2.7. ENFORCEMENT AND SANCTIONS – ARTS.

36-39, LABOR CODE

Executive Secretary v. CA, G.R. No. 131719, May 25, 2004, 429 SCRA 81 (2004)

Facts:
Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of
1995, took effect on July 15, 1995. Before the law took effect, ARCO-Phil filed a petition asking
the court to declare some provisions of the law unconstitutional. The law required that only skilled
workers were to be deployed for employed abroad. According to the respondent, the right of
unskilled workers to due process is violated because they are prevented from finding employment
and earning a living abroad. It cannot be argued that skilled workers are immune from abuses by
employers, while unskilled workers are merely prone to such abuses. It was pointed out that both
skilled and unskilled workers are subjected to abuses by foreign employers. Furthermore, the
prohibition of the deployment of unskilled workers abroad would only encourage fly-by-night
illegal recruiters. The respondent, likewise, alleged that Section 6, subsections (a) to (m) is
unconstitutional because licensed and authorized recruitment agencies are placed on equal footing
with illegal recruiters. It contended that while the Labor Code distinguished between recruiters
who are holders of licenses and non-holders thereof in the imposition of penalties, Rep. Act No.
8042 does not make any distinction. The penalties in Section 7(a) and (b) being based on an invalid
classification are, therefore, repugnant to the equal protection clause, besides being excessive;
hence, such penalties are violative of Section 19(1), Article III of the Constitution. 9 It was also
pointed out that the penalty for officers/officials/employees of recruitment agencies who are found
guilty of economic sabotage or large-scale illegal recruitment under Rep. Act No. 8042 is life
imprisonment.

Issue:
The core issue in this case is whether or not the trial court committed grave abuse of its discretion
amounting to excess or lack of jurisdiction in issuing the assailed order and the writ of preliminary
injunction on a bond of only P50,000; and
Whether or not the appellate court erred in affirming the trial court's order and the writ of
preliminary injunction issued by it.

Held:
It must be borne in mind that subject to constitutional limitations, Congress is empowered to define
what acts or omissions shall constitute a crime and to prescribe punishments therefor. The power
is inherent in Congress and is part of the sovereign power of the State to maintain peace and order.
Whatever views may be entertained regarding the severity of punishment, whether one believes in
its efficiency or its futility, these are peculiarly questions of legislative policy. The comparative
gravity of crimes and whether their consequences are more or less injurious are matters for the
State and Congress itself to determine. Specification of penalties involves questions of legislative
policy.
Due process prohibits criminal stability from shifting the burden of proof to the accused, punishing
wholly passive conduct, defining crimes in vague or overbroad language and failing to grant fair
warning of illegal conduct. Class legislation is such legislation which denies rights to one which
are accorded to others, or inflicts upon one individual a more severe penalty than is imposed upon
another in like case offending. Bills of attainder are legislative acts which inflict punishment on
individuals or members of a particular group without a judicial trial. Essential to a bill of attainder
are a specification of certain individuals or a group of individuals, the imposition of a punishment,
penal or otherwise, and the lack of judicial trial.

Penalizing unlicensed and licensed recruitment agencies and their officers and employees and their
relatives employed in government agencies charged with the enforcement of the law for illegal
recruitment and imposing life imprisonment for those who commit large scale illegal recruitment
is not offensive to the Constitution. The accused may be convicted of illegal recruitment and large
scale illegal recruitment only if, after trial, the prosecution is able to prove all the elements of the
crime charged.

The possibility that the officers and employees of the recruitment agencies, which are members of
the respondent, and their relatives who are employed in the government agencies charged in the
enforcement of the law, would be indicted for illegal recruitment and, if convicted sentenced to
life imprisonment for large scale illegal recruitment, absent proof of irreparable injury, is not
sufficient on which to base the issuance of a writ of preliminary injunction to suspend the
enforcement of the penal provisions of Rep. Act No. 8042 and avert any indictments under the
law. The normal course of criminal prosecutions cannot be blocked on the basis of allegations
which amount to speculations about the future.

There is no allegation in the amended petition or evidence adduced by the respondent that the
officers and/or employees of its members had been threatened with any indictments for violations
of the penal provisions of Rep. Act No. 8042. Neither is there any allegation therein that any of its
members and/or their officers and employees committed any of the acts enumerated in Section
6(a) to (m) of the law for which they could be indicted. Neither did the respondent adduce any
evidence in the RTC that any or all of its members or a great number of other duly licensed and
registered recruitment agencies had to stop their business operations because of fear of indictments
under Sections 6 and 7 of Rep. Act No. 8042. The respondent merely speculated and surmised that
licensed and registered recruitment agencies would close shop and stop business operations
because of the assailed penal provisions of the law. A writ of preliminary injunction to enjoin the
enforcement of penal laws cannot be based on such conjectures or speculations. The Court cannot
take judicial notice that the processing of deployment papers of overseas workers have come to a
virtual standstill at the POEA because of the assailed provisions of Rep. Act No. 8042. The
respondent must adduce evidence to prove its allegation, and the petitioners accorded a chance to
adduce controverting evidence.

The respondent even failed to adduce any evidence to prove irreparable injury because of the
enforcement of Section 10(1)(2) of Rep. Act No. 8042. Its fear or apprehension that, because of
time constraints, its members would have to defend foreign employees in cases before the Labor
Arbiter is based on speculations. Even if true, such inconvenience or difficulty is hardly irreparable
injury.
By issuing the writ of preliminary injunction against the petitioners sans any evidence, the trial
court frustrated, albeit temporarily, the prosecution of illegal recruiters and allowed them to
continue victimizing hapless and innocent people desiring to obtain employment abroad as
overseas workers, and blocked the attainment of the salutary policies embedded in Rep. Act No.
8042. It bears stressing that overseas workers, land-based and sea-based, had been remitting to the
Philippines billions of dollars which over the years had propped the economy.

In issuing the writ of preliminary injunction, the trial court considered paramount the interests of
the eleven licensed and registered recruitment agencies represented by the respondent, and
capriciously overturned the presumption of the constitutionality of the assailed provisions on the
barefaced claim of the respondent that the assailed provisions of Rep. Act No. 8042 are
unconstitutional. The trial court committed a grave abuse of its discretion amounting to excess or
lack of jurisdiction in issuing the assailed order and writ of preliminary injunction. It is for this
reason that the Court issued a temporary restraining order enjoining the enforcement of the writ of
preliminary injunction issued by the trial court. No cost.

2.08. LIABILITY OF AGENCY

G&M (Phil.) Inc. v. Batomalaque, G.R. No.151849, June 23, 2005, 461 SCRA 111 (2005)

Facts:
Respondent Epifanio Cruz filed a complaint against petitioner for illegal dismissal, underpayment
and non-payment of wages, and refund of transportation expenses after being deported by his
employer, Salim Al Yami Est. According to respondent, the cause for his dismissal was his
complaint for sub-human working conditions, non-payment of wages and overtime pay, salary
deduction and change of employer. Respondent alleged that when he arrived in the Kingdom of
Saudi Arabia, he was made to sign an employment contract in blank and his salary was reduced to
SR604.00. Respondent further claims that he was only paid in an amount equivalent to five
months’ salary and he did not receive his salary for the last two months. Respondent submitted a
copy of his pay slip showing the amount of SR604.00 as his basic salary. Petitioner G & M (Phils.),
Inc. recruited respondent Cruz as trailer driver for its foreign principal, Salim Al Yami Est., for a
period of two years, and with a stipulated monthly salary of US$625. Petitioner contends that
respondent abandoned his job when he joined an illegal strike and refused to report for work,
constituting a breach of his employment contract and a valid cause for termination of employment.
The Labor Arbiter and the NLRC granted Cruz's claim for underpayment of wages and two months
unpaid salary, strengthened by the Court of Appeals' dismissal of G & M's special civil action for
certiorari, hence this petition for review on certiorari under Rule 45 of the Rules of Court.

ISSUE:
Whether or not in complaints involving underpayment of salaries, the employee has the burden of
proving such underpayment?

Held:
No.
It is the burden of petitioner, G&M Phils. Inc. to prove that the salaries paid by its foreign principal
complied with the contractual stipulations of their agency-Worker agreement. The rule is that the
burden of proving payment of monetary claims rests on the employer, in this case, herein
petitioner, being the employment agency or recruitment entity, and agent of the foreign principal,
Salim Al Yami Est. which recruited respondent. Where a person is sued for a debt admits that the
debt was originally owed, and pleads payment in whole or in part, it is incumbent upon him to
prove such payment. This is based on the principle of evidence that each party must prove his
affirmative allegations. Since petitioner asserts that respondent has already been fully paid of his
stipulated salary, the burden is upon petitioner to prove such fact of full payment. The debtor has
the burden of showing with legal certainty that the obligation has been discharged by payment.

Petition denied for lack of merit.

2.09. MIGRANT WORKERS ACT - R.A. No. 8042, SECS. 2, 4; 6; AND 10, AS AMENDED
BY R.A. NO. 10022
Phil. Employ Services v. Paranio, G.R. No. 144786, April 15, 2004, 427 SCRA 732 (2004)

Facts:
On different dates from April 1996 to October 1996, respondents Joseph Paramio, Ronald Navarra,
Romel Sarmiento, Recto Guillermo, Ferdinand Bautista and Apolinario Curameng, Jr. applied for
employment in Taiwan with petitioner, Phil. Employ Services and Resources, Inc. (PSRI for
brevity), a domestic corporation engaged in the recruitment and deployment of Filipino Workers
Overseas. Their applications were processed along with the requisite papers and documents in
support thereof, and they paid P19,000 each as placement fee. Thereafter, they executed in the
Philippines separate one-year contracts of employment with their employer in Taiwan, Kuan Yuan
Fiber Co., Ltd. Hsei-Chang. The respondents were deployed in Taiwan as operators on different
dates and each of them had a monthly salary of NT$15,360 (New Taiwan Dollars), with free food
and accommodation. After the orientation given by their employer, the respondents were told that
their schedule of work was up to 9:00 p.m. except for respondent Navarra who was made to work
up to 12:00 midnight. The respondents were downhearted when they discovered that, upon their
arrival in their quarters, they had no beddings, pillows and blankets. They encountered worse
problems in the course of their employment.
The respondents brought their problems to the attention of the management. In March of 1997,
Fabian Chua, local manager of the petitioner PSRI, made a surprise visit to Kuan Yuan in Taiwan
and was apprised of the said complaints. However, instead of solving the problems, Chua
cautioned the respondents not to air their complaints and to simply forget about whatever plans
they had in mind. Disappointed, the respondents, along with their co-workers, contacted the
Overseas Workers Welfare Administration (OWWA) in Taiwan and sought the latters assistance,
only to be frustrated when their requests were not favorably acted upon.
May 14, 1997, respondent Paramio got ill as a result of the employers failure to give breakfast on
the said date and dinner the night before. His manager still ordered him to work. When he pleaded
that he be allowed to take some rest, the manager refused. Respondent Paramio was, instead, made
to carry a container weighing around 30 kilograms. Due to his condition, the container slipped
from his hands and he injured his thumb. He was brought to the hospital where he was operated
on and treated for his wound. Instead of giving him financial assistance for his hospital bills, his
employer told him a week after his release from the hospital that it would be better for him to go
home to the Philippines to recuperate. An official from the Taiwanese Labor Department
intervened for respondent Paramio and his employer was told that it had no right to repatriate the
respondent because the accident which caused the injury happened while the latter was at work.

On October 22, 1997, respondents Sarmiento, Guillermo, Curameng, Jr. and Bautista, together
with respondents Paramio and Navarra, filed separate complaints before the NLRC Arbitration
Branch against Bayani Fontanilla for illegal dismissal, non-payment of overtime pay, refund of
placement fee, tax refund, refund of plane fares, attorney’s fees and litigation expenses. In their
position paper, the respondents raised the issue of whether or not the petitioner PSRI and Bayani
Fontanilla were liable for the reimbursement of their respective placement fees, nightshift
differentials, overtime pay and damages, and their salaries for the unexpired portion of their
respective contracts.
WHEREFORE, judgment is hereby rendered against the petitioner.

Aggrieved, the petitioner appealed before the National Labor Relations Commission (NLRC), the
NLRC issued a resolution finding that the respondents were legally dismissed and set aside the
decision of the labor arbiter.

Respondents filed a petition of Rule 65 to CA, the CA rendered a decision partly granting the
petition in that it nullified the March 29 and May 17, 1999 Resolutions of the NLRC and reinstated
the decision of the labor arbiter with modification.

Issue:
(a) whether or not the respondents were illegally dismissed; and
(b) whether or not the deed of release and quitclaim executed by respondent Navarra was valid.

Held:
The petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 54744 is
AFFIRMED WITH MODIFICATIONS. The petitioner is ordered to pay the following:

(1) The amount of NT$46,080 or its peso equivalent to respondent Ronald Navarra minus the
amount of P49,000 already advanced to him;
(2) To the respondents Romel Sarmiento, Recto Guillermo, Ferdinand Bautista, Apolinario
Curameng, Jr. and Joseph Paramio, their respective salaries corresponding to the unexpired portion
of their respective contracts;
(3) The amount of the placement fees as indicated in the respective official receipts issued to each
of the respondents, with interest of 12% per annum, in conformity with Section 10, paragraph 5 of
Rep. Act No. 8042;
(4) To each of the respondents, the amount of P4,300 representing the expenses they incurred for
their return to the Philippines.
Placewell International Services, Corp., v. Camote, G.R. No. 169973, June 26, 2006, 492
SCRA 761 (2006)

Facts:
Petitioner Placewell International Services Corporation (PISC) deployed respondent Ireneo B.
Camote to work as building carpenter for SAAD Trading and Contracting Co. (SAAD) at the
Kingdom of Saudi Arabia (KSA) for a contract duration of two years, with a corresponding salary
of US$370.00 per month. At the job site, respondent was allegedly found incompetent by his
foreign employer; thus the latter decided to terminate his services. However, respondent pleaded
for his retention and consented to accept a lower salary of SR 800.00 per month. Thus, SAAD
retained respondent until his return to the Philippines two years after.

On November 27, 2001, respondent filed a sworn Complaint for monetary claims against petitioner
alleging that when he arrived at the job site, he and his fellow Filipino workers were required to
sign another employment contract written in Arabic under the constraints of losing their jobs if
they refused; that for the entire duration of the new contract, he received only SR 590.00 per
month; that he was not given his overtime pay despite rendering nine hours of work every day;
that he and his co-workers sought assistance from the Philippine Embassy but they did not succeed
in pursuing their cause of action because of difficulties in communication.

Issue:
Whether there is estoppel by laches

Held:
R.A. No. 8042 explicitly prohibits the substitution or alteration to the prejudice of the worker, of
employment contracts already approved and verified by the Department of Labor and Employment
(DOLE) from the time of actual signing thereof by the parties up to and including the period of the
expiration of the same without the approval of the DOLE. The subsequently executed side
agreement of an overseas contract worker with her foreign employer which reduced her salary
below the amount approved by the POEA is void because it is against our existing laws, morals
and public policy. The said side agreement cannot supersede her standard employment contract
approved by the POEA.

Petitioner’s contention that respondent is guilty of laches is without basis. Laches has been defined
as the failure of or neglect for an unreasonable and unexplained length of time to do that which by
exercising due diligence, could or should have been done earlier, or to assert a right within
reasonable time, warranting a presumption that the party entitled thereto has either abandoned it
or declined to assert it. Thus, the doctrine of laches presumes that the party guilty of negligence
had the opportunity to do what should have been done, but failed to do so. Conversely, if the said
party did not have the occasion to assert the right, then, he cannot be adjudged guilty of laches.
Laches is not concerned with the mere lapse of time; rather, the party must have been afforded an
opportunity to pursue his claim in order that the delay may sufficiently constitute laches.
In the instant case, respondent filed his claim within the three-year prescriptive period for the filing
of money claims set forth in Article 291 of the Labor Code from the time the cause of action
accrued. Thus, we find that the doctrine of laches finds no application in this case.

Section 3. Alien Employment

STATUTORY REFERENCE: ARTS. 40-42; REVISED GUIDELINES FOR ISSUANCES
OF EMPLOYMENT PERMIT – 1988; DEPARTMENT ORDER NO. 146-15, SERIES OF
2015 – REVISED RULES FOR THE ISSUANCE OF EMPLOYMENT PERMITS TO
FOREIGN NATIONALS (See POLICY CHANGES)
3.1. COVERAGE

Non-Resident Alien
Almodiel v. NLRC, G.R. No. 100641, June 14, 1993, 223 SCRA 341 (1993)

Facts:
Petitioner is a CPA hired as Cost Accounting Manager of Respondent Raytheon Philippines, Inc.
As such, his major duties were (1) plan, coordinate, and carry out year-end physical inventory (2)
formulate and issue out hard copies of standard product costing and other cost pricing analysis if
needed and required and set up the written cost accounting system for the whole company.
however, when the standard cost accounting system for Raytheon plans worldwide was adopted
and installed in the Philippine operations, the services of the petitioner was reduced to only the
submission of period reports that would use computerized forms prescribed and designed by the
international head office of the company in California, USA.

On January 1989, petitioner was told of the abolition of his position on the ground of redundance.
He was constrained to file the complaint for illegal dismissal after his request to have him
transferred to another department was denied. He also alleged that the functions of his position
were absorbed by the Payroll/MIS/finance Department which is headed by a resident alien without
working permit from the DOLE.

The NLRC ruled for Raytheon and directed the latter to pay the petitioner P100, 000.00 as
separation pay. Hence, this petition.

Issue:
WON the termination of the petitioner on the ground of redundancy was tainted with malice, Bad
faith and irregularity.

Held:
An employer has no legal obligation to keep more employees that are necessary for the operation
of the business. Considering further that petitioner held a managerial position, Raytheon had a
broad latitude of discretion in abolishing the position. The reason obviously is that officers in such
3ey positions perform not only functions which by nature require the employers full trust and
confidence but also functions that spell the success or failure of an enterprise.likeewise destitute
of merit is petitioners imputation of unlawful discrimination when Raytheon caused corollary
functions appertaining to cost accounting to be absorbed by a resident alien without working
permit. Article of the 40 of the Labor Code which requires employment permit refers to non-
resident aliens.

3.2. TECHNIQUE REGULATION - EMPLOYMENT PERMIT – ARTS. 40-42, LABOR

CODE; ART. XII, SEC. 12, CONSTITUTION
R.A. No. 7916 – The Special Economic Zone Act of 1995 - Secs. 2(b); 3(c); 4, 10; 40
R.A. No. 7918 – Amending Omnibus Investments Code of 1987 – Sec. 39(g)

Alien Employment Permit (AEP)

General Milling Corporation v. Torres, G.R. No. 93666, April 22, 1991, 196 SCRA 215 (1991)

Facts:
Earl Timothy Cone is a US citizen, who was hired by General Milling as a sports consultant and
assistant coach. He possessed an alien employment permit which was changed to pre-arranged
employee by the Board of Special Inquiry of the Commission on Immigration and Deportation.
GMC requested that Cone’s employment permit be changed to a full-fledged coach, which was
contested by The Basketball Coaches Association of the Philippines. Alleging that GMC failed to
show that there is no competent person in the Philippines to do the coaching job. Secretary of
Labor cancelled Cone’s employment permit.

Issue:
Whether or not the Secretary of Labor act with grave abuse of discretion in revoking Cone’s Alien
Employment Permit

Held:
The Secretary of Labor did not act with grave abuse of discretion in revoking Cone’s Alien
Employment Permit. GMC’s claim that hiring of a foreign coach is an employer’s prerogative has
no legal basis. Under Section 40 of the Labor Code, an employer seeking employment of an alien
must first obtain an employment permit from the Department of labor. GMC’s right to choose
whom to employ is limited by the statutory requirement of an employment permit.

Section 4. Employment of Apprentices, Learners and Handicapped Workers

4.1. POLICY OBJECTIVES – SECS. 2-3, R.A. No. 7796
4.2. APPRENTICE

Allowed Employment
Requirement Program Approval

Nitto Enterprises v. NLRC, G.R. No. 114337, September 29, 1995, 248 SCRA 654 (1995)

Facts:
Petitioner Nito Enterprises hired Capili as an apprentice machinist under an apprenticeship
agreement for six months for a daily wage, which was 75% of applicable minimum wage.
However, shortly 2 months after he started work, Capili was asked to resign for the reason that he
had been causing accidents, that he has been doing certain things beyond the scope of his duty,
and that he had even injured himself in handling one of the machines, to the financial prejudice of
the company as his medication would be shouldered by Nito Enterprises.

Capili later filed a complaint for illegal dismissal, which the Labor Arbiter dismissed. This
decision was reversed by the NLRC, holding that Capili was a regular employee. With this, Nito
came to the Supreme Court. Nito Enterprises assails the NLRC decision on the ground that no
apprenticeship program had yet been filed and approved at the time the agreement was executed.

Issue:
Is Capili a regular employee or an apprentice?

Held:
Capili is a regular employee. Apprenticeship needs DOLE’s prior approval, or apprentice becomes
regular employee.
Petitioner did not comply with the requirements of the law. It is mandated that apprenticeship
agreements entered into by the employer and apprentice shall be entered only in accordance with
the apprenticeship program duly approved by the Minister of Labor and Employment.
Prior approval by the Department of Labor and Employment of the proposed apprenticeship
program is, therefore, a condition sine quo non before an apprenticeship agreement can be validly
entered into.

The act of filing the proposed apprenticeship program with the Department of Labor and
Employment is a preliminary step towards its final approval and does not instantaneously give rise
to an employer-apprentice relationship.
Hence, since the apprenticeship agreement between petitioner and private respondent has no force
and effect in the absence of a valid apprenticeship program duly approved by the DOLE, private
respondent’s assertion that he was hired not as an apprentice but as a delivery boy (“kargador” or
“pahinante”) deserves credence. He should rightly be considered as a regular employee of
petitioner as defined by Article 280 of the Labor Code and pursuant to the constitutional mandate
to protect the rights of workers and promote their welfare.

4.3. LEARNERS
4.4. HANDICAPPED WORKER – R.A. No. 7277, AS AMENDED BY R.A. NO. 9442
Defined – Secs. 4(a), (b), (c), (d), 1-8 (R.A. No. 7277)
Allowed Employment – Sec. 5 (R.A. No. 7277)
Regular Worker

Bernardo v. NLRC, G.R. No. 122917, July 12, 1999, 310 SCRA 186 (1999)
Facts:
Petitioners numbering 43 are deaf–mutes who were hired on various periods from 1988 to 1993
by respondent Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly
worded agreement called ‘Employment Contract for Handicapped Workers. Subsequently, they
are dismissed.

Petitioners maintain that they should be considered regular employees, because their task as money
sorters and counters was necessary and desirable to the business of respondent bank. They further
allege that their contracts served merely to preclude the application of Article 280 and to bar them
from becoming regular employees.

Private respondent, on the other hand, submits that petitioners were hired only as “special workers
and should not in any way be considered as part of the regular complement of the Bank.” Rather,
they were “special” workers under Article 80 of the Labor Code.

Issue:
WON petitioners have become regular employees.

Held:
The uniform employment contracts of the petitioners stipulated that they shall be trained for a
period of one month, after which the employer shall determine whether or not they should be
allowed to finish the 6-month term of the contract. Furthermore, the employer may terminate the
contract at any time for a just and reasonable cause. Unless renewed in writing by the employer,
the contract shall automatically expire at the end of the term.

Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and
renewed the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the
renewal of the contracts of the handicapped workers and the hiring of others lead to the conclusion
that their tasks were beneficial and necessary to the bank. More important, these facts show that
they were qualified to perform the responsibilities of their positions. In other words, their disability
did not render them unqualified or unfit for the tasks assigned to them.

In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee
should be given the same terms and conditions of employment as a qualified able-bodied person.
Section 5 of the Magna Carta provides:

“Section 5. Equal Opportunity for Employment.—No disabled person shall be denied access to
opportunities for suitable employment. A qualified disabled employee shall be subject to the same
terms and conditions of employment and the same compensation, privileges, benefits, fringe
benefits, incentives or allowances as a qualified able bodied person.”
The fact that the employees were qualified disabled persons necessarily removes the employment
contracts from the ambit of Article 80. Since the Magna Carta accords them the rights of qualified
able-bodied persons, they are thus covered by Article 280 of the Labor Code, which provides:

“ART. 280. Regular and Casual Employment. — The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall
be deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, x x x”

“The primary standard, therefore, of determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual trade or business
of the employer. The test is whether the former is usually necessary or desirable in the usual
business or trade of the employer. The connection can be determined by considering the nature of
the work performed and its relation to the scheme of the particular business or trade in its entirety.
Also if the employee has been performing the job for at least one year, even if the performance is
not continuous and merely intermittent, the law deems repeated and continuing need for its
performance as sufficient evidence of the necessity if not indispensability of that activity to the
business. Hence, the employment is considered regular, but only with respect to such activity, and
while such activity exists.”

Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and
renewed the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the
renewal of the contracts of the handicapped workers and the hiring of others lead to the conclusion
that their tasks were beneficial and necessary to the bank. More important, these facts show that
they were qualified to perform the responsibilities of their positions. In other words, their disability
did not render them unqualified or unfit for the tasks assigned to them.

Without a doubt, the task of counting and sorting bills is necessary and desirable to the business
of respondent bank. With the exception of sixteen of them, petitioners performed these tasks for
more than six months.

Petition granted.

Section 5. Conditions of Employment – Hours of Work

STATUTORY REFERENCE: ARTS. 82-90, LABOR CODE; BOOK III, RULES 1, IA, II,
OMNIBUS RULES
5.1. HOURS REGULATION Rationale and Enforcement

Manila Terminal Co. Inc. v. CIR, G.R. No. L-4148, July 16, 1952, 91 Phil. 625 (1952)

Facts:
Manila Terminal Company, Inc. hereinafter to be referred as to the petitioner, undertook the
arrastre service in some of the piers in Manila’s Port Area at the request and under the control of
the United States Army. The petitioner hired some thirty men as watchmen on twelve-hour shifts
at a compensation of P3 per day for the day shift and P6 per day for the night shift. The watchmen
of the petitioner continued in the service with a number of substitutions and additions, their salaries
having been raised during the month of February to P4 per day for the day shift and P6.25 per day
for the nightshift. The private respondent sent a letter to Department of Labor requesting that the
matter of overtime pay be investigated. But nothing was done by the Dept. of Labor. Later on, the
petitioner instituted the system of strict eight-hour shifts. The private respondent filed an amended
petition with the Court of Industrial Relations praying, among others, that the petitioner be ordered
to pay its watchmen or police force overtime pay from the commencement of their employment.
By virtue of Customs Administrative Order No. 81 and Executive Order No. 228 of the President
of the Philippines, the entire police force of the petitioner was consolidated with the Manila Harvor
Police of the Customs Patrol Service, a Government agency under the exclusivecontrol of the
Commissioner of Customs and the Secretary of Finance The Manila Terminal Relief and Mutual
Aid Association will hereafter be referred to as the Association. Judge V. Jimenez Yanson of the
Court of Industrial Relations in his decision ordered the petitioner to pay to its police force but
regards to overtime service after the watchmen had been integrated into the Manila Harbor Police,
the has no jurisdiction because it affects the Bureau of Customs, an instrumentality of the
Government having no independent personality and which cannot be sued without the consent of
the State. The petitioner filed a motion for reconsideration. The Association also filed a motion for
reconsideration in so far its other demands were dismissed. Both resolutions were denied. The
public respondent decision was to pay the private respondents their overtime on regular days at
the regular rate and additional amount of 25% overtime on Sundays and legal holidays at the
regular rate only, and watchmen are not entitled to night differential pay for past services. The
petitioner has filed a present petition for certiorari.

Issue:
WON overtime pay should be granted to the workers

Held:
The Supreme Court affirmed the appealed decision that the petitioner's watchmen will be entitled
to extra compensation only from the dates they respectively entered the service of the petitioner,
hereafter to be duly determined by the Court of Industrial Relations.

Based on Fair Labor Standards Act of the United States which provides that "any employer who
violates the provisions of section 206 and section 207 of this title shall be liable to the employee
or employees affected in the amount of their unpaid minimum wages or their unpaid overtime
compensation as the case may be," - a provision not incorporated in Commonwealth Act No. 444,
our Eight-Hour Labor Law.
We cannot agree to the proposition, because sections 3 and 5 of Commonwealth Act 444 expressly
provides for the payment of extra compensation in cases where overtime services are required,
with the result that the employees or laborers are entitled to collect such extra compensation for
past overtime work. To hold otherwise would be to allow an employer to violate the law by simply,
as in this case, failing to provide for and pay overtime compensation.
5.2. COVERAGE -- ARTS. 82-90, LABOR CODE
Rationale Exemption – Managerial Employees

Peñaranda v. Baganga Plywood Corp., G.R. No. 159577, May 3, 2006, 489 SCRA 94 (2006)

Facts:
In June 1999, Peñaranda was hired by Baganga Plywood Corporation (owned by Hudson Chua)
to take charge of the operations and maintenance of its steam plant boiler. Peñaranda was employed
as a Foreman/Boiler Head/Shift Engineer tasked to do the following tasks among others:

1. To supply the required and continuous steam to all consuming units at minimum cost.

2. To supervise, check and monitor manpower workmanship as well as operation of boiler and
accessories.

3. To evaluate performance of machinery and manpower.

5. To train new employees for effective and safety while working.

7. To recommend personnel actions such as: promotion, or disciplinary action.

In 2001, BPC shut down due to some repairs and maintenance. BPC did not technically fire
Peñaranda but due to the latter’s insistence, BPC gave him his separation benefits.

BPC subsequently reopened but Peñaranda did not reapply.

Peñaranda now claims that BPC still needed to pay him his overtime pays and premium pays.

The NLRC ruled that Peñaranda is a managerial employee and as such he is not entitled to overtime
and premium pay as stated under the Labor Code. Peñaranda appealed. He said that he is not a
managerial employee.

Issue:
Whether or not Peñaranda is entitled to overtime and premium pay.

Held:
No. Though there is an error made by the NLRC in finding Peñaranda as a managerial employee,
the Supreme Court still ruled that Peñaranda is not entitled to overtime and premium pay.

Peñaranda is not a managerial employee. Under the Implementing Rules and Regulations of the
Labor Code, managerial employees are those that perform the following:
“(1) their primary duty consists of the management of the establishment in which they are
employed or of a department or subdivision thereof;

“(2) They customarily and regularly direct the work of two or more employees therein;

“(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and
recommendations as to the hiring and firing and as to the promotion or any other change of status
of other employees are given particular weight.”

Peñaranda does not meet the above requirements.

Peñaranda is instead considered as a managerial staff. Under the Implementing Rules and
Regulations of the Labor Code, managerial staffs are those that perform the following:

“(1) the primary duty consists of the performance of work directly related to management policies
of the employer;

“(2) customarily and regularly exercise discretion and independent judgment;

“(3) (i) Regularly and directly assist a proprietor or a 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 work along specialized or technical lines requiring special
training, experience, or knowledge; or (iii) execute under general supervision special assignments
and tasks; and

“(4) who do not devote more than 20 percent of their hours worked in a workweek to activities
which are not directly and closely related to the performance of the work described in paragraphs
(1), (2), and (3) above.”

Peñaranda’s function as a shift engineer illustrates that he was a member of the managerial staff.
His duties and responsibilities conform to the definition of a member of a managerial staff under
the Implementing Rules.

Peñaranda supervised the engineering section of the steam plant boiler. His work involved
overseeing the operation of the machines and the performance of the workers in the engineering
section. This work necessarily required the use of discretion and independent judgment to ensure
the proper functioning of the steam plant boiler.

Further, Peñaranda in his position paper admitted that he was a supervisor for BPC. As supervisor,
petitioner is deemed a member of the managerial staff.

Asia Pacific Chartering, Inc. v. Farolan, G.R. No.151370, December 4, 2002, 393 SCRA 454
(2002)
Facts:
Respondent Maria Linda R. Farolan was hired as Sales Manager of petitioner for its passenger and
cargo GSA operations for Scandinavian Airline System (SAS).
Soon after respondent assumed her post, she participated in a number of meetings/seminars
(technical aspects all geared towards improving her marketing and sales skills)
Respondent, upon instruction of Bondoc (VP/Comptroller), submitted a report. As reflected in
respondent’s report, there was a drop in SAS’ sales revenues which to her was attributable to
market forces beyond her control.
Petitioner directed its high ranking officer Roberto Zozobrado to conduct an investigation on the
matter and identify the problem/s and implement possible solutions.
Zozobrado thus informally took over some of respondent’s marketing and sales responsibilities,
albeit respondent retained her title as Sales Manager and continued to receive her salary as such.
Soren Jespersen, General Manager of SAS, came to the Philippines to assess the statistics on SAS’
sales revenues and SAS was convinced that respondent was not fit for the job of Sales Manager;
and in view of the changes introduced by Zozobrado, SAS-GSA sales operations drew positive
results.
Respondent Farolan nevertheless, received letter from Jespersen congratulating him for exceeding
sale results in April and a number of recommendations for improvement.
However, on even date, Petitioner terminated the employment of respondent on ground of loss of
trust and confidence
Thus, respondent filed a complaint for illegal dismissal with prayer for damages and attorney’s
fees.
Respondents version: alleged that Bondoc and Zozobrado had asked her to tender her resignation
as she was not the person whom SAS was looking for to handle the position of Sales Manager 9
but that she refused, hence, she was terminated
Labor Arbiter: ruled in favor of respondent;
NLRC: reversed the ruling of the LA
CA: Set aside the decision of NLRC

Issue:
WON, APC, AS EMPLOYER, HAS THE MANAGEMENT PREROGATIVE TO REPLACE A
SALES MANAGER WHOM IT HAS REASONABLE GROUNDS TO BELIEVE CANNOT
EFFECTIVELY DISCHARGE THE DUTIES DEMANDED BY SUCH POSITION.

Held:
Recent decisions of this Court distinguish the treatment of managerial employees from that of rank
and file personnel insofar as the application of the doctrine of loss of trust and confidence is
concerned.

MANAGERIAL EMPLOYEES; CONDITIONS THAT MUST BE MET BEFORE ONE MAY

BE CONSIDERED A MANAGERIAL EMPLOYEE. — As enunciated in Samson v. NLRC, 330
SCRA 460, “Before one may be properly considered a managerial employee, all the following
conditions must be met: (1) Their primary duty consists of the management of the establishment
in which they are employed or of a department or subdivision thereof; (2) They customarily and
regularly direct the work of two or more employees therein; (3) They have the authority to hire or
fire other employees of lower rank; or their suggestions and recommendations as to the hiring and
firing and as to the promotion or any other change of status of other employees are given particular
weight. (Section 2(b), Rule I, Book III of the Omnibus Rules Implementing the Labor Code, italics
supplied).
It is not disputed that her job description, and the terms and conditions of her employment, with
the exception of her salary and allowances, were never reduced to writing.
By respondent’s claim, her function, as verbally explained to her by Murray, dealt mainly with
servicing of existing clientele. Bondoc, however, described respondent’s functions and duties as
critical

DISMISSAL; LOSS OF TRUST AND CONFIDENCE; MUST BE BASED ON A WILLFUL

BREACH AND FOUNDED ON CLEARLY ESTABLISHED FACTS; BREACH OF DUTIES;
WHEN CONSIDERED WILLFUL; CASE AT BAR. — Even assuming, however, that respondent
was a managerial employee, the stated ground (in the letter of termination) for her dismissal, “loss
of confidence,” should have a basis and determination thereof cannot be left entirely to the
employer. Loss of trust and confidence to be a valid ground for an employee’s dismissal must be
based on a willful breach and founded on clearly established facts. A breach is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act
done carelessly, thoughtlessly, heedlessly or inadvertently. Respondent’s detailed REPORT dated
September 8, 1993, relative to SAS profit and loss for 1993, which was closely examined and
analyzed by the LA contains an explanation of what brought about the decline in sales revenues.
And it contains too a number of recommended measures on improvement of sales for the remainder
of 1993 and for 1994. As did the Labor Arbiter and the Court of Appeals, this Court finds
respondent’s explanation in her Report behind the decline in sales revenues as due to market forces
beyond respondent’s control plausible. In any event, there is no showing that the decline is
reflective of any willful breach of duties by respondent.