country is a signatory to or a ratifier of multilateral
Filipinos.
conventions, declarations or resolutions relating to workers,
- A demand for fruit pickers in California arose. Filipinos ended
including migrant workers
up being in demand with a good reputation as fruit pickers,
o Country has concluded bilateral agreement or arrangement
prompting up manpower recruitment in the Philippines
with our government as to the protection of rights of
- After World War II, Filipino workers were mostly going to US
OFWs.
military installments in Japan, Guam and the Wake Islands to
work on military bases
b. Employment Agencies
- During this same timeframe, a demand for health workers arose
in Canada and Australia. Our Asian neighbors also began
b. 1. Private Sector – Agencies and Entities
opening their labor markets for construction and logging jobs.
- It was in the 1970s, however, that overseas employment
b. 1.1. Parties
became much more prevalent as the oil-rich countries in the
Middle East (particularly Saudi Arabia), began to demand skilled


Parties: - Issued by Sec. of Labor
(a) Worker; and
(b) Private employment agency, or b. 1.1.iii. Private recruitment entity
(c) Private recruitment entity
Art. 13 (e) "Private recruitment entity" means any person or
b. 1.1.i. Worker association engaged in the recruitment and placement of
workers, locally or overseas, without charging, directly or
Art. 13 (a). "Worker" means any member of the labor force, indirectly, any fee from the workers or employers.
whether employed or unemployed.
(f) "Authority" means a document issued by the Department of
RA 8042 as amended, Sec. 3 (a). "Overseas Filipino worker" Labor authorizing a person or association to engage in
refers to a person who is to be engaged, is engaged or has been recruitment and placement activities as a private recruitment
engaged in a remunerated activity in a state of which he or she is entity.
not a citizen or on board a vessel navigating the foreign seas
other than a government ship used for military or non- Private recruitment entity
commercial purposes or on an installation located offshore or on - Engaged in recruitment and placement of workers
the high seas; to be used interchangeably with migrant worker. - Either locally or abroad
- Without charging any fee
-‐ Any member of the labor force (local or abroad) - Must have an authority—Document authorizing the entity to
-‐ OFW was, is, or will be engaged in a remunerated activity engage in recruitment and placement
- in:
1) A state in which he or she is not a citizen b. 1.2. Recruitment and Placement
2) (2) A vessel navigating foreign seas
- Except if government or military vessel, or on installation Kinds:
locate offshore/high seas. (a) Local employment
(b) Overseas employment
b. 1.1.ii. Private employment agency
b. 1.2.i. Local employment
Art. 13 (c) "Private fee-charging employment agency" means
any person or entity engaged in recruitment and placement of Art. 13 (b) "Recruitment and placement" refers to any act of
workers for a fee which is charged, directly or indirectly, from the canvassing, enlisting, contracting, transporting, utilizing, hiring
workers or employers or both. or procuring workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad,
(d) "License" means a document issued by the Department of whether for profit or not: Provided, That any person or entity
Labor authorizing a person or entity to operate a private which, in any manner, offers or promises for a fee, employment
employment agency. to two or more persons shall be deemed engaged in recruitment
and placement.
Art. 12 (f). Statement of objectives – It is the policy of the State:

Local employment
To strengthen the network of public employment offices and
rationalize the participation of the private sector in the - Acts (cectuhp + rcpa)
- Canvassing, enlisting, contracting, transporting, utilizing,
recruitment and placement of workers, locally and overseas, to
hiring or procuring workers, referrals, contract services,
serve national development objectives
promising or advertising employment (local or abroad)
- Offers or promises employment, for a fee, to 2 or more
Art. 14 (a). Employment promotion – The Secretary of Labor
persons
shall have the power and authority: To organize and establish
new employment offices in addition to the existing employment
b. 1.2.ii. Overseas employment
offices under the Department of Labor as the need arises
RA 8042 as amended, Sec. 6 Definition — For purposes of

Private employment agency
this Act, illegal recruitment shall mean any act of canvassing,
- Engaged in recruitment or placement of workers for a fee
enlisting, contracting, transporting, utilizing, hiring, or procuring
charged directly or indirectly to the EE or ER or both
workers and includes referring, contract services, promising or
- Must have a license
advertising for employment abroad, whether for profit or not,
- Document authorizing the agency to operate
when undertaken by non-licensee or non-holder of authority

contemplated under Article 13(f) of Presidential Decree No. 442, of Labor and Employment from the time of actual signing
as amended, otherwise known as the Labor Code of the thereof by the parties up to and including the period of the
Philippines: Provided, That any such non-licensee or non-holder expiration of the same without the approval of the Department
who, in any manner, offers or promises for a fee employment of Labor and Employment;
abroad to two or more persons shall be deemed so engaged. It
shall likewise include the following acts, whether committed by j. For an officer or agent of a recruitment or placement agency to
any person, whether a non-licensee, non-holder, licensee or become an officer or member of the Board of any corporation
holder of authority: engaged in travel agency or to be engaged directly or indirectly
in the management of travel agency;
a. To charge or accept directly or indirectly any amount greater
than that specified in the schedule of allowable fees prescribed k. To withhold or deny travel documents from applicant workers
by the Secretary of Labor and Employment, or to make a worker before departure for monetary or financial considerations, or for
pay or acknowledge any amount greater than that actually any other reasons, other than those authorized under the Labor
received by him as a loan or advance; Code and its implementing rules and regulations;
b. To furnish or publish any false notice or information or l. Failure to actually deploy a contracted worker without valid
document in relation to recruitment or employment; reason as determined by the Department of Labor and
Employment:
c. To give any false notice, testimony, information or document
or commit any act of misrepresentation for the purpose of m. Failure to reimburse expenses incurred by the worker in
securing a license or authority under the Labor Code, or for the connection with his documentation and processing for purposes
purpose of documenting hired workers with the POEA, which of deployment, in cases where the deployment does not actually
include the act of reprocessing workers through a job order that take place without the worker's fault. Illegal recruitment when
pertains to nonexistent work, work different from the actual committed by a syndicate or in large scale shall be considered
overseas work, or work with a different employer whether an offense involving economic sabotage; and
registered or not with the POEA;
n. To allow a non-Filipino citizen to head or manage a licensed
d. To include or attempt to induce a worker already employed to recruitment/manning agency.
quit his employment in order to offer him another unless the Illegal recruitment is deemed committed by a syndicate if carried
transfer is designed to liberate a worker from oppressive terms out by a group of three (3) or more persons conspiring or
and conditions of employment; confederating with one another. It is deemed committed in large
scale if committed against three (3) or more persons individually
e. To influence or attempt to influence any person or entity not or as a group.
to employ any worker who has not applied for employment
through his agency or who has formed, joined or supported, or In addition to the acts enumerated above, it shall also be
has contacted or is supported by any union or workers' unlawful for any person or entity to commit the following
organization; prohibited acts:
f. To engage in the recruitment or placement of workers in jobs 1. Grant a loan to an overseas Filipino worker with interest
harmful to public health or morality or to the dignity of the exceeding eight percent (8%) per annum, which will be used for
Republic of the Philippines; payment of legal and allowable placement fees and make the
migrant worker issue, either personally or through a guarantor or
g. To obstruct or attempt to obstruct inspection by the Secretary accommodation party, postdated checks in relation to the said
of Labor and Employment or by his duly authorized loan;
representative;
2. Impose a compulsory and exclusive arrangement whereby an
h. To fail to submit reports on the status of employment, overseas Filipino worker is required to avail of a loan only from
placement vacancies, remittance of foreign exchange earnings, specifically designated institutions, entities or persons;
separation from jobs, departures and such other matters or
information as may be required by the Secretary of Labor and 3. Refuse to condone or renegotiate a loan incurred by an
Employment; overseas Filipino worker after the latter's employment contract
has been prematurely terminated through no fault of his or her
i. To substitute or alter to the prejudice of the worker, own;
employment contracts approved and verified by the Department


4. Impose a compulsory and exclusive arrangement whereby an Overseas employment
overseas Filipino worker is required to undergo health - Illegal Recruitment (Sec. 6, RA 8042)—Does not have license
examinations only from specifically designated medical clinics, nor authority but engages in acts of recruitment and
institutions, entities or persons, except in the case of a seafarer placement for a fee to two or more persons, or has a license
whose medical examination cost is shouldered by the and engages in the practices enumerated in the provision
principal/ship owner;
b. 1.2.ii.a. Policy of deregulation
5. Impose a compulsory and exclusive arrangement whereby an
overseas Filipino worker is required to undergo training, RA 8042 as amended, Sec. 29 Comprehensive Deregulation
seminar, instruction or schooling of any kind only from Plan On Recruitment Activities – Pursuant to a progressive policy
specifically designated institutions, entities or persons, except of deregulation whereby the migration of workers becomes
for recommendatory trainings mandated by principals/ship strictly a matter between the worker and his foreign employer,
owners where the latter shoulder the cost of such trainings; the DOLE within one (1) year from the effectivity of this Act, is
hereby mandated to formulate a five-year comprehensive
6. For a suspended recruitment/manning agency to engage in deregulation plan on recruitment activities taking into account
any kind of recruitment activity including the processing of labor market trends, economic conditions of the country and
pending workers' applications; and emergency circumstances which may affect the welfare of
migrant workers.
7. For a recruitment/manning agency or a foreign
principal/employer to pass on the overseas Filipino worker or Sec. 30 Gradual Phase-Out Of Regulatory Functions – Within a
deduct from his or her salary the payment of the cost of period of five (5) years from the effectivity of this Act, the DOLE
insurance fees, premium or other insurance related charges, as shall phase out the regulatory functions of the POEA pursuant to
provided under the compulsory worker's insurance coverage. the objectives of deregulation.
The persons criminally liable for the above offenses are the Hon. Patricia A. Sto. Tomas v. Rey Salac et al
principals, accomplices and accessories. In case of juridical
Doctrine: The ff. provisions of RA 8042 are interpreted such:
persons, the officers having ownership, control, management or
Sec. 6—Illegal recruitment distinguishes between licensed and
direction of their business who are responsible for the
non-licensed recruitment entities, in that licensed entities are
commission of the offense and the responsible
guilty only of illegal recruitment if they commit the acts
employees/agents thereof shall be liable. enumerated in the section, while non- licensed entities
conducting recruitment activities are guilty of illegal recruitment,
In the filing of cases for illegal recruitment or any of the
whether or not they commit the acts enumerated.
prohibited acts under this section, the Secretary of Labor and
Sec. 7—It is within the power of Congress to fix penalties
Employment, the POEA Administrator or their duly authorized contained in this section, consistent with the State’s policy of
representatives, or any aggrieved person may initiate the
fully protecting labor.
corresponding criminal action with the appropriate office. For
Sec. 9—Allowing offended parties to file criminal actions in
this purpose, the affidavits and testimonies of operatives or
their places of residence is consistent with RA 8042’s policy of
personnel from the Department of Labor and Employment,
serving the best interests of the victims of illegal recruitment.
POEA and other law enforcement agencies who witnessed the Sec. 10—Corporate officers, directors, and partners of a
acts constituting the offense shall be sufficient to prosecute the
recruitment and placement agency are solidarily liable with their
accused.
agency only when it is shown that they have been remiss in
directing the agency’s affairs.
In the prosecution of offenses punishable under this section, the CASE # 1
public prosecutors of the Department of Justice shall collaborate
FACTS:
with the anti-illegal recruitment branch of the POEA and, in
1. 2002 – Rey Salac et al are recruiters deploying workers
certain cases, allow the POEA lawyers to take the lead in the
abroad
prosecution. The POEA lawyers who act as prosecutors in such 2. They filed a petition before the RTC to enjoin the Secretary
cases shall be entitled to receive additional allowances as may of Labor, Patricia Sto. Tomas, the POEA, and TESDA, from
be determined by the POEA Administrator.
regulating the activities of private recruiters. [filed petition
for certiorari, prohibition and mandamus and preliminary
The filing of an offense punishable under this Act shall be
injunction]
without prejudice to the filing of cases punishable under other 3. Rey et al invoked Sections 29 and 30 of the RA 8042 or the
existing laws, rules or regulations.
Migrant Workers Act which provides that recruitment
agencies in the Philippines shall be deregulated one year


from the passage of the said law; that 5 years thereafter, deployment of OFWs thereby rendering the consolidated
recruitment should be fully deregulated. petitions moot and academic.
-‐ SEC. 29. COMPREHENSIVE DEREGULATION PLAN -‐ RA 9422 now provides:
ON RECRUITMENT ACTIVITIES. – o SEC. 1. Section 23, paragraph (b.1) of Republic Act No.
Pursuant to a progressive policy of deregulation 8042, otherwise known as the “Migrant Workers and
whereby the migration of workers becomes strictly a Overseas Filipinos Act of 1995” is hereby amended to
matter between the worker and his foreign employer, read as follows:
the DOLE within one (1) year from the effectivity of this § (b.1) Philippine Overseas Employment Administration
Act, is hereby mandated to formulate a five-year – The Administration shall regulate private sector
comprehensive deregulation plan on recruitment participation in the recruitment and overseas
activities taking into account labor market trends, placement of workers by setting up a licensing and
economic conditions of the country and emerging registration system. It shall also formulate and
circumstances which may affect the welfare of migrant implement, in coordination with appropriate entities
workers. concerned, when necessary, a system for promoting
-‐ SEC. 30. GRADUAL PHASE-OUT OF REGULATORY and monitoring the overseas employment of Filipino
FUNCTIONS. – Within a period of five (5) years from workers taking into consideration their welfare and
the effectivity of this Act, the DOLE shall phase-out the the domestic manpower requirements.
regulatory functions of the POEA pursuant to the § In addition to its powers and functions, the
objectives of deregulation. administration shall inform migrant workers not only
4. RA 8042 was passed in 1995, hence, Rey et al insisted that of their rights as workers but also of their rights as
as early as 2000, the aforementioned government agencies human beings, instruct and guide the workers how to
should have stopped issuing memoranda and circulars assert their rights and provide the available
regulating the recruitment of workers abroad. mechanism to redress violation of their rights.
5. RTC granted petition of Salac, et al. à annulled all orders, § In the recruitment and placement of workers to
circulars and issuances inconsistent with deregulation service the requirements for trained and competent
policy Filipino workers of foreign governments and their
6. The government officials concerned filed present petition instrumentalities, and such other employers as public
seeking to annul RTC’s decision interests may require, the administration shall deploy
7. [Philippine Association of Service Exporters, Inc. and only to countries where the Philippines has
Confederated Association of Licensed Entertainment concluded bilateral labor agreements or
Agencies intervened; RTC decision paralyzed the arrangements: Provided, That such countries shall
deployment of OFWs and performing artists] guarantee to protect the rights of Filipino migrant
8. In a parallel case, Asian Recruitment Council workers; and: Provided, further, That such countries
Philippine Chapter, Inc. filed a petition before the RTC shall observe and/or comply with the international
seeking to enjoin DOLE Secretary, POEA and TESDA from laws and standards for migrant workers.
implementing the 2002 Rules and Regulations Governing CASE # 2
the Recruitment and Employment of Overseas Workers FACTS:
also in violation of the deregulation policy of RA 8042 1. PASEI filed petition assailing the constitutionality of
9. RTC granted petition Sections 6, 7 and 9 of RA 8042:
10. Government officials concerned filed another petition -‐ SEC. 6. Definition. — For purposes of this Act, illegal
seeking to enjoin RTC from enforcing said decision. recruitment shall mean any act of canvassing, enlisting,
11. Hence consolidated cases. contracting, transporting, utilizing, hiring, procuring
workers and includes referring, contract services,
ISSUE/S: promising or advertising for employment abroad,
WON Sections 29 and 30 are valid. (MOOT) whether for profit or not, when undertaken by a
non-license or non-holder of authority
HELD: contemplated under Article 13(f) of Presidential
The issue is moot. Decree No. 442, as amended, otherwise known as the
-‐ In 2008, during the pendency of the case, Pres. GMA signed Labor Code of the Philippines: Provided, That such
into law RA 9422 An Act to Strengthen the Regulatory non-license or non-holder, who, in any manner, offers
Functions of the POEA, which expressly repealed Sec 29 or promises for a fee employment abroad to two or
and 30 of RA 8042 and replaced the deregulation policy with more persons shall be deemed so engaged. It shall
a close government regulation policy of recruitment and likewise include the following acts, whether
committed by any person, whether a non-


licensee, non-holder, licensee or holder of -‐ By its terms, persons who engage in “canvassing, enlisting,
authority: contracting, transporting, utilizing, hiring, or procuring
workers” without the appropriate government license or
xxx xxx xxx authority are guilty of illegal recruitment whether or not they
commit the wrongful acts enumerated in that section.
2. PASEI claims that the definition by the law is vague as it -‐ On the other hand, recruiters who engage in the canvassing,
fails to distinguish between licensed and non-licensed enlisting, etc. of OFWs, although with the appropriate
recruiters government license or authority, are guilty of illegal
-‐ SEC. 7. Penalties. — recruitment only if they commit any of the wrongful acts
(a) Any person found guilty of illegal recruitment shall enumerated in Section 6.
suffer the penalty of imprisonment of not less than six -‐ As regards Section 7: The penalties are valid. It is within the
(6) years and one (1) day but not more than twelve (12) prerogative of Congress to prescribe the said penalties.
years and a fine not less than two hundred thousand -‐ It is not within the power of the Court to question the
pesos (P200,000.00) nor more than five hundred wisdom of Congress
thousand pesos (P500,000.00). -‐ In fixing such tough penalties, the law considered the
(b) The penalty of life imprisonment and a fine of not unsettling fact that OFWs must work outside the country’s
less than five hundred thousand pesos (P500,000.00) borders and beyond its immediate protection. The law must
nor more than one million pesos (P1,000,000.00) shall therefore make an effort to give the utmost protection to
be imposed if illegal recruitment constitutes economic them
sabotage as defined herein. Provided, however, That -‐ As regards Section 9: The Rules on Criminal Procedure,
the maximum penalty shall be imposed if the person particularly Section 15(a) of Rule 110, itself, provides that the
illegally recruited is less than eighteen (18) years of rule on venue when it comes to criminal cases is subject to
age or committed by a non-licensee or non-holder of existing laws. Therefore, there is nothing arbitrary when
authority. Congress provided an alternative venue for violations of a
3. PASEI argues that the penalties for simple violations special penal law like RA 8042.
against RA 8042, e.g. (1) mere failure to render report or (2)
obstructing inspection, are already punishable for at least 6 CASE # 3
years and 1 day imprisonment and a fine of at least P200k. FACTS:
PASEI argues that such is unreasonable 1. Jasmin Cuaresma, a nurse working in Saudi Arabia was
-‐ SEC. 9. Venue. — A criminal action arising from illegal found dead.
recruitment as defined herein shall be filed with the 2. Her parents filed a claim for death and insurance benefits
Regional Trial Court of the province or city where the and damages against Becmen and White Falcon for the
offense was committed or where the offended party death of their daughter
actually resides at the time of the commission of the 3. LA: dismissed claim as Cuaresmas have already received
offense: Provided, That the court where the criminal insurance benefits from Overseas Workers Welfare
action is first filed shall acquire jurisdiction to the Administration (OWWA). LA gave credence to the findings
exclusion of other courts: Provided, however, That the of Saudi Arabian Authorities that Jasmin committed suicide
aforestated provisions shall also apply to those 4. Spouses appealed to NLRC
criminal actions that have already been filed in court at 5. NLRC: found Becmen and White Falcon jointly and
the time of the effectivity of this Act. severally liable for Jasmin’s death. The autopsy report
4. PASEI contends that this violates the general rule on venue revealed that death was actually due to criminal violence
of criminal cases which is the place where the crime is and rape
committed. 6. Becmen and White Falcon appealed to CA
5. RTC declared said provisions unconstitutional 7. CA: affirmed [But Becman has a right to reimburse from
6. DOLE Secretary et al. petitioned for the annulment of the White Falcon]
RTC decision 8. The case reached the Supreme Court where the Supreme
Court found that death was not work-related but ruled that
ISSUE/S: since Becmen was negligent in investigating the true cause
WON Sections 6, 7, and 9of RA 8042 are unconstitutional (NO) of death of Jasmin (a violation of RA 8042), it shall be liable
for damages.
HELD: The provisions are not unconstitutional 9. The Supreme Court also ruled that pursuant to Section 10
-‐ As regards Section 6: The law clearly and unambiguously of RA 8042, the directors and officers of Becmen are
distinguished between licensed and non-licensed recruiters. themselves jointly and solidarily liable with
Becmen.


10. Eufrocina Gumabay and the other officers of Becmen filed 7. Members of the diplomatic corps although hirings done by
a motion for leave to intervene. They aver that Section 10 them have to be processed through the POEA
violates their right to due process. 8. Other persons or entities as may be authorized by the DOLE
secretary
ISSUE/S:
WON Section 10 is unconstitutional (YES) Art. 25 Private sector participation in the recruitment and
placement of workers – Pursuant to national development
HELD: Yes, the provision is unconstitutional. objectives and in order to harness and maximize the use of
-‐ In the SECOND CASE [RP v. PASEI] RTC held private sector resources and initiative in the development and
unconstitutional the last sentence of paragraph 2 section 10 implementation of a comprehensive employment program, the
-‐ It pointed out that absent sufficient proof that the corporate private employment sector shall participate in the recruitment
officers and directors of the erring company had knowledge and placement of workers, locally and overseas, under such
of and allowed the illegal recruitment, making them guidelines, rules and regulations as may be issued by the
automatically liable would violate their right to due process Secretary of Labor.
of law.
-‐ But the court has already held, pending the adjudication of - RA 8042 transferred from POEA to NLRC the jurisdiction
this present case, that under Section 10, liability of the over OFW’s claims arising from ER-EE relationship
corporate officers is not automatic. - But POEA retains original and exclusive jurisdiction over
-‐ There must be a finding that they were remiss in directing cases involving violations of POEA rules, disciplinary cases
the affairs of that company, such as sponsoring or tolerating and other cases that are administrative in character involving
the conduct of illegal activities OFWs
-‐ No evidence that the corporate officers and directors were - POEA performs regulatory, enforcement, and limited or
personally involved in their company’s particular actions or special adjudicatory functions
omissions in Jasmin’s case - Board of POEA has authority to promulgate the necessary
-‐ Hence, they are not jointly and solidarily liable with Becman rules and regulations to govern the exercise of the
and White Falcon adjudicatory functions of POEA
b. 1.2.ii.b. Policy of close government regulation

Art. 18 Ban on direct-hiring – No employer may hire a Filipino
worker for overseas employment except through the Boards and
RA 9422 entities authorized by the Secretary of Labor. Direct-hiring by
members of the diplomatic corps, international organizations
Sec. 2 Section 29 of the same law (RA 8042) is hereby repealed. and such other employers as may be allowed by the Secretary of
Labor is exempted from this provision.
Sec. 3 Section 30 of the same law (RA 8042) is also hereby
repealed.
b. 1.3.ii. Prohibited Business Agencies and Entities
b. 1.3. Allowed and Protected Entities Prohibited agencies and entities

1. Travel agencies
b. 1.3.i. Allowed Private Agencies and Entities - Officers, members of board
- Those engaged in partnership with them
Art. 16 Private recruitment – Except as provided in Chapter II of - Corporations with officers engaged in travel agencies
this Title, no person or entity other than the public employment 2. Sales agencies of airlines
offices, shall engage in the recruitment and placement of 3. Those with derogatory records
workers. - Certified by NBI or POEA Anti-Illegal Recruitment (AIR)
- Probable cause/ prima facie guilty of IR
Allowed Private Agencies and Entities - ConvictedofIR
1. Public employment offices - Agencies with revoked licenses
2. Private recruitment entities 4. Officials and government employees of agencies in charge
3. Private employment agencies of implementation of RA 8042 cannot engage in recruitment
4. Shipping or manning agents or representatives of OFW
5. The POEA - Same prohibition for their relatives up to 4th degree of
6. Construction contractors if authorized to operate by DOLE consanguinity
and Construction Industry Authority
General rule:


No direct hiring except through boards and entities authorized. Contractor Services (JEAC). They were advised that
someone would meet them in Singapore.
Exceptions 2. True enough, one Victor Lim welcomed them upon their
a. Diplomatic corps arrival. Victor is the owner of Step-Up Employment Agency.
b. International orgs He informed them that they would work as fishermen with a
c. Employers allowed by Sec. of Labor monthly salary of $200. They boarded a vessel called Ruey
Horn # 3.
b. 1.3.ii.a. Travel agencies 3. On the boat, Mario and other workers were subject to the
following inhumane working conditions:
Art. 26 Travel agencies prohibited to recruit – Travel agencies -‐ Inadequate supply of food and water
and sales agencies of airline companies are prohibited from -‐ Mistreatment by the ship captain
engaging in the business of recruitment and placement of -‐ Lack of medical assistance
workers for overseas employment whether for profit or not. -‐ 22 work hours per day, without pay
4. Unable to cope with the said inhumane conditions, Mario
- In addition to those mentioned in this article, POEA Rule 1, and the other Filipinos left the vessel while it was docked at
Sec. 2 also disqualifies persons with derogatory records Mauritius Islands.
such as those convicted for illegal recruitment or other 5. Upon Mario’s return to the Philippines, he asked JEAC to
crimes involving moral turpitude pay his unpaid salaries.
- The same prohibition extends to any official or employee of 6. Instead of acquiescing to Mario’s demand, JEAC asked for
DOLE, POEA, OWWA, DFA and other government agencies his passport, promising to find him another job. However,
directly involved in the implementation of RA 8042 or any of no such job came and Mario was only paid P500.
their relatives within the fourth civil degree. 7. Mario filed suit at the Phil. Overseas Employment
Administation (POEA) against JEAC and its owner, Jose
b. 1.3.ii.b. Direct hiring Cayanan.
-‐ Country Bankers was also impleaded as the surety of
Art. 18 Ban on direct hiring – No employer may hire a Filipino JEAC
8. JEAC raised the defense that Mario was a total stranger to
worker for overseas employment except through the Boards and
them and never procured their services. They also
entities authorized by the Secretary of Labor. Direct-hiring by
presented affidavits of Efren Balucas and Alexander Natura,
members of the diplomatic corps, international organizations
Mario’s co-workers in Singapore. A certification from Step-
and such other employers as may be allowed by the Secretary of
Labor is exempted from this provision. Up Agency accompanied these affidavits.
-‐ The affidavits stated that Mario admitted to them that
he came to Singapore as a tourist and not through
- Direct-hiring is not allowed except by members of the
JEAC and that he applied directly to Victor Lim’s Step-
diplomatic corps and others mentioned in this article
Up Agency. The certification from Step-Up
- Also excepted are “name hirees” or those individual
corroborated the affidavits.
workers who are able to secure contracts for overseas
-‐ Mario disputed this saying that he knew the Jose
employment on their own efforts and representation without
Cayanan as they used to go watch horse races and
the assistance or participation of any agency.
that Jose Cayanan sent them photocopies of PNB
- Their hiring still has to be processed through the POEA
checks that he issued to their relatives as a reminder of
- Name hirees should register with the POEA by submitting
what Mario and the other workers owed him, which
the following documents:
Mario presented.
a. Employment contract
9. POEA: JEAC liable to pay Mario.
b. Valid passport
-‐ Dismissed the claim against Country Bankers as
c. Employment visa or work permit, or equivalent
Travelers Insurance was the proper surety during that
document
time they were deployed.
d. Certificate of medical fitness
10. NLRC: POEA decision set aside; complaint dismissed
e. Certificate of attendance to the required employment
-‐ There was no employer-employee relationship
orientation/briefing
between Mario and JEAC
-‐ NLRC gave weight to the affidavits presented
Hornales v. NLRC
-‐ Mario’s motion for reconsideration was denied. Hence
FACTS:
the petition for certiorari
1. Oct 1991: Mario, along with other Filipinos, was sent to
-‐ SolGen called the decision baseless and erroneous,
Singapore by JEAC International Management &
contending that the affidavits were hearsay.


7) Joint and several liability of recruitment/placement agency
ISSUE/S: and principal/employer (corporate officers and company)
WON JEAC was responsible for Mario’s recruitment and 8) Responsibilities of local recruitment agencies/liability for
deployment to Singapore (YES) damages and attorney’s fees
HELD: b. 1.4.i. Licensing/Qualifications of Applicants

Yes. JEAC was responsible for his recruitment and
deployment. It is now liable to pay his unpaid wages. b. 1.4.i.a. Citizenship – At least 75% owned and controlled by
-‐ Mario’s documentary evidence and case prevails over that Filipino citizens
of the evidence presented by JEAC. Art. 27 Citizenship Requirement. – Only Filipino citizens or
o As a rule in labor cases, the scales must tilt in favor of a corporations, partnerships or entities at least seventy-five
party who was deprived of the opportunity to cross- percent (75%) of the authorized and voting capital stock of which
examine the affidavits being submitted by an adverse is owned and controlled by Filipino citizens shall be permitted to
party . participate in the recruitment and placement of workers, locally
o As Mario never had the chance to cross-examine the and overseas.
affiants, the affidavits only amounted to mere hearsay.
o The certification by Step-Up Agency must not also be Part. II. Licensing and Regulation
given weight as it was not verified nor made under oath. Rule I. Participation of the Private Sector in the Overseas
-‐ Photocopies of the check sent by Jose to Mario disprove
Employment Program
JEAC’s claim that Mario was a “total stranger”
Section 1. Qualifications. Only those who possess the following
o It is of no matter that the photocopies and not the
qualifications may be permitted to engage in the business of
original is submitted. In labor cases, the rules of evidence recruitment and placement of Filipino workers:
are relaxed in the interest of due process.
a. Filipino citizens, partnerships or corporations at least seventy
-‐ CA also erred in holding that JEAC was merely a travel
five percent (75%) of the authorized capital stock of which is
agency when there was nothing in the record that proves
owned and controlled by Filipino citizens;
that allegation.
-‐ While JEAC claims they should not be held liable because
b. 1.4.i.b. Capitalization -- Single proprietorship/ partnership: at
no employment contract between Mario and Step-Up was
least P2M
approved by the POEA, the Court here makes an exception
-‐ Corporation: at least P2M paid-up capital
because it would absolve them.
-‐ Within 4 years of issuing license, Both should increase their
o At most, the effect of their non-compliance should be
capitalization at the rate of P250k per year
cancellation or withdrawal of their license, which the
Court said should be determined in a proper and
Art. 28 Capitalization. – All applicants for authority to hire or
separate proceeding.
renewal of license to recruit are required to have such substantial
capitalization as determined by the Secretary of Labor.
DISPOSITIVE: POEA Decision reinstated.
b. 1.4. Government Techniques of Regulation – Private - A private employment agency for local employment should
Recruitment have a minimum net worth of P200,000 (single proprietorship) or
a minimum of P500,000 in paid up capital (corporation)
Techniques - A private recruitment or manning agency for overseas
1) Licensing—Qualifications as to: employment should have a minimum capital of P2,000,000 for
a) Citizenship single proprietorship OR minimum of P2,000,000 in paid up
b) Capitalization capital for corporations.
c) Validity of license
d) Non-transferability Part. II. Licensing and Regulation
e) Registration/license fees Rule I. Participation of the Private Sector in the Overseas
f) Bonds Employment Program
2) Placement fees (workers’fees/filingfees/licensefees) Section 1. Qualifications. Only those who possess the following
3) Reports/employment information qualifications may be permitted to engage in the business of
4) Illegal recruitment (simple or qualified/syndicated) recruitment and placement of Filipino workers:
5) Enforcement powers b. A minimum capitalization of Two Million Pesos (P2,000,000.00)
6) POEA Standard Employment Contract in case of a single proprietorship or partnership and a minimum
paid-up capital of Two Million Pesos (P2,000,000.00) in case of a


corporation; Provided that those with existing licenses shall, or authority shall be used directly or indirectly by any person
within four years from effectivity hereof, increase their other than the one in whose favor it was issued or at any place
capitalization or paid up capital, as the case may be, to Two other than that stated in the license or authority be transferred,
Million Pesos (P2,000,000.00) at the rate of Two Hundred Fifty conveyed or assigned to any other person or entity. Any transfer
Thousand Pesos (P250,000.00) every year. of business address, appointment or designation of any agent or
representative including the establishment of additional offices
General Rule: Licensees/holders of authority should only anywhere shall be subject to the prior approval of the
conduct recruitment and placement activity at their authorized Department of Labor.
official addresses, which is generally in Metro Manila.
Exception: They may be allowed to conduct provincial Part. II. Licensing and Regulation
recruitment or participate in job fairs, only with written authority Rule II. Issuance of License
from POEA. Section 7. Non-Transferability of License. No license shall be
transferred, conveyed or assigned to any person, partnership or
b. 1.4.i.c. Validity of license corporation. It shall not be used directly or indirectly by any
General rule: 4 years person, partnership or corporation other than the one in whose
Exception: Provisional license, which has 1 year to comply favor it was issued.
(compliance upgrades to full license, plus 3 years)
In case of death of the sole proprietor and to prevent disruption
Part. II. Licensing and Regulation of operation to the prejudice of the interest of legitimate heirs,
Rule II. Issuance of License the license may be extended upon request of the heirs, to
Section 5. Provisional License. Applicants for new license shall continue only for the purpose of winding up business
be issued a provisional license which shall be valid for a limited operations.
period of one (1) year within which the applicant should be able
to comply with its undertaking to deploy 100 workers to its new Part. II. Licensing and Regulation
principal. The license of a complying agency shall be upgraded Rule II. Issuance of License
to a full license entitling them to another three years of Section 8. Change of Ownership/Relationship of Single
operation. Non-complying agencies will be notified of the Proprietorship or Partnership. Transfer or change of ownership of
expiration of their license. a single proprietorship licensed to engage in overseas
employment shall cause the automatic revocation of the license.
Part. II. Licensing and Regulation
Rule II. Issuance of License A change in the relationship of the partners in a partnership duly
Section 6. Validity of the License. Except in case of a licensed to engage in overseas employment which materially
provisional license, every license shall be valid for four (4) years interrupts the course of the business or results in the actual
from the date of issuance unless sooner cancelled, revoked or dissolution of the partnership shall likewise cause the automatic
suspended for violation of applicable Philippine law, these rules revocation of the license.
and other pertinent issuances. Such license shall be valid only at
the place/s stated therein and when used by the licensed Part. II. Licensing and Regulation
person, partnership or corporation. Rule II. Issuance of License
Section 9. Upgrading of Single Proprietorship or Partnerships.
b. 1.4.i.d. Non-transferability License holders which are single proprietorships or partnerships
General Rule: Cannot be used other than the agency or entity may, subject to the guidelines of the Administration, convert into
which applied for the license or authority corporation for purposes of upgrading or raising their
Exception: If death in single proprietorship, heirs can continue capabilities to respond adequately to developments/changes in
only for the purpose of winding up business operations the international labor market and to enable them to better
comply with their responsibilities arising from the recruitment
Automatic revocation when: and deployment of workers overseas.
1. Change of ownership
2. Dissolution of partnership The approval of merger, consolidation or upgrading shall
3. Merger automatically revoke or cancel the licenses of the single
5. Consolidation proprietorships, partnerships or corporations so merged,
6. Upgrading of single proprietorship consolidated or upgraded.
Art. 29 Non-transferability of License or Authority. – No license


General Rule: Licensees or holders of authority, or their Labor to guarantee compliance with prescribed recruitment
authorized representatives, may undertake recruitment and procedures, rules and regulations, and terms and conditions of
placement activity only at their authorized official addresses. employment as may be appropriate.
Exception: May conduct provincial recruitment (since most AMOUNT OF BOND (LOCAL VS. OVERSEAS)
licensees have official addresses in NCR) or job fairs only upon LOCAL (prior to the approval of license)
written authority from the POEA. 1. Cash bond 25K
2. Surety bond 100K
b. 1.4.i.e. Registration/license fees -‐ Both valid for two years.
1. License fee of P50,000 -‐ Will answer for all valid and legal claims arising from illegal
2. Escrow Agreement of P1M use of license and shall guarantee compliance with LC and
3. SuretybondofP100k its IRR.
4. Those with existing license, to increase escrow bond to
P1M within 4 years OVERSEAS (upon approval of the application for
license)
Art. 30 Registration Fees. – The Secretary of Labor shall 1. Escrow Agreement 1M
promulgate a schedule of fees for the registration of all 2. Surety bond 100k from a bonding company acceptable to
applicants for license or authority. POEA and accredited by insurance Commission
-‐ Surety Bond will cover validity of the period of the license.
Part. II. Licensing and Regulation Bonds and escrows will answer for all valid and legal claims
Rule II. Issuance of License arising from violations of the use of license and
Section 4. Payment of Fees and Posting of Bonds. Upon accreditation and contracts of employment.
approval of the application, the applicant shall pay a license fee -‐ POEA shall have the power to enforce liability under cash or
of P50,000.00. It shall submit an Escrow Agreement in the surety bonds.
amount of P1,000,000.00, confirmation of escrow deposit with an
accredited reputable bank and a surety bond of P100,000.00 Art. 31 vs Art. 223
from a bonding company acceptable to the Administration and -‐ Art. 31 Not limited to monetary awards to employees but
accredited with the Insurance Commission. also for violations by the recruiter of the conditions of its
license.
Agencies with existing licenses shall, within four years from -‐ Answers for:
effectivity hereof, increase their Escrow Deposit to One Million 1. Violations of the conditions for the grant and use of
Pesos . license or authority
2. Violations of labor laws
The bonds and escrow shall answer for all valid and legal claims 3. Violations of contract of employment
arising from violations of the conditions for the grant and use of -‐ Does not include claims against recruitment agency such as
the license, and/or accreditation and contracts of employment. reimbursement for the airline tickets used by the agency’s
The bonds and escrow shall likewise guarantee compliance with recruits.
the provisions of the Code and its implementing rules and -‐ Art. 223 Bond is a requirement for the perfection of an
regulations relating to recruitment and placement, the Rules of appeal. Refers claims for monetary awards to employees
the Administration and relevant issuances of the Department whose contract of employment has been violated.
and all liabilities which the Administration may impose. The
surety bonds shall include the condition “that notice to the Part. II. Licensing and Regulation
principal is notice to the surety and that any judgment against Rule II. Issuance of License
the principal in connection with matters falling under Section 4. Payment of Fees and Posting of Bonds. Upon
POEA’s/NLRC’s jurisdiction shall be binding and conclusive on approval of the application, the applicant shall pay a license fee
the surety. The surety bonds shall cover the validity period of the of P50,000.00. It shall submit an Escrow Agreement in the
license. amount of P1,000,000.00, confirmation of escrow deposit with an
accredited reputable bank and a surety bond of P100,000.00
b. 1.4.i.f. Bonds from a bonding company acceptable to the Administration and
- To answer for any violations and ensure compliance accredited with the Insurance Commission.
- Notice to the principal amounts to notice to the surety bond
Agencies with existing licenses shall, within four years from
Art. 31 Bonds. – All applicants for license or authority shall post effectivity hereof, increase their Escrow Deposit to One Million
such cash and surety bonds as determined by the Secretary of Pesos .


-‐ Fees chargeable to principals: visa fee, airfare, POEA
The bonds and escrow shall answer for all valid and legal claims processing fee, OWWA membership fee
arising from violations of the conditions for the grant and use of -‐ When recruitment agency agrees to perform documentation
the license, and/or accreditation and contracts of employment. services, worker shall only pay the actual costs of the
The bonds and escrow shall likewise guarantee compliance with document – must be supported by official receipts
the provisions of the Code and its implementing rules and -‐ No other charges unless POEA approved
regulations relating to recruitment and placement, the Rules of -‐ Collected only when hired
the Administration and relevant issuances of the Department
and all liabilities which the Administration may impose. The SERVICE FEES
surety bonds shall include the condition “that notice to the LOCAL
principal is notice to the surety and that any judgment against -‐ Not more than 20% of the annual salary of worker
the principal in connection with matters falling under -‐ Not to be deducted from worker’s salary
POEA’s/NLRC’s jurisdiction shall be binding and conclusive on -‐ Transportation expenses of worker – charged against
the surety. The surety bonds shall cover the validity period of the employer and cannot be deducted from worker’s salary
license.
OVERSEAS
b. 1.4.ii. Workers’ Fees/Filing Fees/License Fees (Placement fee) -‐ Charge principals a service or manning fees to cover
-‐ EE only be charged if obtained employment, or has services rendered in recruitment documentation and
commenced employment placement of worker’s and seafarers.
-‐ Must be covered by receipt
-‐ If country where OFW to be deployed does not allow REFUND OF FEES
placement and recruitment fee, agency may collect one -‐ POEA has the power to order refund of illegally collected
month salary + documentation costs fees
o Passport, NBI/Barangay clearance, authentication, birth
certificate, medicare, trade test and inoculation (if Part. II Licensing and Regulation
needed), medical examination fees Rule V. Fees, Costs and Contributions
o But if agency perform documentation services, EE to pay Section 3. Fees/Costs Chargeable to the Workers. Except
only the actual cost of documents where the prevailing system in the country where the worker is to
be deployed, either by law, policy or practice, do not allow the
Art. 32 Fees to be Paid by Workers. – Any person applying with charging or collection of placement and recruitment fee, a
a private fee-charging employment agency for employment landbased agency may charge and collect from its hired workers
assistance shall not be charged any fee until he has obtained a placement fee in an amount equivalent to one month salary,
employment through its efforts or has actually commenced exclusive of documentation costs.
employment. Such fee shall be always covered with the
appropriate receipt clearly showing the amount paid. The Documentation costs to be paid by the worker shall include, but
Secretary of Labor shall promulgate a schedule of allowable not limited to, expenses for the following:
fees. a. Passport
b. NBI/Police/Barangay Clearance
PLACEMENT FEE c. Authentication
d. Birth Certificate
LOCAL
e. Medicare
-‐ Shall not be more than 20% of worker’s 1st month’s basic
f. Trade Test, if necessary
salary
-‐ Do not charge before commencement of employment g. Inoculation, when required by host country
h. Medical Examination fees
OVERSEAS
In the event that the recruitment agency agrees to perform
-‐ General rule: Land-based agency: may collect amount
equivalent to 1 month salary, exclusive of documentation documentation services, the worker shall pay only the actual cost
costs of the document which shall be covered by official receipts.
-‐ Exception: If the prevailing system in the country where
worker is to be deployed does not allow placement & Avelina Sagun v. Sunace International Management Services
recruitment fee. FACTS:
1. AUG. 1998: Avelina applied with Sunace for the position of
DOCUMENT FEE caretaker in Taiwan
OVERSEAS


- In consideration of her placement and employment, 7. Instant petition for review on certiorari under Rule 45
she allegedly paid P30,000 (CASH), P10,000 (promissory
note) and NT$60,000 (salary deduction) ISSUES:
- Although she was promised she would be employed as 1. WON Sunace violated Art. 32 and 34 (b), false notice or
a caretaker, she was made to work as a domestic helper information [this was discussed together] (NO)
at the job site, and, at the same time, in a poultry farm 2. WON Sunace violated Art. 34 (a), collection of excess
2. Avelina filed with the POEA a complaint for alleged violation placement fee (NO)
of Art. 32 and Art. 34 (a) and (b) of the Labor Code against
Sunace and its surety, Country Bankers Insurance HELD:
Corporation 1. Court held: NO, the POEA, the Sec. of Labor, the
- She alleged that Sunace violated the prohibition on OP and the CA already absolved Sunace of liability
excessive placement fees and that she was made to under Art. 32 and 34 (b)
work as a domestic helper rather than a caretaker - No appeal was interposed by Avelina when the Sec. of
- Sunace denied Avelina’s allegations and maintained Labor absolved Sunace
that it only collected P20,840, an amount authorized
by the POEA, and for which an official receipt was 2. Court held: NO, the pieces of evidence presented
issued by Avelina failed to show that Sunace collected
- Sunace stressed that it did not furnish or publish from her more than the allowable placement fee
any false notice or information or document in - Court weighed the evidence again because of the
relation to recruitment or employment – it was duly difference in findings of the lower court and administrative
received, passed upon, and approved by the POEA agencies
3. Dec. 2001: POEA Administrator Rosalinda Dimapilis-Baldoz - In proceedings before administrative and quasi-judicial
DISMISSED the complaint for lack of merit because Avelina agencies, the quantum of evidence required is
failed to establish the following: substantial evidence, or that level of relevant evidence
- Violation of Art. 32 since the amount received by which a reasonable mind might accept as adequate to
Sunace as placement fee was covered by an official justify a conclusion
receipt o The pieces of evidence that Avelina showed failed to
- Violation of Art. 34 (a) as it was not shown that Sunace show that Sunace collected more than what was
charged excessive fees allowable
- Violation of Art. 34 (b) because Sunace processed - Sunace’s evidence:
Avelina’s papers as caretaker, the position she applied o An acknowledgement receipt showing that Avelina paid
and was hired for and Sunace received P20,840
- Avelina filed an MR w/the Office of the Sec. of Labor - Avelina’s evidence:
4. Sec. of Labor Patricia Sto. Tomas partially granted the o Photocopy of a promissory note she executed, where
motion, holding Sunace liable for collection of excessive she promised to pay Sunace P10,000 for the amount
placement fee, in violation of Art. 34 (a) she borrowed for only 2 weeks
- Sunace appealed to the Office of the President o Her testimony on purported deductions made by her
5. OP affirmed the order of the Sec. of Labor foreign employer, which amounted to NT$60,000
- Emphasized the State’s policy on the full protection to o Her claim that the P10,000 was NOT a loan, but part of
labor, local and overseas the placement fee collected by Sunace and that the
- Held that it was impossible for Sunace to have salary deductions still formed part of said placement
extended a loan to Avelina since it was not in the fee
business of lending money (this was Sunace’s defense - SC: We are more inclined to give more credence to
against the salary deductions, I think) Sunace’s evidence – the acknowledgement receipt showing
- Held that it was immaterial that no evidence to show the amount paid by Avelina and received by Sunace
the overcharging since the issuance of a receipt could o A receipt is a written and signed acknowledgement that
not be expected money or goods have been delivered
- Sunace’s MR was denied, so it elevated the matter to o Although it is not conclusive evidence, an exhaustive
the CA review of the records of this particular case fails to
6. CA ruled in favor of Sunace, and affirmed the decision of the disclose any other evidence sufficient and strong
Order of the POEA Administrator, dismissing the complaint enough to overturn the acknowledgement embodied in
- Reversed because the rulings of the Sec. of Labor and the receipt as to the amount Sunace received from
the OP were based not on evidence but on speculation, Avelina
conjecture, possibilities and probabilities


oSince she failed to adduce sufficient rebuttal evidence, may be required by the Secretary of Labor.
Avelina is bound by the contents of the receipt as it
remains as the primary or best evidence
RA 8042, Sec. 6. Definitions - For purposes of this Act, illegal
- SC (on the promissory note): The promissory note cannot be recruitment shall mean any act of canvassing, enlisting,
considered as adequate evidence to show the excessive
contracting, transporting, utilizing, hiring, procuring workers and
placement fee because it is a solemn acknowledgement of a
includes referring, contact services, promising or advertising for
debt and a formal commitment to repay
employment abroad, whether for profit or not, when undertaken
o Person who signs it is bound to honor it as a legitimate
by a non-license or non-holder of authority contemplated under
obligation Article 13(f) of Presidential Decree No. 442, as amended,
o SC: As held by the CA, the fact that Sunace is not a
otherwise known as the Labor Code of the Philippines. Provided,
lending company doesn’t preclude it from extending a
that such non-license or non-holder, who, in any manner, offers
loan to Avelina
or promises for a fee employment abroad to two or more
- SC (on the salary deductions): quoting the CA, “there is no persons shall be deemed so engaged. It shall likewise include
single piece of document or receipt showing that
the following acts, whether committed by any persons, whether
deductions have in fact been made, nor is there any proof
a non-licensee, non-holder, licensee or holder of authority.
that these deductions from the salary formed part of the
subject placement fee.” h) To fail to submit reports on the status of employment,
- Mere allegations of payment of excessive placement fees placement vacancies, remittances of foreign exchange earnings,
cannot be given merit as the charge of illegal exaction is
separations from jobs, departures and such other matters or
considered a grave offense which could cause the
information as may be required by the Secretary of Labor and
suspension or cancellation of the agency’s license. They
Employment;
should be proven and substantiated by clear, credible,
and competent evidence.
b. 1.4.iv. Illegal Recruitment: Simple/Qualified or Syndicated
DISP: Petition DENIED for lack of merit.
Simple illegal recruitment

b. 1.4.iii. Reports/Employment Information
May be committed by licensed, non-licensed or non-holders of
authority
Reports/employment information
Sec. of Labor may require a submission of report on:
Unlawful acts (Art. 34, LC; Sec. 6 RA 8042)
3. Status of employment
1. Charge greater amount than specified schedule of
4. Job vacancies
allowable fees
5. Details of job requisitions
2. Publish false notice or information with regard to:
6. Separation from jobs
a. Recruitment or employment
7. Wages
b. Misrepresentation in securing license or authority
8. Other terms and conditions of the contract
3. Induce EE to quit his job and offer him another
4. Influence ER not to accept EE not recruited by him or
Art. 33 Reports on Employment Status. – Whenever the public
belongs to a union or org
interest requires, the Secretary of Labor may direct all persons or
5. Work engaged in is harmful to health or against morality
entities within the coverage of this Title to submit a report on the and dignity
status of employment, including job vacancies, details of job
6. Fail to submit reports on status, vacancies, remittance,
requisitions, separation from jobs, wages, other terms and
separation, departure of employment
conditions and other employment data.
7. Substitute or alter employment contracts approved by
8. DOLE
Art. 14 Employment Promotion. – The Secretary of Labor shall 9. Be engaged in travel agency
have the power and authority: 10. Withhold/ deny travel documents of EE
(d) To require any person, establishment, organization or 11. Failure to deploy without justifiable reasons
institution to submit such employment information as may be 12. Failure to reimburse expenses if worker is not deployed 12.
prescribed by the Secretary of Labor. Allow non-Filipino to manage agency
Art. 34 Prohibited Practices. – It shall be unlawful for any Other prohibited acts
individual, entity, licensee, or holder of authority: 1. Loan with interest more than 8%
(h) To fail to file reports on the status of employment, placement 2. Require exclusive and compulsory arrangement in:
vacancies, remittance of foreign exchange earnings, separation - Loans
from jobs, departures and such other matters or information as - Health examinations


- Trainings, seminars, instruction, schooling -‐ Termination of EE without just cause = entitled to full
3. Refuse to condone loan of EE if employment was pre- reimbursement of placement fees plus either (whichever is
terminated w/o his fault less):
4. Suspended recruitment agency engaging in recruitment (a) salary for the unexpired portion of the contract or
activity (b) 3 mos for every year of the unexpired term
5. Deduction of insurance premiums on EE salary
Mandatory period for resolution
Qualified illegal recruitment -‐ Prelim. Investigation: 30 days
Committed by a syndicate composed of three or more -‐ If with prima facie evidence of guilt, file information within
conspiring or confederating with one another 24 hrs
Large scale illegal recruitment Prescription

If committed against 3 or more persons, with economic -‐ 5 years
sabotage -‐ 20 years if with economic sabotage
Who may file cases of illegal recruitment
1. Sec. of Labor Art. 34 Prohibited Practices. – It shall be unlawful for any
4. POEA individual, entity, licensee, or holder of authority:
5. Aggrieved party (a) To charge or accept, directly or indirectly, any amount
greater than that specified in the schedule of allowable fees
Venue prescribed by the Secretary of Labor, or to make a worker
1. Where the offense happened pay any amount greater than that actually received by him
2. Residence of offended party during the commission of the as a loan or advance;
offense (b) To furnish or publish any false notice or information or
3. Money claims arising from ER-EE relationship, law, contract document in relation to recruitment for employment;
be filed in NLRC (c) To give any false notice, testimony, information or
4. Administrative cases (issuing of licenses, refund of fees): document or commit any act of misrepresentation for the
POEA purpose of securing a license or authority under this Code;
(d) To induce or attempt to induce a worker already employed
Penalty to quit his employment in order to offer him to another
unless the transfer is designed to liberate the worker from
Local Employment oppressive terms and conditions of employment;
-‐ Licensee Violator: 2 – 5 years OR P10k – P50k OR BOTH (e) To influence or to attempt to influence any person or entity
-‐ Non- Licensee Violator: 4 – 8 years OR P20k – P100k OR not to employ any worker who has not applied for
BOTH employment through his agency;
-‐ Automatic revocation of license and forfeiture of cash and (f) To engage in the recruitment or placement of workers in
surety bonds jobs harmful to public health or morality or to the dignity of
the Republic of the Philippines;
Overseas Employment (g) To obstruct or attempt to obstruct inspection by the
-‐ Suspension and/or Cancellation of authority Secretary of Labor or by his duly authorized representatives;
-‐ Illegal recruitment Penalty: 12-20 years AND P1M-2M (h) To fail to file reports on the status of employment,
-‐ Other prohibited acts: 6 years, 1 day – 12 years AND P200k placement vacancies, remittance of foreign exchange
o P500k earnings, separation from jobs, departures and such other
-‐ Life Imprisonment AND P500k – P1M if there is economic matters or information as may be required by the Secretary
sabotage of Labor;
-‐ Maximum penalty if person recruited is a minor (i) To substitute or alter employment contracts approved and
verified by the Department of Labor from the time of actual
Prescription signing thereof by the parties up to and including the
-‐ 5 years periods of expiration of the same without the approval of
-‐ 20 years if with economic sabotage the Secretary of Labor;
(j) To become an officer or member of the Board of any
Money claims for illegal recruitment corporation engaged in travel agency or to be engaged
-‐ Solidary liability of the principal and the recruitment agency directly or indirectly in the management of a travel agency;
-‐ Not affected by substitution or modification of the contract and
(k) To withhold or deny travel documents from applicant


workers before departure for monetary or financial or has contacted or is supported by any union or workers'
considerations other than those authorized under this Code organization;
and its implementing rules and regulations. (h) To engage in the recruitment or placement of workers in
jobs harmful to public health or morality or to the dignity of
Art. 38 Illegal Recruitment. – the Republic of the Philippines;
(a) Any recruitment activities, including the prohibited practices (i) To fail to submit reports on the status of employment,
enumerated under Article 34 of this Code, to be undertaken by placement vacancies, remittance of foreign exchange
non-licensees or non-holders of authority, shall be deemed earnings, separation from jobs, departures and such other
illegal and punishable under Article 39 of this Code. The matters or information as may be required by the Secretary
Department of Labor and Employment or any law enforcement of Labor and Employment;
officer may initiate complaints under this Article. (j) To substitute or alter to the prejudice of the worker,
(b) Illegal recruitment when committed by a syndicate or in large employment contracts approved and verified by the
scale shall be considered an offense involving economic Department of Labor and Employment from the time of
sabotage and shall be penalized in accordance with Article 39 actual signing thereof by the parties up to and including the
hereof. period of the expiration of the same without the approval of
the Department of Labor and Employment;
(k) For an officer or agent of a recruitment or placement
RA 8042, as amended, Sec. 6 Definition. - For purposes of
agency to become an officer or member of the Board of any
this Act, illegal recruitment shall mean any act of canvassing,
corporation engaged in travel agency or to be engaged
enlisting, contracting, transporting, utilizing, hiring, or procuring
directly or indirectly in the management of travel agency;
workers and includes referring, contract services, promising or
(l) To withhold or deny travel documents from applicant
advertising for employment abroad, whether for profit or not,
workers before departure for monetary or financial
when undertaken by non-licensee or non-holder of authority
considerations, or for any other reasons, other than those
contemplated under Article 13(f) of Presidential Decree No. 442,
authorized under the Labor Code and its implementing
as amended, otherwise known as the Labor Code of the
rules and regulations;
Philippines: Provided, That any such non-licensee or non-holder
(m) Failure to actually deploy a contracted worker without valid
who, in any manner, offers or promises for a fee employment
reason as determined by the Department of Labor and
Employment;
shall likewise include the following acts, whether committed by
(n) Failure to reimburse expenses incurred by the worker in
any person, whether a non-licensee, non-holder, licensee or
connection with his documentation and processing for
holder of authority:
purposes of deployment, in cases where the deployment
does not actually take place without the worker's fault.
(c) To charge or accept directly or indirectly any amount
Illegal recruitment when committed by a syndicate or in
greater than that specified in the schedule of allowable fees
large scale shall be considered an offense involving
prescribed by the Secretary of Labor and Employment, or to
economic sabotage; and
make a worker pay or acknowledge any amount greater
(o) To allow a non-Filipino citizen to head or manage a licensed
than that actually received by him as a loan or advance;
recruitment/manning agency.
(d) To furnish or publish any false notice or information or
document in relation to recruitment or employment;
Illegal recruitment is deemed committed by a syndicate if carried
(e) To give any false notice, testimony, information or
out by a group of three (3) or more persons conspiring or
document or commit any act of misrepresentation for the
confederating with one another. It is deemed committed in large
purpose of securing a license or authority under the Labor
Code, or for the purpose of documenting hired workers with
or as a group.
the POEA, which include the act of reprocessing workers
through a job order that pertains to nonexistent work, work
In addition to the acts enumerated above, it shall also be
different from the actual overseas work, or work with a
unlawful for any person or entity to commit the following
different employer whether registered or not with the
prohibited acts:
POEA;
(f) To include or attempt to induce a worker already employed
(1) Grant a loan to an overseas Filipino worker with interest
to quit his employment in order to offer him another unless
exceeding eight percent (8%) per annum, which will be used
the transfer is designed to liberate a worker from oppressive
for payment of legal and allowable placement fees and
terms and conditions of employment;
make the migrant worker issue, either personally or through
(g) To influence or attempt to influence any person or entity not
a guarantor or accommodation party, postdated checks in
to employ any worker who has not applied for employment
relation to the said loan;
through his agency or who has formed, joined or supported,

(2) Impose a compulsory and exclusive arrangement whereby be determined by the POEA Administrator.
an overseas Filipino worker is required to avail of a loan only
from specifically designated institutions, entities or persons; The filing of an offense punishable under this Act shall be
(3) Refuse to condone or renegotiate a loan incurred by an without prejudice to the filing of cases punishable under other
overseas Filipino worker after the latter's employment existing laws, rules or regulations."1avvphi1
contract has been prematurely terminated through no fault
of his or her own; RA 8042, as amended, Sec. 7 Penalties. -
(4) Impose a compulsory and exclusive arrangement whereby (a) Any person found guilty of illegal recruitment shall suffer the
an overseas Filipino worker is required to undergo health penalty of imprisonment of not less than twelve (12) years and
examinations only from specifically designated medical one (1) day but not more than twenty (20) years and a fine of not
clinics, institutions, entities or persons, except in the case of less than One million pesos (P1,000,000.00) nor more than Two
a seafarer whose medical examination cost is shouldered by million pesos (P2,000,000.00).
the principal/shipowner;
(5) Impose a compulsory and exclusive arrangement whereby (b) The penalty of life imprisonment and a fine of not less than
an overseas Filipino worker is required to undergo training, Two million pesos (P2,000,000.00) nor more than Five million
seminar, instruction or schooling of any kind only from pesos (P5,000,000.00) shall be imposed if illegal recruitment
specifically designated institutions, entities or persons, constitutes economic sabotage as defined therein.
except for recommendatory trainings mandated by
principals/shipowners where the latter shoulder the cost of Provided, however, That the maximum penalty shall be imposed
such trainings; if the person illegally recruited is less than eighteen (18) years of
(6) For a suspended recruitment/manning agency to engage in age or committed by a non-licensee or non-holder of authority.
any kind of recruitment activity including the processing of
pending workers' applications; and (c) Any person found guilty of any of the prohibited acts shall
(7) For a recruitment/manning agency or a foreign suffer the penalty of imprisonment of not less than six (6) years
principal/employer to pass on the overseas Filipino worker and one (1) day but not more than twelve (12) years and a fine of
or deduct from his or her salary the payment of the cost of not less than Five hundred thousand pesos (P500,000.00) nor
insurance fees, premium or other insurance related charges, more than One million pesos (P1,000,000.00).
as provided under the compulsory worker's insurance
coverage. If the offender is an alien, he or she shall, in addition to the
penalties herein prescribed, be deported without further
The persons criminally liable for the above offenses are the proceedings.
principals, accomplices and accessories. In case of juridical
persons, the officers having ownership, control, management or In every case, conviction shall cause and carry the automatic
direction of their business who are responsible for the revocation of the license or registration of the
commission of the offense and the responsible recruitment/manning agency, lending institutions, training
employees/agents thereof shall be liable. school or medical clinic.
In the filing of cases for illegal recruitment or any of the

RA 8042, as amended, Sec. 8 Prohibition On Officials And
Employees. - It shall be unlawful for any official or employee of
Employment, the POEA Administrator or their duly authorized
the Department of Labor and Employment, the Philippine
representatives, or any aggrieved person may initiate the
Overseas Employment Administration, or the Overseas Workers
corresponding criminal action with the appropriate office. For
Welfare Administration, or the Department of Foreign Affairs, or
other government agencies involved in the implementation of
personnel from the Department of Labor and Employment,
this Act, or their relatives within the fourth civil degree of
POEA and other law enforcement agencies who witnessed the
consanguinity or affinity, to engage, directly or indirectly, in the
acts constituting the offense shall be sufficient to prosecute the
business of recruiting migrant workers as defined in this Act. The
accused.
penalties shall be imposed upon them.
In the prosecution of offenses punishable under this section, the

public prosecutors of the Department of Justice shall collaborate RA 8042, as amended, Sec. 9 Venue. - A criminal action
with the anti-illegal recruitment branch of the POEA and, in arising from illegal recruitment as defined herein shall be filed
certain cases, allow the POEA lawyers to take the lead in the with the Regional Trial Court of the province or city where the
prosecution. The POEA lawyers who act as prosecutors in such offense was committed or where the offended party actually
cases shall be entitled to receive additional allowances as may resides at the same time of the commission of the offense:


Provided, That the court where the criminal action is first filed Filipino workers until and unless it fully satisfies the judgement
shall acquire jurisdiction to the exclusion of other courts. award.
Provided, however, That the aforestated provisions shall also
apply to those criminal actions that have already been filed in Noncompliance with the mandatory periods for resolutions of
court at the time of the effectivity of this Act. case provided under this section shall subject the responsible
officials to any or all of the following penalties:
RA 8042, as amended, Sec. 10 Money Claims. -
Notwithstanding any provision of law to the contrary, the Labor (a) The salary of any such official who fails to render his decision
Arbiters of the National Labor Relations Commission (NLRC) or resolution within the prescribed period shall be, or caused
shall have the original and exclusive jurisdiction to hear and to be, withheld until the said official complies therewith;
decide, within ninety (90) calendar days after the filing of the (b) Suspension for not more than ninety (90) days; or
complaint, the claims arising out of an employer-employee (c) Dismissal from the service with disqualification to hold any
relationship or by virtue of any law or contract involving Filipino appointive public office for five (5) years.
workers for overseas deployment including claims for actual,
moral, exemplary and other forms of damage. Consistent with Provided, however, That the penalties herein provided shall be
this mandate, the NLRC shall endeavor to update and keep without prejudice to any liability which any such official may have
abreast with the developments in the global services industry. incured under other existing laws or rules and regulations as a
consequence of violating the provisions of this paragraph.
The liability of the principal/employer and the
recruitment/placement agency for any and all claims under this RA 8042, as amended, Sec. 11 Mandatory Periods For
section shall be joint and several. This provision shall be Resolution Of Illegal Recruitment Cases. - The preliminary
incorporated in the contract for overseas employment and shall investigations of cases under this Act shall be terminated within
be a condition precedent for its approval. The performance a period of thirty (30) calendar days from the date of their filing.
bond to de filed by the recruitment/placement agency, as Where the preliminary investigation is conducted by a
provided by law, shall be answerable for all money claims or prosecution officer and a prima facie case is established, the
damages that may be awarded to the workers. If the corresponding information shall be filed in court within twenty-
recruitment/placement agency is a juridical being, the corporate four (24) hours from the termination of the investigation. If the
officers and directors and partners as the case may be, shall preliminary investigation is conducted by a judge and a prima
themselves be jointly and solidarily liable with the corporation or facie case is found to exist, prosecution officer within forty-eight
partnership for the aforesaid claims and damages. (48) hours from the date of receipt of the records of the case.
Such liabilities shall continue during the entire period or duration RA 8042, as amended, Sec. 12 Prescriptive Periods. - Illegal
of the employment contract and shall not be affected by any recruitment cases under this Act shall prescribe in five (5) years:
substitution, amendment or modification made locally or in a Provided, however, That illegal recruitment cases involving
foreign country of the said contract. economic sabotage as defined herein shall prescribe in twenty
(20) years.
Any compromise/amicable settlement or voluntary agreement
on money claims inclusive of damages under this section shall be
b. 1.4.iv.a. When undertaken by non-licensees, non-holders
paid within thirty (30) days from approval of the settlement by
the appropriate authority.
b. 1.4.iv.b. Prohibited practices
In case of termination of overseas employment without just, valid

PERT/CPM Manpower Exponent Co. Inc., v. Armando Vinuya, et
or authorized cause as defined by law or contract, or any
al. (2012)
unauthorized deductions from the migrant worker's salary, the
Agency: PERT/CPM
worker shall be entitled to the full reimbursement if his Principal (Overseas Employer): Modern Metal Solution
placement fee and the deductions made with interest at twelve
OFWs: Armando, Louie, Arsenio, Robelito, Virgilio, Marino,
percent (12%) per annum, plus his salaries for the unexpired
Sandy, Noel
portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less.
FACTS:
1. Between March 29 and May 12, 2007 – Armando Vinuya, et
In case of a final and executory judgement against a foreign
al., were deployed by the agency in 2007 to work as
employer/principal, it shall be automatically disqualified, without
aluminum fabricator/installer for the agency’s principal,
further proceedings, from participating in the Philippine
Modern Metal in Dubai
Overseas Employment Program and from recruiting and hiring


2. The employment contracts which were approved by -‐ They even signed affidavits of quitclaim and release
Philippine Overseas Employment Administration (POEA) after they resigned, so they cannot claim for benefits
provided the following terms: and damages
-‐ Two-year employment 14. COMPULSORY ARBITRATION RULINGS: Dismissed
-‐ 9 hours a day complaint. They voluntarily resigned.
-‐ Salary of 1,350 Dirhams with overtime pay, food -‐ Four of the complainants were found to have executed
allowance a compromise agreement (with quitclaim and release)
-‐ Free and suitable housing (four to a room) with the agency before the POEA
-‐ Free transpo -‐ Considered the POEA recourse a case of forum
-‐ Free laundry shopping
-‐ Free medical and dental services 15. Armando et al. appealed to NLRC
3. Armando, et al. each paid P15,000 processing fee -‐ The quitclaim and releases should not have been
4. Apr. 2, 2007 – However, Modern Metal gave them admitted (they were photocopies which failed to
appointment letters containing terms different from the explain circumstances behind their execution)
approved employment contract: -‐ Compromise agreement only covered the refund of
-‐ Employment increased to three years their airfare and not all their money claims
-‐ Salary reduced to 1,000 to 1,200 Dirhams and food 16. NLRC à granted appeal. Armando et al. were illegally
allowance of 200 Dirhams dismissed.
5. Working and living conditions: -‐ It is illegal for an employer to require employees to
-‐ Required to work from 6:30 AM to 6:30 PM with a one execute new employment contracts, especially those
to one and a half hour-break which provide benefits inferior to the POEA-approved
-‐ Overtime work was either unpaid or underpaid contracts
-‐ Housing accommodations were cramped – shared with -‐ Quitclaim and release were signed under duress
27 other occupants -‐ No forum-shopping: POEA involved pre-deployment
-‐ Their lodging house was very far from their jobsite issues whereas complaint with NLRC is one for illegal
leaving them only 3-4 hours of sleep a day dismissal and money claims arising from employment
-‐ No potable water -‐ Ordered agency , Romeo (President of agency) and
-‐ Air polluted Modern Metal to pay jointly and severally
6. When they received their first salary (amount in appointment 17. Both parties moved for reconsideration; Armando et al. as
letters, with deduction for placement fees) they called up regards their unpaid salaries.
the agency and complained about their condition – nothing -‐ Award should have covered salaries for the unexpired
happened portion of their employment contract, and not for three
7. May 5, 2007 – Modern Metal required Armando et al. to sign months in light of the Court’s ruling in Serrano v.
a new employment contract, with the same terms in their Gallant Maritime Services which declared
appointment letter, but this time they were “ordinary labor unconstitutional Sec. 10 par. 5 of RA 8042 which limited
workers” and no longer aluminum fabricators the entitlement of illegally dismissed OFWs to their
8. Burdened with all the expenses they incurred for their salaries for the unexpired term of their contract or three
deployment, they had no choice but to sign months, whichever is less
9. However on Aug. 5, 2007, they can no longer bear the 18. NLRC à denied agency’s motion, granted Armando et al.’s
working conditions so they decided to resign 19. Agency moved for reconsideration contending that Serrano
-‐ For fear that Modern Metal will not give them their ruling cannot be applied as it was not yet final and
salaries and release papers, they cited personal executory
problems for their resignation. Except Era who 20. NLRC à denied.
expressed that he didn’t like the company policy 21. CA à upheld NLRC ruling
10. The agency finally repatriated them to the Philippines in -‐ They were illegally dismissed
September 2007 -‐ Resignation letters were dubious
11. All of them (except for two) shouldered their own airfare -‐ No forum-shopping à Compromise agreements
12. Armando et al. filed a complaint for illegal dismissal against pertain to charge of recruitment violations against the
agency and its President, Romeo agency which is distinct from their illegal dismissal
13. Agency’s contentions: complaint
-‐ Armando et al. were not illegally dismissed, they -‐ NLRC correct in adjusting salary award
resigned to seek a better paying job, and when their 22. Agency filed MR à denied
supposed job did not materialize, they had to go home


23. File petition with SC, reiterating their contentions, and o Increase of working hours
further arguing that Serrano ruling should not be applied b) Guilty of BREACH OF CONTRACT
because: -‐ Armando et al. were made to suffer substandard
-‐ Armando et al. were not illegally dismissed working and living arrangements; they did not
-‐ Said ruling cannot be given retroactive effect à illegal receive the accommodations that they agreed to
dismissal complaint filed in 2007, ruling became final o Made to work from 6:30 AM to 6:30 PM
and executory in 2009 o Cramped living quarters that was very far from
-‐ RA 10022 (enacted March 2010) which amended RA jobsite leaving them only 3-4 hours of sleep
8042 restored subject clause in Sec. 10 RA 8042 (the 3- due to long travel hours
month limit for computation of unpaid salary) o No potable water
24. Shet sa wakas. o Air was polluted
o Agency failed to act on their reports
ISSUES:
1. Whether Armando et al. were illegally dismissed or è The oppressive working and living conditions compelled
voluntarily resigned (Illegally dismissed) them to resign
2. WON compromise agreements (with quitclaim and release) è They were constructively dismissed
between employees and agency foreclose their employer- o Constructive dismissal – “resignation because
employee relationship claims with NLRC (NO) continued employment is rendered impossible,
3. WON Serrano ruling should be applied (YES) unreasonable or unlikely, as, an offer involving
demotion in rank and a diminution in pay”
RATIO: o Continued employment had become
1. Armando et al. were illegally dismissed. Agency UNREASONABLE
and Modern Metal committed flagrant violations of o Resignation letters were dubious and were
the law on overseas employment. prepared by Modern Metal in attempt to
a) Agency and Modern Metal are guilty of CONTRACT escape liability; employees signed it for fear
SUBSTITUTION that salaries and release papers would not be
-‐ Committed a prohibited practice under Art. 34 LC given to them
o Prohibited practices – It shall be unlawful for o Affidavit of quitclaim and release purported
any individual, entity, licensee, or holder of executed by Armando et al. not given weight
authority: cAaETS à likewise executed by Modern Metal to
(i) To substitute or alter employment contracts escape liability
approved and verified by the Department of
Labor from the time of actual signing thereof 2. Compromise agreements (with quitclaim and
by the parties up to and including the periods release) did not foreclose their money claims
of expiration of the same without the approval arising from their ER-EE relationship with Modern
of the Secretary of Labor Metal
-‐ Engaged in Illegal Recruitment. Art. 28 of RA 8042 -‐ It settled their claim for refund of their airfare and not
defined “illegal recruitment” to include the their other claims (they were paid P12k each, total of
following act: P72k à uniform insubstantial amount could not have
o (i) To substitute or alter to the prejudice of the covered all their money claims)
worker, employment contracts approved and
verified by the Department of Labor and 3. Serrano ruling applies
Employment from the time of actual signing -‐ Amendment introduced by RA 10022—restoring a
thereof by the parties up to and including the provision of RA 8042 declared unconstitutional—cannot
period of the expiration of the same without be given retroactive effect, not only because there is no
the approval of the Department of Labor and express declaration of retroactivity in the law, but
Employment because retroactive application will result in an
-‐ The appointment letters and the new employment impairment of a right that had accrued to the
contract executed by Modern Metal altered the employees by virtue of the Serrano ruling
POEA-approved employment contract to the -‐ Whether RA 10022 is constitutional is not for the court
prejudice of the employees to rule upon in the present case
o Change of two-year employment to three
years Stolt-Nielsen Transpo, Group, Inc. & Chung Gai-Ship Mgmt. v.
o Reduction of salary Sulpecio Medequillo, Jr.


FACTS: -‐ Stolt’s claim that the monetary award should be limited
1. Nov 6, 1991: Sulpecio was hired by Stolt-Nielsen on behalf to 3 months for every year in the unexpired term of the
of its principal, Chung Gai Ship as the Third Asst. Engineer contract was NOT granted. NLRC noted that the case
onboard the vessel, “Stolt Aspiration,” for a nine-month occurred within 1991-1992 which was before the
period. (First Contract) effectivity of RA 8042 which provided the said limitation.
-‐ His wages were comprised of a basic monthly salary: 7. CA: NLRC affirmed.
$808.00 with fixed overtime pay: $404.00 for a total of
$1212.00/month, during the 9-month employment ISSUES:
period commencing on Nov. 6. 1. WON there was novation of the First Contract by the
-‐ He actually joined the vessel on Nov. 8, 1991 Second Contract (YES)
2. Feb 1992: After 3 months of rendering service inside the 2. WON there was prescription of the cause of action (NO)
said vessel docked in Batangas, he was ordered by the 3. WON the penalty on the part of Stolt should only be a
ship’s master to disembark and to be repatriated to Manila, mere reprimand (NO)
WITHOUT any explanation 4. How should Stolt be made liable? (Damages via Money
3. Upon his return to Manila, he went to the Stolt office where Claims)
they transferred his assignment to another vessel, “Stolt
Pride,” under the same terms as the First Contract. (Second HELD:
Contract) 1. There was a novation of the First Contract by the
-‐ Apr 1992: This Second Contract was noted and Second Contract.
approved by the POEA and was considered to have -‐ The four elements of a valid novation concurred:
commenced. o A previous valid obligation (First Contract)
-‐ Sept 1992: POEA later certified this Second Contract o An agreement of the parties to the new
WITHOUT the knowledge that Sulpecio was NOT contract (Sulpecio and Stolt executed a
actually deployed. Second Contract)
-‐ Sulpecio tried to follow-up and tried to be deployed to o Extinguishment of the old contract (Second
the Stolt Pride, per the Second Contract. However, Contract was executed to fully replace the
Stolt did nothing. first)
4. Dec 1994: Sulpecio now tried to reclaim his passport, o New contract must be valid (Second Contract
seaman’s book and other employment document. Stolt did was valid)
not release these documents until Sulpecio had signed a -‐ Both LA and CA found that there was novation of the
document (was not mentioned but probably a waiver) First Contract. This was accorded conclusiveness and
-‐ Sulpecio signed the document since he needed the finality by the Court, per the general rule on the
documents to be able to apply for other agencies. findings of quasi-judicial bodies.
5. Mar 1995: Sulpecio filed before the POEA a complaint for 2. No, the action has not prescribed.
illegal dismissal (First Contract) and a failure to deploy -‐ It was the first contract that prescribed; the start of the
(Second Contract) 3-year period of prescription started in Feb 1992 when
-‐ LA: There was constructive dismissal. $12,537 awarded. he was repatriated. However, he only filed the
-‐ The First Contract was novated by the execution of the complaint on Mar 1995, which had already exceeded
Second Contract. Hence, they are not liable under the the 3-year prescription period.
First Contract but clearly liable for the Second. -‐ HOWEVER, Stolt’s liability in this case does not spring
-‐ No award of moral and exemplary damages due to lack from the First Contract but from the Second Contract,
of substantial evidence. which had already extinguished the First Contract by
-‐ Stolt appealed insofar as the finding of constructive novation.
dismissal. They maintain that this was improper since he -‐ And even if there was no actual deployment under the
was not even deployed yet. Second Contract, it was still a perfected contract and
6. NLRC: LA affirmed with modification; only $3,636 awarded. has already given rise to obligations on the part of
-‐ Stolt argued that they were not properly notified of the Stolt.
hearings under the LA. The NLRC ruled however that o The POEA Standard Employment Contract
the records showed that there were attempts to serve provides that “employment shall commence
the proper notices but they failed because Stolt failed upon the actual departure of the seafarer.”
to provide the notice of their new address. This means that the seafarer’s departure shall
-‐ The NLRC upheld the finding of unjust termination be the determining point of whether an
because Stolt failed to justify their non-deployment of employer-employee relationship has begun.
Sulpecio.


o In this case, since there was no deployment, - Rizalina: That she and her daughter were interested to
there was no ER-EE relationship. HOWEVER, work overseas, approached Dolores about this, that
this does not mean that Sulpecio did not have they submitted their passports and pictures to her, that
remedies. they underwent a medical examination, and that they
3. No, the penalty is not only a mere reprimand. paid a total of P140,000 as evidenced by the receipts
-‐ The breach occurred in Feb 1992. The rule in place at issued by Dolores, that they were made to take a flight
the time was the 1991 POEA Rules and Regulations to Zamboanga (to go to Malaysia where the visa for
Governing Overseas Employment, which provided that Italy would be processed) and when they sensed they
“failure to deploy” is a cause for suspension or were being fooled, looked for Dolores but couldn’t find
cancellation of license. her, and later learned that she wasn’t a licensed
-‐ Therefore, Stolt’s contention that Rule IV, Part VI of the recruiter
POEA Rules and Regulations Governing the - Julia: That she inquired from Dolores about overseas
Recruitment and Employment of Land-Based Overseas recruitment for her two sons and that the 2 paid
Workers is untenable. P140,000 for their placement fees, handed over their
4. Sec. 10 of RA 8042 (Money Claims) is applicable. passports, that they went to Zamboanga but got stuck
-‐ The said provision provides that that money claims by there because the passport was left with one Erlinda
reason of contract, involving OFW for overseas Ramos, but that they would be able to leave soon, but
deployment, may be filed with the LA who has original they remained stranded and Julia had to eventually get
and exclusive jurisdiction over the same. them, that they were able to get P60,000 (P50K from
-‐ While the employer-employee relationship never Dolores, P10K from her husband) as refund from
materialized, the contract was still perfected and it gave Dolores, and that they eventually discovered she was
rise to obligations. Hence, Stolt is liable for breach as not a licensed recruiter
they failed to deploy Sulpecio, as agreed upon. - Dolores was presented by the defense, and she just
-‐ Stolt is liable for 9 months worth of salary, as provided basically denied being the recruiter because she was
in the Second Contract. also an applicant; that Erlinda Ramos was the recruiter;
that Erlinda designated her as the “leader” of all the
See also: People of the Philippines v. Dolores Ocden applicants to be overseas workers; that she received the
FACTS: payments from Marilyn and Rizalina (did not deceive
1. Jeffries Golidan, Howard Golidan, Karen Simeon, Jean them) and turned them over to Erlinda (but did not
Maximo, Norma Pedro, Marylyn Mana-a, Rizalina Ferrer and indicate in the receipts that it was for and on behalf of
Milan Daring filed an information for illegal recruitment Erlinda)
in large scale against Dolores Ocden 5. RTC found Dolores guilty beyond reasonable doubt of
- For a fee, recruiting and promising employment as illegal recruitment in large scale and 3 counts of estafa
factory workers in Italy to more than 3 persons including (Jeffries, Howard, Rizalina)
but not limited to the above-mentioned without first 6. CA: affirmed the conviction but modified penalties
securing the necessary license or authority from the
DOLE ISSUES:
2. Jeffries, Howard, Norma, Milan, Rizalina and Marilyn (yes, 1. WON Dolores is guilty of illegal recruitment
nag-iba spelling) charged Dolores with 6 counts of estafa 2. WON Dolores is guilty of estafa
- That she defrauded them by means of false pretenses
executed prior to or simultaneous with the fraud HELD:
- That knowing she is not authorized as a job recruiter, 1. Court held: YES, she is guilty of illegal
she pretended that she could secure a job for them, in recruitment.
consideration for either P70,000 or P65,000 - Dolores: Prosecution failed to prove this beyond reasonable
- That the plaintiffs were deceived and convinced by the doubt
false pretenses, which made them part with their money o Other than the allegations of the witnesses, no
3. Dolores pleaded not guilty evidence was adduced to prove she was a non-licensee
4. The prosecution presented 3 witnesses: Marilyn Mana-a, or non-holder of authority to lawfully engage in
Rizalina Ferrer (both complainants) and Julia Golidan recruitment and placement of workers
(mother of Jeffries and Howard) o No certification was offered in evidence
- Marilyn: That she applied for work as a factory worker in - SC: Her contentions are bereft of merit.
Italy, that she was made to submit her bio-data and o Art. 13 (b) enumerates acts which constitute recruitment
passport, that she was made to undergo medical and placement
examinations, and that she paid P60,000 to Dolores


o RA 8042 (Migrant Workers and Overseas Filipinos Act of and a “holder of authority” who commits the violation under
1995) broadened the concept of illegal recruitment and Sec. 6 (m), or failure to reimburse expenses incurred by the
provided stiffer penalties, especially for those that worker, is such a prohibited act
constitute economic sabotage, i.e., illegal recruitment o Illegal recruitment can be committed by any person;
in large scale and illegal recruitment committed by a certification that Dolores is unlicensed in
syndicate inconsequential
§ Sec. 6 (last sentence): Regarding the act of illegal o She was shown to have committed illegal recruitment
recruitment – “It shall likewise include the following because she received placement fees and failed to
acts, whether committed by any person, whether a reimburse/refund them when they were not able to
non-licensee, non-holder, licensee or holder of leave for Italy, through no fault of their own
authority” - Dolores: Prosecution did not sufficiently establish that she
§ Sec. 6 (m): Failure to reimburse expenses incurred illegally recruited at least 3 persons to constitute illegal
by the worker in connection with his recruitment on a large scale; only Marilyn testified in court
documentation and processing for purposes of (out of all victims) and she did not even complete her
deployment, in cases where the deployment does testimony
not actually take place without the worker's fault. - SC: In People v. Hu, conviction for large scale illegal
Illegal recruitment when committed by a syndicate recruitment must be based on a finding in each case of
or in large scale shall be considered an offense illegal recruitment of 3 or more persons, whether
involving economic sabotage. individually or as a group
Illegal recruitment is deemed committed by a o While the law does not require that at least 3 victims
syndicate if carried out by a group of three (3) or testify, it is necessary that there is sufficient evidence
more persons conspiring or confederating with one that the offense was committee against 3 or more
another. It is deemed committed in large scale if persons
committed against three (3) or more persons o Here, there is conclusive evidence that Dolores
individually or as a group. recruited Marilyn, Rizalina, Jeffries and Howard for
§ Sec. 7 (a): penalty for illegal recruitment is purported employment as factory workers in Italy
imprisonment of not less than 6 years and 1 day o Even though only Rizalina and Julia testified as to the
but not more than 12 years and a fine of P200,000 failure to reimburse the placement fees, the testimonies
nor more than P500,000 already established the fact of non-reimbursement as to
§ Sec. 7 (b): penalty for illegal recruitment three people: Rizalina and Julia’s 2 sons, Jeffries and
constituting economic sabotage is life Howard
imprisonment and a fine of not less than P500,000
nor more than P1,000,000 2. Court held: YES, she is guilty of estafa.
o To prove illegal recruitment, it must be shown that - The Court affirms the conviction for estafa because the
Dolores gave complainants the distinct impression that same evidence proving her liability for illegal recruitment
she had the power or ability to send them abroad for also established her liability for estafa
work such that the latter were convinced to part with - A person may be charged and convicted separately of
their money in order to be employed: illegal recruitment under RA 8042, in relation to the Labor
§ Dolores informed Marilyn, Rizalina and Julia about Code, and estafa under Art. 315 (2)(a) of the RPC
the job opportunity and necessary requirements o People v. Yabut: Offense of illegal recruitment is malum
§ She required them to attend the seminar prohibitum where the criminal intent of the accused is
conducted by Erlinda at Dolores’ house not necessary for conviction, while estafa is malum in se
§ She received the job applications, pictures, bio- where the criminal intent of the accused is crucial for
data, passports, and certificates of previous conviction. Conviction for offenses under the Labor
employment Code does not bar conviction for offenses punishable
§ She personally accompanied them to their medical by other laws. Conviction for estafa does not bar a
examinations conviction for illegal recruitment. One’s acquittal of the
§ She received placement fees and even issued crime of estafa will not necessarily result in his acquittal
receipts of the crime of illegal recruitment in large scale, and
§ She assured them that they would be deployed to vice versa.
Italy - Elements of estafa are: a) that the accused defrauded
- SC: No need to present certification that she is a non- another by abuse of confidence or by means of deceit, and
licensee or non-holder of authority because Sec. 6 of RA b) that damage or prejudice capable of pecuniary
8042 enumerates the acts constituting illegal recruitment, estimation is caused to the offended party or third person


- SC: Elements are present in this case because Dolores - DOLE Secretary and POEA has concurrent jurisdiction to
represented that she could provide them with overseas suspend or cancel a license
jobs; convinced by Dolores, they paid substantial amounts - A recruitment agency is held solidarily liable for the unpaid
as placement fees salaries of the worker it recruited for employment with a foreign
principal.
DISP: Instant appeal DENIED. CA AFFIRMED with
MODIFICATION. b. 1.4.v.b.2. Issuance of orders
Note: Art. 38 (c) declared UNCONSTITUTIONAL per Salazar v. Art. 36 Regulatory Power. – The Secretary of Labor shall have
Achacoso, relying on Art. III, Sec. 2 CON87 the power to restrict and regulate the recruitment and
placement activities of all agencies within the coverage of this
b. 1.4.v. Enforcement Powers Title and is hereby authorize to issue orders and promulgate
rules and regulations to carry out the objectives and implement
1. Rule-making the provisions of this Title.
-‐ To issue orders and promulgate rules
-‐ To suspend or cancel licenses or authority - RA 8042 once included a policy for deregulation of the
2. Regulatory regulatory function of the POEA. It was said that this goes
3. Visitorial against the very spirit of the law, which is to provide the full
-‐ Art. 38 (c), LC was unconstitutional for violating right protection to overseas workers.
against unreasonable search and seizure - However, the debate has been settled since RA 9422 repealed
-‐ May at any time inspect the premises, books of the deregulation provisions of RA 8042.
accounts, or records
-‐ May require to submit reports
-‐ Act on any violation b. 1.4.v.c. Visitorial power
b. 1.4.v.a. Rule-making power Art. 37 Visitorial Power. – The Secretary of Labor or his duly
authorized representatives may, at any time, inspect the
Art. 36 Regulatory Power. – The Secretary of Labor shall have premises, books of accounts and records of any person or entity
the power to restrict and regulate the recruitment and covered by this Title, require it to submit reports regularly on
placement activities of all agencies within the coverage of this prescribed forms, and act on violation of any provisions of this
Title and is hereby authorize to issue orders and promulgate Title.
rules and regulations to carry out the objectives and implement
the provisions of this Title. b. 1.4.vi. POEA Standard Employment Contract
b. 1.4.v.b. Regulatory power b. 1.4.vi.a. To be integrated in every seafarer’s contract
Art. 36 Regulatory Power. – The Secretary of Labor shall have Wallem Maritime Services, Inc. v. Ernesto C. Tanawan (2012)
the power to restrict and regulate the recruitment and FACTS:
placement activities of all agencies within the coverage of this 1. Wallem Maritime Services Inc., then acting as a local agent
Title and is hereby authorize to issue orders and promulgate of Scandic Ship Management, Ltd., engaged Ernesto as
rules and regulations to carry out the objectives and implement dozer driver assigned to the vessel, M/V Eastern Falcon.
the provisions of this Title. 2. On one occasion, while Ernesto was assisting two co-
workers in lifting a steel plate aboard the vessel, a corner of
b. 1.4.v.b.1. Suspension or cancellation of License/Authority the steel plate touched the floor of the deck, causing the
sling to slide and the steel plate to hit his left foot. His x-ray
Art. 35 Suspension and/or Cancellation of License or Authority. examination showed he had suffered multiple fractures in
– The Minister of Labor shall have the power to suspend or his left toes
cancel any license or authority to recruit employees for overseas 3. Following Ernesto’s repatriation on November 28, 1997, the
employment for violation of rules and regulations issued by the company-designated physician, Dr. Robert D. Lim,
Ministry of Labor, the Overseas Employment Development conducted the evaluation and treatment of his foot injury.
Board, or for violation of the provisions of this and other 4. A series of medical treatments and physical therapy was
applicable laws, General Orders and Letters of Instructions. conducted.
5. On May 21, 1998, Dr. Lim reported that Ernesto was already
fit to work.


6. From his repatriation until such pronouncement of fitness to seafarers’ employment in foreign ocean-going vessel, is
work, Ernesto was paid sickness allowances equivalent to his deemed written in every employment contract of
monthly salary. seafarers.
7. Afterwards, Ernesto visited his private physician, Dr. - POEA SEC provides that in cases where the seafarer is
Hernando D. Bunuan, due to a worsening condition of his repatriated due to any injury or illness sustained on
right eye. board the vessel, he shall submit himself to a post-
8. Such eye injury was supposedly sustained while on board employment medical examination by a company-
the vessel. Ernesto narrated how he had sustained the eye designated physician within three working days
injury, stating that the Chief Engineer directed him to spray- upon his return. Failure of the seafarer to
paint the loader of the vessel; that as he was opening a can comply with the mandatory reporting
of thinner, some of the thinner accidentally splashed into his requirement shall result in his forfeiture of the
right eye. right to claim the above benefits.
9. He was diagnosed with retinal detachment with vitreous - Ernesto submitted himself to Dr. Lim, the company-
hemorrhage on the right eye for which surgical repair was designated physician, for a medical examination on
needed. December 1, 1997, which was within the 3-day
10. Ernesto filed in the Arbitration Branch of the NLRC a reglementary period from his repatriation.
complaint for disability benefits for the foot and eye injuries - Dr. Lim treated Ernesto for the foot injury from
against the petitioner and its foreign principal. December 1, 1997 until May 21, 1998, when Dr. Lim
11. Wallem Maritime insists that under the POEA Standard declared him fit to work.
Employment Contract (POEA SEC), which governed the - However, the assessment of the company-designated
relationship between the seafarer and his manning agent, it physician is not final, binding or conclusive on the
was the company-designated physician who would assess seafarer, the labor tribunals, or the courts
and establish the disability of the repatriated seaman - Seafarer may request a second opinion and the medical
- Ernesto’s claim for any disability benefit had no basis report issued by the physician of choice shall also be
because the company-designated physician already evaluated by the labor tribunal and the court.
pronounced him fit to work - Ernesto was not able to work for 172 days, which is
- Ernesto should have reported the eye injury to the already a permanently disability, as under the law, there
company-designated physician within three working is permanent disability if worker is unable to perform
days upon his arrival in the country pursuant to Sec. job for more than 120 days, regardless of whether or
20(B)(3) of the POEA SEC; that his non-reporting now not he loses the use of any body part
barred Ernesto from recovering disability benefit for the - Even in the absence of an official finding by the
eye injury; that to ignore the application of the 3-day company-designated physician to the effect that the
reglementary period would lead to the indiscriminate seafarer suffers a disability and is unfit for sea duty, the
filing of baseless claims against the manning agencies seafarer may still be declared to be suffering from a
and their foreign principals permanent disability if he is unable to work for more
- Ernesto also failed to establish that he sustained the than 120 days.
eye injury while on board the vessel - What clearly determines the seafarer’s entitlement to
12. LA à ruled in favor of Ernesto awarding him US$5,225.00 for permanent disability benefits is his inability to work for
the foot injury and US$20,900.00 for the eye injury. more than 120 days.
13. NLRC à reversed - Although the company-designated physician already
14. CA à reinstated LA ruling declared the seafarer fit to work, the seafarer’s disability
is still considered permanent and total if such
ISSUE: declaration is made belatedly (that is, more than 120
1. WON Ernesto should be awarded the disability benefits for days after repatriation; in this case, he was declared fit
his foot injury even after being declared fit to work by to work after 172 days).
company-designated physician (YES) - Ernesto is entitled to disability benefits with respect to
2. WON Ernesto can claim disability benefits for his eye injury his foot injury
(NO)
2. Ernesto’s claim for disability benefits due to the eye injury
RATIO: was already barred by his failure to report the injury and to
1. Ernesto should be awarded disability benefits for his foot have his eye examined by a company-designated physician
injury within three days from repatriation
- POEA SEC (Standard Employment Contract), which -‐ The rationale for the rule is that reporting the illness or
contains the standard terms and conditions of the injury within three days from repatriation fairly makes it


easier for a physician to determine the cause of the -‐ This physician diagnosed him to be suffering from
illness or injury. “Foraminal stenosis L3-L14 and central disk protrusion
-‐ Ascertaining the real cause of the illness or injury L4-L5”
beyond the period may prove difficult. -‐ For this, he underwent a surgical procedure called
-‐ To ignore the rule might set a precedent with negative laminectomy and discectomy.
repercussions, like opening the floodgates to a limitless -‐ The costs were borne by KJGS.
number of seafarers claiming disability benefits, or -‐ He was eventually discharged on Feb 2001, roughly 6-7
causing unfairness to the employer who would have months after the surgery. He refused to sign his
difficulty determining the cause of a claimant’s illness Certificate of Fitness For Work, however.
because of the passage of time. 5. He sought the second opinion of another doctor, Dr.
-‐ Ernesto did not report the eye injury either to the Jocelyn Mara who came out with a diagnosis of “failed
petitioner or to Dr. Lim while he was undergoing back syndrome” and gave Leo a Grade 6 disability rating,
treatment for the foot injury. Curiously, he did not even which meant that he was medically unfit to work again as a
offer any explanation as to why he had his eye seaman and called for a $25,000 award in disability
examined only after almost nine months from his benefits.
repatriation. 6. He filed a complaint in the NLRC to collect the amount,
-‐ Whoever claims entitlement to the benefits provided by along with moral and exemplary damages with attorney’s
law should establish his right to the benefits by fees.
substantial evidence. 7. LA: Complaint dismissed.
-‐ As such, Ernesto must present concrete proof showing -‐ POEA Memo Circular #9, series of 2000 provides that in
that he acquired or contracted the injury or illness that the event of conflict between the physician provided by
resulted to his disability during the term of his the employer and the other from the employee, a third
employment contract. physician should be agreed upon by both parties to
-‐ Yet, he did not present any proof of having sustained come up with a diagnosis.
the eye injury during the term of his contract. -‐ Hence, the complaint was premature as the third
-‐ All that he submitted was his bare allegation that his physician should have been sought first.
eye had been splashed with some thinner while he was -‐ The assessment that Leo is fir to work prevails.
on board the vessel. He also did not adduce any proof 8. NLRC: Remanded to LA.
demonstrating that the splashing of thinner could have -‐ Like the LA, it ruled that a 3rd physician should have
caused the retinal detachment with vitreous been sought first.
hemorrhage. 9. CA: NLRC decision set aside; LA decision reinstated.
-‐ Claim for disability benefits for eye injury denied -‐ Contract is actually governed by POEA Memo Circular
#55, series of 1996 as the employment contract was
b. 1.4.vi.b. Construction: liberal executed on Jan 2000.
-‐ Such memo did not have the similar rule in the series of
Abante v. KJGS Fleet Management, Manila, et al. 2000 Memo. Hence, the company physician’s diagnosis
FACTS: should be considered as controlling.
1. Employer: KJGS Fleet Mgmt. Manila
Employee: Leopoldo Abante ISSUE:
Terms: $535/month for 9 months 1. WON the Series of 2000 Memo is applicable (YES)
2. June 2000: Leopoldo slipped and hurt his back while 2. WON Leo is entitled to the Grade 6 disability benefits, as
carrying equipment onboard a vessel. evaluated by the physician of his choice. (YES)
3. When vessel arrived in Taiwan, Leo was brought to a
hospital. He was diagnosed to be suffering from “lower HELD:
back pain r/o old fracture lesion 4th lumbar body.” He was, 1. Yes. The Memo is applicable.
however, still declared to be fit for restricted work and was -‐ The Court applied its ruling in Seagull Maritime
recommended to see another doctor upon arrival at the Corporation v. Dee where the same issue arose: does
next port of call. the Series of 2000 Memo apply?
4. Jul 2000: Leo could not, however, take the pain and -‐ Yes. The Court ruled in that case that the rules were
requested repatriation to the Philippines. designed “primarily for the benefit of Filipino seamen…
-‐ In the same month, he reported to KJGS who brought Its provisions must be construed and applied fairly,
him to their company physician. reasonable and liberally in their favor.”
2. Yes. He is entitled to the award of such benefits.


-‐ While the Memo calls for the diagnosis of a third
physician chosen by both parties, the Memo does not Part. II Licensing and Regulation
preclude the employee from getting a second opinion Rule II Issuance of License
from a physician of his own choosing. Section 1. Requirements for Licensing. Every applicant for
-‐ In the Seagull case, the Court also held that while it is license to operate a private employment agency shall submit a
the company physician who must declare that the written application together with the following requirements:
seafarer indeed suffered permanent diability during
employment, the employee has that right to a second f. A verified undertaking stating that the applicant:
opinion from a different doctor, which can then be used 3. Shall assume joint and solidary liability with the employer for
by the tribunals to award claims. all claims and liabilities which may arise in connection with the
-‐ Leo’s physician of choice did not make a significantly implementation of the contract, including but not limited to
different diagnosis from the company physician payment of wages, death and disability compensation and
-‐ Since “permanent disability” is defined as the inability repatriations;
to work for more than 120 days, Leo deserves the award g. In case of corporation or partnership, verified undertaking by
of the benefits as the Certificate for Fitness For Work its officers, directors, partners that they will be jointly and
was presented to him more than 6 months after the severally liable with the company over claims arising from
surgery. employer- employee relationship.
-‐ This entitles him to an award of $60,000
-‐ Moral and exemplary damages, however, cannot be
RA 8042, Sec. 10 (2) Money Claims – Notwithstanding any
granted for lack of evidence. Also, important is the fact
that KJGS did shoulder the costs of the treatment.
National Labor Relations Commission (NLRC) shall have the
Attorney’s fees are however, granted. original and exclusive jurisdiction to hear and decide, within
ninety (90) calendar days after the filing of the complaint, the
b. 1.4.vi.c. Terms and Conditions
claims arising out of an employer-employee relationship or by
virtue of any law or contract involving Filipino workers for
b. 1.4.vi.c.1. Disability benefits overseas deployment including claims for actual, moral,
exemplary and other forms of damage. Consistent with this
b. 1.4.vii. Joint and Several Liability of Recruitment/placement
mandate, the NLRC shall endeavor to update and keep abreast
agency and principal/employer (corporate officers and company)
with the developments in the global services industry.
– A verified undertaking
The liability of the principal/employer and the
Joint and several liability of recruitment/placement
recruitment/placement agency for any and all claims under this
agency and principal/employer
section shall be joint and several. This provision shall be
-‐ Requires that a PEA submit a verified undertaking stating
incorporated in the contract for overseas employment and shall
that it shall assume joint and solidary liability with employer be a condition precedent for its approval. The performance
for all claims and liabilities which may arise in connection
bond to de filed by the recruitment/placement agency, as
with the implementation of the contract, including but not
provided by law, shall be answerable for all money claims or
limited to payment of wages, death and disability
damages that may be awarded to the workers. If the
compensation and repatriations
recruitment/placement agency is a juridical being, the corporate
Effect of termination of agency agreement between
themselves be jointly and solidarily liable with the corporation or
principal and manning agent
partnership for the aforesaid claims and damages.
1. The performance bond to be filed by the
recruitment/placement agency, as provided by law, shall be Such liabilities shall continue during the entire period or duration
answerable for all money claims or damages that may be
of the employment contract and shall not be affected by any
awarded to the workers.
substitution, amendment or modification made locally or in a
2. Such liabilities shall continue during the entire period or
foreign country of the said contract.
duration of the employment contract and shall not be
affected by any substitution, amendment or modification of Any compromise/amicable settlement or voluntary agreement
the contract made locally or in a foreign country.
on money claims inclusive of damages under this section shall be
3. For immediate and sufficient payment of claims
paid within thirty (30) days from approval of the settlement by
the appropriate authority.
Purpose of joint and several liability: Immediate and
sufficient payment
In case of termination of overseas employment without just, valid


or authorized cause as defined by law or contract, or any b. 1.4.vii.a. Effect of Termination of Agency Agreement Between
unauthorized deductions from the migrant worker's salary, the Manning Agent and Principal
worker shall be entitled to the full reimbursement if his
placement fee and the deductions made with interest at twelve RA 8042, Sec. 10 (as amended by RA 10022) Money
percent (12%) per annum, plus his salaries for the unexpired Claims. – (2) The liability of the principal/employer and the
portion of his employment contract or for three (3) months for recruitment/placement agency for any and all claims under this
every year of the unexpired term, whichever is less. section shall be joint and several. This provision shall be
incorporated in the contract for overseas employment and shall
In case of a final and executory judgement against a foreign be a condition precedent for its approval. The performance
employer/principal, it shall be automatically disqualified, without bond to de filed by the recruitment/placement agency, as
further proceedings, from participating in the Philippine provided by law, shall be answerable for all money claims or
Overseas Employment Program and from recruiting and hiring damages that may be awarded to the workers. If the
Filipino workers until and unless it fully satisfies the judgement recruitment/placement agency is a juridical being, the corporate
award. officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or
Noncompliance with the mandatory periods for resolutions of partnership for the aforesaid claims and damages.
case provided under this section shall subject the responsible
officials to any or all of the following penalties: Rules Implementing RA 8042
(a) The salary of any such official who fails to render his decision Rule VII. Money Claims
or resolution within the prescribed period shall be, or caused to Sec.3. Joint and Several Liability.
be, withheld until the said official complies therewith; The liability of the principal/employer and the
(b) Suspension for not more than ninety (90) days; or recruitment/placement agency on any and all claims under this
(c) Dismissal from the service with disqualification to hold any Rule shall be joint and several. This liability shall be incorporated
appointive public office for five (5) years. in the contract for overseas employment and shall be a condition
precedent for its approval. The performance bond to be filed by
Provided, however, That the penalties herein provided shall be the recruitment/placement agency, as provided by law, shall be
without prejudice to any liability which any such official may have answerable for all money claims or damages that may be
incured under other existing laws or rules and regulations as a awarded to the workers.
consequence of violating the provisions of this paragraph."
If the recruitment/placement agency is a juridical being, the
Omnibus Rules Implementing RA 8042 corporate officers and directors and partners, as the case may
Rule VII. Money Claims be, shall themselves be jointly and severally liable with the
Sec.3. Joint and Several Liability. corporation or partnership for the aforesaid claims and
The liability of the principal/employer and the damages.
recruitment/placement agency on any and all claims under this
Rule shall be joint and several. This liability shall be incorporated Such liabilities shall continue during the entire period or duration
in the contract for overseas employment and shall be a condition of the employment contract and shall not be affected by any
precedent for its approval. The performance bond to be filed by substitution, amendment or modification of the contract made
the recruitment/placement agency, as provided by law, shall be locally or in a foreign country.
answerable for all money claims or damages that may be
awarded to the workers. b. 1.4.vii.b. Purpose of joint and several liability: immediate and
sufficient payment
If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners, as the case may OSM Shipping Phil, Inc. v. NLRC (2003)
be, shall themselves be jointly and severally liable with the FACTS:
corporation or partnership for the aforesaid claims and 1. Fermin Guerrero was hired by OSM Shipping Philippines,
damages. Inc. for and in behalf of its principal, Philippine Carrier
Shipping Agency Services Co. (PC-SASCO)
Such liabilities shall continue during the entire period or duration - To board the vessel M/V Princess Hoa as Master
of the employment contract and shall not be affected by any Mariner
substitution, amendment or modification of the contract made - Contract period was 10 months with 44 hours of work
locally or in a foreign country. per week
- Basic monthly salary was US$1,070, US$200 allowance,
US$321 fixed overtime, US$89 vacation leave per month


2. July 21, 1994: Fermin boarded the vessel and complied allowances, accrued fixed overtime pay, vacation leave pay
faithfully with the duties assigned to him and termination pay
- He worked for almost 7 months, and despite the - There was a constructive dismissal of Fermin since he
services he rendered, he was not paid any had not been paid his salary for 7 months
compensation or remuneration - Dismissed OSM’s contention that there was a novation
3. January 1995: Fermin was forced to disembark the vessel of the employment contract
because he cannot even buy his basic personal necessities - OSM appealed to the NLRC
4. Fermin filed a complaint for illegal dismissal and non- 6. NLRC: Affirmed LA’s decision with modification as to the
payment of salaries, overtime pay and vacation pay amount of liability
- OSM’s answer: That the initial contract with Fermin was - OSM and PC-SASCO are jointly and severally ordered
NOVATED (iba na yata kasi employer niya and nag-iba to pay Fermin US$11,359.65 or its peso equivalent at
daw object ng contract – instead of overseas, coastwise the time of payment, representing unpaid salaries,
na) accrued fixed overtime pay, allowance, vacation leave
- Note: Vessels "plying coastwise" are those which are pay and termination pay
engaged in the domestic trade, or plying between port 7. OSM filed a petition to set aside the judgment of the NLRC
and port in the United States, as contradistinguished à dismissed because OSM allegedly failed to comply with
from those engaged in the foreicn trade, or plying the requirements of Sec. 3, Rule 46 ROC – because it
between a port of the United States and a port of a attached not a duplicate original or certified true copy of
foreign country. San Francisco v. California Steam Nav. LA’s decision, but a mere machine copy and because it did
Co., 10 Cal. 504. not indicate the actual address of Fermin
(http://thelawdictionary.org/coastwise/) 8. Because the petition was dismissed and the MR was denied,
o That Concorde Pacific, which owned the vessel this petition
M/V Princess Hoa, appointed PC-SASCO as ship
manager to negotiate and transact with third ISSUE/S:
persons for the crewing selection or determination 1. [Procedural] WON OSM has complied with Sec. 3, Rule 46
of qualifications of Filipino Seamen (YES)
o That PC-SASCO, on that same day, entered into a 2. [Substantive] WON the NLRC committed grave abuse of
Crew Agreement with OSM to process the discretion in ruling in favor of Fermin (NO)
documents of crew members of M/V Princess Hoa
o That the initial plan of Concorde was to use the HELD:
vessel in overseas trade 1. Court held: YES, OSM complied with Sec. 3, Rule
o That in September 1994, the contract of Fermin 46
was processed - NLRC: OSM did not comply with the Rule; should have
o However, Concorde Pacific changed its mind and attached a certified true copy of LA’s decision
decided to use the vessel instead for coastwise - SC: Sec. 3 Rule 46 does not require that all supporting
trade – the hired crewmembers never left the papers and documents accompanying a petition must be
Philippines and were merely used in the coastwise duplicate originals or certified true copies. Only the
trade duplicate originals or certified true copies of the
o Concorde Pacific had the vessel converted the questioned judgment must accompany the petition
vessel to Philippine registry by bareboat chartering o Here, what was questioned was the NLRC decision and
it out to another entity named Philippine Carrier it was certified
Shipping Lines Co. (PCSLC) o LA’s decision was not the questioned decision, so it did
o Because of the chartering out of the vessel to not have to be certified
PCSLC, Concorde had to terminate its - NLRC: OSM did not indicate Fermin’s address
management agreement with PC-SASCO, and PC- - SC: The indication that Fermin could be served with process
SASCO consequently terminated its crew care of his counsel was substantial compliance
agreement with OSM o All pleadings addressed to Fermin have always been
o That PCSLC, the bareboat charterer, became the sent to his counsel, Atty. Macalino
disponent owner/employer of the crew, so now it is o Since Fermin was a seaman and was often not at home,
responsible for the payment of the wages of service of pleadings to him personally would have been
Fermin futile
5. LA: Ruled in favor of Fermin; ordered OSM and PC-SASCO
to jointly and severally pay Fermin his unpaid salaries and 2. Court held: NO, the NLRC did not commit grave
abuse of discretion. It was right in upholding the


LA’s decision holding that Fermin was entitled to o That OSM and its principal have terminated their
recover his unpaid salaries and other monetary agency agreement does not relieve OSM of its liability
benefits § Reason, as cited in Catan v. NLRC, is because
- SC: (On why it still ruled on the merits) Court is mindful of obligations covenanted in the agreement between
the plight of workers in general, seeking to recover wages the agent and its principal, are not coterminous
that are unlawfully withheld from them; and such recovery with the term of the agreement; if either or both
should not be needlessly delayed at the expense of their decide to end the agreement, the responsibilities
survival of such parties towards the contracted employees
o It is now on its NINTH year since inception and a do not at all end, but extends until the expiration
remand to the CA will only unduly delay its disposition of the employment contracts; otherwise, it will
- OSM: does not deny hiring Fermin as master mariner, but it render nugatory the very purpose for which the law
argues that since he was not deployed overseas, his governing the employment of workers for foreign
employment contract became ineffective jobs abroad was enacted
o Contract became ineffective because its object
became absent b. 1.4.viii. Responsibilities of local recruitment agencies/liability
o That using the vessel in coastwise trade and for damages and atty’s fees
subsequently chartering it to another principal had the
effect of novating the contract RA 8042, Sec. 10 Money Claims – Notwithstanding any
- SC: We are not persuaded. OSM was the legitimate provision of law to the contrary, the Labor Arbiters of the
manning agent of PC-SASCO and, as such, it was allowed to National Labor Relations Commission (NLRC) shall have the
select, recruit, hire and deploy seamen on board the vessel original and exclusive jurisdiction to hear and decide, within
M/V Princess Hoa, which was managed by PC-SASCO ninety (90) calendar days after filing of the complaint, the claims
o It was in this capacity that OSM hired Fermin and they arising out of an employer- employee relationship or by virtue of
then executed and agreed upon an employment any law or contract involving Filipino workers for overseas
contract deployment including claims for actual, moral, exemplary and
o An employment contract is perfected at the moment: other forms of damages.
§ The parties come to agree upon its terms
§ Conquer in the essential elements The liability of the principal/employer and the
a. Consent of the contracting parties recruitment/placement agency for any and all claims under this
b. Object certain which is the subject matter of section shall be joint and several. This provisions shall be
the contract incorporated in the contract for overseas employment and shall
c. Cause of the obligation be a condition precedent for its approval. The performance
o Based on the perfected contract, Fermin complied bond to be filed by the recruitment/placement agency, as
with his obligations and rendered his services on provided by law, shall be answerable for all money claims or
board the vessel damages that may be awarded to the workers. If the
o The contract had an object, which was the rendition recruitment/placement agency is a juridical being, the corporate
of service by Fermin on board the vessel officers and directors and partners as the case may be, shall
o The non-deployment did not affect the validity of the themselves be jointly and solidarily liable with the corporation or
employment contract. The decision to use the vessel for partnership for the aforesaid claims and damages.
coastwise shipping was made by OSM only and did not
bear the written conformity of Fermin – a contract Such liabilities shall continue during the entire period or duration
cannot be novated by the will of only one party of the employment contract and shall not be affected by any
- OSM: It processed the contract of Fermin with the POEA substitution, amendment or modification made locally or in a
only after it had started working foreign country of the said contract.
- SC: This is without merit. OSM can’t use its own misfeasance
to defeat his claim Any compromise/amicable settlement or voluntary agreement
- SC: OSM, as manning agent, is jointly and severally on money claims inclusive of damages under this section shall be
liable with its principal, PC-SASCO, for Fermin’s claim paid within four (4) months from the approval of the settlement
o This is in accordance with Sec. 1, Rule II of the POEA by the appropriate authority.
Rules and Regulations
o Joint and solidary liability is meant to assure In case of termination of overseas employment without just, valid
aggrieved workers of immediate and sufficient or authorized cause as defined by law or contract, the workers
payment of what is due them shall be entitled to the full reimbursement of his placement fee
with interest of twelve percent (12%) per annum, plus his salaries


for the unexpired portion of his employment contract or for arising out of an employer- employee relationship or by virtue of
three (3) months for every year of the unexpired term, whichever any law or contract involving Filipino workers for overseas
is less. deployment including claims for actual, moral, exemplary and
other forms of damages.
Non-compliance with the mandatory periods for resolutions of
cases provided under this section shall subject the responsible Omnibus Rules Implementing RA 8042
officials to any or all of the following penalties: Rule VII. Money Claims
a) The salary of any such official who fails to render his decision Sec.1. Jurisdiction of Labor Arbiters
or resolutions within the prescribed period shall be, or caused to Notwithstanding any provision of law to the contrary, the Labor
be, withheld until the said official complies therewith; Arbiters of the NLRC shall have the original and exclusive
b) Suspension for not more than ninety (90) days; or jurisdiction to hear and decide, within ninety (90) calendar days
c) Dismissal from the service with disqualifications to hold any after the filing of the complaint, the claims arising out of an
appointive public office for five (5) years. employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment
Provided, however, that the penalties herein provided shall be including claims for actual, moral, exemplary and other forms of
without prejudice to any liability which any such official may have damages.
incurred under other existing laws or rules and regulations as a
consequence of violating the provisions of this paragraph.
Poseidon International Maritime Services v. Tito Tamala
FACTS:
b. 1.5. Jurisdiction 1. Poseidon Hired Tito, Felipe, Artemio and Joel, in behalf of
Van Doorn and those of its partners—Dinko Tuna and
b. 1.5.i. RTC over criminal action arising from illegal recruitment Snappertuna—to man the fishing vessels of Van Doorn at the
coastal area of Cape Verde Islands for a duration of 12
RA 8042, Sec. 9 Venue - A criminal action arising from illegal months.
recruitment as defined herein shall be filed with the Regional 2. Fishing operations started on Sept. 17, 2004
Trial Court of the province or city where the offense was 3. On Nov. 20, 2004, however, operations abruptly stopped and
committed or where the offended party actually resides at the did not resume
same time of the commission of the offense: Provided, That the 4. May 25, 2005 – Before Tito et al. disembarked the vessel
court where the criminal action is first filed shall acquire Goran Ekstrom of Snappertuna (their immediate employer on
jurisdiction to the exclusion of other courts. Provided, however, board the fishing vessels, executed an agreement with them
That the aforestated provisions shall also apply to those criminal regarding their salaries:
actions that have already been filed in court at the time of the - Tito et al. would get 100% of their unpaid salaries for the
effectivity of this Act. unexpired portion of their pre-terminated contract
5. On May 26, 2005, however, Poseidon and Van Doorn, with its
Omnibus Rules Implementing RA 8042 partners entered into another agreement reducing the
Rule IV. Illegal Recruitment previously agreed amount to 50% of Tito et al.’s unpaid
Sec.6. Venue salaries for the unexpired portion of their contract
A criminal action arising from illegal recruitment as defined 6. Tito et al. received the settlement pay under their letter of
under this Rule shall be filed with the Regional Trial Court of the acceptance.
province or city where the offense was committed or where the 7. They also signed a waiver and quitclaim and the
offended party actually resides at the time of the commission of corresponding cash vouchers
the offense; Provided, that the court where the criminal action is 8. Nov. 16, 2005 – Titio et al. filed complaint for illegal
first filed shall acquire jurisdiction to the exclusion of other termination of employment with prayer for the payment of
courts. their salaries for the unexpired portion of their contracts
9. Tito et al.’s contentions:
b. 1.5.ii. LA over money claims arising out of an ER-EE -‐ Subsequent execution of waiver and quitclaim should
rel/law/contract not be given weight
-‐ Their dire need for cash for their starving families
RA 8042, Sec. 10 Money Claims – (1) Notwithstanding any compelled and unduly influenced their decision to sign
10. Poseidon and Van Doorn’s contentions:
-‐ No cause of action
-‐ The waivers and quitclaims were voluntarily signed and
original and exclusive jurisdiction to hear and decide, within
ninety (90) calendar days after filing of the complaint, the claims agreed to and thus, effectively bars their claim
11. LA → dismissed complaint


-‐ Waivers and quitclaims valid the presence or absence of grave abuse of discretion in the
-‐ The letter of acceptance superseded their previous NLRC decision before it, and not strictly on the basis of
agreement whether the NLRC decision under review is intrinsically
-‐ LA merely resolved the validity of the waivers and correct.
quitclaims as Tito et al. abandoned their pleadings on o In other words, we have to be keenly aware that the CA
illegal dismissal undertook a Rule 65 review, not a review on appeal, of the
12. NLRC → AFFIRMED LA decision NLRC decision challenged before it.
13. MR denied o Hence, SC cannot re-examine the factual findings of the
14. Tito et al. filed petition for certiorari under Rule 65 before NLRC and the
the CA CA, nor do they substitute their own judgment for theirs, as their
15. findings of fact are generally conclusive on this Court. We cannot
16. CA → REVERSED. touch on factual questions except in the course of determining
-‐ Ordered Poseidon and Van Doorn to pay the balance whether the CA correctly ruled in determining whether or not
of 100% of the unpaid salaries for the unexpired portion the NLRC committed grave abuse of discretion in considering
of their pre-terminated contract and appreciating the factual issues before it
-‐ Waivers and quitclaims were invalid and highly
suspicious; Tito et al. were coerced and unduly 2. No. Dismissal was valid.
influenced into accepting 50% settlement pay - Tito et al. abandoned their claim of illegal dismissal
-‐ Amount in the first agreement is more in keeping with - In LA and NLRC, the manner of dismissal was not a
Sec. 10, RA 8042 which provides: contested issue
o Sec. 10 xxx - Records show that dismissal was due to Van Doorn’s
In case of termination of overseas employment decision to stop their fishing operations in the exercise of
without just, valid, or authorized cause, the worker their management prerogative
shall be entitled to the full reimbursement of his - Management has the freedom to close or cease its
placement fee with interest at 12% per annum, plus operations for any reason, as long as it is done in good faith
his salaries for the unexpired portion of his and the employer faithfully complies with the substantive
employment contract or for three months for every and procedural requirements laid down by law and
unexpired year of the unexpired term, whichever is jurisprudence (LC Art. 283 and POEA-SEC Sec 23).
less. Requisites:
-‐ The pre-termination of the contract was simply the 1) Decision to close or cease operations must be bona
result of Van Doorn’s decision to stop its operations fide in character
17. MR of Poseidon denied. 2) Service of written notice on the affected employees and
18. Poseidon filed petition for review on Certiorari under Rule on the DOLE at least 1 month prior to the effectivity of
45 the termination
19. Tito et al. contends that petition raises questions of fact, 3) Payment of termination or separation pay equivalent to
which are not proper for Rule 45 petition. 1 month pay or at least 1 ½ month pay for every year of
service, whichever is higher
ISSUES: - Termination of employment complied with the requisites
1. WON SC can review factual findings of NLRC and CA (NO) - Records show that Van Doorn did not intend to defeat
2. WON there was illegal dismissal (NO) employees’ rights
3. WON Tito et al. are entitled to 100% of their unpaid salaries o Van Doorn did not immediately repatriate them or
for the unexpired portion of their contract (NO) hired replacements
4. WON waivers and quitclaims were valid (YES) o Tito et al., although they were no longer rendering any
service, were still paid their full salaries for November
RATIO: 2004 until January 2005
1. No can dosville, baby doll. o From February 2005 until repatriation in May 2005, they
o Petition for review on certiorari under Rule 45 is limited to were paid their wages albeit half of their respective
the review of questions of law i.e., to legal errors that the CA monthly salary
may have committed in its decision, in contrast with the - Van Doorn however, is liable to pay nominal damages for
review for jurisdictional errors in original certiorari actions failure to observe procedural requisites for termination
under Rule 65. under Art. 283, particularly the service of notice
o In reviewing the legal correctness of a CA decision rendered 3. No. They are not. Sec. 10, RA 8042 has no
under Rule 65 of the Rules of Court, SC examines the CA application in this case.
decision from the prism of whether it correctly determined


- Application of said provision presumes a finding of illegal -‐ However, the turbo generator had already been
dismissal prepared and synchronized even before the arrival at
- Considering that there was no such finding, they cannot be Japan. An inspection of the boom also revealed that it
entitled to 100% of unpaid salaries for the unexpired portion was operational.
of their employment contract -‐ Upon verification, it was found out that when the Kure
4. Yes, they are valid and binding. docked in Japan, the cargo hold was not immediately
- Records show that Tito et al. voluntarily executed the opened (again, a responsibility of the deck officers and
waivers and quitclaims, with full understanding of its terms not the engineers) and the stock was not prepared.
and with the payment of credible and reasonable -‐ Moreover, the shipmaster and the chief mate went on
consideration shore leave once again.
- Settlement pay is reasonable under the circumstances -‐ They theorized that to save face, the shipmaster
- They received more than what they were entitled to shifted the blame to the Engineering Dept.
- They were mature an intelligent individuals 5. Despite protests, Lorenzo and the other engineering
- Their claim that they were in dire need for cash and that officers were ordered to disembark and thereafter, was
they would not be paid anything if they do not sign, do not repatriated.
constitute the coercion nor qualify as the undue influence 6. On it part, Phil. Transmarine and Universe Tankship
contemplated by the law sufficient to invalidate a waiver and disputed the allegations, providing an alternative account:
quitclaim -‐ Sometime on March 2002, a test of the cargo
discharging conveyor system revealed that Lorenzo
Note: A clause in RA 8042, Sec. 10 which states that: “for 3 and the eng’g officers failed to supply power to the
months for every year of the unexpired term, whichever is less,” same because they failed to start the turbo generator,
was declared unconstitutional, pursuant to Serrano v. Gallant even after 3 hours of trying to start the same.
Maritime Services. -‐ During that same incident, the shipmaster claims that
he called the engine room but Lorenzo hanged up on
See also: Lorenzo Tangga-an v. Phil Transmarine Carriers Inc. him. When the shipmaster went to the engine room,
FACTS: he said that Lorenzo and the others just pretended to
1. Jan. 31, 2002: Lorenzo entered into an overseas be busy and productive.
employment contract with Phil. Transmarine for and in -‐ There was another incident where Lorenzo was
behalf of its employer, Universe Tankship. The contract had nowhere to be found when the generator system and
the following terms: the conveyor boom were to be used. Apparently,
-‐ Lorenzo will be employed as “Chief Engineer” of the Lorenzo allegedly went on shore leave during that
S.S. Kure for 6 months time; this caused a 2-hour delay.
-‐ Basic Salary of $5000, with vacation leave pay -‐ For the 2nd incident, the shipmaster required Lorenzo
equivalent to 15 days a month, which is $2500 and a to explain in writing about the incident. Lorenzo failed
tonnage bonus of $700/month to explain why he did not supervise the operations
2. Feb 11, 2002: Lorenzo was finally deployed. and instead blamed the shipmaster in the written
3. While they were loading at Cedros, Mexico, Lorenzo explanation
noticed that the vessel listed too much at the bow. At that -‐ His explanation not satisfactory, the company decided
particular time, the shipmaster and the chief mate were to terminate his services. Thus, a notice of dismissal
both on shore leave, which was prohibited by maritime was issued and he was repatriated.
standards. Lorenzo chose to ignore the improper conduct 7. Lorenzo filed a complaint for illegal dismissal, with prayer
of the two senior officers. for payment of salaries for the unexpired portion of the
4. March 13, 2002: After discharging its cargo in Japan, the contract with leave pay, moral and exemplary damages,
S.S. Kure sailed to the USA. On the way there, the with attorney’s fees.
shipmaster required Lorenzo and the other Filipino 8. LA: Lorenzo illegally dismissed.
engineer officers to report to his office. -‐ LA believes that an open investigation should have
-‐ The shipmaster informed them that they would be been conducted as to the incidents, instead of
repatriated on account of the delay in the discharging outright dismissal. Lacking the said investigation, the
of cargo in Japan. This duty, however, was the dismissal was without just cause.
responsibility of deck officers. -‐ The dismissal also lacked the twin requirements of
-‐ The shipmaster blamed the delay to the non-readiness notice and hearing.
of the turbo generator and the inoperation of the -‐ As to the claim for back salaries, LA found that
boom. Lorenzo was entitled not for 4 months (the unexpired
portion of his contract) but only to 3 months, along


with the stipulated benefits of vacation leave pay and wording of Section 10, when the illegally dismissed
tonnage bonus. employee’s employment contract has a term of less
-‐ Award of damages were denied for lack of basis but that one year, he shall be entitled to recover the
attorney’s fees were granted as Lorenzo was salaries representing the unexpired portion of the
constrained to litigate. said employment contract.
9. NLRC: LA affirmed. o The Court found that the CA was confused by the
-‐ NLRC upheld the finding of illegal dismissal, as the phrase, “…whichever is less.”
twin requirements of notice and hearing were not o The correct interpretation is that the choice of which
complied with. amount to award to an illegally dismissed overseas
-‐ Also upheld the inclusion of benefits as they were part contract worker (i.e., whether his salaries shall be the
of his employment contract, and in illegal dismissal unexpired contract of his term OR three months
cases, the employee is entitled to such. salary for every year of the unexpired term,
-‐ Also affirmed the award of attorney’s fees as there was whichever is lower) ONLY applies when the
bad faith on the part of the company. employment contract has a term of at least one year
10. CA: LA and NLRC affirmed, with modification. or more. If it is less than one year, then there is no
-‐ There was illegal dismissal. need to make a choice; the employee shall be
-‐ But held that Lorenzo is entitled only to 3 months entitled to salaries for the unexpired portion of the
worth of back salaries and not the benefits. This is contract.
pursuant to Sec. 10 of RA 8042. - Since the employment contract of Lorenzo was for 6 months
-‐ Award of attorney’s fees were also deleted as the CA and he was only employed for 2 months, he is entitled to his
did not find bad faith present. salary for the 4 months left in his employment contract.
11. Respondents (Transmarine and Universe) and Petitioner - Moreover, the deletion of the award of the benefits
(Lorenzo) filed a petition, with petitioners questioning the stipulated (vacation leave pay and tonnage bonus) was
deletion of the awards of the benefits and attorney’s fees. improper. These benefits were expressly provided and
On the other hand, respondents supported the CA ruling. guaranteed in his employment contract as part of his
monthly salary and benefit package; they were not made
ISSUES: contingent. Art. 279 of the Labor Code mandates that an
1. WON the CA’s interpretation of Sec. 10 of RA 8042 was employee’s full backwages shall be inclusive of allowances
correct (NO) and other benefits or their monetary equivalent.
2. WON the CA’s deletion of the award of attorney’s fees was - Total award = ($5000 basic salary + $2500 vacation leave pay
proper (NO) + $700 tonnage bonus) x 4 months = $32,800
RATIO: 2. The deletion of attorney’s fees was improper.

1. The CA misinterpreted Sec. 10 of RA 8042. - In this case, attorney’s fees are applied in their extraordinary
- The relevant portion of Sec. 10: concept— an indemnity for damages ordered by the court
o “In case of termination of overseas employment to be paid by the losing party to the winning party.
without just, valid or authorized cause as defined by law - Art. 111 of the Labor Code is an exception to the declared
or contract, the workers shall be entitled to the full policy of strict construction in the award of attorney’s fees.
reimbursement of his placement fee with interest of While the merit of awarding the same will still need to be
twelve percent (12%) per annum, plus his salaries for the proven, the finding of bad faith is not a requisite for the said
unexpired portion of his employment contract or for award of attorney’s fees.
three (3) months for every year of the unexpired term, - Being illegally dismissed, Lorenzo was constrained to
whichever is less.” litigate. Hence, he is entitled to receive attorney’s fees,
- The CA based its misguided interpretation in the case equivalent to 10% of the total award ($3,280)
of Skippers Pacific Inc v. Skippers Maritime Services. In
that case: b. 1.5.iii. POEA over administrative cases
o The LA, NLRC and CA all took the view that the
employee was entitled to the salary for the b. 1.5.iii.a. Pre-employment/Recruitment violation cases
unexpired term of his contract but limited it only to
three months (instead of 4 months, the actual Omnibus Rules Implementing RA 8042
unexpired term), pursuant to their interpretation of Rule X. Role of DOLE
Sec. 10 of 8042. Sec.6. Jurisdiction of the POEA
o The Court did not agree with the ruling and The POEA shall exercise original and exclusive jurisdiction to
modified the same. It held that, following the hear and decide:


(a) all pre-employment/recruitment violation cases which are under the POEA Rules and Regulations of 1991 (1991 POEA
administrative in character, involving or arising out of violations Rules).
of Rules and Regulations relating to licensing and registration, 6. On May 23, 1996, the POEA dismissed the complaint for
including refund of fees collected from the workers or violation disciplinary action.
of the conditions for issuance of license or authority to recruit 7. Relying on Section 1, Rule V, Book VII of the 1991 POEA
workers; and Rules, petitioners filed a partial appeal on August 2, 1996 in
the NLRC, still maintaining that respondents should be
b. 1.5.iii.b. Disciplinary cases and other special cases administratively sanctioned for their conduct while they
were on board MT Seadance.
8. On March 21, 1997, the NLRC dismissed petitioners appeal
Omnibus Rules Implementing RA 8042
for lack of jurisdiction pursuant to Migrant Workers and
Rule X. Role of DOLE
Overseas Filipinos Act of 1995
Sec.6. Jurisdiction of the POEA
The POEA shall exercise original and exclusive jurisdiction to 9. Petitioners filed MR. NLRC denied MR.
10. Petitioners then commenced in SC a special civil action for
hear and decide:
certiorari and mandamus; however, SC referred the petition
(b) disciplinary action cases and other special cases, which are
to the CA.
administrative in character, involving employers, principals,
contracting partners and OFWs processed by the POEA. 11. On December 21, 2001, the CA dismissed the petition for
certiorari and mandamus, holding that the inclusion and
deletion of overseas contract workers from the POEA
See also: Eastern Mediterranean Maritime Ltd. & Agemar
blacklist/watchlist were within the exclusive jurisdiction of
Manning Agency v. Estanislao Surio
the POEA to the exclusion of the NLRC, and that the NLRC
FACTS:
had no appellate jurisdiction to review the matter .
1. Respondents were former crewmembers of MT Seadance,
Likewise, the Rules and Regulations implementing RA 8042
a vessel owned by petitioner Eastern Mediterranean
as well as Sections 6 and 7 Rule VII, Book VII of the POEA
Maritime Ltd. and manned and operated by petitioner
Rules & Regulations (1991) reiterate the jurisdiction of the
Agemar Manning Agency, Inc.
POEA. Thus, it can be concluded from the afore-quoted
2. While respondents were still on board the vessel, they
law and rules that, public respondent has no jurisdiction to
experienced delays in the payment of their wages and in
review disciplinary cases decided by the POEA involving
the remittance of allotments, and were not paid for extra
contract workers. Clearly, the matter of inclusion and
work and extra overtime work. They also complained about
deletion of overseas contract workers in the POEA
the vessels inadequate equipment, and about the failure of
Blacklist/Watchlist is within the exclusive jurisdiction of the
the petitioners to heed their repeated requests for the
POEA to the exclusion of the public respondent. Nor has
improvement of their working conditions.
the latter appellate jurisdiction to review the findings of the
3. On December 19, 1993, when MT Seadance docked at the
POEA involving such cases.
port of Brofjorden, Sweden to discharge oil,
representatives of the International Transport Federation
ISSUE:
(ITF) boarded the vessel and found the wages of the
WON NLRC has jurisdiction to review on appeal cases decided
respondents to be below the prevailing rates. The ensuing
by POEA on matters pertaining to disciplinary actions against
negotiations between the ITF and the vessel owner on the
private respondents (NO)
increase in respondents’ wages resulted in the payment by
the vessel owner of wage differentials and the immediate
RATIO: The NLRC had no appellate jurisdiction.
repatriation of respondents to the Philippines.
- Although Republic Act No. 8042, through its Section 10,
4. Subsequently, on December 23, 1993, the petitioners filed
transferred the original and exclusive jurisdiction to hear
against the newly-repatriated respondents a complaint for
and decide money claims involving overseas Filipino
disciplinary action based on breach of discipline and for the
workers from the POEA to the Labor Arbiters, the law did
reimbursement of the wage increases in the Workers
not remove from the POEA the original and exclusive
Assistance and Adjudication Office of the POEA.
jurisdiction to hear and decide all disciplinary action cases
5. During the pendency of the administrative complaint in the
and other special cases administrative in character involving
POEA, Republic Act No. 8042 (Migrant Workers and
such workers.
Overseas Filipinos Act of 1995) took effect on July 15, 1995.
o The obvious intent of Republic Act No. 8042 was to
Section 10 of Republic Act No. 8042 vested original and
have the POEA focus its efforts in resolving all
exclusive jurisdiction over all money claims arising out of
administrative matters affecting and involving such
employer-employee relationships involving overseas
workers.
Filipino workers in the Labor Arbiters .→The jurisdiction
over such claims was previously exercised by the POEA


o This intent was even expressly recognized in the the taking of the appeal, point out the cases in which it
Omnibus Rules and Regulations Implementing the is proper to present the appeal, the procedure to be
Migrant Workers and Overseas Filipinos Act of 1995 observed, and the courts by which the appeal is to be
promulgated on February 29, 1996 (see footnote 3). proceeded with and resolved. This is why we
o It is clear to us, therefore, that the NLRC had no consistently hold that the right to appeal is statutory in
appellate jurisdiction to review the decision of the character, and is available only if granted by law or
POEA in disciplinary cases involving overseas contract statute.
workers. - When Republic Act No. 8042 withheld the appellate
- RA 8042 IS RETROACTIVE (considered PROCEDURAL LAW): jurisdiction of the NLRC in respect of cases decided by the
o Petitioners position that Republic Act No. 8042 should POEA, the appellate jurisdiction was vested in the Secretary
not be applied retroactively to the review of the POEA’s of Labor in accordance with his power of supervision and
decision dismissing their complaint against control under Section 38(1), Chapter 7, Title II, Book III of the
respondents has no support in jurisprudence. Revised Administrative Code of 1987 .
o Although, as a rule, all laws are prospective in - Thus, Section 1, Part VII, Rule V of the 2003 POEA Rules and
application unless the contrary is expressly provided, or Regulations specifically provides, as follows: “Section 1.
unless the law is procedural or curative in nature, there Jurisdiction. The Secretary shall have the exclusive and
is no serious question about the retroactive applicability original jurisdiction to act on appeals or Petition for Review
of Republic Act No. 8042 to the appeal of the POEA’s of disciplinary action cases decided by the Administration.”
decision on petitioners disciplinary action against - SC: In conclusion, we hold that petitioners should have
respondents. appealed the adverse decision of the POEA to the Secretary
o In a way, Republic Act No. 8042 was a procedural law of Labor instead of to the NLRC. Consequently, the CA,
due to its providing or omitting guidelines on appeal. being correct on its conclusions, committed no error in
o A law is procedural, according to De Los Santos v. Vda. upholding the NLRC.
De Mangubat, when it “refers to the adjective law
which prescribes rules and forms of procedure in order
that courts may be able to administer justice. b. 2. Public Sector Agencies
Procedural laws do not come within the legal
conception of a retroactive law, or the general rule Art. 12 Statement of objectives – It is the policy of the State:
against the retroactive operation of statues [thus] they
may be given retroactive effect on actions pending and (f) To strengthen the network of public employment offices and
undetermined at the time of their passage and this will rationalize the participation of the private sector in the
not violate any right of a person who may feel that he is recruitment and placement of workers, locally and overseas, to
adversely affected, insomuch as there are no vested serve national development objectives;
rights in rules of procedure.
o Republic Act No. 8042 applies to petitioners complaint Art. 14 Employment promotion – The Secretary of Labor shall
by virtue of the case being then still pending or
have the power and authority:
undetermined at the time of the law’s passage, there
(a) To organize and establish new employment offices in addition
being no vested rights in rules of procedure.
to the existing employment offices under the Department of
o Republic Act No. 8042 and its implementing rules and
Labor as the need arises;
regulations were already in effect when petitioners took
their appeal. A statute that eliminates the right to
EO 247 Reorganizing POEA, Sec. 3 Powers and Functions -
appeal and considers the judgment rendered final and
In the pursuit of its mandate, the Administration shall have the
unappealable only destroys the right to appeal, but not
following powers and functions:
the right to prosecute an appeal that has been
perfected prior to its passage, for, at that stage, the
(a) Regulate private sector participation in the recruitment and
right to appeal has already vested and cannot be
overseas placement of workers by setting up a licensing and
impaired.
registration system;
o Conversely and by analogy, an appeal that is perfected
when a new statute affecting appellate jurisdiction
(b) Formulate and implement, in coordination with appropriate
comes into effect should comply with the provisions of
entities concerned, when necessary, a system for promoting and
the new law, unless otherwise provided by the new law.
monitoring the overseas employment of Filipino workers taking
o Relevantly, petitioners need to be reminded that the
into consideration their welfare and the domestic manpower
right to appeal from a decision is a privilege
requirements;
established by positive laws, which, upon authorizing


(c) Protect the rights of Filipino workers for overseas employment (n) Establish and maintain close relationship and enter into joint
to fair and equitable recruitment and employment practices and projects with the Department of Foreign Affairs, Philippine
ensure their welfare; Tourism Authority, Manila International Airport Authority,
Department of Justice, Department of Budget and Management
(d) Exercise original and exclusive jurisdiction to hear and decide and other relevant government entities, in the pursuit of its
all claims arising out of an employer-employee relationship or by objectives. The Administration shall also establish and maintain
virtue of any law or contract involving Filipino workers for joint projects with private organizations, domestic or foreign, in
overseas employment including the disciplinary cases; and all the furtherance of its objectives.
pre- employment cases which are administrative in character
involving or arising out of violation or requirement laws, rules c. Sanctions
and regulations including money claims arising therefrom, or
violation of the conditions for issuance of license or authority to RA 8042 as amended by RA 10022, Sec. 6 Definition - For
recruit workers. purposes of this Act, illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring,
All prohibited recruitment activities and practices which are or procuring workers and includes referring, contract services,
penal in character as enumerated and defined under and by promising or advertising for employment abroad, whether for
virtue of existing laws, shall be prosecuted in the regular courts profit or not, when undertaken by non-licensee or non-holder of
in close coordination with the appropriate Departments and authority contemplated under Article 13(f) of Presidential Decree
agencies concerned; No. 442, as amended, otherwise known as the Labor Code of the
Philippines: Provided, That any such non- licensee or non-holder
(e) Maintain a registry of skills for overseas placement; who, in any manner, offers or promises for a fee employment
(f) Recruit and place workers to service the requirements for shall likewise include the following acts, whether committed by
trained and competent Filipino workers by foreign governments any person, whether a non-licensee, non-holder, licensee or
and their instrumentalities and such other employers as public holder of authority:
interest may require;
(a) To charge or accept directly or indirectly any amount greater
(g) Promote the development of skills and careful selection of than that specified in the schedule of allowable fees prescribed
Filipino workers; by the Secretary of Labor and Employment, or to make a worker
pay or acknowledge any amount greater than that actually
(h) Undertake overseas market development activities for received by him as a loan or advance;
placement of Filipino workers;
(b) To furnish or publish any false notice or information or
(i) Secure the best terms and conditions of employment of document in relation to recruitment or employment;
Filipino contract workers and ensure compliance therewith;
(c) To give any false notice, testimony, information or document
(j) Promote and protect the well-being of Filipino workers or commit any act of misrepresentation for the purpose of
overseas; securing a license or authority under the Labor Code, or for the
purpose of documenting hired workers with the POEA, which
(k) Develop and implement programs for the effective include the act of reprocessing workers through a job order that
monitoring of returning contract workers, promoting their re- pertains to nonexistent work, work different from the actual
training and re-employment or their smooth re-integration into overseas work, or work with a different employer whether
the mainstream of national economy in coordination with other registered or not with the POEA;
government agencies;
(d) To include or attempt to induce a worker already employed
(l) Institute a system for ensuring fair and speedy disposition of to quit his employment in order to offer him another unless the
cases involving violation or recruitment rules and regulations as transfer is designed to liberate a worker from oppressive terms
well as violation of terms and conditions of overseas and conditions of employment;
employment;
(e) To influence or attempt to influence any person or entity not
(m) Establish a system for speedy and efficient enforcement of to employ any worker who has not applied for employment
decisions laid down through the exercise of its adjudicatory through his agency or who has formed, joined or supported, or
function; has contacted or is supported by any union or workers'
organization;


migrant worker issue, either personally or through a guarantor or
(f) To engage in the recruitment or placement of workers in jobs accommodation party, postdated checks in relation to the said
harmful to public health or morality or to the dignity of the loan;
Republic of the Philippines;
(2) Impose a compulsory and exclusive arrangement whereby an
(h) To fail to submit reports on the status of employment, overseas Filipino worker is required to avail of a loan only from
placement vacancies, remittance of foreign exchange earnings, specifically designated institutions, entities or persons;
separation from jobs, departures and such other matters or
information as may be required by the Secretary of Labor and (3) Refuse to condone or renegotiate a loan incurred by an
Employment; overseas Filipino worker after the latter's employment contract
(i) To substitute or alter to the prejudice of the worker, has been prematurely terminated through no fault of his or her
employment contracts approved and verified by the Department own;
of Labor and Employment from the time of actual signing
thereof by the parties up to and including the period of the (4) Impose a compulsory and exclusive arrangement whereby an
expiration of the same without the approval of the Department overseas Filipino worker is required to undergo health
of Labor and Employment; examinations only from specifically designated medical clinics,
institutions, entities or persons, except in the case of a seafarer
(j) For an officer or agent of a recruitment or placement agency whose medical examination cost is shouldered by the
to become an officer or member of the Board of any corporation principal/shipowner;
engaged in travel agency or to be engaged directly or indirectly
in the management of travel agency; (5) Impose a compulsory and exclusive arrangement whereby an
overseas Filipino worker is required to undergo training,
(k) To withhold or deny travel documents from applicant workers seminar, instruction or schooling of any kind only from
before departure for monetary or financial considerations, or for specifically designated institutions, entities or persons, except
any other reasons, other than those authorized under the Labor for recommendatory trainings mandated by
Code and its implementing rules and regulations; principals/shipowners where the latter shoulder the cost of such
trainings;
(l) Failure to actually deploy a contracted worker without valid
reason as determined by the Department of Labor and (6) For a suspended recruitment/manning agency to engage in
Employment; any kind of recruitment activity including the processing of
pending workers' applications; and
(m) Failure to reimburse expenses incurred by the worker in
connection with his documentation and processing for purposes (7) For a recruitment/manning agency or a foreign
of deployment, in cases where the deployment does not actually principal/employer to pass on the overseas Filipino worker or
take place without the worker's fault. Illegal recruitment when deduct from his or her salary the payment of the cost of
committed by a syndicate or in large scale shall be considered insurance fees, premium or other insurance related charges, as
an offense involving economic sabotage; and provided under the compulsory worker's insurance coverage.
(n) To allow a non-Filipino citizen to head or manage a licensed The persons criminally liable for the above offenses are the
recruitment/manning agency. principals, accomplices and accessories. In case of juridical
persons, the officers having ownership, control, management or
Illegal recruitment is deemed committed by a syndicate if carried direction of their business who are responsible for the
out by a group of three (3) or more persons conspiring or commission of the offense and the responsible
confederating with one another. It is deemed committed in large employees/agents thereof shall be liable.
or as a group. In the filing of cases for illegal recruitment or any of the
In addition to the acts enumerated above, it shall also be Employment, the POEA Administrator or their duly authorized
unlawful for any person or entity to commit the following representatives, or any aggrieved person may initiate the
prohibited acts: corresponding criminal action with the appropriate office. For
(1) Grant a loan to an overseas Filipino worker with interest personnel from the Department of Labor and Employment,
exceeding eight percent (8%) per annum, which will be used for POEA and other law enforcement agencies who witnessed the
payment of legal and allowable placement fees and make the acts constituting the offense shall be sufficient to prosecute the


accused. mandate, the NLRC shall endeavor to update and keep abreast
with the developments in the global services industry.
In the prosecution of offenses punishable under this section, the
public prosecutors of the Department of Justice shall collaborate The liability of the principal/employer and the
with the anti-illegal recruitment branch of the POEA and, in recruitment/placement agency for any and all claims under this
certain cases, allow the POEA lawyers to take the lead in the section shall be joint and several. This provision shall be
prosecution. The POEA lawyers who act as prosecutors in such incorporated in the contract for overseas employment and shall
cases shall be entitled to receive additional allowances as may be a condition precedent for its approval. The performance
be determined by the POEA Administrator. bond to de filed by the recruitment/placement agency, as
"The filing of an offense punishable under this Act shall be provided by law, shall be answerable for all money claims or
without prejudice to the filing of cases punishable under other damages that may be awarded to the workers. If the
existing laws, rules or regulations recruitment/placement agency is a juridical being, the corporate
RA 8042 as amended by RA 10022, Sec. 7 Penalties - themselves be jointly and solidarily liable with the corporation or
partnership for the aforesaid claims and damages.
(a) Any person found guilty of illegal recruitment shall suffer the
penalty of imprisonment of not less than twelve (12) years and Such liabilities shall continue during the entire period or duration
one (1) day but not more than twenty (20) years and a fine of not of the employment contract and shall not be affected by any
less than One million pesos (P1,000,000.00) nor more than Two substitution, amendment or modification made locally or in a
million pesos (P2,000,000.00). foreign country of the said contract.
(b) The penalty of life imprisonment and a fine of not less than Any compromise/amicable settlement or voluntary agreement
Two million pesos (P2,000,000.00) nor more than Five million on money claims inclusive of damages under this section shall be
pesos (P5,000,000.00) shall be imposed if illegal recruitment paid within thirty (30) days from approval of the settlement by
constitutes economic sabotage as defined therein. the appropriate authority.
Provided, however, That the maximum penalty shall be imposed In case of termination of overseas employment without just, valid
if the person illegally recruited is less than eighteen (18) years of or authorized cause as defined by law or contract, or any
age or committed by a non-licensee or non-holder of authority. unauthorized deductions from the migrant worker's salary, the
worker shall be entitled to the full reimbursement if his
(c) Any person found guilty of any of the prohibited acts shall placement fee and the deductions made with interest at twelve
suffer the penalty of imprisonment of not less than six (6) years percent (12%) per annum, plus his salaries for the unexpired
and one (1) day but not more than twelve (12) years and a fine of portion of his employment contract or for three (3) months for
not less than Five hundred thousand pesos (P500,000.00) nor every year of the unexpired term, whichever is less.
more than One million pesos (P1,000,000.00).
In case of a final and executory judgement against a foreign
If the offender is an alien, he or she shall, in addition to the employer/principal, it shall be automatically disqualified, without
penalties herein prescribed, be deported without further further proceedings, from participating in the Philippine
proceedings. Overseas Employment Program and from recruiting and hiring
Filipino workers until and unless it fully satisfies the judgement
In every case, conviction shall cause and carry the automatic award.
revocation of the license or registration of the
recruitment/manning agency, lending institutions, training Noncompliance with the mandatory periods for resolutions of
school or medical clinic. case provided under this section shall subject the responsible
officials to any or all of the following penalties:
RA 8042, Sec. 10 (5) – (6) Money Claims – Notwithstanding

(a) The salary of any such official who fails to render his decision
any provision of law to the contrary, the Labor Arbiters of the
or resolution within the prescribed period shall be, or caused to
be, withheld until the said official complies therewith;
original and exclusive jurisdiction to hear and decide, within
(b) Suspension for not more than ninety (90) days; or
ninety (90) calendar days after the filing of the complaint, the
(c) Dismissal from the service with disqualification to hold any
claims arising out of an employer-employee relationship or by
appointive public office for five (5) years.
virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral,
Provided, however, That the penalties herein provided shall be
exemplary and other forms of damage. Consistent with this

without prejudice to any liability which any such official may have - Acts prohibited in Article 34 are grounds for
incured under other existing laws or rules and regulations as a suspension/cancellation of license or authority.
consequence of violating the provisions of this paragraph. - The SOLE and the POEA have concurrent jurisdiction to
suspend or cancel a license/authority. The SOLE’s authority
c. 1. Local Employment is found in Sec.35. Pursuant to his rule- making power under
Section 36, he may vest authority to the POEA to conduct
necessary proceedings for suspension/cancellation or
Art. 39 Penalties –
license/authority.
(a) The penalty of life imprisonment and a fine of One Hundred
Thousand Pesos (P1000,000.00) shall be imposed if illegal
LIABILITY
recruitment constitutes economic sabotage as defined herein;
- A recruitment agency is solidarily liable with the foreign
principal for the unpaid salaries of the worker it recruited.
(b) Any licensee or holder of authority found violating or causing
another to violate any provision of this Title or its implementing - The agency may still be sued for violation of contract even if
the recruitment agency and principal have severed their
rules and regulations shall, upon conviction thereof, suffer the
agency agreement at the time of the petitioner’s injury, IF
penalty of imprisonment of not less than two years nor more
no notice of such severance was given to petitioner.
than five years or a fine of not less than P10,000 nor more than
P50,000, or both such imprisonment and fine, at the discretion of - Obligations in recruitment agreement are not coterminous
the court; with the terms of the agreement. Thus, if the agent and
principal decide to end the contract, they are still liable to
their workers until the expiration of their contracts provided
(c) Any person who is neither a licensee nor a holder of authority
in the recruitment agreement.
under this Title found violating any provision thereof or its
implementing rules and regulations shall, upon conviction
thereof, suffer the penalty of imprisonment of not less than four
years nor more than eight years or a fine of not less than P20,000 RA 8042 as amended by RA 10022, Sec. 7 Penalties -
nor more than P100,000 or both such imprisonment and fine, at
the discretion of the court; (a) Any person found guilty of illegal recruitment shall suffer the
penalty of imprisonment of not less than twelve (12) years and
(d) If the offender is a corporation, partnership, association or one (1) day but not more than twenty (20) years and a fine of not
entity, the penalty shall be imposed upon the officer or officers less than One million pesos (P1,000,000.00) nor more than Two
of the corporation, partnership, association or entity responsible million pesos (P2,000,000.00).
for violation; and if such officer is an alien, he shall, in addition to
the penalties herein prescribed, be deported without further (b) The penalty of life imprisonment and a fine of not less than
proceedings; Two million pesos (P2,000,000.00) nor more than Five million
pesos (P5,000,000.00) shall be imposed if illegal recruitment
(e) In every case, conviction shall cause and carry the automatic constitutes economic sabotage as defined therein.
revocation of the license or authority and all the permits and
privileges granted to such person or entity under this Title, and Provided, however, That the maximum penalty shall be imposed
the forfeiture of the cash and surety bonds in favor of the if the person illegally recruited is less than eighteen (18) years of
Overseas Employment Development Board or the National age or committed by a non-licensee or non-holder of authority.
Seamen Board, as the case may be, both of which are authorized
to use the same exclusively to promote their objectives. (c) Any person found guilty of any of the prohibited acts shall
suffer the penalty of imprisonment of not less than six (6) years
c. 2. Overseas Employment and one (1) day but not more than twelve (12) years and a fine of
not less than Five hundred thousand pesos (P500,000.00) nor
more than One million pesos (P1,000,000.00).
Art. 35 Suspension and/or cancellation of license or authority –
The Minister of Labor shall have the power to suspend or cancel
If the offender is an alien, he or she shall, in addition to the
any license or authority to recruit employees for overseas
penalties herein prescribed, be deported without further
employment for violation of rules and regulations issued by the
proceedings.
Ministry of Labor, the Overseas Employment Development
Board, or for violation of the provisions of this and other
In every case, conviction shall cause and carry the automatic
applicable laws, General Orders and Letters of Instructions.
revocation of the license or registration of the
recruitment/manning agency, lending institutions, training
SUSPENSION/CANCELLATION OF LICENSE school or medical clinic.


- Foreigners may not be employed in certain “nationalized”
WHERE TO FILE? business.
Crim action arising from illegal recruitment shall be filed with the - The Anti-Dummy Law (CA 108, as amended by PD 715)
RTC of the province or city where the offense was committed or prohibits employment of aliens in entities that own or control a
where the offended party was actually residing at the time of the right, franchise, privilege, property or business whose exercise or
commission of the offense. enjoyment is reserved by law only to Filipinos or to corporations
Prescription: or associations whose capital should be at least 60% Filipino-
1. Illegal recruitment: 5 years owned:
2. Illegal recruitment involving economic sabotage: 20 years o Operation of public utility
o Development, exploitation and utilization of natural
resources
2. Alien Employment Regulation o Financing companies
- Constitution provides that mass media enterprises can be
Art. 12 Statement of objectives – It is the policy of the State: owned or managed only by Filipinos or by corporations or
associations wholly owned or managed by them.
(e) To regulate the employment of aliens, including the - Secretary of Justice rendered an Opinion, that aliens may be
establishment of a registration and/or work permit system; employed in entities engaged in nationalized activities:
a. Where the Secretary of Justice specifically authorizes the
employment of foreign technical personnel
Art. 40 (now 43) Statement of objective – It is the objective of
b. Where aliens are elected members of board of directors or
this Title to develop human resources, establish training
governing body of corporations or associations in
institutions, and formulate such plans and programs as will
proportion to their allowable participation in the capital of
ensure efficient allocation, development and utilization of the
such entities.
nation’s manpower and thereby promote employment and
accelerate economic and social growth.
Omnibus Rules
Art. 41 (now 44) Definitions – As used in this Title:
Book I
Rule XIV
(a) "Manpower" shall mean that portion of the nation’s
Employment of Aliens
population which has actual or potential capability to contribute
directly to the production of goods and services.
SECTION 1. Coverage. — This Rule shall apply to all aliens
employed or seeking employment in the Philippines, and their
(b) "Entrepreneurship" shall mean training for self-employment
present or prospective employers.
or assisting individual or small industries within the purview of
this Title.
SECTION 2. Submission of list. — All employers employing
foreign nationals, whether resident or non-resident shall submit
Art. 42 (now 45) National Manpower and Youth Council; a list of such nationals to the Bureau indicating their names,
Composition – To carry out the objectives of this Title, the citizenship, foreign and local addresses; nature of employment
National Manpower and Youth Council, which is attached to the and status of stay in the Philippines.
Department of Labor for policy and program coordination and
hereinafter referred to as the Council, shall be composed of the SECTION 3. Registration of resident aliens. — All employed
Secretary of Labor as ex- officio chairman, the Secretary of resident aliens shall register with the Bureau under such
Education and Culture as ex-officio vice-chairman, and as ex- guidelines as may be issued by it.
officio members, the Secretary of Economic Planning, the
Secretary of Natural Resources, the Chairman of the Civil Service SECTION 4. Employment permit required for entry. — No alien
Commission, the Secretary of Social Welfare, the Secretary of seeking employment, whether on resident or non-resident
Local Government, the Secretary of Science and Technology, the status, may enter the Philippines without first securing an
Secretary of Trade and Industry and the Director-General of the employment permit from the Department of Labor and
Council. The Director General shall have no vote. Employment. If an alien enters the country under a non-working
visa and wishes to be employed thereafter, he may only be
- Art. 40 requires only non-resident aliens to secure employment allowed to be employed upon presentation of a duly approved
permit. Resident aliens are not so required. employment permit.
- For immigrants and resident aliens, what is required is an Alien
Employment Registration Certificate (AERC) SECTION 5. Requirements for employment permit application.


— The application for an employment permit shall be the date of its issuance unless sooner revoked by the Secretary
accompanied by the following: of Labor and Employment for violation of any provisions of the
Code or of these Rules.
(a) Curriculum vitae duly signed by the applicant indicating
his educational background, his work experience and other SECTION 8. Advice to Commission on Immigration and
data showing that he possesses high technical skills in his Deportation. — The Bureau shall advice the Commission on
trade or profession; Immigration and Deportation on the issuance of an employment
permit to an applicant.
(b) Contract of employment between the employer and the
principal which shall embody the following, among others: SECTION 9. Understudy Training Program. — The employer
(1) That the non-resident alien worker shall comply with shall submit a training program for his understudies to the
all applicable laws and rules and regulations of the Bureau within thirty (30) days upon arrival of the alien workers.
Philippines; The supervision of the training program shall be the
(2) That the non-resident alien worker and the employer responsibility of the Bureau and shall be in accordance with
shall bind themselves to train at least two (2) Filipino standards established by the Secretary of Labor and
understudies for a period to be determined by the Employment.
Secretary of Labor and Employment; and
(3) That he shall not engage in any gainful employment Art. XII, Sec. 12 CON87 The State shall promote the
other than that for which he was issued a permit. preferential use of Filipino labor, domestic materials and locally
produced goods, and adopt measures that help make them
(c) A designation by the employer of at least two (2) competitive.
understudies for every alien worker. Such understudies must
be the most ranking regular employees in the section or
SUMMARY OF ALIEN EMPLOYMENT REGULATIONS
department for which the expatriates are being hired to
Coverage Aliens employed or seeking employment
ensure the actual transfer of technology.
Diplomatic service, foreign gov’t officials
Officers and their sps of int’l orgs where Phils. Is
SECTION 6. Issuances of employment permit. — The Secretary
a member
of Labor and Employment may issue an employment permit to
Members of governing board with voting rights
the applicant based on:
Those granted exemption
a) Compliance by the applicant and his employer with the Owners of companies accredited with POEA
Exceptions
requirements of Section 2 hereof; with purpose of interviewing Filipinos for
employment abroad
b) Report of the Bureau Director as to the availability or non- Academic purposes (to teach and conduct
availability of any person in the Philippines who is research)
competent, able, and willing to do the job for which the Resident foreign nationals
services of the applicant are desired; Temporary resident visa holders
Requirements
c) His assessment as to whether or not the employment of Curriculum vitae (educational background,
the applicant will redound to the national interest; work experience, and high technical skills)
Contract of employment – must include:
d) Admissibility of the alien as certified by the Commission 1. Compliance with laws, rules, and
on Immigration and Deportation; regulations
Conditions 2. Undertaking of alien and ER to train at
e) The recommendation of the Board of Investments or other for grant of least 2 understudies > must be the most
appropriate government agencies if the applicant will be permit ranking regular employee
employed in preferred areas of investments or in accordance 3. Purpose: Ensure the actual transfer of
with imperatives of economic developments; and technology
4. Not engage in other employment not in
f) Payments of a P100.00 fee. permit
Issuance of alien employment permit (Sec. 6)
SECTION 7. Duration of employment permit. — Subject to Compliance with the requirements
renewal upon showing of good cause, the employment permit
shall be valid for a minimum period of one (1) year starting from


Documents from Bureau of Director: foreign nationals are exempt from securing an employment
-‐ Report of the availability and non- permit:
availability of Filipinos competent, able, (a) All members of the diplomatic service and foreign
and willing to do the job government officials accredited by and with reciprocity
-‐ Assessment that it will be for the national arrangement with the Philippine government.
interest (b) Officers and staff of international organizations of which the
Certification of admissibility from Commission Philippine government is a member, and their
on Immigration legitimate spouses desiring to work in the Philippines.
Recommendation from Board of Investments (c) Foreign nationals elected as members of the Governing
that employment is in preferred areas of Board who do not occupy any other position, but have
investment only voting rights in the corporation:
Payment of P100 fee (d) All foreign nationals granted exemption by law:
Valid for one year (e) Owners and representatives of foreign principals whose
Validity of
Subject to renewal upon showing of good cause companies are accredited by the Philippine Overseas
AEP
Cannot extend beyond five years Employment Administration (POEA), who come to the
No suspension of AEP Philippines for a limited period and solely for the purpose of
Upon complaint, or motu proprio to be interviewing Filipino applicants for employment abroad:
cancelled by Regional Director (f) Foreign national who come to the Philippines to teach,
Revocation Grounds present and/or conduct research studies in universities and
or Non-compliance with the rules colleges as visiting, exchange or adjunct professors under formal
cancellation Misrepresentation in application agreements between the Philippine government and foreign
government ; provided that the exemption is on a reciprocal
Meritorious objection/information
basis; and
Conviction of criminal offense
(g) Permanent resident foreign nationals, probationary or
Termination of employment
temporary resident visa holders.
a. Coverage
- Non-resident aliens required to secure employment permit.
Resident aliens are not required.
Art. 40 (now 43) Statement of objective – It is the objective of
- Immigrants and resident aliens: Alien Employment
this Title to develop human resources, establish training
Registration Certificate
institutions, and formulate such plans and programs as will
- However, foreigners may not be employed in certain
ensure efficient allocation, development and utilization of the
“nationalized” businesses.
nation’s manpower and thereby promote employment and
1. Anti-dummy law prohibits employment of aliens in
accelerate economic and social growth.
entities that own or control a right reserved by law only
to Filipinos or corporations 60% of which are Filipino’s.
Omnibus Rules 2. Financing companies (same 60% rule)
Book I 3. Mass media enterprises
Rule XIV - Enterprises registered under the Omnibus Investments
Sec. 1 Coverage — This Rule shall apply to all aliens employed Code may for a limited period employ foreign nationals in
or seeking employment in the Philippines, and their present or technical, supervisory, or advisory positions.
prospective employers.
Andrew James McBurnie v. Eulalio Ganzon (2013)
DO 97-09, Sec. 1 Coverage – All foreign nationals who intend FACTS:
to engage in gainful employment in the Philippines shall apply 1. Andrew is an Australian National. On May 11, 1999, he
for Alien Employment Permit (AEP) signed a five-year employment agreement with the company
EGI-Managers, Inc. as an Executive Vice-President who shall
Rule I.1. oversee the management of the company’s hotels and
resorts within the Philippines.
2. He performed work for the company until sometime in
Exemption:
November 1999, when he figured in an accident that
compelled him to go back to Australia while recuperating
Rule I.2.
from his injuries.
DO 97-09, Sec. 2 Exemption – The following categories of


3. While in Australia, he was informed by respondent Ganzon 22. Andrew filed an MR, invoking the fact that the Court’s
that his services were no longer needed because their decision had become final and executory.
intended project would no longer push through.
4. He filed a complaint for illegal dismissal against EGI. ISSUES:
5. EGI opposed this saying that their agreement with Andrew 1. WON the third MR was correctly accepted by the Court (YES)
was to jointly invest in and establish a company for the 2. WON the Motion to Reduce Bond should have been
management of hotels. They did not intend to create an entertained by the NLRC and not outrightly denied. (YES)
employer-employee relationship, and the execution of the 3. WON Andrew was illegally dismissed and thus entitled to the
employment contract that was being invoked by Andrew was monetary award (NO)
solely for the purpose of allowing Andrew to obtain an alien
work permit in the Philippines. At the time Andrew left for RATIO:
Australia for his medical treatment, he had not yet obtained a 1. As a general rule, second and subsequent MR’s are
work permit. prohibited resting on the basic tenet of
6. LA: ruled that Andrew was illegally dismissed. EGI was immutability of judgments
ordered to pay almost 60M of monetary award to Andrew - HOWEVER, this rule admits of EXCEPTIONS
(salary and benefits for unexpired term of employment o Sec 3, Rule 115 ROC permits the acceptance of
contract, damages, and attorney’s fees) subsequent MR’s in the higher interest of justice when
7. EGI filed an appeal with NLRC, with a Motion to reduce Bond the assailed decision is not only legally erroneous but is
and posted an appeal bond of P100k. likewise patently unjust and potentially capable of
8. NLRC denied the motion to reduce bond, explaining that in causing unwarranted and irremediable injury or
cases involving monetary award, an employer seeking to damage to the parties.
appeal the LA’s decision is unconditionally required by Art. o EGI’s Motion for Leave to file a second MR was
223 LC to post bond in the amount equivalent to the granted, which means that the Court therefore allowed
monetary award. NLRC required EGI to post the deficiency of the filing of a Second MR. There was no more reason
the total bond required for the Court to consider the Second MR as a
9. EGI failed to post bond and instead filed a Petition for prohibited pleading, and deny it plainly on such
Certiorari and Prohibition with the CA ground.
10. For failure to post bond, NLRC dismissed their appeal and o Hence, the Court finds it appropriate to accept the
the subsequent MR was denied. pending motion for reconsideration and resolve it on
11. CA granted EGI’s application for a writ of preliminary the merits in order to rectify its prior disposition of the
injunction and ordered EGI to post a bond of P10M to main issues in the petition
perfect their appeal. 2. Yes, the outright denial is a serious error.
12. Then CA remanded the case to NLRC to rule on the merits - RULE ON APPEAL BONDS
13. Andrew filed a motion for reconsideration for the reduction o Sec. 6, Rule VI of the NLRC Rules of Procedure provides
of the bond, which was denied, prompting him to file a that no motion to reduce bond shall be entertained
Petition for Review on Certiorari with the CA except on meritorious grounds and upon posting of a
14. Meanwhile, NLRC dismissed the earlier ruling of LA bond in a reasonable amount in relation to the
-‐ Andrew was never an employee of EGI, but a potential monetary award. Filing of Motion to Reduce Bond
investor, barring a claim of dismissal, much less an illegal without compliance with the requisites shall not stop
dismissal. He failed to obtain a work permit, thus the the running of the period to perfect an appeal.
employment contract was void and could not be the • Unless the NLRC grants the Motion to Reduce Bond
source of any right or obligation. within the 10-day reglementary period, the
15. However, Andrew’s petition was granted by the CA employer is still expected to post the cash or surety
16. CA reversed the decision granting EGI’s Motion to Reduce bond securing the full amount within the said 10-day
Appeal Bond, and reversed the NLRC ruling in favor of EGI, period.
for failure to perfect an appeal. • Hence, the fulfillment of two conditions, (1)
17. EGI filed an MR → denied meritorious grounds, and (2) posting of a bond in a
18. Filed a Motion for Leave to submit Second MR → granted; reasonable amount, shall suffice to suspend the
however, the Second MR was denied for lack of merit, running of the period to perfect an appeal from the
considering that a second MR is a prohibited pleading LA’s decision to the NLRC.
19. The CA’s decision (#16 in the facts) then became final and • However, there is no assurance whether appellant’s
executory. motion is indeed based on meritorious ground and
20. EGI filed a third MR. (Push!) whether the bond he or she posted is of a
21. The Court en banc issued a Resolution accepting the case. reasonable amount.


• In order to give full effect to the provisions on o Two conditions stipulated in the contract for its
motion to reduce bond, the appellant must be effectivity:
allowed to wait for the ruling of the NLRC on the (1) Successful completion of the project financing for
motion even beyond the 10-day period to perfect the hotel project in Baguio
an appeal. (2) The procurement of such permit is a condition for
• A serious error of the NLRC was its outright denial the effectivity of the employment contract.
of the motion to reduce the bond. Without even o Both conditions did not materialize.
considering EGI’s arguments. It effectively denied o The procurement of an employment permit is a
EGI of the opportunity to seek reduction of the required before foreigners would be authorized to
bond even when the same is allowed under the obtain employment in the Philippines. Article 40, Title II
rules and settled jurisprudence. of the Labor Code which reads:
o The two conditions for reduction of appeal bond has • Art. 40. Employment permit for non-resident aliens.
been met: Any alien seeking admission to the Philippines for
1) “Reasonable amount” employment purposes and any domestic or foreign
• Under the rules on Motion to Reduce Bonds, such employer who desires to engage an alien for
motions should be accompanied by the posting of a employment in the Philippines shall obtain an
cash or surety bond equivalent to 10% of the employment permit from the Department
monetary award, which shall provisionally be o Considering the non-fulfillment of the said conditions,
deemed the reasonable amount of the bond in the and that Andrew never obtained an employment
meantime that an appellant’s motion is mending permit, the employment contract never reached its
resolution effectivity, and EGI could have never legally employed
• The NLRC shall thereafter determine the Andrew.
“reasonable amount” of the bond and accordingly, - The court likewise gave weight on the NLRC finding that
give the appellant a period of 10 days from notice of Andrew was merely a potential investor in a project with a
the NLRC order within which to perfect the appeal. group including Eulalio Ganzon and Martinez but said
• In this case, the CA made the determination of a project did not materialize for lack of funds.
“reasonable amount” when it ordered EGI to post a - Besides the employment agreement, Andrew failed to
bond of P10M. EGI complied with this order and present other competent evidence to prove his claim an ER-
posted a bond in said amount. EE relationship; four-fold test was not satisfied.
2) “Meritorious grounds” o No documents such as payslips or vouchers that his
• The reduction of appeal bond shall likewise be salaries during the time that he allegedly worked for
justified by “meritorious grounds” which delves on EGI were paid by the company
the worth of the parties’ arguments, taking into o Andrew claims that the contract was already effective
account their respective rights and the because EGI provided him with the housing
circumstances that attend the case. accommodation stipulated in the employment contract.
• Meritorious grounds may refer to appellant’s lack of He also claims that he was allowed to use a Hyundai
financial capability to pay full amount of the bond, car. However, records show that the expenses were not
or to the actual merits of the main appeal such as completely shouldered by the company, and that he
when there is a valid claim that there was no illegal still paid rent for the Condo Unit in Makati provided to
dismissal to justify the award. him.
• In this case, there is an apparent merit on EGI’s - Whoever claims entitlement to the benefits must establish
appeal, considering the earlier finding of the NLRC his or her right thereto. Andrew could not successfully claim
that there was no ER-EE relationship that existed that he was dismissed, much less illegally dismissed, by the
between Andrew and EGI. latter.
o HENCE, the court finds the reduction of the appeal
bond JUSITIFIED. Almodiel v. NLRC
3. NO, he was not able to prove that he was employed FACTS:
by EGI 1. Petitioner Farle P. Almodiel is a certified public accountant
- Before a case for illegal dismissal can prosper, an ER-EE who was hired in October, 1987 as Cost Accounting Manager
relationship must first be established of respondent Raytheon Philippines, Inc. through a reputable
o The employment contract between Andrew and placement firm, John Clements Consultants, Inc. with a
Ganzon clearly reveals that it was merely executed to starting monthly salary of P18,000.00.
facilitate Andrew’s application for an employment 2. Before said employment, he was the accounts executive of
permit. Integrated Microelectronics, Inc. for several years. He left his


lucrative job therein in view of the promising career offered simply added to the duties of another does not affect
by Raytheon. He started as a probationary or temporary the legitimacy of the employer's right to abolish a
employee. As Cost Accounting Manager, his major duties position when done in the normal exercise of its
were: (1) plan, coordinate and carry out year and physical prerogative to adopt sound business practices in the
inventory; (2) formulate and issue out hard copies of management of its affairs.
Standard Product costing and other cost/pricing analysis if o Considering further that petitioner herein held a
needed and required and (3) set up the written Cost position which was definitely managerial in character,
Accounting System for the whole company. Raytheon had a broad latitude of discretion in
3. On August 17, 1988, he recommended and submitted a Cost abolishing his position. An employer has a much wider
Accounting/Finance Reorganization, affecting the whole discretion in terminating employment relationship of
finance group but the same was disapproved by the managerial personnel compared to rank and file
Controller. employees. Officers in such key positions perform not
4. However, he was assured by the Controller that should his only functions which by nature require the employer's
position or department which was apparently a one-man full trust and confidence but also functions that spell
department with no staff becomes untenable or unable to the success or failure of an enterprise.
deliver the needed service due to manpower constraint, he - Re resident alien
would be given a three-year advance notice. o Likewise destitute of merit is petitioner's imputation of
5. In the meantime, the standard cost accounting system was unlawful discrimination when Raytheon caused corollary
installed and used at the Raytheon plants and subsidiaries functions appertaining to cost accounting to be
worldwide. It was likewise adopted and installed in the absorbed by Danny Ang Tan Chai, a resident alien
Philippine operations. without a working permit. Article 40 of the Labor Code
6. As a consequence, the services of a Cost Accounting which requires employment permit refers to non-
Manager allegedly entailed only the submission of periodic resident aliens. The employment permit is required for
reports that would use computerized forms prescribed and entry into the country for employment purposes and is
designed by the international head office of the Raytheon issued after determination of the non-availability of a
Company in California, USA. person in the Philippines who is competent, able and
7. On January 27, 1989, petitioner was summoned by his willing at the time of application to perform the services
immediate boss and in the presence of IRD Manager, Mr. for which the alien is desired. Since Ang Tan Chai is a
Rolando Estrada, he was told of the abolition of his position resident alien, he does not fall within the ambit of the
on the ground of redundancy. He pleaded with management provision.
to defer its action or transfer him to another department, but o Petitioner also assails Raytheon's choice of Ang Tan
he was told that the decision of management was final and Chai to head the Payroll/Mis/Finance Department,
that the same has been conveyed to the Department of claiming that he is better qualified for the position. It
Labor and Employment. should be noted, however, that Ang Tan Chai was
8. Thus, he was constrained to file the complaint for illegal promoted to the position during the middle part of
dismissal before the Arbitration Branch of the National 1988 or before the abolition of petitioner's position in
Capital Region, NLRC, Department of Labor and early 1989. Besides the fact that Ang Tan Chai's
Employment. promotion thereto is a settled matter, it has been
consistently held that an objection founded on the
ISSUES: ground that one has better credentials over the
WON bad faith, malice and irregularity crept in the abolition of appointee is frowned upon so long as the latter
petitioner's position of Cost Accounting Manager on the ground possesses the minimum qualifications for the position.
of redundancy (NO) In the case at bar, since petitioner does not allege that
Ang Tan Chai does not qualify for the position, the
RATIO: Court cannot substitute its discretion and judgment for
There was no bad faith in the abolition of Almodiel’s that which is clearly and exclusively management
position. prerogative.
- On the termination due to redundancy
o Whether petitioner's functions as Cost Accounting
Manager have been dispensed with or merely absorbed b. Conditions for Grant of Permit
by another is however immaterial.
o An employer has no legal obligation to keep more Omnibus Rules
employees than are necessary for the operation of its Book I
business. The fact that the functions of a position were Rule XIV


Sec. 5 Requirements for employment permit application — The
application for an employment permit shall be accompanied by Pacific Consultants International Asia, Inc. v. Schonfeld
the following: FACTS:
1. Klaus Schonfeld, a Canadian citizen (New Westminster,
(a) Curriculum vitae duly signed by the applicant indicating British Columbia, Canada), is a consultant in the field of
his educational background, his work experience and other environmental engineering and water supply and sanitation
data showing that he possesses high technical skills in his 2. In Oct. 1997, Klaus was hired by the Pacific Consultants
trade or profession; International of Japan (PCIJ) through its subsidiary, Pacicon
Philippines, Inc. (PPI)
(b) Contract of employment between the employer and the -‐ He was hired by Jens Peter Henrichsen, Sector Manager
principal which shall embody the following, among others: of PPI
(1) That the non-resident alien worker shall comply with -‐ This is pursuant to PCIJ’s decision to engage in
all applicable laws and rules and regulations of the consultancy services for water and sanitation in the
Philippines; Philippines
(2) That the non-resident alien worker and the employer -‐ Klaus was assigned as the PPI Sector Manager in the
shall bind themselves to train at least two (2) Filipino Philippines, and his salary was to be paid partly by PPI
understudies for a period to be determined by the and PCIJ
Secretary of Labor and Employment; and 3. Jan. 7, 1998: Henrichsen transmitted a letter of employment
(3) That he shall not engage in any gainful employment to Klaus in Canada; he made some revisions, signed the
other than that for which he was issued a permit. contract, and sent it back to Henrichsen; several important
portions of the letter:
(c) A designation by the employer of at least two (2) understudies -‐ “You will, from the date of commencement, be
for every alien worker. Such understudies must be the most [“seconded”] to our subsidiary Pacicon Philippines, Inc. in
ranking regular employees in the section or department for Manila, hereinafter referred as Pacicon. Pacicon will
which the expatriates are being hired to ensure the actual provide you with a separate contract, which will define
transfer of technology. that part of the present terms and conditions for which
Pacicon is responsible. In case of any discrepancies or
contradictions between the present Letter of
Omnibus Rules
Employment and the contract with Pacicon Philippines,
Book I
Inc. or in case that Pacicon should not live up to its
Rule XIV
Sec. 6 Issuances of employment permit — The Secretary of obligations, this Letter of Employment will prevail.”
-‐ Sec. 21 of the General Conditions of Employment
Labor and Employment may issue an employment permit to the
appended to the letter of employment reads: “21
applicant based on:
Arbitration – Any question of interpretation,
a) Compliance by the applicant and his employer with the understanding or fulfillment of the conditions of
employment, as well as any question arising between the
requirements of Section 2 hereof;
Employee and the Company which is in consequence of
or connected with his employment with the Company
b) Report of the Bureau Director as to the availability or non-
and which can not be settled amicably, is to be finally
availability of any person in the Philippines who is competent,
able, and willing to do the job for which the services of the settled, binding to both parties through written
submissions, by the Court of Arbitration in London”
applicant are desired;
4. Jan. 9, 1998: (in dispute) A second contract was allegedly
entered into between Klaus and Henrichsen, where it
c) His assessment as to whether or not the employment of the
applicant will redound to the national interest; indicates that Klaus was employed by PPI
5. Klaus arrived in the Philippines and assumed his position as
PPI Sector Manager, and was accorded the status of a
d) Admissibility of the alien as certified by the Commission on
resident alien
Immigration and Deportation;
-‐ As required by Rule XIV (Employment of Aliens) of the
e) The recommendation of the Board of Investments or other Omnibus Rules Implementing the Labor Code, PPI
applied for an Alien Employment Permit for Klaus before
appropriate government agencies if the applicant will be
the DOLE and appended Klaus’ contract of employment
employed in preferred areas of investments or in accordance
to the application
with imperatives of economic developments; and
6. Feb. 26, 1999: DOLE granted the application and issued the
Permit to Klaus
f) Payments of a P100.00 fee.


7. Klaus received his compensation from PPI (from Feb. to June that he received orders and instructions from Henrichsen
1998, Nov. to Dec. 1998, Jan. to Aug. 1999) (president of PPI), and the principles of forum non
-‐ PPI also reimbursed him for expenses incurred in conveniences and lex loci contractus do not apply, and
connection with his work; although he is a Canadian citizen, Phil. Labor laws apply
-‐ Klaus reported for work in Manila except for occasional o The material allegations of the complaint determine
assignments abroad which judicial body has jurisdiction and Sec. 21 of the
-‐ Klaus received instructions from Henrichsen Arbitration clause did not provide an exclusive venue
8. May 5, 1999: Klaus received a letter from Henrichsen o That PPI has 2 different positions: his complaint
informing him that his employment had been terminated, should be filed in Tokyo (where contract was made)
effective Aug. 4, 1999 because PCIJ and PPI had not been and later that it should be filed in the London Court
successful in the water and sanitation sector in the (as indicated by Sec. 21 of the Arbitration clause)
Philippines -‐ LA: Granted the motion to dismiss the complaint;
9. July 24, 1999: Henrichsen sent Klaus an email requesting him o That the Jan. 7 contract of employment between
to stay put until such time he would be able to report on Klause and PCIJ
certain projects and discuss all the opportunities he had o That the Philippines was only the “duty station” where
developed → he continued his work with PPI until the end of Klaus was required to work
business hours on Oct. 1, 1999 o That PCIJ remained Klaus’ employer
10. Klaus filed with PPI several money claims including unpaid 12. On appeal, the NLRC affirmed in toto the LA ruling → Klaus
salary, leave pay, air fare from Manila to Canada and cost of filed a petition for certiorari to the CA
shipment of goods to Canada. PPI partially settled some of -‐ Klaus said the absence of a written contract of
his claims (US$ 5,635.99) but refused to pay the rest employment is not decisive of WON he is an employee of
11. Dec. 5, 2000: Klaus filed a complaint for illegal dismissal with PPI
the LA against Pacific Consultants International Asia and o (allegations of 4-fold test) That PPI, through
Henrichsen Henrichsen, directed his work/duties; that the Alien
-‐ Alleged that he was illegally dismissed, that PPI hadn’t Employment Permit proves he is an employee of PPI;
notified the DOLE of its decision to close one of its that it was PPI president Henrichsen who terminated
departments (which resulted in his dismissal), & they his employment; that PPI paid his salary and
failed to notify him that his employment was terminated reimbursed his transactions
after Aug. 4 -‐ CA: Applied the 4-fold test and found that Klaus was an
o He also claimed for separation pay and other unpaid employee of PPI; also declared that even under the Jan. 7
benefits, alleging that the company acted in bad faith contract, the parties were not precluded from choosing a
and disregarded his rights different venue (the venue is not exclusive under the
-‐ Pacific International & Henrichsen filed a motion to contract)
dismiss because: 1) the LA had no jurisdiction; and 2) -‐ MR denied
venue was improperly laid 13. Instant petition
o Averred that Klaus was a Canadian citizen, a transient
expatriate who had left the Philippines ISSUES:
o That he was employed and dismissed by PCIJ, a 1. WON the CA can review findings of the LA and the NLRC
foreign corporation based in Tokyo, Japan (YES)
o That since Klaus’ cause of action was based on his 2. WON an ER-EE relationship existed between Pacific
letter of employment executed in Tokyo, under the Consultants Int’l Asia and Klaus (YES)
principle of lex loci contractus, the complaint should 3. WON the labor arbiter has jurisdiction over Klaus’ claim as a
have been filed in Tokyo foreign national (YES)
o That Klaus did not offer any justification for filing his
complaint in the NLRC HELD:
o That Sec. 12 of the General Conditions of 1. Court held: YES, CA can review findings of lower
Employment (quoted above) contained an agreement courts
between Klaus and PCIJ that any employment-related - Pacific Consultants: Findings of the LA are conclusive on the
dispute should be brought before the London Court CA
of Arbitration - Klaus: Petitioners raised factual issues, proscribed by Rule
-‐ Klaus opposed the motion, contending that he was 45, ROC; that the LA and NLRC opted to erroneously
employed by PPI to work in the Philippines under a dismiss his complaint
contract separate from the Jan. 7 contract with PCIJ; he
insists his employer is PPI, a Phil-registered corporation,


- SC: Court is not proscribed from reviewing the evidence on - They should be considered merely as an agreement or
record; apparently the LA and the NLRC ignored the additional forum, not as limiting venue to the specified
documentary evidence showing that he was an employee place; not exclusive, but rather, permissive
2. Court held: YES, an ER-EE relationship existed - If the intention was to restrict the venue, there must be
between Pacific Consultants and Klaus language clearly and categorically expressing the purpose
- SC: The LA and the NLRC ignored Klaus’ documentary and design that actions be litigated ONLY at the place
evidence showing he was an employee of PPI: named
o PPI applied for the issuance of an AEP to Klaus before - SC: In this case, no restrictive words like “only,” “solely,”
the DOLE, where PPI averred that Klaus is its employee “exclusively in this court,” “in no other court save—,”
(by attaching a copy of Klaus’ employment contract to particularly,” “nowhere else but/except—,” or words of
the application) equal import
• Pursuant to Sec. 5 and Sec. 6 of the Omnibus Rules o It cannot be shown that the court of arbitration in
Implementing the Labor Code: Sec. 5 (Contract of London is an exclusive venue
employment required in an application), Sec. 6 - PPI: Klaus should have filed his complaint in his place of
(Issuance of employment permit pursuant to permanent residence, or where PCIJ holds its principal
complying with Sec. 2 requirement of submitting a office, where the contract of employment was signed, in
list of foreign nationals indicating their names, and, London
among others, the nature of their employment o SC: By enumerating possible venues where Klaus could
o SC: Thus, as Klaus claimed, he had an employment have filed his complaint, PPI itself admits that the
contract with PPI; otherwise PPI would not have filed an provision on venue is indeed merely permissive
application for a permit with the DOLE → Estopped PPI o PPI’s insistence on the application of the principle of
from alleging that PCIJ, and not PPI, was the employer forum non conveniens must be rejected; that Klaus is a
- SC: There was an ER-EE relationship using the four-fold test, Canadian citizen and was a repatriate does not warrant
as concluded by the CA (as shown by the CA’s findings) the application of said principle because:
1. The selection and engagement of the employee; • First, the Labor Code does not include forum non
2. The payment of wages; conveniens as a ground for the dismissal of the
3. The power of dismissal; complaint
4. The employer’s power to control the employee’s • Second, the propriety of dismissing a case based on
conduct that principle requires a factual determination;
o The control test, the most important index of the hence, it is properly considered as defense
existence of the ER-EE relationship – an ER-EE • Third, in Bank of America v. CA, a Philippine Court
relationship exists where the person for whom the may assume jurisdiction provided the following
services are performed reserves the right to control not requisites are met: a) the Philippine Court is one to
only the end to be achieved but also the means to be which the parties may conveniently resort to; b) that
used in reaching such end the Philippine Court is in a position to make an
• SC: The power to control and supervise Klaus’ work intelligent decision as to the law and the facts, and
performance devolved upon PPI. Likewise, the c) the Philippine Court has or is likely to have power
power to terminate the employment relationship to enforce its decision
was exercised by the President of PPI
• It is not the letterhead used by the company in the c. Validity of AEP
termination letter, but the person who exercised the
power to terminate Omnibus Rules
• The absence of signatures in the second letter of Book I
employment is inconsequential because an ER-EE Rule XIV
relationship may exist even in the absence of a Sec. 7 Duration of employment permit — Subject to renewal
written contract, so long as the 4 elements are upon showing of good cause, the employment permit shall be
present valid for a minimum period of one (1) year starting from the date
3. Court held: YES, the labor arbiter has jurisdiction of its issuance unless sooner revoked by the Secretary of Labor
over Klaus’s claim and Employment for violation of any provisions of the Code or of
- The settled rule on stipulations regarding venue is that while these Rules.
they are considered valid and enforceable, venue
stipulations in a contract, do not, as a rule, supersede the DO 97-09, Sec. 11 Validity of AEP – The AEP shall be valid for
general set forth in Rule 4, Revised ROC in the absence of the position and the company for which it was issued for a
qualifying or restrictive words period of one year, unless the employment contract, consultancy


services, or other modes of engagement provides otherwise, (a) "Apprenticeship" means practical training on the job
which in no case shall exceed five years. supplemented by related theoretical instruction.
d. Denial of Application (b) An "apprentice" is a worker who is covered by a written

apprenticeship agreement with an individual employer or any of
DO 97-09, Sec. 10 Denial of application – An application for the entities recognized under this Chapter.
AEP may be denied by the Regional Director based on any of
the following grounds: (c) An "apprenticeable occupation" means any trade, form of
employment or occupation which requires more than three (3)
(a) misrepresentation of facts in the application; months of practical training on the job supplemented by related
(b) submission of falsified documents theoretical instruction.
(c) the foreign national has a derogatory record; and,
(d) availability of a Filipino who is competent, able and willing (d) "Apprenticeship agreement" is an employment contract
to do the job intended for the foreign national wherein the employer binds himself to train the apprentice and
the apprentice in turn accepts the terms of training.
Denial of application for AEP shall cause the forfeiture of the
fees paid by the applicant. Art. 59 Qualifications of apprentice – To qualify as an
apprentice, a person shall:
e. Revocation/Cancellation, Grounds-Due Process
(a) Be at least fourteen (14) years of age;
DO 97-09, Sec. 13, as amended by DO 120-12
Cancellation/revocation of AEP – The Regional Director may, (b) Possess vocational aptitude and capacity for appropriate
motu proprio or upon petition, cancel or revoke an AEP after tests; and
due process, based on any of the following grounds:
(c) Possess the ability to comprehend and follow oral and written
(a) Non-compliance with any of the requirements or instructions.
conditions for which the AEP was issued
(b) Misrepresentation of facts in the application Trade and industry associations may recommend to the
(c) Submission of falsified or tampered documents Secretary of Labor appropriate educational requirements for
(d) Meritorious objection or information against the different occupations.
employment of the foreign national
(e) The foreign national has been convicted of criminal Art. 60 Employment of apprentices – Only employers in the
offense or a fugitive from justice highly technical industries may employ apprentices and only in
(f) Employer terminated he employment of the foreign apprenticeable occupations approved by the Secretary of Labor
national and Employment. (As amended by Section 1, Executive Order
No. 111, December 24, 1986)
3. Development of Human Resources
- General policy and guidelines in the implementation of
a. Manpower Development – Technical Education and apprenticeship program
Skills Development of Filipino Middle-level Manpower o Apprenticeship – arrangement and the period when an
upcoming worker undergoes hands-on training to learn the
Art. 57 Statement of objectives – This Title aims: ropes of a skilled job
o In DO 9 Series of 1989, the policy of the DOLE is to:
1. To help meet the demand of the economy for trained § Obtain the voluntary adoption of apprenticeship
manpower; programs by employers and workers to help meet the
2. To establish a national apprenticeship program through the increasing demand for skilled manpower necessary for
participation of employers, workers and government and non- economic development and
government agencies; and § Increase worker productivity through a relevant and
3. To establish apprenticeship standards for the protection of effective apprenticeship program
apprentices. o Under the DO, the Bureau of Local Employment is required
to undertake the review of trades , occupations and jobs to
determine apprenticeability, after which it should publish a
Art. 58 Definition of Terms – As used in this Title:
list of approved apprenticeable occupations.


Regional offices are required to screen and evaluate
o and the apprentice.
apprenticeship programs so that only companies with
adequate facilities for training are issued the corresponding
Art. 63 Venue of apprenticeship programs – Any firm,
certificate of program recognition, which is required, prior employer, group or association, industry organization or civic
to the hiring of apprentices.
group wishing to organize an apprenticeship program may
o A Plant Apprenticeship Committee (tripartite) shall
choose from any of the following apprenticeship schemes as the
organize, administer and monitor the technical progress of
training venue for apprentice:
the program, ratify every apprenticeship agreement
processed by the organizing company, and recommend to (a) Apprenticeship conducted entirely by and w
the Regional Office concerned the issuance of a certificate
ithin the sponsoring firm, establishment or entity;
of completion to the apprentice after passing the
appropriate trade test.
(b) Apprenticeship entirely within a Department of Labor and
- Technical Education and Skills Development Authority (TESDA) Employment training center or other public training institution;
implements the apprenticeship program
or
- Requisites for Employment of Apprentices:
(c) Initial training in trade fundamentals in a training center or
a. The employer should be engaged in a business that is
other institution with subsequent actual
considered as a highly technical industry. A highly technical work participation within the sponsoring firm or entity during the
industry is a trade, business, enterprise, industry, or other final stage of training.
activity which utilizes the application of advanced
technology.
Art. 64 Sponsoring of apprenticeship program – Any of the
b. The job which the apprentice will work on should be an
apprenticeship schemes recognized herein may be undertaken
apprenticeable occupation. An apprenticeable occupation
or sponsored by a single employer or firm or by a group or
is one which is officially endorsed by a tripartite body and
association thereof or by a civic organization. Actual training of
approved for apprenticeship by the TESDA
apprentices may be undertaken:
- Apprenticeable age – 15 years old
(a) In the premises of the sponsoring employer in the case of

individual apprenticeship programs;
Art. 61 Contents of apprenticeship agreements –
(b) In the premises of one or several designated firms in the
Apprenticeship agreements, including the wage rates of
case of programs sponsored by a group or (association of
apprentices, shall conform to the rules issued by the Secretary of
employers or by a civic organization; or
Labor and Employment. The period of apprenticeship shall not
(c) In a Department of Labor and Employment training center
exceed six months. Apprenticeship agreements providing for
or other public training institution.
wage rates below the legal minimum wage, which in no case
shall start below 75 percent of the applicable minimum wage,
may be entered into only in accordance with apprenticeship Art. 65. Investigation of violation of apprenticeship agreement
programs duly approved by the Secretary of Labor and – Upon complaint of any interested person or upon its own
Employment. The Department shall develop standard model initiative, the appropriate agency of the Department of Labor
programs of apprenticeship. (As amended by Section 1, and Employment or its authorized representative shall
Executive Order No. 111, December 24, 1986) investigate any violation of an apprenticeship agreement
pursuant to such rules and regulations as may be prescribed by
the Secretary of Labor and Employment.
Art. 62 Signing of apprenticeship agreement – Every
apprenticeship agreement shall be signed by the employer or
his agent, or by an authorized representative of any of the Art. 66 Appeal to the Secretary of Labor and Employment – The
recognized organizations, associations or groups and by the decision of the authorized agency of the Department of Labor
apprentice. and Employment may be appealed by any aggrieved person to
the Secretary of Labor and Employment within five (5) days from
An apprenticeship agreement with a minor shall be signed in his receipt of the decision. The decision of the Secretary of Labor
behalf by his parent or guardian, if the latter is not available, by and Employment shall be final and executory.
an authorized representative of the Department of Labor, and
the same shall be binding during its lifetime. Art. 67 Exhaustion of administrative remedies No person shall
institute any action for the enforcement of any apprenticeship
Every apprenticeship agreement entered into under this Title agreement or damages for breach of any such agreement,
shall be ratified by the appropriate apprenticeship committees, if unless he has exhausted all available administrative remedies.
any, and a copy thereof shall be furnished both the employer


Art. 68 Aptitude testing of applicants Consonant with the apprenticeable and which may be learned through practical
minimum qualifications of apprentice-applicants required under training on the job in a relatively short period of time which shall
this Chapter, employers or entities with duly recognized not exceed three (3) months.
apprenticeship programs shall have primary responsibility for
providing appropriate aptitude tests in the selection of Art. 74 When learners may be hired – Learners may be
apprentices. If they do not have adequate facilities for the employed when no experienced workers are available, the
purpose, the Department of Labor and Employment shall employment of learners is necessary to prevent curtailment of
perform the service free of charge. employment opportunities, and the employment does not
create unfair competition in terms of labor costs or impair or
Art. 69 Responsibility for theoretical instruction – lower working standards.
Supplementary theoretical instruction to apprentices in cases
where the program is undertaken in the plant may be done by Art. 75 Learnership agreement’s Any employer desiring to
the employer. If the latter is not prepared to assume the employ learners shall enter into a learnership agreement with
responsibility, the same may be delegated to an appropriate them, which agreement shall include:
government agency.
(a) The names and addresses of the learners;
Art. 70 Voluntary organization of apprenticeship programs;
exemptions. (b) The duration of the learnership period, which shall not
exceed three (3) months;
(a( The organization of apprenticeship program shall be primarily
a voluntary undertaking by employers; (c). The wages or salary rates of the learners which shall begin at
b. When national security or particular requirements of economic not less than seventy-five percent (75%) of the applicable
development so demand, the President of the Philippines may minimum wage; and
require compulsory training of apprentices in certain trades,
occupations, jobs or employment levels where shortage of . A commitment to employ the learners if they so desire, as
trained manpower is deemed critical as determined by the regular employees upon completion of the learnership. All
Secretary of Labor and Employment. Appropriate rules in this learners who have been allowed or suffered to work during the
connection shall be promulgated by the Secretary of Labor and first two (2) months shall be deemed regular employees if
Employment as the need arises; and training is terminated by the employer before the end of the
c. Where services of foreign technicians are utilized by private stipulated period through no fault of the learners.
companies in apprenticeable trades, said companies are
required to set up appropriate apprenticeship programs. Art. 75 Learnership agreement – Any employer desiring to
employ learners shall enter into a learnership agreement with
Art. 71 Deductibility of training costs – An additional deduction them, which agreement shall include:
from taxable income of one-half (1/2) of the value of labor
training expenses incurred for developing the productivity and Art. 76 Learners in piecework – Learners employed in piece or
efficiency of apprentices shall be granted to the person or incentive-rate jobs during the training period shall be paid in full
enterprise organizing an apprenticeship program: Provided, That for the work done.
such program is duly recognized by the Department of Labor
and Employment: Provided, further, That such deduction shall
Art. 77 Penalty clause – Any violation of this Chapter or its
not exceed ten (10%) percent of direct labor wage: and
implementing rules and regulations shall be subject to the
Provided, finally, That the person or enterprise who wishes to
general penalty clause provided for in this Code.
avail himself or itself of this incentive should pay his apprentices
the minimum wage.
Learnership Apprenticeship
Focus and Terms of Trains in a semi- Trains in a highly
Art. 72 Apprentices without compensation – The Secretary of
Training skilled job or in skilled job found
Labor and Employment may authorize the hiring of apprentices
industrial only in a highly
without compensation whose training on the job is required by
occupations that technical industry;
the school or training program curriculum or as requisite for
require training for the training period
graduation or board examination.
less than 3 months exceeds 3 months
Jobs allowed Allowed for even Strictly only for
Art. 73 Learners defined. Learners are persons hired as trainees non-technical jobs highly technical
in semi-skilled and other industrial occupations which are non- industries and only

in apprenticeable
occupations a. 1. Definition
approved by the
DOLE Art. 44 Definitions – As used in this Title:
(a) "Manpower" shall mean that portion of the nation’s

Art. 78 Definition – Handicapped workers are those whose population which has actual or potential capability to contribute
earning capacity is impaired by age or physical or mental directly to the production of goods and services.
deficiency or injury.
a. 2. General Policy
Art. 79 When employable – Handicapped workers may be
employed when their employment is necessary to prevent SUMMARY OF MANPOWER DEVELOPMENT (TESDA)
curtailment of employment opportunities and when it does not Manpower—Actual or potential capability to
create unfair competition in labor costs or impair or lower produce goods and services
working standards. Skills development—Learning opportunites
to acquire or upgrade abilities, knowledge,
Art. 80 Employment agreement – Any employer who employs and skills
handicapped workers shall enter into an employment agreement Technical education—Non-degree programs
with them, which agreement shall include: for middle-level workers, para-professionals,
technicians
1. The names and addresses of the handicapped workers to be Purpose: To acquire general education,
Definitions
employed; theoretical, scientific and technological
2. The rate to be paid the handicapped workers which shall not studies, and related job skills training
be less than seventy five (75%) percent of the applicable legal Middle-level manpower
minimum wage; - Possess practical skills or
3. The duration of employment period; and 4. The work to be knowledge equivalent to (at least)
performed by handicapped workers. secondary education acquired from
formal or non- formal education
The employment agreement shall be subject to inspection by - Skilled workers highly competent in their
the Secretary of Labor or his duly authorized representative. trade
To provide relevant, accessible, high quality
and efficient technical education and skills
Art. 81 Eligibility for apprenticeship – Subject to the
development
appropriate provisions of this Code, handicapped workers may General policies
Encourage active participation of various
be hired as apprentices or learners if their handicap is not such
concerned sectors, particularly private
as to effectively impede the performance of job operations in
enterprises
the particular occupations for which they are hired.
To attain int’l competitiveness by quality
education and skills development program
Art. II, Sec. 17 CON87 The State shall give priority to
Meet the demands of quality middle-level
education, science and technology, arts, culture, and sports to
manpower
foster patriotism and nationalism, accelerate social progress, and Specific goals
Disseminate scientific and technical
promote total human liberation and development. and objectives
knowledge base
Recognize complementary roles of public
Art. XIV, Sec. 1 CON87 The State shall protect and promote and private institutions
the right of all citizens to quality education at all levels, and shall Development of values and morals
take appropriate steps to make such education accessible to all.
a. 3. Specific Goals and Objectives
Art. XIV, Sec. 2 (4) CON87 The State shall:
RA 7796, Sec. 3 Statement of Goals and Objectives. — It is the
(4) Encourage non-formal, informal, and indigenous learning goal and objective of this Act to
systems, as well as self- learning, independent, and out-of-school
study programs particularly those that respond to community (a) Promote and strengthen the quality of technical education
needs; and skills development programs to attain international


competitiveness.
2) To establish a national apprenticeship program
(b)Focus technical education and skills development on through the participation of employers, workers and
meeting the changing demands for quality middle-level government and non-government agencies; and
manpower;
3) To establish apprenticeship standards for the
(c) Encourage critical and creative thinking by disseminating protection of apprentices.
the scientific and technical knowledge base of middle-level
manpower development programs;
- Meet the demands for trained manpower
(d) Recognize and encourage the complementary roles of - Establishment of national apprenticeship program
public and private institutions in technical education and - Establishment of apprenticeship standards
skills development and training systems; and
b. 2. Definition
(e) Inculcate desirable values through the development of
moral character with emphasis on work ethic, self-discipline, Art. 58 (b). An "apprentice" is a worker who is covered by a
self- reliance and nationalism. written apprenticeship agreement with an individual employer or
any of the entities recognized under this Chapter
b. Training and Employment of Special Workers –

Apprentices and Learners
Art. 73 Learners defined - Learners are persons hired as
trainees in semi-skilled and other industrial occupations which
APPRENTICE LEARNER are non-apprenticeable and which may be learned through
Level of skill Highly technical Semi- practical training on the job in a relatively short period of time
industries skilled/industrial which shall not exceed three (3) months.
occupations
Occupation Training for an Training in non-
RA 7794, Sec 4
apprenticeable apprenticeable
occupation occupation
(j) “Apprenticeship" training within employment with compulsory
Agreement Apprenticeship Learnership
related theoretical instruction involving a contract between an
Regulation Approval of Approval of TESDA
apprentice and an employer on an approved apprenticeable
TESDA, endorsed
occupation
by a tripartite body
Period No more than 6 Not more than 3
(k) "Apprentice" is a person undergoing training for an
months months approved apprenticeable occupation during an apprenticeship
Wages Minimum 75% of wage agreement
May not be paid if
necessary for (l) "Apprenticeship Agreement" is a contract wherein a
graduation/board prospective employer binds himself to train the apprentice who
examination in turn accepts the terms of training for a recognized
Regularization If allowed to work If training was apprenticeable occupation emphasizing the rights, duties and
after probationary terminated w/o his responsibilities of each party
period fault and before
stipulated period, (m). "Apprenticeable Occupation" is an occupation officially
and worked for at endorsed by a tripartite body and approved for apprenticeable
least 2 months by the Authority
b. 1. Policy Objectives (n) “Learners" refers to persons hired as trainees in semi-skilled

and other industrial occupations which are non-apprenticeable.
Art. 57 Statement of objectives - This Title aims: Learnership programs must be approved by the Authority.
Apprenticeship is the arrangement and the period when an
1) To help meet the demand of the economy for trained upcoming worker undergoes hands-on training, more or less
manpower; formal, to learn the ropes of a skilled job.


Art. 72 Apprentices without compensation - The Secretary of

Requisites for Employment of Apprentices: Labor and Employment may authorize the hiring of apprentices
1. Employer should be engaged in a business that is without compensation whose training on the job is required by
considered a highly technical industry (trade, business, the school or training program curriculum or as requisite for
enterprise, which utilizes application of advanced graduation or board examination.
technology)
2. Job should be classified as an apprenticeable occupation.
Art. 281 Probationary employment - Probationary employment
shall not exceed six (6) months from the date the employee
Apprenticeable Age:
started working, unless it is covered by an apprenticeship
14 years under Labor Code, but 15 years under the IRR.
agreement stipulating a longer period. The services of an
However, conflict between the two is rendered moot by RA 7610
employee who has been engaged on a probationary basis may
as amended by RA 7658 which prohibits employment of children be terminated for a just cause or when he fails to qualify as a
below 15 years of age.
regular employee in accordance with reasonable standards
made known by the employer to the employee at the time of his
b. 3. Allowed Employment and When
engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee
Art. 60 Employment of apprentices - Only employers in the
highly technical industries may employ apprentices and only in
Art. 75 Learnership agreement - Any employer desiring to
apprenticeable occupations approved by the Secretary of Labor
employ learners shall enter into a learnership agreement with
and Employment.
them, which agreement shall include:
Art. 74 When learners may be hired - Learners may be (a) The names and addresses of the learners;
employed when no experienced workers are available, the
employment of learners is necessary to prevent curtailment of (b) The duration of the learnership period, which shall not
employment opportunities, and the employment does not exceed three (3) months;
create unfair competition in terms of labor costs or impair or
lower working standards. (c) The wages or salary rates of the learners which shall begin at
not less than seventy-five percent (75%) of the applicable
RA 7794, Sec 4 (m) "Apprenticeable Occupation" is an minimum wage; and
occupation officially endorsed by a tripartite body and approved
for apprenticeable by the Authority (d) A commitment to employ the learners if they so desire, as
regular employees upon completion of the learnership.
Apprentice
For highly technical industries in apprenticeable occupations All learners who have been allowed or suffered to work during
the first two (2) months shall be deemed regular employees if
Learners training is terminated by the employer before the end of the
No employee available; employment is necessary to prevent stipulated period through no fault of the learners. The
curtailment of employment opportunities learnership agreement shall be subject to inspection by the
Secretary of Labor and Employment or his duly authorized
b. 4. Conditions of Employment representative.
Art. 61 Contents of apprenticeship agreements - Art. 76 Learners in piecework - Learners employed in piece or
Apprenticeship agreements, including the wage rates of incentive-rate jobs during the training period shall be paid in full
apprentices, shall conform to the rules issued by the Secretary of for the work done.
Labor and Employment. The period of apprenticeship shall not
exceed six months. Apprenticeship agreements providing for b. 5. Enforcement
wage rates below the legal minimum wage, which in no case
shall start below 75 percent of the applicable minimum wage, Art. 65 Investigation of violation of apprenticeship agreement -
may be entered into only in accordance with apprenticeship Upon complaint of any interested person or upon its own
programs duly approved by the Secretary of Labor and initiative, the appropriate agency of the Department of Labor
Employment. The Department shall develop standard model and Employment or its authorized representative shall
programs of apprenticeship. investigate any violation of an apprenticeship agreement


pursuant to such rules and regulations as may be prescribed by shall give full support to the improvement of the total well-being
the Secretary of Labor and Employment. of disabled persons and their integration into the mainstream of
society. Toward this end, the State shall adopt policies ensuring
Art. 66 Appeal to the Secretary of Labor and Employment - The the rehabilitation, self- development and self-reliance of
decision of the authorized agency of the Department of Labor disabled persons. It shall develop their skills and potentials to
and Employment may be appealed by any aggrieved person to enable them to compete favorably for available opportunities.
the Secretary of Labor and Employment within five (5) days from
receipt of the decision. The decision of the Secretary of Labor b. Disabled persons have the same rights as other people to
and Employment shall be final and executor. take their proper place in society. They should be able to live
freely and as independently as possible. This must be the
concern of everyone — the family, community and all
Art. 67 Exhaustion of administrative remedies. - No person shall
government and nongovernment organizations. Disabled
institute any action for the enforcement of any apprenticeship
persons' rights must never be perceived as welfare services by
agreement or damages for breach of any such agreement,
the Government.
unless he has exhausted all available administrative remedies.
c. The rehabilitation of the disabled persons shall be the concern

-‐ Upon complaint or own initiative of DOLE, investigate
of the Government in order to foster their capacity to attain a
violations of apprenticeship agreement
more meaningful, productive and satisfying life. To reach out to
-‐ Appeal to Sec. of Labor w/in 5 days of receipt of decision
a greater number of disabled persons, the rehabilitation services
(Final and executory)
and benefits shall be expanded beyond the traditional urban-
-‐ Must exhaust all administrative remedies
based centers to community based programs that will ensure full
participation of different sectors as supported by national and
c. Persons with disability of PWDs
local government agencies.
c. 1. Definition
d. The State also recognizes the role of the private sector in
promoting the welfare of disabled persons and shall encourage
RA 7277, Sec 4 partnership in programs that address their needs and concerns.
(a). Disabled persons are those suffering from restriction or e. To facilitate integration of disabled persons into the
different abilities, as a result of a mental, physical or sensory mainstream of society, the State shall advocate for and
impairment, to perform an activity in the manner or within the encourage respect for disabled persons. The State shall exert all
range considered normal for a human being efforts to remove all social, cultural, economic, environmental
and attitudinal barriers that are prejudicial to disabled persons.
(b) Impairment is any loss, diminution or aberration of
psychological, physiological, or anatomical structure or function
-‐ Disabled persons are part of Philippine society. Promote
improvement of the total well-being of disabled persons
(c) Disability shall mean (1) a physical or mental impairment that
-‐ Disabled persons have the same rights as other people
substantially limits one or more psychological, physiological or
-‐ Rehabilitation of the disabled persons
anatomical function of an individual or activities of such
-‐ Role of the private sector in promoting the welfare of
individual; (2) a record of such an impairment; (3) being regarded
disabled persons
as having such an impairment
-‐ Integration of disabled persons into the mainstream of
society
(d). Handicap refers to a disadvantage for a given individual,
resulting from an impairment or a disability, that limits or
c. 3. Coverage
prevents the function or activity, that is considered normal given
the age and sex of the individual.
RA 7277, Sec 3 Coverage — This Act shall cover all disabled
persons and, to the extent herein provided, departments, offices
c. 2. Policy Declaration
and agencies of the National Government or nongovernment
organizations involved in the attainment of the objectives of this
RA 7277, Sec . 2 Declaration of Policy — The grant of the Act.
rights and privileges for disabled persons shall be guided by the
following principles:
c. 4. Employment Rights and Privileges
a. Disabled persons are part of Philippine society, thus the State

Art. 81 Eligibility for apprenticeship - Subject to the appropriate

provisions of this Code, handicapped workers may be hired as - Sheltered employment
apprentices or learners if their handicap is not such as to o Definition: Provision of productive work for disabled
effectively impede the performance of job operations in the persons through workshops providing special facilities,
particular occupations for which they are hired. income-producing projects or homework schemes
o Purpose: To earn a living and acquire working capacity
o Given when suitable employment cannot be found
RA 7277, Sec 4
through open employment
(i). Sheltered Employment refers to the provision of productive
work for disabled persons through workshops providing special Bernardo v. NLRC & FEBTC
FACTS:
facilities, income-producing projects or homework schemes with
1. Employer: Far East Bank and Trust Co. (FEBTC)
a view to giving them the opportunity to earn a living thus
Employees: 43 deaf-mutes
enabling them to acquire a working capacity required in open
industry. 2. FEBTC hired the 43 deaf-mute complainants in between the
period of 1988-1993, using a uniformly worded ‘Employment
Contract for Handicapped Workers.’ Below is the impt.
RA 7277, Sec 5 Equal Opportunity for Employment — No
provision of the employment contract:
disable person shall be denied access to opportunities for
-‐ “8. The Employee acknowledges the fact that he/she had
suitable employment. A qualified disabled employee shall be
been employed under a special employment program of
subject to the same terms and conditions of employment and
the Bank, for which the reason the standard hiring
the same compensation, privileges, benefits, fringe benefits,
requirements of the Bank were not applied in his/her
incentives or allowances as a qualified able bodied person. Five
case. Consequently the Employee acknowledges and
percent (5%) of all casual emergency and contractual positions in
accepts the fact that the terms and conditions of the
the Departments of Social Welfare and Development; Health;
employment generally observed by the Bank with respect
Education, Culture and Sports; and other government agencies,
to the Bank’s regular employee are not applicable to the
offices or corporations engaged in social development shall be
Employee and that therefore, the terms and conditions of
reserved for disabled persons
the Employee’s employment with the Bank shall be
governed solely and exclusively by this Contract and by
RA 7277, Sec 6. Sheltered Employment — If suitable the applicable rules and regulation that the Dept. of
employment for disabled persons cannot be found through Labor and Employment may issue in connection with the
open employment as provided in the immediately preceding employment of disabled and handicapped workers. More
Section, the State shall endeavor to provide it by means of specifically, the Employee hereby acknowledges that the
sheltered employment. In the placement of disabled persons in provision of Book Six of the Labor Code as amended,
sheltered employment, it shall accord due regard to the particularly on the regulation of employment and
individual qualities, vocational goals and inclinations to ensure a separation pay are not applicable him/her.
good working atmosphere and efficient production. 3. These are the number of deaf-mutes hired during the 1988-
1993 period:
RA 7277, Sec 7 Apprenticeship. — Subject to the provisions of -‐ 1998: 2
the Labor Code as amended, disabled persons shall be eligible -‐ 1989: 2
as apprentices or learners: Provided, That their handicap is not -‐ 1990: 19
as much as to effectively impede the performance of job -‐ 1991: 6
operations in the particular occupation for which they are hired; -‐ 1992: 6
Provided, further, That after the lapse of the period of -‐ 1993: 21
apprenticeship, if found satisfactory in the job performance, they -‐ Some of them would have their contracts renewed after 6
shall be eligible for employment. months.
-‐ By the time the case arose, there were 56 deaf-mutes who
- Eligible for apprenticeship or learnership if handicap will not had been employed by FEBTC under the same contract.
impede job performance -‐ Their responsibility was count and sort bills.
o After the period of apprenticeship, if job is satisfactory, 4. Later on, the hired deaf-mute employees were dismissed.
PWD eligible for employment They filed a complaint for illegal dismissal with the LA.
- If qualified, employment conditions, compensation, benefits 5. FEBTC maintained they only hired the deaf-mutes as part of
as the normal EE its corporate responsibility philosophy and only as ‘pakiusap,’
- 5%ofcontractualpositionsingov’tagenciesisreservedfor in the light of their policy to only hire trained and qualified
PWDs professionals. Furthermore, they added that their hiring was
only done on a special arrangement basis and that the task


assigned to them were already being performed by their business of the employer. The test is whether the former is
tellers. usually necessary or desirable in the usual business or trade
6. LA: Complaint dismissed of the employer… The connection can be determined by
7. NLRC: LA affirmed. considering the nature of the work performed and its relation
-‐ Complainants could not be considered as regular to the scheme of the particular business or trade in its
employees under the ambit of Art. 280 of the Labor entirety.”
Code. • Without a doubt, the counting and sorting of bills is
-‐ The terms of the contract should be observed. necessary and desirable to the business of FEBTC. 27 of
-‐ The Magna Carta of Disabled Persons, which mandates these 43 complainant performed these tasks for more
that qualified disabled persons be granted the same than six months.
terms and conditions as qualified able-bodied • When the bank renewed the contracts of the 27 deaf-
employees, is inapplicable in this case, considering the mute employees, they became regular employees. No
factual circumstances employer is allowed to determine indefinitely the fitness
of its employees.
ISSUES: • Because of this status, they are entitled to security of
WON the complainants became regular employees (YES) tenure; they cannot be dismissed without authorized
cause.
RATIO: - Considering that the allegations of FEBTC that money sorting is
The deaf-mute employees became regular employees. no longer available, the Court deemed it proper to award
- Complainants argue that they should be considered as regular the 27 deaf-mute employees with separation pay in
employees and that employment contract they entered into was lieu of reinstatement. Unfortunately, the other 16 deaf-mute
to preclude the application of Art. 280. employees are not entitled to the same benefits because their
- FEBTC, on the other hand, argues that they were “special employment contracts were not renewed and hence, did not
workers” under Art. 80 of the Labor Code and that these deaf- become regular employees.
mute employees were merely accommodated. - As to the applicability of the Brent ruling (where the Court
- Despite the good intentions of the FEBTC, however, the Court upheld an employment contract with a fixed term), the Court
finds that 27 of the 43 deaf-mutes DID become regular found it sufficient that the term limit in the contract was pursuant
employees. to Art. 80. Again, however, the enactment of the Magna Carta
o Art. 80 provides that the employment agreement for hiring for Disabled Persons, the employment contracts of the deaf-
handicapped workers should contain the following mutes were taken out of the ambit of Art. 80.
information: (a) names and addresses of the handicapped o Moreover, the rights granted by substantial law, such as the
worker, (b) rates to be paid, which should not be less than said Magna Carta, should not be subservient to the terms of
75% of the applicable legal minimum wage, (c) duration of the contract. Again, an employment contract is one that is
the employment period, and (d) work to be performed by impressed with public interest.
handicapped workers. o Its argument that there were work hazards for the deaf-
o FEBTC complied with these requirements. However, mutes, such as the danger of nighttime (since they worked
subsequent events, including the enactment of the Magna until 5 PM), is untenable as they were also risks shouldered
Carta for Disabled Persons (RA 7277), justify the application by the able-bodied employees. It is not a valid excuse.
of Art. 280
o The fact that FEBTC renewed the employment contract of DISP: Petition granted. Award of separation pay in lieu of
some of the deaf-mutes attests to the fact that they were installment is given.
qualified for their positions. Stated differently, their disability
did not render them unqualified or unfit for the tasks c. 5. Discrimination in Employment
assigned to them.
o In this light, the Magna Carta mandates that this qualified RA 7277, Sec 32 Discrimination on Employment — No entity,
disabled employee should be given the same terms and whether public or private, shall discriminate against a qualified
conditions of employment as a qualified able-bodied disabled person by reason of disability in regard to job
employee. This removes them from the ambit of Art. 80 of application procedures, the hiring, promotion, or discharge of
the Labor Code and places them under the rule provided in employees, employee compensation, job training, and other
Art. 280. terms, conditions, and privileges of employment. The following
o The Court has held in De Leon v. NLRC that the “primary constitute acts of discrimination:
standard, therefore, of determining regular employment is
the reasonable connection between the particular activity (a) Limiting, segregating or classifying a disabled job applicant in
performed by the employee in relation to the usual trade or such a manner that adversely affects his work opportunities;


medical record; Provided, however, That:
(b) Using qualification standards, employment tests or other
selection criteria that screen out or tend to screen out a disabled (1) supervisors and managers may be informed
person unless such standards, tests or other selection criteria are regarding necessary restrictions on the work or duties of the
shown to be job-related for the position in question and are employees and necessary accommodations;
consistent with business necessity; (2) first aid and safety personnel may be informed, when
appropriate, if the disability may require emergency treatment;
(c) Utilizing standards, criteria, or methods of administration that: (3) government officials investigating compliance with
(1) have the effect of discrimination on the basis of this Act shall be provided relevant information on request; and
disability; or (4) the results of such examination are used only in
(2) perpetuate the discrimination of others who are accordance with this Act
subject to common administrative control.
Acts of discrimination
(d) Providing less compensation, such as salary, wage or other 1. Limit job opportunities for disabled by segregation and
forms of remuneration and fringe benefits, to a qualified classification
disabled employee, by reason of his disability, than the amount 2. Qualification standards that tend to screen out a disabled
to which a non-disabled person performing the same work is person unless if job related or necessary in business
entitled; 3. Standards which have the effect of discriminating or
perpetuating the discrimination of PWD
(e) Favoring a non-disabled employee over a qualified disabled 4. Less compensation for the same work
employee with respect to promotion, training opportunities, 5. Favor non-disabled EE over qualified PWD in promotion,
study and scholarship grants, solely on account of the latter's training, and scholarship grants
disability; 6. Transfer PWD in a position he cannot perform because of
his disability
(f) Re-assigning or transferring a disabled employee to a job or 7. Dismiss PWD because of his disability unless there is proof
position he cannot perform by reason of his disability; of impairment to the business interest (ER should first
provide reasonable accommodations for the PWD)
(g) Dismissing or terminating the services of a disabled 8. Failing to select or administer in the most effective manner
employee by reason of his disability unless the employer can employment tests which accurately reflect the skills,
prove that he impairs the satisfactory performance of the work aptitude or other factor of the disabled
involved to the prejudice of the business entity: Provided, 9. Exclude membership in labor unions
however, That the employer first sought to provide reasonable
accommodations for disabled persons; May be subject to medical examination provided that:
- All employees are subject to the same
(h) Failing to select or administer in the most effective manner - Information is confidential except:
employment tests which accurately reflect the skills, aptitude or - Supervisors be informed of the necessary restrictions
other factor of the disabled applicant or employee that such - First aid or safety personnel in case of emergency
tests purports to measure, rather than the impaired sensory, treatment
manual or speaking skills of such applicant or employee, if any; - Gov’t officials investigating violations
and - Results of examination only for the purpose of the law
(i) Excluding disabled persons from membership in labor unions c. 6. Enforcement

or similar organizations
RA 7277, Sec 44 Enforcement by the Secretary of Justice —
RA 7277, Sec 33 Employment Entrance Examination — Upon
an offer of employment, a disabled applicant may be subjected (a) Denial of Right
to medical examination, on the following occasions:
(1) Duty to Investigate — the Secretary of Justice shall
(a) all entering employees are subjected to such an examination investigate alleged violations of this Act, and shall undertake
regardless of disability; periodic reviews of compliance of covered entities under this
Act.
(b) information obtained during the medical condition or history
of the applicant is collected and maintained on separate forms (b) Potential Violations — If the Secretary of Justice has
and in separate medical files and is treated as a confidential reasonable cause to believe that —


that the court Auxiliary aid or service, modification of
(1) any person or group of persons is engaged in a may grant policy, practice or procedure
pattern or practice of discrimination under this Act; or Making facilities readily accessible to and
(2) any person or group of persons has been usable by PWD
discriminated against under this Act and such discrimination First Offense
raises an issue of general public importance, the Secretary of Fine (P50K-P100K) OR
Justice may commence a legal action in any appropriate court. Imprisonment (6 months – 2 years) OR
Both
RA 7277, Sec 45 Authority of Court — The court may grant Subsequent Offense
any equitable relief that such court considers to be appropriate, Fine (P100K-P200K) OR
Penalties
including, to the extent required by this Act: (a) granting Imprisonment (2 years – 6 years) OR
temporary, preliminary or permanent relief; (b) providing an Both
auxiliary aid or service, modification of policy, practice or Abuse of Privilege
procedure, or alternative method; and (c) making facilities readily Fine (P5K-P50K) OR
accessible to and usable by individuals with disabilities. Imprisonment (6 months) OR
Both
RA 7277, Sec 46 Penal Clause —
(a) Any person who violates any provision of this Act shall suffer 4. Conditions of Employment
the following penalties:
A. HOURS OF WORK
(1) for the first violation, a fine of not less than Fifty
thousand pesos (P50,000.00) but not exceeding One hundred 1. Regulation; Rationale
thousand pesos (P100,000.00) or imprisonment of not less than
six (6) months but not more than two (2) years, or both at the - To safeguard the health and welfare of the laborer
discretion of the court; and - To combat unemployment by compelling employers who go
(2) for any subsequent violation, a fine of not less than beyond 8 hours of operations to utilize different shifts of laborers
One hundred thousand pesos (P100,000.00) but not exceeding who would only work for 8 hours each.
Two hundred thousand pesos (P200,000.00) or imprisonment for
not less than two (2) years but not more than six (6) years, or both Manila Terminal Co. Inc. v. CIR
at the discretion of the court FACTS:
1. Sep. 1, 1945: After having undertaken the arrastre service in
(b) Any person who abuses the privileges granted herein shall be the Manila Port Area for the US Army, Manila Terminal Co
punished with imprisonment of not less than six (6) months or a (MTC) hired 30 people to serve as watchmen for 12-hour
fine of not less than Five thousand pesos (P5,000.00), but not shifts for compensation rate of P3.00/day for day shifts and
more than Fifty thousand pesos (P50,000.00), or both, at the P6.00/day for the night sfits.
discretion of the court. 2. Feb. 1, 1946: MTC continued to provide arrastre service in
the area, but this time, under a contract with the Bureau of
(c) If the violator is a corporation, organization or any similar Customs. The watchmen who were hired continued with their
entity, the officials thereof directly involved shall be liable services and also received an increase in their pay (now at
therefor. P4.00/day for day shift and P6.25/day for night shift).
3. Mar 28, 1947: Dominador Jimenez, from the Manila Terminal
(d) If the violator is an alien or a foreigner, he shall be deported Relief and Mutual Aid Assoc. (MTRMAA), sent a letter to the
immediately after service of sentence without further Dept. of Labor (DOL), requesting them to investigate the
deportation proceedings. matter of overtime pay (from the excess four hours when it
was still 12-hour shifts that were observed). DOL, however,
failed to act on this request. One month later, Victorino
SUMMARY OF JUSTICE SECRETARY’S ENFORCEMENT Magno Cruz and 5 other employees, also from MTRMAA,
POWERS filed a 5-point demand with the DOL but again, DOL failed
Undertake periodic reviews of compliance to act on the demand.
Duty of Sec. of
May file legal action against those who 4. May 24, 1947: MTC started to implement the system of strict
Justice
engage in the practice of discrimination 8-hour shifts.
Equitable reliefs Temporary, preliminary or permanent relief


5. Jul 1947: The MTRMAA finally certified by the DOL, it filed a - The employee is already in a disadvantageous position as
petition with the CIR for MTC to pay the watchmen overtime he/she will be naturally hesitant to raise his/her claims for fear
pay from the commencement of their employment. of reprisal by the employer.
6. May 1949: The watchmen were integrated into the Manila 4. NO, the argument that the nullity of the contract
Harbor Police of the Customs Patrol Service under the precludes recovery is untenable.
Bureau and the Secretary of Finance, by virtue of Customs - The argument only applies when both the employer and
AO No. 81 and EO 228 of the President. employee is in pari delicto, whose general rule provides that
7. CIR: Petition Granted. MTC is order to pay the overtime pay. it precludes both parties from recovering damages against
However, as for the overtime pay when the watchmen were each other.
already with the Customs Patrol Service, it ruled that it has no - The parties in this case are not in pari delicto, hence the
jurisdiction, as the Bureau of Customs has no independent argument finds no application.
personality from the Government and therefore is immune 5. NO, CA 444 does not prevent recovery of back
from suit. overtime pay.
8. MTC filed to reconsider. The CIR denied the said motion. - Secs. 3 and 5 of CA 444 expressly provides for the payment
Hence the petition. of extra compensation where overtime services are required
and that employees are entitled to collect such extra
ISSUES: compensation for past overtime work.
1. WON the CIR has jurisdiction to render money judgments
involving obligations in arrears (YES) 2. Coverage
2. WON the initial employment contract (the 12-hour shift
contract) already provided overtime pay, thereby barring
Art 82 Coverage - The provisions of this Title shall apply to
recovery (NO)
employees in all establishments and undertakings whether for
3. WON estoppel by latches have already defeated the cause
profit or not, but not to government employees, managerial
of MTRMAA (NO)
employees, field personnel, members of the family of the
4. WON the nullity of the contract already precludes any
employer who are dependent on him for support, domestic
recovery by MTRMAA (NO)
helpers, persons in the personal service of another, and workers
5. WON CA 444 does not authorize the recovery of back
who are paid by results as determined by the Secretary of Labor
overtime pay (NO)
in appropriate regulations.
As used herein, "managerial employees" refer to those whose
RATIO:
primary duty consists of the management of the establishment in
1. YES, the CIR has jurisdiction to render money
which they are employed or of a department or subdivision
judgments.
thereof, and to other officers or members of the managerial
- The Court has already settled this issue in the past case of
staff. "Field personnel" shall refer to non-agricultural employees
Detective & Protective Bureau Inc v. CIR and United
who regularly perform their duties away from the principal place
Employees Welfare Assoc.
of business or branch office of the employer and whose actual
2. NO, the initial employment of contract did not
hours of work in the field cannot be determined with reasonable
provide for overtime pay yet.
certainty.
- The allegation by MTC that the initial employment contract
already accounted for overtime pay is unsupported by the
General rule: All employees
evidence on record.
- While the watchmen themselves agreed to the stipulation of Exceptions:
12-hour shifts, they were hardly in the position to bargain the 1. Government employees
implementation of the 8-hour shift rule. 2. Managerial employees
- Moreover, after MTC implemented the 8-hour shift rule, no 3. Managerial staff
reductions in salaries were made; on the contrary, they were 4. Field personnel
increased. 5. Dependent family members
3. NO, estoppel by latches cannot apply to the 6. Domestic servants or persons in the personal service of
employees. another
- To let estoppel defeat the cause of the employees is to 7. Piece-rate workers
subvert the purpose of the 8-Hour Labor Law.
- The law principally requires the employer to observe the 8- 2. a. Government employees
hour shift limit. The onus for compliance is with the
employer. Art. 276 (now 282) Government employees - The terms and


conditions of employment of all government employees, department or sub-division thereof.
including employees of government-owned and controlled (2) They customarily and regularly direct the work of two
corporations, shall be governed by the Civil Service Law, rules or more employees therein.
and regulations. Their salaries shall be standardized by the (3) They have the authority to hire or fire employees of
National Assembly as provided for in the New Constitution. lower rank; or their suggestions and recommendations as to
However, there shall be no reduction of existing wages, benefits hiring and firing and as to the promotion or any other change of
and other terms and conditions of employment being enjoyed status of other employees, are given particular weight.
by them at the time of the adoption of this Code.
(c). Officers or members of a managerial staff if they perform the
Article IX-B, Sec. 1, CON87 following duties and responsibilities:
(1) The civil service shall be administered by the Civil Service
Commission composed of a Chairman and two Commissioners (1) The primary duty consists of the performance of
who shall be natural-born citizens of the Philippines and, at the work directly related to management policies of their employer;
time of their appointment, at least thirty-five years of age, with (2) Customarily and regularly exercise discretion and
proven capacity for public administration, and must not have independent judgment; and
been candidates for any elective position in the elections (3) (i) Regularly and directly assist a proprietor or a
immediately preceding their appointment. managerial employee whose primary duty consists of the
management of the establishment in which he is employed or
subdivision thereof; or (ii) execute under general supervision
OR, Book III, Rule I Sec. 2 Exemption – The provisions of
work along specialized or technical lines requiring special
this Rule shall not apply to the following persons if they qualify
training, experience, or knowledge; or (iii) execute, under
for exemption under the conditions set forth herein:
general supervision, special assignments and tasks; and
(4) Who do not devote more than 20 percent of their
(a) Government employees whether employed by the National
hours worked in a work week to activities which are not directly
Government or any of its political subdivision, including those
and closely related to the performance of the work described in
employed in government- owned and/or controlled
paragraphs (1), (2) and (3) above.
corporations.
Managerial employees
- Governed by Civil Service Commission, salaries
-‐ Primary duty consists of the management of the
standardized, no reduction of existing wages, benefits and
establishment
other terms and conditions of employment
-‐ Customarily and regularly direct the work of two or more
employees
EXCEPTION: Employees of GOCCs created under the
-‐ Authority to hire or fire employees of lower rank (Not merely
Corporation Code
routinary, or clerical but with the exercise of independent
judgment)
2. b. Managerial employees
Int’l Pharmaceuticals Ic. V. NLRC

Art. 212 (m). "Managerial employee" is one who is vested with
FACTS:
the powers or prerogatives to lay down and execute
1. International Pharmaceuticals, Inc. (IPI) is a corporation
management policies and/or to hire, transfer, suspend, lay-off,
engaged in the manufacture, production and sale of
recall, discharge, assign or discipline employees. Supervisory
pharmaceuticals
employees are those who, in the interest of the employer,
2. March 1983: IPI employed Virginia Camacho Quintia as
effectively recommend such managerial actions if the exercise of
Medical Doctor of its Research & Dev’t. Dept., replacing one
such authority is not merely routinary or clerical in nature but
Diana Villaraza
requires the use of independent judgment. All employees not
-‐ Virginia’s contract provided for a 1-year term from Mar.
falling within any of the above definitions are considered rank-
19, 1983, subject to renewal by mutual consent at least 30
and-file employees for purposes of this Book
days before expiration
-‐ Her monthly compensation was P4,000 and it was agreed
OR, Book III, Rule I Sec. 2 she would continue teaching at Cebu Doctor’s Hospital
(b). Managerial employees, if they meet all of the following (full-time faculty member)
conditions: -‐ Same year, the gov’t launched a program encouraging
the dev’t of herbal medicine and offering incentives to
(1) Their primary duty consists of the management of interested parties
the establishment in which they are employed or of a


-‐ IPI decided to venture into the dev’t of herbal medicine 2. WON Virginia was illegally dismissed (YES)
and one of the gov’t requirements was the hiring of a
pharmacologist → why Virginia was hired (and why IPI is RATIO:
contending that Virginia was just a project employee) 1. NO, she was a regular employee of IPI
3. When Virginia’s contract was about to expire, she was a. NO, Art. 280 (now 286) was correctly applied by
invited by Xavier University to be the chairperson of the the NLRC
pharmacology dept. but Pio Castillo (Pres. and GM) asked - NLRC: The written contract was valid but after its
her to stay, assuring her of security of tenure → she declined expiration, as IPI decided to continue Virginia’s services, it
Xavier’s offer must respect the security of tenure in accordance with
4. Mar. 19, 1984: Virginia’s contract expired but she remained Art. 280 (now 286): “To our mind, when complainant was
with IPI, where she performed the work of Medical Doctor of allowed to continue working without the benefit of a
the R&D department and of company physician → continued contract after the expiration of the one year period
until her termination on July 12, 1986 provided in their written contract, that act completely
-‐ - Virginia is alleging that she was terminated because she changed the complexion of the relationship between the
took up the cudgels for the rank and file employees parties”
against the officers of their own Savings and Loan - IPI: The NLRC decision shouldn’t have interpreted Art.
Association (inequality in the imposition of interest rate) 280 to render fixed-term employment contracts invalid
→ demand for full disclosure of the association’s - SC: NLRC precisely upheld the validity of the contract in
financial status, her participation was resented by the accordance with the Brent School case but the validity of
officers, all appointed by the management → was the written contract is not in issue; what is in issue is
berated and when she sought permission to explain her whether Virginia became a regular employee after the
side, was told to leave contract’s expiration
5. July 10, 1986: Virginia was replaced by Paz Wong as head of - IPI: In Singer Sewing Machine v. Drilon, Art. 280 was
R&D found to just distinguish between regular and casual
6. July 12, 1986: Virginia received an inter-office memorandum employment to determine entitlement benefits, and in
officially terminating her allegedly because of the expiration this case, Virginia’s regular employee status has been
of her contract disputed by IPI. The cited case supports its argument that
7. Jan. 21, 1987: Virginia filed a complaint against IPI for illegal an agreement may provide that one party may render
dismissal and prayed for reinstatement and payment of full necessary services without being hired as a regular
backwages employee.
-‐ IPI: Virginia was hired on a “consultancy basis - SC: IPI is mistaken. Virginia’s status as an employee is not
coterminous with the duration of the project” (herbal disputed. She was an employee. The question is whether,
medicine) and she was terminated after abandonment of given the fact that she was an employee, she was a
that project and that her employment which lasted for 2 regular or a project employee, considering she had been
more years was by virtue of an oral agreement with the continued in the service of IPI For more than 2 years
same terms following expiration of her contract.
-‐ LA: Virginia was illegally dismissed and she was a regular b. NO, Virginia’s tasks were actually necessary to
employee (not a project employee) and she couldn’t be IPI’s business
dismissed without just and/or legal cause; that IPI failed - IPI: Virginia’s tasks were not really necessary and
to observe due process; that IPI has to reinstate Virginia desirable, and her work was done on a temporary basis
and pay her backwages for 3 years (only for the duration of the herbal medicine
8. On appeal, NLRC affirmed the ruling development project) and she wasn’t required to keep
-‐ MR by IPI, denied fixed office hours → continued after expiration of
9. Hence, this petition contract (temp nature)
- SC: Allegations are contrary to the factual findings:
ISSUES: o Virginia was the head of R&D dept. and she
1. WON Virginia was a project employee (NO) performed the function of company physician and
a. WON Art. 280 (now 286) was incorrectly applied by NLRC she undertook various civic activities for more than 3
(NO) years
b. WON Virginia’s tasks were unnecessary to the business of o This shows she was not a consultant but a regular
IPI (NO) employee albeit a managerial one
c. WON Virginia became a regular employee after the o Plus, Virginia was hired to replace one Diana
expiration of the written contract despite the absence of Villaraza (so the position she was appointed to was
a written one (YES) an existing one) and when she was terminated,


someone else (Paz Wong) was appointed in her - SC: No principle of law to support IPI’s proposition
place → if the employment was for a particular o o The written contract provided it was subject to
project which had been allegedly terminated, why renewal by mutual consent → NO EVIDENCE shown
would there be a need to replace her? that they mutually agreed to renew it
o Terms of the written contract were clear: IPI hires o o To sustain IPI’s contention that there was an
Virginia as Medical Director of R&D Dept. and the implied extension would make it possible for
tasks she did make no mention of any project or any employers to circumvent Art. 280 (now 286)
consultancy whatsoever - IPI: Virginia was a project employee, and that it had
o As observed by the OSG, Virginia’s duties reject any discontinued its herbal medicine project, then Virginia
notion of consultancy should have been terminated, too
o Clearly she was hired as Medical Director and not as - SC: IPI did not prove it undertook a project (no mention
consultant; the work she performed was manifestly at all in the contract) and what the contract actually states
necessary and desirable to the business because IPI is that the employment was one for a definite period, not
admits R&D are part of its business a project
- SC: The fact that she was not required to report at a fixed - Since she was a regular employee, she could only be
hour or to keep fixed hours does not detract from her dismissed for just or authorized cause
status as a regular employee; IPI admits Virginia was a 2. YES, she was illegally dismissed
managerial employee, and not covered by the LC - An employer is allowed wider discretion in respect of
provisions on hours of work managerial personnel and they can be separated for loss of
o As cited in one case, “The primary standard of confidence; however, mere allegation of a ground is
determining a regular employment is the insufficient
reasonable connection between the particular o In Western Shipping Agency, Inc. v. NLRC, loss of
activity performed by the employee in relation to confidence must be substantiated and burden of proof is
the usual business or trade of the employer. The on the employer
test is whether the former is usually necessary or o SC: IPI failed to discharge this burden and it failed to
desirable in the usual business or trade of the accord due process to Virginia (2-notice rule: 1) notice of
employer … Also, if the employee has been particular acts or omissions for which dismissal is sought;
performing the job for at least one year, even if the and 2) subsequent notice informing employee of
performance is not continuous or merely employer’s decision to dismiss him)
intermittent, the law deems the repeated and • Memoranda sent to her informing her of the
continuing need for its performance as sufficient termination of her contract without apprising her of
evidence of the necessity if not indispensability of the acts or omission do not satisfy the requirements of
that activity to the business. notice; she was also not given the opportunity to be
- That she was teaching full-time at the Cebu Doctor’s heard
College does not affect her work. Whether one’s • SC: Dismissal was illegal
employment is regular is not determined by the number - IPI: Reinstatement is impossible because the position has
of hours one works, but by the nature of the work and by been abolished
the length of time one has been in that particular job - SC: LIES. A replacement was appointed 2 days prior to her
- Considering all the foregoing, Virginia became a regular termination; if it was abolished, no necessity to find a
employee after her contract expired on Mar. 18, 1984 and replacement
her services were continued for more than 2 years in the - SC: But because of the antagonism and Virginia’s preference
usual trade or business of IPI for separation pay, reinstatement is no longer feasible →
c. YES, Virginia became a regular employee separation pay in lieu of reinstatement, equivalent to one
- PI: No factual basis to support NLRC’s reliance on the month salary for every year of service + backwages (for 3
absence of a written contract as indicating that Virginia years without deduction because the dismissal was made
became a regular employee before RA 6715)
o o Cited Brent School case where it was
recognized that term contracts can be made orally; 2. c. Field Personnel
that there was no subsequent contract does not
mean the original one was abandoned and that OR, Book III, Rule I Sec. 2 (f). Non-agricultural field
Virginia became a regular employee due to the personnel if they regularly perform their duties away from the
absence thereof; implied renewal was entered into, principal or branch office or place of business of the employer
or the absence of the written contract indicates that and whose actual hours of work in the field cannot be
they impliedly agreed to extend their written contrat determined with reasonable certainty.


o “…employees in all establishments and undertakings
Field Personnel whether for profit or not”
- Non-agricultural employees who regularly perform their o “…not to government employees, FIELD PERSONNEL,
duties away from the principal place of business, hours in members of the family of the employer who are
the field cannot be determined with certainty dependent on him for support, domestic helpers, persons
in the personal service of another, and workers who are
Mercidar Fishing Corp v. NLRC paid by results.
FACTS: o FIELD PERSONNEL defined as “non-agricultural
1. Fermin Agao, Jr. was employed by Mercidar Fishing employees who regularly perform their duties away from
Corporation as a “bodegero” or ship’s quartermaster on the principal place of business or branch office of the
board its boats employer and whose hours of work in the field cannot be
2. According to Fermin, he had been sick and was allowed to determined with reasonable certainty”
go on leave without pay for a month - If Fermin’s line of work comes within the meaning of a Field
3. When he reported to work, he was told to come back Personnel, he is not entitled to service incentive leave pay,
another time as he could not be reinstated immediately. among others
Thereafter, Mercidar refused to give him work. - The meaning of the phrase “whose actual hours of work in
4. For this reason, Fermin asked for his certificate of the field cannot be determined with reasonable certainty”
employment, but was refused unless he submitted his was explained in Union of Filipro Employees v. Vicar:
resignation o Such phrase should be read in conjunction with Rule IV,
5. He asked to be given separation pay but was again refused Book III of the IRR providing for who are and who are not
and was prevented from entering the premises entitled to Holiday with pay. It provides that those not
6. According to Mercidar, Fermin actually abandoned his work. entitled to it are “Field personnel and other employees
He failed to report for work after his leave had expired. He whose time and performance is unsupervised by the
was absent without leave for three months. employer.”
-‐ Nonetheless, it assigned him to another vessel, but he - This means that in deciding whether or not an employee’s
was left behind actual working hours in the field can be determined with
-‐ Fermin thereafter asked for a certificate of employment reasonable certainty, query must be made as to whether or
on the pretext that he was applying to another fishing not such employee’s time and performance is constantly
company supervised by the employer.
-‐ He refused to get the certificate and resign unless he was - In the aforementioned case, it was held that the salesmen of
given separation pay Nestle Philippines, Inc. were field personnel because the
7. Fermin filed a complaint for illegal dismissal, non-payment of company has no way of determining whether or not these
13th month pay and non-payment of five days service sales personell, even if the report to the office at a fixed time
incentive leave for 1990 prior to field work and come back at a fixed time afterwards,
8. LA: ruled in favor of Fermin are really spending the hours in between in actual field work.
9. Mercidar appealed to NLRC - The law requires the actual hours of work in the field be
-‐ Claimed that it cannot be held liable for service incentive reasonable ascertained.
leave pay by fishermen in its employ as the latter - Such is not the case in Fermin’s employment
supposedly are “field personnel” and this not entitled to o During the entire course of their fishing voyage,
such pay under the LC fishermen employed by Mercidar have no choice but to
10. NLRC: dismissed for lack of merit remain on board its vessel
11. Hence, this petition o Although they perform non-agricultural work away from
Mercidar’s business offices, the fact remains that
ISSUES: throughout the duration of their work, they are under
1. WON Fermin is a “field personnel” not entitled to service their employer’s effective control and supervision through
incentive leave pay (NO) the vessel’s patron or master
2. WON Fermin was constructively dismissed. (YES) 2. Yes, he was constructively dismissed.
- Fermin did not abandon his work. There is no proof of
RATIO: concurrence of the intention to abandon and some overt acts
1. Fermin is not a field personnel. He is entitled to from which it may be inferred that the employee has no more
service incentive leave pay. interest in working
- Art. 82 of LC provides for who are covered under the - Filing of complaint inconsistent with abandonment
provisions on Working Conditions and Rest Periods - LA and NLRC’s findings are supported by substantial
evidence, hence Court will not disturb it


- The definition of “field personnel” is not merely concerned
Far East Agricultural Supply Inc. v. Lebatique with the location where the employee regularly performs his
FACTS: duties but also the fact that the employee’s performance is
1. Mar 1996: Far East hired Jimmy as a truck driver with a daily unsupervised by their employer.
wage of P223.50. His task was to deliver animal feeds to - Jimmy is not a field personnel for the following reasons:
clients. o Company drivers are directed to deliver the goods at a
2. Jan 2000: Jimmy complained that he was not being paid for specified time or place
his overtime work, particularly on Jan 22 when he was o They are not given the discretion to solicit, select and
required to make a second delivery. On that same day, contact prospective clients
Manuel Uy, brother of Far East’s General Manager Alexander o Far East issued a directive that company drivers should
Uy, suspended him for illegal use of company vehicle. Jimmy say at client’s premises during truck-ban hours.
tried reporting for work but was barred entry into the - Hence, drivers like Jimmy are under the supervision and
premises. control of Far East and is a regular employee entitled to
3. Jimmy sought the assistance of DOLE’s Public Assitance and overtime pay and service incentive leave pay.
Complaints unit for the recovery of the said unpaid overtime
pay. Two days after his suspension, he received a letter from 2. d. Dependent Family Members
Far East requiring him to report back to work.
4. Upon return to work, Alexander asked him why he was
claiming for overtime pay. Jimmy explained that he was
never paid for overtime and that Manuel fired him. After 2. e. Domestic Helpers
talking to Manuel, Alexander terminated Jimmy’s
employment Art. 141 Coverage - This Chapter shall apply to all persons
5. Mar 2000: Jimmy filed a complaint for illegal dismissal and rendering services in households for compensation. “Domestic
nonpayment of overtime pay. or household service” shall mean service in the employer’s home
6. LA: There was illegal dismissal. Far East is ordered to which is usually necessary or desirable for the maintenance and
reinstate Jimmy and pay him back wages. enjoyment thereof and includes ministering to the personal
7. NLRC: LA reversed. comfort and convenience of the members of the employer’s
-‐ Jimmy was field personnel and hence was not entitled to household, including services of family drivers
overtime pay and service incentive leave pay.
8. CA: LA decision reinstated.
Art. 145 Assignment to Non-Household Work. – No
househelper shall be assigned to work in a commercial, industrial
or agricultural enterprise at a wage or salary rate lower than that
ISSUES:
provided for agricultural or non-agricultural workers as
1. WON Jimmy was illegally dismissed (YES)
prescribed herein.
2. WON Jimmy should be considered as field personnel (NO)
OR, Book III, Rule I Sec. 2 (d). Domestic servants and

RATIO:
persons in the personal service of another if they perform such
1. YES, Jimmy was illegally dismissed
services in the employer's home which are usually necessary or
- Far East’s averment that he was merely suspended and that
desirable for the maintenance and enjoyment thereof, or
he abandoned his work thereafter is untenable.
minister to the personal comfort, convenience, or safety of the
- The records show that there was never an intention on
employer as well as the members of his employer's household.
Jimmy’s part to abandon his job.
- An employee who takes his steps to protest his layoff cannot,
by any stretch of imagination, be said to have abandoned his -‐ Service in the employer’s home which is usually necessary or
work. desirable for the maintenance and enjoyment thereof and
- Moreover, when he was suspended, he was never given a includes ministering to the personal comfort and
chance to air his side of the story. convenience of the members of the employer’s household
2. NO, Jimmy is not field personnel. (includes family drivers)
- Art. 82 of the Labor Code provides that field personnel shall -‐ No DW shall be assigned to work in a commercial, industrial
refer to “non-agricultural employees who regularly perform or agricultural enterprise at a wage or salary rate lower than
their duties away from the principal place of business or that provided for agricultural or non-agricultural workers as
branch office of the employer and whose actual hours of prescribed herein.
work in the field cannot be determined with reasonable -‐ Exceptions:
certainty.


(a) Any person who performs domestic work only -‐ Paid a standard amount for every piece or unit of work
occasionally or sporadically and not on an occupational produced that is more or less regularly replicated, without
basis. regard to the time spent in producing the same
(b) The term shall not include children who are under foster
family arrangement, and are provided access to 2. g.i. Definition
education and given an allowance incidental to
education -‐ Those who are paid a standard amount for every piece or
(c) Assignment to non-household work. unit of work produced that is more or less regularly
replicated, without regard to the time spent in producing
EXCEPTION: Assignment in a Commercial Industrial or the same. (Labor Congress v. NLRC)
Agricultural Enterprise
Labor Congress v. NLRC
2. f. Persons in the Personal Service of Another FACTS:
1. 99 petitioners (Ana Marie Ocampo, et al.) were rank-and-file
OR, Book III, Rule I Sec. 2 (d). Domestic servants and employees of Empire Food Products, hired on various dates
persons in the personal service of another if they perform such 2. Petitioners (Ana Marie, et al.) filed a complaint (NLRC Case)
services in the employer's home which are usually necessary or for payment of money claims and for violation of labor
desirable for the maintenance and enjoyment thereof, or standards laws; they also filed a petition for direct
minister to the personal comfort, convenience, or safety of the certification of the Labor Congress of the Philippines (LCP) as
employer as well as the members of his employer's household. their bargaining representative
3. Oct. 23, 1990: petitioners represented by LCP Pres. Benigno
-‐ Service in the employer’s home which is usually necessary or Navarro, Sr. and respondents Gonzalo Kehyeng and Evelyn
desirable for the maintenance and enjoyment thereof and Kehyeng (for Empire Food) entered into a Memorandum of
includes ministering to the personal comfort and Agreement:
convenience of the members of the employer’s household a. That the Management of Empire Foods has no objection
(includes family drivers) to the certification of LCP as the SOLE and EXCLUSIVE
-‐ No DW shall be assigned to work in a commercial, industrial bargaining agent and representative for the employees
or agricultural enterprise at a wage or salary rate lower than regarding “WAGES, HOURS OF WORK, and OTHER
that provided for agricultural or non-agricultural workers as TERMS AND CONDITIONS OF EMPLOYMENT”
prescribed herein. b. That as regards the pending NLRC case (in #2), the issues
-‐ Exceptions: will be resolved during the negotiation of the CBA
(a) Any person who performs domestic work only c. That in consideration of the foregoing, the NLRC Case
occasionally or sporadically and not on an occupational shall be provisionally withdrawn
basis. d. That the parties agreed that upon signing the
(b) The term shall not include children who are under foster Agreement, no harrasments, threats, interferences of
family arrangement, and are provided access to their respective rights, no vengeance or revenge by each
education and given an allowance incidental to partner nor any act of ULP (unfair labor practice) which
education might disrupt the operations of the business
(c) Assignment to non-household work. e. That pending the negotiations or formalization of the
CBA, the MOA shall govern the parties in the exercise of
EXCEPTION: Assignment in a Commercial Industrial or their rights and whatever problems and grievances may
Agricultural Enterprise arise shall be resolved by them
f. That parties agree to respect and comply with the terms
2. g. Piece-Rate Workers and any violation of any provision shall constitute an act
of ULP
4. Oct. 24, 1990: Mediator Arbiter approved the MOA and
OR, Book III, Rule I Sec. 2 (e). Workers who are paid by
certified LCP as the “sole and exclusive bargaining agent
results, including those who are paid on piece-work, "takay,"
among the rank-and-file employees”
"pakiao" or task basis, and other non-time work if their output
rates are in accordance with the standards prescribed under 5. Nov. 9, 1990: Petitioners submitted a proposal for collective
bargaining
Section 8, Rule VII, Book Three of these regulations, or where
6. [NOT IN FACTS: based on guard’s testimony, on Jan. 21,
such rates have been fixed by the Secretary of Labor and
petitioners were absent from work, so the cheese curls to be
Employment in accordance with the aforesaid Section
packed that day were spoiled]
Piece-rate Workers


7. Jan. 23, 1991: Petitioners filed a complaint against private 4. WON respondents violated petitioners right to self-
respondents for: organization (NO)
- Unfair labor practice by way of illegal lockout and/or
dismissal RATIO:
- Union busting through harrasments, threats and intering 1. Court held: YES, there was grave abuse of
with the rights to self-organization discretion and its findings cannot bind the SC
- Violation of the MOA - The LA made a complete turnaround in its second decision
- Underpayment of wages despite having substantially the same evidence without
- Actual, moral and exemplary damages explaining why it changed its mind
8. LA: Absolved private respondents but directed the - The NLRC chastised the LA for errors in judgment and
reinstatement of the complainants procedure, so it remanded the case back
9. NLRC: Vacated the decision and remanded the case for - The LA, after the case was remanded, did not heed the
further proceedings pronouncements of the NLRC; neither did he understand the
- LA noted that complainant didn’t present any witness; purpose of the remand of the records (to hear the
NLRC reviewed the minutes and it appears that the testimonies of the individual complainants which it had
complainant presented witnesses and the LA must have overlooked to afford them opportunity to substantiate their
overlooked the testimonies of some of the individual claims)
complainants; that said complainants must be afforded - The LA, in concluding that petitioners abandoned their work,
the time and opportunity to substantiate their claims was moved by, at worst, spite, or at best, lackadaisically
10. LA ruled: glossed over petitioner’s evidence
- That complainants failed to present with definiteness and o In concluding that there was abandonment of work, LA
clarity the acts constitutive of unfair labor practice, and and NLRC relied on the testimony of Security Guard
failure to present prime facie evidence is fatal to the Rolando Cairo
cause of complainants; 2. Court held: NO, the petitioners did not abandon
- That the charge of illegal lockout has no leg to stand on their work
because the guard Orlando (of Empire Foods) testified - SC was persuaded by the OSG’s observations:
that complaints refused and failed to report for work, and o The LA and the NLRC relied on the testimony of Security
under cross-examination, complainants failed to rebut Guard Rolando Cairo that on Jan. 21, 1991, the
- That complainants failed to specify what threats or petitioners refused to work, and as a result, the cheese
intimidation was committed curls ready for repacking on said date were spoiled
- That violation of the MOA was a resolutory condition, o That the failure to work for one day does not amount to
which cannot be made the basis of an imposition of an abandonment of work; in fact, 2 days after, the petitioners
obligation filed a complaint for, among others, ULP, illegal lockout
- That evidence shows there was no underpayment of and/or illegal dismissal
wages: complainants are piece workers or paid on a o In several cases, SC held that “one could not possibly
pakiao basis (a certain amount for every 1000 pieces of abandon his work and shortly thereafter vigorously
cheese curls or other products repacked) and the only pursue his complaint for illegal dismissal”
limitation is that they should receive compensation NO o In De Ysasi III v. NLRC, Court stressed that it is the
LESS THAN MINIMUM WAGE for 8 hours of work → deliberate and unjustified refusal to resume employment
testimony by Gonzalo Kehyeng showed compliance, and not mere absence that constitutes abandonment →
which complainants failed to rebut absence of petitioner employees for ONE DAY did not
- Claim for moral and exemplary damages has no basis constitute abandonment
because there was no malice, bad faith or fraud shown to o In the first decision, the LA directed the reinstatement,
have been perpetrated and in his second, he didn’t state why he is abandoning
11. NLRC: Affirmed in toto → MR → denied → Instant special his earlier directive
civil action for certiorari o In directing the reinstatement, LA impliedly held that they
did not abandon their work but were not allowed to work
ISSUES: without just cause
1. WON there was grave abuse of discretion on the part of the o That they are “pakyao” or piece workers does not imply
NLRC (YES) that they are not regular employees entitled to
2. WON petitioners abandoned their work (NO) reinstatement
3. WON petitioners are entitled to benefits they are praying for o In Tabas v. California Manufacturing Co., Inc., the SC has
(YES) held that the work of merchandisers of processed food,
who coordinate with grocery stores and other outlets for


the sale of processed food is necessary in the day-to-day o Sec. 8(b) Rule IV, Book III specifically mentions piece
operations; with more reason the work of processed food workers are being entitled to holiday pay: “Where a
repackers is necessary in the day-to-day operations of covered employee is paid by results or output, such as
Empire Foods payment on piece work, his holiday pay shall not be less
- Burden of proving the existence of just cause for dismissing than his average daily earnings for the last 7 actual
an employee, such as abandonment, rests on the employer working days”
→ respondents failed to discharge o Revised Guidelines on the Implementation of the 13th
- Private respondents violated petitioners’ rights to security of Month Pay Law clearly exclude the employer of piece rate
tenure and constitutional right to due process by not serving workers from those exempted from paying 13th month
them with a written notice of such termination, pursuant to pay: “The following employers are still not covered …
Sec. 2, Rule XIV, Book V of the Omnibus Rules Implementing except where the workers are paid on piece-rate basis in
the LC → Petitioners are entitled to reinstatement with full which case the employer shall grant the required 13th
back wages, pursuant to Art. 279 (now 285) month pay to such workers”
- Bec of the number of employees involved, length of time o As to overtime pay, Sec. 2(e), Rule I, Book III provides that
that has lapsed, and the perceptible resentment and enmity workers who are paid by results including those who are
→ reinstatement impractical, separation pay instead at the paid on piece-work, takay, pakiao, or task basis, if their
rate of 1 month for every year of service output rates are in accordance with the standards under
o Amount of back wages cannot be fully settled at this Sec. 8, Rule VII, Book III, or where such rates have been
time; because they are piece-rate workers having been fixed by the Sec. of Labor, are not entitled to overtime
paid by the piece, there is a need to determine the pay
varying degrees of production and days worked by each • Here, private respondents did not allege adherence
worker → best left to the NLRC to the standards in Sec. 8 nor with the rates
3. Court held: YES, as regular employees (although prescribed by Sec. of Labor → petitioners are beyond
piece-rate workers) they are entitled to holiday pay, the ambit of exempted persons and are therefore
premium pay, 13th month pay and service incentive entitled to overtime pay (NLRC to determine exact
leave amounts)
- 3 facts why they are entitled: 4. Court held: NO, petitioners did not prove any
1) As to the nature of the tasks, their job of repacking snack wrongdoing on respondents’ part
food was necessary or desirable in the usual business of - Petitioners relied almost entirely on documentary evidence
private respondents, who were engaged in the which did not prove any wrongdoing:
manufacture and selling of such food products; o Their complaint to prove violation of labor laws, their
2) Petitioners worked for private respondents throughout Consolidated Affidavit, petition for certification election,
the year, their employment not having been dependent existence of the MOA
on a specific project or season; o None of these prove anything
3) The length of time that petitioners worked for private
respondents 2. g.ii. Nature of work of piece-rate workers
- Although their mode of compensation was on a “per piece
basis,” the status and nature of their employment was that of -‐ Workers under piece-rate employment have no fixed
regular employees salaries and their compensation is computed on the basis of
- Rules implementing LC exclude certain employees from accomplished tasks.
receiving benefits such as nighttime pay, holiday pay, service
incentive leave and 13th month pay: inter alia, “field Best Wear Garments v. Adelaida B. De Lemos and Cecille M.
personnel and other employees whose time and Ocubillo
performance is unsupervised by the employer, including FACTS:
those who are engaged on task or contract basis, purely 1. Cecile and Adelaida were employed by Best Wear Garments
commission basis, or those who are paid a fixed amount for as sewers on piece-rate basis
performing work irrespective of the time consumed in the 2. The two claimed that they were arbitrarily transferred by their
performance thereof.” manager Alex to other areas of operation which they said
o SC: Petitioners, as piece-rate workers, do not fall within amounted to constructive dismissal as it resulted in less
this group; not only did they labor under the control of earnings for them
private respondents, they also toiled throughout the year 3. They filed a complaint for illegal dismissal
with the fulfillment of their quota as basis for 4. Adelaida claimed that after two months in her new
compensation assignment, she was again transferred to a different


operation where she could not earn as much as before - Transfer was unreasonable, inconvenient, and prejudicial
because by-products require long period of time to finish to employees
- She averred that the reason for her transfer was her 13. Best Wear Garments filed MR → denied.
refusal to render overtime work up to 7 pm 14. Hence, this petition.
- Her request to be returned to her previous assignment
was rejected and she was constrained not to report for ISSUES:
work as Alex had become indifferent to her WON Adelaida and Cecile were constructively dismissed (NO)
- Her last salary was withheld
5. Cecile claims that her transfer was precipitated by her having RATIO:
incurred excessive absences from 2001 to 2003 due to the No, there were not constructively dismissed.
fact that her father became very sick in 2001 and died in 2003 - Being piece-rate workers, their earnings depended on the
- She herself became very sickly quality and quantity of finished products
- When she reported back to work, she was assigned to - That their work output might have been affected by the change
different machines, whichever was available of assignment does not necessarily imply that any resulting
- She said that there are times she could not earn for a day reduction in pay is tantamount to constructive dismissal
because no machine was available - Workers under piece-rate employment have no fixed salaries
- She was required to render overtime work up to 7 pm and their compensation is computed on the basis of
which she refused as she was only paid until 6:25 pm accomplished tasks
6. Best Wear Garments claim that the two were not terminated. o Some garments or by-products took longer to finish so they
Adelaida resigned due to personal problem, and Cecile could not earn as much as before
likewise resigned. The two requested for separation pay, but o Type of sewing jobs available would depend on the
since the company had no existing policy on granting specifications made by clients
separation pay, their request could not be granted - Transfer was not unreasonable, inconvenient, or prejudicial as
- Thereafter, Adelaida and Cecile did not back to work such reassignment is dictated by business necessity, which is
- Also, they could not have been terminated for refusal to within the ambit of management prerogative, which, in the
render overtime work, as they are piece-rate workers and absence of bad faith, ill motive or discrimination, should not be
hence, not paid according to the number of hours interfered with by the courts.
worked - Records are bereft of any showing of clear discrimination,
7. LA: ruled that Adelaida and Cecile were illegally dismissed. insensibility, or disdain against Adelaida and Cecile
Ordered payment of separation pay and backwages - Their objection to the transfer being grounded solely upon the
8. Best Wear Garments appealed to NLRC personal inconvenience or hardship that will be cause to them is
9. NLRC: REVERSED. Adelaida and Cecile should report back not a valid reason to disobey an order of transfer
to work. - They were not dismissed; they eventually discontinued reporting
- Termination of employment was Adelaida and Cecile’s for work after their plea to be returned to former assignment was
decision. They were never terminated by Best Wear not granted
Garments - Remedy is not award of backwages, but reinstatement.
- Their transfer was a legitimate exercise of management
prerogative 3. Normal Hours of Work
o The kind of work Best Wear Garments performs is
dependent on the client which specifies the work 3. a. In general
o Work to be performed by employees depend upon
the specifications of the contract Art. 83 Normal hours of work - The normal hours of work of any
o If employees were assigned to different operations, it employee shall not exceed eight (8) hours a day. (Par. 1)
was pursuant to the requirements of its contracts
- They failed to state how much they earned before their 3. b. Health personnel
transfer, so existence of diminution of pay could not be
determined
Art. 83
- Further, they were paid on a piece-work basis; the more
output, the more earnings. The earning is dependent
Health personnel in cities and municipalities with a population of
upon them.
at least one million (1,000,000) or in hospitals and clinics with a
10. Adelaida and Cecile filed MR → denied
bed capacity of at least one hundred (100) shall hold regular
11. Elevated the case to the CA office hours for eight (8) hours a day, for five (5) days a week,
12. CA → granted petition. REVERSED NLRC. REINSTATED LA.
exclusive of time for meals, except where the exigencies of the
- No valid and legitimate business reason for the transfer service require that such personnel work for six (6) days or forty-


eight (48) hours, in which case, they shall be entitled to an
additional compensation of at least thirty percent (30%) of their RATIO:
regular wage for work on the sixth day. For purposes of this 1. YES, certiorari was the proper recourse.
Article, "health personnel" shall include resident physicians, - The CA has the power to issue writs of certiorari, as provided
nurses, nutritionists, dietitians, pharmacists, social workers, by Sec. 9 of BP 129.
laboratory technicians, paramedical technicians, psychologists, 2. YES, there was an existent ER-EE relationship
midwives, attendants and all other hospital or clinic personnel. - Use of the four-fold test points to the existence of the
(Par. 2) relationship:
o Selection: Exercised when it hired Hernani and even
Legend Hotel (Manila) v. Hernani Realuyo increased his salary
FACTS: o Wages: Hernani was being paid P400/night, which was
1. Sep 1992: Hernani was working as a pianist at Legend’s eventually increased to P750/night. These are considered
Tanglaw Restaurant as a pianist, with the stage name of Joey as ‘wages’ referred to in the Labor Code, even if they are
Roa. termed as “talent fee.”
- He had an initial rate of P400/night but the same was o Control: As the CA stated, Legend exercised control and
increased to P750/night supervision in the performances made by Hernani, with
- He could not choose his performance times, which were respect to which songs he should play, what he should
set at 7 PM – 10 PM for 3 to 6 times a week wear, and even his working hours.
- He had to conform to the Filipiniana motif of the o Dismissal: Exhibited by the fact that they actually
restaurant terminated his services.
- He was subjected to the rules employees’ on - Even his working hours of less than the maximum 8 hours is
representation checks and chits. immaterial. While the Labor Code sets the maximum at 8
2. Jul 1992: Management notified Hernani that his services hours per day, it does not prohibit employees from working
would be terminated as a cost-cutting measure. He disputed at less than 8 hours.
this, insisting that Legend Hotel had been lucratively 3. NO, Hernani was illegally dismissed; rentrenchment
operating. He filed a complaint for alleged unfair labor was invalid.
practice, and constructive illegal dismissal, with money - While retrenchment is a recognized cause for termination of
claims. employment, Legend failed to adduce evidence that it was
3. In its defense, Legend claims that there is no ER-EE actually suffering losses. Hence, the claim that the dismissal
relationship between them and Hernani. And that he was was for valid cause is untenable.
only a talent that they engaged for a few hours for certain
times during the week. It also reiterated that his termination 4. Compensable Hours of Work
was a cost-cutting measure.
4. LA: Complaint dismissed for lack of ER-EE relationship. -‐ Hours required to be on duty or to be at the workplace
- LA based its ruling on the fact that Hernani received his -‐ On duty: Hours required for EE to give ER regardless of
talent fee nightly, unlike the regular employees who WON hours are spent in productive labor or involve physical
received their wages monthly. or mental exertion
- LA also noted the absence of the power of control which -‐ At work: hours EE suffered or permitted work
disproves the existence of an ER-EE relationship -‐ Included (discussion below):
5. NLRC: LA affirmed 1. Rest period (5-20 minutes)
6. CA: LA and NLRC reversed 2. Meal period(20minutesonly)
- CA found that there was the power of control, which is 3. Waiting time (if essential to his work or if required by
the most decisive factor in the four-fold test. Hernani’s EE)
performances were supervised by the restaurant manager 4. On call
who directed him on which songs to play, which uniform 5. Inactive due to work interruptions
to wear and even the time and frequency of his 6. Necessary work after normal working hours
performances. 7. Lectures, meetings, trainings
7. Hence the petition by Legend. 8. Travel time
ISSUES: 4. a. On duty
1. WON the certiorari filed in the CA was the proper recourse
(YES) Art. 84 (a). Hours worked. - Hours worked shall include all time
2. WON there was an ER-EE relationship existing (YES) during which an employee is required to be on duty or to be at a
3. WON there was valid termination (NO) prescribed workplace.


goods
OR, Book III, Rule I Sec. 3 (a). Hours worked. — The If waiting is an integral part of his work or the
following shall be considered as compensable hours worked: All Waiting time employee is required or engaged by the
time during which an employee is required to be on duty or to employer to wait
be at the employer's premises or to be at a prescribed work Working while on call – When one is in the
place employer’s premises or so close thereto that
he cannot use the time effectively and
OR, Book III, Rule I Sec. 4 (a). Principles in determining gainfully for his own purpose he shall be
On call
hours worked. — The following general principles shall govern in considered as working while on call
determining whether the time spent by an employee is Not working while on call – When one is not
considered hours worked for purposes of this Rule: All hours are required to leave word at his home or with
hours worked which the employee is required to give his company officials where he may be reached
employer, regardless of whether or not such hours are spent in Counted as working time if:
productive labor or involve physical or mental exertion. 1. If interruptions are beyond his control,
2. Either:
Inactive due to a. Imminence of the resumption of work
4. b. At work work requires the employee’s presence at the
interruptions: place of work
b. Interval is too brief to be utilized
Art. 84 (b). Hours worked. - Hours worked shall include all time
effectively and gainfully in the
during which an employee is suffered or permitted to work
employee’s own interest
Counted as working time if:
OR, Book III, Rule I Sec. 3 (b). Hours worked. — The
Necessary 1. Work was necessary or beneficial for ER
following shall be considered as compensable hours worked: All
work after 2. EE could not abandon work even after end
time during which an employee is suffered or permitted to work.
normal working of his normal working hours
hours 3. With knowledge of ER or immediate
5. Specific Rules supervisor
Will only be NOT counted if all are present:
SUMMARY OF RULES 1. Attendance is outside the regular working
Short duration or coffee break Lectures,
hours;
-‐ Included in compensable hours meetings,
2. Attendance is voluntary; and
-‐ Duration: 5-20 minutes only trainings
3. EE does not perform any productive work
-‐ Need not leave the premises, enough that during such attendance
he: Travel time
Rest Period
o Stops working
o Rest completely
o May leave his workplace to go elsewhere, 5. a. Rest period
whether within or outside the premises
More than 20 minutes – Not compensable 5. a.i. Short duration or “coffee break”
Duty of employer to give either:
1. Regular meal period: Not less than 60 Art. 84 Rest periods of short duration during working hours
minutes; not credited as compensable shall be counted as hours worked (Par. 2)
work hours
2. Shorter meal period: Not less than 20
OR, Book III, Rule I Sec. 7 Rest periods or coffee breaks
minutes; credited as compensable work
running from five (5) to twenty (20) minutes shall be considered
hours if:
as compensable working time. (Par. 2)
Meal period a. Non-manual work and does not involve
strenuous physical exertion
b. Establishment operates at least 16 5. a.ii. More than 20 min.
hrs/day
c. In actual or impending emergency, there OR, Book III, Rule I Sec. 4 (b). An employee need not leave
is urgent work needed to avoid serious the premises of the work place in order that his rest period shall
loss to er not be counted, it being enough that he stops working, may rest
d. To prevent serious loss in perishable completely and may leave his work place, to go elsewhere,


whether within or outside the premises of his work place. 4. The nurse on duty, Mr. Merlino Eusebio, called Dr. Fabros at
home, informing him of the emergency. When the patient
5. b. Meal period arrived at the clinic at 7:50 PM, nurse Eusebio immediately
rushed him to the hospital.
Duty of ER to give either: 5. When private respondent reached the clinic at around 7:51 in
1. Not less than 60 minutes not credited as compensable work the evening, nurse had already left with the patient. Mr.
hours Acosta died the following day.
2. Not less than 20 minutes credited as compensable work 6. Upon learning about the incident, PAL Medical Director
hours if: Banzon ordered the Chief Flight Surgeon to conduct an
a. Non-manual work and does not involve strenuous investigation; who, in turn, required private respondent to
physical exertion explain why no disciplinary sanction should be taken against
b. Establishment operates at least 16 hrs/day him.
c. In actual or impending emergency, there is urgent work 7. Respondent explained that he was entitled to a 30-minute
needed to avoid serious loss to er meal break; that he immediately left his residence upon
d. To prevent serious loss in perishable goods learning of the emergency and that he arrived at the clinic a
few minutes later; and that Mr. Eusebio panicked and
5. b.i. Regular Meal Period (one hour) brought the patient to the hospital without waiting for him.
8. Finding his explanation unacceptable, the management
charged Dr. Fabros with abandonment of post while on duty,
Art. 85 Meal periods - Subject to such regulations as the
and was given 10 days to submit a written answer to the
Secretary of Labor may prescribe, it shall be the duty of every
administrative charge.
employer to give his employees not less than sixty (60) minutes
time-off for their regular meals. 9. In his answer, respondent denied that he abandoned his post
and reiterated that he only left to have his dinner at home,
but rushed back after the nurse called.
OR, Book III, Rule I Sec. 7 Every employer shall give his
10. After evaluation, petitioner-company decided to suspend
employees, regardless of sex, not less than one (1) hour time-off
him for three months effective December 16, 1994.
for regular meals, except in the following cases when a meal
11. Private respondent filed a complaint for illegal suspension
period of not less than twenty (20) minutes may be given by the
against petitioner.
employer provided that such shorter meal period is credited as
12. LA: Suspension illegal. Ordered PAL to pay respondent all
compensable hours worked of the employee:
the benefits he should have received during his period of
suspension plus P500, 000 moral damages.
(a) Where the work is non-manual work in nature or does not
13. NLRC: Dismissed appeal, and affirmed LA decision, finding it
involve strenuous physical exertion;
supported by the facts on record and the law on the matter
(b) Where the establishment regularly operates not less than
14. NLRC: MR → denied → Instant special civil action for
sixteen (16) hours a day;
certiorari
(c) In case of actual or impending emergencies or there is urgent
work to be performed on machineries, equipment or installations
ISSUES:
to avoid serious loss which the employer would otherwise suffer;
1. WON the suspension was valid (NO)
and;
2. WON the act of respondent, in leaving the company
(d) Where the work is necessary to prevent serious loss of
premises to take his meals, constitutes abandonment (NO)
perishable goods (Par. 1)
3. WON moral damages may be awarded (NO)
Philippine Airlines, Inc. vs. NLRC HELD:

FACTS: 1. Court held: YES, respondent was illegally
1. Private respondent (Dr. Herminio A. Fabros) was employed suspended, and did not abandon his post
by PAL as flight surgeon, who was assigned at the PAL - The antecedent facts belie PAL’s contention of abandonment
Medical Clinic at Nichols and was on duty from 4 PM until 12 of post.
MN. o Respondent merely left the clinic that night only to have
2. Feb. 17, 1994: at around 7 PM, private respondent left the dinner at his house which was only a few minutes’ drive
clinic to have his dinner at his residence, which was a five- away. His whereabouts were known to the nurse on duty
minute drive away. so that he could be easily reached in case of emergency.
3. A few minutes later, the clinic received an emergency call Upon being informed of Mr. Acosta’s condition, he
from the PAL Cargo Services, as one of its employees, Mr. immediately left his home and returned to the clinic
Manuel Acosta, had suffered a heart attack.


2. Court held: NO, as the eight-hour work period does (b) Where the establishment regularly operates not less than
not include the meal break. sixteen (16) hours a day;
- PAL: Being a full-time employee, he is obliged to stay in the (c) In case of actual or impending emergencies or there is urgent
company premises for not less than 8 hours. Hence, he may work to be performed on machineries, equipment or installations
not leave the company premises during such time, even to to avoid serious loss which the employer would otherwise suffer;
take his meals and;
- SC: The meal period is excluded from the eight-hour work (d) Where the work is necessary to prevent serious loss of
period. Nowhere in the law may it be inferred that perishable goods (Par. 1)
employees must take their meals within the company
premises. As such, employees are not prohibited from going 5. c. Waiting time
out of the premises as long as they return to their posts on
time.
OR, Book III, Rule I Sec. 5 (a). Waiting time. —Waiting time
o o Article 83 of the Labor Code expressly provides that spent by an employee shall be considered as working time if
health personnel shall hold regular office hours for eight
waiting is an integral part of his work or the employee is required
hours a day, exclusive of time for meals, subject to
or engaged by the employer to wait.
exceptions provided in the same provision.
o o Article 85, LC makes it mandatory for employers to
Arica v. NLRC
provide their employees a meal period of not less than
NOTE: SC only discussed the issue of WoN Arica et al.’s claim is
sixty minutes.
barred by res judicata. See the Minister of Labor’s decision for
o o Sec.7, Rule I, Book III of the Omnibus Rules
the discussion on “waiting time”.
Implementing the Labor Code also reiterates the duty of
the employers to provide a meal period.
FACTS:
3. Court held: NO, as there was no proof that the
1. April 9, 1984 – Teofilo Arica et al. filed a complaint against
suspension was done in bad faith
Standard (Phil.) Fruits Corporation (STANFILCO) for assembly
- As a rule, moral damages are recoverable only where the
time, moral damages and attorney’s fees
dismissal or suspension was attended by bad faith or fraud,
2. LA → dismissed the complaint
or constituted an act oppressive to labor, or was done in a
- The 30-minute assembly time long practiced cannot be
manner contrary to morals, good customs or public policy.
considered waiting time or work time and, therefore, not
The person claiming such damages must prove the existence
compensable.
of bad faith by clear and convincing evidence for the law
- The aforementioned pronouncement has been made in
always presumes good faith.
an earlier case and can no longer be disturbed without
- There is no showing that the management was moved by
doing violence to the time-honored principle of res
some evil in suspending respondent, but rather, it suspended
judicata.
him based on an honest, albeit erroneous, belief that his act
3. NLRC → upheld LA’s decision
of leaving the company premises to take his meals at home
- The customary functions referred to in the provision of
constituted abandonment of post, which warrants the penalty
the agreement include the long-standing practice and
of suspension.
institutionalized non-compensable assembly time. This, in
- Furthermore, it is also evident that management gave
effect, stopped complainants from pursuing the case.
respondent all the opportunity to refute the charge against
4. Jan. 15, 1987 – Arica et al. filed a Motion for Reconsideration
him and to defend himself. These circumstances negate the
→ denied by NLRC for lack of merit
existence of bad faith.
5. Arica et al. contend that the preliminary activities as workers
of STANFILCO in the assembly area is compensable as
5. b.ii. Shorter Meal Period (less than one hour but not less than
working time (5:30am – 6:00am) since these preliminary
20 min)
activities are necessarily and primarily for STANFILCO’s
benefit. These preliminary activities are:
OR, Book III, Rule I Sec. 7 Every employer shall give his
- Roll call. They are then to get their individual work
employees, regardless of sex, not less than one (1) hour time-off
assignments from the foreman.
for regular meals, except in the following cases when a meal
- They are individually required to accomplish the
period of not less than twenty (20) minutes may be given by the
Laborer’s Daily Accomplishment Report during which
employer provided that such shorter meal period is credited as
they are often made to explain their reported
compensable hours worked of the employee:
accomplishment.
- They go to the stockroom to get the working materials,
(a) Where the work is non-manual work in nature or does not
tools and equipment.
involve strenuous physical exertion;


-
They travel to the field bringing with them their tools, o Res judicata operates to bar not only the relitigation in a
equipment and materials. subsequent action of the issues squarely raised, passed upon
6. STANFILCO averred that the instant complaint is not new and adjudicated in the first suit, but also the ventilation in
- The same claim has been brought against them by the said subsequent suit of any other issue which could have
same group of rank and file employees in Associated been raised in the first but was not
Labor Union v STANFILCO which was filed on April 27, - As a rule, the findings of facts of quasi-judicial agencies which
1976 when ALU was the bargaining agent of the have acquired expertise because their jurisdiction is confined to
complainants specific matters are accorded not only respect but at times even
- The aforementioned case involved a claim for “waiting finality if such findings are supported by subsequent substantial
time”, as the complainants purportedly were required to evidence
assemble at a designated area at least 30 minutes prior to o Records show that the LA’s decision pointed out in detail the
the start of their scheduled working hours “to ascertain basis of his findings and conclusions; no reason to disturb
the work force available for the day by means of a roll call, these findings nor those of the NLRC
for the purpose f assignment or reassignment of
employees to such areas in the plantation where they are DISSENT (Sarmiento):
most needed.” - Res judicata is not at bar as there were substantial changes in the
- The Minister of Labor rendered a decision on May 12, factual scenario, as alleged by the complainants. The
1978: respondents have not successfully rebutted these allegations.
o The 30-minute assembly time long practiced and - In contrast with the circumstances during the institution of the
institutionalized by mutual consent of the parties first case, the complainants are now placed under a number of
under Art. IV, Sec. 3 of the CBA cannot be considered restrictions. The 30-minute assembly time had become a
as “waiting time” within the purview of Sec. 5, Rule I, “waiting time” as contemplated by the Labor Code.
Book III of the Rules and Regulations Implementing
the Labor Code Ma’am Daway: Disagrees with the ruling. SC should not have
o The 30-minute assembly is a deeply-rooted, routinary just relied on res judicata because the facts of this case were
practice of the employees, and the proceedings different from ALU v. STANFILCO (aka Ople Decision). This 30-
attendant thereto are not so complex as to deprive minute prep is waiting time as it is integral part of the job.
the workers of the time to attend to other personal
pursuits 5. d. On call
o Since they are not new employees, there was no need
for long briefings. Also, since their houses are near 5. d.i. Working while On Call
the farm, they can go back to their houses after the
roll call
OR, Book III, Rule I Sec. 5 (b) An employee who is required
o The employees are not subject to the absolute control
to remain on call in the employer's premises or so close thereto
of the company during this period, otherwise, failure
that he cannot use the time effectively and gainfully for his own
to report in the assembly time would justify the
purpose shall be considered as working while on call. (1st
imposition of disciplinary measures → not provided
sentence)
for in the CBA
o The 30-minute assembly time was not intended for
5. d.ii. Not working while on call
the interests of the employer but for the employees to
indicate their availability for work
OR, Book III, Rule I Sec. 5 (b) An employee who is not
required to leave word at his home or with company officials
ISSUE:
where he may be reached is not working while on call. (2nd
WON the petitioners’ claim is barred by res judicata (YES)
sentence)
HELD:
YES, the claim is barred by res judicata. Ma’am Daway: Said that this is ironic, because how can one be
- Arica et al. are merely reiterating the very same claim which they not working when one is on call?
filed through the ALU and which records show had already been
considered terminated and closed 5. e. Inactive due to work interruptions
- Petitioners claim that there were substantial changes in the
factual scenario, making the respondent firm now liable for the OR, Book III, Rule I Sec. 4 (d). The time during which an
same claim they earlier filed → SC ruled otherwise 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 2. WON 60% of the incremental proceeds of increased tuition
presence at the place of work or if the interval is too brief to be shall be devoted exclusively to salary increase (YES)
utilized effectively and gainfully in the employee's own interest. 3. WON alleged payment of salaries for extra loads on Sept. 21,
1981 was proven by substantial evidence (NO)
University of Pangasinan Faculty Union v University of HELD:

Pangasinan 1. Yes, they are entitled to ECOLA
FACTS: - PDs 1614, 1634, 1678 and 1713 (various PDs on ECOLA)
1. University of Pangasinan Faculty Union (the Union) is a labor provide in “Allowances of Fulltime Employees” that
union composed of faculty members of University of “employees shall be paid in full the required o allowance
Pangasinan (the University) regardless of the number of their regular working days if they
- The faculty members teach for a normal duration of 10 incur no absences during the month. If they incur absences
mos./school year without pay, the amounts corresponding to the absences
- They are paid their salaries on a regular monthly basis may be deducted from the monthly allowance.”
2. In Nov. and Dec. 1981, the Union’s members were fully paid - Said PDs provide in “Leave of Absence Without Pay” that
their regular monthly salaries. However, they were not paid “all covered employees shall be entitled to the allowance
their ECOLA during the semestral break (Nov. 7 to Dec. 5) provided herein when they are on leave of absence with
- a. The University claims that the faculty members are not pay.”
entitled to the ECOLA because the semestral break is not - Beyond dispute that the Union’s members are full-time
an integral part of the school year employees receiving their monthly salaries irrespective of the
- b. Also, no actual services were rendered by the number of working days or teaching hours in a month.
teachers during said period; “No work, no pay” principle - The semestral breaks are in the nature of work interruptions
applies beyond the employees’ control.
3. During the same schoolyear (1981-1982), the University was o These breaks cannot be considered as absences within
authorized by the Ministry of Education and Culture to the meaning of the law for which deductions may be
collect a 15% tuition increase made from monthly allowances.
- The faculty members demanded a salary increase to be o “No work, no pay” principle does not apply. The “no
taken from the 60% incremental proceeds of the work” situation contemplated in the law is one where
increased tuition fees → the University refused the employees voluntarily absent themselves.
- During pendency of the case in the arbitration branch, o To a certain extent, the University can specify dates
the University granted a 5.86% across-the-board salary when no classes would be held. Surely, the framers of
increase. The Union, however, is still pursuing full the law did not intend to allow employers to withhold
distribution of the 60% of the incremental proceeds as employee benefits by the simple unilateral imposition
mandated by PD 451 of “no work” days
4. Some of the Union’s members were given extra loads during • The University contended that “the fact of
SY 1981-1982 receiving a salary alone should not be the basis of
- Some had extra loads on Sept. 21, 1981, but they were receiving ECOLA → without merit
unable to teach as it was proclaimed a working holiday o Sec. 5 (Allowance for Unworked Days) of the IRR of
- There is disagreement as to WoN the Union members wage Order No. 1 states that “all covered employees
were paid their salaries for aforementioned loads whether paid on a monthly or daily basis shall be
5. Dec. 18, 1981 – the Union filed a complaint against the entitled to their daily living allowance when they are
University, seeking: paid their basic wage.”
- The payment of Emergency Cost of Living Allowances o SC presents the principle of “No pay, no ECOLA”
(ECOLA) for Nov. 7 to Dec. 5, 1981 • The payment of wages in full for the months of Nov.
- Salary increases from the 60% of the incremental and Dec. is a tacit recognition of the unusual state
proceeds of increased tuition fees of affairs in which teachers find themselves
- Payment of salaries for suspended extra loads o Although on forced leave, profs and teachers remain
6. LA → dismissed the complaint burdened with the task of working during a period of
7. NLRC → dismissed petitioner’s appeal time supposedly available for rest and private matters
(e.g. correcting papers, evaluating students, submitting
ISSUE/S: grade reports)
1. WON the Union’s members are entitled to ECOLA during o Sec 4 (d) of the Omnibus Rules Implementing LC
the semestral break (YES) applies in this case. It says that “the time during which
an employee is inactive by reason of interruptions in his


work beyond his control shall be considered time either
if the imminence of the resumption of work requires the OR, Book III, Rule I Sec. 6 Lectures, meetings, training
employee’s presence at the place of work or if the programs — Attendance at lectures, meetings, training
interval is too brief to be utilized effectively and programs, and other similar activities shall not be counted as
gainfully in the employee’s own interest.” working time if all of the following conditions are met: (a)
- The legal principles of “No work, no pay; No pay, no Attendance is outside of the employee's regular working hours;
ECOLA” must necessarily give way to the purpose of the law (b) Attendance is in fact voluntary; and (c) The employee does
to augment the income of employees to enable them to not perform any productive work during such attendance.
cope with the harsh living conditions brought about by
inflation; and to protect employees and their wages against
the ravages brought by these conditions. 5. h. Travel Time
2. 2. Yes, 60% of the incremental proceeds of
increased tuition shall be devoted exclusively to Rada. vs. NLRC
salary increase FACTS:
- Sec. 3(a) of PD 451is clear. The 60% incremental proceeds 1. Private respondent Philnor Consultants and Planners, Inc.
from the tuition increase are to be devoted entirely to wage employed petitioner (Hilario Rada) as a driver under a
or salary increases which means increases in basic salary. The ‘Contract of Employment for a Definite Period’ dated July 7,
law cannot be construed to include allowances which are 1977 with the following terms:
benefits over and above the basic salaries of the employees. - That he is hired as a driver for the construction
To charge such benefits to the 60% incremental proceeds supervision phase of the Manila North Expressway
would be to reduce the increase in basic salary provided by Extension, Second Stage (MNEE Stage 2) for a term of
law, an increase intended also to help the teachers and other about 24 months effective July 1, 1977
workers tide themselves and their families over these difficult - Annex A contained therein provides that: “it is
economic times. understood that Employer does not have a continuing
- SC previously ruled in UE v UE Faculty Association that need for the services of the Employee beyond the
benefits mandated by law and collective bargaining may be termination date of the contract, and that the latter’s
charged to the 12% return on investments within the 40% services shall automatically, and without notice, terminate
incremental proceeds of tuition increase → no need to go upon the completion of the specified phase of the
beyond this ruling project; and that it is further understood that his/her
3. No, the payment of wages for extra load is not services is coterminous with the same and not with the
granted. whole project or other phases thereof.”
- The question of fact is properly within the competence of the 2. When the first contract expired on June 30, 1979, the MNEE
NLRC to pass upon. The findings of fact of NLRC are binding Stage 2 was not yet finished on account of inadequate
on SC there being no indication of their being funding. As such, petitioner was offered a second Contract
unsubstantiated by evidence. Employment for a Definite Period of 10 months, from July 1,
- Assuming arguendo that the petitioners have not been paid 1979 to April 30, 1980.
for these extra loads, they are not entitled to payment 3. When the project remained unfinished on April 1980,
following the principles of "No work, no pay." respondent renewed petitioner’s contract for the third time,
- What is now involved here are extra and not regular loads. and executed another Contract of Employment for a Definite
Extra loads should be paid for only when actually performed Period for 19 months, from May 1, 1980 to November 30,
by the employee. Since there was no work on Sept. 21, 1981, 1980. This contract was subsequently extended a number of
it would now be unfair to grant petitioner’s demand for extra times, the last extension being for a period of 3 months, from
wages on that day. October 1, 1985 to December 31, 1985.
4. Petitioner’s contract was not extended beyond December
5. f. Necessary Work after Normal Working Hours 1985 because he had no more work to do in the project.
5. It appears from the record that sometime in the 2nd week of
OR, Book III, Rule I Sec. 4 (c). If the work performed was December 1985, petitioner applied for ‘Personal Clearance,’
necessary, or it benefited the employer, or the employee could and acknowledged having received the amount of P3,796.20
not abandon his work at the end of his normal working hours representing conversion to cash of unused leave credits and
because he had no replacement, all time spent for such work financial assistance. He also released respondents from all
shall be considered as hours worked, if the work was with the obligations and/or claims, etc. in a ‘Release, Waiver and
knowledge of his employer or immediate supervisor. Quitclaims.’
5. g. Lectures, meetings, trainings


6. Petitioner filed before the NLRC a Complaint for non- 2. WON petitioner is a regular employee (NO)
payment of separation pay and overtime pay. LA required 3. WON Rada can claim overtime compensation (YES)
both parties to submit their respective position papers.
- Philnor: Rada was not illegally terminated since he was HELD:
hired under 3 distinct contracts of employment, all for a 1. Court held: YES, in view of the liberal application of
definite period; and that since the MNEE Stage 2 Project rules in labor disputes
was finished, his contract was no longer extended. It also - Rada: Philnor’s failure to post appeal bond within the 10-day
added that Rada did not render overtime services nor period is fatal to the appeal; hence, LA’s decision became
demanded or claimed such overtime pay. Nevertheless, final and executory.
Philnor was released from all obligations and claims when - SC: Where the fee has been paid although payment was
petitioner signed a ‘Release, Waiver, and Quitclaim.’ delayed, the interests of justice and the desired objective of
7. Instead of filing his position paper, Petitioner an Amended resolving controversies on the merits demands that the
Complained alleging that he was illegally dismissed, and that appeal be given due course.
he was not paid overtime pay although he was made to o It is within the power of the NLRC to have allowed late
render three hours overtime work from Monday to Saturday payment of the bond, considering that the LA Decision
for a period of three years. Both parties then submitted their did not state the amount awarded as backwages and
respective Position Papers. overtime pay, hence the amount of the bound could
- Rada: claimed that he was illegally dismissed, being a not be determined. It was only in the order of the NLRC
regular employee entitled to security of tenure; that the of February 16, 1990 that the amount of the bond was
contract of employment for a definite period is against specified and which bond, after an extension granted
public policy and was designed merely to evade any by the NLRC, was timely filed by respondent.
benefits or liabilities which he should have received; and o Moreover, per Article 221, LC, in any labor proceeding,
that his position as driver was essential, necessary and the rules of evidence prevailing in the Courts of Law or
desirable to the conduct of the business of Philnor; and equity shall not be controlling, and in view of the liberal
that he rendered overtime work until 3 PM daily except application of the rules in labor disputes.
Sundays and holidays and, therefore, he was entitled to o Furthermore, the issue of timeliness of the appeal is an
overtime pay. entirely new and unpleaded mater in the proceedings
- Philnor: it adopted company policy of allowing certain below and it may not now be raised before the first
employees to bring home project vehicles to afford fast time in the SC.
and free transportation to and from the project field 2. Court held: NO, he is a project employee
office to avoid project delays and inefficiency due to - Rada: Citing LA decision, he is a regular employee since he
employee tardiness caused and transportation problems; has worked continuously for 8 years for private respondent
that Rada was allowed to use a project vehicle which he - SC: Rada is a project employee and not a regular employee.
used to pick up and drop off several employees along o Project employees are those whose work was
EDSA on his way Marikina; that when he was absent or on coterminous with the project for which they were hired.
leave, another employee used the same vehicle in Project employees, as distinguished from regular or
transporting the employees; and that the “overtime non-project employees, are those whose employment
work” Rada supposedly rendered, which is about 3 hours has been fixed for a specific project or undertaking the
daily, was not really overtime work but was merely completion of which has been determined at the time
enjoying the benefit and convenience of free of the engagement of the employee.
transportation provided by Philnor. o Policy Instructions No. 20 of the Secretary Labor also
8. LA: Petitioner was illegally dismissed, and should be defined project employees are hose employed in
reinstated. Ordered respondent to pay overtime pay. connection with a particular construction project. They
9. NLRC: Set aside LA decision, and dismissed complaint. are not entitled to termination pay if they are
- The ruling in Quiwa vs. Philnor Consultants and Planners terminated as a result of the completion of the project
Inc., is applicable. In that case, Quiwa was a project or any phase thereof in which they are employed.
employee and he was not entitled to termination pay o In determining WON the employee is a project
under Policy Instructions No. 20 since his employment employee, it is important to take note of whether or not
was coterminous with the completion of the project the nature of the business the employer is engaged
into is one which will allow it to employ workers for an
ISSUES: indefinite period. If the nature of its business is
1. WON NLRC had jurisdiction in spite of Philnor’s failure to file necessarily dependent on the availability of projects, it
supersedeas (appeal-surety) bond within the 10-day would be extremely burdensome for the employer to
reglementary period (YES)


employ them as permanent employees and pay them other day. Permission given to the employee to go on leave on
wages even if there are no projects for them to work on. some other day of the week shall not exempt the employer from
o Another distinction between a project employee and a paying the additional compensation required in this Chapter.
non-project employee is that the former is hired for
more than one project, while the latter render services
Art. 89 Emergency overtime work. Any employee may be
only for a particular project which took that same
required by the employer to perform overtime work in any of the
period of time. It is clear that petitioner was employed
following cases:
only under MNEE Stage 2. As such, his termination is
a. When the country is at war or when any other national or local
valid by reason of the completion of the project and the emergency has been declared by the National Assembly or the
expiration of his employment contract.
Chief Executive;
o The case at bar is also different from that of Fegurin vs.
b. When it is necessary to prevent loss of life or property or in
NLRC, where the employee therein belongs to a “work
case of imminent danger to public safety due to an actual or
pool” from which the company would draw workers for impending emergency in the locality caused by serious
assignment to other projects at its discretion.
accidents, fire, flood, typhoon, earthquake, epidemic, or other
3. Court held: YES, since the supposed “travel time”
disaster or calamity;
of petitioner belongs is actually compensable work
c. When there is urgent work to be performed on machines,
hours installations, or equipment, in order to avoid serious loss or
- SC: That fact that he picks up employees of Philnor at certain damage to the employer or some other cause of similar nature;
specified points along EDSA going to the project site and
d. When the work is necessary to prevent loss or damage to
drops them off on his way back is not merely incidental to
perishable goods; and
petitioner’s job as a driver, but said transportation
e. Where the completion or continuation of the work started
arrangement had been adopted, not so much for the before the eighth hour is necessary to prevent serious
convenience of the employees, but primarily for the benefit
obstruction or prejudice to the business or operations of the
of the employer.
employer.
o Such arrangement was instituted as a solution to
Any employee required to render overtime work under this
employees’ tardiness which has cause project delays Article shall be paid the additional compensation required in this
and inefficiencies, all to the detriment of the company.
Chapter.
o Another proof that picking up/ dropping off employees
is part of the job is that when petitioner is absent,
Art. 90 Computation of additional compensation. For purposes
another driver is supposed to replace him in doing the
of computing overtime and other additional remuneration as
same. If driving these employees to and from the
required by this Chapter, the "regular wage" of an employee
project site is really not part of his job, then there would
shall include the cash wage only, without deduction on account
have been no need to find a replacement driver.
of facilities provided by the employer.
o As such, petitioner should be given overtime pay for
the three excess hours of work performed during
working days from January 1983 to December 1985. Book III Conditions of Employment
Rule I Hours of Work
6. Overtime Work/Pay Sec. 8 Overtime pay. — Any employee covered by this Rule
who is permitted or required to work beyond eight (8) hours on
General rule: employer cannot compel employee to work ordinary working days shall be paid an additional compensation
overtime for the overtime work in the amount equivalent to his regular
Exception: Art. 89 LC and Rules Book 3, Rule 3, sec. 6 (f) wage plus at least twenty-five percent (25%) thereof.
Art. 87 Overtime work. Work may be performed beyond eight Sec. 9 Premium and overtime pay for holiday and rest day work.
(8) hours a day provided that the employee is paid for the — (a) Except employees referred to under Section 2 of this Rule,
overtime work, an additional compensation equivalent to his an employee who is permitted or suffered to work on special
regular wage plus at least twenty-five percent (25%) thereof. holidays or on his designated rest days not falling on regular
Work performed beyond eight hours on a holiday or rest day holidays, shall be paid with an additional compensation as
shall be paid an additional compensation equivalent to the rate premium pay of not less than thirty percent (30%) of his regular
of the first eight hours on a holiday or rest day plus at least thirty wage. For work performed in excess of eight (8) hours on special
percent (30%) thereof. holidays and rest days not falling on regular holidays, an
employee shall be paid an additional compensation for the
overtime work equivalent to his rate for the first eight hours on a
Art. 88 Undertime not offset by overtime. Undertime work on
special holiday or rest day plus at least thirty percent (30%)
any particular day shall not be offset by overtime work on any


thereof. 5. Completion or continuation of the work
(b) Employees of public utility enterprises as well as those started before the eighth hour is necessary
employed in non-profit institutions and organizations shall be to prevent serious obstruction or prejudice
entitled to the premium and overtime pay provided herein, to the business or operations of the
unless they are specifically excluded from the coverage of this employer
Rule as provided in Section 2 hereof. Undertime Undertime cannot be offset w/overtime pay
(c) The payment of additional compensation for work performed work/leave Allowing employee to go on leave will not
on regular holidays shall be governed by Rule IV, Book Three, of exempt employer from payment of OT
these Rules. Additional Rate of the first 8 hours on a holiday or rest
compensation day plus at least 30%
Sec. 10 Compulsory overtime work. — In any of the following
cases, an employer may require any of his employees to work Overtime Pay Rates Computation
beyond eight (8) hours a day, provided that the employee - COLA shall not be included in the computation of overtime
required to render overtime work is paid the additional pay
compensation required by these regulations: - Overtime pay rates vary according to the day the overtime
(a) When the country is at war or when any other national or local work is performed
emergency has been declared by Congress or the Chief
Executive; Sector/Industry Rate Amount
(b) When overtime work is necessary to prevent loss of life or Work in excess of 8 hours on ordinary working days: Plus 25% of
property, or in case of imminent danger to public safety due to the hourly rate
actual or impending emergency in the locality caused by serious Non-agriculture P404.00 P404/8 x (125% x
accident, fire, floods, typhoons, earthquake, epidemic or other OT) à
disaster or calamities; P50.50 x 125% x
(c) When there is urgent work to be performed on machines, number of hours
installations, or equipment, in order to avoid serious loss or OT work
damage to the employer or some other causes of similar nature; Retail/Service P367.00 P367/8 x (125% x
(d) When the work is necessary to prevent loss or damage to Establishment OT) à
perishable goods; P45.88 x 125% x
(e) When the completion or continuation of work started before number of hours
the 8th hour is necessary to prevent serious obstruction or OT work
prejudice to the business or operations of the employer; or Work in excess of 8 hours on a scheduled rest day or special day:
(f) When overtime work is necessary to avail of favorable weather Plus 30% of the hourly rate
or environmental conditions where performance or quality of Non-agriculture P404.00 P404/8 x 130% x
work is dependent thereon. (130% x OT) à
In cases not falling within any of these enumerated in this P50.50 x 130% x
Section, no employee may be made to work beyond eight hours 130% x number of
a day against his will. hours OT work
Retail/Service P367.00 P367/8 x 130% x
SUMMARY OF OVERTIME PAY Establishment (130% x OT) à
Regular Regular wage plus at least 25% thereof P45.88 x 130% x
overtime pay OT pay = 100% + 25% 130% x number of
Emergency of ER may require EE OT work if: hours OT work
compulsory 1. Country is at war or when national or local Work in excess of 8 hours on a regular holiday: Plus 30% of the
overtime work emergency has been declared hourly rate
2. To prevent loss of life or property during Non-agriculture P404.00 P404/8 x 200% x
serious accidents, fire, flood, typhoon, (130% x OT) à
earthquake, epidemic, or other disaster or P50.50 x 200% x
calamity (130% x number
3. Urgent work on work to be performed on of hours OT work)
machines, installations, or equipment in Retail/Service P367.00 Not covered by
order to avoid serious loss or damage to Establishment the rule on
ER employing less than 10 holiday pay
4. Necessary to prevent loss or damage to workers
perishable goods Work in excess of 8 hours on a regular holiday which falls on a

scheduled rest day: Plus 30% of the hourly rate -‐ Estoppel and laches will not bar an employee from
Non-agriculture P404.00 P404/8 x 260% x recovering overtime pay. The Court in Manila Terminal Co. v.
(130% x OT) à CIR provides 3 reasons:
P50.50 x 260% x o It is contrary to the spirit of the Eight Hour Labor Law,
(130% x number which itself provides that employees cannot waive their
of hours OT work) claim to overtime pay.
Retail/Service P367.00 Not covered by o The law itself obligates the owner to provide overtime
Establishment the rule on pay, so much so that the employer is penalized for a
employing less than 10 holiday pay violation.
workers o The employee is in a naturally disadvantaged position:
they are reluctant to press their claims since the
-‐ Generally, premium pay, for work performed on rest days, employers may devise a way to terminate their
special days or regular holidays, is included in the employment.
computation for overtime services rendered in the said days. -‐ As for waiver and quitclaims, the general rule is that they are
However, the employees and employer may stipulate higher invalid. However, an exception is when the waiver/quitclaim
rates than this and such higher rates, being more favorable was made in consideration of benefits and privileges which
to workers, shall be the one observed. may be more than what will accrue to them in overtime pay,
-‐ Also, overtime pay rates in general may be stipulated to be
higher in the CBA.
Work Days: How Counted 6. a. Overtime in ordinary working day

-‐ For the purposes of the Eight Hour Labor Law, the day does
not start at midnight. Instead, it starts at time when the z Art. 87 Overtime work. Work may be performed beyond eight
regularly commences his work and ends 24 hours later. (8) hours a day provided that the employee is paid for the
o Ex. An employee starts his work at 9 AM. One work day overtime work, an additional compensation equivalent to his
for this employee runs from 9 AM – 9 AM of the following regular wage plus at least twenty-five percent (25%) thereof.
day. Work performed beyond eight hours on a holiday or rest day
-‐ Any work done in excess of 8 hours within this 24-hour period shall be paid an additional compensation equivalent to the rate
is considered overtime work, even if the said overtime work is of the first eight hours on a holiday or rest day plus at least thirty
done during the next calendar day. percent (30%) thereof.
o Ex. X works on May 5 from 10 AM – 6 PM. However, he
also renders 4 hours of work on May 6, from 4 AM – 8 AM. Book III Conditions of Employment
o Even if the overtime work was done on a different day Rule I Hours of Work
from his regular shift (regular shift was done on May 5 but Sec. 8 Overtime pay. — Any employee covered by this Rule
overtime was done on May 6), it still is considered as who is permitted or required to work beyond eight (8) hours on
overtime because it was within the work day, as defined ordinary working days shall be paid an additional compensation
by the law (X’s work day = 10 AM of May 5 – 10 AM of for the overtime work in the amount equivalent to his regular
May 6). wage plus at least twenty-five percent (25%) thereof.
-‐ The shift of the employee during the work day need not be
continuous. As long as it exceeds 8 hours, the excess work 6. b. Emergency or compulsory overtime work
rendered shall merit overtime pay.
o Ex. X starts work at 8 AM, His first shift is 8 AM – 12 NN.
Art. 89 Emergency overtime work. Any employee may be
He later returns for a second shift at 6 PM – 10 PM. Any
required by the employer to perform overtime work in any of the
work done in excess of these two shifts combined (which
following cases:
accounts for 8 hours already) shall merit overtime pay.
a. When the country is at war or when any other national or local
emergency has been declared by the National Assembly or the
-‐ A claim for overtime pay will not be sustained if there is a lack
Chief Executive;
of factual and legal basis. Employee claiming overtime pay
b. When it is necessary to prevent loss of life or property or in
must prove that he rendered work with substantial evidence.
case of imminent danger to public safety due to an actual or
As for an employer who claims he has already paid overtime
impending emergency in the locality caused by serious
work, he must prove the same with substantial evidence as
accidents, fire, flood, typhoon, earthquake, epidemic, or other
well.
disaster or calamity;
c. When there is urgent work to be performed on machines,
installations, or equipment, in order to avoid serious loss or

damage to the employer or some other cause of similar nature; 3. Oliver and Abdul’s evidence:
d. When the work is necessary to prevent loss or damage to -‐ Their respective daily time records reflecting the
perishable goods; and number of hours served and their wages for the same
e. Where the completion or continuation of the work started -‐ Itemized list of their claims for the corresponding
before the eighth hour is necessary to prevent serious periods served
obstruction or prejudice to the business or operations of the 4. SCII’s defense:
employer. -‐ Oliver and Abdul were paid their just salaries and
Any employee required to render overtime work under this benefits
Article shall be paid the additional compensation required in this -‐ They received salaries above the statutory minimum
Chapter. wage
-‐ Their holiday pay were already included in the
computation of their monthly salaries
Book III Conditions of Employment
Rule I Hours of Work -‐ They were paid additional premium of 30% in addition
to their basic salary whenever they were required to
Sec. 10 Compulsory overtime work. — In any of the following
work on Sundays and 200% of their salary for work done
cases, an employer may require any of his employees to work
on holidays
beyond eight (8) hours a day, provided that the employee
required to render overtime work is paid the additional -‐ They were paid 13th month pay for the years 1998 and
compensation required by these regulations: 1999
5. SCII’s evidence:
(a) When the country is at war or when any other national or local
-‐ Copies of payroll listings and lists of employees who
emergency has been declared by Congress or the Chief
received their 13th month pay for the periods December
Executive;
(b) When overtime work is necessary to prevent loss of life or 1997 to November 1998 and December 198 to
November 1999
property, or in case of imminent danger to public safety due to
6. LA: Ruled in favor of Oliver and Abdul
actual or impending emergency in the locality caused by serious
-‐ Payroll listings presented by SCII did not prove that
accident, fire, floods, typhoons, earthquake, epidemic or other
disaster or calamities; they were duly paid as the same were not signed by
them
(c) When there is urgent work to be performed on machines,
-‐ 13th month payroll was acknowledged sufficient proof of
installations, or equipment, in order to avoid serious loss or
payment as it bears Oliver and Abdul’s signatures
damage to the employer or some other causes of similar nature;
-‐ Without indicating any detailed computation of the
(d) When the work is necessary to prevent loss or damage to
perishable goods; judgment award, LA ordered the payment of overtime
pay, holiday pay, service incentive leave pay and
(e) When the completion or continuation of work started before
proportionate 13th month pay for the year 2000
the 8th hour is necessary to prevent serious obstruction or
7. SCII appealed to NLRC
prejudice to the business or operations of the employer; or
(f) When overtime work is necessary to avail of favorable weather -‐ No basis for awards aside from the self-serving itemized
computations
or environmental conditions where performance or quality of
-‐ There was no representative daily time record
work is dependent thereon.cralaw
presented by Oliver and Abdul
In cases not falling within any of these enumerated in this
-‐ Asserted that the payroll listings should have been
Section, no employee may be made to work beyond eight hours
a day against his will. given more probative value
-‐ Submitted new evidence: payrolls bearing the
signatures of Oliver and Abdul showing that they
-‐ In these cases, overtime work becomes an obligation on the
received their salaries; copies of transmittal letters to
part of the employee. Otherwise, overtime work is generally
the bank to show that the salaries reflected in the
held to be optional. An employee may not be compelled to
payrolls were directly deposited to the ATM accounts
render overtime work when these circumstances do not
of SCII’s employees
obtain.
8. NLRC: dismissed appeal; MRà denied.
9. SCII appealed with the CA
Abduljuahid Pigcaulan v. Security & Credit Investigation, Inc.
10. CA: set aside LA and NLRC rulings
FACTS:
-‐ No factual and legal bases mentioned in the
1. Oliver and Abdul were both employed by SCII as security
questioned rulings to support the conclusions made
guards
-‐ Dismissed all monetary claims
2. They filed with LA complaints for underpayment of salaries
-‐ LA decision did not contain a detailed computation of
and non-payment of overtime, holiday, rest day, service
monetary award
incentive leave pay and 13th month pays.


11. Oliver and Abdul filed MR à denied. -‐ They were unsigned and unauthenticated—no way of
12. Present Petition for Review on Certiorari filed by Abdul verifying the truth of the handwritten entries stated
13. Oliver belatedly submitted an affidavit where he verified therein
under oath the contents and allegations of the petition filed -‐ Written only in pieces of paper and solely prepared by
by Abdul Abdul and Oliver
14. SCII avers that since the petition was filed by Abdul alone, -‐ Can hardly be considered as competent evidence to be
CA Decision has already become final and binding upon used as basis to prove that the two were underpaid of
Oliver their salaries
-‐ Nothing in the records which could substantially
ISSUES: support Abdul’s contention that he had rendered
1. WON CA Decision has become final and binding upon service beyond 8 hours to entitle him to overtime pay
Oliver (YES) 3. Yes. He is entitled to holiday pay, service
2. WON Abdul is entitled to overtime pay (NO) incentive leave pay and proportionate 13 t h month
3. WON Abdul is entitled to holiday pay, service incentive pay for year 2000
leave pay, 13th month pay (YES) -‐ Under Art. 94 LC, Abdul is entitled to his regular rate on
4. WON CA erred in dismissing the claims instead of holidays even if he does not work.
remanding the case to the LA for a detailed computation of -‐ He is also entitled to service incentive leave benefit
the judgment award (YES) under Art. 95, LC which gives said benefit to employees
that have rendered at least 1-year service. Under said
provision, they are entitled to a yearly service incentive
RATIO: leave of 5 days with pay
1. Petition was filed by Abdul solely on his own -‐ Under PD 851, he is likewise entitled to his 13th month
behalf; since no appeal from the CA decision was pay
brought by Oliver, the same has already become -‐ SCII has the burden of proving that it has paid these
final upon Oliver benefits—one who pleads payment has the burden of
-‐ The petition: proving it
o Under the heading “Parties,” only Abdul’s name o Payroll listings and transmittal letters to the bank
is mentioned to show that Abdul received his salaries and
o Body of petition refers only to a “petitioner” benefits did not prove SCII’s allegations
o Verification and Certification of Non-Forum o SCII failed to show any other concrete proof by
Shopping was executed by Abdul alone means of records, pertinent files or similar
o Said certification was prepared by Atty. Grageda, documents reflecting that the specific claims have
indicated as “Counsel for Petitioner Abdul” only been paid
-‐ Oliver cannot simply incorporate in his affidavit a o With respect to 13th month pay, SCII presented
verification of the contents and the allegations of the proof that said benefit was paid by only for the
petition as he is not one of the petitioners therein years 1998 and 199
-‐ If said petition was filed in behalf of both Abdul and -‐ SCII failed to provide convincing proof that it has
Oliver, subsequent submission of a verification may be already settled the claims
allowed and pleading is not necessarily rendered fatally -‐ As to the award: As a rule, all money claims arising from
defective an ER-EE relationship shall be filed within 3 years from
-‐ Oliver likewise failed to at least incorporate in his the time the cause of action accrued. Abdul is only
affidavit a certificate of non-forum shopping entitled to amounts due him for the period within three
-‐ Assuming that petition is also filed on Oliver’s behalf, years preceding the filling of complaint in 2000
he failed to show any reasonable cause for his failure to 4. Yes, CA erred.
join Abdul to personally sign the Certification of Non- -‐ LA’s failure to provide sufficient basis for the monetary
Forum Shopping award should not result in prejudice of the substantial
-‐ Oliver failed to give justifiable reason why he did not rights of the party
inform anyone of his whereabouts when he knows that -‐ It should have remanded the case for detailed
he has a pending case against his former employer computation as Abdul was clearly entitled to said
2. No. There was no substantial evidence to support benefits.
the grant of overtime pay
-‐ Handwritten itemized computations are self-serving,
unreliable and insubstantial evidence to sustain the 6. c. Undertime work/leave
grant of overtime pay


Art. 88 Undertime not offset by overtime. Undertime work on (b) Those of retail and service establishments regularly
any particular day shall not be offset by overtime work on any employing not more than five (5) workers;
other day. Permission given to the employee to go on leave on (c) Domestic helpers and persons in the personal service of
some other day of the week shall not exempt the employer from another;
paying the additional compensation required in this Chapter. (d) Managerial employees as defined in Book Three of this Code;
(e) Field personnel and other employees whose time and
6. d. Additional compensation performance is unsupervised by the employer including those
who are engaged on task or contract basis, purely commission
Art. 87 Overtime work. Work may be performed beyond eight basis, or those who are paid a fixed amount for performing work
(8) hours a day provided that the employee is paid for the irrespective of the time consumed in the performance thereof.
overtime work, an additional compensation equivalent to his
regular wage plus at least twenty-five percent (25%) thereof. Sec. 2 Night shift differential. — An employee shall be paid
Work performed beyond eight hours on a holiday or rest day night shift differential of no less than ten per cent (10%) of his
shall be paid an additional compensation equivalent to the rate regular wage for each hour of work performed between ten
of the first eight hours on a holiday or rest day plus at least thirty o'clock in the evening and six o'clock in the morning.
percent (30%) thereof.
Sec. 3 Additional compensation. — Where an employee is
permitted or suffered to work on the period covered after his
work schedule, he shall be entitled to his regular wage plus at
Rule I Hours of Work
least twenty-five per cent (25%) and an additional amount of no
Sec. 9 Premium and overtime pay for holiday and rest day work.
less than ten per cent (10%) of such overtime rate for each hour
— (a) Except employees referred to under Section 2 of this Rule,
or work performed between 10 p.m. to 6 a.m.
an employee who is permitted or suffered to work on special
holidays or on his designated rest days not falling on regular
Sec. 4 Additional compensation on scheduled rest day/special
holidays, shall be paid with an additional compensation as
holiday. — An employee who is required or permitted to work
premium pay of not less than thirty percent (30%) of his regular
on the period covered during rest days and/or special holidays
wage. For work performed in excess of eight (8) hours on special
not falling on regular holidays, shall be paid a compensation
holidays and rest days not falling on regular holidays, an
equivalent to his regular wage plus at least thirty (30%) per cent
employee shall be paid an additional compensation for the
and an additional amount of not less than ten (10%) per cent of
overtime work equivalent to his rate for the first eight hours on a
such premium pay rate for each hour of work performed.
special holiday or rest day plus at least thirty percent (30%)
Sec. 5 Additional compensation on regular holidays. — For
thereof.cralaw
work on the period covered during regular holidays, an
(b) Employees of public utility enterprises as well as those
employee shall be entitled to his regular wage during these days
employed in non-profit institutions and organizations shall be
plus an additional compensation of no less than ten (10%) per
entitled to the premium and overtime pay provided herein,
cent of such premium rate for each hour of work performed.cr
unless they are specifically excluded from the coverage of this
Sec. 6 Relation to agreements. — Nothing in this Rule shall
Rule as provided in Section 2 hereof.cralaw
justify an employer in withdrawing or reducing any benefits,
(c) The payment of additional compensation for work performed
supplements or payments as provided in existing individual or
on regular holidays shall be governed by Rule IV, Book Three, of
collective agreements or employer practice or policy.
these Rules.
7. Night Work RA 10151
Sec. 1 Article 130 of the Labor Code is hereby repealed.

Art. 86 Night shift differential. Every employee shall be paid a
night shift differential of not less than ten percent (10%) of his
Sec. 2 Article 131 of the Labor Code is hereby repealed.
regular wage for each hour of work performed between ten
o’clock in the evening and six o’clock in the morning.
Sec. 3 The subsequent articles in Book Three, Title III, Chapter I
to Chapter IV of Presidential Decree No. 442 are hereby
Book III Conditions of Employment renumbered accordingly.
Rule II Night Shift Differential
Sec. 1 Coverage. — This Rule shall apply to all employees Sec. 4 A new chapter is hereby inserted after Book Three, Title
except: III of Presidential Decree No. 442, to read as follows:
(a) Those of the government and any of its political subdivisions,
including government-owned and/or controlled corporations; "Chapter V


"Employment of Night Workers
"A night worker certified as temporarily unfit for night work shall
"Article 154. Coverage. - This chapter' shall apply to all persons, be given the same protection against dismissal or notice of
who shall be employed or permitted or suffered to work at night, dismissal as other workers who are prevented from working for
except those employed in agriculture, stock raising, fishing, reasons of health."
maritime transport and inland navigation, during a period of not
less than seven (7) consecutive hours, including the interval from "Article 158. Women Night Workers. - Measures shall be taken
midnight to five o'clock in the morning, to be determined by the to ensure that an alternative to night work is available to women
Secretary of Labor and Employment, after consulting the workers who would otherwise be called upon to perform such
workers' representatives/labor organizations and employers. work:
"'Night worker' means any employed person whose work "(a) Before and after childbirth, for a period of at least sixteen
requires performance of a substantial number of hours of night (16) weeks, which shall be divided between the time before and
work which exceeds a specified limit. This limit shall be fixed by after childbirth;
the Secretary of Labor after consulting the workers'
representatives/labor organizations and employers." "(b) For additional periods, in respect of winch a medical
certificate IS produced stating that said additional periods are
"Article 155. Health Assessment. - At their request, workers shall necessary for the health of the mother or child:
have the right to undergo a health assessment without charge
and to receive advice on how to reduce or avoid health "(1) During pregnancy;
problems associated with their work:
"(2) During a specified time beyond the period, after childbirth is
"(a) Before taking up an assignment as a night worker; fixed pursuant to subparagraph (a) above, the length of which
shall be determined by the DOLE after consulting the labor
"(b) At regular intervals during such an assignment; and organizations and employers.
"(c) If they experience health problems during such, an "During the periods referred to in this article:
assignment which are not caused by factors other than the
performance of night work. "(i) A woman worker shall not be dismissed or given notice of
dismissal, except for just or authorized causes provided for in
"With the exception of a finding of unfitness for night work, the this Code that are not connected with pregnancy, childbirth and
findings of such assessments shall not be transmitted to others childcare responsibilities.
without the workers' consent and shall not be used to their
detriment." "(ii) A woman worker shall not lose the benefits regarding her
status, seniority, and access to promotion which may attach to
"Article 156. Mandatory Facilities. - Suitable first·aid facilities her regular night work position.
shall be made available for workers performing night work,
including arrangements where such workers, where necessary, "Pregnant women and nursing mothers may be allowed to work
can be taken immediately to a place for appropriate treatment. .at night only if a competent physician, other than the company
The employers are likewise required to provide safe and physician, shall certify their fitness to render night work, and
healthful working conditions and adequate or reasonable specify, in the case of pregnant employees, the period of the
facilities such as sleeping or resting quarters in the establishment pregnancy that they can safely work.
and transportation from the work premises to the nearest point
of their residence subject to exceptions and guidelines to be "The measures referred to in this article may include transfer to
provided by the DOLE." day work where this is possible, the provision of social security
benefits or an extension of maternity leave.
"Article 157. Transfer. - Night workers who are certified as unfit
for night work, due to health reasons, shall be transferred, "The provisions of this article shall not leave the effect of
whenever practicable, to a similar job for which they are fit to reducing the protection and benefits connected with maternity
work. leave under existing laws."
"If such transfer to a similar job is not practicable, these workers "Article 159. Compensation. The compensation for night workers
shall be granted the same benefits as other workers who are in the form of working time, pay or similar benefits shall
unable to work, or to secure employment during such period. recognize the exceptional nature of night work."


7. Those in agriculture, stock raising, fishing, maritime
"Article 160. Social Services. - Appropriate social services shall transport and inland navigation, during a period of not less
be provided for night workers and, where necessary, for workers than seven (7) consecutive hours
performing night work."
7. a. Coverage
"Article 161. Night Work Schedules. - Before introducing work
schedules requiring the services of night workers, the employer Art. 86 Night shift differential. Every employee shall be paid a
shall consult the workers' representatives/labor organizations night shift differential of not less than ten percent (10%) of his
concerned on the details of such schedules and the forms of regular wage for each hour of work performed between ten
organization of night work that are best adapted to the o’clock in the evening and six o’clock in the morning.
establishment and its personnel, as well as on the occupational
health measures and social services which are required. In Rule II, Sec. 1 Coverage. — This Rule shall apply to all
establishments employing night workers, consultation shall take employees except:
place regularly." (a) Those of the government and any of its political subdivisions,
including government-owned and/or controlled corporations;
Sec. 5 The subsequent articles starting from Book Four, Title I, (b) Those of retail and service establishments regularly
Chapter I of Presidential Decree No. 442 are hereby renumbered employing not more than five (5) workers;
accordingly. (c) Domestic helpers and persons in the personal service of
another;
Sec. 6 Application - The measures referred to in this chapter (d) Managerial employees as defined in Book Three of this Code;
shall be applied not later than six (6) months from the effectivity (e) Field personnel and other employees whose time and
of this Act. performance is unsupervised by the employer including those
Sec. 7 Guidelines - The DOLE shall promulgate appropriate basis, or those who are paid a fixed amount for performing work
regulations in addition to existing ones to ensure protection, irrespective of the time consumed in the performance thereof.
safety and welfare of night workers.
7. b. Exclusion
Sec. 8 Penalties - Any violation of this Act, and the rules and
regulations issued pursuant hereof shall be punished with a fine
Art. 82 Coverage. The provisions of this Title shall apply to
of not less than Thirty thousand pesos (P30,000.00) nor more
employees in all establishments and undertakings whether for
than Fifty thousand pesos (P50,000.00) or imprisonment of not
profit or not, but not to government employees, managerial
less than six (6) months, or both, at the discretion of the court. If
employees, field personnel, members of the family of the
the offense is committed by a corporation, trust, firm,
employer who are dependent on him for support, domestic
partnership at association, or other entity, the penalty shall be
helpers, persons in the personal service of another, and workers
imposed upon the guilty officer or officers of such corporation,
who are paid by results as determined by the Secretary of Labor
trust, firm, partnership or association, or entity.
Coverage and exclusion: As used herein, "managerial employees" refer to those whose
All workers except:
1. Gov’t employees
2. Retail and service establishments regularly employing not
more than 5 workers staff.
a. Retail: sale of goods to end-users for personal or
household use
"Field personnel" shall refer to non-agricultural employees who
b. Service: sale of service to individuals for their household
regularly perform their duties away from the principal place of
use business or branch office of the employer and whose actual
3. Domestic helpers and persons in the personal service of
another
certainty.
4. Managerial employees
5. Managerial staff
Rule II, Sec. 1 Coverage. — This Rule shall apply to all
6. Field personnel
employees except:
-‐ Paid by results
-‐ Paid on commission basis
including government-owned and/or controlled corporations;


(b) Those of retail and service establishments regularly such premium pay rate for each hour of work performed.
employing not more than five (5) workers; Sec. 5 Additional compensation on regular holidays. — For
(c) Domestic helpers and persons in the personal service of work on the period covered during regular holidays, an
another; employee shall be entitled to his regular wage during these days
(d) Managerial employees as defined in Book Three of this Code; plus an additional compensation of no less than ten (10%) per
(e) Field personnel and other employees whose time and cent of such premium rate for each hour of work performed.
performance is unsupervised by the employer including those
who are engaged on task or contract basis, purely commission COMPUTATIONS
basis, or those who are paid a fixed amount for performing work - Min. daily wage (NCR 2012) = P456
irrespective of the time consumed in the performance thereof. - Min. hourly rate = P456/8 hours = P57/hr
- Overtime rate – 100% + 25% = 125%
7. b.i. Retail establishment o P57/hr x 1.25 = P71.25/hr
- Night time – 10pm-6am = 100% + 10% = 110%
RA 6727, f "Retail Establishment" is one principally engaged in o P57 x 1.1 = P62.7
the sale of goods to end-users for personal or household use;
Lepanto Consolidated Mining Co. v. Lepanto Local Staff Union
7. b.ii. Service establishment FACTS:
1. Lepanto is a domestic mining corporation while the Union is
the duly certified bargaining agent of the Lepanto’s
RA 6727, g "Service Establishment" is one principally engaged
in the sale of service to individuals for their own or household employees.
2. Lepanto and the Union entered into their 4th Collective
use and is generally recognized as such;
Bargaining Agreement (CBA) for the period of July 1, 1998 to
June 30, 2000.
3. Pertinent provisions of the CBA are:
7. c. Additional compensation
- Art. VIII, Sec. 3 Night Shift Differential Pay – The company
shall continue to pay night shift differential for work
Art. 86 Night shift differential. Every employee shall be paid a
during the FIRST and THIRD shifts to all covered
night shift differential of not less than ten percent (10%) of his
employees within the bargaining unit as follows:
regular wage for each hour of work performed between ten
o’clock in the evening and six o’clock in the morning.
For the FIRST shift (11 PM – 7AM), the differential pay will
be 20% of the basic rate. For the THIRD shift (3 PM – 11
-‐ 10% of his regular wage for each hour of work performed PM), the differential pay will be 15% of the basic rate.
between 10pm-6am regardless if holiday (regular or special)
or rest day However, for overtime work, which extends beyond the
regular day shift (7 AM – 3 PM), there will be no night
Rule II Night Shift Differential differential pay added before the overtime pay is
Sec. 2 Night shift differential. — An employee shall be paid calculated.
night shift differential of no less than ten per cent (10%) of his - Art. XII, Sec 9 Longevity Pay – The company shall grant
regular wage for each hour of work performed between ten longevity pay of P30.00 per month effective July 1, 1998
o'clock in the evening and six o'clock in the morning. and every year thereafter.
4. On April 23, 2000, respondent filed a complaint with the
Sec. 3 Additional compensation. — Where an employee is National Conciliation and Mediation Board of the CAR
permitted or suffered to work on the period covered after his Region alleging that petitioner failed to pay the night
work schedule, he shall be entitled to his regular wage plus at differential and longevity pay of respondent’s members as
least twenty-five per cent (25%) and an additional amount of no provided in the 4th CBA. Petitioner and respondent failed to
less than ten per cent (10%) of such overtime rate for each hour amicably settle the dispute and submitted the same to the
or work performed between 10 p.m. to 6 a.m. Voluntary Administrator for resolution.
5. VA: Ruled against Lepanto.
Sec. 4 Additional compensation on scheduled rest day/special - Longevity pay of P30/month granted from the period of
holiday. — An employee who is required or permitted to work July 1, 1998 and every year thereafter.
on the period covered during rest days and/or special holidays - Night shift differential pay of 15% of the basic rate of
not falling on regular holidays, shall be paid a compensation hours of work rendered beyond 3PM for the following
equivalent to his regular wage plus at least thirty (30%) per cent shifts: 7 AM – 4 PM, 7:30 AM - 4:30 PM, and 8 AM – 5 PM.
and an additional amount of not less than ten (10%) per cent of


-
VA held that the surface workers on the second shift who intention of the parties with regards to the said differential pay.
performed work beyond 3 PM should be given additional Having not presented any proof to their claim that Lepanto’s
night shift differential pay equivalent to 15% of their basic payment of the differential pay was due to error, the claim is
rate. The VA interpreted the provision on night held to be untenable.
differential pay to mean that an employee who extends
work beyond the second shift shall receive overtime pay, DISP: Petition denied; CA affirmed.
which is to be computed before the night shift differential
pay. The provision only means the omission of the night Ma’am Daway: A different ruling will be violative of Art.100 LC
shift differential in the computation of overtime pay. on non-diminution of benefits.
- The VA further held that the inclusion of the night shift
differential pay provision in the CBA evinced the intent of See also: Shell Oil Co. of the Philippines, Ltd. v. National Labor
the parties to grant such differential benefits to Union (pp. 327-330 of the Phil. Reports)
employees who rendered work beyond the regular day - It is not natural for employees to work during nighttime for
shift. physiological reasons. Artificial lighting during nighttime work,
6. Lepanto filed for a motion for reconsideration. The VA and unnatural times of eating, resting and sleep factor into less
denied it for lack of merit. productivity for those who work during the night.
7. CA: VA affirmed - The lack of sunlight also tends to contribute to the deterioration
- The provision on the night shift differential pay is clear in of the health of employees. Serious moral dangers are also
that it does grant the night shift differential to the abound due to needing to travel the streets alone at night and
employees of the second shift for work rendered beyond also due to the interference with normal home life.
the regular day shift. What it merely provides is that the - Economically, it is also disadvantageous since workers are less
night shift differential shall be excluded in the productive (due to reasons stated above), therefore leading to
computation of overtime pay. less output.
- The records of the case also reveals that Lepanto had - In summary, while having night shifts continues to be an ongoing
already been complying with the provision by paying the practice, health concerns for employees, as well as economic
night shift differential to employees working beyond 3 considerations militate against it.
PM. Even after the VA ruling, Lepanto continued to do so.
Hence, its defense of erroneous payment is estopped.
- Lepanto filed for reconsideration but was denied.
Note: For purposes of computing additional benefits under
Book III, Title I of the Labor Code – Minimum Wage Rates in
ISSUE
NCR = P456/day, effective 1 Nov. 2012, per Wage Order No.
WON the CA erred in affirming the VA decision (NO)
NCR-17 (2 June 2012); P466/day, effective Sept. 2013 per Wage
Order No. NCR-18
RATIO
The CA was correct; employees of the second shift
should be paid the night shift differential.
B. WEEKLY REST PERIODS
- The terms and conditions of the 4th CBA is clear and constitutes
the law between Lepanto and the employees represented by the
Art. 91 Right to weekly rest day.
Union. Hence, it should be upheld.
a. It shall be the duty of every employer, whether operating for
- The disputed part of the provision: “However, for overtime work,
profit or not, to provide each of his employees a rest period of
which extends beyond the regular day shift (7 AM – 3 PM), there
not less than twenty-four (24) consecutive hours after every six (6)
will be no night differential pay added before the overtime pay is
consecutive normal work days.
calculated.”
b. The employer shall determine and schedule the weekly rest
- The VA and CA’s interpretation is correct; the provision only day of his employees subject to collective bargaining agreement
provides that the night differential should not figure into the and to such rules and regulations as the Secretary of Labor and
computation of overtime pay but it does not take away the said Employment may provide. However, the employer shall respect
benefit. The second shift employees are entitled to the the preference of employees as to their weekly rest day when
differential pay. The inclusion of the disputed paragraph was such preference is based on religious grounds.
never intended to exclude the employees working during the
second shift to be excluded from the payment of differential pay
Art. 92 When employer may require work on a rest day. The
for work rendered beyond 3 PM.
employer may require his employees to work on any day:
- As also correctly noted by the CA, the contemporaneous and
a. In case of actual or impending emergencies caused by serious
subsequent acts of Lepanto in granting the said differential pay,
accident, fire, flood, typhoon, earthquake, epidemic or other
before and after the VA ruling, have already evinced the


disaster or calamity to prevent loss of life and property, or writing at least seven (7) days before the desired effectivity of the
imminent danger to public safety; initial rest day so preferred.
b. In cases of urgent work to be performed on the machinery, Where, however, the choice of the employee as to his rest day
equipment, or installation, to avoid serious loss which the based on religious grounds will inevitably result in serious
employer would otherwise suffer; prejudice or obstruction to the operations of the undertaking
c. In the event of abnormal pressure of work due to special and the employer cannot normally be expected to resort to
circumstances, where the employer cannot ordinarily be other remedial measures, the employer may so schedule the
expected to resort to other measures; weekly rest day of his choice for at least two (2) days in a month.
d. To prevent loss or damage to perishable goods; Sec. 5 Schedule of rest day. — (a) Where the weekly rest is
e. Where the nature of the work requires continuous operations given to all employees simultaneously, the employer shall make
and the stoppage of work may result in irreparable injury or loss known such rest period by means of a written notice posted
to the employer; and conspicuously in the work place at least one week before it
f. Under other circumstances analogous or similar to the becomes effective.
foregoing as determined by the Secretary of Labor and (b) Where the rest period is not granted to all employees
Employment. simultaneously and collectively, the employer shall make known
to the employees their respective schedules of weekly rest
Art. 93 Compensation for rest day, Sunday or holiday work. through written notices posted conspicuously in the work place
a. Where an employee is made or permitted to work on his at least one week before they become effective.
scheduled rest day, he shall be paid an additional compensation Sec. 6 When work on rest day authorized. — An employer may
of at least thirty percent (30%) of his regular wage. An employee require any of his employees to work on his scheduled rest day
shall be entitled to such additional compensation for work for the duration of the following emergencies and exceptional
performed on Sunday only when it is his established rest day. conditions:
b. When the nature of the work of the employee is such that he (a) In case of actual or impending emergencies caused by
has no regular workdays and no regular rest days can be serious accident, fire, flood, typhoon, earthquake, epidemic or
scheduled, he shall be paid an additional compensation of at other disaster or calamity, to prevent loss of life or property, or in
least thirty percent (30%) of his regular wage for work performed cases of force majeure or imminent danger to public safety;
on Sundays and holidays. (b) In case of urgent work to be performed on machineries,
c. Work performed on any special holiday shall be paid an equipment or installations to avoid serious loss which the
additional compensation of at least thirty percent (30%) of the employer would otherwise suffer;
regular wage of the employee. Where such holiday work falls on (c) In the event of abnormal pressure of work due to special
the employee’s scheduled rest day, he shall be entitled to an circumstances, where the employer cannot ordinarily be
additional compensation of at least fifty per cent (50%) of his expected to resort to other measures;
regular wage. (d) To prevent serious loss of perishable goods;
d. Where the collective bargaining agreement or other (e) Where the nature of the work is such that the employees have
applicable employment contract stipulates the payment of a to work continuously for seven (7) days in a week or more, as in
higher premium pay than that prescribed under this Article, the the case of the crew members of a vessel to complete a voyage
employer shall pay such higher rate. and in other similar cases; and
(f) When the work is necessary to avail of favorable weather or
environmental conditions where performance or quality of work
is dependent thereon.
Rule III Weekly Rest Periods
No employee shall be required against his will to work on his
Sec. 1 General statement on coverage. — This Rule shall apply
scheduled rest day except under circumstances provided in this
to all employers whether operating for profit or not, including
Section: Provided, However, that where an employee volunteers
public utilities operated by private persons.
to work on his rest day under other circumstances, he shall
Sec. 2 Business on Sundays/Holidays. — All establishments and
express such desire in writing, subject to the provisions of
enterprises may operate or open for business on Sundays and
Section 7 hereof regarding additional compensation.
holidays provided that the employees are given the weekly rest
Sec. 7 Compensation on rest day/Sunday/holiday. — (a) Except
day and the benefits as provided in this Rule.
those employees referred to under Section 2, Rule I, Book Three,
Sec. 3 Weekly rest day. — Every employer shall give his
an employee who is made or permitted to work on his scheduled
employees a rest period of not less than twenty-four (24)
rest day shall be paid with an additional compensation of at least
consecutive hours after every six consecutive normal work days.
30% of his regular wage. An employee shall be entitled to such
Sec. 4 Preference of employee. — The preference of the
additional compensation for work performed on a Sunday only
employee as to his weekly day of rest shall be respected by the
when it is his established rest day.
employer if the same is based on religious grounds. The
(b) Where the nature of the work of the employee is such that he
employee shall make known his preference to the employer in

has no regular work days and no regular rest days can be week before effectivity
scheduled, he shall be paid an additional compensation of at General rule: Employee cannot be
least 30% of his regular wage for work performed on Sundays compelled to work on a rest day
and holidays. Exceptions:
(c) Work performed on any special holiday shall be paid with an 1. To prevent loss of life or property
additional compensation of at least 30% of the regular wage of during serious accidents, fire, flood,
the employees. Where such holiday work falls on the employee's typhoon, earthquake, epidemic, or
scheduled rest day, he shall be entitled to additional other disaster or calamity
compensation of at least 50% of his regular wage. 2. Urgent work on machinery,
(d) The payment of additional compensation for work performed equipment, installation to avoid
on regular holiday shall be governed by Rule IV, Book Three, of serious loss or damage to ER
these regulations. Compulsory Work 3. Necessary to prevent loss or damage
(e) Where the collective bargaining agreement or other on Rest Day to perishable goods
applicable employment contract stipulates the payment of a 4. Of abnormal nature of the work
higher premium pay than that prescribed under this Section, the requires continuous operations and
employer shall pay such higher rate. the stoppage of work may result in
Sec. 8 Paid-off days. — Nothing in this Rule shall justify an irreparable injury or loss to the
employer in reducing the compensation of his employees for the employer pressure of work due
unworked Sundays, holidays, or other rest days which are 5. Analogous circumstances
considered paid-off days or holidays by agreement or practice 6. When the work is necessary to avail of
subsisting upon the effectivity of the Code. favorable weather or environmental
Sec. 9 Relation to agreements. — Nothing herein shall prevent conditions where performance or
the employer and his employees or their representatives in quality of work is dependent thereon
entering into any agreement with terms more favorable to the Additional compensation of at least 30%
employees than those provided herein, or be used to diminish of his regular wage
any benefit granted to the employees under existing laws, If no regular work or rest day, and works on
agreements, and voluntary employer practices. a Sunday, entitled to at least 30% of his
regular wage
SUMMARY OF WEEKLY REST PERIODS Special Holiday: At least 30% of his
Coverage All workers, including employees of public regular wage
Premium Pay
utilities operated by private persons Holiday and Rest Day: At least 50% of
Exceptions 1. Gov’t employees his regular wag
2. Domestic helpers and persons in the If Sunday is scheduled rest day, entitled to
personal service of another at least 30% of his regular wage
3. Managerial employees Business may operate on Sundays and
4. Managerial staff holidays provided that ER pay EE the
5. Dependent family members benefits and premium pay
6. Domestic workers CBA on Higher ER and EE may stipulate in CBA more
7. Persons in the personal service of Premium Pay favorable terms for EE but not diminish any
another benefit granted to them
8. Field personnel
9. Paid by results Premium Pay Rates
Right to Weekly Duty of employer to give at least 24 - COLA shall not be included in the computation of premium
Rest Period consecutive hours after every 6 consecutive pay
normal work days (subject to CBA and - Minimum are as follows
rules of DOLE)
To be determined and scheduled by ER Sector/Industry Rate Amount
-‐ Take into consideration the preference Work performed on rest days or on special days: Plus 30% of
of worker if based on religious grounds daily basic rate of 100% à 130%
Determination or
-‐ EE to make known his preference in Non-agriculture P404.00 P404 x 130% =
Preference of
writing at least 7 days before effectivity P525.50
Employee
Employer may grant individual or Retail/Service P367.00 P367 x 130% =
collective/simultaneous leave for all EE, Establishment P477.10
but must post notices in the workplace a Work performed on a rest day which is also a special day: Plus

50% of daily basic rate of 100% à 150%
Non-agriculture P404.00 P404 x 150% = Art. 91(a) It shall be the duty of every employer, whether
P606.00 operating for profit or not, to provide each of his employees a
rest period of not less than twenty-four (24) consecutive hours
Retail/Service P367.00 P367 x 150% = after every six (6) consecutive normal work days.
Establishment P550.50
Work performed on a regular holiday which is also employee’s Book III Conditions of Employment
rest day (not applicable to employees not covered by holiday- Rule III Weekly Rest Periods
pay rule): Plus 30% of the regular holiday rate of 200% based on Sec. 3 Weekly rest day. — Every employer shall give his
daily basic wage rate à 260% employees a rest period of not less than twenty-four (24)
consecutive hours after every six consecutive normal work days.
1. Coverage/Exclusions
3. Determination/Preference of Employee
Art. 82 Coverage. The provisions of this Title shall apply to
employees in all establishments and undertakings whether for Art. 91(b) The employer shall determine and schedule the
profit or not, but not to government employees, managerial weekly rest day of his employees subject to collective bargaining
employees, field personnel, members of the family of the agreement and to such rules and regulations as the Secretary of
employer who are dependent on him for support, domestic Labor and Employment may provide. However, the employer
helpers, persons in the personal service of another, and workers shall respect the preference of employees as to their weekly rest
who are paid by results as determined by the Secretary of Labor day when such preference is based on religious grounds.

As used herein, "managerial employees" refer to those whose
Sec. 4 Preference of employee. — The preference of the
employee as to his weekly day of rest shall be respected by the
employer if the same is based on religious grounds. The
staff.
employee shall make known his preference to the employer in
writing at least seven (7) days before the desired effectivity of the
"Field personnel" shall refer to non-agricultural employees who
initial rest day so preferred.cralaw
regularly perform their duties away from the principal place of
Where, however, the choice of the employee as to his rest day
business or branch office of the employer and whose actual
based on religious grounds will inevitably result in serious
prejudice or obstruction to the operations of the undertaking
certainty.
and the employer cannot normally be expected to resort to
other remedial measures, the employer may so schedule the
Art. 91 Right to weekly rest day. weekly rest day of his choice for at least two (2) days in a month.
a. It shall be the duty of every employer, whether operating for
profit or not, to provide each of his employees a rest period of Sec. 5 Schedule of rest day. — (a) Where the weekly rest is
not less than twenty-four (24) consecutive hours after every six (6) given to all employees simultaneously, the employer shall make
consecutive normal work days. known such rest period by means of a written notice posted
b. The employer shall determine and schedule the weekly rest conspicuously in the work place at least one week before it
day of his employees subject to collective bargaining agreement becomes effective.cralaw
and to such rules and regulations as the Secretary of Labor and (b) Where the rest period is not granted to all employees
Employment may provide. However, the employer shall respect simultaneously and collectively, the employer shall make known
the preference of employees as to their weekly rest day when to the employees their respective schedules of weekly rest
such preference is based on religious grounds. through written notices posted conspicuously in the work place
at least one week before they become effective.
Rule III Weekly Rest Periods Who determines rest days?
Sec. 1 General statement on coverage. — This Rule shall apply - General rule: employer
to all employers whether operating for profit or not, including - Exception: preference based upon religious grounds
public utilities operated by private persons.
Can an employer compel an employee to work on a
2. Right to Weekly Rest Period rest day?


- General rule: No Section 7 hereof regarding additional compensation.
- Exception: Art. 92
5. Premium Pay
4. Compulsory Work on Rest Day
Art. 93 Compensation for rest day, Sunday or holiday work.
Art. 92 When employer may require work on a rest day. The a. Where an employee is made or permitted to work on his
employer may require his employees to work on any day: scheduled rest day, he shall be paid an additional compensation
a. In case of actual or impending emergencies caused by serious of at least thirty percent (30%) of his regular wage. An employee
accident, fire, flood, typhoon, earthquake, epidemic or other shall be entitled to such additional compensation for work
disaster or calamity to prevent loss of life and property, or performed on Sunday only when it is his established rest day.
imminent danger to public safety; b. When the nature of the work of the employee is such that he
b. In cases of urgent work to be performed on the machinery, has no regular workdays and no regular rest days can be
equipment, or installation, to avoid serious loss which the scheduled, he shall be paid an additional compensation of at
employer would otherwise suffer; least thirty percent (30%) of his regular wage for work performed
c. In the event of abnormal pressure of work due to special on Sundays and holidays.
circumstances, where the employer cannot ordinarily be c. Work performed on any special holiday shall be paid an
expected to resort to other measures; additional compensation of at least thirty percent (30%) of the
d. To prevent loss or damage to perishable goods; regular wage of the employee. Where such holiday work falls on
e. Where the nature of the work requires continuous operations the employee’s scheduled rest day, he shall be entitled to an
and the stoppage of work may result in irreparable injury or loss additional compensation of at least fifty per cent (50%) of his
to the employer; and regular wage.
f. Under other circumstances analogous or similar to the
foregoing as determined by the Secretary of Labor and
Employment.
Sec. 7 Compensation on rest day/Sunday/holiday. — (a) Except
Book III Conditions of Employment those employees referred to under Section 2, Rule I, Book Three,
Rule III Weekly Rest Periods an employee who is made or permitted to work on his scheduled
Sec. 6 When work on rest day authorized. — An employer may rest day shall be paid with an additional compensation of at least
require any of his employees to work on his scheduled rest day 30% of his regular wage. An employee shall be entitled to such
for the duration of the following emergencies and exceptional additional compensation for work performed on a Sunday only
conditions: when it is his established rest day.
(a) In case of actual or impending emergencies caused by (b) Where the nature of the work of the employee is such that he
serious accident, fire, flood, typhoon, earthquake, epidemic or has no regular work days and no regular rest days can be
other disaster or calamity, to prevent loss of life or property, or in scheduled, he shall be paid an additional compensation of at
cases of force majeure or imminent danger to public safety; least 30% of his regular wage for work performed on Sundays
(b) In case of urgent work to be performed on machineries, and holidays.
equipment or installations to avoid serious loss which the (c) Work performed on any special holiday shall be paid with an
employer would otherwise suffer; additional compensation of at least 30% of the regular wage of
(c) In the event of abnormal pressure of work due to special the employees. Where such holiday work falls on the employee's
circumstances, where the employer cannot ordinarily be scheduled rest day, he shall be entitled to additional
expected to resort to other measures; compensation of at least 50% of his regular wage.
(d) To prevent serious loss of perishable goods; (d) The payment of additional compensation for work performed
(e) Where the nature of the work is such that the employees have on regular holiday shall be governed by Rule IV, Book Three, of
to work continuously for seven (7) days in a week or more, as in these regulation
the case of the crew members of a vessel to complete a voyage (e) Where the collective bargaining agreement or other
and in other similar cases; and applicable employment contract stipulates the payment of a
(f) When the work is necessary to avail of favorable weather or higher premium pay than that prescribed under this Section, the
environmental conditions where performance or quality of work employer shall pay such higher rate.
is dependent thereon.
No employee shall be required against his will to work on his 6. Work on a Sunday or Holiday Which is Also Scheduled Rest
scheduled rest day except under circumstances provided in this
Day
Section: Provided, However, that where an employee volunteers
to work on his rest day under other circumstances, he shall
Art. 93 Compensation for rest day, Sunday or holiday work.
express such desire in writing, subject to the provisions of


a. Where an employee is made or permitted to work on his any benefit granted to the employees under existing laws,
scheduled rest day, he shall be paid an additional compensation agreements, and voluntary employer practices.
of at least thirty percent (30%) of his regular wage. An employee
shall be entitled to such additional compensation for work Computations:
performed on Sunday only when it is his established rest day. - Overtime on a special holiday
b. When the nature of the work of the employee is such that he o 130% x 30% = 169% à P96.33/hr
has no regular workdays and no regular rest days can be - Work on a special holiday that falls on a rest day
scheduled, he shall be paid an additional compensation of at o 150% à P85.50/hr
least thirty percent (30%) of his regular wage for work performed o Overtime:
on Sundays and holidays. § 150% x 30% = 195% à P111.15/hr
- Regular holiday
Book III Conditions of Employment o Did no work – 100%
Rule III Weekly Rest Periods o Worked – 200% à P114
Sec. 2 Business on Sundays/Holidays. — All establishments and o Regular holiday on a rest day
enterprises may operate or open for business on Sundays and § 200% x 30% = 260% à P148.20/hr
holidays provided that the employees are given the weekly rest o Overtime work during a regular holiday on a rest day
day and the benefits as provided in this Rule. § 260% x 30% = 338% à P192.66/hr
C. HOLIDAYS
Sec. 7 (a) Except those employees referred to under Section 2, Art. 94 Right to holiday pay.
Rule I, Book Three, an employee who is made or permitted to a. Every worker shall be paid his regular daily wage during
work on his scheduled rest day shall be paid with an additional regular holidays, except in retail and service establishments
compensation of at least 30% of his regular wage. An employee regularly employing less than ten (10) workers;
shall be entitled to such additional compensation for work b. The employer may require an employee to work on any
performed on a Sunday only when it is his established rest day. holiday but such employee shall be paid a compensation
(b) Where the nature of the work of the employee is such that he equivalent to twice his regular rate; and
has no regular work days and no regular rest days can be c. As used in this Article, "holiday" includes: New Year’s Day,
scheduled, he shall be paid an additional compensation of at Maundy Thursday, Good Friday, the ninth of April, the first of
least 30% of his regular wage for work performed on Sundays May, the twelfth of June, the fourth of July, the thirtieth of
and holidays. November, the twenty-fifth and thirtieth of December and the
day designated by law for holding a general election.
7. CBA on Higher Premium Pay
SUMMARY OF HOLIDAYS
Art. 93 Compensation for rest day, Sunday or holiday work. Coverage All workers
d. Where the collective bargaining agreement or other Exceptions 1. Those in retail or service establishments
applicable employment contract stipulates the payment of a with less than 10 workers
higher premium pay than that prescribed under this Article, the 2. Government employees
employer shall pay such higher rate. 3. Domestic helpers and persons in the
personal service of another
4. Managerial employees
5. Field personnel, including:
a. Those paid on a commission basis
Sec. 7 (e) Where the collective bargaining agreement or other
b. Those paid a fixed amount for
applicable employment contract stipulates the payment of a
performing work irrespective of the
higher premium pay than that prescribed under this Section, the
time consumed
employer shall pay such higher rate.
Regular 1. New Year’s Day – January 1
Holidays* 2. Maundy Thursday
Book III Conditions of Employment 3. Good Friday
Rule III Weekly Rest Periods 4. Araw ng Kagitingan (April 9)
Sec. 9 Relation to agreements. — Nothing herein shall prevent 5. Labor Day – May 1
the employer and his employees or their representatives in 6. Independence Day – June 12
entering into any agreement with terms more favorable to the 7. National Heroes Day – Last Sunday of
employees than those provided herein, or be used to diminish August

8. Bonifacio Day – November 30 1. For regular holidays as provided for under EO 203
9. Christmas Day – December 25 (incorporated in EO 292) as amended by RA 9177 the
10. Rizal Day – December 30 following rules shall apply:
Special 1. All Saints Day – November 1
Holidays* 2. Last Day of the Year – December 31 New Year's Day - January 1
Twice his regular rate
Maundy Thursday - Movable Date
Faculty in private school – Not paid for
regular holidays during semestral vacation Good Friday - Movable Date
Holiday Pay but regular holidays during Christmas
Araw ng Kagitingan - April 9
vacation are paid
Divisor as factor Labor Day - May 1
Sunday Independence Day - June 12
Official Muslim 1. ‘Amun Jadid (New Year), which falls on
Holidays** the 1st day of the 1st lunar month of National Heroes Day - Last Sunday of August
Muharram; Bonifacio Day - November 30
2. Maulid-un-Nabi (Birthday of the Prophet
Muhammad), which falls on the 12th day of Eidul Fitr - Movable Date
the 3rd lunar month of Rabi-ul-Awwal; Christmas Day - December 25
3. Lailatul Isra Wal Mi’raj (Nocturnal Journey
and Ascension of the Prophet Rizal Day - December 30
Muhammad), which falls on the 27th day of
the 7th lunar month of Rajab; a. If it is an employee's regular workday
4. ‘Id-ul-Fitr (Hari Raya Pausa), which falls on i. If unworked - 100%
the 1st day of the 10th lunar month of ii. If worked
Shawwal, commemorating the end of the - 1st 8 hours - 200%
fasting season; and - excess of 8 hours - plus 30% of hourly rate
5. ‘Id-ul-Adha (Hari Raja Haji), which falls on on said day
the 10th day of the 12th lunar month of Dhu
l-Hijja b. If it is an employee's rest day
If on leave of absence: i. If unworked - 100%
- With pay: entitled to holiday pay ii. If worked
- Without pay: not paid if absent on the day - 1st 8 hours - plus 30% of 200%
before holiday - excess of 8 hours - plus 30% of hourly rate
Absences
Successive holidays: If absent on the day on said day
before holiday, only entitled to the second
holiday pay (for Maundy Thursday and Good 2. For declared special days such as Special Non-Working
Friday) Day, Special Public Holiday, Special National Holiday, in
Non-working If day before holiday is rest day, he will be addition to the two (2) nationwide special days (November
Day, Rest Day entitled provided that he worked before the 1, All Saints Day and December 31, Last Day of the Year)
rest day listed under EO 203, as amended, the following rules shall
* via RA 9242, as amended by EO 292 apply:
** Art. 169, PD 1083, “Official Muslim Holidays”
a. If unworked
MEMORANDUM CIRCULAR NO. 01 - No pay, unless there is a favorable company
policy, practice or collective bargaining
Pursuant to the provisions of the Labor Code, as amended in agreement (CBA) granting payment of wages on
relation to the observance of declared holidays and in response special days even if unworked.
to the queries received every time a Presidential Proclamation or
a law is enacted by Congress which declares certain days either b. If worked
as a regular holiday, a special day or a special working holiday, - 1st 8 hours - plus 30% of the daily rate of 100%
the following guidelines shall be observed by all employers in - excess of 8 hours - plus 30% of hourly rate on
the private sector: said day
c. Falling on the employee's rest day and if worked


- 1st 8 hours - plus 50% of the daily rate of 100% Bonifacio Day - November 30
- excess of 8 hours - plus 30% of hourly rate on
said day Christmas Day - December 25
3. For those declared as special working holidays, the Rizal Day - December 30
following rules shall apply:
For work performed, an employee is entitled only to his
basic rate. No premium pay is required since work (B) Nationwide Special Days
performed on said days is considered work on ordinary
working days. All Saints Day - November 1
Holiday Pay for Monthly Paid Employees Last Day of the Year - December 31
- A reading of Art. 94 reveals that monthly paid employees
have not been excluded from the coverage of holiday pay.
Hence, they are entitled to the said benefit. (2) The terms "legal or regular holiday" and "special holiday",
- Even if the divisor is lower than 365, the divisor is acceptable as used in laws, orders, rules and regulations or other issuances
as long as the daily rate is at least equal or greater than the shall be referred to as "regular holiday" and "special day",
legal minimum rate. respectively.
- If the holiday falls on a Sunday, there is no legal obligation
for the employer to pay extra, aside from the usual holiday
RA 9492, Sec. 1 Section 26, Chapter 7, Book I of Executive
pay, per the Court’s ruling in Wellington v. Trajano.
Order No. 292, as amended, otherwise known as the
Administrative Code of 1987, is hereby amended to read as
follows:
1. Coverage/Exclusions
"Sec. 26, Regular Holidays and Nationwide Special Days. – (1)
Unless otherwise modified by law, and or proclamation, the
Art. 94(a) Every worker shall be paid his regular daily wage following regular holidays and special days shall be observed
during regular holidays, except in retail and service in the country:
establishments regularly employing less than ten (10) workers;
a) Regular Holidays
EO 292, Sec. 26 Regular Holidays and Nationwide Special New Year’s Day - Jan. 1
Days. - Maundy Thursday - Movable Date
Good Friday - Movable Date
Unless otherwise modified by law, order or proclamation, the Eidul Fitr - Movable Date
following regular holidays and special days shall be observed Araw ng Kagitingan - Monday nearest Apr. 9
in this country: Labor Day - Monday nearest May 1
Independence Day - Monday nearest Jun 12
(A) Regular Holidays National Heroes Day - Last Monday of August
Bonifacio Day - Monday nearest Nov 30
New Year's Day - January 1 Christmas Day - Dec 25
Rizal Day - Monday nearest Dec 30
Maundy Thursday - Movable date
b) Nationwide Special Holidays
Good Friday - Movable date Ninoy Aquino Day - Monday nearest Aug 21
All Saints Day - Nov 1
Araw ng Kagitingan - April 9 Last Day of the Year - Dec 31
(Bataan and Corregidor Day)
c) In the event the holiday falls on a Wednesday, the holiday
Labor Day - May 1 will be observed on the Monday of the week. If the holiday falls
on a Sunday, the holiday will be observed on the Monday that
Independence Day - June 12 follows:
Provided, That for movable holidays, the President shall
National Heroes Day - Last Sunday of August issue a proclamation, at least six months prior to the
holiday concerned, the specific date that shall be declared


as a nonworking day: use and is generally recognized as such;
Provided, however, The Eidul Adha shall be celebrated as a Mantrade/FMMC Division Employees and Workers Union v.
regional holiday in the Autonomous Region in Muslim Bacungan
Mindanao.” FACTS:
1. Petitioner (Mantrade/FMMC Division Employees and
Art. 82 Coverage. The provisions of this Title shall apply to Workers Union filed this petition for Certiorari and
employees in all establishments and undertakings whether for Mandamus against respondent (Arbitrator Froilan
profit or not, but not to government employees, managerial Bacungan) and respondent-company (Mantrade
employees, field personnel, members of the family of the Development Corporation.)
employer who are dependent on him for support, domestic 2. The petition arose from a decision by Bacungan, holding
helpers, persons in the personal service of another, and workers that Mantrade Development Corporation is not under any
who are paid by results as determined by the Secretary of Labor legal obligation to pay holiday pay to its monthly paid
in appropriate regulations. employees who are uniformly paid by the month,
irrespective of the number of working days therein.
As used herein, "managerial employees" refer to those whose 3. In denying petitioner’s claim for holiday pay, respondent
primary duty consists of the management of the establishment in arbitrator stated that although monthly salaried employees
which they are employed or of a department or subdivision are not among those included under Art. 94, LC, they
thereof, and to other officers or members of the managerial appear to be excluded under Sec. 2, Rule IV, Book III of the
staff. Rules and Regulations implementing said provision.
4. Respondent-corporation, on the other hand, contends that
"Field personnel" shall refer to non-agricultural employees who the present action is barred pursuant to Article 263, LC,
regularly perform their duties away from the principal place of which provides in part that “voluntary arbitration awards or
business or branch office of the employer and whose actual decisions shall be final, inappealable, and executory,” in
hours of work in the field cannot be determined with reasonable relation to Sec. 3 and 29 of the Arbitration Law (R.A. 876)
certainty. which excludes arbitration in labor disputes from those
appealable by certiorari.
5. Lastly, respondent-company contends that the special civil
Rule IV Holidays with Pay action of certiorari does not lie because respondent
arbitrator is not an “officer exercising judicial functions”
Sec. 1 Coverage. — This rule shall apply to all employees
within the contemplation of Rule 65, section 1.
except:
(a) Those of the government and any of the political subdivision,
including government-owned and controlled corporation; ISSUES:
1. WON certiorari could lie in reviewing the decision of the
(b) Those of retail and service establishments regularly
arbitrator (YES)
employing less than ten (10) workers;
2. WON respondent-company is exempted from granting
(c) Domestic helpers and persons in the personal service of
another; holiday pay to monthly-paid employees (NO)
(d) Managerial employees as defined in Book Three of the Code; 3. WON mandamus may lie to compel Mantrade to pay
holiday pay (YES)
(e) Field personnel and other employees whose time and
performance is unsupervised by the employer including those
HELD:
basis, or those who are paid a fixed amount for performing work 1. Court held: Contrary to Mantrade’s contention, SC
has power to review decision of respondent
irrespective of the time consumed in the performance thereof.
arbitrator
- Issue was already decided in the case of Oceanic Bic
1. a. Retail Establishment
Division vs. Romero (1984)
o While decisions of voluntary arbitrators must be
RA 6727, f "Retail Establishment" is one principally engaged in
given respect and, as a general rule, must be
the sale of goods to end-users for personal or household use;
accorded a certain measure of finality, it is not
correct however, that this respect precludes the
1. b. Service Establishment exercise of judicial review over the decisions.
o Art. 262, LC which makes voluntary arbitration
RA 6727, g "Service Establishment" is one principally engaged awards final, inappealable and executory refers only
in the sale of service to individuals for their own or household to appeals to NLRC and not to judicial review


o In spite of statutory provisions making ‘final’ the may not be paid for the regular holidays during semestral
decisions of certain administrative agencies, the vacations. They shall, however, be paid for the regular holidays
Court has taken cognizance of petitions questioning during Christmas vacation;
these decisions on the grounds of want of
jurisdiction, grave abuse of discretion, violation of Jose Rizal College v. NLRC
due process, denial of substantial justice or FACTS:
erroneous interpretation of the law. 1. National Alliance of Teachers and Office Workers (NATOW)
o Lastly, by the nature of her functions, a voluntary in behalf of the faculty and personnel of Hose Rizal College
arbitrator acts in a quasi-judicial capacity. As such, filed with the LA a complaint against the college for non-
there is no reason why her decisions involving payment of holiday pay
interpretation of law should be beyond judicial - Complainants are categorized into three groups:
review. (1) Personnel on monthly basis, who receive their
2. Court held: NO, the IRR, which adds such monthly salary uniformly throughout the year,
exemption, is null and void for being ultra vires irrespective of the actual number of working days
- Issue is already decided in the case of Insular Bank of in a month without deduction for holidays;
Asia and America Employees’ Union vs. Inciong (2) Personnel on daily basis who are paid on actual
o Sec.2, Rule IV, Book III of the implementing rules days worked and they receive unworked holiday
and Policy Instruction No. 9 issued by the Secretary pay and
of Labor is null and void. In the guise of clarifying (3) Collegiate faculty who are paid on the basis of
the Labor Code’s provisions on holiday pay, they student contact hour.
have in effect amended them, by excluding monthly 2. LA:
paid employees from the said benefits, thereby - The faculty and personnel who are paid their salary on a
providing an exception not provided by law. monthly basis are presumed to be paid the 10 paid
o An administrative interpretation which diminishes legal holidays and are no longer entitled to separate
the benefits of labor more than what the statute payment for the said regular holidays
delimits or withholds is obviously ultra vires. - Personnel who are paid their wages on a daily basis are
(Chartered Bank Employees Association vs. Ople) entitled to be paid the 10 unworked regular holidays
3. Court held: YES, in view of the decisions already - The collegiate faculty who, by contract, are paid
cited compensation per student contact hour are not entitled
- While it may be true that mandamus is not proper to to unworked regular holiday pay considering that these
enforce a contractual obligation, the remedy being an regular holidays have been excluded in the
action for specific performance, in view of the above- programming or the student contact hours
cited subsequent decisions of the SC clearly defining 3. NATOW appealed with the NLRC
the legal duty to grant holiday pay to monthly salaried 4. NLRC: modified decision of LA and declared that the
employees, mandamus is an appropriate equitable teaching personnel paid by the hour are entitled to holiday
remedy. pay
5. Jose Rizal filed instant Petition for Certiorari
6. Jose Rizal College’s arguments:
2. Regular Holidays/Special Holidays - It is not covered by Book V of the LC as it is a non-profit
institution;
- RA 9242, as amended by EO 292 - Its hourly paid faculty members are paid on a contract
basis because they are required to hold classes for a
3. Holiday Pay particular number of hours.
- In the programming of these student contract hours,
Art. 94(b) The employer may require an employee to work on legal holidays are excluded and labelled in the
any holiday but such employee shall be paid a compensation schedule as "no class day", but if a regular week day is
equivalent to twice his regular rate; and declared a holiday, the school calendar is extended to
compensate for that day.
3. a. Faculty in Private School - Thus, the advent of any legal holidays within the
semester will not affect the faculty's salary because this
Book III Conditions of Employment day is not included in their schedule while the calendar
Rule IV Holidays with Pay is extended to compensate for special holidays.
Sec. 8(a) Holiday pay of certain employees. — (a) Private school - Hence the programmed number of lecture hours is not
teachers, including faculty members of colleges and universities, diminished.


7. Solicitor General’s arguments: income, and it does not matter that the school calendar
- Under Art. 94 of the LC (as amended), holiday pay is extended in view of the days or hours lost.
applies to all employees except those in retail and - The income that they could have earned from other
service establishments. sources is lost during the extended days similarly, when
- Under Sec. 8 of IRR of LC, private school teachers, classes are called of or shortened on account of
including faculty members of colleges and universities, typhoons, floods, rallies, and the like
may not be paid for the regular holidays during - Faculty members must be paid, whether or not
semestral vacations but shall however be paid for the extensions are considered
regular holidays during Christmas vacations 3. No, Jose Rizal College was not deprived of due
- Under said provisions, Jose Rizal College, although a process.
non-profit institution, are obliged to give pay even on - It was amply heard and represented in the proceedings,
unworked regular holidays to hourly paid faculty as the records show.
members - It submitted its position paper before the LA and NLRC
and even filed a MR of the NLRC decision, etc.
- Hence, its claim of lack of due process is unfounded.
ISSUES:
1. WON School Faculty who according to their contracts are 3. b. Divisor as Factor
paid per lecture hour are entitled to unworked holiday pay
(NO) Trans-Asia Phil. Employees Association (TAPEA) v. NLRC
2. WON School Faculty are entitled to holiday pay for special FACTS:
holidays (YES) 1. TAPEA entered into a CBA with their employer (Trans-Asia
3. WON Jose Rizal College was deprived of due process when Philippines), with its effectivity date running from Apr. 1, 1988
it was not notified of the appeal made to the NLRC against to Mar. 31, 1991.
the decision of the LA (NO) 2. The CBA provided, among others, that an employee who is
permitted to work on a legal holiday shall receive a salary
RATIO: equivalent to 200% of the regular daily wage rate plus a 60%
1. No, they are not entitled to holiday pay for regular premium pay as holiday pay for services rendered by the
holidays. employee on such legal holiday.
- The IRR provision is not justified by the provisions of the 3. When the CBA concluded, however, the issue of unpaid
law which is silent with respect to faculty members paid holiday pay from the period of Jan 1985 to Dec. 1987 was still
by the hour left unresolved. The parties underwent preventive mediation
- Under their teaching contracts, the teachers are meetings, to no avail.
obliged to work and consent to be paid only for work 4. TAPEA filed a complaint with the LA on Aug. 18, 1988 for the
actually done payment of their holiday pay in arrears. The complaint was
- Regular Holidays specified as such by law are known to later amended to include the payment of holiday fees for the
both school and faculty members as “no class day” current CBA.
- The teachers do not expect payment for said unworked 5. TAPEA argues that their claim for the holiday pay in arrears is
days and this was clearly in their minds when they based on its non-inclusion in their monthly pay. They also
entered into the teaching contracts provided the following circumstances which support their
2. Yes, they are entitled to holiday pay for special claim:
holidays. - First, the Employees’ Manual requires that the employee
- Both the LC and IRR are silent as to payment on special should have worked or was on authoried leave with pay
public holidays on the day immediately preceding the legal holiday.
- However, it is apparent that the purpose of holiday pay TAPEA argues that this evinces Trans-Asia’s intention to
(prevention of diminution of monthly income of pay holiday pay in addition with their monthly pay
employees on account of work interruptions) is because there would be no need for this condition if
defeated when regular class day is cancelled on there were no intention on Trans-Asia’s part to pay the
account of a special public holiday and class hours are same.
held on another working day to make up for time lost in - Second, the appointment papers of the employees did
the school calendar not stipulate that the holiday pay was to be included in
- The faculty member, although forced to take a rest, their monthly pay.
does not earn what he should earn on that day - Third, TAPEA claims that the inclusion of the additional
- When a special public holiday is declared, faculty 60% premium pay in the CBA provision was specifically
member paid by the hour is deprived of expected inserted there to make up for the holiday pay in arrears


that were in question. This, according to TAPEA is an 7. LA: Complaint dismissed.
admission of the non-payment of the holiday pay. - Trans-Asia has consistently used the 286 days as divisor
- Finally, TAPEA cites the CBA provision on holiday pay for the computation of its employees’ benefits,
itself, saying that there would be no need for an express recognizing the inclusion of the 10 legal holidays as full
provision if they had already been paying the holiday in holidays with pay. And because of this consistent
past. application, there is no doubt that can be resolved in
- With regard to their amendment of the complaint to favor of the employees/TAPEA.
include the current CBA in the issues submitted, they - Due to the reason stated above, the imputation of bad
claim that Trans-Asia was in bad faith for not faith and unfair labor practice must also fail. The provision
implementing the CBA provision on holiday pay even in the CBA granting 260% holiday pay rate was just to
after a duly executing the CBA with TAPEA. reiterate what has been provided in the Labor Code, as it
6. Trans-Asia made a reply, in seriatim, to the points raised by was already included in the employee’s monthly pay.
TAPEA: 8. NLRC: LA affirmed.
- First, the precondition established is non-indicative of the
alleged non-payment of the holiday pay since it claims ISSUES:
that it has always honored the labor law provisions on 1. WON the NLRC and LA erred in their decisions that the
holiday pay by incorporating the same with the monthly holiday pay was already included in the monthly salary (NO)
salaries of the employees. It claims that it even has always 2. WON there were any doubts that may be resolved in favor of
used the divisor of 286 days in computing for overtime TAPEA and Trans-Asia’s employees (NO)
pay and daily rate deduction for absences. It arrived at
the said number from the following formula: RATIO:
1. NLRC and LA decisions upheld; holiday pay is
!" ! !! already included in the monthly salary.
= 286,
! - Trans-Asia’s inclusion of the holiday pay is already evidenced
by its use of 286 days as its divisor in computing for benefits
where 52 = no. of weeks per year
for its employees.
44 = no. of work hours per week
o 365 days – 52 Sundays – 26 Saturdays = 286 days (or
8 = no. of work hours per day.
properly, 287 days).
- Trans-Asia clarifies that this 286 days divisor already takes
o Since the 10 legal holidays were never subtracted from
into account the 10 regular holidays in a year. Since it only
the formula above, the only logical conclusion is that the
subtracts 52 Sundays and 26 Saturdays (since employees
payment for these holidays is already incorporated.
are required to work half-day on Saturdays). If they had
o Hence, the arguments put forward by the TAPEA must
not included the 10 holidays, as TAPEA claims, then the
fail, as they were merely inferences and suppositions.
divisor would only be 277.
- It is on the account of this fact that the LA submitted its
- As to TAPEA’s contention of the provision on the CBA
decision and why the NLRC affirmed the same.
granting the 260% holiday pay rate, it was only included
- Petitioners insist the provision in the CBA to grant a 260%
there by Trans-Asia in compliance with Sec. 4, Rule IV,
holiday pay rate is conclusive proof that the monthly salary
Book III of the Omnibus Rules.
does not include holiday pay. They cited Chartered Bank
o Sec. 4 Compensation for Holiday Work – Any
Employees Assoc v. Ople:
employee who is permitted or suffered to work on any
o “Any remaining doubts, which may arise from the
regular holiday, not exceeding 8 hours, shall be paid
conflicting or different divisors, used in the computation
at least 200% of his regular daily wage. If the holiday
of overtime pay and employee’s absences are resolved
falls on the scheduled rest day of the employee, he
by the manner in which work actually rendered on
shall be entitled to an additional premium pay of at
holidays is paid. Thus, whenever monthly paid employees
least 30% of his regular holiday rate of 200% based on
work on a holiday, they are given an additional 100% base
his regular wage rate.
pay on top of a premium pay of 50%” If the employee’s
- As to the contention that the inclusion of the provision
monthly pay already includes their salaries for holidays,
above is an admission of the nonpayment, Trans-Asia
they should be paid only premium pay but not both base
contends that they only included it as an affirmation of
and premium pay.”
the mandate of the Labor Code.
o The Court was not convinced with the argument since in
- As to the imputation of bad faith in not implementing the
the Chartered case, Chartered Bank used different
CBA provisions, Trans-Asia explains that what TAPEA is
divisors in computing the benefits (251 days) and the
claiming for, in effect, is the double payment of holiday
deductions (365 days). This caused confusion as to
pay, which Trans-Asia cannot accede to as it already
whether the holiday pay was already included in the
included the same in their monthly pay.


monthly salary. However, in the case at bar, Trans-Asia scheduled, he shall be paid an additional compensation of at
has been consistently using only one divisor: 286. The least thirty percent (30%) of his regular wage for work performed
Chartered case is clearly inapplicable. on Sundays and holidays.
- However, the Court notes that there is a need to adjust this
divisor, from 286 to 287, in order to properly account for all
the legal holidays, as set in EO 203, in relation to Sec. 6 of
the Rules Implementing RA 6727.
Sec. 2 Business on Sundays/Holidays. — All establishments and
o IRR of RA 6727, Sec 6 (d) For those who do not work and
enterprises may operate or open for business on Sundays and
are not considered paid on Saturdays and Sundays or rest holidays provided that the employees are given the weekly rest
days:
day and the benefits as provided in this Rule.
Equivalent Monthly Rate (EMR) =

!"#$%&# !"#$% !"#$ !"#$ ! !"! !"#$
Wellington Investment Inc. v. Cresenciano B. Trajano (Under-
!" Secretary of Labor and Employment), Elmer Abadilla, and 34
others (1995)
Where 262 days = 250 ordinary working days + 10 regular FACTS:
holidays + 2 days special days 1. Aug. 6, 1991, a routine inspection was conducted by a Labor
o Based on the formula above, the proper divisor used for Enforcement Office (LEO) on Wellington Flour Mills, an
those not considered paid on Saturdays and Sundays establishment owned & operated by Wellington Investment
should be 262 days. In the present case, since Trans-Asia and Manufacturing Corporation
employees have half-day work on Saturdays, 26 days - Report: finding of “non-payment of regular holidays
should be added to 262, which is equal to 288 days. falling on a Sunday for monthly-paid employees.”
However, due to the fact that their rest day falls on - Wellington sought reconsideration, arguing that there
Sundays, the number of unworked but paid legal holidays is no legal basis for LEO’s finding. It pays its employees
should be 9 and not 10 (since National Heroes’ Day is a fixed monthly compensation using the “314” factor,
always on a Sunday). which undeniably covers and already includes
o However, if the divisor is 287, the benefits will be payment for all the working days in a month as
diminished since it is a bigger divisor than 286. In view of well as the 10 unworked regular holidays within
Sec. 100 of the Labor Code, which provides for non- a year.
diminution of benefits, this 287 shall only be used as a 2. July 28, 1992: Regional Director ruled that “when a regular
divisor when advantageous for the employees, such as in holiday falls on a Sunday, an extra or additional working day
computation of the deductions for absences (since it will is created and the employer has the obligation to pay the
mean smaller deductions). 286 will still be used in the employees for the extra day except the last Sunday of
computation for overtime pay and other benefits since August since the payment for the said holiday is already
this will mean a bigger amount. included in the 314 factor,” à directed Wellington to pay its
2. NO; no doubts were left to be resolved in favor of employees compensation corresponding to four (4) extra
the employees. working days.
- While the doctrine is to resolve all doubts in favor of labor, 3. Wellington filed MR (treated as an appeal), pointing out that
no such doubt(s) exists in this case. The NLRC and LA’s it was in effect being compelled to “shell out an additional
decision were firmly grounded on substantial evidence and pay for an alleged extra working day” despite its complete
leaves no room for doubt to be resolved in the employee’s payment of all compensation lawfully due its workers, using
favor. the 314 factor.
- USec Cresenciano Trajano (Resp) held that the “divisor
DISP: Petition dismissed; NLRC and LA affirmed. being used by Wellington does not reliably reflect the
actual working days in a year,” à demanded
3. c. Sunday Wellington to pay the six additional working days
resulting from regular holidays falling on Sundays in
Art. 93 Compensation for rest day, Sunday or holiday work. 1988, 1989 and 1990
a. Where an employee is made or permitted to work on his 4. Wellington filed MR à denied à instituted this special civil
scheduled rest day, he shall be paid an additional compensation action of certiorari and SC granted TRO enjoining R from
of at least thirty percent (30%) of his regular wage. An employee enforcing the above orders.
shall be entitled to such additional compensation for work
performed on Sunday only when it is his established rest day. ISSUE:
b. When the nature of the work of the employee is such that he
has no regular workdays and no regular rest days can be


WON a monthly-paid employee, receiving a fixed monthly holidays had fallen on Sundays à precluded the enjoyment
compensation, is entitled to an additional pay aside from his by the employees of a non-working day and employees
usual holiday pay, whenever a regular holiday falls on a Sunday consequently had to work an additional day for that month
- Labor USec Trajano: Adopted Labor Officer’s theory and
HELD: NO, a monthly-paid employee is NOT entitled said that “Wellington assumes that all the regular holidays
to an additional pay whenever a regular holiday falls fell on ordinary days and never on a Sunday. Thus, the
on a Sunday. respondent failed to consider the circumstance that
(Statement of legal basis first and Wellington’s minimum whenever a regular holiday coincides with a Sunday, an
compliance) additional working day is created and left unpaid.” à
- Every worker should, according to Art. 94 LC, "be paid his should use the “317 factor) not the “314 factor” to account
regular daily wage during regular holidays, except in retail for an increase in 3 working days resulting from regular
and service establishments regularly employing less than holidays falling on Sundays for the years 1988, 1989 and
ten (10) workers;" even if the worker does no work on these 1990
holidays. - SC: The theory loses sight of the fact that the monthly salary
o Regular holidays: New Year's Day, Maundy Thursday, in Wellington, based on the “314 factor” accounts for ALL
Good Friday, April 9 (Araw ng Kagitingan), May 1 (Labor 365 days of the year and leaves no day unaccounted for à it
Day), June 12 (Independence Day), July 4 (US pays for all days with the exception of only 51 Sundays
Independence Day?), November 30 (Nat’l Heroes Day), o If USec Trajano’s theory would be followed, each of the
December 25, and the day designated by law for 3 years mentioned above would make them a year of
holding a general election (or national referendum or 368 days
plebiscite). o If his theory would be followed, no employer opting to
- Employees uniformly paid by the month: “monthly minimum pay his employees monthly would have a definite basis
wage shall not be less than the statutory multiplied by 365 to determine the number of days for which
days divided by 12” à shall serve as compensation, whether compensation must be given à he would have to
worked or not, and irrespective of the number of working ascertain the number of holidays that would fall on
days therein Sundays and he would be compelled to make
o Monthly compensation intended to prevent adjustments in the monthly salaries EVERY YEAR
computations and adjustments resulting from o No law requires employees to make adjustments; as
contingencies (declaration of a special holiday or any mentioned above, what the law requires is to assure
fortuitous cause precluding work) that “the monthly minimum wage shall not be less than
o Employee is still entitled to the ENTIRE monthly salary the statutory minimum wage multiplied by 365 days
- SC: No question that Wellington complied with the divided by 12” and to pay that salary “for all days in the
minimum norm laid down by the law – by paying its month whether worked or not,” and “irrespective of the
employees "a salary of not less than the statutory or number of working days therein
established minimum wage," and that the monthly salary o This required salary is due and payable regardless of
thus paid was "not less than the statutory minimum wage the declaration of any special holiday or any fortuitous
multiplied by 365 days divided by twelve.” à Wellington event
complied with the minimum norm o The law also intended to precisely avoid re-
o The monthly salary was fixed by Wellington to provide computations and alterations in the salary for the
for compensation for every working day of the year contingencies
including the holidays specified by law — and - Respondents: Their conclusions and dispositions are
excluding only Sundays. justified by Sec. 2, Rule X, Book III of the Implementing
o The “314 factor” they used simply deducted 51 Rules, giving the Regional Director the power “To order and
Sundays from the 365 days normally comprising a year, administer (in cases where ER-EE relations still exist), after
and used the difference as basis for determining the due notice and hearing, compliance with the labor
monthly salary. standards provisions of the Code and the other labor
o The monthly salary thus fixed actually covers payment legislations”
for 314 days of the year, including regular and - SC: SIRA SILA. Their argument assumes that there are some
special holidays, as well as days when no work is “labor standards provisions” of the Code and the other
done by reason of fortuitous cause, as above specified, labor legislations” imposing on employers the obligation to
or causes not attributable to the employees. give additional compensation to their monthly-paid
(Respondent’s arguments) employees in the event that a legal holiday should fall on a
- Labor Officer (one who conducted inspection): It was Sunday in a particular month – with which compliance may
discovered that in certain years, two or three regular be commanded by the Regional Director – when the


existence of said provisions is precisely the matter to be 6. DOLE-Iligan District Office conducted a routine inspection
established in the premises of San Miguel Corporation (SMC) in Iligan
o They attempted to legislate, or interpret legal City.
provisions in such a manner as to create obligations 7. In the course of the inspection, it was discovered that there
where none are intended was underpayment by SMC of regular Muslim holiday pay to
o Acted with authority; grave abuse of direction its employees.
8. DOLE sent a copy of the inspection result to SMC and it was
3. d. Muslim Holiday received by and explained to its personal officer Elena dela
Puerta.
PD 1083, Art. 169 Official Muslim holidays. The following are 9. SMC contested the findings and DOLE conducted summary
hereby recognized as legal Muslim holidays: hearings, but still, SMC failed to submit proof that it was
(a) 'Amun Jadid (New Year), which falls on the first day of the first paying regular Muslim holiday pay to its employees.
lunar month of Muharram; 10. Hence, Alan Macaraya, Director IV of DOLE Iligan District
(b) Maulid-un-Nabi (Birthday of the Prophet Muhammad), which Office issued a compliance order directing SMC to consider
falls on the twelfth day of the third lunar month of Rabi-ul-Awwal; Muslim holidays as regular holidays and to pay both its
(c) Lailatul Isra Wal Mi'raj (Nocturnal Journey and Ascension of Muslim and non-Muslim employees holiday pay within 30
the Prophet Muhammad), which falls on the twenty-seventh day days from the receipt of the order.
of the seventh lunar month of Rajab; (d) 'Id-ul-Fitr (Hari Raya 11. DOLE MAIN OFFICE: SMC appealed à dismissed for
Pausa), which falls on the first day of the tenth lunar month of being filed late à motion for reconsideration à granted à
Shawwal, commemorating the end of the fasting season; and dismissed for lack of merit à petition for certiorari to CA
(e) 'Id-ul-Adha (Hari Raja Haji), which falls on the tenth day of the 12. CA: Affirmed DOLE decision.
twelfth lunar month of Dhu 1-Hijja.
ISSUES:
4. WON this Rule 65 petition should be granted (NO)
PD 1083, Art. 170 Provinces and cities where officially
5. WON SMC liable to pay holiday pay for Muslim holidays for
observed.
(1) Muslim holidays shall be officially observed in the Provinces of both Muslim and non-Muslim employees (YES)
6. WON Regional Director Macaraya has jurisdiction (YES)
Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North
Cotabato, Sultan Kudarat, Sulu, Tawi- Tawi, Zamboanga del
HELD:
Norte and Zamboanga del Sur, and in the Cities of Cotabato,
4. Court held: NO, as certiorari cannot be availed of
Iligan, Marawi, Pagadian, and Zamboanga and in such other
Muslim provinces and cities as may hereafter be created. as a substitute for a lost appeal
- Herein petition is a petition for certiorari under Rule 65
(2) Upon proclamation by the President of the Philippines,
instead of an appeal under Rule 45.
Muslim holidays may also be officially observed in other
o Appeal from a final disposition of the CA is a Rule
provinces and cities.
45 petition for review, and not a special civil action
under Rule 65.
PD 1083, Art. 171 Dates of observance. The dates of Muslim
o Reglementary period to appeal, under Rule 45, is 15
holidays shall be determined by the Office of the President of
days from notice of judgment or denial of motion
the Philippines in accordance with the Muslim Lunar Calendar
for reconsideration.
(Hijra).
o Herein petition did not show that petitioner has no
plain, speedy and adequate remedy in the ordinary
PD 1083, Art. 172 Observance of Muslim employees. course of law against its perceived grievance. As
(1) All Muslim government officials and employees in places such Rule 65 could not lie.
other than those enumerated under Article 170 shall also be o For failure of SMC to file a timely appeal, the
excused from reporting to office in order that they may be able decision of CA had already become final and
to observe Muslim holidays. executory.
(2) The President of the Philippines may, by proclamation, o Even if granted, petition falls on merits
require private offices, agencies or establishments to excuse 5. Court held: YES
their Muslim employees from reporting for work during a Muslim - Muslim holidays are provided under Articles 169 and
holiday without reduction in their usual compensation. 170, Title I, Book V, of PD 1083, or the Code of Muslim
Personal Laws
SMC v. CA - SMC: Muslim holidays, as well as holiday pay provided
FACTS: for by Art. 94, LC shall be applicable only to Muslims,
pursuant to Article 3(3) of same law.


- SC: Wages and other emoluments granted by law to Sec. 6(c) Absences – (c) Where the day immediately preceding
the working man are determined on the basis of the the holiday is a non-working day in the establishment or the
criteria laid down by laws and certainly not on the basis scheduled rest day of the employee, he shall not be deemed to
of the worker’s faith or religion. be on leave of absence on that day, in which case he shall be
- At any rate, Article 3(3) of PD 1083 also declares that ‘… entitled to the holiday pay if he worked on the day immediately
nothing herein shall be construed to operate to the preceding the non-working day or rest day.
prejudice of a non-Muslim.’
- Citing also the 1999 Handbook on Worker’s Statutory
Benefits approved by DOLE Secretary Laguesma: “…. D. SERVICE INCENTIVE LEAVE
Both Muslim and Christians working within the Muslim
areas may not report for work on the days designated
Art. 95 Right to service incentive leave.
by law as Muslim holidays.”
a. Every employee who has rendered at least one year of service
6. Court held: YES shall be entitled to a yearly service incentive leave of five days
- Under Article 128, LC, Regional Director Macaraya
with pay.
acted as the duly authorized representative of the
b. This provision shall not apply to those who are already
Secretary of Labor and Employment and it was within
enjoying the benefit herein provided, those enjoying vacation
his power to issue the compliance order to SMC. leave with pay of at least five days and those employed in
- SMC never denied that it was not paying Muslim establishments regularly employing less than ten employees or
holiday pay to its non-Muslim employees because they
in establishments exempted from granting this benefit by the
contend they are not entitled to it. Hence, the issue
Secretary of Labor and Employment after considering the
could be resolved even without documentary proofs. In
viability or financial condition of such establishment.
any case, there was no indication that Macaraya failed c. The grant of benefit in excess of that provided herein shall not
to consider any documentary proof presented by SMC.
be made a subject of arbitration or any court or administrative
- On the issue of denial of due process, it is sufficient that
action.
SMC was furnished a copy of the inspection order and it
was received by and explained to its Personnel Officer.
Further, a series of summary hearings were conducted.
Rule V Service Incentive Leave
Thus, SMC could not claim it was not given an
Sec. 1 Coverage. — This rule shall apply to all employees
opportunity to defend itself.
except:
4. Absences
including government-owned and controlled corporations;
(b) Domestic helpers and persons in the personal service of
another;
Rule IV Holidays with Pay
(c) Managerial employees as defined in Book Three of this Code;
Sec. 6(a) Absences. — (a) All covered employees shall be
(d) Field personnel and other employees whose performance is
entitled to the benefit provided herein when they are on leave of
unsupervised by the employer including those who are engaged
absence with pay. Employees who are on leave of absence
on task or contract basis, purely commission basis, or those who
without pay on the day immediately preceding a regular holiday
are paid a fixed amount for performing work irrespective of the
may not be paid the required holiday pay if he has not worked
time consumed in the performance thereof;
on such regular holiday.
(e) Those who are already enjoying the benefit herein provided;
(f) Those enjoying vacation leave with pay of at least five days;
Book III Conditions of Employment and
Rule IV Holidays with Pay (g) Those employed in establishments regularly employing less
Sec. 10 Successive regular holidays. — Where there are two (2) than ten employees.
successive regular holidays, like Holy Thursday and Good Friday,
an employee may not be paid for both holidays if he absents Sec. 2 Right to service incentive leave. — Every employee who
himself from work on the day immediately preceding the first has rendered at least one year of service shall be entitled to a
holiday, unless he works on the first holiday, in which case he is yearly service incentive leave of five days with pay.
entitled to his holiday pay on the second holiday.
Sec. 3 Definition of certain terms. — The term "at least one-
5. Non-working day/sched. Rest Day year service" shall mean service for not less than 12 months,
whether continuous or broken reckoned from the date the
Book III Conditions of Employment employee started working, including authorized absences and
Rule IV Holidays with Pay paid regular holidays unless the working days in the

establishment as a matter of practice or policy, or that provided
in the employment contract is less than 12 months, in which case Art. 95 a. Every employee who has rendered at least one year
said period shall be considered as one year. of service shall be entitled to a yearly service incentive leave of
five days with pay.
Sec. 4 Accrual of benefit. — Entitlement to the benefit provided b. This provision shall not apply to those who are already
in this Rule shall start December 16, 1975, the date the enjoying the benefit herein provided, those enjoying vacation
amendatory provision of the Code took effect. leave with pay of at least five days and those employed in
establishments regularly employing less than ten employees or
Sec. 5 Treatment of benefit. — The service incentive leave shall in establishments exempted from granting this benefit by the
be commutable to its money equivalent if not used or exhausted Secretary of Labor and Employment after considering the
at the end of the year. viability or financial condition of such establishment.
Sec. 6 Relation to agreements. — Nothing in the Rule shall Book III Conditions of Employment
justify an employer from withdrawing or reducing any benefits, Rule V Service Incentive Leave
supplements or payments as provided in existing individual or Sec. 1 Coverage. — This rule shall apply to all employees
collective agreements or employer's practices or policies. except:
SUMMARY OF SERVICE INCENTIVE LEAVE including government-owned and controlled corporations;
Coverage All employees who have rendered at least 1 (b) Domestic helpers and persons in the personal service of
year of service another;
Exceptions 1. Those already enjoying the benefits (c) Managerial employees as defined in Book Three of this Code;
2. Those employed in establishments (d) Field personnel and other employees whose performance is
exempted from granting this benefit unsupervised by the employer including those who are engaged
3. Government and GOCC employees on task or contract basis, purely commission basis, or those who
4. Domestic helpers and persons in the are paid a fixed amount for performing work irrespective of the
personal service of another time consumed in the performance thereof;
5. Managerial employees (e) Those who are already enjoying the benefit herein provided;
6. Field personnel (f) Those enjoying vacation leave with pay of at least five days;
7. Commission basis and
8. Paid fixed amount for performing work (g) Those employed in establishments regularly employing less
irrespective of the time consumed than ten employees.
9. Those with vacation leave with pay of at
least five days Makati Haberdashery, Inc. v. NLRC
10. Establishments regularly employing less Complainants here are the Sandigan ng Manggagawang
than ten employees Pilipino—TUCP and members: Jacinto Garciano, Alfredo Basco,
Requirements At least one year of service with yearly Victorio Laureto, Ester Narvaez, Eugenio Robles, Belen Vista,
incentive leave of 5 days with pay Alejandro Estrabo, Vevencio Tiro, Casimiro Zapata, Gloria
- Service for not less than 12 months, Estrabo, Leonora Mendoza, Macaria Dimpas, Merilyn Viray, Lily
whether continuous or broken from the Opina, Janet Sangdang, Josefina Alcoceba, Maria Angeles
date of actual work of EE FACTS:
- Includes authorized absences and paid 1. Complainants/respondents have been working for Makati
regular holidays unless the working days Haberdashery as tailors, seamstress, sewers, basters
in the establishment as a matter of (manlililip) and “plantsadoras”
practice or policy, or that provided in the - Paid on a piece-rate basis, except Maria and Leonila
employment contract is less than 12 who are paid monthly
months, in which case said period shall - In addition to piece-rate, they are given daily allowance
be considered as one year of P3.00 provided they report for work before 9:30AM
Treatment of Convertible to cash if not exhausted at the everyday
benefit end of the year. - Work hours are 9:30AM to 6 or 7PM, Mon to Sat and
during peak periods even Sundays and holidays
- The basis of the commutation/conversion of the SIL shall be 2. July 20, 1984: Sandigan ng Manggagawang Pilipino, a labor
the salary rate at the date of commutation/conversion. organization of the workers, filed a complaint for:
1) underpayment of the basic wage
1. Coverage/Exclusions 2) underpayment of living allowance


3) non-payment of overtime work as to the means and method by which the same is to be
4) non-payment of holiday pay accomplished
5) non-payment of service incentive pay - SC: The most important requisite of control is present
6) 13th month pay o Whenever a customer enters into a contract with the
7) benefits under Wage Orders Nos. 1, 2, 3, 4, 5 haberdashery or its proprietor, the latter directs an
3. Pending the case, Dioscoro (respondent) left with Salvador, employee to take the customer’s measurements, sew
a salesman of Haberdashery, an open package containing a the pants, coat or shirt, etc. à SUPERVISION is actively
“jusi” barong tagalog manifested in all these aspects – the manner and
- When confronted, Dioscoro replied that it was ordered quality of cutting, sewing and ironing
by Casimiro (respondent) for his customer, and o Memorandum of Asst. Manager Cecilio Inocencio, Jr.
Casimiro allegedly admitted that he copied the design mentioned new procedures to be followed with the
of Haberdashery; in the afternoon, when questioned following phrases:
again about the barong, both denied ownership of the § “To follow instruction and orders from the
same undersigned”
- A memorandum was issued to each of them to explain § “Before accepting the job orders tailors must
why no action should be taken against them for check the materials, job orders, due dates and
accepting a job order which is prejudicial and in direct other things”
competition with the business of the company à § à said memorandum shows that Makati
allegedly did not submit an explanation and did not Haberdashery has reserved the right to control its
report for work à hence, dismissed employees not only as to the result but also the
- Dioscoro and Casimiro filed a complaint for illegal means and methods by which the same are to be
dismissal accomplished
4. LA rendered judgment: o Further shown that private respondents are regular
- Ruled against Haberdashery, ordering them to reinstate employees by the fact that they have to report for work
Dioscoro and Casimira without loss of seniority rights, regularly from 9:30AM to 6 or 7PM and are paid
full backwages additional allowance if they report for work before 9:30
- Ruled that in the earlier case (in #2), the claim for and which is forfeited if they arrive at or after 9:30
underpayment re violation of the minimum wage law is 2. Court held: YES, they are entitled to monetary
dismissed claims, EXCEPT service incentive leave pay and
- Found that Haberdashery violated the decrees on cost holiday pay
of living allowance, service incentive leave pay and 13th - No dispute that respondents are entitled to the
month pay à economic analyst of the Commission is Minimum Wage as mandated by Sec. 2(g) of Letter of
directed to compute the monetary awards due each Instruction No. 829, and reiterated in Sec. 3(f) Rules
complainant Implementing PD1713: “All employees paid by the result
5. Makati Haberdashery appealed to the NLRC à affirmed but shall receive not less than the applicable new minimum
limited Dioscoro and Casimiro’s backwages to just one year wage rates for 8 hours work a day, except where a payment
- MR denied à instant petition by result rate has been established by the Sec. of Labor” à
no such rate has been established
ISSUES: (On the claim of underpayment for violation of the Minimum
1. WON there was an ER-EE relationship between Wage Law and Wage Orders)
Haberdashery and the workers (to establish illegal dismissal - SC: Private respondents did not appeal the ruling of the LA
yata, under issue 3) (YES) that there was lack of evidence; neither did they raise that
2. WON the workers are entitled to monetary claims (YES, issue in the SC à issue has been laid to rest
except service incentive leave pay and holiday pay) (On cost of living allowance)
3. WON Dioscoro and Casimiro were illegally dismissed (NO) - SC: As a consequence of their status as regular employees,
they can claim cost of living allowance
HELD: o Apparent from the provision defining the employees
1. Court held: YES, an ER-EE relationship existed entitled to the allowance as “…All workers in the
- The test is four-fold: 1) selection and management of the private sector, regardless of their position, designation
employee; 2) payment of wages; 3) power of dismissal; 4) or status, and irrespective of the method by which their
power to control employee’s conduct wages are paid)
- The “control test” is the most important – the determination (On 13 t h Month Pay)
of whether the ER controls or has reserved the right to - SC: Private respondents are also entitled to claim their 13th
control the EE not only as to the result of the work but also Month Pay under Sec. 3(e) of the Rules and Regulations


Implementing PD 851: “The Decree shall apply to all interests of the employer, another justifiable ground for
employers except to e) employers of those who are paid on dismissal
purely commission, boundary, or task basis, and those who - Right of an employer to dismiss an employee whose
are paid a fixed amount for performing a specific work, continuance in the service is inimical to the employer’s
irrespective of the time consumed in the performance interest
thereof, except where the workers are paid on - The LA gave no credence to the employees’ version and
piece-rate basis in which case the employer shall be found their excuse that the barong tagalog was the one
covered by this issuance” they got from the embroiderer for the assistant manager
(On service incentive leave) investigating them unbelievable
- SC: They are not entitled to service incentive leave pay - It is evident there is no illegal dismissal
because as piece-rate workers being paid at a fixed amount - The right to dismiss or impose disciplinary sanctions upon
for performing work irrespective of time consumed in the an employee for just and valid cause, pertains in the first
performance thereof, they fall under one of the exceptions place to the employer, as well as the authority to determine
stated in Sec. 1(d), Rule V Implementing Regulations, Book the existence of said cause in accordance with the norms of
III, LC due process
- “Rule V Service Incentive Leave – Sec. 1 Coverage – This o SC: No evidence that the employer violated said norms.
rule shall apply to all employees except: d) Field personnel On the contrary, the employees who vigorously insist
and other employees whose performance is unsupervised on the ER-EE relationship, were the ones who exhibited
by the employer including those who are engaged on task their lack of respect and regard for their employer’s
or contract basis, purely commission basis, or those who are rules à Haberdashery had valid grounds to terminate
paid a fixed amount for performing work irrespective of the them
time consumed in the performance thereof”
(On holiday pay) Ma’am Daway: Wrong decision. The Labor Congress ruling is
- SC: For the same reason (as in service incentive leave), correct, piece-rate workers are NOT automatically excluded from
private respondents cannot also claim holiday pay under service incentive leave. The entire provision in Sec. 1 (d) must be
Sec. 1(e), Rule IV, Implementing Regulations, Book III, LC considered: “field personnel and other employees whose time
- “Rule IV Holidays with Pay – Sec. 1 Coverage – This rule and performance is unsupervised by the employer, including
shall apply to all employees except: e) Field personnel and those who are engaged on task or contract basis, purely
other employees whose time and performance is commission basis, or those who are paid a fixed amount for
unsupervised by the employer including those who are performing work irrespective of the time consumed in the
engaged on task or contract basis, purely commission basis, performance thereof.” In Makati Haberdashery, employees’ time
or those who are paid a fixed amount for performing work and performance were SUPERVISED by the employer thus falling
irrespective of the time consumed in the performance outside of the exception in the Omnibus Rules. They should be
thereof.” entitled to service incentive leave.
3. Court held: NO, Dioscoro and Casimiro were NOT
illegally dismissed See Again: Labor Congress v. NLRC
- SC: Public respondents misread the evidence: it does show FACTS:
that a violation of the employer’s rules has been committed 1. 99 petitioners (Ana Marie Ocampo, et al.) were rank-and-file
o The evidence of such transgression, the copied barong employees of Empire Food Products, hired on various dates
tagalog, was in the possession of Dioscoro who pointed 2. Petitioners (Ana Marie, et al.) filed a complaint (NLRC Case)
to Casimiro as the owner for payment of money claims and for violation of labor
o When required to explain, they not only failed to do so standards laws; they also filed a petition for direct
but instead went on AWOL, waited for period to certification of the Labor Congress of the Philippines (LCP)
explain to expire and for Makati Hab to dismiss them as their bargaining representative
and then, filed an action for illegal dismissal on the far- 3. Oct. 23, 1990: petitioners represented by LCP Pres. Benigno
fetched ground that they were dismissed because of Navarro, Sr. and respondents Gonzalo Kehyeng and Evelyn
union activities Kehyeng (for Empire Food) entered into a Memorandum of
- Assuming that such acts do not constitute abandonment, Agreement:
their blatant disregard of the memorandum is an open a. That the Management of Empire Foods has no objection
defiance to the lawful orders of the employer, a justifiable to the certification of LCP as the SOLE and EXCLUSIVE
ground for termination of employment by the employer bargaining agent and representative for the employees
provided for in Art. 283 (a) (now 288) as well as a clear regarding “WAGES, HOURS OF WORK, and OTHER
indication of guilt for the commission of acts inimical to the TERMS AND CONDITIONS OF EMPLOYMENT”


b. That as regards the pending NLRC case (in #2), the - That violation of the MOA was a resolutory condition,
issues will be resolved during the negotiation of the CBA which cannot be made the basis of an imposition of an
c. That in consideration of the foregoing, the NLRC Case obligation
shall be provisionally withdrawn - That evidence shows there was no underpayment of
d. That the parties agreed that upon signing the wages: complainants are piece workers or paid on a
Agreement, no harrasments, threats, interferences of pakiao basis (a certain amount for every 1000 pieces of
their respective rights, no vengeance or revenge by each cheese curls or other products repacked) and the only
partner nor any act of ULP (unfair labor practice) which limitation is that they should receive compensation NO
might disrupt the operations of the business LESS THAN MINIMUM WAGE for 8 hours of work →
e. That pending the negotiations or formalization of the testimony by Gonzalo Kehyeng showed compliance,
CBA, the MOA shall govern the parties in the exercise of which complainants failed to rebut
their rights and whatever problems and grievances may - Claim for moral and exemplary damages has no basis
arise shall be resolved by them because there was no malice, bad faith or fraud shown to
f. That parties agree to respect and comply with the terms have been perpetrated
and any violation of any provision shall constitute an act 11. NLRC: Affirmed in toto → MR → denied → Instant special
of ULP civil action for certiorari
4. Oct. 24, 1990: Mediator Arbiter approved the MOA and
certified LCP as the “sole and exclusive bargaining agent ISSUES:
among the rank-and-file employees” WON petitioners are entitled to benefits they are praying for
5. Nov. 9, 1990: Petitioners submitted a proposal for collective (YES)
bargaining
6. [NOT IN FACTS: based on guard’s testimony, on Jan. 21, Court held: YES, as regular employees (although
petitioners were absent from work, so the cheese curls to be piece-rate workers) they are entitled to holiday pay,
packed that day were spoiled] premium pay, 13th month pay and service incentive
7. Jan. 23, 1991: Petitioners filed a complaint against private leave
respondents for: - 3 facts why they are entitled:
- Unfair labor practice by way of illegal lockout and/or 1) As to the nature of the tasks, their job of repacking snack
dismissal food was necessary or desirable in the usual business of
- Union busting through harrasments, threats and intering private respondents, who were engaged in the
with the rights to self-organization manufacture and selling of such food products;
- Violation of the MOA 2) Petitioners worked for private respondents throughout
- Underpayment of wages the year, their employment not having been dependent
- Actual, moral and exemplary damages on a specific project or season;
8. LA: Absolved private respondents but directed the 3) The length of time that petitioners worked for private
reinstatement of the complainants respondents
9. NLRC: Vacated the decision and remanded the case for - Although their mode of compensation was on a “per piece
further proceedings basis,” the status and nature of their employment was that of
- LA noted that complainant didn’t present any witness; regular employees
NLRC reviewed the minutes and it appears that the - Rules implementing LC exclude certain employees from
complainant presented witnesses and the LA must have receiving benefits such as nighttime pay, holiday pay, service
overlooked the testimonies of some of the individual incentive leave and 13th month pay: inter alia, “field
complainants; that said complainants must be afforded personnel and other employees whose time and
the time and opportunity to substantiate their claims performance is unsupervised by the employer, including
10. LA ruled: those who are engaged on task or contract basis, purely
- That complainants failed to present with definiteness and commission basis, or those who are paid a fixed amount for
clarity the acts constitutive of unfair labor practice, and performing work irrespective of the time consumed in the
failure to present prime facie evidence is fatal to the performance thereof.”
cause of complainants; o SC: Petitioners, as piece-rate workers, do not fall within
- That the charge of illegal lockout has no leg to stand on this group; not only did they labor under the control of
because the guard Orlando (of Empire Foods) testified private respondents, they also toiled throughout the year
that complaints refused and failed to report for work, and with the fulfillment of their quota as basis for
under cross-examination, complainants failed to rebut compensation
- That complainants failed to specify what threats or o Sec. 8(b) Rule IV, Book III specifically mentions piece
intimidation was committed workers are being entitled to holiday pay: “Where a


covered employee is paid by results or output, such as paid regular holidays unless the working days in the
payment on piece work, his holiday pay shall not be less establishment as a matter of practice or policy, or that provided
than his average daily earnings for the last 7 actual in the employment contract is less than 12 months, in which case
working days” said period shall be considered as one year.
o Revised Guidelines on the Implementation of the 13th
Month Pay Law clearly exclude the employer of piece rate 2. b. Treatment of Benefits
workers from those exempted from paying 13th month
pay: “The following employers are still not covered …
except where the workers are paid on piece-rate basis in Rule V Service Incentive Leave
which case the employer shall grant the required 13th
Sec. 5 Treatment of benefit. — The service incentive leave shall
month pay to such workers”
be commutable to its money equivalent if not used or exhausted
o As to overtime pay, Sec. 2(e), Rule I, Book III provides that
at the end of the year.
workers who are paid by results including those who are
paid on piece-work, takay, pakiao, or task basis, if their
E. VACATION LEAVE/SICK LEAVE
output rates are in accordance with the standards under
Sec. 8, Rule VII, Book III, or where such rates have been
Sick Leave, Vacation Leave and Other Similar Benefits
fixed by the Sec. of Labor, are not entitled to overtime
- While the 5-day SIL is mandatory, ‘sick leaves’ and ‘vacation
pay
leaves’ are voluntary benefits. They are, by their nature,
• Here, private respondents did not allege adherence
intended to be replacements for regular income which
to the standards in Sec. 8 nor with the rates
otherwise would not be earned because the employee
prescribed by Sec. of Labor → petitioners are beyond
would not be working during these periods. They are
the ambit of exempted persons and are therefore
intended to alleviate the economic condition of workers.
entitled to overtime pay (NLRC to determine exact
o Since they are only voluntary in nature, entitlement to
amounts)
commutation/conversion of these sick leaves to cash
must be proven. They may be demanded in cases where
2. Requirements
the commutation has already ripened into a company
practice or policy.
Art. 95(a) Every employee who has rendered at least one year
of service shall be entitled to a yearly service incentive leave of PNCC Skyway Traffic Management & Security Division Workers
five days with pay. Org. v. PNCC Skyway Corp.
FACTS:
Book III Conditions of Employment 1. The Petitioner is the labor union of the Traffic Management
Rule V Service Incentive Leave and Security Division workers of PNCC Skyway Corp. They
Sec. 2 Right to service incentive leave. — Every employee who entered into a Collective Bargaining Agreement with their
has rendered at least one year of service shall be entitled to a employer which included vacation leave and expenses for
yearly service incentive leave of five days with pay. security license provisions.
2. Under the said Collective Bargaining Agreement, the
Sec. 3 Definition of certain terms. — The term "at least one- company was given the prerogative to schedule the
year service" shall mean service for not less than 12 months, vacation leave of employees during the year taking into
whether continuous or broken reckoned from the date the consideration the request of preference of the employees.
employee started working, including authorized absences and -‐ It also provided that unused vacation leaves shall be
paid regular holidays unless the working days in the converted to cash and shall be paid to the employees
establishment as a matter of practice or policy, or that provided on the first week of December every year.
in the employment contract is less than 12 months, in which case -‐ It also required that all covered employees must secure
said period shall be considered as one year. a valid Security Guard License with the condition that
any guard who fails to renew his security guard license
2. a. Meaning – “at least one year of service” should be placed on forced leave until such time that
he can present a renewed security license.
Book III Conditions of Employment -‐ The payment of all fees regarding the procurement and
Rule V Service Incentive Leave renewal of said license shall be paid for by the
Sec. 3 Definition of certain terms. — The term "at least one- employees on their personal account.
year service" shall mean service for not less than 12 months, 3. Respondent Corporation published the scheduled vacation
whether continuous or broken reckoned from the date the leave of the employees through a memorandum.
employee started working, including authorized absences and

4. Petitioner Labor Union objected to the implementation of Consequently, the public using the skyway system will
the same on the ground that the individual members of the not be assured of its safety, security and convenience.
union have their own right to schedule their vacation leave. -‐ Although the preferred vacation leave schedule of
-‐ It alleged that the unilateral scheduling of the petitioner's members should be given priority, they
employees' vacation leave was done only to avoid the cannot demand, as a matter of right, that their request
monetization of their vacation leave in December 2004. be automatically granted by the respondent.
-‐ They cited a memo issued by the HR Department of the -‐ In the grant of vacation leave privileges to an
respondent corporation stating that “ (as) we are employee, the employer is given the leeway to impose
targeting the zero conversion come December 2004, it conditions on the entitlement to and commutation of
is suggested that the leave balances as of to date be the same, as the grant of vacation leave is not a
given preferential scheduling”. standard of law, but a prerogative of management.
5. Petitioner Labor Union also demanded that the expenses -‐ It is a mere concession or act of grace of the employer
for the required in-service training of its member security and not a matter of right on the part of the employee.
guards be shouldered by the respondent because said Thus, it is well within the power and authority of an
training is a requirement for the renewal of their license. employer to impose certain conditions, as it deems fit,
6. Parties agreed to submit issue before the voluntary on the grant of vacation leaves, such as having the
arbitrator. option to schedule the same.
-‐ Since it is established that the grant of vacation leave is
Voluntary arbitrator: The scheduling of all vacation leaves is a prerogative of the employer, the latter can compel its
under the discretion of the union members. Skyway must pay for employees to exhaust all their vacation leave credits.
the leaves they compelled the employees to use. The security The vacation leave privilege was not intended to serve
personnel must also be paid for their absences and for renewal as additional salary, but as a non-monetary benefit or
of licenses. for the employees to spend time with their families.
-‐ To give the employees the option not to consume it
CA: reversed the decision of the arbitrator. When the terms of with the aim of converting it to cash at the end of the
the contract (CBA) are clear, there is no room for interpretation. year would defeat the very purpose of vacation leave.
2. Yes. Employer should shoulder expenses for the
ISSUES: renewal of their licenses.
1. WON individual members of the Labor Union have the right -‐ Article XXI, Section 6 of the CBA provides that:
to schedule their vacation leave (NO) o “All expenses of security guards in securing
2. WON employer must shoulder the expenses incurred by the /renewing their licenses shall be for their
employees for the renewal of their licenses (YES) personal account.”
-‐ A reading of the provision would reveal that it
RATIO: encompasses all possible expenses a security guard
1. NO. Their preference shall only be taken into would pay or incur in order to secure or renew his
consideration, but the final decision is to be made licenses.
by the employer. -‐ This is clearly against the law and must therefore be
-‐ Where the language of a written contract is clear and voided.
unambiguous, the contract must be taken to mean that -‐ The IRR of RA 5487 (An Act to Regulate the
which, on its face, it purports to mean, unless some Organization and Operation of Private Detective,
good reason can be assigned to show that the words Watchmen or Security Guards Agencies) provides that
used should be understood in a different sense. it is the primary responsibility of the operators of the
-‐ The CBA is clear and unequivocal in categorically company to maintain and upgrade the standards of
providing that the scheduling of vacation leave shall be efficiency, discipline, performance and competence of
under the option of the employer. their personnel.
-‐ The preference requested by the employees is not o Since it is the primary responsibility of
controlling because respondent retains its power and operators of company security forces to
prerogative to consider or to ignore said request. maintain and upgrade the standards of
-‐ The reason why the management is given this efficiency, discipline, performance and
prerogative is because if it was given to the union competence of their personnel, it follows that
members, it will result in significantly crippling the the expenses to be incurred therein shall be
number of key employees of the company manning the for the personal account of the company.
toll ways on holidays and other peak seasons. o Further, the intent of the law to impose upon
the employer the obligation to pay for the cost


of its employees’ training as it manifested that allowing him not to report for work for seven (7) days but
“where the quality of training is better served continues to earn the compensation therefor, on the condition
by centralization, the CFSD Directors may that his spouse has delivered a child or suffered a miscarriage for
activate a training staff from local talents to purposes of enabling him to effectively lend support to his wife
assist. The cost of training shall be pro-rated in her period of recovery and/or in the nursing of the newly-born
among the participating agencies/private child.
companies”.
o The law mandates pro-rating of expenses Sec. 4 The Secretary of Labor and Employment, the Chairman
because it would be impracticable and unfair of the Civil Service Commission and the Secretary of Health
to impose the burden of expenses suffered by shall, within thirty (30) days from the effectivity of this Act, issue
all participants on only one participating such rules and regulations necessary for the proper
agency or company. implementation of the provisions hereof.
o Thus, it follows that if there is no centralization,
there can be no pro-rating, and the company Sec. 5 Any person, corporation, trust, firm, partnership,
that has its own security forces shall shoulder association or entity found violating this Act or the rules and
the entire cost for such training respondent regulations promulgated thereunder shall be punished by a fine
company. not exceeding Twenty-five thousand pesos (P25,000) or
imprisonment of not less than thirty (30)days nor more than six (6)
This case is remanded to the voluntary arbitrator for the months.
computation of the expenses incurred by the SECURITY
GUARDS for their in-service training, and respondent company is If the violation is committed by a corporation, trust or firm,
directed to reimburse its security guards for the expenses partnership, association or any other entity, the penalty of
incurred. imprisonment shall be imposed on the entity's responsible
officers, including, but not limited to, the president, vice-
Technical ISSUE: WON the petition must be dismissed for the president, chief executive officer, general manager, managing
lack of authority of the union president to sign the certification director or partner directly responsible therefor.
and verification against forum shopping? (NO)
Sec. 6 Nondiminution Clause - Nothing in this Act shall be
RATIO: No. Requirement is simply a condition affecting the construed to reduce any existing benefits of any form granted
form of pleadings and non-compliance does not necessarily under existing laws, decrees, executive orders, or any contract
render petition fatally defective. Verification is only formal, not agreement or policy between employer and employee.
jurisdictional.
-‐ The Union president has sufficient authority to verify
and certify the pleading as he is the union president of 1. State Poilcy
the petitioners.
-‐ Board Resolution authorizing him to verify the petition
Art. XV, Sec. 1, CON87 The State recognizes the Filipino
was merely a reiteration of the authority given to the
family as the foundation of the nation. Accordingly, it shall
Union President to file the case
strengthen its solidarity and actively promote its total
-‐ Assuming that he did not have authority, the resolution
development.
thereby ratified his prior execution of the verification
and certificate of non-forum shopping
2. Coverage
Ma’am Daway: Take note that VL is NOT the same as service

RA 8187, Sec. 2. Notwithstanding any law, rules and
incentive leave. It is not a mandate of law but a manner of
regulations to the contrary, every married male employee in the
management prerogative.
private and public sectors shall be entitled to a paternity leave of
seven (7) days with full pay for the first four (4) deliveries of the
F. PATERNITY LEAVE
legitimate spouse with whom he is cohabiting. The male
employee applying for paternity leave shall notify his employer
RA 8187
of the pregnancy of his legitimate spouse and the expected date
Sec. 1 Short Title - This Act shall be known as the "Paternity
of such delivery. For purposes, of this Act, delivery shall include
Leave Act of 1996".
childbirth or any miscarriage.
Sec. 3 Definition of Term - For purposes of this Act, Paternity

Leave refers to the benefits granted to a married male employee IRR, RA 8187, Sec. 2. Every married male government


employee shall be entitled to paternity leave benefits of 7 days
with full pay for the 1st 4 deliveries of the legitimate spouse with 7. Penalty Provisions
whom he is cohabiting under such terms and conditions as
hereinafter provided. RA 8187, Sec. 5 Any person, corporation, trust, firm,
partnership, association or entity found violating this Act or the
The rules on paternity leave of employees in the public sector rules and regulations promulgated thereunder shall be punished
shall be promulgated by the Civil Service Commission. by a fine not exceeding Twenty-five thousand pesos (P25,000) or
imprisonment of not less than thirty (30)days nor more than six (6)
3. Conditions months.
IRR, RA 8187, Sec. 3 Conditions to entitlement of paternity If the violation is committed by a corporation, trust or firm,
leave benefits. — A married male employee shall be entitled to partnership, association or any other entity, the penalty of
paternity benefits provided that: imprisonment shall be imposed on the entity's responsible
officers, including, but not limited to, the president, vice-
a. he is an employee at the time of delivery of his child; president, chief executive officer, general manager, managing
director or partner directly responsible therefor.
b. he is cohabiting with his spouse at the time she gives birth or
suffers a miscarriage. SECTION 10. Penalty. — Any person, corporation, trust, firm,
partnership, association or entity found violating any provision of
c. he has applied for paternity leave in accordance with Section 4 these Rules shall be penalized by a fine not exceeding twenty
hereof; and five thousand pesos (P25,000) or imprisonment of not less than
thirty (30) days nor more than six (6) months.
d. his wife has given birth or suffered a miscarriage.
If the violation is committed by a corporation, trust or firm,
IRR, RA 8187, Sec. 4 Application for leave — The married partnership, association or any other entity, the penalty of
male employees shall apply for paternity leave with his employer imprisonment shall be imposed on the entity’s responsible
within a reasonable period of time from the expected date of officers, including but not limited to, the president, vice
delivery by the pregnant spouse, or within such period as may president, chief executive officer, general manager, managing
be provided by company rules and regulations or by collective director or partner directly responsible therefor.
bargaining agreement, provided that prior application for leave
shall not be required in case of miscarriage. 8. Employment – Related Rights and Benefits
4. When to Avail of Benefits RA 8187

Sec. 2 Coverage — Every married male employee in the private
IRR, RA 8187 Sec. 5 Validation requirement – Any employee sector shall be entitled to paternity leave benefits of seven (7)
who has availed of the paternity leave may be required to furnish days with full pay for the first four deliveries by his lawful spouse
his office a certified true copy of his marriage contract; the birth under such terms and conditions as hereinafter provided.
certificate of the newly born child; medical certificate with
pathology reports in case of miscarriage duly signed by the The rules on paternity leave of employees in the public sector
attending physician or midwife showing the actual date of the shall be promulgated by the Civil Service Commission.
childbirth or miscarriage.
Sec. 3 Conditions to entitlement of paternity leave benefits — A
5. Benefits married male employee shall be entitled to paternity benefits
provided that:
IRR, RA 8187, Sec. 6 Benefits — The employee is entitled to

a. he is an employee at the time of delivery of his child;
his full pay, consisting of basic salary, for the seven (7) days
during which he is allowed not to report for work, provided, that
b. he is cohabiting with his spouse at the time she gives birth or
his pay shall not be less than the mandated minimum wage.
suffers a miscarriage.
6. Treatment of Benefit
c. he has applied for paternity leave in accordance with Section 4
hereof; and
IRR, RA 8187 Sec. 7 The benefits specified hereunder shall be
non-cumulative and strictly non-convertible to cash. d. his wife has given birth or suffered a miscarriage.

(2) Parent left solo or alone with the responsibility of
parenthood due to death of spouse;
IRR, RA 8187, Sec. 1 Definition of Terms — As used in these
Rules, the following terms shall have the meaning as indicated (3) Parent left solo or alone with the responsibility of
hereunder: parenthood while the spouse is detained or is serving
sentence for a criminal conviction for at least one (1) year;
(b) “Employee” refers to any person who performs services for
another and receives compensation therefor, provided an (4) Parent left solo or alone with the responsibility of
employer-employee relationship exists between them. parenthood due to physical and/or mental incapacity of
spouse as certified by a public medical practitioner;
IRR, RA 8187, Sec. 3 Conditions to entitlement of paternity
leave benefits. — A married male employee shall be entitled to (5) Parent left solo or alone with the responsibility of
paternity benefits provided that: parenthood due to legal separation or de facto separation
from spouse for at least one (1) year, as long as he/she is
(a) he is an employee at the time of delivery of his child; entrusted with the custody of the children;

parenthood due to declaration of nullity or annulment of
G. PARENTAL LEAVE
marriage as decreed by a court or by a church as long as
he/she is entrusted with the custody of the children;
1. State Policy

Art. XV, Sec. 1, CON87 The State recognizes the Filipino
parenthood due to abandonment of spouse for at least one
family as the foundation of the nation. Accordingly, it shall
(1) year;
strengthen its solidarity and actively promote its total
development.
(8) Unmarried mother/father who has preferred to keep and
rear her/his child/children instead of having others care for
RA 8972, Sec. 2 Declaration of Policy - It is the policy of the them or give them up to a welfare institution;
State to promote the family as the foundation of the nation,
strengthen its solidarity and ensure its total development. (9) Any other person who solely provides parental care and
Towards this end, it shall develop a comprehensive program of support to a child or children;
services for solo parents and their children to be carried out by
the Department of Social Welfare and Development (DSWD), (10) Any family member who assumes the responsibility of
the Department of Health (DOH), the Department of Education, head of family as a result of the death, abandonment,
Culture and Sports (DECS), the Department of the Interior and disappearance or prolonged absence of the parents or solo
Local Government (DILG), the Commission on Higher Education parent.
(CHED), the Technical Education and Skills Development
Authority (TESDA), the National Housing Authority (NHA), the A change in the status or circumstance of the parent claiming
Department of Labor and Employment (DOLE) and other related benefits under this Act, such that he/she is no longer left alone
government and nongovernment agencies. with the responsibility of parenthood, shall terminate his/her
eligibility for these benefits.
2. Coverage
3. Criteria
RA 8972, Sec. 3 Definition of Terms - Whenever used in this
Act, the following terms shall mean as follows: RA 8972
Sec. 4 Criteria for Support - Any solo parent whose income in
(a) "Solo parent" - any individual who falls under any of the the place of domicile falls below the poverty threshold as set by
following categories: the National Economic and Development Authority (NEDA) and
subject to the assessment of the DSWD worker in the area shall
(1) A woman who gives birth as a result of rape and other be eligible for assistance:
crimes against chastity even without a final conviction of the
offender: Provided, That the mother keeps and raises the Provided, however, That any solo parent whose income is above
child; the poverty threshold shall enjoy the benefits mentioned in
Sections 6, 7 and 8 of this Act.


Sec. 8 Parental Leave - In addition to leave privileges under RA 8972, Sec. 6 Flexible Work Schedule - The employer shall
existing laws, parental leave of not more than seven (7) working provide for a flexible working schedule for solo parents:
days every year shall be granted to any solo parent employee Provided, That the same shall not affect individual and company
who has rendered service of at least one (1) year. productivity: Provided, further, That any employer may request
exemption from the above requirements from the DOLE on
IRR, RA 8972, Art. IV, Sec. 7 Criteria for Support – Any solo certain meritorious grounds.
parent whose income in the place of domicile falls equal to or
below the poverty threshold as set by the NSCB and subject to IRR, RA 8972, Art V. Sec. 16 Flexible Work Schedule – The
the assessment of the duly appointed or designated social employer shall provide for a flexible work schedule for solo
worker in the area shall be eligible for assistance: Provided, parents: Provided, That the same shall not affect individual and
however, That any solo parent whose income is above the company productivity: Provided further, That any employer may
poverty threshold shall enjoy the benefits mentioned in Sections request exemption from the above requirements from the DOLE
16, 17, 18, 19, 20, 21 and 23 of these Rules. on certain meritorious grounds.
For purposes of the Act and these Rules, the place of domicile In the case of employees in the government service, flexible
shall refer to the residence mentioned in Section 8(a) of these working hours will be subject to the discretion of the head of the
Rules. agency. In no case shall the weekly working hours be reduced in
the event the agency adopts the flexible working hours schedule
4. Qualifications of Solo Parents format (flexi-time). In the adoption of flexi-time, the core working
hours shall be prescribed taking into consideration the needs of
IRR, RA 8972, Sec. 8 Qualifications of Solo Parent – A solo the service.
parent seeking benefits other than those provided for under
Sections 16, 17, 18, 19, 20, 21 and 23 of these Rules shall be 5. b. Work Discriminations
qualified on the basis of the following:
RA 8972, Sec. 7 Work Discrimination - No employer shall
(a) A resident of the area where the assistance is sought, as discriminate against any solo parent employee with respect to
certified by the barangay captain; Provided, that if the solo terms and conditions of employment on account of his/her
parent is a transferee from another barangay, he/she is required status.
to secure a clearance from his/her previous barangay, indicating
whether or not he/she has availed of any benefits for solo IRR, RA 8972, Art. V Sec. 17 Work Discrimination – No
parents, and the nature of such benefits. employer shall discriminate against any solo parent employee
with respect to terms and conditions of employment on account
(b) With an income level equal to or below the poverty threshold of his/her status.
as set forth by NSCB and assessed by a social worker as
provided for under Section 7 of these Rules.
5. c. Leave
RA 8972, Sec. 8 Parental Leave - In addition to leave privileges

5. Employment – Related Rights and Benefits
under existing laws, parental leave of not more than seven (7)
working days every year shall be granted to any solo parent
RA 8972, Sec. 3 Definition of Terms - Whenever used in this employee who has rendered service of at least one (1) year.
Act, the following terms shall mean as follows:
IRR, RA 8972, Art. V, Sec. 19 Conditions for Entitlement of

(d) "Parental leave" - shall mean leave benefits granted to a solo
Parental Leave – A solo parent shall be entitled to parental leave
parent to enable him/her to perform parental duties and
provided that:
responsibilities where physical presence is required.
(a) He/She has rendered at least one (1) year of service whether
(e) "Flexible work schedule" - is the right granted to a solo
continuous or broken at the time of the affectivity of the Act;
parent employee to vary his/her arrival and departure time
without affecting the core work hours as defined by the
(b) He/She has notified his/her employer of the availment thereof
employer.
within a reasonable time period; and
5. a. Flexible Work Schedule (c) He/She has presented a Solo Parent Identification Card to


his/her employer a woman or her child as a sex object, making demeaning
and sexually suggestive remarks, physically attacking the
6. Treatment of Benefit sexual parts of the victim's body, forcing her/him to watch
obscene publications and indecent shows or forcing the
6. a. Non cumulative woman or her child to do indecent acts and/or make films
thereof, forcing the wife and mistress/lover to live in the
IRR, RA 8972, Art. V, Sec. 18 Parental Leave – In addition to conjugal home or sleep together in the same room with
leave privileges under existing laws, parental leave of not more the abuser;
than seven (7) working days every year shall be granted to any
solo parent employee who has rendered service of at least one b) acts causing or attempting to cause the victim to
(1) year. The seven-day parental leave shall be non-cumulative. engage in any sexual activity by force, threat of force,
physical or other harm or threat of physical or other harm
or coercion;
c) Prostituting the woman or child.

6. b. Non convertible to cash
C. "Psychological violence" refers to acts or omissions

IRR, RA 8972, Art. V, Sec. 21 Crediting of Existing Leave – If
causing or likely to cause mental or emotional suffering of
there is an existing or similar benefit under a company policy, or
the victim such as but not limited to intimidation,
a collective bargaining agreement or collective negotiation
harassment, stalking, damage to property, public ridicule or
agreement the same shall be credited as such. If the same is
humiliation, repeated verbal abuse and mental infidelity. It
greater than the seven (7) days provided for in the Act, the
includes causing or allowing the victim to witness the
greater benefit shall prevail.
physical, sexual or psychological abuse of a member of the
family to which the victim belongs, or to witness pornography
Emergency or contingency leave provided under a company
in any form or to witness abusive injury to pets or to unlawful
policy or a collective bargaining agreement shall not be credited
or unwanted deprivation of the right to custody and/or
as compliance with the parental leave provided for under the Act
visitation of common children.
and these Rules.
D. "Economic abuse" refers to acts that make or attempt to

H. VICTIMS’ LEAVE
make a woman financially dependent which includes, but is
not limited to the following:
1. Definition/Coverage
1. withdrawal of financial support or preventing the victim
RA 9262, Sec. 3 Definition of Terms - As used in this Act, from engaging in any legitimate profession, occupation,
business or activity, except in cases wherein the other
(a) "Violence against women and their children" refers to any act spouse/partner objects on valid, serious and moral
or a series of acts committed by any person against a woman grounds as defined in Article 73 of the Family Code;
who is his wife, former wife, or against a woman with whom the
person has or had a sexual or dating relationship, or with whom 2. deprivation or threat of deprivation of financial
he has a common child, or against her child whether legitimate resources and the right to the use and enjoyment of the
or illegitimate, within or without the family abode, which result in conjugal, community or property owned in common;
or is likely to result in physical, sexual, psychological harm or
suffering, or economic abuse including threats of such acts, 3. destroying household property;
battery, assault, coercion, harassment or arbitrary deprivation of
liberty. It includes, but is not limited to, the following acts: 4. controlling the victims' own money or properties or
solely controlling the conjugal money or properties.
A. "Physical Violence" refers to acts that include bodily or
physical harm; (b) "Battery" refers to an act of inflicting physical harm upon the
woman or her child resulting to the physical and psychological or
B. "Sexual violence" refers to an act which is sexual in nature, emotional distress.
committed against a woman or her child. It includes, but is
not limited to: (c) "Battered Woman Syndrome" refers to a scientifically defined
pattern of psychological and behavioral symptoms found in
a) rape, sexual harassment, acts of lasciviousness, treating women living in battering relationships as a result of cumulative


abuse. Barangay/kagawad or prosecutor or the Clerk of Court, as the
case may be, shall issue a certification at no cost to the woman
(d) "Stalking" refers to an intentional act committed by a person that such an action is pending, and this is all that is required for
who, knowingly and without lawful justification follows the the employer to comply with the 10-day paid leave. For
woman or her child or places the woman or her child under government employees, in addition to the aforementioned
surveillance directly or indirectly or a combination thereof. certification, the employee concerned must file an application
for leave citing as basis R.A. 9262. The administrative
(e) "Dating relationship" refers to a situation wherein the parties enforcement of this leave entitlement shall be considered within
live as husband and wife without the benefit of marriage or are the jurisdiction of the Regional Director of the DOLE under
romantically involved over time and on a continuing basis during Article 129 of the Labor Code of the Philippines, as amended, for
the course of the relationship. A casual acquaintance or ordinary employees in the private sector, and the Civil Service
socialization between two individuals in a business or social Commission, for government employees.
context is not a dating relationship.
The availment of the ten day-leave shall be at the option of the
(f) "Sexual relations" refers to a single sexual act which may or woman employee, which shall cover the days that she has to
may not result in the bearing of a common child. attend to medical and legal concerns. Leaves not availed of are
noncumulative and not convertible to cash.
(g) "Safe place or shelter" refers to any home or institution
maintained or managed by the Department of Social Welfare The employer/agency head who denies the application for leave,
and Development (DSWD) or by any other agency or voluntary and who shall prejudice the victim-survivor or any person for
organization accredited by the DSWD for the purposes of this assisting a co-employee who is a victim-survivor under the Act
Act or any other suitable place the resident of which is willing shall be held liable for discrimination and violation of R.A 9262.
temporarily to receive the victim.
The provision of the Labor Code and the Civil Service Rules and
(h) "Children" refers to those below eighteen (18) years of age or Regulations shall govern the penalty to be imposed on the said
older but are incapable of taking care of themselves as defined employer/agency head.
under Republic Act No. 7610. As used in this Act, it includes the
biological children of the victim and other children under her 3. Treatment: Non-cumulative/non convertible to cash
care.
IRR, RA 9262, Rule IV, Sec. 42 (Par. 2) Ten-day paid leave
2. Entitlement to Leave in addition to other leave benefits - The availment of the ten
day-leave shall be at the option of the woman employee, which
Sec. 43 Entitled to Leave – Victims under this Act shall be shall cover the days that she has to attend to medical and legal
entitled to take a paid leave of absence up to ten (10) days in concerns. Leaves not availed of are noncumulative and not
addition to other paid leaves under the Labor Code and Civil convertible to cash.
Service Rules and Regulations, extendible when the necessity
arises as specified in the protection order. I. SPECIAL LEAVE BENEFITS FOR WOMEN
Any employer who shall prejudice the right of the person under 1. Covered employees
this section shall be penalized in accordance with the provisions
of the Labor Code and Civil Service Rules and Regulations. RA 9710 (Magna Carta for Women), Sec. 18 Special Leave
Likewise, an employer who shall prejudice any person for Benefits for Women - A woman employee having rendered
assisting a co-employee who is a victim under this Act shall continuous aggregate employment service of at least six (6)
likewise be liable for discrimination. months for the last twelve (12) months shall be entitled to a
special leave benefit of two (2) months with full pay based on her
IRR, RA 9262, Rule IV, Sec. 42 Ten-day paid leave in gross monthly compensation following surgery caused by
addition to other leave benefits - At any time during the gynecological disorders.
application of any protection order, investigation, prosecution
and/or trial of the criminal case, a victim of VAWC who is J. SERVICE CHARGES
employed shall be entitled to a paid leave of up to ten (10) days
in addition to other paid leaves under the Labor Code and Civil Art. 96 Service charges - All service charges collected by hotels,
Service Rules and Regulations and other existing laws and restaurants and similar establishments shall be distributed at the
company policies, extendible when the necessity arises as rate of eighty-five percent (85%) for all covered employees and
specified in the protection order. The Punong

fifteen percent (15%) for management. The share of the covered employees. The 15% shall be for the disposition by
employees shall be equally distributed among them. In case the management to answer for losses and breakages and
service charge is abolished, the share of the covered employees distribution to managerial employees at the discretion of the
shall be considered integrated in their wages. management in the latter case.
The provision allows management to retain 15% of the service 4. Frequency of Distribution
charge to answer for loss and breakages, as well as for
distribution to managerial employees. OR, Book III Rule VI, Sec. 4 Frequency of distribution — The
shares referred to herein shall be distributed and paid to the
OR, Book III Rule VI employees not less than once every two (2) weeks or twice a
Sec. 6 Relation to agreements — Nothing in this Rule shall month at intervals not exceeding sixteen (16) days.
prevent the employer and his employees from entering into any
agreement with terms more favorable to the employees than 5. Rule if abolished
those provided herein, or be used to diminish any benefit
granted to the employees under existing laws, agreement and OR, Book III Rule VI, Sec. 5 Integration of service charges —
voluntary employer practice. In case the service charges is abolished the share of covered
employees shall be considered integrated in their wages. The
Sec. 7 This rule shall be without prejudice to existing, future basis of the amount to be integrated shall be the average
collective bargaining agreements. Nothing in this rule shall be monthly share of each employee for the past twelve (12) months
construed to justify the reduction or diminution of any benefit immediately preceding the abolition of withdrawal of such
being enjoyed by any employee at the time of effectivity of this charges.
rule.
Phil. Hoteliers Inc. v. NUWHRAIN-APL-IUF
1. Covered establishments FACTS:
1. Wage Order No. 9 (WO 9) was promulgated in NCR and took
OR, Book III Rule VI Sec. 1 Coverage — This rule shall apply effect on Nov. 5, 2001.
only to establishments collecting service charges such as hotels, - It provides that all private sector workers and employees
restaurants, lodging houses, night clubs, cocktail lounge, in the NCR who receive daily wage rates of P250 up to
massage clinics, bars, casinos and gambling houses, and similar P290 shall receive an emergency cost of living allowance
enterprises, including those entities operating primarily as (ECOLA) in the amount of P30 per day, payable in two
private subsidiaries of the Government. tranches:
Amount of ECOLA Effectivity

2. Covered employees P15 Nov. 5, 2001
P15 Feb. 1, 2002
OR, Book III, Rule VI, Sec. 2 Employees covered — This rule
shall apply to all employees of covered employers, regardless of 2. Mar 20, 2002: NUWHRAIN-Dusit Hotel Nikko Chapter (Union)
their positions, designations or employment status, and sent a letter to Dir. Alex Maraan of the DOLE-NCR, reporting
irrespective of the method by which their wages are paid except Dusit Hotel Nikko’s non-compliance with WO 9 and was
to managerial employees. As used herein, a "managerial requesting for assistance on the matter. At the time the letter
employee" shall mean one who is vested with powers or was sent, there was an ongoing compulsory arbitration with
prerogatives to lay down and execute management policies the NLRC due to a bargaining deadlock between the Union
and/or to hire, transfer, suspend, lay-off, recall, discharge, and Dusit. On May 24, 2002, NUWHRAIN sent another letter
assign, or discipline employees or to effectively recommend to follow up on its request.
such managerial actions. All employees not falling within this 3. In response to the first letter, DOLE sent Labor Standards
definition shall be considered rank-and-file employees. Officer Natividad to conduct an inspection of the hotel’s
premises. The report dated May 2, 2002 stated:
3. Sharing - The employees are receiving more than P290 in daily
wages, which is exempted from the coverage of WO 9.
- Payrolls to follow later upon request, incl. position paper
OR, Book III, Rule VI, Sec. 3 Distribution of service charges
— All service charges collected by covered employers shall be of Dusit.
4. In response to the second letter, LSO Natividad was again
distributed at the rate of 85% for the employees and 15% for the
sent for an inspection. Her report dated May 29, 2002 stated:
management. The 85% shall be distributed equally among the
- There was no presentation of payrolls.

- Based on the submitted list by the Union, there are 144 - The CA finally stressed that the ECOLA, under the law, is
affected in the implementation of WO 9, the ECOLA distinct and separate from the benefits derived from
covering the periods from Nov. 5, 2001 to the present. negotiation or agreements with the employer.
5. Accordingly, the DOLE-NCR issued a Notice of Inspection - Dusit’s MR was denied. Hence, the petition.
Result, directing Dusit to comply with the violations within
five days from the receipt of this notice, and to submit any ISSUE
questions on the findings of the LSO within the same period, WON the 144 employees were still entitled to the ECOLA
if any, or else an Order of Compliance shall be issued. The despite the salary increases granted (which was retroactive to
Notice of Inspection was duly received by Dusit. Jan 2001) by the NLRC decision (NO)
6. Oct. 9 2002: The NLRC rendered a decision on the ongoing
compulsory arbitration with the ff. pronouncements, granting RATIO:
wage increases: Only 82 employees are entitled to the first tranch of
- Effective Jan 1, 2001: P500/month the ECOLA; no more employees are entitled to the
- Effective Jan 1, 2002: P550/month second tranch of the ECOLA.
- Effective Jan 1, 2003: P600/month - “WO 9, Sec. 13 – Wage increases/allowances granted by
7. Oct. 22, 2002: Since there was no favorable response to the an employer in an organized establishment with 3
Notice of Inspection, DOLE-NCR, through Dir. Maraan, months prior to the effectivity of this order shall be
issued a Compliance Order, directing Dusit to pay 144 of its credited as compliance… provided, the
employees the total amount of P1,218,240, corresponding to corresponding bargaining agreement provision
the unpaid ECOLA under WO 9 plus the penalty of double allowing creditability exists. In absence of such an
indemnity, pursuant to RA 6727 agreement or provision in the CBA, any increase
8. Dusit filed for reconsideration of the Compliance Order, granted… shall not be credited as compliance…”
arguing that the NLRC decision of Oct. 9 had already - The Court notes that the Union’s insistence in applying
resolved the issue regarding WO 9, with the increase in the above article is what causes the confusion. They
salaries (which is retroactively effective to Jan 1, 2001) argue that since their CBA, from the NLRC decision, did
bringing the employees out of the coverage of WO 9. not contain such a provision, it should not be considered
- Dec. 27, 2002: This appeal was granted, with the DOLE as compliance.
Sec. upholding the argument of Dusit. - However, the Court holds that this reliance on Sec. 13 is
- July 22: 2004: The Union appealed this reversal, arguing misplaced, as Dusit is not even arguing this issue. Dusit’s
that the wage increases granted in the NLRC decision position is that the slary increase granted, which retroacts
should not be considered as compliance with WO 9. This to Jan 2001 (which is months before the WO 9 effectivity
appeal was granted since the NLRC decision categorically date of Nov. 2001) should have taken them out of the
stated that the salary increases were not to be considered coverage of the said wage order, which only covered
as compliance with WO 9. The appeal was granted and those receiving daily wage rates of P250 to P290.
the Compliance Order was reinstated. o When the NLRC decision granted the said salary
- Dec. 16, 2004: Dusit appealed this reinstatement of the increases, the effectivity date was retroactive: Jan 1,
Compliance Order. The appeal was once again granted. 2001 for P500.month and Jan 1, 2002 for the
The DOLE Sec. admitted that he had disregarded that P550/month. (NOTE: the dispute began on Mar. 20,
the wage increase in the NLRC decision had retroacted to 2002)
Jan. 1, 2001 and taken with the hotel employees’ share in o Even if they were belatedly paid, the increased
the service charges of Dusit already amounts to salaries were then the rightful salaries of the 144
compliance with WO 9. employees during Jan 1, 2001 and Jan 1, 2002. Their
- Expectedly, the Union appealed but this time, was increased salaries during those dates should then be
denied. The Union then brought the matter to the CA. made the basis of whether they were still covered by
9. CA: Decision granted in favor of the Union. the first and second tranches of WO 9.
- The CA referred to Sec. 13 of WO 9 which provided that o To hold that the salary increase during those dates
wage increases or allowances granted by the employer were to be effective but not applicable for ECOLA
shall not be credited as compliance unless so provided in considerations would allow the violation of unjust
the law or the CBA itself and that in this case, there was enrichment since they would still be allowed to
no such provision. receive ECOLA despite being outside of its coverage.
- The CA also rejected the argument of Dusit that receiving - With the first salary increase of P500/month (effective Jan
shares in the service charge amounted to substantial 1, 2001), only 82 of the 144 were left covered by first
compliance with WO 9. tranch of WO 9 (effective Nov. 2011). After the second
- The CA upheld the penalty of double indemnity round of salary increase of P550/month (effective Jan 1,


2002), none of the 144 employees remained within the
coverage of WO 9 for its second tranch (effective Feb. Wesleyan Univ.-Phil. v. Wesleyan Univ.-Phil. Faculty and Staff
2002). Association
- As to Dusit’s argument that the shares of the employees FACTS:
in the service charge are to be considered as compliance 1. Wesleyan University-Phil. Is a non-stock, non-profit
with WO 9, the Court rejected this argument. It reiterated educational institution and WU-Phil. Faculty and Staff
that Art. 96 of the Labor Code already mandates that Association is the exclusive bargaining agent of rank-and-
employees of certain establishments are to receive their file and staff employees of WU
share in the service charges. Employees of hotels are 2. Dec. 2003: Parties signed a 5-year CBA (effective June 1,
covered under this provision. Since this is mandatory in 2003 to May 31, 2008)
nature, the hotel cannot claim that giving the shares of 3. Aug. 16, 2005: WU through its Pres., Atty. Maglaya, issued a
the service charge constitutes compliance with WO 9. Memorandum providing guidelines on the implementation
The employees’ right to their share in the service charges of vacation and sick leave credits as well as vacation
is distinct and separate from their entitlement to ECOLA. leave commutation
- The Court, however, finds no reason to impose double - VACATION AND SICK LEAVE CREDITS: Vacation and
indemnity. IRR of RA 6727 provides that if violation are sick leave credits are not automatic. They have
indeed found during inspections, there should be an to be earned. Monthly, a qualified employee
express advice that there will be double indemnity if earns an equivalent of 1.25 days credit each for
there is refusal/failure to correct these violations. Since VL and SL. Vacation Leave and Sick Leave credits
the Notice of Inspection did not contain such advice, the of 15 days become complete at the cut off date of May
imposition of double indemnity would be improper. 31 of each year. (Example, only a total of 5 days credit
will be given to an employee for each of sick leave [or]
DISP: Only 82 out of the 144 employees should receive 1st vacation leave, as of month end September, that is, 4
tranch of ECOLA under WO 9. None of the 144, however, will months from June to September multiplied by 1.25
receive the 2nd tranch since they are already out of WO 9’s days). An employee, therefore, who takes VL or SL
coverage. Receipt of service charges are not considered beyond his leave credits as of date will have to file leave
complianzzce. without pay for leaves beyond his credit.
- VACATION LEAVE COMMUTATION: Only vacation
leave is commuted or monetized to cash. Vacation
K. NON DIMINUTION OF BENEFITS leave commutation is effected after the second year of
continuous service of an employee. Hence, an
Art. 100 Prohibition against elimination or diminution of employee who started working June 1, 2005 will get his
benefits - Nothing in this Book shall be construed to eliminate or commutation on May 31, 2007 or thereabout.
in any way diminish supplements, or other employee benefits 4. Aug. 25: Association’s President, Cynthia De Lara, informed
being enjoyed at the time of promulgation of this Code. Atty. Maglaya that Association is not amenable to the
unilateral changes made, and questioned it for being
-‐ For this rule to apply, it must be shown that: violative of existing practices and the CBA, specifically Sec.
(1) The grant of the benefit founded on a policy or has 1 and 2, Art. XII of the CBA
ripened into a practice over a long period - ARTICLE XII VACATION LEAVE AND SICK LEAVE
(2) The practice is consistent and deliberate - SECTION 1. VACATION LEAVE - All regular and non-
(3) The practice is not due to error in the construction or tenured rank-and-file faculty and staff who are entitled
application of a doubtful or difficult question of law to receive shall enjoy fifteen (15) days vacation leave
(4) The diminution or discontinuance is done unilaterally by with pay annually.
the employer - 1.1 All unused vacation leave after the second year of
service shall be converted into cash and be paid to the
Exceptions to the Non-diminution Rule entitled employee at the end of each school year to be
(1) Correction of error given not later than August 30 of each year.
(2) Negotiated benefits - SECTION 2. SICK LEAVE - All regular and non-tenured
(3) Wage order compliance rank-and-file faculty and staff shall enjoy fifteen (15)
(4) Benefits on reimbursement basis days sick leave with pay annually.
(5) Reclassification of positionzzzzz 5. Feb. 8, 2006: A Labor Management Committee Meeting was
(6) Contingent benefits or conditional bonus held: PET advised RESP to file a grievance complaint and
(7) Productivity incentives PET announced its plan of implementing a one-
retirement policy, which was unacceptable to RESP


6. VA: Declared the one-retirement policy and the - Exception to practice rule: when “the practice is due to
Memorandum contrary to law error in the construction or application of a doubtful or
- RESP: submitted affidavits to prove that there was an difficult question of law”
established practice of giving 2 retirement benefits 1. Court held: YES, the Affidavits are substantial
from: 1) Private Education Retirement Annuity evidence; practice shows 2 retirement benefits!
Association (PERAA) Plan and 2) CBA Retirement Plan - RESP was able to present substantial evidence in the
o That the CBA provides that Membership in the form of affidavits to support its claim re 2 retirement plans
Retirement Plan shall be automatic for all full-time, à that as early as 1997, PET has been giving 2 retirement
regular staff and tenured faculty of the University benefits
- VA directed the University to: 1) reinstate the earlier - PET FAILED to present any evidence or refute the
scheme, practice or policy on vacation and sick leave veracity of the affidavits
credits and vacation leave commutation and 2) resume - Also, the retired employees of PET (who made the affidavits)
and proceed with the established practice of extending have nothing to lose or gain because they already received
to qualified employees retirement benefits under both their retirement benefits – no reason for them to perjure
the CBA and the PERAA Plan themselves
7. CA: VA affirmed; nullified the one-retirement policy and - The affidavits of retired employees, corroborated by
Memorandum because these unilaterally amended the CBA incumbent employees, are more than sufficient to show
without RESP’s consent à this petition the granting of 2 retirement benefits and that it has ripened
8. PET’s arguments: into practice
- Only one retirement plan because the CBA and the - PET’s assertion that the PERAA and the CBA plans are the
PERAA Plan are one and the same same = not supported by evidence
- No established company practice or policy of giving - Any doubt in the interpretation of the CBA should be
two retirement benefits to employees resolved in favor of the RESPs (CBA provision on “Plan”
- If there were 2 retirement benefits released, this was by does not distinguish if it is referring to the CBA or the
mere oversight or mistake because there is no Board PERAA plan)
Resolution authorizing their release; since there was no - Also, no need for PET to have announced the
Board Resol’n, the benefits are unauthorized and implementation of the one-retirement policy in the meeting
irregular, cannot ripen into practice or policy on Feb. 2006 if it were true that it was already implementing
- The Memorandum is in full accord with existing policy a one-retirement policy (why announce something
9. RESP’s arguments: already in practice?)
- There are 2 retirement plans; PERAA is different from - There was also a letter-memorandum dated May 11,
CBA 2006, entitled “Suggestions on the defenses we can
- It has always been a practice of WU to give 2 retirement introduce to justify the abolition of double retirement
benefits policy”
- The Memorandum is arbitrary and contrary to the CBA - These show it has been a practice; PET cannot, without the
and existing practices consent of RESP, eliminate the 2-retirement policy and
implement a 1-retirement policy because it would violate
ISSUES: the rule on non-diminution of benefits
1. WON the Affidavits are substantial evidence to establish the - PET contends the practice is illegal or unauthorized, but no
2-retirement practice (YES) evidence was presented to substantiate its allegation
2. WON the Memorandum (on the sick leave) is contrary to - SC: There is substantial evidence to prove the existence of a
extant policy (YES) practice of giving 2 retirement benefits
2. Court held: YES, the Memorandum is contrary to
HELD: the existing CBA
Court’s ruling: Petition is bereft of merit! - Sec. 1 and 2 of Art. XII of the CBA provide that all covered
- Non-Diminution Rule in Art. 100 explicitly prohibits employees are entitled to 15 days sick leave and 15 days
employers from eliminating or reducing benefits received by vacation leave with pay; after the 2nd year of service, all
their employees, but applies only if the benefit is based on unused VLs shall be converted to cash and paid to the
an express policy, a written contract, or has ripened into employee
practice - PET’s Memorandum states that VL and SL credits are NOT
- To consider it as a practice, it must be consistently and automatic as leave credits would be earned on a month-to-
deliberately made by the employer over a long period of month basis à this limits the available leave credits at the
time start of the school year


o Example of PET’s new system: for the first 4 months of 10. Metrobank replied that they were ineligible to the said
the school year, employee is only entitled to 5 days VL benefits since they had already ceased their employment and
and 5 days SL (1.25 credit for each VL and SL per were no longer officers of the bank as of June 15, 1998.
month) 11. Filed complaint with LA for underpayment of retirement
- The Memorandum imposes a limitation NOT AGREED benefits.
UPON by the parties nor stated in the CBA à IT MUST 12. LA: Dismissed complaint.
BE STRUCK DOWN 13. NLRC: Granted appeal. Reversed LA decision
- When the provision of the CBA is clear, the literal meaning 14. CA: Affirmed NLRC
shall govern - Private respondent’s evidence reveals that from 1986 to
1995, it has been the practice of Metrobank that
whenever it enters and signs a new CBA with its rank and
See also: Metropolitan Bank and Trust Co. v. NLRC and Patag file employees, it likewise issues a memorandum
FACTS: extending increased benefits to its officers effective every
1. Respondents Felipe Patag and Bienvenido Flora were former 1st of January of the year, without any condition that
employees of petitioner Metrobank, who availed of the the officers-beneficiaries should remain as
bank’s compulsory retirement plan in accordance with the employees as of a certain date of a given
1995 Officers’ Benefits Memorandum, the former being an year. Under the circumstances, the same may be
Assistant Manager and the latter as a Senior Manager. deemed to have ripened into company practice
2. They retired on February 1, 1998 and April 1, 1998, or policy which cannot be peremptorily
respectively, and received their retirement benefits withdrawn
computed at 185% of their gross monthly salary for every
year of service as provided under the said 1995 ISSUES:
Memorandum. In all, Patag received the total amount of WON respondents are eligible to the increased rate of
P1.95M while Flora was paid P3.04M. retirement pay provided for in the 1998 Memorandum despite
3. They retired at a time when CBA negotiations were on-going the fact that they have retired prior to the issuance of said
between Metrobank and its rank and file employees for the memorandum and did not meet the condition therein required
period 1998-2000. (YES)
4. Newly passed CBA increased the rate of retirement benefits
for its managerial employees or officers, from 185% to 200%. HELD:
5. Both petitioners wrote a letter to the bank requesting that Court held: YES, since the practice has ripened into
their retirement benefits be computed at the increased rate company policy under which they have acquired a
embodied in the just concluded CBA. Metrobank did not vested right therein
reply to their requests. - Metrobank: While it may be true that its officers were
6. Records show that since the 1986-88 CBA, and continuing extended the same as or higher benefits than those
with each CBA thereafter, Metrobank would issue a contained in the new CBA with its rank and file employees
Memorandum granting a similar or better benefits to its from 1986 to 1997, it cannot be concluded to have ripened
managerial employees or officers, retroactive to January 1st into company practice since the provisions of the retirement
of the first year of effectivity of the CBA. plan itself and the law on retirement should be controlling
7. When the new CBA was passed, a similar Memorandum was - SC: We do not agree. To be considered a company practice,
also issued, which increased the rate from 185% to 2005 the giving of the benefits should have been done over a long
effective January 1. 1998, but with the condition that the period of time, and must be shown to have been consistent
benefits shall only be extended to those who remain in and deliberate. The test of this rule on long practice requires
service as of June 15, 1998. This was signed by then an indubitable showing that the employer agreed to
Metrobank president. continue giving the benefits knowing fully well that are not
8. Respondents again wrote asking a letter for a necessarily obligated by law to do so.
reconsideration of its condition that the increased benefits o In the present case, the respondents were able to prove
shall apply only to those officers still employed as of June 15, that for the period 1986-1997, Metrobank issued at least 4
1998. Metrobank again denied this request. separate memoranda, coinciding with the approval of 4
9. Respondents, through counsel, wrote a letter demanding the different CBAs with rank and file employees, wherein
payment of their unpaid retirement benefits, representing bank officers were granted benefits that were equal or
the increased benefits they claimed they should have superior to those provided for in the new CBA.
received under the new Memorandum. o Respondent had no hand in the preparation of said
memoranda for they appeared to be issuances of the


bank alone. Thus, it cannot be argued that such claim was over a significant period of time, despite the lack of
baseless or self-serving. legal or contractual obligation on the part of the
- SC: Record also shows that the benefits were always made to employer to do so, the grant of such benefits
retroact effective every January 1st of the year of issuance and ripens into a vested right of the employees
without any condition regarding the term or date of and can no longer be unilaterally reduced or
employment. Such condition was imposed for the first time in withdrawn by the employer
the assailed 1998 Memorandum. On Estoppel:
o For over a decade, Metrobank has consistently, - Metrobank: Respondents are deemed estopped from
deliberately and voluntarily granted improved claiming additional benefits in view of their “unqualified
benefits to its officers, after the signing of each CBA, receipt” of their retirement benefits.
retroactive to January 1st of the same year as the grant of - SC: There was nothing in the receipts/vouchers signed
improved benefits and without the condition that the by respondents to indicate that they are waiving their
officers should remain employees as of a certain date. right to claim any deficiency in their benefits. In fact,
This indicates a unilateral and voluntary act on their consistent acts of demanding the improved
Metrobank’s part, to give said benefits to its officers, benefits before and after their actual receipt of their
knowing fully that such act was not required by law or the benefits belie any intention to waive their legal right to
company retirement plan. demand the deficiency of their benefits.
- SC: With regard to the length of time the company practice On Equal Protection Grounds:
should have been exercised to constitute voluntary employer - Metrobank: Assailed CA decision would result in unfair
practice which cannot be unilaterally withdrawn by the discrimination since it would grant greater benefits to
employer, jurisprudence has not laid down any hard respondents vis-à-vis the other retirees who did not
and fast rule. The common denominator in such cases demand the improved benefits.
appears to be the regularity and deliberateness of the - SC: The right to file a labor complaint or assert a cause
grant of benefits over a significant period of time. of action against an employer is a personal right of each
o Metrobank has promulgated such practice from 1986 to employee. If there are other employees situated
1997 or for about 11 years. similarly as that of respondents who decided not to
o Such voluntary employer practice cannot be unilaterally demand payment of the improved benefits, that is their
withdrawn or diminished by the employer without prerogative, but it should not prejudice or ban those
violating the spirit of Art. 100, LC on non-diminution of who want to assert their rights and pursue legal
benefits. remedies against petitioner.
o In the same way, the added condition of continued
employment in new Memorandum effectively reduced Obiter: it is worth noting that the condition of continued
benefits of employees who retired prior to the 1998 employment to be eligible for improved benefits, which was
Memorandum as compared to previous retirees who included in 1998 Memorandum dated June 10, 1998, came only
received benefits under Memorandum with no such after respondents wrote letters dated February 2, and Marc 25
condition. As such, it is violative of Art. 100 and must be requesting the bank to use the increased rate as basis of
struck down. computation of retirement benefits. The imposition of the said
- SC: Had it been true that there was no company practice of condition shortly after respondents made their requests is
granting the improved benefits, as petitioner claimed, then it suspicious, to say the least.
would have been simple enough to do so. For a company as
prestigious as petitioner, which would have certainly have a
comprehensive and efficient system of keeping employees 5. Minimum W ages and W age Fixing Machinery
records, all it would have to do was to show some examples
of past retirees in the years of 1986-1997 whose retirement A. MINIMUM WAGES
benefits were computed at an old rate and not an improved
rate. However, petitioner did not do so. Art. 99 Regional minimum wages - The minimum wage rates for
On Article 287: agricultural and non-agricultural employees and workers in each
- Metrobank: It had no obligation under Art. 287, LC or and every region of the country shall be those prescribed by the
the express terms of the retirement plan to grant Regional Tripartite Wages and Productivity Boards.
improved benefits to employees no longer in service.
- SC: While ordinarily, an employee would have no right
to demand benefits that he employer was not obligated
by law or contract, where there is an established
employer practice of granting benefits to employees
opportunities for all.


and to provide means for a desirable improvement in his
It shall guarantee the rights of all workers to self-organization, mode of living
activities, including the right to strike in accordance with law. 1. b. No Work, No Pay/A fair day’s wage for a fair day’s labor
work, and a living wage. They shall also participate in policy and -‐ It is a concept that continues to govern the relationship
decision-making processes affecting their rights and benefits as between labor and capital and remains a basic factor in
may be provided by law. determining the employee’s wages.
-‐ General Rule: If there is no work performed by the
The State shall promote the principle of shared responsibility employee, there can be no wage or pay.
between workers and employers and the preferential use of -‐ Exception: Unless the laborer was willing, able and ready
voluntary modes in settling disputes, including conciliation, and to work but was prevented by management, illegally locked
shall enforce their mutual compliance therewith to foster out, suspended or dismissed
industrial peace.
Virginia Sugue v Triumph International (Phils.)
The State shall regulate the relations between workers and FACTS:
employers, recognizing the right of labor to its just share in the 1. Consolidated petitions assailing CA ruling
fruits of production and the right of enterprises to reasonable 2. Triumph hired Virginia Sugue and Renato Valderrama
returns to investments, and to expansion and growth. - Virginia was hired in May 1990 as Assistant Manager for
Marketing; promoted to Marketing Services Manager
with monthly salary of P82,500
1. General Principles - Renato was hired in April 1993 as Direct Sales Manager
a. Living wage – includes all benefits with monthly salary of P121,000
b. No work no pay - what is important is: the rendition of - Main function/responsibility: ensure that company’s
services sales targets and objectives were met
c. Equal pay for equal value - Even if employees have 3. June 1, 2000 – Virginia and Renato filed a complaint with
differences, if they have the same work and same work NLRC against Triumph for payment of money claims arising
load, they should have the same wage from unpaid vacation and sick leave credits, birthday leave
d. Form: even if the contract says “no wage/remuneration” and 14th month pay (1999-2000)
if it can be proven otherwise, then the latter shall prevail.
4. June 19, 2000 – Virginia and Renato attended the
preliminary conference of aforementioned case
1. a. Right to a living wage
- June 20 – Triumph’s Personnel Manager, Ralph Funtila,
issued memoranda requiring Virginia and Renato to
Art. XIII, Sec 3. Pars. (2) & (4), CON87 It shall guarantee
inform the office of the General Manager of their
the rights of all workers to self-organization, collective
whereabouts on June 19, 2000 from 9:06 am to 11:15
bargaining and negotiations, and peaceful concerted activities,
am. They replied that they attended the prelim
including the right to strike in accordance with law. They shall be
conference
entitled to security of tenure, humane conditions of work, and a
- June 23 – Virginia and Renato were directed to submit a
living wage. They shall also participate in policy and decision-
written explanation as to: 1) why they used company
making processes affecting their rights and benefits as may be
time and the company vehicle and driver in attending
provided by law.
the prelim conference, and 2) why they left the office
without advising the Managing Director. They
explained that they believed they may use company
employers, recognizing the right of labor to its just share in the
time and vehicle since the hearing was pursuant to a
fruits of production and the right of enterprises to reasonable
complaint they filed as employees of Triumph
returns to investments, and to expansion and growth.
- June 28 – Triumph charged the ½ day utilized by
Virginia and Renato in attending the hearing to their
vacation leave credits
Art. XIII, Sec. 3
5. Renato’s version:
-‐ Must be fair and just
- His request for an executive check-up on June 19, 2000
-‐ Some margin or leeway must be provided, over and above
was disapproved. He did not report for work on July 3-5
the minimum, to take care of contingencies, such as
due to persistent cough and vertigo; request for sick
increase of prices of commodities and increase in wants,
leave disapproved for lack of med cert


- July 17, 2000 – he wrote Triumph stating that he in a case or incident between him and his employer, he
considered himself constructively dismissed due to the might seek reimbursement of his wages from his union
unreasonable pressures and harassments he suffered OR he might have his absence from his work charged
- Aug 11, 2000 – He was dismissed for abandonment of against his vacation leave
work o Reiterated in Manila Trading & Supply Co. v Manila
6. Virginia’s version: Trading Labor Association
- July 25, 2000 – she wrote Triumph stating that she - Even assuming that Virginia and Renato in good faith
considers herself constructively dismissed believed that they are merely exercising their legal right to
- Charge of constructive dismissal based on: prosecute their monetary claims when they choose to
o the fact that her request for vacation leave from July absent themselves from work on 6/19/2000, it would have
14-15, 2000 was subject to the condition that she imposed little burden on them to have the courtesy to
first submit a report on the company’s 2001 inform their employer beforehand of their intention to
Marketing Plan personally attend the hearing and the decency to do so on
o deferment of approval of her request for executive their own time and at their own expenses.
check-up 2. No, Virginia and Renato were not unjustly denied
o memo instructing her to report to Efren Temblique, availment of their leaves.
OIC for Marketing demotion as Efren was her - Renato’s application for sick leave was disapproved because
former assistant he failed to comply with the company’s requirement that an
- Sept 1, 2000 – She was dismissed for abandonment of application for sick leave for two or more days must be
work supported by a medical certificate which must be verified by
7. July 31, 2000 – Virginia and Renato filed a complaint for the company physician
constructive dismissal against Triumph - Memorandum advising Virginia that her application for
8. Aug 1, 2000 – Renato started working in Fila Phils., Inc leave will be approved if she will commit to submitting her
(competitor of Triumph) as Sales Director reports in connection with the 2001Marketing Plan two days
9. LA: declared Virginia and Renato constructively dismissed after her leave not unreasonable
10. NLRC: reversed LA ruling o Virginia’s reports were indispensable in the preparation
11. CA: reinstated LA Decision but deleted award of atty’s fees of the 2001 Marketing plan
and reduced moral and exemplary damages o Company had been experiencing a significant decline
- Renato died while case was pending with CA in sales emphasizes the need for Virginia to submit an
updated report
ISSUES: - The grant of vacation and sick leave privileges to an
1. Whether bad faith or malice can be ascribed to Triumph for employee, the employer is given leeway to impose
charging the half-day spent in attending the prelim conditions on the entitlement to the same as the grant of
conference to the leave credits of Virginia and Renato (NO) vacation and sick leave is not a standard of law, but a
2. WON Virginia and Renato were unjustly denied availment of prerogative of management. It is within the power and
their leaves as part of a scheme on the part of Triumph to authority of an employer to deny an employee’s application
harass them (NO) for leave cannot be perceived as discriminatory or
3. WON Virginia and Renator were constructively dismissed harassment
(NO) 3. No, Virginia and Renato were not constructively
dismissed; they abandoned their work
HELD: - Triumph did not act with discrimination, insensibility or
1. There is no bad faith. Triumph is justified in disdain towards Virginia and Renato, which foreclosed any
charging Virginia and Renato’s half-day absence to choice on their part except to forego their continued
their vacation leave credits. employment
- JB Heilbronn Co. v NLRC: laborers who voluntarily absent - Virginia and Renato abandoned their work
themselves from work to attend the hearing of a case in o They failed to report for work without justifiable reason
which they seek to prove and establish their demands o Their overt act of writing letters informing Triumph that
against the company, the legality and propriety of which is they considered themselves constructively dismissed
not yet known, should lose their pay during the period of was a clear manifestation of their intention to desist
such absence from work, Age-old rule governing relation from their employment. Also, their defiance and
between labor and capital: FAIR DAY’S WAGE FOR A FAIR disregard of the memo requiring them to explain their
DAY’S LABOR absences demonstrated a clear intention on their part
o In a case where a laborer absents himself from work to sever their ER-EE relationship. They didn’t ask for
because of a strike or to attend a conference or hearing


reinstatement, which contradicts their stance that they hence deserve no payment. However, the NLRC notes
didn’t abandon work that AKELCO failed to substantiate such allegation and
hence, the complaint must be granted in favor of the
Aklan Electric Cooperative (AKELCO) v. NLRC, Rodolfo Retiso respondents.
and 165 others (2000) - AKELCO was now ordered to pay the salaries and other
FACTS: monies pertaining to the interregnum.
1. Respondents (numbering around 165) were employees of 8. AKELCO’s motion for reconsideration having been denied,
AKELCO. They were working at their main office in Lezo, they filed this petition for certiorari under Rule 65, alleging
Aklan and receiving regularly their salaries. grave abuse of discretion on the part of NLRC in their
2. Jan 1992: AKELCO released a Resolution allowing the reversal of the LA’s decision.
temporary transfer of their office to Kalibo, Aklan since their
head office at Lezo was closed and that the area was ISSUE:
dangerous at the time. WON NLRC committed a grave abuse of discretion when it
- Nevertheless, a majority of the employees still went reversed the LA decision (YES)
ahead to Lezo to report for work. They continued to
receive their salaries. RATIO:
3. Feb 1992: An unnumbered Resolution by the Board of The NLRC committed a grave abuse of its discretion;
Director of AKELCO withdrew the earlier resolution its decision is reversed and set aside.
designating the temporary transfer from Lezo to Kalibo; - AKELCO alleges/argues that:
work was to resume once again in Lezo. Some returned to o Respondents considered the transfer to Kalibo illegal,
Lezo but some of the employees stayed at Kalibo. even when it did not have the power to do so, and hence
4. Those who were at Lezo received their salaries from Jan not only objected to the order of transfer but completely
1992 – May 1992. However, in a new Resolution, they were defied the same by staying in Lezo.
not paid their salaries from the period of Jun 1992 – Mar o Respondents’ defiance of the order of transfer resulted in
1993 the disruption of AKELCO’s business operations.
- It was only after Mar 1993 that the employees at Lezo o Respondents do not have a choice on where to work and
were allowed to draw their salaries again. hence, must be considered as dismissed by the reason of
5. Respondents filed suit, trying to claim payment of salaries, their defiance to report to Kalibo.
13th month pay, ECOLA and other fringe benefits for the o Respondents illegally collected fees and charges from
said period of Jun 1992 – Mar 1993. AKELCO’s customers and arrogated the same unto
6. LA: Complaint dismissed. themselves
7. NLRC: LA reversed; complaint given due course in favor of o It was an error for the NLRC to consider that the
respondents. computation of claims for wages and benefits merely
- The NLRC held that the records show that the submitted by the respondents as it basis for overruling
respondents had rendered service from the period of the Labor Arbiter when it should have done so only on
Jun 1992 – Mar 1993. the basis of substantial evidence.
- The NLRC took note of the fact that the management - The Solicitor-General supported the contentions of AKELCO
responded to the office manager’s request for payment because the respondents could not have possibly worked
in the following manner: “Rest assured that we shall during the interregnum since all the records and equipment
recommend your aforesaid request… This payment, of AKELCO were brought to Kalibo from the old office in
however, shall be subject to, among others, the Lezo and that the computations submitted by respondents is
availability of funds and the approval of AKELCO’s not proof of rendition of work.
Board of Directors. o The Court found merit in the position of AKELCO and the
- The NLRC treated the reply above as an admission on Solicitor General.
the part of AKELCO that the respondents were indeed o Respondents have not proven that they had indeed
entitled to the compensation they were claiming in this rendered services during the interregnum of Jun 1992 –
complaint since the request came from the office Mar 1993 so as to entitle them to the compensation they
manager, who is most competent to know whether the claim.
employees under him rendered service and, hence, o Respondents base their claim on three points: (a) the
deserve compensation. letter-request of the office manager addressed to
- AKELCO’s basis for the non-payment of the salaries AKELCO, (b) AKELCO’s reply to the letter-request, which
during the interregnum (Jun 1992 – Mar 1993) was the they consider as assurance of the payment of their claims,
principle of “no work, no pay;” they allege that the and (c), the computation of their unpaid wages, which
respondents did not work during the interregnum and they submitted themselves to the NLRC.


o The Court, however, does not consider them as (See again) U-Pang Faculty Union v. U-Pang
substantial evidence that can support the NLRC decision. FACTS:
They do not really establish the fact that the respondents 1. University of Pangasinan Faculty Union (the Union) is a
actually rendered services during the interregnum. labor union composed of faculty members of University of
Moreover: Pangasinan (the University)
§ (a) The office manager who submitted the letter- - The faculty members teach for a normal duration of 10
request was actually one of the respondents’ own and mos./school year
is a claimant himself. His actions, therefore, in this - They are paid their salaries on a regular monthly basis
regard must be considered as self-serving and biased. 2. In Nov. and Dec. 1981, the Union’s members were fully
§ (b) AKELCO’s reply to the letter request cannot be paid their regular monthly salaries. However, they were not
taken as an assurance of payment, and even less so, paid their ECOLA during the semestral break (Nov. 7 to
as an approval of respondents’ claim. At best, it is Dec. 5)
only an undertaking to recommend the payment of - a. The University claims that the faculty members are not
the claims. It is also noteworthy that the payment was entitled to the ECOLA because the semestral break is not
to be subject to the availability of funds and the an integral part of the school year
approval of the Board. - b. Also, no actual services were rendered by the
§ (c) NLRC did err in merely relying on the submission of teachers during said period; “No work, no pay” principle
computations from the respondents as its basis for applies
overturning the LA decision 3. During the same schoolyear (1981-1982), the University was
o AKELCO, on its part, was able to show that respondents authorized by the Ministry of Education and Culture to
did not render service during the interregnum. collect a 15% tuition increase
§ AKELCO’s resolution to effect the temporary transfer - The faculty members demanded a salary increase to be
from Lezo to Kalibo was approved by the NEA taken from the 60% incremental proceeds of the
administrator (which had control over all electric increased tuition fees → the University refused
cooperatives). This establishes that there was indeed - During pendency of the case in the arbitration branch,
a necessity to make such transfer. The issuance of the the University granted a 5.86% across-the-board salary
resolution must be considered as a valid exercise of increase. The Union, however, is still pursuing full
management prerogative. distribution of the 60% of the incremental proceeds as
§ AKELCO’s records and equipment were also mandated by PD 451
transferred from Lezo to Kalibo. Respondents’ claim 4. Some of the Union’s members were given extra loads
that they continued to report for work in Lezo should during SY 1981-1982
be then considered as having no basis. - Some had extra loads on Sept. 21, 1981, but they were
§ Respondents’ excuse for their defiance is that they unable to teach as it was proclaimed a working holiday
considered the transfer to be illegal. However, they - There is disagreement as to WoN the Union members
did not have the color nor the authority from the law were paid their salaries for aforementioned loads
to make that declaration unilaterally. What they 5. Dec. 18, 1981 – the Union filed a complaint against the
should have done was to follow the order as it had the University, seeking:
presumption of legality. - The payment of Emergency Cost of Living Allowances
§ The unnumbered resolution (which declared the (ECOLA) for Nov. 7 to Dec. 5, 1981
return of operations to Lezo) was also validly proven - Salary increases from the 60% of the incremental
by AKELCO to be an invalid act of its Board. This is in proceeds of increased tuition fees
consideration of the following subsequent actions of - Payment of salaries for suspended extra loads
AKELCO: (a) it issued a resolution dismissing from 6. LA → dismissed the complaint
employment those employees who refused to work, 7. NLRC → dismissed petitioner’s appeal
(b) the issuance of another resolution accepting back
the dismissed respondents out of compassion, ISSUE/S:
subject to the principle of “no work, no pay,” (c) a 1. WON the Union’s members are entitled to ECOLA during
resolution rejecting the claims of respondents for the the semestral break (YES)
wages during the interregnum. There would have 2. WON 60% of the incremental proceeds of increased tuition
been no need for these resolutions if the unnumbered shall be devoted exclusively to salary increase (YES)
resolution was indeed valid and binding. 3. WON alleged payment of salaries for extra loads on Sept.
21, 1981 was proven by substantial evidence (NO)
DISP: NLRC decision reversed and set aside. LA affirmed.
HELD:


1. Yes, they are entitled to ECOLA - The legal principles of “No work, no pay; No pay, no
- PDs 1614, 1634, 1678 and 1713 (various PDs on ECOLA) ECOLA” must necessarily give way to the purpose of the law
provide in “Allowances of Fulltime Employees” that to augment the income of employees to enable them to
“employees shall be paid in full the required o allowance cope with the harsh living conditions brought about by
regardless of the number of their regular working days if they inflation; and to protect employees and their wages against
incur no absences during the month. If they incur absences the ravages brought by these conditions.
without pay, the amounts corresponding to the absences 2. Yes, 60% of the incremental proceeds of
may be deducted from the monthly allowance.” increased tuition shall be devoted exclusively to
- Said PDs provide in “Leave of Absence Without Pay” that salary increase
“all covered employees shall be entitled to the allowance - Sec. 3(a) of PD 451is clear. The 60% incremental proceeds
provided herein when they are on leave of absence with from the tuition increase are to be devoted entirely to wage
pay.” or salary increases which means increases in basic salary. The
- Beyond dispute that the Union’s members are full-time law cannot be construed to include allowances which are
employees receiving their monthly salaries irrespective of the benefits over and above the basic salaries of the employees.
number of working days or teaching hours in a month. To charge such benefits to the 60% incremental proceeds
- The semestral breaks are in the nature of work interruptions would be to reduce the increase in basic salary provided by
beyond the employees’ control. law, an increase intended also to help the teachers and other
o These breaks cannot be considered as absences within workers tide themselves and their families over these difficult
the meaning of the law for which deductions may be economic times.
made from monthly allowances. - SC previously ruled in UE v UE Faculty Association that
o “No work, no pay” principle does not apply. The “no benefits mandated by law and collective bargaining may be
work” situation contemplated in the law is one where charged to the 12% return on investments within the 40%
the employees voluntarily absent themselves. incremental proceeds of tuition increase → no need to go
o To a certain extent, the University can specify dates beyond this ruling
when no classes would be held. Surely, the framers of 3. No, the payment of wages for extra load is not
the law did not intend to allow employers to withhold granted.
employee benefits by the simple unilateral imposition - The question of fact is properly within the competence of the
of “no work” days NLRC to pass upon. The findings of fact of NLRC are binding
• The University contended that “the fact of on SC there being no indication of their being
receiving a salary alone should not be the basis of unsubstantiated by evidence.
receiving ECOLA → without merit - Assuming arguendo that the petitioners have not been paid
o Sec. 5 (Allowance for Unworked Days) of the IRR of for these extra loads, they are not entitled to payment
wage Order No. 1 states that “all covered employees following the principles of "No work, no pay."
whether paid on a monthly or daily basis shall be - What is now involved here are extra and not regular loads.
entitled to their daily living allowance when they are Extra loads should be paid for only when actually performed
paid their basic wage.” by the employee. Since there was no work on Sept. 21, 1981,
o SC presents the principle of “No pay, no ECOLA” it would now be unfair to grant petitioner’s demand for extra
• The payment of wages in full for the months of Nov. wages on that day.
and Dec. is a tacit recognition of the unusual state
of affairs in which teachers find themselves
o Although on forced leave, profs and teachers remain 1. c. Equal pay for work of equal value
burdened with the task of working during a period of
time supposedly available for rest and private matters
(e.g. correcting papers, evaluating students, submitting Art. 135 Discrimination prohibited – It shall be unlawful for any
grade reports) employer to discriminate against any woman employee with
o Sec 4 (d) of the Omnibus Rules Implementing LC respect to terms and conditions of employment solely on
applies in this case. It says that “the time during which account of her sex.
an employee is inactive by reason of interruptions in his
work beyond his control shall be considered time either The following are acts of discrimination:
if the imminence of the resumption of work requires the
employee’s presence at the place of work or if the (a.) Payment of a lesser compensation, including wage, salary or
interval is too brief to be utilized effectively and other form of remuneration and fringe benefits, to a female
gainfully in the employee’s own interest.” employees as against a male employee, for work of equal value;


o To which country does one owe economic
Art. 248 Unfair labor practices of employers – It shall be allegiance?
unlawful for an employer to commit any of the following unfair o Was the individual hired abroad specifically to work
labor practice: in the School and was the School responsible for
bringing that individual to the Philippines?
(e.) To discriminate in regard to wages, hours of work and other - Should the answer to any of these queries point to the
terms and conditions of employment in order to encourage or Philippines, the faculty member is classified as a local
discourage membership in any labor organization. Nothing in hire; otherwise, he or she is deemed a foreign-hire.
this Code or in any other law shall stop the parties from requiring - The School grants foreign-hires certain benefits not
membership in a recognized collective bargaining agent as a accorded local-hires. These include housing,
condition for employment, except those employees who are transportation, shipping costs, taxes, and home leave
already members of another union at the time of the signing of travel allowance. Foreign-hires are also paid a salary
the collective bargaining agreement. Employees of an rate twenty-five percent (25%) more than local-hires.
appropriate bargaining unit who are not members of the The School justifies the difference on two "significant
recognized collective bargaining agent may be assessed a economic disadvantages" foreign-hires have to endure,
reasonable fee equivalent to the dues and other fees paid by namely: (a) the "dislocation factor" and (b) limited
members of the recognized collective bargaining agent, if such tenure.
non-union members accept the benefits under the collective - Foreign-hire would have to uproot himself, leave family
bargaining agreement: Provided, that the individual and friends, take the risk of deviating from a promising
authorization required under Article 242, paragraph (o) of this career path for the profession as an educator in a
Code shall not apply to the non-members of the recognized foreign land, so this foreign hire is faced with economic
collective bargaining agent; realities: decent abode, effective means of transpo,
allowance for his children’s education, insurance,
- Unlawful for women to receive lesser salary or wage for work salary/retirement compensation
of equal value o The compensation scheme is simply the School's
-‐ ULP: To discriminate in regard to wages, hours of work, adaptive measure to remain competitive on an
and other terms and conditions of employment international level in terms of attracting competent
professionals in the field of international education.
ISAE v. Quisumbing 2. JUNE 1995: Negotions for new CBA were held, and ISAE, a
Summary: IS has a recruitment system for teachers that legitimate labor union and CB representative, contested the
classifies them into foreign hires and local hires. Foreign hires difference in salary rates à deadlock
are paid a salary rate 25% more than local hires, and are 3. SEPT 7 1995: ISAE filed a notice of strike, and failure of
accorded certain benefits not accorded local hires, such as National Conciliation and Mediation Board to have a
housing, transpo, shipping costs, taxes, and home leave travel compromise prompted DOLE to assume jurisdiction
allowance. IS tries to justify it as due to the economic 4. DOLE Acting Sec. Crescenciano Trajano resolved in favor of
disadvantages foreign hires have to endure, and as a means to the school, upheld the point-of-hire classification for the
remain competitinve on an international level. Court held: NO, distinction in salary rates: The principle “equal pay for equal
the difference in salary rates is discriminatory to local-hires. work” does not find application in the present case. The
international character of the School requires the hiring of
FACTS: foreign personnel to deal with different nationalities and
1. IS, pursuant to PD 732, is a domestic educational institution different cultures, among the student population.
established primarily for dependents of foreign diplomatic 5. Then DOLE Sec. Leonardo Quisumbing denied ISAE’s MR
personnel and other temporary residents. 6. This PET
- authorizes the School to employ its own teaching and
management personnel selected by it either locally or ISSUE:
abroad, from Philippine or other nationalities WON the point-of-hire classification employed is discriminatory
- Accordingly, the School hires both foreign and local to Filipinos (WON a local hire should have the same salary as a
teachers as members of its faculty, classifying the same foreign hire) (YES)
into two: (1) foreign-hires and (2) local-hires. The School
employs four tests to determine whether a faculty RATIO: YES! Employees should be given equal pay for
member should be classified as a foreign-hire or a local work of equal value. That is a principle long honored
hire: in this jurisdiction. That is a principle that rests on
o What is one's domicile? fundamental notions of justice.
o Where is one's home economy? - Acting Sec.: found that principle of “equal pay for equal


work” doesn’t find application in the case because the o The provisions institutionalize in this jurisdiction the
hiring of foreign personnel is required by the international long honored legal truism of “equal pay for
character of the school equal work” Persons who work with substantially
o that certain amenities have to be provided for foreign equal qualifications, skill, effort and responsibility,
hires to entice them to render services under similar conditions, should be paid similar salaries.
o that foreign hires have limited contract of employment, à This applies to IS, its “international character”
unlike local hires who enjoy security of tenure notwithstanding.
o ISAE cannot invoke EPC bec classification is reasonable - "Salary" is defined in Black's Law Dictionary (5th ed.) as "a
if based on substantial distinctions, and there are reward or recompense for services performed." Similarly,
substantial distinctions bet foreign hires and local hires the Philippine Legal Encyclopedia states that "salary" is the
- SC: NO WE CANNOT AGREE "[c]onsideration paid at regular intervals for the rendering of
- Our CON exhorts Congress to “give highest priority to the services."
enactment of measures that protect and enhance the right o In Songco v. NLRC, salary is paid for services
of all people to human dignity, reduce social, economic, rendered
and political inequalities.” And Art. 19 NCC requires every - If an employer accords employees the same position and
person "in the exercise of his rights and in the performance rank, presumption is that these employees perform equal
of his duties, [to] act with justice, give everyone his due, and work. IS hasn’t discharged the burden of proving they are
observe honesty and good faith." diff
- Int’l law, which springs from general principles of law, - IS cannot invoke the need to entice foreign hires to
likewise proscribes discrimination. General principles of rationalize salary rate distinctions because SALARY is
law include principles of equity, i.e., the general principles defined as a “reward or recompense for SERVICES
of fairness and justice, based on the test of what is PERFORMED”
reasonable - SC: The point-of-hire classification is an INVALID
o Different international conventions embody the general CLASSIFICATION bec there is no reasonable distinction
principle against discrimination, the very antithesis of between services rendered by foreign-hires and local-hires;
fairness and justice à Philippines incorporated this as practice of IS of according higher salaries contravenes
part of nat’l laws public policy
- The Constitution also directs the State to promote "equality
of employment opportunities for all." Similarly, the Labor
Code provides that the State shall "ensure equal work 1. d. Form: agreement for compensation of services
opportunities regardless of sex, race or creed." It would be
an affront to both the spirit and letter of these provisions if Art. 97
the State, in spite of its primordial obligation to promote (f). "Wage" paid to any employee shall mean the remuneration
and ensure equal employment opportunities, closes its eyes or earnings, however designated, capable of being expressed in
to unequal and discriminatory terms and conditions of terms of money, whether fixed or ascertained on a time, task,
employment. piece, or commission basis, or other method of calculating the
- Discrimination, particularly in terms of wages, is frowned same, which is payable by an employer to an employee under a
upon by the Labor Code. Art. 135, for example, prohibits written or unwritten contract of employment for work done or to
and penalizes the payment of lesser compensation to a be done, or for services rendered or to be renderedand includes
female employee as against a male employee for work of the fair and reasonable value, as determined by the Secretary of
equal value. Art. 248 declares it an unfair labor practice for Labor and Employment, of board, lodging, or other facilities
an employer to discriminate in regard to wages in order to customarily furnished by the employer to the employee.
encourage or discourage membership in any labor
organization. "Fair and reasonable value" shall not include any profit to the
- International Covenant on Economic, Social, and employer, or to any person affiliated with the employer.
Cultural Rights, Art. 7: The States Parties to the present
Covenant recognize the right of everyone to the enjoyment
of just and favourable conditions of work, which ensure, in "Wage"
particular: a. Remuneration which provides all workers, as a -‐ Means the remuneration or earnings, however designated,
minimum, with: Fair wages and equal remuneration capable of being expressed in terms of money,
for work of equal value without distinction of any -‐ Whether fixed or ascertained on a time, task, piece, or
kind, in particular women being guaranteed conditions of commission basis, or other method of calculating the same,
work not inferior to those enjoyed by men, with equal pay Payable to EE under a written or unwritten contract of
for equal work”


employment for work done or to be done, or for services 3. WON there was valid termination (NO)
rendered or to be rendered
-‐ Includes the fair and reasonable value, as determined by the RATIO:
SOL, of board, lodging, or other facilities customarily 1. YES, certiorari was the proper recourse.
furnished by the employer to the employee. - The CA has the power to issue writs of certiorari, as provided
by Sec. 9 of BP 129.
"Fair and reasonable value" 2. YES, there was an existent ER-EE relationship
-‐ Shall not include any profit to the employer, or to any - Use of the four-fold test points to the existence of the
person affiliated with the employer. relationship:
o Selection: Exercised when it hired Hernani and even
Legend Hotel (Manila) v. Hernani Realuyo increased his salary
FACTS: o Wages: Hernani was being paid P400/night, which was
1. Sep 1992: Hernani was working as a pianist at Legend’s eventually increased to P750/night. These are considered
Tanglaw Restaurant as a pianist, with the stage name of as ‘wages’ referred to in the Labor Code, even if they are
Joey Roa. termed as “talent fee.”
- He had an initial rate of P400/night but the same was o Control: As the CA stated, Legend exercised control and
increased to P750/night supervision in the performances made by Hernani, with
- He could not choose his performance times, which were respect to which songs he should play, what he should
set at 7 PM – 10 PM for 3 to 6 times a week wear, and even his working hours.
- He had to conform to the Filipiniana motif of the o Dismissal: Exhibited by the fact that they actually
restaurant terminated his services.
- He was subjected to the rules employees’ on - Even his working hours of less than the maximum 8 hours is
representation checks and chits. immaterial. While the Labor Code sets the maximum at 8
2. Jul 1992: Management notified Hernani that his services hours per day, it does not prohibit employees from working
would be terminated as a cost-cutting measure. He at less than 8 hours.
disputed this, insisting that Legend Hotel had been 3. NO, Hernani was illegally dismissed; rentrenchment
lucratively operating. He filed a complaint for alleged unfair was invalid.
labor practice, and constructive illegal dismissal, with - While retrenchment is a recognized cause for termination of
money claims. employment, Legend failed to adduce evidence that it was
3. In its defense, Legend claims that there is no ER-EE actually suffering losses. Hence, the claim that the dismissal
relationship between them and Hernani. And that he was was for valid cause is untenable.
only a talent that they engaged for a few hours for certain
times during the week. It also reiterated that his
termination was a cost-cutting measure. 1. e. Exemption from income tax of Minimum Wage Earners
4. LA: Complaint dismissed for lack of ER-EE relationship.
- LA based its ruling on the fact that Hernani received his RA 9504 “xxx provided, That minimum wage earners as defined
talent fee nightly, unlike the regular employees who in Section 22(HH) of this Code shall be exempt from the
received their wages monthly. payment of income tax on their taxable income: Provided,
- LA also noted the absence of the power of control which further, That the holiday pay, overtime pay, night shift differential
disproves the existence of an ER-EE relationship pay and hazard pay received by such minimum wage earners
5. NLRC: LA affirmed shall likewise be exempt from income tax.”
6. CA: LA and NLRC reversed
- CA found that there was the power of control, which is
the most decisive factor in the four-fold test. Hernani’s RA 9504, Sec. 2
performances were supervised by the restaurant manager Not over P10,000 5%
who directed him on which songs to play, which uniform
Over P10,000 but not over P500 + 10% of the excess over
to wear and even the time and frequency of his
P30,000 P10,000
performances.
Over P30,000 but not over P2,500 + 15% of the excess
7. Hence the petition by Legend.
P70,000 over P30,000
ISSUES:
P140,000 over P70,000
1. WON the certiorari filed in the CA was the proper recourse
(YES)
P250,000 over P140,000
2. WON there was an ER-EE relationship existing (YES)


P500,000 over P250,000 3. WHO should carry the burden of the wage increases
Over P500,000 P125,000 + 32% of the excess (EQUALLY, *only in the instant case because of the factual
over P500,000 circumstances)
2. Coverage HELD:
1. Court held: YES, Fact that PFDA is a GOCC is of
-‐ All ER, no one is exempted no moment
-‐ Employees = All employed by employers, except to farm - While PFDA is GOCC, the guards who would be affected
tenants/lessees, DW engaged in needle work or in any by the Wage Order are not employees of the petitioner.
cottage industry - The contract of services explicitly states that the security
-‐ All EE except guards are not considered employees of the petitioner.
e. Farm tenancy or leasehold - There being no employer-employee relationship between
f. Domestic service including drivers PFDA and the security guards, the jurisdiction of the CSC
g. Needlework or in any duly registered cottage industry may not be invoked.
h. Workers in any duly registered cooperative 2. Court held: YES
recommended by the Bureau of Cooperative - The contract entered into by the petitioner which is merely
Development and approved by Sec. of Labor job contracting makes the petitioner an indirect employer.
- Notwithstanding that PFDA is a GOCC, its liabilities, which
Philippine Fisheries Development Authority v. NLRC (1992) are joint and solidary with that of the contractor, are
FACTS: provided in Art. 106, 107, and 109 of LC.
1. Petitioner PFDA is a GOCC created by P.D. No. 997 - This places the petitioner’s liabilities under the scope of the
2. Nov. 11, 1985 – it entered into a contract with the Odin NLRC.
Security Agency for security services of its Iloilo Fishing Port - Term “employer” in Book Three, Title II on Wages
Complex. specifically provides that even GOCCs may fall within its
3. Oct. 24, 1987 – during the effectivity of said Security definition.
Agreement, private respondent Odin Security Agency 3. Court held: EQUAL SHARE
requested petitioner to adjust the contract rate in view of - In job contracting, PFDA as principal is jointly and severally
the implementation of Wage Order No. 6 which took effect liable with the contractor for the payment of unpaid wages,
on Nov. 1, 1984. pursuant to Art. 106, 107, and 109 of the Labor Code.
4. Wage Order No. 6 provides that ‘in cases of contracts for - In the case of Eagle Security v. NLRC, Court held that
security, the increases in the minimum wage and allowance Wage Orders are explicit that payment of the increases are
rates of the workers shall be borne by the principal or client ‘to be borne’ by the principal or client. However, the
of the construction/service contractor and the contract shall security guard’s primary recourse for the payment of the
be deemed amended accordingly. increase is with their direct employer. Wage Orders then
5. Sec. 7 of the Security Agreement calls for an automatic requires the amendment of the contract as to the
escalation of the rate per guard in case of wage increase. consideration to cover the service contractor’s payment of
6. Petitioner ignored these requests. Respondent filed with the increases mandated. In the end, therefore, ultimate
the Office of the Sub-Regional Arbiter a complaint for liability for the payment of the increases rests
unpaid amount of re-adjustment rate under Wage Order with the principal.
No.6 - (NOTE: VERY IMPORTANT!!!) HOWEVER, Court
7. PFDA filed a motion to dismiss, on jurisdictional grounds. took note of the fact that respondent entered into the
8. LA: Granted Motion to Dismiss, stating that the petitioner, contract when Wage Order No. 6 had already been in
being a GOCC, would place it under the scope and force, but the rates of the security guards as stipulated in
jurisdiction of the Civil Service Commission and not within the contract did not consider the increases in the minimum
the ambit of the NLRC. wage the Wage Order mandated. It was only after two
9. NLRC: Reversed and Set Aside LA decision. Ruled for years that the Agency has asked for an adjustment in the
private respondents contract price. They are equally guilty as the petitioner
when in entered into the contract without considering
ISSUES: Wage Order No. 6.
1. WON NLRC had jurisdiction (YES) - Evidently, what the Agency wanted, by filing the complaint
2. WON PFDA, as an indirect employer, is bound by the in its own behalf and in behalf of the security guards, is to
rulings of the NLRC (YES) exculpate itself from liability.
- Court held that respondents could only claim
reimbursement against the petitioner for only one-half of


the amount due considering the Agency was also Labor and Employment.
at fault.
- Defense of respondent that they were waiting for the The period of apprenticeship shall not exceed six months.
Philippine Association of Detective and Protective Agency Apprenticeship agreements providing for wage rates below the
Operators (PADPAO) to fix the new contract rate is legal minimum wage, which in no case shall start below 75
untenable. The PADPAO memorandum was not necessary percent of the applicable minimum wage, may be entered into
to make Wage Order No. 6 effective. It was merely an only in accordance with apprenticeship programs duly approved
internal agreement among the operators to set the ceiling by the Secretary of Labor and Employment. The Department
of the contract rates. shall develop standard model programs of apprenticeship.
On Denial of Due Process: Art. 75
- Petitioner was no deprived of due process simply because (c). Learnership agreement. - Any employer desiring to employ
no hearing was conducted. A decision on the merits is learners shall enter into a learnership agreement with them,
proper where the issues raised by the parties did not which agreement shall include: The wages or salary rates of the
involve intricate questions of law. (NOTE: Di ko din gets to. learners which shall begin at not less than seventy-five percent
UGH) (75%) of the applicable minimum wage
- In the case at bar, there can be no question that the
security guards are entitled to wage adjustments. The
Art. 80
computation of the amount due to each individual guard
(b). Employment agreement. - Any employer who employs
can be made during the execution of the decision where
handicapped workers shall enter into an employment agreement
hearings can be held.
with them, which agreement shall include: The rate to be paid
On Security Agreement being Void Ab Initio:
the handicapped workers which shall not be less than seventy
- Petitioner claims that contract for security services is void
five (75%) percent of the applicable legal minimum wage
ab initio on the ground that it did not comply with the
bidding requirements set by law.
- Court ruled that petitioner are estopped from assailing the RA 7323, Sec. 2 Sixty per centum (60%) of said salary or wage
contract since services were already rendered and that they shall be paid by the employer in cash and forty per centum (40%)
have already benefitted from it for 2 years already. by the Government in the form of a voucher which shall be
applicable in the payment for his tuition fees and books in any
educational institution for secondary, tertiary, vocational or
3. Minimum Wage technological education. The amount of the education voucher
shall be paid by the Government to the educational institution
concerned within thirty (30) days from its presentation to the
Art. 99 Regional minimum wages - The minimum wage rates for
officer or agency designated by the Secretary of Finance. The
agricultural and non-agricultural employees and workers in each
voucher shall not be transferable except when the payee thereof
and every region of the country shall be those prescribed by the
dies or for a justifiable cause stops in his duties in which case it
Regional Tripartite Wages and Productivity Boards
can be transferred to his brothers or sisters. If there be none, the
amount thereof shall be paid his heirs or to the payee himself, as
Art. 97
the case may be.
(f). "Wage" paid to any employee shall mean the remuneration
or earnings, however designated, capable of being expressed in
Wage Order No. NCR-18, Sept 2013
terms of money, whether fixed or ascertained on a time, task,
New Daily Minimum Wage Rates
piece, or commission basis, or other method of calculating the
same, which is payable by an employer to an employee under a Sector Basic Basic New COLA New
written or unwritten contract of employment for work done or to Wage Wage Basic Wage
be done, or for services rendered or to be rendered and Increase Wage Rates
includes the fair and reasonable value, as determined by the Non- P426 P10 P436 P30 P466
Secretary of Labor and Employment, of board, lodging, or other agriculture
facilities customarily furnished by the employer to the employee. Agriculture P389 P10 P399 P30 P429
Private P389 P10 P399 P30 P429
"Fair and reasonable value" shall not include any profit to the Hospitals (Bed
employer, or to any person affiliated with the employer. Capacity of 100
or less)
Retail/Service P389 P10 P399 P30 P429
Art. 61 Contents of apprenticeship agreements -
Establishments
Apprenticeship agreements, including the wage rates of
with 15 workers
apprentices, shall conform to the rules issued by the Secretary of

or less -‐ Learners, Apprentices, PWDs: Shall have at least 75% of
Manufacturing P389 P10 P399 P30 P429 minimum wage
Establishment -‐ Public Employees are Covered by the Salary Standardization
Regularly Law
Employing less
than 10 workers What is the prevailing law on NCR Minimum wage
-‐ · Private sector – wage order #17
-‐ · Public sector – salary standardization law
OR, Book III Rule VII Sec. 4 When Wage Increase Due Other
Workers —
3. a. Coverage/exclusions
a) All workers and employees who, prior to July 1, 1989, were
already receiving a basic wage above the statutory minimum
wage rates provided under Republic Act 6640 but not over Wage Order No. NCR-17, Sec. 2 The P30 per day COLA
prescribed in this Order shall apply to all minimum wage earners
P100.00 per day shall receive a wage increase equivalent to that
in the private sector in the region, regardless of their position,
provided in the preceding Section.
designation, status of employment and irrespective of the
b) Those receiving not more than the following monthly basic method by which they are paid.
wage rates prior to July 1, 1989 shall be deemed covered by the
This Wage Order shall not cover household or domestic helpers;
preceding subsection:
persons in the personal service of another, including family
drivers, and workers of duly-registered Barangay Micro Business
(i) P3,257.50 — where the workers and employees work everyday,
including premium payments for Sundays or rest days, special Enterprises (BMBEs) with Certificate of Authority pursuant to RA
9178. Provided however that duly registered BMBEs should pay
days and regular holidays.
their workers not lower than the region’s poverty threshold of
P259.36 per day for a family of five as of 2011, subject to the
(ii) P3,041.67 — where the workers and employees do not work
but considered paid on rest days, special days and regular condition that should there be a change in the poverty
threshold, as determined by the National Statistics Office, the
holidays.
same shall be applicable.
(iii) P2,616.67 — where the workers and employees do not work
and are not considered paid on Sundays or rest days. 3. b. Definition
(iv) P2,183.33 — where the workers and employees do not work Art. 97
and are not considered paid on Saturdays and Sundays or rest (f). "Wage" paid to any employee shall mean the remuneration
days. or earnings, however designated, capable of being expressed in
terms of money, whether fixed or ascertained on a time, task,
c) Workers and employees who, prior to July 1, 1989, were piece, or commission basis, or other method of calculating the
receiving a basic wage of more than P100.00 per day or its same, which is payable by an employer to an employee under a
monthly equivalent, are not by law entitled to the wage increase written or unwritten contract of employment for work done or to
provided under the Act. They may however, receive wage be done, or for services rendered or to be rendered and
increases through the correction of wage distortions in includes the fair and reasonable value, as determined by the
accordance with Section 16, Chapter I of these Rules. Secretary of Labor and Employment, of board, lodging, or other
facilities customarily furnished by the employer to the employee.
Sec. 7 Basis of Minimum Wages Rates — The statutory
minimum wage rules prescribed under the Act shall be for the "Fair and reasonable value" shall not include any profit to the
normal working hours, which shall not exceed eight hours work a employer, or to any person affiliated with the employer.
day.
3. c. Exemptions
-‐ Minimum wage earners in the private sector Wage Order No. NCR-17, Sec. 7 Exemptions – Upon
-‐ Regardless of position, designation or status of employment application and as determined by the Board, based on
and irrespective of the method by which they are paid. documentation and other requirements in accordance with
-‐ BUT does not cover: applicable rules and regulation issued by the NWPC, the
1. Domestic workers following may be exempted from the applicability of this Order:
2. Personal services
3. Workers of duly registered BMBEs 1. Distressed Establishments

2. Retail/Service Establishment Regularly Employing Not More
Than 10 Workers ISSUE:
3. Establishments whose Total Assets including those arising 1. WON commissions are included in determining compliance
from loans but exclusive of the land on which the particular with the minimum wage requirement (YES)
business entity’s office, plant and equipment are situated, are 2. WON Iran complied with twin notice requirement in
not more than P3 Million; and, dismissing employees (NO)
4. Establishments Adversely Affected by Natural Calamities. 3. WON vouchers of 13th month pay should be taken into
account although introduced only on appeal (YES)
3. d. Determination of compliance with minimum wage
RATIO:
Iran v. NLRC (1998) 1. Yes, commissions are included in determining
FACTS: compliance with minimum wage requirements.
1. Iran is engaged in softdrinks merchandising and distribution - LC 97 (f) explicitly includes commissions as part of
in Mandaue, Cebu. He employed Godofredo, Moreno, wages.
Celso, Fernando as truck drivers who double as salesmen - While commissions are, indeed, incentives or forms of
and Pepito, Aplonilario, Jesus, Edwin, and Diosdado as encouragement to inspire employees to put a little
truck helpers who likewise assisted in the delivery. As part of more industry on the jobs particularly assigned to
their compensation, they received commissions per case of them, still these commissions are direct remunerations
softdrinks sold. for services rendered.
- Salesmen: o Commissions have been defined as the
o Ten centavos per case of regular softdrinks recompense, compensation or reward of an
o Twelve centavos per case of family size softdrinks agent, salesman, executor, trustee, receiver,
- Truck helpers factor, broker or bailee, when the same is
o Eight centavos per case of regular softdrinks calculated as a percentage on the amount of his
o Ten centavos per case of family size softdrinks transactions or on the profit to the principal.
2. In June 1991, Iran discovered cash shortages and o The nature of the work of a salesman and the
irregularities while conducting an audit. In a return-to-work reason for such type of remuneration for services
Order, he requested Godofredo et al. to report to work rendered demonstrate clearly that commissions
every day, but not allowed to go on their respective routes. are part of a salesman’s wage or salary.
They stopped reporting for work so Iran concluded they - Thus, the commissions earned by Godofredo et al. in
abandoned their employment. Iran terminated their services selling softdrinks constitute part of the compensation
and subsequently filed complaint for estafa. or remuneration paid to drivers/salesmen and truck
3. December 5, 1991, Godofredo et al. filed complaints against helpers for serving as such, and hence, must be
Iran for illegal dismissal, illegal deduction, underpayment of considered part of the wages paid them
wages, premium pay for holiday and rest day, holiday pay, - There is no law mandating that commissions be paid
service incentive leave pay, 13th month pay, allowances, only after the minimum wage has been paid to the
separation pay, recovery of cash bond, damages and employee.
attorney’s fees. - The establishment of a minimum wage only sets a
floor below which an employee’s remuneration cannot
LA: Iran validly terminated them, there being just cause for fall, not that commissions are excluded from wages in
dismissal. BUT Iran did not comply with minimum wage determining compliance with the minimum wage law.
requirements and failed to pay 13th month pay. Total award: - Philippine Agricultural Commercial and Industrial
P81k. Workers Union v NLRC: drivers and conductors who
are compensated purely on a commission basis are
4. Both parties appealed to NLRC. automatically entitled to the basic minimum pay
- Iran: presented for the first time, vouchers evidencing mandated by law should said commissions be less
payment of 13th month pay signed by Godofredo et al. than their basic minimum for eight hours work. It can,
- Godofredo et al.: they were illegally dismissed; thus, be inferred that were said commissions equal to
contested mathematical errors in computing Jesus’ or even exceed the minimum wage, the employer
wage differentials need not pay, in addition, the basic minimum pay
prescribed by law
NLRC: affirmed validity of dismissal, but found that it did not 2. No. In terminating employees, the employer must
comply with procedural requirements for dismissing employees; furnish the worker with 2 written notices: (a) a
corrected computation of Jesus’ wage differentials notice which apprises the employee of the


particular acts or omissions for which his dismissal rental value will be used
is sought, and (b) the subsequent notice which
informs the employee of the employer’s decision FACILITIES SUPPLEMENTS
to dismiss him Who Worker Employer
- Return-to-work order as equivalent to the first notice benefits?
apprising the employee of the particular acts or Part of Yes No – addition to
omissions for which his dismissal is sought. But Iran wage? wage/extra
admitted that Godofredo et al. were never told in said Deductible Yes No
notice that their dismissal was being sought, only that from the
they should settle their accountabilities. wage?
3. Yes, vouchers should have been taken into Examples Meals, board and
account. lodging
- There should have been a relaxation of technical rules
of evidence From SLL International Cables Specialist v. NLRC
- The intent of PD 851 is the granting of additional
FACILITIES SUPPLEMENTS
income in the form of 13th month pay to employees not
Items of necessary expense for Extra remuneration/special
as yet receiving the same and not that a double burden
laborer’s and his family’s privilege given to laborers
should be imposed on the employer who is already
existence
paying his employees 13th month pay or its equivalent
Part of laborer’s wage thus Primarily for ER’s benefit
- However, vouchers cover only a particular year; cannot
deductible
be presumed that the same amounts were given on
If the fair rental value is lower Over and above laborer’s
other years
than the computed value, fair wage thus not deductible
- Iran only entitled to credit amounts paid for particular
rental value will be used
year covered by vouchers
*Distinction between facilities and supplements lies with the
PURPOSE for which the allowance is given
DISPOSITIVE: Remanded for computation of correct wage
differentials.
-‐ Wage necessarily includes facilities or commodities.
Since Art. 97 (f) provides that the wage includes the fair and
reasonable value of board, lodging, and other facilities
3. e. Facilities and Supplements/Allowances
customarily furnished by the employer to the employee, the
employer may deduct the value thereof (ex. food and
OR, Book III Rule VII-A Sec. 5 Facilities – the term
housing) the employee’s wage.
“facilities” as used in this Rule shall include articles or services
-‐ Existing laws excludes allowances from the basic
for the benefit of the employee or his family but shall not include
salary or wage in the computation of the amount of
tools of the trade or articles or service primarily for the benefit of
retirement pay and other benefits payable to an employee.
the employer or necessary to the conduct of the employer’s
business.
Millares v. NLRC and PICOP (1999)
FACTS:
1. Petitioners (numbering 116) were employed by the Paper
FACILITIES SUPPLEMENTS Industries Corp. of the Phils (PICOP), occupying various
Include articles or services for positions in Bislig, Surigao del Sur.
the benefit of the 2. 1992: PICOP suffered a financial setback because of the
employee or his family gov’t regulations on logging as well as the economic crisis.
Does not include tools of the In view thereof, PICOP undertook a retrenchment program
trade or articles or service Extra remuneration or special and terminated the services of petitioners.
primarily for the benefit of the privileges or benefits given to 3. In accord with the Labor Code provisions, the petitioners
employer or received by the laborers received separation pay computed at the rate of 1 month
Value of Facilities = cost of over and above their of basic pay for every year of service.
operation and maintenance + ordinary earnings or - Petitioners, however, were of the view that the
adequate depreciation + wages allowances they allegedly received regularly should also
reasonable allowance (not be included in the computation. The following were the
more than 5 ½ % interest) allowances referred to:
If the fair rental value is lower o Staff/Manager’s Allowance – while PICOP had free
than the computed value, fair housing facilities for the employees, there were


limited slots. While fully occupied, PICOP would for every year of service.” The question now is what does the
then give this allowance for those who live outside term ‘pay’ in the provision connote?
the facilities but near the mill site. However, when -‐ Relating Art. 283 to Art. 97, pay and wage mean/refer to the
there is a vancancy, the employee would stop same thing. The Court gave focus to the last part of Art 97 (f):
receiving the allowance and would take up the that wage “includes the fair and reasonable value, as
vacancy. determined by the Secretary of Labor, of board, lodging, or
o Transportation Allowance – granted to those who other facilities customarily furnished by the employer to the
use their own vehicles in the performance of their employee.”
duties. Should conditions no longer obtain, the o As to the aspect of being “customary,” the fact that the
payment of this allowance is discontinued. allowance is furnished monthly does not automatically
o Bislig Allowance – given to division managers and grant it the character of being customary. The
corporate officers assigned in Bislig due to the allowances in question are temporary only because
hostile environment obtaining. When they are there are certain conditions that, when met, will cause
assigned out of Bislig, however, they will cease to these allowances to cease from being given.
receive this. o As to the aspect of facility, Sec. 5, Rule VII, Book III of
4. There being no resolution on the matter, the parties the Implementing Rules defines it as “including articles
submitted it for the decision of the Executive Labor Arbiter. or services for the benefit of the employee or his family,
5. ELA: Decision in favor of petitioners. and excluding tools of the trade or articles or service
- Applying Art. 97 (f) of the Labor Code which defines primarily for the benefit of the employer or necessary to
“wage,” the allowances in question, being customarily the conduct of the employer’s business.” In
furnished by PICOP and regularly received by determining what privilege constitutes facility, the
petitioners, forms part of the wages and hence should criterion is its purpose. Since the assailed allowances
be included in the computation for the separation pay were for the benefit and convenience of the company, it
in retrenchment. is not considered as facility. This is supported by the
- Another point is that in the cases of Santos v. NLRC and fact that the assailed allowances were not subject to
Soriano v. NLRC, it was ruled that not only basic salary withholding tax.
but also regular allowances which the employee had o As for the value being determined by the Secretary of
been receiving should be included in the computation Labor, it is actually PICOP that determined the value of
of the separation pay. these assailed allowances and were given in lieu of the
6. NLRC: ELA reversed. actual provisions for housing and transportation needs
- The allowances do not form part of the basic pay whereas the Bislig allowance was in consideration of the
because they are contingency-based. hostile environment at the time.
- The Santos and Soriano cases are also inapplicable o The conclusion is that, as reached by the NLRC, these
since they involved cases of illegal dismissal where the allowances do not form part of the petitioners’ wages
separation pay was granted in lieu of their since they are not regularly received.
reinstatement. -‐ The cited cases by the ELA is inapplicable since it has been
- It is the case of Estate of Eugene Kneebone v. NLRC, determined that these allowances were not regularly
which finds control in this case where it was held there received.
that representation and transportation allowances were
deemed not part of the salary and, hence, should not DISP: NLRC affirmed. Petition dismissed.
be included in the separation pay computations.
7. Hence this petition. SLL International Cables Specialist v NLRC (2011)
FACTS:
ISSUES: 1. Roldan Lopez, Danilo Cañete, and Edgardo Zuñiga were
WON the NLRC committed a grave abuse of discretion on the hired by Sonny Lagon as apprentices or trainee
part of the NLRC for reversing the findings of the ELA (NO) cable/linemen
- Paid min wage but since they were only trainees, they
RATIO: did not report for work regularly
There was no grave abuse of discretion on the part of - Subs to regular workers or in undertakings that needed
the NLRC. extra workers to expedite completion of work
-‐ In cases of retrenchment, the employer is obligated by Art. 2. PRs were engaged as project employees by SLL
283 of the Labor Code to provide separation pay computed International Cables Specialist in their Islacom Project in
to be equivalent to “1 month ‘pay’ or at least ½ month ‘pay’ Bohol (March 1997 to Dec 1997). Their employment was
terminated upon completion of the project


- They received P145/day (min wage in Region VII) value of the meals and snacks enjoyed by the latter,
3. March 1998 – Zuñiga and Cañete were engaged again by provided that such deduction is with the written
Lagon as project employees for its PLDT Antipolo project authorization of the employees concerned.
(until Sept 1998) - Before value of facilities can be deducted from the
- They received P145/day (min wage for Rizal was P160) employees’ wages, the following requisites must be
4. Nov 1998 – PRs were re-employed for Racitelcom project in attendant:
Bulacan; paid P145/day 1. Proof must be shown that such facilities are
5. May 1999 – PRs were re-employed for Lagon’s project in customarily furnished by the trade
Caloocan City 2. The provision of deductible facilities must be
- May 21, 1997-Dec 1999 – they received P145 (min wage voluntarily accepted in writing by the employee
in Manila was P198) 3. Facilities must be charged t reasonable value
- Jan-Feb 28, 2000 – they received P165 (min wage was
P213) o Mere availment is not sufficient to allow
- Faced with economic problems, Lagon was constrained deductions from employees’ wages
to cut down on OT work - SLL failed to present any company policy or guideline
6. PRs filed a complaint for illegal dismissal, non-payment of showing that provisions for meals and lodging were
wages, holiday pay,13th month pay for 1997 and 1998 and part of the employee’s salaries; also failed to provide
SIL + damages proof of the employees’ written authorization, much
7. LA: less show how they arrived at their valuations. Also, it is
- Rs were regular employees because they were not clear whether PRs actually enjoyed said facilities.
repeatedly hired by Ps and they performed activities - Supplements v Facilities
which were usual, necessary and desirable in the • Supplements constitute extra remuneration or
business or trade of the employer special privileges or benefits given to or received
- PRs were underpaid. Board and lodging, electricity, by the laborers over and above their ordinary
water, and food could not be included in the earnings or wages.
computation of their wages because these were given • Facilities are items of expense necessary for the
without their written consent laborer's and his family's existence and subsistence
- No illegal dismissal so that by express provision of law, they form part
8. NLRC affirmed LA decision of the wage and when furnished by the employer
are deductible therefrom, since if they are not so
ISSUE/S: furnished, the laborer would spend and pay for
1. WON there was underpayment of wages (NO) them just the same.
2. WON the value of the facilities should be included in the
computation of the “wages” received by PRS (NO) • In the case at bar, the items provided were given
freely by SLL for the purpose of maintaining the
HELD: efficiency and health of its workers while they were
1. Cannot be entertained by the Court because it working at their respective projects
involves factual issues.
- General rule on payment of wages: a party who alleges
payment as a defense has the burden of proving it. 3. f. Cash Wage/Commission
- PRs entitled to be paid the min wage, whether they are
regular or non-regular employees. OR, Book III Rule VII-A Sec. 4 Cash Wage – the minimum
o Project employees are not among those who are wage rates prescribed in Section 1 hereof shall be basic, cash
not covered by the payment of min wage in Sec. 3, wages without deducting therefrom whatever benefits,
Rule VII, Rules to Implement the Labor Code supplements or allowances which the employees enjoy free of
2. No, the requirements for a valid deduction of charge aside from the basic pay. An employer may provide
value of facilities from employees’ wages have not subsidized meals and snacks to his employees provided that the
been met in this case. subsidy shall not be less than 30% of the fair and reasonable
- Sec. 1, DOLE Memorandum Circular No. 2 provides that value of such facilities. In such a case, the employer may deduct
an employer may provide subsidized meals and snacks from the wages of the employees not more than 70% of the
to his employees provided that the subsidy shall not be value of the meals and snacks enjoyed by the employees,
less than 30% of the fair and reasonable value of such provided that such deduction is within the written authorization
facilities. In such cases, employer may deduct from the of the employees concerned.
wages of the employees not more than 70% of the


losses or other similar causes, xxx the employee shall
Commissions are: be entitled to termination pay equivalent at
1. PART OF WAGE: If it is an additional compensation agreed least to his one month salary, or to one-half
to be given by the employer without condition month pay for every year of service, whichever is
2. NOT PART OF WAGE: If it is paid only after realization of higher, a fraction of at least six (6) months being
profits or for a certain amount of productivity considered as one whole year.”
"Sec. 10. The computation of the termination pay of an
From Philippine Duplicators v. NLRC employee as provided herein shall be based on his
latest salary rate, unless the same was reduced by the
SALES COMMISSION PRODUCTIVITY BONUS employer to defeat the intention of the Code, in which
Paid upon specific results Given based on productivity case the basis of computation shall be the rate before its
achieved by a salesman deduction."
Mandatory once earned Management prerogative 5. LA: Payment of separation pay equivalent to their one
Part of basic salary: part of Akin to profit sharing: month salary, exclusive of commissions allowances, etc. for
remuneration for service considered as bonus, ER’s act every year of service
rendered of gratuity - Definition of ‘wage’ in Art. 97 (f) of the Labor Code is a
general definition. It is ‘wage’ in its generic sense. It
Songco v. NLRC (1990) does not show any indication that commission is part of
FACTS: salary; only that commission by itself may be
1. Private respondent F.E. Zuellig filed with the DOLE Regional considered a wage, such as in cases of salesmen,
Office an application seeking clearance to terminate the agents and field personnel who do not earn any regular
services of the 3 petitioners (Jose Sangco, Romeo Cipres, salary, but rely mainly on commission earned.
and Amancio Manuel) allegedly on the ground of - However, provisions on the IRR referring to separation
retrenchment due to financial losses. pay, in conjunction with Art. 273 and 274 pertain
2. At first, petitioners opposed the dismissal by eventually, specifically to salary only.
they manifested that they are no longer contesting such 6. NLRC: Dismissed appeal, and affirmed LA decision
dismissal, and the only issue to be resolved is the basis of - While commission may refer to wage, it does not mean
the separation pay due them. that commission, allowances or analogous income
3. Petitioners, who were in the sales force of Zuellig received necessarily forms part of the employee’s salary because
monthly salaries of at least P400. In addition, they receive to do so would lead to anomalies, if not absurd
commissions for every sale they made. construction of the word “salary.” What then would
4. PERTINENT PROVISIONS: prevent the employee from insisting that emergency
o CBA: ARTICLE XIV — Retirement Gratuity. living allowance, 13th month pay, overtime and
"Section 1(a) — Any employee, who is separated from premium pay and other fringe benefits should be
employment xxx or permanent lay-off not due to the fault added to the computation of their separation pay.
of said employee shall receive from the company a ISSUES:
retirement gratuity in an amount equivalent to one WON earned sales commissions and allowances should be
(1) month's salary per year of service. One month included in the monthly salary of petitioners for the purpose of
of salary as used in this paragraph shall be deemed separation pay (YES)
equivalent to the salary at date of retirement; years of
service shall be deemed equivalent to total service HELD:
credits, a fraction of at least six months being considered Court held: YES
one year, including probationary employment.” - PET: Computation of separation pay should include not only
o Art. 284, Labor Code basic salary but their earned sales commissions and
“In case of retrenchment to prevent losses and other allowances also, since pursuant to Art. 97, LC, commission is
similar causes, the separation pay shall be part of one’s salary.
equivalent to one (1) month pay or at least one- - RESP: If it were really the intention of the LC as well as its
half (1/2) month pay for every year of service, implementing rules to include commission in the
whichever is higher. A fraction of at least six (6) computation of separation pay, it should have explicitly said
months shall be considered one (1) whole year. so in clear and unequivocal terms. Furthermore, in the
o Sec. 9(b) and 10, Rule 1, Book VI of the Rules definition of the term ‘wage”, “commission” is used only as
Implementing the Labor Code one of the features or designations attached to the word
"Sec. 9(b). Where the termination of employment is due remuneration or earnings.
to retrenchment initiated by the employer to prevent


- SC: It is settled in the case of Santos v. NLRC that in the included in their separation pay. In the computation thereof,
computation of backwages and separation pay, what should be taken into account is the average
transportation and living allowances are included. Question commissions earned during their last year of employment.
in the case at bar is with regards to earned sales
commissions. Boie Takeda v. De la Serna (1993)
- Broadly, the word "salary" means a recompense or
consideration made to a person for his pains or industry in FACTS: Two consolidated cases:
another man's business. Whether it be derived from
"salarium," or more fancifully from "sal," the pay of the Boie Tekada v. De la Serna:
Roman soldier, it carries with it the fundamental idea 1. A routine inspection was conducted in the premises of
of compensation for services rendered . petitioner Boie-Takeda Chemicals, Inc. by Labor and
- There is eminent authority for holding that the words Development Officer Reynaldo B. Ramos
"wages" and "salary" are in essence. "Salary," the 2. Finding that Boie-Takeda had not been including the
etymology of which is the Latin word "salarium," is often commissions earned by its medical representatives in the
used interchangeably with "wage", the etymology of which is computation of their 13th month pay, Ramos served a
the Middle English word "wagen". Both words generally Notice of Inspection Results on Boie-Takeda through its
refer to one and the same meaning, that is, a president, Mr. Benito Araneta, requiring Boie-Takeda within
reward or recompense for services performed. ten (10) calendar days from notice to effect restitution or
- Likewise, "pay" is the synonym of "wages" and "salary" correction of "the underpayment of 13th month pay for the
(Black's Law Dictionary, 5th Ed.). Inasmuch as the words years 1986, 1987 and 1988 of Med Rep in the total amount
"wages", "pay" and "salary" have the same of P558,810.89."
meaning, and commission is included in the definition of 3. Boie-Takeda wrote the Labor Department contesting the
"wage", the logical conclusion, therefore, is, in the Notice of Inspection Results, and expressing the view:
computation of the separation pay of petitioners, - The commission paid to our medical representatives is
their salary base should include also their earned not to be included in the computation of the 13th
sales commissions month pay since the law and its implementing rules
- Court agreed with the Solicitor General that even if speak of REGULAR or BASIC salary and therefore
commissions were in the form of incentives or exclude all other remunerations which are not part of
encouragement, so that the petitioners would be inspired to the REGULAR salary.
put a little more industry on the jobs particularly assigned to - If no sales are made under the effort of a particular
them, still these commissions are direct representative, there is no commission during the
remunerations for services rendered which period when no sale was transacted, so that
contributed to the increase of income of Zuellig. commissions are not and cannot be legally defined as
- The nature of the work of a salesman and the reason for regular in nature.
such type of remuneration for services rendered demonstrate 4. Regional Director Luna C. Piezas issued an Order directing
clearly that commissions are part of petitioners' wage or Boie-Takeda:
salary. - To pay its medical representatives and its managers the
- SC took judicial notice of the fact that some salesmen do not total amount of P565,746.47 representing
receive any basic salary but depend on commissions and underpayment of thirteenth (13th) month pay for the
allowances or commissions alone, although an employer- years 1986, 1987, 1988
employee relationship exists. I 5. Acting Labor Secretary Dionisio de la Serna, who affirmed
- If we adopt the opposite view that commissions do not form
part of wage or salary, then, in effect, it will be saying that Philippine Fuji Xerox Corp. v. Trajano:
this kind of salesmen do not receive any salary and therefore, 1. A similar Routine Inspection was conducted in the premises
not entitled to separation pay in the event of discharge from of Philippine Fuji Xerox Corp.
employment. This narrow interpretation is not in 2. Pursuant to Routine Inspection, in his Notice of Inspection
accord with the liberal spirit of our labor laws and
Results, addressed to the Manager, Mr. Nicolas O. Katigbak,
considering the purpose of separation pay which is,
Senior Labor and Employment Officer Nicanor M. Torres
to alleviate the difficulties which confront a
dismissed employee thrown to the streets to face noted the following violation committed by Philippine Fuji
the harsh necessities of life. Xerox Corp.:
- Citing the case of Soriano v. NLRC, the Court ruled that since - Underpayment of 13th month pay of 62 employees,
the commissions in this case were earned by actual market more or less — pursuant to Revised Guidelines on the
transactions attributable to petitioners, theses should be


Implementation of the 13th month pay law for the - In including commissions in the computation of the 13th
period covering 1986, 1987 and 1988. month pay, the second paragraph of Section 5(a) of the
3. Nicolas and Gonzales were summoned to appear before Revised Guidelines on the Implementation of the 13th
Labor Employment and Development Officer Mario F. Month Pay Law unduly expanded the concept of "basic
Santos, NCR Office, Department of Labor for a conciliation salary" as defined in P.D. 851.
conference. When no amicable settlement was reached, the - It is a fundamental rule that implementing rules cannot add
parties were required to file their position papers. to or detract from the provisions of the law it is designed to
4. Regional Director Luna C. Piezas issued an Order: implement. Administrative regulations adopted under
- Philippine Fuji Xerox to pay deficiency in 13 month pay
th
legislative authority by a particular department must be in
already paid harmony with the provisions of the law they are intended to
5. Secretary of Labor: Denied the appeal for lack of merit. carry into effect. They cannot widen its scope. An
administrative agency cannot amend an act of Congress.
The two petitions were consolidated: - BASIC SALARY: a rate of pay for a standard work period
exclusive of such additional payments as bonuses and
Petitioners: That under P.D. 851, the 13th month pay is based overtime
solely on basic salary. As defined by the law itself and clarified by
- San Miguel Corp v. Inciong: Under PD 851 and its IRR, basic
the implementing and Supplementary Rules as well as by the
salary of an employee is used as the basis in the
Supreme Court in a long line of decisions, remunerations which
do not form part of the basic or regular salary of an employee, determination of his 13th month pay. Any compensations
such as commissions, should not be considered in the which are deemed not part of the basic pay is excluded as
computation of the 13th month pay. This being the case, the basis in the computation of mandatory bonus.
Revised Guidelines on the Implementation of the 13th Month o Under PD 851 IRR, the ff. compensations are deemed
Pay Law issued by then Secretary Drilon providing for the not part of basic salary:
inclusion of commissions in the 13th month pay, were issued in
§ cost of living allowances
excess of the statutory authority conferred by P.D. 851.
§ profit-sharing payments
- “Revised Guidelines on the Implementation of the 13th § all allowances and monetary benefits which are not
Month Pay Law promulgated by then Labor Secretary considered or integrated as part of the regular
Franklin Drilon” basic salary of the employee
o Under a later set of Supplementary IRR of PD 851,
5. 13th Month Pay for Certain Types of Employees. overtime pay, earnings and other remunerations
are excluded as part of the basic salary in the
(a) Employees Paid by Results. — Employees who are computation of 13th month pay
paid on piece work basis are by law entitled to the 13th
- The exclusion of these remunerations indicate the intention
month pay.
to strip basic salary of other payments which are properly
considered as fringe benefits
Employees who are paid a fixed or guaranteed wage
plus commission are also entitled to the mandated 13th - The all-embracing “earnings and other remunerations”
month pay based on their total earnings during the which are deemed not part of the basic salary (in the
calendar year, i.e., on both their fixed or guaranteed Supplementary IRR) includes payments for sick, vacation, or
wage and commission. maternity leaves, premium for works performed on rest days
and special holidays, pays for regular holidays and night
ISSUE: differentials
WON respondent labor officials in computing said benefit,
o Overtime pay is an additional compensation other than
committed "grave abuse of discretion amounting to lack of
jurisdiction," by giving effect to Section 5 of the Revised and added to the regular wage or basic salary
Guidelines on the implementation of the Thirteenth Month Pay - In remunerative schemes consisting of a fixed wage plus
(YES) commission, the fixed wage is patently the “basic salary” for
this is what the employee receives for a standard work
RATIO: period. Commissions are given for extra efforts exerted in
YES, there was a grave abuse of discretion. consummating sales or other related transactions


DISPOSITIVE: Consolidated petitions are GRANTED. The as a source of rights until declared invalid by a proper
second paragraph of Section 5 (a) of the Revised Guidelines on body (i.e., the Supreme Court).
the Implementation of the 13th Month Pay Law issued on 9. Hence, this petition.
November 126, 1987 by then Labor Secretary Franklin M. Drilon
is declared null and void as being violative of the law said ISSUE:
Guidelines were issued to implement, hence issued with grave WON the 13th month pay computations should include the
abuse of discretion correctible by the writ of prohibition commissions (YES)
and certiorari. The assailed Orders of January 17, 1990 and
October 10, 1991 based thereon are SET ASIDE. RATIO:
The 13 t h month pay granted to PD’s employees should
include their commissions received.
Phil. Duplicators v. NLRC and Phil. Duplicators Union-TUPAS -‐ Art. 97 (f) defines wage as “remuneration or earnings,
(1993) however designated… for work done or to be done, or for
FACTS: services rendered or to be rendered…”
1. PD is a domestic corporation engaged in the sale of -‐ In the instant case, the sales commissions received by PD’s
copying machines and other related products. In their salesmen is without question a part of the compensation
employ are salesmen who are compensated with a paid to them for services rendered and hence is part of the
fixed/guaranteed salary plus commissions based on the wage or salary, as defined by Art. 97 (f).
price of the machines sold. -‐ The fact that this compensation is in the nature of a
2. PD 851 was promulgated, prescribing the payment of 13th commission, it does not detract from its character that it is
month pay to all employees receiving a “basic salary” of a part of the wage paid to the salesmen.
not more than P1000/month. -‐ The term “basic salary” as used in PD 851 was only used to
-‐ This was amended by Memorandum Order No. 28 distinguish “wage” from fringe benefits (e.g., vacation
which removed the limit of P1000/month and instead leave, maternity leave, etc.). Sales commissions are still part
entitled all rank-and-file employees to receive the 13th of these “wages” and are not mere fringe benefits.
month pay. -‐ A look at the IRR of PD 851 will tell that what were excluded
-‐ The Ministry of Labor then issued MOLE Explanatory from the term “basic salary” were “profit-sharing payments
Bulletin No. 86-12, clarifying that employees “who are and all allowances and monetary benefits which are not
plaid a fixed or guaranteed wage plus commission” are considered or integrated as part of their regular salary.”
also entitled to the 13th month pay. The sales commissions received by the salesmen were not
3. In view of these issuances, the Union asked for the payment of this nature and hence, not excluded.
of the 13th month pay computed on the basis of their fixed -‐ The opinion issued by Dir. Sanchez is controlling and
salary plus their commissions. should be accorded great respect as it constitutes
4. PD refused the request but stated that it would respect the “contemporaneous administrative construction,” to which
opinion coming from the Ministry of Labor. the Court traditionally accords respect
5. Hence, Dir. Sanchez of the Bureau of Working Conditions -‐ Finally, it should be noted that the opinion by Dir. Sanchez
rendered an opinion in favor of the Union, declaring the was adopted and reiterated by Sec. Drilon in the Revised
issuances to be applicable to the employees of PD. Guidelines on the Implementation of the 13th Month Pay
-‐ It provided that the 13th month pay is to be computed Law.
on the basis of their fixed salary plus their total -‐
commissions for the calendar year divided by twelve DISP: Petition dismissed.
6. Despite the opinion, PD refused payment of the 13th month
pay based on both fixed salary and commissions; it only
paid based on the fixed salary. Union then instituted a 3. g. Gratuity and Salary Wages, Difference
complaint against PD for the non-payment of the
differentials. SALARY GRATUITY
7. LA: Complaint adjudged in favor of the Union. PD directed Given as a form of Freely given, or without
to pay the differentials. compensation recompense
8. NLRC: LA affirmed. Linked to actual services Not intended for actual
-‐ On PD’s argument that the issuances regarding the performed or to be performed services
application of the 13th month pay to those receiving Mandatory Not mandatory
fixed wages and commissions, the NLRC held that it
had no authority to pass on the validity of the Plastic Town Center v. NLRC
Explanatory Bulletin 86-12 and it shall, therefore, remain FACTS:


1. Nagkakaisang Lakas ng Manggagawa (NLM) and Plastic b. Unfair labor practice through violation of CBA by only
Town have a CBA: giving 26 days pay (instead of 30 days equivalent to 1
a. Sec. 1 of the CBA: “The company agrees to grant month) as gratuity pay to resigning employees
permanent/regular rank and file workers covered by this 5. LA: Ruled in favor of Plastic Town Center Corp.
Agreement who have rendered at least one year of - P1 increase was ahead of the implementation of the
continuous service, across-the-board wage increased as CBA provision, or was advantageous to complainant
follows: members à we can not fault Plastic Town for its refusal
"'a. Effective 1 July, 1983 — P1.00 per worked day; to grant a second P1 increase on July 1, 1984
"'b. Effective 1 July, 1984 — P1.00 per worked day; - Since the workers are paid on daily basis, it computed
"'c. Effective 1 July, 1985 — P1.00 per worked day; the salary received by the worker in a month as monthly
b. Sec. 3 of the CBA: “It is agreed and understood by the salary à salary of 26 days is a month salary
parties herein that the aforementioned increase in pay o As daily wage earner, no instance that the worker
shall be credited against future allowances or wage would work 30 days a month since work doesn’t
orders hereinafter implemented or enforced by virtue include Sundays or rest days à could not expect a
of Letters of Instructions, Decrees and other labor month salary exceeding 26 days service; to award
legislation." the daily wage earner for more than 26 days is pay
c. Sec. 2 of the CBA: “It is the intention of both the for days he does not work
COMPANY and the UNION, that the grant of gratuity o For monthly-paid workers, he expects his monthly
pay by the COMPANY herein set forth is to reward salary to be fixed which is a monthly salary
employees and laborers, who have rendered 6. NLM appealed to NLRC: reversing LA’s decision
satisfactory and efficient service with the COMPANY. - Plastic Town to grant P1 increase for July 1, 1984 and
THUS, in case of voluntary resignation, which is not the equivalent of 30 days salary in gratuity pay, as
covered by Section 1 above, the COMPANY required by its CBA
nevertheless agrees to grant a gratuity pay to the - MR by Plastic Town à denied à this Petition
resigning employee or laborer as follows:
Two to Five years of service: 1 month salary ISSUES:
Six (6) to Ten (10) yrs. of service months salary: 2 and a 1. WON Plastic town should grant the P1 increase for July 1,
half months salary 1984 (YES)
Eleven (11) to Fifteen yrs. of service: 4 months salary 2. W gratuity pay (involving a monthly salary) should be
Sixteen (16) to twenty yrs. of service: 5 months salary equivalent to 26 or 30 days (30 days)
Twenty one yrs. of service and above: 12 months salary
2. Certain Wage Orders were passed: HELD:
a. Wage Order No. 4 provided for the integration of the 1. YES, Plastic Town should grant the P1 increase
mandatory emergency cost of living allowances - Plastic Town: On May 1, it granted P1 increase pursuant to
(ECOLA) under PD 1614, 1634, 1678 and 1713 into the Wage Order No. 4 which, in consonance with Sec. 3 of CBA,
basic pay of all covered workers effective May 1, 1984; was to be credited to the July 1, 1984 increase (it was July
and after the integration, the applicable statutory increase); it did not credit the P1 per day increase pursuant
minimum daily wage rate must be complied with (in this to Wage Order No. 5 because it credited it pursuant to
case, P32) Wage Order No. 4
b. Wage Order No. 5 (implemented June 16, 1984) - SC: Sec. 3 of the CBA clearly states that CBA granted
additional P3 per day to the basic salary increases shall be credited against future allowances or
3. Plastic Town incurred a deficiency of P1 in the wage rate wage orders à CBA increase to be effected
after integrating the ECOLA with basic pay à Plastic Town o As a contract, it constitutes the law between the parties
advanced to May 1, 1984 (2 months earlier) the and in interpreting contracts, the rules on contract must
implementation of the P1 wage increase provided in the govern
CBA starting July 1, 1984 for the benefit of the workers (I o Contracts which are not ambiguous are to be
think this means it credited to May the wage increase in interpreted according to their literal meaning and
paid in July) should not be interpreted beyond their obvious
4. SEPT. 7, 1984: Nagkakaisang Lakas ng Manggagawa intendment
(NLM)—Katipunan filed a complaint charging Plastic Town o CBA increase to be effected on July 1, 1984 cannot be
with: retroactively applied to mean compliance with
a. Violation of Wage Order No. 5 – by crediting the P1 Wage Order No. 4
increase in the CBA as part of compliance w/ it o Words of contract are plain and readily understandable
à no need for further construction or interpretation


- SC: Agree with NLRC when it said Plastic Town is bound by o CC: provides when months are not designated by
the CBA to grant an increase name, a month is understood to be 30 days à applies
o Bet. July 1, 1983-July 1, 1984, 2 increases mandated by to the case
Wage Order Nos. 4 (May 1) and 5 (June 16)
o That it complied with Wage Order Nos. 4 and 5 does
not relieve it of its obligation to grant the P1 increase 3. h. Effect on Benefits
under CBA
2. Gratuity pay should be equivalent to 30 days. Art. 100 Prohibition against elimination or diminution of
- Plastic Town: 1 month salary for daily paid workers should benefits - Nothing in this Book shall be construed to eliminate or
be computed on the basis of 26, not 30 days; under the “fair in any way diminish supplements, or other employee benefits
day’s wage for fair day’s labor,” gratuity pay should be being enjoyed at the time of promulgation of this Code.
computed on the basis of 26 days for one month salary,
considering they are daily paid So that the rule against diminution of supplements or
- SC: No abuse of discretion in grating gratuity pay equivalent benefits may apply it must be shown that:
to 1 month (or 30 days salary) -‐ The grant of the benefit is founded on a policy or has
o We quote NLRC: “To say that awarding the daily wage ripened into a practice over a long period
earner salary for more than 26 days is paying him for -‐ The practice is consistent and deliberate
days he does not work misses the point entirely. The -‐ The practice is not due to error in the construction or
issue here is not payment for days worked but payment application of a doubtful or difficult question of law
of gratuity pay equivalent to one month or 30 days -‐ The diminution or discontinuance is done unilaterally by the
salary.” employer
o Definition of gratuity (Moreno’s Philippine Law
Dictionary): Exceptions:
§ Something given freely, or without recompense; a 1. Not established practice
gift; something voluntarily given in return for a 2. Mistake in the application of law
favor or services; a bounty; a tip (Pirovano v. De la 3. Negotiated benefits contained in a CBA as these are
Rama Steamship Co.) bilateral
§ That paid out the beneficiary for past services -‐ The giving of salary increase across-the-board to
rendered purely out of the generosity of the giver comply with a CBA provision cannot be said to have
or grantor. (Peralta v. Auditor General) ripened into a company practice
§ Salary or compensation. The very term ‘gratuity’ 4. Reimbursement benefits
differs from the words ‘salary’ or ‘compensation’ in -‐ There can be an elimination of an existing benefit in
leaving the amount thereof, within the limits of exchange for an equal or better one
reason, to the arvitrament of the giver. (Herranz & 5. Reclassification of position; promotion
Garriz v. Barbudo) -‐ However, this must be done in good faith. The
- SC: Gratuity pay is not intended to pay a work for actual personnel movement should not be intended to
services rendered; it is a money benefit given to the circumvent the law to deprive employees of the
workers whose purpose is “to reward employees or benefits they used to receive
laborers, who have rendered satisfactory and efficient 6. Contingent or conditional benefits such as a bonus
service to the company” (Sec. 2, CBA)
o While it may be enforced once it forms part of a Davao Fruits Corporation vs. Associated Labor Unions (1993)
contractual undertaking, grant of such benefit is not FACTS:
mandatory so as to be considered a part of labor 1. Respondent, for and in behalf of all the rank-and-file
standard law unlike the salary, cost of living allowances, workers and employees of petitioner filed a complaint
holiday pay, leave benefits, which are covered by the before the Ministry of Labor and Employment, Regional
LC Arbitration Branch XI, Davao City for “Payment of the
o Nowhere has it been stated that gratuity pay should be Thirteenth-Month Pay Differentials.”
based on the actual number of days worked over the 2. Respondent sought to recover from petitioner the
period of years (as basis) à no point in counting the thirteenth month pay differential for 1982 equivalent to
number of days worked their sick, vacation and maternity leaves, premium
o Plus, any doubts to be resolved in light of Art. 1702 (in for work done on rest days and special holidays,
favor of laborer) and pay for regular holidays which petitioner,
allegedly in disregard of company practice since 1975,


excluded from the computation of the 13th month pay for - Essentially, whatever compensation an employee receives for
1982. an eight-hour work daily or the daily wage rate is the basic
3. Petitioner, in its answer, claimed that it erroneously salary. Any compensation or remuneration other than the
included the items subject of the complaint in the daily wage rate is excluded, including the benefits herein
computation of the 13th month pay for the years prior to claimed.
1982, upon a doubtful and difficult question of law - Rule already clarified under the Supplementary Rules and
- This mistake was discovered in 1981 after promulgation Regulations and the case of SMC v. Inciong, that since such
of the decision in San Miguel Corporation v. Inciong, benefits excluded from the definition of basic salary, it is
wherein the Court ruled that salary to be considered in consequently excluded in the computation for 13th month
the computation of 13th month pay excludes pay.
“earnings and other remunerations,” including
the benefits herein claimed by the respondent. HOWEVER, the factual circumstances of this case
4. LA: In favor of respondent ALU warrants an exception to the general rule
5. NLRC: Affirmed LA decision - PET: Mistake in the interpretation of “basic salary” was
caused by the opinions, orders and rulings rendered by then
ISSUES: Acting Labor Secretary Inciong, which expressly included the
WON the computation of the 13th month pay includes the subject items in computing the 13th month pay. However, PD
benefits and other remunerations herein claimed by respondent No. 851 clearly does not sanction such inclusion.
(Generally NO, but is subject to company practice, as in the - SC: Supplementary Rules and Regulations was issued barely
case at bar) a month after the effectivity of PD No. 851. Yet, petitioner
computed and paid the 13th month pay without excluding the
HELD: subject items therein until 1981.
NO. “Basic Salary” to be used in computation - From 1975 to 1981, petitioner had freely, voluntarily and
excludes these other benefits. continuously included in the computation of its employees
- PD No. 851 mandates all employers to pay their employees a the benefits claimed by respondents. The considerable
13th month pay. Computation for such pay is set forth in Sec. length of time the questioned items had been
2 of the Rules and Regulations Implementing PD No. 851 included by petitioner indicates a unilateral and
o (a) ‘Thirteenth month pay’ shall mean one twelfth (1/12) voluntary act on its part, sufficient in itself to
of the basic salary of an employee within a calendar negate any claim of mistake.
year. - A company practice favorable to the employee had indeed
o (b) 'Basic Salary' shall include all remunerations or been established and payments made pursuant thereto
earnings paid by an employer to an employee for ripened into benefits enjoyed by them. Thus, to grant what
services rendered but may not include cost of petitioner’s prayer in this case would be to discontinue a
living allowances granted pursuant to Presidential benefit being enjoyed by the employees in contravention to
Decree No. 525 or Letter of Instructions No. 174, Art. 100, LC and Sec. 10 of the Rules and
profit-sharing payments, and all allowances Regulations Implementing PD No. 951, which prohibit
and monetary benefits which are not the diminution or elimination by the employer of the
considered or integrated as part of the regular employees’ existing benefits.
or basic salary of the employee at the time of - Petitioner cannot also invoke the principle of solution
the promulgation of the Decree on December indebiti, which is a civil law concept that is not applicable in
16, 1975." Labor Law. Besides, in solution indebiti, the obligee is
- The Supplementary Rules and Regulations promulgated by required to return to the obligor whatever he received from
DOLE, par. 4 excluded “overtime pay, earnings and other the latter. Herein petitioner does not demand the return of
remunerations” from the coverage of the term “basic salary” what it previously paid in 1975-1981, but merely wants to
in the computation. rectify the error by excluding unilaterally from the 13th month
- Clearly, the term “basic salary” includes all remunerations or pay in 1982 the items subject of litigation
earnings paid by the employer to the employee, but
excludes COLA, profit-sharing payments, and all allowances
and monetary benefits which have not been considered as
B. WAGE FIXING MACHINERY
part of the basic salary of the employee as of the effectivity of
PD No. 851.
-‐ We have 1 commission and 17 boards
- Basic salary does not merely exclude the benefits expressly
provided but all payments which may be in the form of
1. Rationale for Wage Rationalization
“fringe” benefits or allowances.


2. Agencies in Wage Fixing Machinery
-‐ Currently, we have 1 Commission and 17 Regional Boards. 4. Wage Order
2. a. National Wages and Productivity Commission -‐ Within 30 days of the conclusion of the last hearing, Board
shall decide and issue a WO
NATIONAL WAGES AND PRODUCTIVITY -‐ Will last for 12 months and no petition for wage increase
COMMISSION shall be entertained within this 12 months
Designation Attached to DOLE for policy and program -‐ WO shall take effect 15 days after its publication in at least 1
coordination newspaper of general circulation
Consultative and advisory body to the -‐ Board shall prepare the IRR not later than 10 days of WO's
President and Congress issuance. This shall be approved by the Sec. of Labor and
Policy and guideline formulation for wages Employment
Minimum wage and productivity measures
creation Appeals for review of WO
Review of regional wages 1. Non-conformity with prescribed guidelines and/or
Undertake studies, researches and surveys procedure
necessary for the attainment of its functions 2. Questions of law
and objectives 3. Grave abuse of discretion
Review plans and programs of the Regional
Powers and 4. a. Methods of Fixing
Tripartite Wages and Productivity Boards
functions
Technical and administrative supervision over
4. a.i. Floor wage method
the Regional Tripartite Wages and Productivity
Boards
Floor-wage method
To call, from time to time, a national tripartite
-‐ Fixing a determinate amount to be added to the prevailing
conference of representatives of government,
statutory minimum wage rates (e.g. setting P25 increase for
workers and employers for the consideration
min. wage rate)
of measures to promote wage rationalization
and productivity
4. a.ii. Salary-ceiling method
Other powers and functions necessary to
implement objectives and goals
Salary-ceiling method
Ex-officio chair: Secretary of Labor
-‐ Wage adjustment to be applied to EEs receiving a certain
Ex-officio vice chair: Director General of NEDA
Composition denominated salary or workers being paid more than
2 members each from workers and employers
existing min. wage (e.g. WO granting P25increase to those
sector (appointed by President)
earning up to P250)
Members’ term 5 years
FLOOR WAGE METHOD VS. SALARY CEILING
METHOD
2. b. Regional Tripartite Wages and Productivity Board -‐ Floor wage method -add to the previous minimum wage.
E.g. P456 + P100 = P556
3. Standards/Criteria for Minimum Wage Fixing -‐ Salary-ceiling method -all wages under a certain wage
increases to that wage. E.g. all wages under P556 must be
1. The demand for living wages; increased to P556
2. Wage adjustment vis-à-vis the consumer price index;
3. The cost of living and changes or increases therein; WHEN MAY THE REGIONAL BOARD MAKE A
4. The needs of workers and their families; DETERMINATION TO INCREASE THE WAGES?
5. The need to induce industries to invest in the countryside; -‐ Upon demand, the board shall investigate existing socio-
6. Improvements in standards of living; economic realities
7. The prevailing wage levels; -‐ Therefore, it is NOT AUTOMATIC
8. Fair return of the capital invested and capacity to pay of
employers; 4. b. Validity
9. Effects on employment generation and family income; and
10. The equitable distribution of income and wealth along the 4. c. Wage Distortion
imperatives of economic and social development

because of special circumstances, as specified
“Wage Distortion” = A situation where an increase in the by SOL or the CBA
wage rates will eliminate or severely diminish the differences Promissory notes
between and among wage groups in an establishment Vouchers
Coupons
Four elements of wage distortion: Tokens
1. An existing hierarchy of positions with corresponding salary Not allowed
Tickets
rates Chits, or
2. A significant change in the salary rate of a lower pay class Any object other than legal tender, even when
without a concomitant increase in the salary rate of a higher expressly requested by the employee
one
Bank/Facility for encashment within 1km radius
3. The elimination of the distinction between the two levels
from workplace
4. The existence of the distortion in the same region of the
Employer did not receive any pecuniary benefit
country.
because of said arrangement
Conditions for
The employees are given reasonable time
For Organized Establishments, steps for fixing wage payment
during banking hours to withdraw their wages
distortion: through check
(compensable hours, if during working hours)
5. Bargaining/Negotiations
The payment by check is with the written
6. Grievance Machineries
consent of the employees concerned, in the
7. Voluntary Arbitration
absence of a CBA
For Unorganized Establishments, steps for fixing wage

2. Time of payment
distortion:
8. Endeavor to negotiate
TIME OF PAYMENT
9. National Conciliation and Mediation Board
Frequency At least once every 2 weeks or 2x per month
10. NLRC
Intervals Must not be more than 16 days
5. Freedom to bargain Valid excuse for delayed payment
Force majeure
BUT must pay immediately after cessation
How/Where do Workers Bargain Their Wages? Payments should be made with intervals not
Tasks which
Organized Establishments Unorganized more than 16 days, in proportion to work
cannot be
(those with a duly establishments completed
completed in
recognized union) Final settlement is made upon completion of
2 weeks
1. Negotiate – (and create 1. Try to negotiate with the the work
CBS) establishment
2. Grievance Machinery 2. NCMB
3. Voluntary Arbitration 3. NLRC 3. Place of payment
General rule: Shall be made at or near the place of

6. Non-diminution of benefits undertaking (workplace)
7. Penalty for violation/Double indemnity Exceptions: Following circumstances:

1. Deterioration of peace and order conditions, or by reason of
-‐ Fine of P25k–P100k, OR actual or impending emergencies (fire, flood, epidemic)
-‐ Imprisonment of 2years–4years, ORBOTH 2. Free transportation to the employees back and forth
3. Under any other analogous circumstances; provided, that
the time spent by the employees in collecting their wages
C. WAGE PAYMENT AND PROTECTION shall be considered as compensable hours worked
1. Form of payment NO PAYMENT in any bar, night or day club, drinking

establishment, massage clinic, dance hall, or other similar places
FORM OF PAYMENT or in places where games are played with stakes of money or
General rule Legal tender only things representing money except in the case of persons
employed in said places.
Exception Check/Money Order if customary OR necessary


In case of Bankruptcy: Unpaid wages before declaration of
Ma’am Daway: Payment of employees’ wages at these places such shall have first preference over creditors
may expose them to vice, instead of turning their income over to
their families. LC Art. 112 – 115
- Only says “no employer,” thus, is a mere prohibition on the
Conditions for payment thru ATM: part of employers
1. ATM system of payment is with the written consent of the
employees LC Art. 116-119
2. The employees are given reasonable time to withdraw their - Deliberately says, “it shall be illegal,” therefore, LC Art. 294
wages from the banking facility (compensable hours, if (penalties) applies
during working hours)
3. System shall allow workers to receive their wages within the Additional prohibition:
period/frequency provided by law Art. 128 (d)
4. There is a bank/ATM facility within 1km radius from place of - Prohibition against obstructing the orders of the
work Secretary of Labor and Employment
5. Upon request of the concerned employee/s, the employer - Directed to any inferior court
shall issue a record of payment of wages, benefits and
deductions for a particular period 3. Prohibition against requirement to make deposits for loss or
6. There shall be no additional expenses and no diminution of damage
benefits and privileges
7. The employer shall assume responsibility in case the wage General rule: No deposits where deductions shall be made for
protection provisions of law and regulations are not the reimbursement of loss of or damage to tools, materials, or
complied with under the arrangement equipment supplied by the employer
4. Person to pay Exception: Employer engaged in such trades, occupations or

business with the practice of making deductions is a recognized
General rule: Directly to the employee one, or is necessary or desirable as determined by the Labor
Sec. in appropriate rules and regulations.
Exceptions: Following circumstances:
1. Written authority member of the family No deduction from the deposits of an employee for the actual
2. A third person authorized by law (e.g. insurance companies amount of the loss or damage shall be made unless:
for premiums) 1. Reasonable opportunity for EE to show cause why
3. Force majeure, then with written authority person deduction not be made
4. Worker has died, then to heirs, the latter executing an 2. His responsibility has been clearly shown.
affidavit regarding their relationship 3. Amount is fair and reasonable and shall not exceed the
actual loss of damage
D. WAGE PROHIBITIONS 4. Must not exceed 20% of weekly pay
1. Prohibition against interference in disposal of wages Attorney's fees in any judicial or administrative proceedings for
the recovery of wages shall not exceed 10% of the amount
-‐ The employer should not interfere with the employee’s awarded.
disposal of wages, nor oblige him to patronize a store or
avail services. 4. Prohibition against withholding of wages
2. Prohibition against wage deduction Exceptions: Special circumstances:

1. Deduction is for insurance premiums
General rule: Employer cannot make any deduction from the 2. For union dues
wages of his employee 3. Authorized by law/by Labor Sec.
4. Due and demandable debt to employer
Exceptions:
1. Insurance premiums 5. Prohibition against deduction to ensure employment
2. Union Dues
3. Other deductions authorized by law/Secretary of Labor 6. Prohibition against retaliatory measures


- Covers offenses only under the title of Wages in the -‐ An order issued by the duly authorized representative of the
Labor Code. Labor Sec. under this Art. may be appealed to the latter. In
case said order involves a monetary award, an appeal by the
7. Prohibition against false reporting employer may be perfected only upon the posting of a cash
or surety bond issued by a reputable bonding company duly
- Covers all offenses under the Labor Code. accredited by the Labor Sec. in the amount equivalent to
the monetary award in the order appealed from.
8. Prohibition against keeping of employee’s records in a place
other the workplace/preservation of records 1. Enforcement Orders of the Labor Sec.
- “Premises” = The main or branch office of the Visitorial Powers

establishment, if any, depending upon where the -‐ The Labor Sec. or his duly authorized representatives,
employees are regularly assigned. including labor regulation officers, shall have access to
- Must be in the workplace, or in the main branch office employer’s records and premises at any time of the day or
of the establishment night whenever work is being undertaken therein, and the
- Required to keep and preserve records at least 3 years right to copy therefrom, to question any employee and
from the date of the last entry in the records. investigate any fact, condition or matter which may be
necessary to determine violations or which may aid in the
9. Prohibition against garnishment/execution enforcement of this Code and of any labor law, wage order
or rules and regulations issued pursuant thereto.
E. WORKER PREFERENCE IN THE EVENT OF
BANKRUPTCY Enforcement Powers
-‐ In cases where the relationship of employer-employee still
General rules: exists, the Labor Sec. or his duly authorized representatives
1. First preference over creditors. shall have the power to issue compliance orders to give
2. Declaration is important before preference to exist. effect to the labor standards provisions of this Code and
3. Every employer or indirect employer shall be jointly and other labor legislation based on the findings of labor
severally liable with his contractor or sub-contractor for the employment and enforcement officers or industrial safety
unpaid wages of the employees of the latter. engineers made in the course of inspection.
4. Such employer or indirect employer may require the -‐ The Secretary or his duly authorized representatives shall
contractor or sub-contractor to furnish a bond equal to the issue writs of execution to the appropriate authority for the
cost of labor under contract on condition that the bond will enforcement of their orders, except in cases where the
answer for the wages due the employees should the employer contests the findings of the labor employment
contractor or subcontractor, as the case may be, fail to pay and enforcement officer and raises issues supported by
the same. documentary proofs which were not considered in the
5. The laborer's wages shall be a lien on the goods course of inspection.
manufactured or the work done. -‐ The Labor Sec. may likewise order stoppage of work or
suspension of operations of any unit or department of an
Common Credits establishment when non-compliance with the law or
Art. 2245: implementing rules and regulations poses grave and
Notes: imminent danger to the health and safety of workers in the
- The excess, if any, after the payment of the credits workplace.
which enjoy preference with respect to specific -‐ Within 24 hours, a hearing shall be conducted to determine
property, real or personal, shall be added to the free whether an order for the stoppage of work or suspension of
property which the debtor may have, for the payment operations shall be lifted or not. In case the violation is
of the other credits. attributable to the fault of the employer, he shall pay the
- For special preferred credits, preferences listed will be employees concerned their salaries or wages during the
given in pari passu, pro rata (in equal footing, period of such stoppage of work or suspension of
proportionately) operation.
F. WAGE RECOVERY/JURISDICTION OF DOLE Power to Review

REGIONAL DIRECTOR VIS-À-VIS LABOR ARBITER -‐ The Labor Sec. may, by appropriate regulations, require
employers to keep and maintain such employment records


as may be necessary in aid of his visitorial and enforcement Provided, That such Claims for actual, moral,
powers under this Code. complaint does not exemplary and other
include a claim for forms of damages arising
KINDS OF CREDITS: reinstatement from the employer-
- · Special preferred credits employee relations
- · Ordinary preferred credits Provided further, That Cases arising from any
- · Common credits the aggregate money violation of Art. 264 of
claims of each this Code, including
KINDS OF SPECIAL PREFERRED CREDITS: employee or DW questions involving the
1. CC Art. 2241 – specific movables does not exceed P5K legality of strikes and
- Number of kinds of claims or liens preferred – 13 lockouts
- Only 2241 (1) is covered by an overriding principle: Divested of Claims for Employees
o “Duties, taxes and fees due thereon to the State or jurisdiction given ALL Compensation, Social
any subdivision thereof” THE FF: Security, PhilHealth and
- 2241 (6) pertains to laborers’ wages 1. Employer contests maternity benefits, all
o “Claims for laborers' wages, on the goods the findings of the other claims arising from
- manufactured or the work done;” labor regulations employer-employee
2. CC Art. 2242 – specific immovables and real rights of the officer and raises relations including those
debtor issues thereon of DWs, involving an
Exception
- Number of kinds of claims or liens preferred – 10 2. In order to resolve amount exceeding P5K
- Only 2242 (1) is covered by an overriding principle: such issues, there is regardless of whether
o “Taxes due upon the land or building” a need to examine accompanied with a
- 2242 (3) pertains to laborers’ wages: evidentiary matters claim for reinstatement
- “ Claims of laborers, masons, mechanics and other 3. Such matter are not
workmen, as well as of architects, engineers and verifiable in the
contractors, engaged in the construction, normal course of
reconstruction or repair of buildings, canals or other inspection
works, upon said buildings, canals or other works Termination disputes
- Since only 2241 (1) and 2242 (1) is covered by an May not be paid if
overriding principle, then, it is only after those under it necessary for
are satisfied that the other special preferred credits graduation/board
shall be taken into consideration. (basis: DBP vs. NLRC) examination
- Prof. Daway says: this is not right. LC Art. 110 is clear: Appeal
“workers shall enjoy first preference as regards their NLRC
goes to
wages and other monetary claims, any provisions of law
to the contrary notwithstanding.” Former Pres. Marcos
must have thought of the 2 CC articles when he DOLE Regional Sec. of Labor Labor Arbiter
promulgated the Labor Code. Director (and duly
authorized
DOLE REGIONAL LABOR ARBITERS representatives)
DIRECTOR Art. 129 Art. 128 (a) -powers Art. 223 (former
Kind of Summary Original and exclusive -power to , to hear of Sec. of Labor 217) cases involving
proceeding jurisdiction and decide any and authorized all workers, whether
Recovery of wages Unfair labor practice matter involving representatives agricultural or non-
and other monetary cases the recovery of agricultural:
claims and benefits, Termination disputes wages and other Art. 128 (b) -power
including legal If accompanied with a monetary claims of Sec. of Labor 1. Unfair labor
What may
interest, owing to an claim for reinstatement, and benefits. and representatives practice cases;
be heard
employee or person those cases that workers -aggregate money to issue 2. Termination
and
employed as a DW, may file involving wages, claims of each 1. compliance disputes;
decided
arising from rates of pay, hours of employee or orders 3. If accompanied
employer-employee work and other terms househelper does 2. writs of with a claim for
relations and conditions of not exceed P5,000 execution reinstatement,
employment -decision may be those cases that


appealed to NLRC Art. 128 (c) -power workers may file -‐ Originally only for employees not receiving more than P1k
EXCLUSIVE to Sec. involving wages, basic salary
of Labor rates of pay, -‐ PD1364wassignedon1978,tostopacceptingapplications for
3. issue order hours of work exemption under PD 851
stopping work and other terms -‐ Memorandum Order 28 was issued by President Cory
and conditions of Aquino in 1986, removing the P1k basic salary ceiling
employment;
4. Claims for actual, b. Coverage
moral, exemplary
and other forms c. Rationale
of damages
arising from the “Whereas” clauses, PD 851
employer- -‐ WHEREAS, it is necessary to further protect the level of real
employee wages from the ravage of worldwide inflation;
relations; -‐ WHEREAS, there has been no increase in the legal minimum
5. Cases arising wage rates since 1970;
from any -‐ WHEREAS, the Christmas season is an opportune time for
violation of society to show its concern for the plight of the working
Article 264 of this masses so they may properly celebrate Christmas and New
Code, including Year.
questions
involving the d. Amount and Date of Payment
legality of strikes
and lockouts; BASIC WAGE/COMMISSIONS
and Amount 1/12 of total basic salary earned in a year
c) 6.involving an COLA granted pursuant to PD 525 and LOI No.
amount 174
exceeding Profit sharing agreements
P5,000 (Except All allowances and monetary benefits which are
claims for not considered or integrated as part of the
Employees Not included regular basic salary of the employee at the time
Compensation, in basic salary of the promulgation of the Decree on
Social Security, December 16, 1975
Medicare and Cash and stock dividends, cost of living
maternity allowances, and all other allowances regularly
benefits, all other enjoyed by the employee, as well as non-
claims arising monetary benefits
from employer- Must be paid not later than Dec. 24
employee When to be
Frequency of payment may be subject to
relations) paid
agreement
1. a. Writ of execution d. 1. Basic Wage/Commissions
1. b. Exception clause/elements d. 2. Substitute Payment
Exempted employers
6. Thirteenth Month Pay – Pres. Decree No. 851 -‐ The Government and GOCCs, except those corporations
operating essentially as private subsidiaries
a. History of the Law -‐ Employers already paying their employees a 13th month pay
or more in a calendar year or its equivalent at the time of
See Dentech Manufacturing v. NLRC. issuance
-‐ PD 851 (13th Month Pay Law) was signed into law in 1975 by -‐ Employers of those who are paid on purely commission,
President Ferdinand Marcos boundary, or task basis, and those who are paid a fixed


amount for performing specific work, irrespective of the A. WOMEN
time consumed in the performance thereof, EXCEPT where
the workers are paid on piece-rate basis 1. Women under the Constitution
2. Coverage
7. Bonus
3. Equal treatment before the law
COMMISSION PRODUCTIVITY BONUS
Paid upon the specific results Generally tied to the 4. Night Work
achieved employee productivity, or capacity for
revenue production, of a 5. Prohibited Acts
corporation
A percentage of the sales Closely resembles profit- 5. a. Discrimination
closed by the employee and sharing
operates as an integral part 5. b. Stipulation against marriage
the basic pay
Intimately related to or directly No clear direct or necessary 5. c. Discharge to prevent enjoyment of benefits
proportional to the extent or relation to the amount of work
energy of an employee's actually done by each 5. d. Discharge on account of pregnancy
endeavors individual employee
Demandable once earned Not a demandable and 5. e. Discharge on account of having filed a complaint or having
enforceable obligation testified or being about to testify under this Code
Mandatory once earned; Management prerogative
considered as wages 5. f. Expulsion of women faculty/female student due to
pregnancy outside of marriage
Conditioned on contract on Conditioned on the profit or
commission; automatic amount of productivity
6. Facilities
increment to each unit of work achieved and management
rendered by salesmen decision
7. Special Women Workers
Included in ‘basic salary’ for Not included in ‘basic salary’
13th month pay computation for 13 month pay computation
8. Maternity Leave
a. Nature
9. Sexual Harassment
-‐ An amount granted and paid to an employee for his

9. a. Definition
industry loyalty which contributed to the success of the
employer's business and made possible the realization of
9. b. When committed in a work-related/employment
profits.
environment
-‐ It is an act of generosity of the employer for which the
employee ought to be thankful and grateful.
B. CHILDREN
-‐ It is also granted by an enlightened employer to spur the
employee to greater efforts for the success of the business
1. UN General Assembly
and realization of bigger profits.
2. Minors under the Constitution

b. Definition; When Demandable
3. Coverage/definition
-‐ If it is made part of the wages and salary
-‐ If it was included in the CBA without condition or
3. a. Child
qualification on how it is to be earned
-‐ If it forms part of the company practice, in support of the
3. b. Child labor
-‐ Non-Diminution of wages principle
3. c. Working child
8. W orking Conditions for Special Group of
W orkers 4. Employment of Children


5. Hours of Work 4. l. Leave benefits
6. Prohibitions Against Worst Forms of Child Labor 4. m. Social and other benefits
7. Discrimination 4. n. Termination of service
8. Jurisdiction 4. n.1. Fixed duration
C. DOMESTIC WORKERS OR “KASAMBAHAYS” 4. n.2. Not fixed
1. Declared Policies 4. o. Grounds for termination
2. Definition 4. o.1. If initiated by the domestic worker
2. a. Domestic work 4. o.2. If initiated by the employer
2. b. Domestic worker or “kasambahay” 4. o.3. If mutually agreed
2. c. Household 4. p. Employment certification
3. Coverage 5. Extent of Duty
4. Conditions of employment/Rights and Privileges 6. Wage Prohibitions Against:
4. a. Standard of treatment 6. a. Charging of recruitment and finder’s fees
4. b. Board, lodging and medical attendance 6. b. Deposits from which deductions shall be made
4. c. Guarantee of privacy 6. c. Debt bondage
4. d. Access to outside communication 6. d. Assignment to non-household work
4. e. Right to education and training 6. e. Charging b the original employer for temporary domestic
service
4. f. Employment contract
6. f. Deductions other than those mandated by law
4. g. Employment age
6. g. Payment in forms other than cash
4. h. Health and safety
6. h. Interference in the disposal of wages
4. i. Daily rest period
6. i. Withholding of wages
4. j. Weekly rest period
7. Remedies
4. k. Compensation
7. a. Abused or exploited domestic worker
4. k.1. Minimum wage
7. b. Mechanism for settlement of disputes
4. k.2. Time, form of payment/person to pay
7. b.1. Jurisdiction of the DOLE Regional Office
4. k.3. Pay slip
7. b.2. Jurisdiction of regular courts
4. k.4. Thirteenth month pay


7. b.3. Penalty 4. c. To be transferred if unfit for night work
8. “Araw ng Mga Kasambahay” 4. d. Compensation
9. Employer’s Right to Privileged Communication 4. e. To appropriate social services
10. Employer’s Reportorial Duties 4. f. To be consulted on night work schedule
D. HOMEWORKERS 5. Women Night Workers
1. Coverage and Regulation

9. Medical, Dental and Occupational Safety
2. Definition
a. Coverage
3. Right to self-organization
b. First Aid Treatment
4. Registration
c. Emergency Medical and Dental Services
4. a. Homeworkers’ Organization
c. 1. When Required
4. b. Employer
c. 2. When Not Required
5. Conditions of Employment
d. Employer Assistance – Obligation
5. a. Standard output/minimum rates
e. Occupational Safety and Health Standards, Training of
5. b. Wage deductions Superv/tech
5. c. Deductions for materials e. 1. When Required
5. d. Improperly executed work e. 2. When Not Required
5. e. Returned goods f. Enforcement/DOLE Obligations
6. Joint and Several Liability of Employer/Contractor
7. Prohibitions
8. Enforcement
E. NIGHT WORKERS
1. Coverage
2. Exception
3. Definition
4. Rights
4. a. To undergo health assessment
4. b. To mandatory suitable first-aid facilities

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LAW 113 LABOR | PROF.

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

LABOR LABOR STANDARDS LAW

2. LABOR LAW : ISSUE/S:

a. Definition (Azucena) HELD:

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

c.1.1. When to/not to tilt the scales of justice as a measure of

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

Ernesto Ymbong v. ABS-CBN Broadcasting Corp.

Elizabeth Gagui v. Simeon Dejero and Teodoro Permejo

See also: Hotel Enterprises of the Phil., Inc. v. Samahan ng mga

The Coca-Cola Export Corp. v. Clarita Gacayan

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

Art. III, Sec. 8, CON87 The right of the people, including

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

Diamond Taxi v. Felipe Llamas, Jr. ISSUE/S:

HELD: b. 1.3. Right to Humane Conditions of Work

Art. 3 Declaration of Basic Policy – The State shall afford

b. 1.2. Right to Security of Tenure

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

Right to Prescribe Rules

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

Who Determines the Existence of Employer-Employee Work Relationship Still Existing

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

Applicability to Government Corporations

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

(c.) "Employee" includes any individual employed by an

Art. 167 (now 173) Definition of terms – As used in this Title,

(f.) "Employer" means any person, natural or juridical, employing

(g.) "Employee" means any person compulsorily covered by the

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

“Labor only” relationship

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”

B2017 Herrera-Lim | Husmillo | Santos “FRONNIE NOTES”