COURSE OUTLINE

LABOR STANDARDS

INTRODUCTION

A. Definition of Labor Law

B. Social Legislation

1. ORO ENTERPRISES, INC. v. NATIONAL LABOR RELATIONS COMMISSION and LORETO L. CECILIO

G.R. No. 110861 November 14, 1994

ORO ENTERPRISES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and LORETO L. CECILIO, respondents.

TOPIC: Social Legislation

Loreto Cecilio, after 41 years of working for Oro Enterprises, wanted to retire and claim her retirement pay. She wanted to claim from Oro as
the retirement pay she was receiving monthly from the Social Security System in the total sum of five hundred pesos (P500.00) a month
could hardly suffice to meet her daily subsistence
Oro informed her that it was in no financial position to give her any retirement benefit apart from the retirement pay she was already
receiving from the Social Security System ("SSS"). Nonetheless, she was offered a house and lot located in San Jose del Monte, Bulacan, in
accordance with a "plan" which was then still being conceived by the company president for retiring employees. The offer did not
materialize, nor did the proposed company plan come into being, for one reason or another.
Loreto filed a complaint with the Office of the Labor Arbiter
Loreto’s contention: she has been employed and faithfully worked for petitioner continuously for forty-one (41) years until she reached the
age of 65 on 19 August 1990; that when she requested petitioner for her "retirement or termination pay," the President of the company
refused to comply; and that the lot being offered to her which is located in Bulacan would not meet her basic needs for subsistence in the
remaining years of her life."3
Oro’s contention: private respondent was not dismissed from the service but voluntarily stopped working on September 15, 1990; that it has
no collective bargaining agreement or any other agreement or established policy concerning payment of retirement benefits to employees
who reach a certain age except that which is required by the Social Security Law; that it has not agreed, whether expressly or impliedly, to
pay any retirement benefit to private respondent or any of its employees; and that in Llora Motors, Inc., and/or Constantino Carlota, Jr. vs.
Honorable Franklin Drilon, et al., (G.R. No. 82895, Nov. 7, 1989), this Honorable Court . . . ruled that payment of retirement benefits cannot
be required in the absence of a collective bargaining agreement or other contractual basis or any established employer policy providing the
grant of such retirement benefits.
Labor Arbiter Edilberto J. Pangan: In favor of Loreto
Petitioner appealed to the NLRC and during the pendency of the appeal, or on 07 January 1993, Republic Act ("R.A.") No. 7641 took effect,
providing among other things, thusly:
Art. 287. Retirement. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or
other applicable employment contract.
xxx xxx xxx
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon
reaching the age of sixty (60) years or more, but not beyond sixty five (65) years which is hereby declared the compulsory retirement age,
who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one
half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term "one half (1/2) month salary" shall mean fifteen (15) days plus one twelfth (1/12)
of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.
xxx xxx xxx
Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of this Code.
NLRC: awarded to private respondent a retirement pay on the basis of Republic Act 7641
In the instant petition, Oro Enterprises ascribes grave abuse of discretion on the part of the NLRC in applying R.A. No. 7641. Petitioner
argues that the law, which became effective only on 07 January 1993, cannot be given any such retroactive effect as to cover private
respondent who, at the age of 65 years, retired from employment with petitioner on 03 September 1990. At the time private respondent
supposedly ceased to work with petitioner, Article 287 of the Labor Code then in force, provided:
Art. 287. Retirement. — Any employee maybe retired upon reaching the retirement age established in the collective bargaining agreement or
other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any
collective bargaining or other agreement.
Rule 1, Book VI, of the Implementing Rules of the Labor Code, in turn, expressed:
Sec. 13. Retirement. — In the absence of any collective bargaining agreement or other applicable agreement concerning terms and conditions
of employment which provides for retirement at an older age, an employee maybe retired upon reaching the age of sixty (60) years.
Sec. 14. Retirement benefits. — (a) An employee who is retired pursuant to a bonafide retirement plan or in accordance with the applicable
individual or collective agreement or established employer policy shall be entitled to all the retirement benefits provided therein or to
termination pay equivalent at least to one-half month salary for every year of service, whichever is higher, a fraction of at least six (6) months
being considered as one whole year.
SHOULD THE NEW LABOR CODE APPLY TO THIS CASE?
YES. RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that —
absent a retirement plan devised by, an agreement with, or a voluntary grant from, an employer — can respond, in part at least, to the
financial well-being of workers during their twilight years soon following their life of labor. There should be little doubt about the fact that
the law can apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only from
the date of the law's enactment but retroactively to the time said employment contracts have started.
Republic Act 7641 took effect on 07 January 1993, while the appeal of private respondent was still pending consideration by the NLRC. Still
for determination at the time was, among other things, the issue of whether or not private respondent has, in fact, been effectively retired.
Petitioner asserts that private respondent has never reported for work after the rejection of her application for retirement benefits. This claim
is denied by private respondent, who avers that she did report for work again but that petitioner has refused to accept her on the ground of
abandonment of duty.
The NLRC, in turn, has said:
After all, the least that could be said here is that the complainant filed her claim for retirement pay only on January 7, 1993 the date R.A. No.
7641 took effect and that against the backdrop that she retired only on September 15, 1990, her monetary claim could be treated as well filed
within the three (3) years prescriptive period set by law . . . .
WHEREFORE, the petition for certiorari is DISMISSED, and the decision of the NLRC is AFFIRMED.

C. Classification of Labor Law

1. Maternity Children’s Hospital v. Hon. Secretary of Labor

MATERNITY CHILDREN'S HOSPITAL vs. THE HONORABLE SECRETARY OF LABOR

FACTS:
Maternity Children's Hospital is a semi-government hospital, managed by the Board of Directors of the Cagayan de Oro Women's Club and
Puericulture Center, headed by Mrs. Antera Dorado, as holdover President.
Petitioner has forty-one (41) employees. Aside from salary and living allowances, the employees are given food, but the amount spent
therefor is deducted from their respective salaries.
On May 23, 1986, ten (10) employees of the petitioner employed in different capacities/positions filed a complaint with the Office of the
Regional Director of Labor and Employment, Region X, for underpayment of their salaries and ECOLAS, which was docketed as ROX Case
No. CW-71-86.
On June 16, 1986, the Regional Director directed two of his Labor Standard and Welfare Officers to inspect the records of the petitioner to
ascertain the truth of the allegations in the complaints
Payrolls covering the periods of May, 1974, January, 1985, November, 1985 and May, 1986, were duly submitted for inspection.
On July 17, 1986, the Labor Standard and Welfare Officers submitted their report confirming that there was underpayment of wages and
ECOLAs of all the employees by the petitioners.
Regional Director issued an Order directing the payment of P723,888.58, representing underpayment of wages and ECOLAs to all the
petitioner's employees.
Petitioner filed a motion for reconsideration which was denied by the Secretary of Labor

ISSUE:
WON the Regional Director erred in extending the award to all hospital employees.

HELD:
The Regional Director correctly applied the award with respect to those employees who signed the complaint, as well as those who did not
sign the complaint, but were still connected with the hospital at the time the complaint was filed
The justification for the award to this group of employees who were not signatories to the complaint is that the visitorial and enforcement
powers given to the Secretary of Labor is relevant to, and exercisable over establishments, not over the individual members/employees,
because what is sought to be achieved by its exercise is the observance of, and/or compliance by, such firm/establishment with the labor
standards regulations. Necessarily, in case of an award resulting from a violation of labor legislation by such establishment, the entire
members/employees should benefit therefrom. As aptly stated by then Minister of Labor Augusto S. Sanchez:

. . It would be highly derogatory to the rights of the workers, if after categorically finding the respondent hospital guilty of underpayment of
wages and ECOLAs, we limit the award to only those who signed the complaint to the exclusion of the majority of the workers who are
similarly situated. Indeed, this would be not only render the enforcement power of the Minister of Labor and Employment nugatory, but
would be the pinnacle of injustice considering that it would not only discriminate but also deprive them of legislated benefits.
Sec. 6, Rule II of the "Rules on the Disposition of Labor Standards cases in the Regional Offices" (supra) presently enforced
SECTION 6. Coverage of complaint inspection. — A complaint inspection shall not be limited to the specific allegations or violations raised
by the complainants/workers but shall be a thorough inquiry into and verification of the compliance by employer with existing labor
standards and shall cover all workers similarly situated. (Emphasis supplied)
However, there is no legal justification for the award in favor of those employees who were no longer connected with the hospital at the time
the complaint was filed, having resigned therefrom in 1984.
The enforcement power of the Regional Director cannot legally be upheld in cases of separated employees.
Article 129 of the Labor Code is not applicable as said article is in aid of the enforcement power of the Regional Director; hence, not
applicable where the employee seeking to be paid underpayment of wages is already separated from the service. His claim is purely a money
claim that has to be the subject of arbitration proceedings and therefore within the original and exclusive jurisdiction of the Labor Arbiter.

Finally, the respondent hospital assails the order under appeal as null and void because it does not clearly and distinctly state the facts and the
law on which the awards were based. Contrary to the pretensions of the respondent hospital, we have carefully reviewed the order on appeal
and we found that the same contains a brief statement of the (a) facts of the case; (b) issues involved; (c) applicable laws; (d) conclusions and
the reasons therefor; (e) specific remedy granted (amount awarded). (p. 40, Rollo)
The petition should be dismissed, as it is hereby DISMISSED, as regards all persons still employed in the Hospital at the time of the filing of
the complaint, but GRANTED as regards those employees no longer employed at that time.

2. Batong Buhay Gold Mines, Inc. v. De la Serna

BATONG BUHAY GOLD MINES, INC. v. HON. DIONISIO DELA SERNA, et al

Private respondents filed a complaint against Batong Buhay (BBGMI) for nonpayment of their basic pay and allowances, 13th month pay,
and other benefits. Complainants then filed a motion for the issuance of an inspection authority. The Labor Standards and Welfare Officers
submitted their report recommending for the issuance of an Order of Compliance to direct BBGMI to pay complainants for the unpaid
salaries, benefits and allowances. The Regional Director 1 adopted the same recommendation. Complainants then filed an ex-parte motion for
the issuance of a writ of execution. The Regional Director directed petitioner to put up a cash or surety bond otherwise, a writ of execution
will be issued. Failure of respondent to post a bond, a writ of execution was issued directing the Special Sheriff to collect said amount from
petitioner otherwise attach goods and chattels of petitioner. The Special sheriff seized three (3) units of Peterbuilt trucks and sold it by public
auction. Petitioner filed a bond which in result, restrained complainants and sheriff from enforcing the writ of execution. BBGMI appealed
the Order of Regional Director Piezas to respondent Undersecretary dela Serna contending that the Regional Director had no jurisdiction over
the case. However, undersec dela Serna uphold the jurisdiction of the Regional Director and annulled all auction sales conducted by the
special sheriff. An MR was filed but was denied. Petitioner alleged that the Regional Director is without jurisdiction over subject case in line
with the ruling in Zambales Base vs. Minister of Labor. Respondent Undersec dela Serna upheld the jurisdiction of the Regional Director
relying on E.O. 111 considering that there still exists an employer-employee relationship between the parties and that the case involves
violation of labor standard provisions of labor code.

ISSUE:
Whether the Regional Director has jurisdiction over the subject labor standards case.

HELD:
Yes, the Regional Director has jurisdiction to hear and decide the instant labor standard case. Labor standards refers to the minimum
requirements prescribed by existing laws, rules and regulations relating to wages, hours of work, cost of living allowance, etc. This is a labor
standard case and is governed by Art. 128 of the Labor code as amended by E.O. 111. The amendment of the visitorial and enforcement
powers of the Regional Director (Article 128(b)) by said E.O. 111 reflects the intention enunciated in Policy Instructions Nos. 6 and 37 to
empower the Regional Directors to resolve uncontested money claims in cases where an employer-employee relationship still exists. This
intention must be given weight and entitled to great respect. Exception clause in Art. 128:

(a) that the petitioner (employer) contests the findings of the labor regulations officer and raises issues thereon;
(b) that in order to resolve such issues, there is a need to examine evidentiary matters; and

(c) that such matters are not verifiable in the normal course of inspection.

Petitioner did not raise any of these grounds. Petitioner put up a defense that the Regional Director was without jurisdiction, there being no
employer-employee relationship, since petitioner had ceased doing business since 1985.

Regional Director’s visitorial and enforcement powers under Art. 128 (b) has undergone series of amendments. The enactment of RA 6715
subjected the power of the Regional Director to adjudicate employee money claims. The Servando ruling expanded the jurisdictional
limitation provided for by RA 6715 to include labor standards cases under Art. 128 (b) and not only to ordinary monetary claims under Art.
129. The Servando ruling was eventually rendered inapplicable with the enactment of Republic Act 7730, the law governing the visitorial and
enforcement powers of the Labor Secretary. RA 7730 can be considered a curative statute to reinforce the conclusion that the Regional
Director has jurisdiction over the present labor standards case. Well-settled is the rule that jurisdiction over the subject matter is determined
by the law in force when the action was commenced, unless a subsequent statute provides for its retroactive application, as when it is a
curative legislation.
The Court ruled that RA 6715 is deemed a curative statute and should be applied to pending cases. The rationale of the ruling of the Court
was that prior to RA 6715, Article 217 as amended by E.O. 111, created a scenario where the Labor Arbiter and the Regional Director of
DOLE had overlapping jurisdiction over money claims. Such a situation was viewed as a defect in the law so that when RA 6715 was passed,
it was treated or interpreted by the Court as a rectification of the infirmity of the law, and therefore curative in nature, with retroactive
application. RA 7730 reveal that “this bill seeks to do away with the jurisdictional limitations imposed in the Servando ruling and to finally
settle doubts on the visitorial and enforcement power of the Sec. of Labor and Employement.” Petition is granted.

“The worker need not litigate to get what legally belongs to him, for the whole enforcement machinery of the Department of Labor exists to
insure its expeditious delivery to him free of charge.”

3. Penafranda v. Baganga Plywood Corp.

G.R. No. 159577 May 3, 2006

CHARLITO PEÑARANDA, Petitioner,
vs.
BAGANGA PLYWOOD CORPORATION and HUDSON CHUA, Respondents.

Topic: Classifications of Labor Law

Nature of Action: Petition for Review

Facts:
June 1999: Petitioner Charlito Peñaranda hired as an employee of Baganga Plywood Corporation (BPC) to take charge of the operations and
maintenance of its steam plant boiler
May 2001: Peñaranda filed a complaint for illegal dismissal (before the NLRC) against BPC and General Manager Hudson Chua
BPC: domestic corporation represented by Chua.

Allegations:
Petitioner:
Employee from March 15, 1999 (salary - P5,000.00/month) as Foreman/Boiler Head/Shift Engineer until he was illegally terminated on
December 19, 2000.
Terminated his services in violation of due process and without valid ground
Overtime pay, premium pay for working during holidays/rest days, night shift differentials were not paid - “I am not a managerial employee”

Respondent:
Petitioner’s separation from service was done pursuant to Art. 283 of the Labor Code
BPC temporarily closed due to repair and general maintenance - even applied for a clearance with the DOLE to shut down and to dismiss
employees
Petitioner was paid his separation pay naman daw
BPC partially reopened but Petitioner failed to reapply = he was not terminated but rather opted to severe employment when he insisted on
receiving his separation pay
As a managerial employee he is not entitled to overtime pay - no office order/or authorization for him to do so

Labor Arbiter:
No illegal dismissal - his complaint was filed prematurely. The temporary closure of BPC did not terminate his employment, so necessarily
no need to reapply.
Petitioner entitled to overtime pay, premium pay for working on rest days, and attorney’s fees in the total amount of P21,257.98

NLRC:
Deleted overtime pay and premium pay - not entitled to these awards because he was a managerial employee.

CA:
2003: dismissed the petition - failed to attach copies of pleadings (purely technical grounds)

Issue: Is Peñaranda a a regular, common employee entitled to monetary benefits under Art. 82 of the Labor Code???

Ruling: (I included other issues - since we’re not sure pa pano mag pa recit si Sir - if you want you can read yung related lang)

Re: CA’s dismissal:

Rules of procedure must be adopted to help promote, not frustrate, substantial justice. CA could have ruled on the Petition on the basis of the
attachments submitted by Petitioner.

10-day period:
Petitioner failed to support his claim that BCP filed their appeal late.

Nature of Employment:
Art. 82 (managerial employees exempted from coverage of Labor Standards)
“managerial employees” are "those whose primary duty consists of the management of the establishment in which they are employed or of a
department or subdivision.
Not a managerial employee - but a managerial staff - which is still exempted under the law
The Implementing Rules of the Labor Code define members of a managerial staff as those with the following duties and responsibilities:
The primary duty consists of the performance of work directly related to management policies of the employer;
Customarily and regularly exercise discretion and independent judgment;
(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
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.

Petitioner’s duties:
To supply the required and continuous steam to all consuming units at minimum cost.
To supervise, check and monitor manpower workmanship as well as operation of boiler and accessories
To evaluate performance of machinery and manpower.
To follow-up supply of waste and other materials for fuel.
To train new employees for effective and safety while working.
Recommend parts and supplies purchases.
To recommend personnel actions such as: promotion, or disciplinary action.

“Petitioner 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. As supervisor, petitioner is deemed a member of the managerial staff.”
Petitioner being a supervisor is further evident from the manner his salary was paid. He belonged to the 10% of respondent’s 354 employees
who were paid on a monthly basis; the others were paid only on a daily basis.
DENIED - not entitled to overtime pay

D. Legal Bases
I. Police Power

1. CMS Estate, Inc. v. SSS

CMS Estate V. SSS

Facts:
Petitioner is a domestic corporation that is engaged in the real estate business.
It started doing business with only six (6) employees.
It's Articles of Incorporation was amended in order to engage in the logging business.
On January 28, 1957, petitioner entered into a contract of management with one Eufracio D. Rojas for the operation and exploitation of the
forest concession.
The logging operation actually started on April 1, 1957 with four monthly salaried employees.
As of September 1, 1957, petitioner had 89 employees and laborers in the logging operation.
On December 26, 1957, petitioner revoked its contract of management with Mr. Rojas.
On August 1, 1958, petitioner became a member of the Social Security System with respect to its real estate business.
On September 6, 1958, petitioner remitted to the System the sum of P203.13 representing the initial premium on the monthly salaries of the
employees in its logging business.
However, on October 9, 1958, petitioner demanded the refund of the said amount, claiming that it is not yet subject to compulsory coverage
with respect to its logging business.
The request was denied by respondent System.

Issue:
WON the contributions required of employers and employees under our Social Security Act of 1954 are obligatory because the said act was
allegedly enacted by Congress in the exercise of the police power of the state, and not for its taxing power.

Held:
The Social Security Law was enacted pursuant to the policy of the government "to develop, establish gradually and perfect a social security
system which shall be suitable to the needs of the people throughout the Philippines, and shall provide protection against the hazards of
disability, sickness, old age and death" (Sec. 2, RA 1161, as amended). It is thus clear that said enactment implements the general welfare
mandate of the Constitution and constitutes a legitimate exercise of the police power of the State.
 2. Fabie v. City of Manila

Ramon Fabie, et al. v. City of Manila

February 16, 1912
G.R. No. L-6583

FACTS: On September 21, 1909 the City of Manila enacted Ordinance No. 124, which is an amendment of Sec. 107 of the Revised
Ordinances of the City of Manila, enacted June 13, 1908 relating to the issuance of permits for the erection of buildings. Sec. 107 provides,
“That the building shall abut or face upon a public street or alley or on a private street or alley which has been officially approved.”

Ramon Fabie, et al. sought to obtain a building permit authorizing the construction of a small nipa house upon the their property which forms
a part of Hacienda de Santa Ana de Sapa and which is inclosed between Calle Herran of the District of Paco and an estero known as Tripa de
Gallina in the City of Manila. The nipa house would serve as a guard house in which watchmen might be stationed in order to prevent the
carrying away of zacate from the premises. The application was denied on the ground that the site of the proposed building did not conform
to the requirements of Sec. 107.

Fabie, et al. contend that the provision is unconstitutional and in violation of the fundamental rights of the property owners of the City of
Manila as guaranteed by the established laws of these Islands and by the Constitution of the United States, in that it constitutes an invasion of
their property rights without due process of law. The lower court ruled in their favor and declared the ordinance null and void, at least to the
extent of the above-cited provision.

ISSUE: WON the Sec. 107 of the amended Ordinance No. 124 is constitutional. That is if the requirement set by the City Council of Manila
is a valid exercise of it police powers on behalf of the public. – Yes.

HELD: The City of Manila is a duly organized municipal corporation having full power and authority to enact lawful ordinances for the
protection and security of the lives, health and property of its citizens. The City insists that the ordinance in question is a valid exercise of its
police power, in that its sole purpose and aim is to effect these ends by affording better sanitary regulations as well as increased facilities for
protection to property from loss by fire.

It is undoubtedly on of the fundamental duties of the City of Manila to make all reasonable regulations looking to the preservation and
security of the general health of the community, and the protection of life and property from loss or destruction by fire. All such regulations
have their sanction in what is termed the police power.

Much difficulty has been experienced by the courts and text writers in the attempt to define the police power of the state, and to set forth its
precise limitations. In fact, it has been said to be, from its very nature incapable of any exact definition or limitation. Mr. Thompson in his
exhaustive treatise on Corporations summarizes as follows the conclusions of the leading adjudicated cases and authorities touching this
subject. He says:

Its business is to regulate and protect the security of social order, the life and health of the citizen, the comfort of an existence in thickly
populated communities, the enjoyment of private and social life, and the beneficial use of property.

And again the same author says:

However courts may differ as to the extent and boundaries of this power, and however difficult it may be of precise definition, there is a
general agreement that it extends to the protection of the lives, health and property of the citizens, and to the preservation of good order and
the public morals. In the absence of any constitutional prohibition, a legislature may lawfully prevent all things hurtful to the comfort, safety,
and welfare of society though the prohibition invades the right of liberty or property of an individual. (Thompson on Corporations, 2d ed.,
vol. 1, sec. 421.)

In the case of US v. Toribio, which cited Lawton v. Steele, the Court laid down the rule to justify the State in the exercise of it police powers
on behalf of the public, it must appear:

First, that the interests of the public generally, as distinguished from those of a particular class, require such interference; and, second, that
the means are reasonably necessary for the accomplishment of the purpose, and not unduly oppressive upon individuals. The legislature may
not, under the guise of protecting the public interest, arbitrary interfere with private business, or impose unusual and unnecessary restrictions
upon lawful occupations. In other words, is determination as to what is a proper exercise of its police powers is not conclusive, but is subject
to the supervision of the court.

It is very clear that the ordinance, if it be held to be reasonable, prescribes a rule in the interest of the public of the City of Manila generally,
as distinguished from the interest of individuals or of a particular class. In determining its validity, therefore, the only questions which need
be considered, are (1) whether its provisions are or are not reasonably necessary for the accomplishment of its purposes, and (2) whether they
are or are not unduly oppressive upon individuals.
The purpose and object of the ordinance is avowedly and manifestly to protect and secure the health, lives and property of the citizens of
Manila against the ravages of fire and disease. The provision that denies permits for the construction of buildings within the city limits unless
they “abut or face upon a public street or alley or on a private street or alley which has been officially approved,” is in our opinion reasonably
necessary to secure the end in view.

There can be no question as to the intent and purpose of the provision of the ordinance under discussion. It is manifestly intended to subserve
the public health and safety of the citizens of Manila generally and was not conceived in favor of any class or of particular individuals. We
are of opinion that the enforcement of its provisions cannot fail to redound to the public good, and that it should be sustained on the principle
that “the welfare of the people is the highest law” (salus populi suprema est lex).

That the ordinance is not “unduly oppressive upon individuals” becomes very clear when the nature and extent of the limitations imposed by
its provisions upon the use of private property are considered with relation to the public interests, the public health and safety, which the
ordinance seeks to secure.

We conclude that the proviso of the ordinance in question directing: “That the building shall abut or face upon a public street or alley which
has been officially approved,” is valid, and that the judgment of the lower court should be reversed, without special condemnation of costs.
So ordered.

II. Social Justice

1. Section 10, Art. II of the 1987 Constitution: Declaration of Principles and State Policies Principles

“Section 10. The State shall promote social justice in all phases of national development.”

2. Section 5, Art. II of the 1987 Constitution: Declaration of Principles and State Policies Principles

“Section 5. The maintenance of peace and order, the protection of life, liberty, and property, and promotion of the general welfare
are essential for the enjoyment by all the people of the blessings of democracy.”

3. Sections 1 and 2, Art. XIII of the 1987 Constitution - Social Justice

“Section 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people
to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth
and political power for the common good.

To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments.”

“Section 2. The promotion of social justice shall include the commitment to create economic opportunities based on freedom of
initiative and self-reliance.”

4. Maximo Calalang v. A.D. Williams, et. al.

Maximo Calalang v. A.D. Williams, et. al.

Facts: The National Traffic Commission resolved to recommend to the Director of Public Works and to the Secretary of Public Works and
Communications that animal-drawn vehicles be prohibited from passing along Rosario Street (Plaza Calderon to Dasmarinas Street) from
7:30am - 12:30pm and 1:30pm 5:30pm, and along Rizal Avenue (railroad crossing at Antipolo Street to Echague Street) from 7am-11pm
from a period of one year from the date of the opening of the Colgante Bridge.
The Commission also recommended the adoption of the measure proposed in the resolution, in pursuance to the Commonwealth Act No. 548,
which authorizes said Director of Public Works, with the approval of the Secretary of Public Works and Communications, to promulgate
rules and regulations to regulate and control the use of and traffic on national roads.
The recommendations were approved. The Mayor of Manila and the Acting Chief of Police of Manila have enforced the said rules and
regulations.
This prompted petitioner, as a private citizen and a taxpayer of Manila, to file a petition for writ of prohibition against the respondents.

RULING:
Petitioner contends that Commonwealth Act No. 548 is unconstitutional because it constitutes an undue delegation of legislative power

The Court ruled that C.A. No 548 does not confer legislative power upon the Director of Public Works and the Secretary of Public Works and
Communications. The authority therein conferred upon them is not to determine what public policy demands but merely to carry out the
legislative policy laid down by the National Assembly in said Act, to wit, "to promote safe transit upon and avoid obstructions on, roads and
streets designated as national roads by acts of the National Assembly or by executive orders of the President of the Philippines." To
promulgate rules and regulations on the use of national roads and to determine when and how long a national road should be closed to traffic,
in view of the condition of the road or the traffic thereon and the requirements of public convenience and interest, is an administrative
function which cannot be directly discharged by the National Assembly.
To assert that a law is less than a law, because it is made to depend on a future event or act, is to rob the Legislature of the power to act
wisely for the public welfare whenever a law is passed relating to a state of affairs not yet developed.
Petitioner contends that the rules and regulations promulgated constitute an unlawful interference with legitimate business or trade and
abridge the right to personal liberty and freedom of locomotion C.A. No. 548 was passed in the exercise of the paramount police power of the
State which aims to promote safe transit upon and avoid obstructions on national roads, in the interest and convenience of the public. It was
inspired by a desire to relieve congestion of traffic. Public welfare, then, lies at the bottom of the enactment of said law, and the state in order
to promote the general welfare may interfere with personal liberty, with property, and with business and occupations.

[MAIN ISSUE] Petitioner contends that the rules and regulations complained of infringe upon the constitutional precept regarding the
promotion of social justice to insure the well-being and economic security of all the people
The promotion of social justice, however, is to be achieved not through a mistaken sympathy towards any given group. Social justice is
"neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of laws and the equalization of social and economic
forces by the State so that justice in its rational and objectively secular conception may at least be approximated. It is the promotion of the
welfare of all the people, the adoption by the Government of measures calculated to insure economic stability of all the competent elements
of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus populi est suprema lex.
Social justice, therefore, must be founded on the recognition of the necessity of interdependence among divers and diverse units of a society
and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent
with the fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about
"the greatest good to the greatest number."

5. Terminal Facilities and Services Corporation (TEFASCO) v. NLRC and Associated Labor Unions (ALU)

Terminal Facilities and Services Corporation (TEFASCO) v. NLRC and Associated Labor Unions (ALU)

Facts: ALU is the exclusive bargaining agent of the on-and-off rank and file workers as well as the monthly paid employees of the petitioner
TEFASCO, a domestic corporation engaged in the business of wharf services and facilities operating for profit and with business operation
located in Davao.
A complaint was filed by ALU against TEFASCO for underpayment of emergency cost of living allowance; that TEFASCO pays each
monthly-paid employee only P455.00 a month as emergency cost of living allowance which is less than the prescribed amount (P517.08) as
stated in the table of computations released by the MOLE (now DOLE).
TEFASCO, on the other hand, contends that the covered employees belong to Group II under the table of computations which includes
establishments that consider rest days as unworked and unpaid and not under Group III as alleged in the complaint which includes
establishments that consider rest days and holidays as paid days although unworked; that the basis of the basic wages allowance is 26 days
per month for monthly paid employees, the four (4) rest days excluded; and that it follows Section 5 of Implementing Rules of Wage No. 6,
to which, “Allowance for Unworked Days – all covered employees shall be entitled to their daily living allowance during the days that they
are paid their basic wage even if unworked.
Labor Arbiter: Ruled in favor of ALU. Records show that each of the complainant’s member receives a monthly basic wage of less than the
amount prescribed under Group III. It is clear therefore that their rest days and holidays, although unworked, are being considered paid upon
which their monthly allowance should be based.
NLRC: Affirmed Labor Arbiter’s decision but modified only as to who among the complaining members should receive the amount of
P517.08

ISSUE: Whether or not the NLRC committed any jurisdictional error in its resolution

RULING:
Wage Order No.6 was issued by the then President Marcos to increase the statutory minimum wage rates and cost of living allowances of the
employee in the private sector.
Article XIII, Section 3 of the Constitution states that “the State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.”
Under the table of computation, an employee who receives a basic monthly rate of not less than P1,095.00 and whose total number of
working days in a year is 365 falls under Group III of the said table of computations and is entitled to a corresponding monthly allowance of
P517.08 effective November 1, 1984. It is understood that under Group III rest days and holidays although unworked are considered paid
days upon which the monthly allowance should be based. On the other hand, employees who fall under Group II of the table of computations
are those whose unworked rest days are not considered paid.
Since the monthly basic salary is P1,059.00, the salary for one-half month is P529.50. If the salary for one-half month is P529.50, why is it
that the basic pay under compensation above is only P488.90? Facts show that the divisor used to find the daily equivalent of the salary of the
ALU’s members is 26 working day in one month, and that the monthly salary of ALU’s members do not include pay for unworked rest days.

Petitioner maintains that its arguments are in accordance with the ruling in Chartered Bank Employees v. Ople
The Court ruled that the cited case is not similar to the instant case in that, first, the Chartered Bank case involves holiday premium and
overtime pay while the case at hand, involves cost of living allowance; and second, in the former, the divisor was provided for in the
collective bargaining agreement of the parties while in the latter, there is no provision regarding divisor, not even in the computation of daily
wage for purposes of determining deductions from the monthly salary in cases of absence(s) of the employees provided for in the parties’
collective bargaining agreement.

In line with the wage order and its rules implementing the wage order, the MOLE (now DOLE) released a table of computations to guide the
employer on the amount of the cost of living allowance which a group of employees should receive. The Court ruled that the company
practice to use a divisor of 26 days in determining the deductions from the monthly salary of an employee when he incurs absences during the
period does not mean that the same procedure should also be followed in determining the monthly cost of living allowance due the employee.
In the absence of any provision in any collective bargaining agreement of the parties, the presumption that a monthly paid employee is
considered paid even on rest days must prevail.

The Court applied the ruling in the case of Ditan v. POEA, wherein –

“we are dealing here not with an ordinary transaction but with a labor contract which deserves special treatment and a liberal interpretation in
favor of the worker. The Constitution mandates the protection of labor and the sympathetic concern of the State for the working class
conformably to the social justice policy. The paramount duty of this Court is to render justice through law. The law in this case allows two
opposite interpretations, one strictly in favor of the employers and the other liberally in favor of the worker. The choice is obvious. We find,
considering the totality of the circumstances attending this case, that the petitioner is entitled to relief.”
Case, DISMISSED.

6. Philippine Telegraph and Telephone Corp. v. NLRC

PHILIPPINE TELEGRAPH AND TELEPHONE CORPORATION v. NATIONAL LABOR RELATIONS COMMISSION and BOBBY
TORIBIANO

Complainant Bobby Toribiano is an employee of Phil. Telegraph first as a collector and later on as a counter-clerk and long distance operator.
Complainant was terminated for tampering the vodex receipt by writing the amount of P41.15 appearing in the duplicate while the original
copy issued to the customer was P113.25. Complainant alleged that it was merely done by inadvertence and without malicious intent to
defraud petitioner. He alleged that on that day, he was alone in the office attending to customers who were filing their telegrams, wherein he
has to count the number of words, determine amount payable; assist customers placing long distance calls and had to wait for them to finish
their calls to determine minutes consumed. That he forgot to take the no. of minutes used up and he estimated only that the customer had
consumed 11 minutes and wrote the amount to the receipt. However, he failed to use a carbon paper for the duplicate. He later found out that
a duplicate receipt has no particulars and since he could no longer recall how much he had wrote, he wrote the amount of P41.15.
Complainant alleged that he was terminated without proper investigation and asks for the payment of his salary for the month including his
holiday pay, rest day etc. Petitioner alleged that complainant’s explanation was shallow. The fact that there was no carbon placed for the
duplicate is enough evidence for his illegal interest and his intention to tamper and malverse company funds. Petitioner’s alleged that
Toribiano violated the trust and confidence reposed upon him which is a valid reason for termination. The Labor arbiter ordered petitioner to
reinstate complainant to his former position plus back wages, etc. NLRC affirmed said decision deleting award of back wages.

ISSUE: WON Toribiano’s termination is valid

SC – Considering that Toribiano was indeed alone in the office busily performing his duties as counter-clerk and long distance operator at the
same time, these dual functions caused him to commit a mistake in the entry receipt through negligence. It was even found out that Toribiano
brought his problem of having to perform dual functions alone to petitioner but were ignored.

The SC held that imposition of such supreme penalty would be very harsh and disproportionate to the infraction committed by Toribiano.
Considering that this is his first offense after having faithfully rendered 7 long years of satisfactory service. While an employer has its own
interests to protect and, pursuant thereto, it may terminate an employee for a just cause, such prerogative to dismiss or lay off an employee
must not be abusively exercised. Such power should be tempered with compassion and understanding. The employer should bear in mind
that, in the execution of said prerogative, what is at stake is not only the employee's position but his livelihood as well.

This ruling is only in keeping with the constitutional mandate for the State to afford full protection to labor such that, when conflicting
interests of labor and capital are to be weighed on the scales of social justice, the heavier influence of the latter should be counterbalanced by
the sympathy and compassion the law must accord the underprivileged worker.

Award of holiday pay, rest day pay and incentive leave pay is deleted. NLRC should have considered petitioner’s belated presentation of
evidence. Technical rules of evidence are not binding in labor cases. Labor officials should use every and reasonable means to ascertain the
facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process.

7. Manila Water Company v. Del Rosario

MANILA WATER COMPANY, Petitioner, v. CARLITO DEL ROSARIO, Respondent.
The Facts

On 22 October 1979, Del Rosario was employed as Instrument Technician by Metropolitan Waterworks and Sewerage System (MWSS).
Sometime in 1996, MWSS was reorganized pursuant to Republic Act No. 8041 or the National Water Crisis Act of 1995, and its
implementing guidelines – Executive Order No. 286. Because of the reorganization, Manila Water absorbed some employees of MWSS
including Del Rosario. On 1 August 1997, Del Rosario officially became an employee of Manila Water.

Sometime in May 2000, Manila Water discovered that 24 water meters were missing in its stockroom. Upon initial investigation, it appeared
that Del Rosario and his co–employee, a certain Danilo Manguera, were involved in the pilferage and the sale of water meters to the
company’s contractor. Consequently, Manila Water issued a Memorandum dated 23 June 2000, directing Del Rosario to explain in writing
within 72 hours why he should not be dealt with administratively for the loss of the said water meters. In his letter–explanation, Del Rosario
confessed his involvement in the act charged and pleaded for forgiveness, promising not to commit similar acts in the future.

On 29 June 2000, Manila Water conducted a hearing to afford Del Rosario the opportunity to personally defend himself and to explain and
clarify his defenses to the charge against him. During the formal investigation Del Rosario was found responsible for the loss of the water
meters and therefore liable for violating Section 11.1 of the Company’s Code of Conduct. Manila Water proceeded to dismiss Del Rosario
from employment on 3 July 2000. \

Del Rosario to file an action for illegal dismissal. Del Rosario averred that his admission to the misconduct charged was not voluntary but
was coerced by the company. Such admission therefore, made without the assistance of a counsel, could not be made basis in terminating his
employment.

Refuting the allegations of Del Rosario, Manila Water pointed out that he was indeed involved in the taking of the water meters from the
company’s stock room and of selling these to a private contractor for personal gain. Invoking Section 11.1 of the Company’s Code of
Conduct, Manila Water averred that such act of stealing the company’s property is punishable by dismissal.
the Labor Arbiter issued a decision dated 30 May 2002 dismissing for lack of merit the complaint filed by Del Rosario who was, however,
awarded separation pay. According to the Labor Arbiter, Del Rosario’s length of service for 21 years, without previous derogatory record,
warrants the award of separation pay.
Manila Water’s Motion for Reconsideration which was denied by the NLRC
the Court of Appeals affirmed the decision of the Labor Arbiter awarding separation pay to Del Rosario. Considering that Del Rosario
rendered 21 years of service to the company without previous derogatory record, the appellate court considered the granting of separation pay
by the labor officer justified.

Manila Water brought the case to the SC

ISSUE: Whether or not the dismissal of Del Rosario constitutes an illegal dismissal.
Whether or not Del Rosario is entitled to separation pay.

The Court’s Ruling

Petition GRANTED – Del Rosario is not entitled to separation pay

ANSWER TO ISSUE 1:
It must be stressed at the outset that the correctness of the Labor Arbiter’s pronouncement on the legality of Del Rosario’s dismissal is no
longer an issue and is beyond modification. While Manila Water timely appealed the ruling of the Labor Arbiter awarding separation pay to
Del Rosario, the latter did not question the dismissal of his illegal termination case. It is settled in our jurisprudence that a party who has not
appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the appealed decision.

ANSWER TO ISSUE 2:
As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282 of the Labor Code is not
entitled to a separation pay. Section 7, Rule I, Book VI of the Omnibus Rules implementing the Labor Code provides:
Sec. 7. Termination of employment by employer. The just causes for terminating the services of an employee shall be those provided in
Article 282 of the Code. The separation from work of an employee for a just cause does not entitle him to the termination pay provided in the
Code, without prejudice, however, to whatever rights, benefits and privileges he may have under the applicable individual or collective
agreement with the employer or voluntary employer policy or practice.

In exceptional cases, however, the Court has granted separation pay to a legally dismissed employee as an act of “social justice” or on
“equitable grounds." In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) did not reflect on the moral
character of the employee.25 red

We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for
example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer
may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground
of social justice.

In this case, the Court is constrained to deny Del Rosario separation pay since the admitted cause of his dismissal amounts to serious
misconduct. He is not only responsible for the loss of the water meters in flagrant violation of the company’s policy but his act is in utter
disregard of his partnership with his employer in the pursuit of mutual benefits.

Considering that Del Rosario rendered 21 years of service to the company will not save the day for him. Citing the case Central Pangasinan
Electric Cooperative, Inc. v. National Labor Relations Commission:
If an employee’s length of service is to be regarded as a justification for moderating the penalty of dismissal, such gesture will actually
become a prize for disloyalty, distorting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of
undesirables.

8. PLDT v. NLRC

G.R. No. 80609August 23, 1988

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN ABUCAY, respondents.

Topic: Social Justice

Re: Legality of the award of financial assistance to an employee who had been dismissed for cause

Facts:
Marilyn Abucay is traffic operator of the Philippine Long Distance Telephone Company (PLDT).
She was accused of 2 complainants (Ms. Bangayan and Ms. Martinez) of demanding and receiving from them P3,800.00 (1988 case so
malaki yung 3k) in exchange for facilitating the approval of their applications for telephone installation.
Investigated, found guilty, and subsequently separated from service
Marilyn went to the Ministry of Labor and Employment claiming she had been illegally removed.

Labor Arbiter:
2 complainants not blameless, happened outside the premises of PLDT
The giving of money is tantamount to corruption of public officers (victim blaming at its finest)
Marilyn must be given one month pay for every year of service as financial assistance
Dismissed for lack of merit.

Continuation of Facts:
National Labor Relations Board affirmed this decision
Marilyn took no further action (“acceptance is the key”)
PLDT appealed (kasi they were ordered to give one month pay for every year of service)

NLRC:
Equitable daw yung decision, taking into consideration her long years of service to the company whereby she had undoubtedly contributed to
the success of respondent - for reasons of equity and compassion that we resolve to uphold the award of financial assistance in her favor.

Allegations:
Petitioner PLDT:
an employee illegally dismissed is entitled to reinstatement and backwages as required by the labor laws. However, an employee dismissed
for cause is entitled to neither reinstatement nor backwages and is not allowed any relief at all because his dismissal is in accordance with law
The decision in effect rewarded rather than punished for her dishonesty, and without any legal authorization or justification. The award is
made on the ground of equity and compassion, which cannot be a substitute for law. Moreover, such award puts a premium on dishonesty and
encourages instead of deterring corruption.

Allegations of NLRC:
The grant of financial assistance is not intended as a reward for her offense but merely to help her for the loss of her employment after
working faithfully with the company for ten years.
“The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is not entitled to separation pay. But there are
exceptions, based upon considerations of equity. Equity has been defined as justice outside law, being ethical rather than jural and belonging
to the sphere of morals than of law.
It is grounded on the precepts of conscience and not on any sanction of positive law. Hence, it cannot prevail against the expressed provision
of the labor laws allowing dismissal of employees for cause and without any provision for separation pay.
SC Ruling:
Not only based on equity, but it is also instilled in our Constitution.
The enhancement of workers’ welfare is one of the primary concerns of the present charter. In fact, instead of confining itself to the general
commitment to the cause of labor in Article II on the Declaration of Principles of State Policies, the new Constitution contains a separate
article devoted to the promotion of social justice and human rights with a separate sub- topic for labor.
We note that heretofore the separation pay, when it was considered warranted, was required regardless of the nature or degree of the ground
proved, be it mere inefficiency or something graver like immorality or dishonesty - It is time we rationalized the exception, to make it fair to
both labor and management, especially to labor.
The award to the employee of separation pay would be sustainable under the social justice policy even if the separation is for cause such as
an absentee mother, loss of confidence, poor attendance.
But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must be more discerning (example is
Sales clerk dismissed for failing to meet his quota v. dismissal because of misappropriation or receipts of sales.)
This is no longer mere incompetence but clear dishonesty (example: security guard dismissed bec. He was sleeping on the job v. dismissal
due to reason that he was “sleeping with” a prostitute on the job)
We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on his moral character
Valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow
worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is
called, on the ground of social justice.
Rewarding rather than punishing the erring employee for his offense would lead to - If an employee who steals from the company is granted
separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar offense in his next employment because he
thinks he can expect a like leniency
This kind of misplaced compassion is not going to do labor in general any good as it will encourage the infiltration of its ranks by those who
do not deserve the protection and concern of the Constitution.
The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may
mitigate the penalty but it certainly will not condone the offense.
Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty.
Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to
be poor.
This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who
have tainted the cause of labor with the blemishes of their own character.
The grant of separation pay in the case at bar is unjustified.
The private respondent has been dismissed for dishonesty, as found by the labor arbiter and affirmed by the NLRC and as she herself has
impliedly admitted.
The fact that she has worked with the PLDT for more than a decade, if it is to be considered at all, should be taken against her as it reflects a
regrettable lack of loyalty that she should have strengthened instead of betraying during all of her 10 years of service with the company.
AFFIRMED.

III. Protection of Labor Clause

1. Section 3, Arti. XIII of the 1987 Constitution: Social Justice and Human Rights

“Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and 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. They shall also participate in policy and decision-making processes affecting their rights and benefits as
may be provided by law.

The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary
modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of
production and the right of enterprises to reasonable returns to investments, and to expansion and growth.”

2. Philippine Movie Pictures Workers’ Association v. Premiere Productions, Inc.

PHILIPPINE MOVIE PICTURES WORKERS' ASSOCIATION vs. PREMIERE PRODUCTIONS, INC.

GR L-5621, 92 Phil 843 (25 March 1953)

Facts:
1. Respondent filed with the Court of Industrial Relations (CIR) an urgent petition seeking authority to lay off 44 men working in three of
its departments, first batch to be laid off 30 days after the filing of the petition and the rest 45 days thereafter.
a. in order that in the intervening period it may finish the filming of its pending picture. The ground for the layoff is the financial losses
which respondent was allegedly suffering during the current year.

2. Petitioner opposed, alleging that

a. the claim of financial losses has no basis in fact it being only an act of retaliation for the strike staged by the workers days before in an
attempt to harass and intimidate them and weaken and destroy the union to which they belong.

3. When the urgent petition was set for hearing, at the request of counsel for respondent, judge Roldan of the CIR, held an ocular
inspection of the studios and filming premises of respondent. He interrogated about 15 laborers who were then present in the place.
a. Judge Roldan allowed respondent to lay off the workers with respect to Unit No. 2 and those assigned to the Ground Maintenance
Department subject to the condition that, in the event that work is available in the future, they should be reemployed. (nov 8 order)

4. A subsequent hearing was held in connection with the workers assigned to Unit No. 1 and on the strength of the evidence submitted by
respondent, Judge Roldan again found the petition justifiable and authorized their lay off in an order under the same condition as those
contained in his previous order.

5. Petitioner moved for the reconsideration of both orders- Court in banc DENIED; Hence this petition for review.

Petitioner (contention)- such a procedure is unfair to the labor union in that it deprived the workers affected of the opportunity to disprove
what apparently was represented to the court during the ocular inspection which at best may only be the result of a prearrangement devised
by the company to justify its claim of lack of work and that what the court should have done was to make a full-dress investigation if not a
formal hearing giving both parties all the time and opportunity to present their evidence before deciding such an important matter which
affects the position and the only means of livelihood of the workers affected by the petition.

*With the procedure adopted by the court, the workers were deprived of their employment without due process of law.

Respondent- claims that the labor union had its day in court because its counsel was present in the investigation or ocular inspection and even
presented some witnesses to protect its interest.

Issue:
May the CIR authorize the layoff of workers on the basis of an ocular inspection without receiving full evidence to determine the cause or
motive of such layoff?

Held: No
In the course of the ocular inspection Judge Roldan proceeded to interrogate the workers he found in the place in the presence of the counsel
of both parties. The testimony of those interrogated was taken down and the counsel of both parties were allowed to cross-examine them.
Judge Roldan also proceeded to examine some of the records of respondent company among them the time cards of some workers which
showed that while the workers reported for work, when their presence was checked they were found to be no longer in the premises. And on
the strength of the findings made by Judge Roldan in this ocular inspection he reached the conclusion that the petition for layoff was justified
because there was no more work for the laborers to do in connection with the different jobs given to them.

The record before the court on this matter is not clear and for such reason it has no way of determining the truth of both claims.
- The stenographic notes taken during the ocular inspection have not been elevated for the reason undoubtedly that this is a petition for
review and the only issue before the court is one of law.
- The only guide that the court finds is the order itself of the court of origin which contains a reference to the evidence that it has
considered for the layoff of the workers. – NOV 8 Order

It is true, as counsel for respondent avers, that hearings were conducted by the court a quo xxx but it is likewise true that those hearings do
not necessarily refer to the petition under consideration but to other matters such as the petition of the labor union containing 14 demands and
the petition of the same union to declare respondent in contempt for having violated certain directives of the court. At any rate, this matter
does not appear clear and we are inclined to resolve the doubt in favor of labor considering the spirit of our Constitution.

* The right to labor is a constitutional as well as a statutory right. Every man has a natural right to the fruits of his own industry. A man who
has been employed to undertake certain labor and has put into it his time and effort is entitled to be protected. The right of a person to his
labor is deemed to be property within the meaning of constitutional guarantees. That is his means of livelihood. He cannot be deprived of his
labor or work without due process of law

Although the CIR, in the determination of any question or controversy, may adopt, its own rules of procedure and may act according to
justice and equity without regard to technicalities, and for that matter is not bound by any technical rules of evidence, this broad grant of
power should not be interpreted to mean that it can ignore or disregard the fundamental requirements of due process in the trials and
investigations of cases brought before it for determination. As aptly pointed out by this court, there are certain cardinal primary rights which
the CIR must respect in the trial of every labor case. One of them is the right to a hearing which includes the right of the party interested to
present his own case and submit evidence in support thereof.

An ocular inspection of the establishment or premises involved is proper if the court finds it necessary, but such is authorized only to help the
court in clearing a doubt, reaching a conclusion, or finding the truth. But it is not the main trial nor should it exclude the presentation of other
evidence which the parties may deem necessary to establish their case. It is merely an auxiliary remedy the law affords the parties or the court
to reach an enlightened determination of the case.

Considering the merits of the controversy before us, we are of the opinion that the required due process has not been followed. The court a
quo merely acted on the strength of the ocular inspection it conducted in the premises of the respondent company. The petition for layoff was
predicated on the lack of work and of the further fact that the company was incurring financial losses. These allegations cannot be established
by a mere inspection of the place of labor specially when such inspection was conducted at the request of the interested party.

As counsel for petitioner says, such inspection could at best witness "the superficial fact of cessation of work but it could not be
determinative of the larger and more fundamental issue of lack of work due to lack of funds". This fundamental issue cannot be determined
without looking into the financial situation of the respondent company. In fact, this matter is now being looked into by the court a quo in
connection with the fourteen demands of the labor union, but before finishing its inquiry it decided to grant the lay- off pending final
determination of the main case. This action is in our opinion premature and has worked injustice to the laborers.

IV. Doctrine of Incorporation

1. Section 1, Art. II of the 1987 Constitution

“Section 2. The Philippines renounces war as an instrument of national policy, adopts the generally accepted principles of
international law as part of the law of the land and adheres to the policy of peace, equality, justice, freedom, cooperation, and amity
with all nations.”

2. International Labor Organization Conventions

E. Labor and the Constitution

I. Due Process of Law

1. Section 1, Art. III of the 1987 Constitution: Bill of Rights

“Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the
equal protection of the laws.”

2. Ang Tibay v. Court of Industrial Relations

ANG TIBAY v CIR

Petitioner:
Ang Tibay is a leather shoe manufacturing company initially sued for its unfair labor practices.

Respondent:
Court of Industrial Relations has authority to decide employer-employee conflicts

Facts:
Toribio Teodoro is the owner of Ang Tibay, a leather shoe manufacturing company.

Ang tibay laid off many workers due to alleged “shortage” of materials.

This was said to only be a scheme as a way to lay off workers because Ang Tibay’s records showed no shortage.

Issue:
W/N Ang Tibay was denied of due process even if it was just a quasi-judicial proceeding

Ruling:
The Court of Industrial Relations is a special court. It is not a court of justice which is essentially passive, acting only when its jurisdiction is
invoked and deciding only cases that are presented to it by the parties litigant.
It has jurisdiction over the entire Philippines, to consider, investigate, decide, and settle any question, matter controversy or dispute arising
between, and/or affecting employers and employees or laborers, and regulate the relations between them, subject to, and in accordance with,
the provisions of Commonwealth Act No. 103 (section 1).

It shall take cognizance or purposes of prevention, arbitration, decision and settlement, of any industrial or agricultural dispute causing or
likely to cause a strike or lockout, arising from differences as regards wages, shares or compensation, hours of labor or conditions of tenancy
or employment, between landlords and tenants or farm-laborers, provided that the number of employees, laborers or tenants of farm-laborers
involved exceeds thirty, and such industrial or agricultural dispute is submitted to the Court by the Secretary of Labor or by any or both of the
parties to the controversy and certified by the Secretary of labor as existing and proper to be by the Secretary of Labor as existing and proper
to be dealth with by the Court for the sake of public interest.

The SC enumerates the procedural rights under a quasi-judicial body:

The first of these rights is the right to a hearing, which includes the right of the party interested or affected to present his own case and submit
evidence in support thereof. “The liberty and property of the citizen shall be protected by the rudimentary requirements of fair play.

Not only must the party be given an opportunity to present his case and to adduce evidence tending to establish the rights which he asserts but
the tribunal must consider the evidence presented.

"While the duty to deliberate does not impose the obligation to decide right, it does imply a necessity which cannot be disregarded, namely,
that of having something to support it is a nullity, a place when directly attached."

But the evidence must be "substantial."

The decision must be rendered on the evidence presented at the hearing. Only by confining the administrative tribunal to the evidence
disclosed to the parties, can the latter be protected in their right to know and meet the case against them. It should not, however, detract from
their duty actively to see that the law is enforced, and for that purpose, to use the authorized legal methods of securing evidence and
informing itself of facts material and relevant to the controversy.

The Court of Industrial Relations or any of its judges, therefore, must act on its or his own independent consideration of the law and facts of
the controversy, and not simply accept the views of a subordinate in arriving at a decision.

The Court of Industrial Relations should, in all controversial questions, render its decision in such a manner that the parties to the proceeding
can know the various issues involved, and the reasons for the decision rendered. The performance of this duty is inseparable from the
authority conferred upon it.

The interest of justice would be better served if the movant is given opportunity to present at the hearing the documents referred to in his
motion and such other evidence as may be relevant to the main issue involved.

3. Noblado v. Alfonso
Noblado et al. vs. Alfonso
G.R. No. 189229, November 23, 2015

Facts:

Herein respondent is an independent contractor engaged in landscaping and the operation and maintenance of a plant nursery under the
business name "Cherry Alfonso Plant Nursery." Petitioners were employees of respondent, having been hired on various dates as gardeners,
landscaper/designer, "leadman," "laborer," and driver.

In separate Complaints filed' on different dates in January and February 2001, petitioners, together with eleven (11) other co-employees,
charged respondent with illegal dismissal. In their Position Paper, petitioners and the other complainants alleged that, during their
employment, they were not paid their salaries, overtime pay, holiday pay, premium pay for holiday and rest day, 13th month pay and service
incentive leave pay and that, subsequently, respondent abruptly terminated their employment on January 15, 2001 without valid cause and
without due process.

In her Position Paper, respondent contended that: petitioners and the other complainants were gardeners and utility workers whom she hired
on a contractual basis; they were assigned to work in the premises of respondent's client, Sta. Lucia Realty Development, Inc. (Sta. Lucia);
the life of their contracts were dependent on the contract entered into by her and Sta. Lucia; petitioners and the other complainants committed
deliberate and malicious stoppage of work-related services, serious misconduct and willful disobedience of a lawful order, gross neglect of
their duties which resulted in great damage and prejudice to Sta. Lucia; as a result, Sta. Lucia canceled its contract with respondent and even
threatened to file a civil action against her; since respondent's contract with Sta. Lucia has been terminated due to the fault of petitioners and
the other complainants, the untimely termination of their employment cannot be construed as illegal.
Labor Arbiter:
The LA found that respondent failed to prove her allegation that petitioners and the other complainants were guilty of abandoning their work.
He also ruled that respondent failed to furnish petitioners and the other complainants a written notice stating the particular acts or omissions
constituting the ground for their dismissal.

NLRC:
The NLRC rendered a Decision affirming the LA's decision and dismissing the appeal for lack of merit.

It held that the respondent is petitioners' actual employer; petitioners and the other complainants are respondent's regular employees, contrary
to the latter's claim that petitioners and the other complainants were project employees; respondent failed to comply with the substantive and
procedural requirements of a valid termination of employment.

CA:
The CA partially granted respondent's appeal.

It held that petitioners were not illegally dismissed from their employment since they voluntarily abandoned their work as shown by the
records. It further held that considering the deliberate stoppage of work, which resulted in the cancellation of respondent's contract with Sta.
Lucia, only the amount of PI 0,000.00 as nominal damages should be awarded to petitioners for the violation of their right to due process.
However, the CA upheld the validity of the Affidavits of Desistance as well as Quitclaims of the 11 withdrawing complainants.

Issue:
whether or not they were illegally dismissed from their employment.

Ruling:
For a dismissal to be valid, the.rule is that the employer must comply with both the substantive and the procedural due process requirements.
Substantive due process requires that the dismissal must be pursuant to either a just or an authorized cause under Articles 282, 283 or 284 of
the Labor Code.

On the other hand, procedural due process in dismissal cases consists of the twin requirements of notice and hearing.

In its decision, the CA held that respondent is not liable for illegal dismissal since petitioners were guilty of gross neglect of their duties
which is a valid cause of termination under the Labor Code. The appellate court ruled that the documentary evidence submitted by
respondent, specifically the sample letters written by respondent, dated January 20 and 25, 2001 and the letters of complaint written by Sta.
Lucia, dated January 18, 2001, clearly established the voluntary and deliberate actions of petitioners to not report for work.

The Court does not agree.

Neglect of duty, to be a ground for dismissal under Article 282 of the Labor Code, must be both gross and habitual. Gross negligence implies
want of care in the performance of one's duties. Habitual neglect imparts repeated failure to perform one's duties for a period of time,
depending on the circumstances. Under these standards and the circumstances obtaining in the case, the Court finds that the CA erred in
concluding that petitioners were guilty of gross and habitual neglect of duties.

Since this is the first time that petitioners allegedly committed gross and habitual neglect of duties, the Court finds that dismissal is too harsh
a penalty to impose on petitioners. Where a penalty less punitive may suffice, whatever missteps may be committed by labor ought not to be
visited with a consequence so severe for what is at stake is not merely the employee's position but his very livelihood and perhaps the life and
subsistence of his family.

Also worth stressing is the fact that in termination cases, the employer bears the burden of proving that the dismissal of the employee is for a
just or an authorized cause. Here, respondent miserably failed to discharge her burden of proving that petitioners' dismissal was based on a
just cause.

Second, turning to the issue of procedural due process, it is apparent that respondent failed to comply with the twin requirements of notice
and hearing. This is the unanimous finding of the LA, the NLRC and the CA.

In fine, respondent's lack of just cause and non-compliance with the procedural requisites in terminating petitioners' employment taints the
latter's dismissal with illegality.

4. Distribution & Control Products, Inc. v. Santos

G.R. no. 212616

Distribution & Control Products, Inc., Vincent M. Tiamsic
-vs-
Jeffrey E. Santos

Doctrine:

Facts: Distribution & Control Products, Inc. is a corporation engaged in selling and distributing electrical products and equipment with
Vincent M. Tiamsic (Petitioner) as its president. Jeffrey E. Santos (Respondent), on the other hand, was employed as the petitioner’s
company driver whose job included delivery of items purchased by customers, receipt documentation, recording of previously purchased
items, coordination with the company warehouse man in accounting products.

Respondent has been working as the petitioner’s company driver since April 5, 2005. On December 5, 2010, Respondent received a notice
informing him that he was being placed under preventive suspension for a period of 30 days beginning December 17, 2010. He was one of
the employees suspected in the unlawful taking of circuit breakers and electrical products of petitioners. A criminal complaint was filed
against him together with several persons for Qualified Theft. He inquired with the HR Department of the company, but to no avail, he was
never given an opportunity to explain his side before his suspension. The same department did not give him any concrete explanation as to
why they had come up of the Respondent’s suspension. After the lapse of his 30-day suspension, he was no longer allowed to return to work
without any justification for such disallowance.

Thus, a complaint was filed by the Respondent before the NLRC for constructive illegal dismissal. On January 30, 2012, the Labor Arbiter
(LA) handling the case rendered a decision in favor of the Respondent; finding him to be illegally terminated from his employment.
Petitioner was ordered to reinstate Respondent and payment of his backwages. The LA ruled that the Petitioner failed to prove that the
dismissal of the respondent was valid and with just cause. Petitioner filed an appeal to the NLRC, but the previous decision was only
affirmed and modified that the reinstatement be replaced with payment of separation pay. A Motion for Reconsideration was filed, but it was
denied.

Petitioner filed a petition for certiorari before the CA but it as likewise denied, and the CA affirmed the previous decision rendered by the
NLRC. Thus, this petition.

ISSUE:
Whether or not the Court of Appeals intruded into the right of the employer to dismiss an employee whose continued employment is inimical
to the employers’ interest; and
Whether or not the Court of Appeals erred in deciding the instant case not in accord with the Honorable Supreme Court decisions, i.e., where
dismissed employee for valid ground should be paid only nominal damages, if the two-notice rule is not complied with.

Ruling: Petition for review is DENIED.

Discussion:
As to issue no. 1: No. Our constitution, statutes, and jurisprudence uniformly guarantee to every employee or worker tenurial security. This
means that an employer shall not dismiss an employee except for a just or authorized cause only after due process is observed. The Petitioner
raised that the termination of the respondent was based on their loss of trust and confidence and hiring him would be inimical to them.

Lost of trust and confidence is a just cause for dismissal under Art. 282 of the Labor Code. However, the petitioner failed to satisfy the two
conditions to properly invoke the said ground, to wit:

Employer must show that the employee concerned holds a position of trust and confidence. Jurisprudence provides for two positions of trust:
managerial employees or those who by the nature of their position are entrusted with confidential and delicate matters and from whom
greater fidelity to duty is correspondingly expected
Cashiers, auditors, property custodians, or those in the normal routine exercise of their functions regularly handle significant amounts of the
employer’s money or property
Employer must establish the existence of an act justifying the loss of trust and confidence. To be valid cause for dismissal, the act that betrays
the employer’s trust must be real and founded on clearly established facts and the employee’s breach of the trust must be willful, it was done
intentionally, knowingly, and purposely without justifiable cause. Moreover, with respect to rank and file personnel, loss of trust and
confidence as ground for valid dismissal, requires proof of involvement in the alleged events in question, and that mere uncorroborated
assertions and accusations by the employer will not be sufficient.

The right of an employee to dismiss an employee on the ground of loss of trust and confidence must not be exercised arbitrarily and without
just cause. Unsupported by sufficient proof, loss of confidence without basis and may not be successfully invoked as a ground for dismissal
as it is subject to abuse because of its subjective nature. It must be founded on clearly established facts sufficient to warrant the employees
separation from work. Thus, the breach of trust or loss of confidence in this case not borne by clearly established facts, dismissal on the said
ground may not be invoked.

It is true that respondent may indeed be considered as one who occupies a position of trust and confidence as he is one of those who were
entrusted with the handling of a significant amount or portion of petitioners' products for sale. However, records show that petitioners failed
to present substantial evidence to support their allegations that respondent had, in any way, participated in the theft of the company's stolen
items and that after his preventive suspension he no longer reported for work. In other words, petitioners were not able to establish the
existence of an act justifying their alleged loss of trust and confidence in respondent.

The Court of Appeals, LA, and NLRC did not err finding that the petitioner was not able to discharge their burden of proving that the
termination of the respondent was for a just and valid cause, and the same did not intruded in the employer’s right to dismiss employees.

As to Issue 2: No. The Court of Appeals, LA, and NLRC again, uniformly ruled that the respondent was dismissed without procedural due
process. The only notice given to the respondent was the 30-day suspension notice and nothing more. Supreme court reiterated, as found by
the LA, that petitioner did not present any evidence that respondent was given opportunity to explain his side considering that he was
implicated for theft. The Supreme court also agrees that the petitioners conducted their won investigation without the participation of the
respondent, which is not in line with the guidelines laid by the Supreme court on how to comply with procedural due process, to wit:

(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a
directive that the employees are given the opportunity to submit their written explanation within a reasonable period. "Reasonable
opportunity" under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to
prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give
the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide
on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation
and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any,
are violated and/or which among the grounds under Art. 282 is being charged against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the
opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3)
rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to
defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could
be used by the parties as an opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination
indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been
established to justify the severance of their employment.

II. Right to Assemble

1. Section 4, Art. III of the 1987 Constitution: Bill of Rights

“Section 4. No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people
peaceably to assemble and petition the government for redress of grievances.”

2. Phimco Industries, Inc. v. Phimco Industries Labor Association

PHIMCO vs PHIMCO LABOR ASSOC.

FACTS
Phimco Labor Assoc (PILA), the exclusive collective bargaining representative of PHIMCO rank and file employees staged a strike due to a
deadlock in the bargaining proceedings.
The NLRC issued a TRO but the strike continued with the strikers blocking the entry and exit points of the company
PHIMCO served dismissal notices on the strikers
PILA filed a case for illegal dismissal and unfair labor practices to the NLRC
Acting Secretary Jose Brillantes of the DOLE assumed jurisdiction over the strike and issued a return-to-work order.
PHIMCO filed a petition to declare the strike illegal
Labor Arbiter Mayor decided the case on the strike and found the strike illegal and that the strikers committed prohibited acts (the strikers not
allowing passage to the company)
PILA filed an appeal
The NLRC decided in their favor
In a parallel development of another case involving PILA and PHIMCO, Labor Arbiter Espiritu ruled that the dismissal of the strikers was
illegal and ordered for their reinstatement and payment of backwages.
The NLRC rendered its decision in the consolidated cases and ruled completely in the union's favor; the picket was not an illegal blockade
and that the striking employees were not given ample opportunity to explain their side
PHIMCO filed a Petition for Certiorari under Rule 65 to the CA
THE CA DECISION
In its first decision, CA upheld the Labor Arbiter's ruling
PHIMCO now appeals to the SC arguing that the strike should be illegal because of the illegal act committed by PILA
Issue
W/N the NLRC was correct in its ruling that the strike was valid and there was illegal dismissal
Ruling
PARTLY CORRECT
The employer, despite the just cause for dismissal, must pay the dismissed workers nominal damages as indemnity for the violation of the
workers' right to statutory due process.
ON THE STRIKE
A strike is the most powerful weapon of workers in their struggle with management in the course of setting their terms and conditions of
employment.
Strike needs to be procedurally valid and there must be no commission of prohibited acts.
Procedurally, for a strike to be valid, it must comply with Article 263 of the Labor Code, which requires that: (a) a notice of strike be filed
with the Department of Labor and Employment (DOLE) 30 days before the intended date thereof, or 15 days in case of unfair labor practice;
(b) a strike vote be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in a
meeting called for that purpose; and (c) a notice be given to the DOLE of the results of the voting at least seven days before the intended
strike.
The 15 to 30-day cooling-off period is designed to afford the parties the opportunity to amicably resolve the dispute with the assistance of the
NCMB conciliator/mediator, while the seven-day strike ban is intended to give the DOLE an opportunity to verify whether the projected
strike really carries the imprimatur of the majority of the union members.
In the present case, the respondents fully satisfied the legal procedural requirements but committed illegal acts which renders the strike illegal
To strike is to withhold or to stop work.
The work stoppage may be accompanied by picketing by the striking employees outside of the company compound.
While a strike focuses on stoppage of work, picketing focuses on publicizing the labor dispute and its incidents to inform the public of what
is happening in the company struck against.
A picket simply means to march to and from the employer's premises, usually accompanied by the display of placards and other signs making
known the facts involved in a labor dispute. It is a strike activity separate and different from the actual stoppage of work
Protected picketing does not include obstructing exits and entrances to the company premises.
The evidence presented by PHIMCO on the strike included pictures and affidavits and testimonies while the evidence presented by PILA
included affidavits and certificates
The photos strengthened PHIMCO's claims
While the picket was moving, the movement was in circles and very close to the gates and it prevented non-striking workers and vehicles
from coming in and getting out. There were also blocking benches and obstructions.
Article 264(e) of the Labor Code tells us that picketing carried on with violence, coercion or intimidation is unlawful.
The manner in which the respondent union officers and members conducted the picket in the present case had created such an intimidating
atmosphere that non-striking employees and even company vehicles did not dare cross the picket line, even with police intervention. Those
who dared cross the picket line were stopped.
ON THE DISMISSAL
PHIMCO violated the requirements of due process of the Labor Code when it dismissed the respondents.
Article 277(b)79cra1aw of the Labor Code, the employer must send the employee, who is about to be terminated, a written notice stating the
cause/s for termination and must give the employee the opportunity to be heard and to defend himself.
To meet the requirements of due process in the dismissal of an employee, an employer must furnish him or her with two (2) written notices:
(1) a written notice specifying the grounds for termination and giving the employee a reasonable opportunity to explain his side and (2)
another written notice indicating that, upon due consideration of all circumstances, grounds have been established to justify the employer's
decision to dismiss the employee.
PHIMCO sent a letter to the strikers ordering them to explain within 25 hours why they should not be dismissed due to the illegal acts they
committed and then dismissed them 3 days later
We do not find this company procedure to be sufficient compliance with the due process requirements that the law guards zealously. It does
not appear from the evidence that the union officers were specifically informed of the charges against them and given the chance to explain
and present their side.

3. Davao City Water District v. Aranjuez

Davao City Water District v. Rodrigo Aranjuez, et al.June 16, 2015

G.R. No. 194192Perez, J.

FACTS: Petitioner Davao City Water District (DCWD) is a government-owned and controlled corporation in Davao City. The private
respondents (Aranjuez, et al.) are officers and members of Nagkahiusang Mamumuo sa Davao City Water District (NAMADACWAD). They
were charged with several administrative cases due to acts committed during the anniversary celebration of DCWD such as wearing of t-
shirts with inscriptions and posting of bond papers outside the designated places. The inscriptions and postings bore employees’ grievances.

Members and officers of NAMADACWAD have been staging pickets in front of the DCWD Office during their lunch breaks to air their
grievances about the non-payment of their Collective Negotiation Agreement (CNA) incentives and their opposition to DCWD’s
privatization and proposed P100M Loan.
Gen. Manager (GM) Rodora Gamboa issued an Office Memorandum addressed to all department managers concerning the different activities
that would take place during DCWD’s then upcoming anniversary celebration. The officers and members of NAMADACWAD held an
Emergency General Assembly and they agreed to wear NAMADACWAD t-shirts with inscriptions stating, “CNA Incentive Ihatag Na, Dir.
Braganza Pahawa Na!” on the day of the anniversary.

As a consequence of their actions, GM Gamboa sent a Memorandum requiring them to explain the reasons for the attire they wore. The
officers and members explained that the Memorandum only required the employees to wear any sports attire, though theirs were with
additional inscriptions containing grievances. They countered that the inscriptions were but manifestations of their constitutional rights of
free speech and freedom of expression.

GM Gamboa filed formal charges against the officers and members of NAMADACWAD.

After giving those concerned the opportunity to explain through several hearings and submission of additional evidence, the Hearing
Committee filed on March 14, 2008 its Consolidated Resolution and Recommendation finding the officers and members of the
NAMADACWAD guilty as charged with penalties ranging from suspension to dismissal.

GM Gamboa issued several Orders adopting the recommendation submitted by the Hearing Committee. Aranjuez, et al. filed an Urgent
Motion for Reconsideration. The Motion was denied by DCWD.

Aranjuez, et al., filed an appeal before the CSC, bringing up the violation of their constitutional rights to assemble and petition for redress of
grievances. CSC issued a Resolution partly granting the consolidated appeal and held that the collective act of respondents in wearing t-shirts
with grievance inscriptions during office hours was not within the ambit of the definition of prohibited mass action punishable under CSC
Resolution 021316 since there was no intent to cause work stoppage. However, though not prohibited under the Resolution, the act was
considered as an offense punishable under “Violation of Reasonable Office Rules and Regulations.” CSC further held that the violations
committed by the private respondents are not serious in nature due to the lack of any abusive, vulgar, defamatory or libelous language.

Aggrieved, DCWD filed a Petition for Review under Rules 43 before the Court of Appeals, which affirmed in toto the resolution of CSC.

ISSUE: WON the concerted mass action is prohibited under Resolution 021316. – Yes.

HELD: Sec. 6 of Resolution 021316 states:

Section 6. Permissible Concerted Mass Action.– A concerted activity or mass action done outside of government office hours shall not be
deemed a prohibited concerted activity or mass action within the contemplation of this omnibus rules provided the same shall not occasion or
result in the disruption of work or service.

DCWD argues that since the concerted or mass action was done within government office hours, such act was not permissible, therefore
prohibited.

Notably, however, a prohibited concerted mass action is defined not in Sec. 6 but in Sec. 5:

Section 5. Definition of Prohibited Concerted Mass Action.– As used in this Omnibus Rules, the phrase “prohibited concerted activity or
mass action” shall be understood to refer to any collective activity undertaken by government employees, by themselves or through their
employees organizations, with the intent of effecting work stoppage or service disruption in order to realize their demands of force
concession, economic or otherwise, from their respective agencies or the government. It shall include mass leaves, walkouts, pickets and acts
of similar nature.

The operative phrases are “any collective activity” and “work stoppage or service disruption.” Without the intent at work stoppage or service
disruption, the concerted activity is not prohibited. The time and place of the activity are not determinative of the prohibition. Whether done
within government hours, a concerted activity is allowed if it is without any intent at work stoppage.

It is clear that the collective activity of joining the fun run in t-shirts with inscriptions on CNA incentives was not to effect work stoppage or
disrupt the service. As pointed out by the respondents, they followed the advice of GM Gamboa “to be there” at the fun run. Respondents
joined, and did not disrupt the fun run. They were in sports attire that they were allowed, nay required, to wear. Else, government employees
would be deprived of their constitutional right to freedom of expression. This, then, being the fact, we have to rule against the findings of
both the CSC and CA that the wearing of t-shirts with grievance inscriptions constitutes as a violation of Reasonable Office Rules and
Regulations.

In GSIS v. Villaviza, it was ruled that the acts of GSIS employees wearing similarly colored shirts while attending a public hearing inside the
GSIS Office, with clenching of fists and orating against the then President Winston Garcia, were not constitutive of a prohibited activity but
were only an exercise of their constitutional freedom of expression.
As defined in Sec. 5 of the Resolution, which serves to regulate the political rights of those in the government service, the concerted activity
or mass action proscribed must be coupled with the “intent of effecting work stoppage or service disruption in order to realize their demands
of force concession. “Wearing similarly colored shirts, attending a public hearing at the GSIS-IU office, bringing with them recording
gadgets, clenching their fists, some even badmouthing the guards and PGM Garcia, are acts not constitutive of an (i) intent to effect work
stoppage or service disruption and (ii) for the purpose of realizing their demands or force concession.”

Precisely, the limitations or qualifications found in Sec. 5 of the Resolution are there to temper and focus the application of such prohibition.
Not all collective activity or mass undertaking of government employees is prohibited. Otherwise, we would be totally depriving our brothers
and sisters in the government service of their constitutional right to freedom of expression.

DCWD also found that Cagula and the rest of the officials violated MC No. 33 in relation to 8 February 1996 Office Memorandum. DCWD
also argues that a violation of this circular constitutes as a serious violation of CSC Rules as the circular is a CSC-issued Memorandum and
not just a mere issuance of DCWD.

CSC issued MC No. 33 in recognition of the rights of the government employees to air their grievances balanced by the delivery of services
to the public which should not be prejudiced. MC No. 33 sets down rules governing the posting of posters and other similar materials within
the premises of government agencies.

It is correct to conclude that those who enter government service are subjected to a different degree of limitation on their freedom to speak
their mind; however, it is not tantamount to the relinquishment of their constitutional right of expression otherwise enjoyed by citizens just by
reason of their employment. Unarguably, a citizen who accepts public employment “must accept certain limitations on his or her freedom.”
But there are some rights and freedoms so fundamental to liberty that they cannot be bargained away in a contract for public employment. It
is the Court’s responsibility to ensure that citizens are not deprived of these fundamental rights by virtue of working for the government.

In the GSIS case, it was held, “government workers, whatever their ranks, have as much right as any person in the land to voice out their
protests against what they believe to be a violation of their rights and interests. Civil Service does not deprive them of their freedom of
expression. It would be unfair to hold that by joining the government service, the members thereof have renounced or waived this basic
liberty. This freedom can be reasonably regulated only but can never be taken away.”

Simply stated, regulation of the freedom of expression is not removal of the constitutional right.

WHEREFORE, We DENY the petition for review on certiorari.

III. Right to Organization

1. Section 8, Art. III of the 1987 Constitution

“Section 8. The right of the people, including those employed in the public and private sectors, to form unions, associations,
or societies for purposes not contrary to law shall not be abridged.”

IV. Non-impairment of Contracts

1. Section 10, Art. III of the 1987 Constitution: Bill of Rights

“Section 10. No law impairing the obligation of contracts shall be passed.”

2. Anucension v. National Labor Union

G.R. No. L-26097 November 29, 1977

DOMINADOR ANUCENSION AND 114 OTHER IGLESIA NI CRISTO AGRICULTURAL WORKERS OF HACIENDA LUISITA,
petitioners,
vs.
NATIONAL LABOR UNION, TARLAC DEVELOPMENT CORPORATION AND COURT OF INDUSTRIAL RELATIONS,
respondents.
MAKASIAR, J.:
TOPIC: Non-impairment of contracts
United Luisita Workers' Union (NLU) and the Hacienda entered into a collective bargaining agreement on August 2, 1962 which contained
union security provisions which read as follows:

SEC. 3. Except only for present members of the 'Iglesia ni Cristo' are not now members of the UNION, all employees and workers within the
appropriate bargaining unit who are not members of the UNION at the time of the execution of this agreement shall have fifteen (15) days
from the date of the execution of this agreement within which to apply for membership in the UNION. The UNION agrees to accept said
employees into membership, under the same terms and conditions under which the employees and workers now members were admitted into
membership.

SEC. 4. Persons who may hereafter be employed to hold positions included in the bargaining unit shall be required to become members of the
UNION within fifteen (15) days after they shall have been included within the said bargaining unit.

SEC. 5. Employees and workers within the appropriate bargaining unit who are now members of the UNION, as well as those who may
subsequently join the UNION pursuant to Sections 3 and 4 above, shall remain members of the UNION during the effectivity of this
agreement as a condition of co continued employment.

(a) The HACIENDA, upon the written request of the UNION, shall discharge any employee who shall fail to fulfill the conditions aforesaid
or who resigns or is suspended from membership in the UNION for disloyalty, violation of the Constitution or By-Laws of the UNION, or
for any valid cause, but it assumes no obligation to discharge any employee if it has reasonable grounds for believing that membership in the
UNION was not available to the employee on the same terms arid conditions generally applicable to other members'

Prior to this CBA, the same union security provisions appeared verbatim in a CBA that was in force from 1959 to 1962. Later on, a group of
more than 150 persons representing themselves to be members of the United Luisita Union (NLU), and followers of a religious sect known as
the Iglesia ni Cristo, made manifest their 'irrevocable resignation' from NLU, invoking freedom of religion. They also invoked that this
cannot be made a ground for the termination of their employment. It appeared that the followers of Iglesia ni Cristo (INC) were prompted to
resign from the union because of the circular from INC enjoining all members of the sect not to join any outside association or organization
of whatever kind or nature or that if they are already members of such association or organization that they disaffiliate themselves, otherwise
they would be expelled from the church..

The Union informed the Hacienda of these resignations and thus demanded from the Hacienda the immediate lay-off of employment of those
mentioned laborers as provided for in Article 2, Section 5(a) of their CBA. As a result, the resigning INC worker-members filed a notice of
stricke against the Hacienda for the alleged mass dismissal of INC agricultural laborers in violation of Rep. Act 3350, for violation of CBA to
favor contracting union, and unlawful encouragement of union membership. They, however, did not go on strike but instead filed a complaint
with Court of Agrarian Relations alleging that they were laid off from the time they resigned en masse until they were recalled to work.

Meanwhile, the Union filed a notice of strike against the Hacienda for violation of their CBA. It did staged the strike for failure of the
Hacienda to dismiss the 115 alleged Iglesia ni Cristo members who had resigned from the Union. The Acting Secretary of Labor intervened
to effect a settlement of the dispute but no settlement could be reached by the parties involved. Case was certified to the Court for
compulsory arbitration.

Another issue that was raised by the INC members is that CIR improperly assumed the power and authority to declare, as it did declare,
Republic Act 3350 unconstitutional. CIR maintains that the Act is unconstitutional because it offers from constitutional infirmities such as the
following:
(a) It abridges the freedom of workers to form associations for purposes not contrary to law;
(b) It impairs the obligation of contracts;
(c) It discriminates in favor of the religious sect known as Iglesia ni Cristo in violation of the constitutional provision prohibiting legislation
for the support of any religious sect; and
(d) It denies to the workers their constitutional right to equal on of the laws.

ISSUE: WON the law should prevail over the CBA between the employer and the union.

RULING: YES. The law is constitutional as already decided by the Supreme Court in two cases (Benjamin Victoriano vs. Elizalde Rope and
Basa vs. FOITAF). The Hacienda cannot be made to comply with the union security clause in the CBA.

The Act in question is an amendment, consisting of the underlined phrase added to paragraph (4), subsection (a) of Section four of the
Industrial Peace Act, which provides:

(4) To discriminate in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage
membership in any labor organization: Provided, That nothing in this act or in any other act or statute of the Republic of the Philippines shall
preclude an employer from making an agreement with a labor organization to require as a condition of employment membership therein, if
such labor organization is the representative of the employees as provided in section twelve, but such agreement shall not cover members of
any religious sects which prohibit affiliation of their members in any such labor organization.

Both the Constitution and Republic Act No. 875 recognized freedom of association. Section 1(6) of Article III of the Constitution of 1935, as
well as Section 7 Article IV of the Constitution of 1973, provide that the right to form associations as societies for purposes not contrary to
law shall not abridge. Section 3 of Republic Act No. 875 provides that employees shall have the right to self-organization and to form, join or
assist labor organizations of their own choosing for the purpose of collective bargaining and to engage in concerted activities for the purpose
of collective bargaining and other mutual aid or protection.
What the Constitution and the Industrial Peace Act recognize and guarantee is the right to form or join associations. It is the employee who
should decide for himself whether he would join; and even after he has joined, he still retains the liberty and the power to leave and cancel his
membership with said organization at any time. It is clear, therefore that the right to join a union includes the right to abstain from joining any
union.

The right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act is, however, limited. The legal
protection, granted to such right to refrain from joining is withdrawn by operation of law, where a labor union and an employer have agreed
on a closed shop, by virtue of the collective bargaining unit, and the employer have agreed on a closed shop, by virtue of the collective
bargaining unit, and the employees must continue to be members of the union for the duration of the contract in order to keep their jobs.

Thus, Section 4 [a] (4) of the Industrial Peace Act, before its amendment by Republic Act No. 3350, provides that although it would be an
unfair labor practice for an employer to discriminate in regard to hire or tenure of employment to encourage or discourage membership in any
labor organization the employer is, however, not precluded "from making an agreement with a labor organization, to require as a condition of
employment membership therein, if such labor organization is the representative of the employees.

To that all-embracing coverage of the closed shop agreement, Republic Act No. 3350 introduced an exception, when it added to Section 4 [a]
(4) of the Industrial Peace Act the following proviso: 'but such agreement shall not cover members of any religious sects which prohibit
affiliation of their members with any labor organization. What the exception provides, therefore, is that members of said religious sects
cannot be refused employment or dismissed from their jobs on the sole ground that they are not members of the collective bargaining union.
It is clear, therefore, that the assailed Act, far from infringing the constitutional provision on freedom of association, upholds and reinforces
it. It does not prohibit the members of said religious sects from affiliating with labor unions. It still leaves to said members the liberty and the
power to affiliate, with labor unions. If, notwithstanding their religious beliefs, the members of said religious faith, they refuse to sign up,
they can do so; the law does not coerce them to join; neither does the law prohibit them from joining; and neither may the employer or labor
union compel them to join. Republic Act No. 3350, therefore, does not violate the constitutional provision on frredom of association.

The Union also contends that the Act is unconstitutional for impairing the obligation of its contract, specifically, the union security clause in
the CBA with the Hacienda. To this, the Court held that this agreement was already in existence at the time Republic Act No. 3350 was
enacted on June 18, 1961, and it cannot, therefore, be deemed to have been incorporated into the agreement. But by reason of this
amendment, they could no longer be dismissed from his job even if he should cease to be a member, or disaffiliate from the Union, and the
Company could continue employing him notwithstanding his disaffiliation from the Union. The Act, therefore, introduced a change into the
express terms of the union security clause; the Company was partly absolved by law from the contractual obligation it had with the Union of
employing only Union members in permanent positions. It cannot be denied, therefore, that there was indeed an impairment of said union
security clause.

It should not be overlooked, however, that the prohibition to impair the obligation of contracts is not absolute and unqualified. The
prohibition is general, affording a broad outline and requiring construction to fill in the details. The prohibition is not to be read with literal
exactness like a mathematical formula, for it prohibits unreasonable impairment only. In spite of the constitutional prohibition, the State
continues to possess authority to safeguard the vital interests of its people. Legislation appropriate to safeguard said interest may modify or
abrogate contracts already in effect.

All contracts made with reference to any matter that is subject to regulation under the police power must be understood as made in reference
to the possible exercise of that power. Otherwise, important and valuable reforms may be precluded by the simple device of entering into
contracts for the purpose of doing that which otherwise may be prohibited. The policy of protecting contracts against impairment presupposes
the maintenance of a government by virtue of which contractual relations are worthwhile - a government which retains adequate authority to
secure the peace and good order of society. The contract clause of the Constitution must, therefore, be not only in harmony with, but also in
subordination to, in appropriate instances, the reserved power of the state to safeguard the vital interests of the people.

It follows that not all legislations, which have the effect of impairing a contract are obnoxious to the constitutional prohibition as to
impairment, and a statute passed in the legitimate exercise of police power, although it incidentally destroys existing contract rights, must be
upheld by the courts. This has special application to contracts regulating relations between capital and labor which are not merely contractual,
and said labor contracts, for being impressed with public interest, must yield to the common good.

Legislation impairing the obligation of contracts can be sustained when it is enacted for the promotion of the general good of the people, and
when the means adopted to secure that end are reasonable. Both the end sought and the means adopted must be legitimate, i.e., within the
scope of the reserved power of the state construed in harmony with the constitutional limitation of that power.

The purpose of the law was to insure freedom of belief and religion, and to promote the general welfare by preventing discrimination against
those members of religious sects which prohibit their members from joining labor unions, confirming thereby their natural, statutory and
constitutional right to work, the fruits of which work are usually the only means whereby they can maintain their own life and the life of their
dependents. It cannot be gainsaid that said purpose is legitimate.
The questioned Act also provides protection to members of said religious sects against two aggregates of group strength from which the
individual needs protection. The individual employee, at various times in his working life, is confronted by two aggregates of power
collective labor, directed by a union, and collective capital, directed by management. The union, an institution developed to organize labor
into a collective force and thus protect the individual employee from the power of collective capital, is paradoxically, both champion of
employee rights, and a new source of their frustration. Moreover, when the Union interacts with management, it produces yet a third
aggregate of group strength from which the individual also needs protection the collective bargaining relationship.

It may not he amiss to point out here that the free exercise of religious profession or belief is superior to contract rights. In case of conflict,
the latter must, therefore, yield to the former. The Supreme Court of the United States has also declared on several occasions that the rights in
the First Amendment, which include freedom of religion, enjoy a preferred position in the constitutional system. Religious freedom, although
not unlimited, is a fundamental personal right and liberty, and has a preferred position in the hierarchy of values. Contractual rights,
therefore, must yield to freedom of religion. It is only where unavoidably necessary to prevent an immediate and grave danger to the security
and welfare of the community that infringement of religious freedom may be justified, and only to the smallest extent necessary to avoid the
danger.
WHEREFORE, THE DECISION OF THE COURT OF INDUSTRIAL RELATIONS HEREIN APPEALED FROM IS HEREBY
VACATED AND SET ASIDE, AND THE CASE ORDERED DISMISSED. WITH COST AGAINST PRIVATE RESPONDENTS.

3. Serrano v. Gallant Maritime Services, Inc.

ANTONIO M. SERRANO vs.

Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC.
G.R. No. 167614 | March 24, 2009

SUBJECT MATTER: Labor and the Constitution; Non-Impairment of Contracts

FACTS:
Antonio Serrano is a Filipino Sea farer hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents) under a
Philippine Overseas Employment Administration (POEA)-approved Contract of Employment with the following terms and conditions:

Duration of contract12 months

PositionChief Officer
Basic monthly salaryUS$1,400.00
Hours of work48.0 hours per week
OvertimeUS$700.00 per month
Vacation leave with pay7.00 days per month

On March 19, 1998, the date of his departure, Serrano was constrained to accept a downgraded employment contract for the position of
Second Officer with a monthly salary of US$1,000.00, upon the assurance that he would be made Chief Officer by the end of April 1998.

Gallant did not deliver on their promise, hence, Serrano refused to stay on as Second Officer and was repatriated to the Philippines on May
26, 1998.

Serrano’s employment contract was for a period of 12 months from March 19, 1998 up to March 19, 1999. However, he had served only two
(2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days.

He filed with the Labor Arbiter (LA) a Complaint9 against Gallant for constructive dismissal and for payment of his money claims of
US$26,442.73.

The LA rendered a Decision dated July 15, 1999, declaring the dismissal of Serrano as illegal and awarding him monetary benefits of US
$8,770.00.

For the US$8,770.00, the LA based his computation on the salary period of three months only -- rather than the entire unexpired portion of
nine months and 23 days of petitioner's employment contract - applying the subject clause.

Gallant Maritime appealed to the National Labor Relations Commission (NLRC) to question the finding of the LA that petitioner was
illegally dismissed.

The NLRC modified the LA’s Decision. It corrected the LA's computation of the lump-sum salary awarded to petitioner. Reducing the rate
from US$2,590.00 to US$1,400.00 because R.A. No. 8042 "does not provide for the award of overtime pay, which should be proven to have
been actually performed, and for vacation leave pay."

The CA affirmed the NLRC ruling on the reduction of the applicable salary rate; however, the CA skirted the constitutional issue raised by
petitioner on the constitutionality of the subject clause:
5th paragraph of Section 10, Republic Act (R.A.) No. 8042,2 to wit:
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just, valid or authorized cause as defined by law or
contract, the workers 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 three (3) months for every year of the unexpired term, whichever is
less.
x x x x (Emphasis and underscoring supplied)

ISSUES:

Whether or not the dismissal of Serrano was illegal?

Does the 5th paragraph of Section 10, RA 8042 violate the non-impairment of contract clause of the Constitution?

CONTENTIONS:

Serrano’s Contention:

the subject clause is unconstitutional because it unduly impairs the freedom of OFWs to negotiate for and stipulate in their overseas
employment contracts a determinate employment period and a fixed salary package

impinges on the equal protection clause, for it treats OFWs differently from local Filipino workers (local workers) by putting a cap on the
amount of lump-sum salary to which OFWs are entitled in case of illegal dismissal, while setting no limit to the same monetary award for
local workers when their dismissal is declared illegal;

that the insertion of the subject clause into R.A. No. 8042 serves no other purpose but to benefit local placement agencies

Gallant’s Contention:

the constitutional issue should not be entertained, for this was belatedly interposed by petitioner in his appeal before the CA, and not at the
earliest opportunity, which was when he filed an appeal before the NLRC.

OSG’s Contention:

As R.A. No. 8042 took effect on July 15, 1995, its provisions could not have impaired petitioner's 1998 employment contract. Rather, R.A.
No. 8042 having preceded petitioner's contract, the provisions thereof are deemed part of the minimum terms of petitioner's employment

OSG emphasizes that OFWs and local workers differ in terms of the nature of their employment, such that their rights to monetary benefits
must necessarily be treated differently.

the OSG defends the rationale behind the subject clause as a police power measure adopted to mitigate the solidary liability of placement
agencies for this "redounds to the benefit of the migrant workers whose welfare the government seeks to promote. The survival of legitimate
placement agencies helps [assure] the government that migrant workers are properly deployed and are employed under decent and humane
conditions

RATIO:
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
of contracts?

No. Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the term of his employment and the
fixed salary package he will receive57 is not tenable.

The enactment of R.A. No. 8042 in 1995 preceded the execution of the employment contract between petitioner and respondents in 1998.
Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when
the parties executed their 1998 employment contract, they were deemed to have incorporated into it all the provisions of R.A. No. 8042.

The subject clause may not be declared unconstitutional on the ground that it impinges on the impairment clause, for the law was enacted in
the exercise of the police power of the State to regulate a business, profession or calling, particularly the recruitment and deployment of
OFWs, with the noble end in view of ensuring respect for the dignity and well-being of OFWs wherever they may be employed.
Does the subject clause violate Section 1,
Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?

Yes.

Imbued with the same sense of "obligation to afford protection to labor," the Court in the present case also employs the standard of strict
judicial scrutiny, for it perceives in the subject clause a suspect classification prejudicial to OFWs.

Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination reveals that the
subject clause has a discriminatory intent against, and an invidious impact on, OFWs at two levels:

First, OFWs with employment contracts of less than one year vis-à-vis OFWs with employment contracts of one year or more;

Second, among OFWs with employment contracts of more than one year; and

Third, OFWs vis-à-vis local workers with fixed-period employment;

The subject clause does not state or imply any definitive governmental purpose; and it is for that precise reason that the clause violates not
just petitioner's right to equal protection, but also her right to substantive due process under Section 1,137 Article III of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired period of nine months and 23 days of
his employment contract, pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.

Is the Petitioner entitled to overtime

and leave pay?

No.

For seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment Contract of Seafarers, in which
salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay is compensation for all
work "performed" in excess of the regular eight hours, and holiday pay is compensation for any work "performed" on designated rest days
and holidays.

By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and holiday pay in the computation of petitioner's
monetary award, unless there is evidence that he performed work during those periods.

RULING:
WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months for every year of the unexpired term, whichever is
less" in the 5th paragraph of Section 10 of Republic Act No. 8042 is DECLAREDUNCONSTITUTIONAL; and the December 8, 2004
Decision and April 1, 2005 Resolution of the Court of Appeals are MODIFIED to the effect that petitioner is AWARDED his salaries for the
entire unexpired portion of his employment contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per month.

V. Right against Involuntary Servitude

1. Section 18, Art. III of the 1987 Constitution: Bill of Rights

“Section 18.
No person shall be detained solely by reason of his political beliefs and aspirations.

No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall have been duly
convicted.”

VI. Protection to Employer

 1. Section 20, Art. II of the 1987 Constitution: Declaration of State Principles and State Policies

“Section 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives
to needed investments.”

2. Management Prerogative

a. St. Lukes v. Sanchez

St. Lukes v. Sanchez

Facts:
Sanchez was hired by petitioner St. Luke's Medical Center, Inc. (SLMC) as a Staff Nurse, and was eventually assigned at SLMC, Quezon
City's Pediatric Unit until her termination on July 6, 2011 for her purported violation of SLMC's Code of Discipline, particularly Section 1,
Rule 1 on Acts of Dishonesty, i.e., Robbery, Theft, Pilferage, and Misappropriation of Funds.

In a Decision dated May 27, 2012, the Labor Arbiter (LA) ruled that Sanchez was validly dismissed

NLRC concluded that the punishment of dismissal was too harsh and the one (1) month preventive suspension already imposed on and served
by Sanchez was the appropriate penalty.[45] Accordingly, the NLRC ordered her reinstatement, and the payment of backwages, other...
benefits, and attorney's fees.

Issue:
Whether or not Sanchez was illegally dismissed by SLMC.

Held:
The right of an employer to regulate all aspects of employment, aptly called "management prerogative," gives employers the freedom to
regulate, according to their discretion and best judgment, all aspects of employment, including work assignment, working methods, processes
to be followed, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of
workers. In this light, courts often decline to interfere in legitimate business decisions of employers. In fact, labor laws discourage
interference in employers' judgment concerning the conduct of their business.

Among the employer's management prerogatives is the right to prescribe reasonable rules and regulations necessary or proper for the conduct
of its business or concern, to provide certain disciplinary measures to implement said rules and to assure that the same would be complied
with. At the same time, the employee has the corollary duty to obey all reasonable rules, orders, and instructions of the employer; and willful
or intentional disobedience thereto, as a general rule, justifies termination of the contract of service and the dismissal of the employee. Article
296 (formerly Article 282) of the Labor Code provides:

Article 296. Termination by Employer. - An employer may terminate an employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or his representative in connection with
his work;
Note that for an employee to be validly dismissed on this ground, the employer's orders, regulations, or instructions must be: (1) reasonable
and lawful, (2) sufficiently known to the employee, and (3) in connection with the duties which the employee has been engaged to
discharge."

b. Peckson v. Robinsons Supermarket

JENNY F. PECKSON v. ROBINSONS SUPERMARKET CORPORATION, et al

Petitioner started as a Sales Clerk of Robinsons Supermarket Corporation. She was currently holding the position of Category Buyer when
respondent Roena Sarte, VP for Merchandising, reassigned her to the position of Provincial Coordinator. Petitioner refused to turn over her
responsibilities to the new Category Buyer or even to accept her new responsibilities as Provincial Coordinator. RSC sent a memorandum to
petitioner and demanded an explanation for her refusal to accept her new assignment despite written and verbal demands. Sarte cited a
company rule which provides that “disobedience, refusal or failure to do assigned task or to obey superior’s/official’s orders/instructions
without valid reason would be meted the penalty of suspension.” However, petitioner ignored the same. Sarte issued another memorandum
reiterating demand to explain with warning that this could be her final chance to explain her side. She submitted a reply and alleged that she
could not accept the position since she saw it as a demotion. It turned out that petitioner already filed a complaint for constructive dismissal
against RSC. Petitioner alleged that the position of Category Buyer was one level above that of the Provincial Coordinator and that the job
description of a provincial coordinator was largely clerical. Respondents maintained that her transfer was not a demotion since Provincial
Coordinator occupied a Level 5 position like the Category buyer with same work conditions, salary, and benefits. However, position of
Category Buyer demands the traits of punctuality; diligence and attentiveness which allegedly petitioner failed to meet supported by
petitioner’s records of poor performance ratings. RSC alleged that the reassignment was made in the exercise of management’s prerogative
considering the petitioner’s below expectation’s performance rating and habitual tardiness.

LA – Dismissed the complaint. It ruled that job reassignment or classification is a strict prerogative of the employer, and that petitioner
cannot refuse her transfer from Category Buyer to Provincial Coordinator since both positions held the same salary structure, high degree of
responsibility and impeccable honesty and integrity. The transfer was dictated by the need for punctuality, diligence and attentiveness in the
position of Category Buyer, which the petitioner clearly lacked.

NLRC – sustained findings of LA. NLRC reiterated the rule that management may transfer an employee from one office to another within the
business establishment, provided there is no demotion in rank or diminution of salary, benefits, and other privileges, and the action is not
motivated by discrimination or bad faith or effected as a form of punishment without sufficient cause.

CA – affirmed NLRC findings.

SC – affirmed

Under the doctrine of management prerogative, every employer has the inherent right to regulate, according to his own discretion
and judgment, all aspects of employment, including hiring, work assignments, working methods, the time, place and manner of work, work
supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of employees. The only limitations to the exercise
of this prerogative are those imposed by labor laws and the principles of equity and substantial justice. The Labor Code does not excuse
employees from complying with valid company policies and reasonable regulations for their governance and guidance.

Petitioner claims that she was constructively dismissed, yet she continued to collect her salary while refusing to follow the order of Sarte to
report to Metroeast Depot. Her deliberate and unjustified refusal to assume her new assignment is a form of neglect of duty, an act of
insubordination. The SC held that the transfer of petitioner was not unreasonable, inconvenient or prejudicial to her.

Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a transfer is a movement from one
position to another of equivalent rank, level or salary without break in the service or a lateral movement from one position to another of
equivalent rank or salary; (b) the employer has the inherent right to transfer or reassign an employee for legitimate business purposes; (c) a
transfer becomes unlawful where it is motivated by discrimination or bad faith or is effected as a form of punishment or is a demotion
without sufficient cause; (d) the employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the
employee. For a transfer not to be considered a constructive dismissal, the employer must be able to show that such transfer is not
unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges
and other benefits.

Judicial Review of labor cases does not go beyond the evaluation of the sufficiency of the evidence upon which its labor officials’
findings rest. As such, the findings of facts and conclusion of the NLRC are generally accorded not only great weight and respect but even
clothed with finality and deemed binding on this Court as long as they are supported by substantial evidence.

c. Imasen Philippines Manufacturing Corporation v. Alcon

IMASEN PHILIPPINE MANUFACTURING CORPORATION vs. ALCON

FACTS:
Ramonchito Alcon was hired as manual welders in Imasen Philippine Manufacturing Corporation, a domestic corporation engaged in the
manufacture of auto seat-recliners and slide-adjusters.
On October 5, 2002, Cyrus A. Altiche, Imasen’s security guard on duty, went to patrol and inspect the production plant’s premises. When
Altiche reached Imasen’s Press Area, he heard the sound of a running industrial fan. Intending to turn the fan off, he followed the sound that
led him to the plant’s "Tool and Die" section where he saw the respondents Alcon and Joann Papa having sexual intercourse on the floor,
using a piece of carton as mattress.
Altiche immediately went back to the guard house and relayed what he saw to Danilo S. Ogana, another security guard on duty.
On Altiche’s request, Ogana madea follow-up inspection. Ogana went to the "Tool and Die" section and saw several employees, including
Alcon and Papa, already leaving the area. He noticed, however, that Alcon picked up the carton that Altiche claimed the respondents used as
mattress during their sexual act, and returned it to the place where the cartons were kept.
Altiche submitted a handwritten report of the incident to Imasen’s Finance and Administration Manager.
On October 14, 2002, Imasen a memoranda informing Alcon and Papa of Altiche’s report incident and directing them to submit their
individual explanation which they have complied with claiming that they were merely sleeping in the "Tool and Die" section at the time of
the incident.
They also claimed that other employees were near the area, making the commission of the act charged impossible.
On October 22, 2002, Imasen issued the respondents another interoffice memorandum
https://lawphil.net/judjuris/juri2014/oct2014/gr_194884_2014.html - fnt8directing them to appear atthe formal hearing of the administrative
charge against them.
On December 4, 2002, Imasen issued the respondents separate interoffice memoranda terminating their services. It found the respondents
guilty of the act charged which it considered as "gross misconduct contrary to the existing policies, rules and regulations of the company."
Alcon and Papa filed before the LA the Complaint for illegal dismissal.
LA dismissed the respondents’ complaint for lack of merit and found the respondents’ dismissal valid, i.e., for the just cause of gross
misconduct and with due process.
In December 24, 2008, NLRC dismissed the respondents’ appeal for lack of merit and declared that Imasen substantially and convincingly
proved just cause for dismissing the respondents and complied with the required due process.
NLRC denied their motion for reconsideration
The respondents filed before the CA a petition for certiorari and the CA nullified the NLRC’s ruling.
Imasen filed for a motion for Reconsideration, however, the CA denied it

ISSUE:
Whether respondents’ action in engaging in sexual intercourse inside company premises during work hours amounts to serious misconduct
within the terms of Article 282 (now Article 296) of the Labor Code justifying their dismissal.
HELD:
The law and jurisprudence guarantee to every employee security of tenure.
Thus, the Court will not hesitate to strike down as invalid any employer act that attempts to undermine workers’ tenurial security.
In protecting the rights of the workers, the law, however, does not authorize the oppression or self-destruction of the employer.
Accordingly, except as limited by special law, an employer is free to regulate, according to his own judgment and discretion, all aspects of
employment, including hiring, work assignments, working methods, time, place and manner of work, tools to beused, processes to be
followed, supervision of workers, working regulations, transfer of employees, worker supervision, layoff of workers and the discipline,
dismissal and recall of workers.
As a general proposition, an employer has free reign over every aspect of its business, including the dismissal of his employees as long as the
exercise of its management prerogativeis done reasonably, in good faith, and in a manner not otherwise intended to defeat or circumvent the
rights of workers.
The just causes for dismissing an employee are provided under Article 282 (now Article 296) of the Labor Code. Under Article 282(a),
serious misconduct by the employee justifies the employer in terminating his or her employment.
For misconduct or improper behavior to be a just cause for dismissal, the following elements must concur: (a) the misconduct must be
serious; (b) it must relate to the performance of the employee’s duties showing that the employee has become unfit to continue working for
the employer; and (c) it must have been performed with wrongful intent.
Respondents’ action amounts to serious misconduct within the terms of Article 282 (now Article296) of the Labor Code justifying their
dismissal
Dismissal situations (on the ground of serious misconduct) involving sexual acts, particularly sexual intercourse committed by employees
inside company premises and during workhours, are not usual violations and are not found in abundance under jurisprudence.
Petitioners’ act from the prism of the elements that must concur for an act to constitute serious misconduct, analyzed and understood within
the context of the overall circumstances of the case.
NLRC was legally correct and well within its jurisdiction when it affirmed the validity of the respondents’ dismissal on the ground of serious
misconduct.
Sexual acts and intimacies between two consenting adults belong, as a principled ideal, to the realm of purely private relations. Whether
aroused by lust or inflamed by sincere affection, sexual acts should be carried out at such place, time and circumstance that, by the generally
accepted norms of conduct, will not offend public decency nor disturb the generally held or accepted social morals. Under these parameters,
sexual acts between two consenting adults do not have a place in the work environment.
Indisputably, the respondents engaged in sexual intercourse inside company premises and during work hours. These circumstances, by
themselves, are already punishable misconduct. Added to these considerations, however, is the implication that the respondents did not only
disregard company rules but flaunted their disregard in a manner that could reflect adversely on the status of ethics and morality in the
company.
Additionally, the respondents engaged in sexual intercourse in an area where co-employees or other company personnel have ready and
available access. The respondents likewise committed their act at a time when the employees were expected to be and had, in fact, been at
their respective posts, and when they themselves were supposed to be, as all other employees had in fact been, working.
Respondents’ misconduct to be of grave and aggravated character so that the company was justified in imposing the highest penalty available
― dismissal. Their infraction transgressed the bounds of socially and morally accepted human public behavior, and at the same time showed
brazen disregard for the respect that their employer expected of them as employees. By their misconduct, the respondents, in effect, issued an
open invitation for others to commit the same infraction, with like disregard for their employer’s rules, for the respect owed to their
employer, and for their co-employees’ sensitivities.
The court reversed CA’s decision for its failure to recognize that no grave abuse of discretion attended the NLRC’s decision to support the
respondents’ dismissal for serious misconduct.

3. Limitations of Management Prerogative

a. Goya, Inc. v. Goya, Inc. Employees

GOYA, INC., vs. GOYA, INC. EMPLOYEES UNION-FFW

G.R. No. 170054 | January 21, 2013
Subject Matter: Protection to Employer ; Limitations of Management Prerogative

FACTS:

In January 2004, petitioner Goya, Inc., a domestic corporation engaged in the manufacture, importation, and wholesale of top quality food
products, hired contractual employees from PESO Resources Development Corporation (PESO) to perform temporary and occasional
services in its factory in Parang, Marikina City.

This prompted respondent Goya, Inc. Employees Union–FFW (Union) to request for a grievance conference on the ground that the
contractual workers do not belong to the categories of employees stipulated in the existing Collective Bargaining Agreement (CBA).

On July 1, 2004, the Company and the Union manifested before Voluntary Arbitrator (VA) Bienvenido E. Laguesma that amicable settlement
was no longer possible;

ISSUE:
Whether or not the Company is guilty of unfair labor acts in engaging the services of PESO, a third party service provider, under the existing
CBA, laws, and jurisprudence.

CONTENTIONS:
Union’s Contention:

the hiring of contractual employees from PESO is not a management prerogative and in gross violation of the CBA tantamount to unfair labor
practice (ULP)

the contractual workers engaged have been assigned to work in positions previously handled by regular workers and Union members, in
effect violating Section 4, Article I of the CBA

the Union contended that it would no longer have probationary and casual employees from which it could obtain additional Union members;
thus, rendering inutile Section 1, Article III (Union Security) of the CBA

that sustaining the Company’s position would easily weaken and ultimately destroy the Union with the Company’s resort to retrenchment
and/or retirement of employees and not filling up the vacant regular positions through the hiring of contractual workers from PESO

Company’s Contention:

(a) the law expressly allows contracting and subcontracting arrangements through Department of Labor and Employment (DOLE) Order No.
18-02;

(b) the engagement of contractual employees did not, in any way, prejudice the Union, since not a single employee was terminated and
neither did it result in a reduction of working hours nor a reduction or splitting of the bargaining unit; and

(c) Section 4, Article I of the CBA merely provides for the definition of the categories of employees and does not put a limitation on the
Company’s right to engage the services of job contractors or its management prerogative to address temporary/occasional needs in its
operation.

(d) its engagement of PESO was a management prerogative.

***Definition: Management prerogative refers to the right of the employer to regulate all aspects of employment, such as the freedom to
prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of their
work, lay-off and discipline, and dismissal and recall of work, presupposing the existence of employer-employee relationship.

***Definition: A collective bargaining agreement or CBA refers to the negotiated contract between a legitimate labor organization and the
employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in all contracts, the
parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary
to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the
parties and compliance therewith is mandated by the express policy of the law.
RATIO:

Voluntary Arbitrator’s Ruling:

VA Laguesma dismissed the Union’s charge of ULP for being purely speculative and for lacking in factual basis, but the Company was
directed to observe and comply with its commitment under the CBA.

That the engagement of PESO is not in keeping with the intent and spirit of the CBA provision in question. It must, however, be stressed that
the right of management to outsource parts of its operations is not totally eliminated but is merely limited by the CBA. Given the foregoing,
the Company’s engagement of PESO for the given purpose is indubitably a violation of the CBA.

CA’s Ruling:
In justifying its act, the Company posits that its engagement of PESO was a management prerogative.

This management prerogative of contracting out services, however, is not without limitation. In contracting out services, the management
must be motivated by good faith and the contracting out should not be resorted to circumvent the law or must not have been the result of
malicious arbitrary actions.

As stated earlier, the work to be performed by PESO was similar to that of the casual employees. With the provision on casual employees, the
hiring of PESO contractual employees, therefore, is not in keeping with the spirit and intent of their CBA.

SC’s Ratio:
As repeatedly held, the exercise of management prerogative is not unlimited; it is subject to the limitations found in law, collective
bargaining agreement or the general principles of fair play and justice

To reiterate, the CBA is the norm of conduct between the parties and compliance therewith is mandated by the express policy of the law.

On VA’s Authority:

Generally, the arbitrator is expected to decide only those questions expressly delineated by the submission agreement. Nevertheless, the
arbitrator can assume that he has the necessary power to make a final settlement since arbitration is the final resort for the adjudication of
disputes. The succinct reasoning enunciated by the CA in support of its holding, that the Voluntary Arbitrator in a labor controversy has
jurisdiction to render the questioned arbitral awards, deserves our concurrence,

RULING:
WHEREFORE, the petition is DENIED. The assailed June 16, 2005 Decision, as well as the October 12, 2005 Resolution of the Court of
Appeals, which sustained the October 26, 2004 Decision of the Voluntary Arbitrator, are hereby AFFIRMED.

b. Supreme Steel Corp. v. Nagkakaisang Manggagawa ng Supreme Independent Union

G.R. No. 185556 March 28, 2011

SUPREME STEEL CORPORATION, Petitioner,

vs.
NAGKAKAISANG MANGGAGAWA NG SUPREME INDEPENDENT UNION (NMS-IND-APL), Respondent.

Topic: protection to employer ; management prerogative

Facts:
Madaming Violation of Collective Bargaining Agreement (CBA).
In 2005, workers (union herein respondent) filed a notice of strike with the National Conciliation and Mediation Board (NCMB) on the
ground that petitioner violated certain provisions of the CBA
Failed to settle dispute.

Secretary of Labor certified the case to the NLRC for compulsory arbitration pursuant to Article 263(g) of the Labor Code.
11 alleged cba violations

Denial of wage increase (annual cba increased denied to 4 employees) (respondent claims that four employees received their respective
anniversary increases and petitioner used such anniversary increase to justify the denial of their CBA increase for the year.)
Workers alleged: company’s long standing practice that upon reaching one year of service, a wage adjustment is granted, and, once wages are
adjusted, the increase provided for in the CBA for that year is no longer implemented. (pay slip used as evidence)
Company alleged that petitioner failed to prove that, as a matter of company practice, the anniversary increase took the place of the CBA
increase

(PINAKA DINISCUSS REGARDING THE TOPIC) Contracting-out labor:

Article II, Section 6 of the CBA provides:
Section 6. Prohibition of Contracting Out of Work of Members of Bargaining Unit. Thirty (30) days from the signing of this CBA,
contractual employees in all departments, except Warehouse and Packing Section, shall be phased out. Those contractual employees who are
presently in the workforce of the COMPANY shall no longer be allowed to work after the expiration of their contracts without prejudice to
being hired as probationary employees of the COMPANY
Hired temporary workers for 5 months. Allowed only sa packing yung temporary workers
Respondent admitted and claimed that it was to cope kasi seasonal increase daw

Failure to provide shuttle service (provided for in cba)

Sabi ni company hirap daw kasi mag comply - nag reneg nalang ng obligation to provide for shuttle service
Refusal to answer for medical expenses
Some employees suffered injuries pati fare nila going to the hospital was not shouldered by the company pati first aid treatment

NLRC AND CA both ruled in favor of the union. (clear violation daw of the CBA - but not so much discussion sa topic.

Ruling of SC:
Petition is partly meritorious
It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and compliance therewith is mandated by
the express policy of the law.
Indeed, jurisprudence recognizes the right to exercise management prerogative. Labor laws also discourage interference with an employer's
judgment in the conduct of its business. For this reason, the Court often declines to interfere in legitimate business decisions of employers.
The law must protect not only the welfare of employees, but also the right of employers.
However, the exercise of management prerogative is not unlimited. Managerial prerogatives are subject to limitations provided by law,
collective bargaining agreements, and general principles of fair play and justice. The CBA is the norm of conduct between the parties and, as
previously stated, compliance therewith is mandated by the express policy of the law.
The CBA is clear in providing that temporary employees will no longer be allowed in the company except in the Warehouse and Packing
Section. Petitioner is bound by this provision. It cannot exempt itself from compliance by invoking management prerogative. (what they did
pa to avoid na ma regular yung mga temporary workers is to have the “temporary employment renewal for another five months - nag avoid
maging regular mga workers. SKL - baka itanong ni Atty. eh)
Rule daw is: Management prerogative is a back seat lang tuwing may CBA.
In favor of union.

c. PLDT v. Paguio

PLDT v. Paguio
Petitioner Philippine Long Distance Telephone Company, Inc. (PLDT) has 27 Exchanges in its Greater Metro Manila (GMM) Network.
Alfredo S. Paguio was the Head of the Garnet Exchange.
In 1994, PLDT assessed the performance of the 27 Exchanges comprising the GMM Network. Upon receipt of the ratings, Paguio sent
Rodolfo Santos, his immediate supervisor and the Assistant Vice-President of the GMM East Center, a letter criticizing the PLDT criteria for
performance rating as unfair because they depended on manpower.
On January 17, 1997, Paguio was reassigned as Head for Special Assignment at the Office of the GMM East Center and asked to turn over
his functions as Garnet Exchange Head to Tessie Go. Believing that his transfer was a disciplinary action, Paguio requested Ferido for a
formal hearing of the charges against him and asked that his reassignment be deferred.
Consequently, Ferido sent Paguio an inter-office memo stating that he found Paguio's reassignment in order as it was based on the finding
that Paguio was not a team player and cannot accept decisions of management, which is short of insubordination. Ferido advised Paguio to
transfer to any group in the company that may avail of his services.
ISSUE:
Whether or not Paguio's transfer is legal?
RULING:
Petition DENIED
we note from the records that there has been no change of cause of action from illegal demotion to 'illegal transfer. Illegal demotion is a type
of illegal transfer. Moreover, it is familiar and fundamental doctrine that it is not the title of the action but the allegations in the pleading that
determines the nature of the action.
As a rule, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, including the transfer of
employees. It is the employer's prerogative, based on its assessment and perception of its employees' qualifications, aptitudes, and
competence, to deploy its employees in the various areas of its business operations in order to ascertain where they will function with
maximum benefit to the company. An employee's right to security of tenure does not give him such a vested right in his position as would
deprive the company of its prerogative to change his assignment or transfer him where he will be most useful.
HOWEVER (exception to GR), there are limits to the management prerogative. The prerogative accorded management should not defeat the
very purpose for which our labor laws exist: to balance the conflicting interests of labor and management. By its very nature, management
prerogative must be exercised always with the principles of fair play and justice.[14] In particular, the employer must be able to show that the
transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his
salaries, privileges and other benefits.[15] The employer bears the burden of proving that the transfer of the employee has complied with the
foregoing test. [16]
In the present case, we see no credible reason for Paguio's transfer except his criticisms of the company's performance evaluation methods. In
the same way, Paguio's performance was consistently rated as outstanding. There was also no proof that Paguio refused to comply with any
management policy. Patently, his transfer could not be due to poor performance. Neither was it because he was needed in the new post for the
new assignment was functionless and it was nothing but a title. Paguio's transfer could only be caused by the management's negative
reception of his comments. It is prejudicial to Paguio because it left him out for a possible promotion as he was assigned to a functionless
position with neither office nor staff.

d. Royal Plant Workers Union v. Coca-Cola Bottlers Philippines

G.R. No. 198783 April 15, 2013

ROYAL PLANT WORKERS UNION, Petitioner,
vs.
COCA-COLA BOTTLERS PHILIPPINES, INC.-CEBU PLANT, Respondent.
MENDOZA, J.:
TOPIC: Limitations of management prerogative
Coca-Cola Bottlers Philippines, Inc. (CCBPI) bottling plant in Cebu City has around 34 bottling operators. All of them are male and they are
members of Royal Plant Workers Union (ROPWU).
Sometime in September 2008, the chairs provided for the operators were removed pursuant to a Coca-Cola’s national directive, "I Operate, I
Maintain, I Clean" program.
The bottling operators took issue with the removal of the chairs and initiated the grievance machinery of the Collective Bargaining
Agreement (CBA) in November 2008.
Failing to compromise, ROPWU sent a Notice to Arbitrate, dated 16 July 2009, to Coca-Cola stating its position to submit the issue on the
removal of the chairs for arbitration.
Nevertheless, before submitting to arbitration the issue, both parties availed of the conciliation/mediation proceedings before the National
Conciliation and Mediation Board (NCMB) Regional Branch No. VII. They failed to arrive at an amicable settlement.
Coca-Cola’s contention: the removal of the chairs is valid as it is a legitimate exercise of management prerogative, it does not violate the
Labor Code and it does not violate the CBA it contracted with ROPWU
ROPWU’s contention: the bottling operators have been performing their assigned duties satisfactorily with the presence of the chairs; the
removal of the chairs constitutes a violation of the Occupational Health and Safety Standards, the policy of the State to assure the right of
workers to just and humane conditions of work as stated in Article 3 of the Labor Code and the Global Workplace Rights Policy.
Arbitration Committee: In favor of ROPWU
CA: Nullified and set aside
The CA held, among others, that the removal of the chairs from the manufacturing/production lines by CCBPI is within the province of
management prerogatives; that it was part of its inherent right to control and manage its enterprise effectively; and that since it was the
employer’s discretion to constantly develop measures or means to optimize the efficiency of its employees and to keep its machineries and
equipment in the best of conditions, it was only appropriate that it should be given wide latitude in exercising it.
Was removing the chairs a valid exercise of Management Prerogative?
YES. The Court has held that management is free to regulate, according to its own discretion and judgment, all aspects of employment,
including hiring, work assignments, working methods, time, place, and manner of work, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision, lay-off of workers, and discipline, dismissal and recall of workers. The
exercise of management prerogative, however, is not absolute as it must be exercised in good faith and with due regard to the rights of labor.
In the present controversy, it cannot be denied that CCBPI removed the operators’ chairs pursuant to a national directive and in line with its
"I Operate, I Maintain, I Clean" program, launched to enable the Union to perform their duties and responsibilities more efficiently. The
chairs were not removed indiscriminately. They were carefully studied with due regard to the welfare of the members of the Union. The
removal of the chairs was compensated by: a) a reduction of the operating hours of the bottling operators from a two-and-one-half (2 ½)-hour
rotation period to a one-and-a-half (1 ½) hour rotation period; and b) an increase of the break period from 15 to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with good intentions as CCBPI wanted to avoid instances of operators sleeping on the
job while in the performance of their duties and responsibilities and because of the fact that the chairs were not necessary considering that the
operators constantly move about while working. In short, the removal of the chairs was designed to increase work efficiency. Hence,
CCBPI’s exercise of its management prerogative was made in good faith without doing any harm to the workers’ rights.
The fact that there is no proof of any operator sleeping on the job is of no moment. There is no guarantee that such incident would never
happen as sitting on a chair is relaxing. Besides, the operators constantly move about while doing their job. The ultimate purpose is to
promote work efficiency.
WHEREFORE, the petition is DENIED.
 4. Rules on Marriage and Non-compete Clause

a. Philippine Telegraph and Telephone Company (PT&T) v. NLRC

Philippine Telegraph and Telephone Company (PT&T) v. NLRC and Grace de Guzman (G.R. No. 118978)
Facts: de Guzman was hired thrice by petitioner as reliever (Supernumerary Project Worker). Under the Reliever Agreement her employment
will end upon expiration of the agreed period.
1st reliever: Nov 21, 1990 – April 20, 1991
2nd reliever: June 10 – July 1, 1991
3rd reliever: July 19 – August 8, 1991
On September, she was once asked again to join petitioner as a probationary employee for a period of 150 days to which she agreed and filled
up a job application form where she indicated in the portion for civil status therein that she was single although she had contracted marriage a
few months earlier (May 26, 1991: after her employment as 1st reliever).
Petitioner learned about this, causing its branch supervisor to send a memorandum to de Guzman requiring her to explain the discrepancy (for
concealing the fact that she was married during her 2nd reliever to present employment as probationary employee) and reminded de Guzman
about the company’s policy of not accepting married women for employment. Sometime later, de Guzman was dismissed from the company.
de Guzman then contested by filing a complaint for illegal dismissal, before the Regional Arbitration Branch of the NLRC in Baguio, in
contrary to Article 136 of the Labor Code, coupled with a claim for non-payment of cost of living allowances. Petitioner argued that her
dismissal was because de Guzman misappropriated company funds and due to her dishonesty.
Labor Arbiter: Private respondent was illegally dismissed; that the ground relied upon by petitioner was clearly insufficient and it was clear
that she was discriminated against on her account of her having contracted marriage
NLRC: Upheld the ruling of Labor Arbiter with regard to the unjust and unlawful discrimination for her illegal dismissal. However, the
NLRC ruled that de Guzman deserved to be suspended for three (3) months in view of the dishonest nature of her acts which should not be
condoned.
Issue: Whether or not the alleged concealment of civil status can be grounds to terminate the services of an employee
RULING:
Article 136 of the Labor Code states, “Stipulation against marriage – It shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon getting married,
a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of marriage.”
The provision above does not apply to women employed in ordinary occupations only but in the whole text, speaks of non-discrimination on
the employment of women
It must be observed that private respondent had gained regular status at the time of her dismissal. Her earlier stints with the company as a
reliever were undoubtedly those of a regular employee, even if the same were for fixed periods, as she performed activities which were
essential or necessary in the usual trade and business of PT&T.
The record discloses clearly that her ties with the company were dissolves principally because of the company’s policy that married women
are not qualified for employment in PT&T, and not merely because of her supposed acts of dishonesty as evidenced in the memorandum
stating, “you’re fully aware that the company is not accepting married women employee”
Petitioner’s policy of not accepting or considering as disqualified from work any women worker who contracts marriage runs afoul of the test
of, and the right against, discrimination afforded all women workers by our labor laws (Article 130-138) and by no less than the Constitution
(Article II, Section 14; Article XIII, Section 3; Article XIII, Section 14).
de Guzman’s act of concealing the true nature of her status from PT&T could not be properly characterized as willful or in bad faith as she
was moved to act that way mainly because she wanted to retain a permanent job in a stable company. While loss of confidence is a just cause
for termination of employment, it should not be simulated. It must rest on an actual breach of duty committed by the employee and not on the
employer’s caprices.
Petitioner invoked the policy of PAL in Zialcita vs Phillipine Air Lines wherein a policy of PAL requiring that prospective flight attendants
must be single and that they will be automatically separated from the service once they marry
The Court ruled that although Article 132 enjoins the Secretary of Labor to establish standards that will ensure the safety and health of
women employees and in appropriate cases shall by regulation require employers to determine appropriate minimum standards for
termination in special occupations (e.g. flight attendants), the standards have not yet been established nor has the Secretary of Labor issued
any regulation.
It is logical to presume that, in the absence of said standards or regulations which are as yet to be established, the policy against marriage is
patently illegal.
de Guzman is entitled to reinstatement without loss of seniority rights and other privileges and to full back wages, inclusive of allowances
and other benefits or their monetary equivalent. However, as she had undeniably committed an act of dishonesty, the three-month suspension
shall be upheld. Thus, her entitlement to back wages, which shall be computed from the time her compensation was withheld up to the time
her actual reinstatement, shall be reduced by deducting therefrom the amount corresponding to her three months suspension.
Such policy likewise assaults good morals and public policy, tending as it does to deprive a woman of the freedom to choose her status, a
privilege that by all accounts inheres in the individual as an intangible and inalienable right.
Case, DISMISSED.

b. Duncan Association of DetailmanPTGWO v. Glaxo

DUNCAN ASSOC. and PEDRO A. TECSON VS. GLAXO WELLCOME PHILIPPINES, INC
FACTS:
Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc. (Glaxo) as medical representative in 1995.
Tecson signed a contract of employment which stipulates that he will disclose to management any existing or future relationship by
consanguinity or affinity with co-employees or employees of competing drug companies and should management find that such relationship
poses a possible conflict of interest, to resign from the company. The Employee Code of Conduct of Glaxo also provides the same.
Tecson entered into a romantic relationship with Bettsy, an employee of Astra Pharmaceuticals (Astra), a competitor of Glaxo.
Tecson received several reminders from his District Manager regarding the conflict of interest which his relationship with Bettsy might
engender.
Tecson married Bettsy in 1998
Tecson requested for time to comply with the company policy against because Astra, Bettsy’s employer, was planning to merge with Zeneca,
another drug company; and Bettsy was planning to avail of the redundancy package to be offered by Astra. They wanted to avail of the
attractive redundancy package from Astra - to hit two birds with one stone, so to speak.
Tecson was transferred to a different area but did not want to be, so he filed a complaint to Glaxo’s Grievance Committee. Glaxo remained
firm.
GRIEVANCE PROCEEDINGS.
During the pendency of the grievance proceedings, Tecson was paid his salary, but was not issued samples of products which were
competing with similar products manufactured by Astra. He was also not included in product conferences regarding such products.
Tecson argues that he was constructively dismissed because: (1) he was transferred to a different sales area, (2) he suffered a diminution in
pay, (3) he was excluded from attending seminars and training sessions for medical representatives, and (4) he was prohibited from
promoting respondent’s products which were competing with Astra’s products.
They were unable to resolve the matter and submitted it to voluntary arbitration.
ARBITRATION LEVEL:
The National Conciliation and Mediation Board (NCMB) rendered its Decision declaring as valid Glaxo’s policy on relationships between its
employees and persons employed with competitor companies, and affirming Glaxo’s right to transfer Tecson to another sales territory.
Tecson filed a Petition for Review with the Court of Appeals assailing the NCMB Decision.
COURT OF APPEALS
CA affirmed the decision of the NCMB and held that Glaxo’s policy prohibiting its employees from having personal relationships with
employees of competitor companies is a valid exercise of its management prerogatives.
Tecson filed an MR but CA also denied the MR.
He elevated the matter to the SC.
ISSUE:
W/N Glaxo’s policy is valid
W/N Tecson was constructively dismissed
RULING:
YES. Glaxos’s policy is valid.
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information
from competitors, especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry. Glaxo possesses the
right to protect its economic interests.
The prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s employees is reasonable
under the circumstances because relationships of that nature might compromise the interests of the company.
The challenged company policy does not violate the equal protection clause of the Constitution as petitioners erroneously suggest. It is a
settled principle that the commands of the equal protection clause are addressed only to the state or those acting under color of its authority.
The assailed company policy was signed by Tescon and was made known to him prior to his employment. Tecson, therefore, was aware of
that restriction when he signed his employment contract and when he entered into a relationship with Bettsy. Since Tecson knowingly and
voluntarily entered into a contract of employment with Glaxo, the stipulations therein have the force of law between them and, thus, should
be complied with in good faith."
NO. Tecson was not constructively dismissed.
Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when continued employment becomes impossible,
unreasonable, or unlikely; when there is a demotion in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by
an employer becomes unbearable to the employee.
None of these conditions are present in the instant case. The record does not show that Tescon was demoted or unduly discriminated upon by
reason of such transfer.

c. Star Paper Corp. v. Simbol

STAR PAPER CORPORATION, JOSEPHINE ONGSITCO & SEBASTIAN CHUA

vs. RONALDO D. SIMBOL, WILFREDA N. COMIA & LORNA E. ESTRELLA
G.R. No. 164774 | April 12, 2006
Subject Matter: Protection to Employer ; Rules of Marriage and Non-Compete Clause

FACTS:
Star Paper Corporation (the company) is a corporation engaged in trading – principally of paper products. Josephine Ongsitco is its Manager
of the Personnel and Administration Department while Sebastian Chua is its Managing Director.
Ronaldo D. Simbol (Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were all regular employees of the company.
Simbol was employed by the company on October 27, 1993. He met Alma Dayrit, also an employee of the company, whom he married on
June 27, 1998.
Prior to the marriage, Ongsitco advised the couple that should they decide to get married, one of them should resign pursuant to a company
policy promulgated in 1995,
1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd degree of relationship, already employed by
the company.
2. In case of two of our employees (both singles [sic], one male and another female) developed a friendly relationship during the course of
their employment and then decided to get married, one of them should resign to preserve the policy stated above.3
Simbol resigned on June 20, 1998 pursuant to the company policy.
Comia was hired by the company on February 5, 1997. She met Howard Comia, a co-employee, whom she married on June 1, 2000.
Ongsitco likewise reminded them that pursuant to company policy, one must resign should they decide to get married. Comia resigned on
June 30, 2000.
Estrella was hired on July 29, 1994. She met Luisito Zuñiga (Zuñiga), also a co-worker. Zuñiga, a married man, got Estrella pregnant. The
company allegedly could have terminated her services due to immorality but she opted to resign on December 21, 1999.

Labor Artibiter’s Ruling

On May 31, 2001, Labor Arbiter Melquiades Sol del Rosario dismissed the complaint for lack of merit.

[T]his company policy was decreed pursuant to what the respondent corporation perceived as management prerogative.

This management prerogative is quite broad and encompassing for it covers hiring, work assignment, working method, time, place and
manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay-off of workers and the discipline, dismissal and recall of workers.

Except as provided for or limited by special law, an employer is free to regulate, according to his own discretion and judgment all the aspects
of employment.

NLRC affirmed the ruling of the Labor Arbiter.

CA’s Ruling:
Decision of the National Labor Relations Commission is hereby REVERSED and SET ASIDE and a new one is entered as follows:
(1) Declaring illegal, the petitioners’ dismissal from employment and ordering private respondents to reinstate petitioners to their former
positions without loss of seniority rights with full backwages from the time of their dismissal until actual reinstatement; and
(2) Ordering private respondents to pay petitioners attorney’s fees amounting to 10% of the award and the cost of this suit.

ISSUE:

Whether the policy of the employer banning spouses from working in the same company violates the rights of the employee under the
Constitution and the Labor Code or is a valid exercise of management prerogative?

CONTENTIONS:

Star Paper’s Contention:

that its policy "may appear to be contrary to Article 136 of the Labor Code" but it assumes a new meaning if read together with the first
paragraph of the rule.

The rule does not require the woman employee to resign.

The employee spouses have the right to choose who between them should resign.

Further, they are free to marry persons other than co-employees.

Respondent’s Contention:
Simbol and Comia allege that they did not resign voluntarily; they were compelled to resign in view of an illegal company policy; Estrella
was being dismissed for immoral conduct.

The aforementioned company policy is illegal and contravenes Article 136 of the Labor Code. They also contended that they were dismissed
due to their union membership.

RATIO:

The SC affirms the decision of the CA

It is true that the policy of petitioners prohibiting close relatives from working in the same company takes the nature of an anti-nepotism
employment policy. Companies adopt these policies to prevent the hiring of unqualified persons based on their status as a relative, rather than
upon their ability.17

These policies focus upon the potential employment problems arising from the perception of favoritism exhibited towards relatives.

We note that two types of employment policies involve spouses: policies banning only spouses from working in the same company (no-
spouse employment policies), and those banning all immediate family members, including spouses, from working in the same company (anti-
nepotism employment policies).

There must be a compelling business necessity for which no alternative exists other than the discriminatory practice.32 To justify a bona fide
occupational qualification, the employer must prove two factors:

that the employment qualification is reasonably related to the essential operation of the job involved; and,

that there is a factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the
duties of the job.

We do not find a reasonable business necessity in the case at bar.

Petitioners’ sole contention that "the company did not just want to have two (2) or more of its employees related between the third degree by
affinity and/or consanguinity"38 is lame. That the second paragraph was meant to give teeth to the first paragraph of the questioned rule39 is
evidently not the valid reasonable business necessity required by the law.

The policy is premised on the mere fear that employees married to each other will be less efficient. If we uphold the questioned rule without
valid justification, the employer can create policies based on an unproven presumption of a perceived danger at the expense of an employee’s
right to security of tenure.

The failure of petitioners to prove a legitimate business concern in imposing the questioned policy cannot prejudice the employee’s right to
be free from arbitrary discrimination based upon stereotypes of married persons working together in one company.

for failure of petitioners to present undisputed proof of a reasonable business necessity, we rule that the questioned policy is an invalid
exercise of management prerogative.

On Estrella’s case:

We have held that in voluntary resignation, the employee is compelled by personal reason(s) to dissociate himself from employment. It is
done with the intention of relinquishing an office, accompanied by the act of abandonment.

Thus, it is illogical for Estrella to resign and then file a complaint for illegal dismissal. Given the lack of sufficient evidence on the part of
petitioners that the resignation was voluntary, Estrella’s dismissal is declared illegal.

RULING:

IN VIEW WHEREOF, the Decision of the Court of Appeals in CA-G.R. SP No. 73477 dated August 3, 2004 is AFFIRMED.

d. Tiu v. Platinum Plans Philippines, Inc.

TIU vs. PLATINUM PLANS PHIL., INC.,

FACTS:
From 1987 to 1989, Daisy B. Tiu was the Division Marketing Director of Platinum Plans Philippines, Inc. which is a domestic corporation
engaged in the pre-need industry.
On January 1, 1993, Tiu was re-hired as Senior Assistant Vice-President and Territorial Operations Head in charge of its Hongkong and
Asean operations.
In September, 1995, Tiu stopped reporting for work and in November 1995, she became the Vice-President for Sales of Professional Pension
Plans, Inc. which is a corporation engaged also in the pre-need industry.
Platinum Plans Philippines, Inc sued Tiu for damages before the RTC of Pasig City alleging that Tiu’s employment with Professional
Pension Plans, Inc. violated the non-involvement clause in her contract of employment, to wit:
8. NON INVOLVEMENT PROVISION – The EMPLOYEE further undertakes that during his/her engagement with EMPLOYER and in
case of separation from the Company, whether voluntary or for cause, he/she shall not, for the next TWO (2) years thereafter, engage in or be
involved with any corporation, association or entity, whether directly or indirectly, engaged in the same business or belonging to the same
pre-need industry as the EMPLOYER. Any breach of the foregoing provision shall render the EMPLOYEE liable to the EMPLOYER in the
amount of One Hundred Thousand Pesos (P100,000.00) for and as liquidated damages.5
Tiu countered that the non-involvement clause was unenforceable for being against public order or public policy:
In upholding the validity of the non-involvement clause, RTC ruled that a contract in restraint of trade is valid provided that there is a
limitation upon either time or place. In the case of the pre-need industry, the trial court found the two-year restriction to be valid and
reasonable.
On appeal, CA affirmed the RTC’s ruling stating that Tiu entered into the contract on her own will and volition. Thus, she bound herself to
fulfill not only what was expressly stipulated in the contract, but also all its consequences that were not against good faith, usage, and law.
CA also ruled that the stipulation prohibiting non-employment for two years was valid and enforceable considering the nature of respondent’s
business.
Tiu moved for reconsideration but was denied.
ISSUE:
Whether the non-involvement clause is valid.
HELD:
A non-involvement clause is not necessarily void for being in restraint of trade as long as there are reasonable limitations as to time, trade,
and place.
In this case, the non-involvement clause has a time limit: two years from the time Tiu’s employment with respondent ends. It is also limited
as to trade, since it only prohibits Tiu from engaging in any pre-need business akin to respondent’s.1awphi1.net
Since petitioner was the Senior Assistant Vice-President and Territorial Operations Head in charge of respondent’s Hongkong and Asean
operations, she had been privy to confidential and highly sensitive marketing strategies of respondent’s business. To allow her to engage in a
rival business soon after she leaves would make respondent’s trade secrets vulnerable especially in a highly competitive marketing
environment.
Non-involvement clause not contrary to public welfare and not greater than is necessary to afford a fair and reasonable protection to
respondent.
Article 1306 of the Civil Code provides that parties to a contract may establish such stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.
Article 115914 of the same Code also provides that obligations arising from contracts have the force of law between the contracting parties
and should be complied with in good faith. Courts cannot stipulate for the parties nor amend their agreement where the same does not
contravene law, morals, good customs, public order or public policy, for to do so would be to alter the real intent of the parties, and would
run contrary to the function of the courts to give force and effect thereto.15 Not being contrary to public policy, the non-involvement clause,
which petitioner and respondent freely agreed upon, has the force of law between them, and thus, should be complied with in good faith.
WHEREFORE, the petition is DENIED for lack of merit.

e. Century Properties, Inc. v. Babiano

G.R. No. 220978 July 5, 2016

CENTURY PROPERTIES, INC., Petitioner,
vs
EDWIN J. BABIANO and EMMA B. CONCEPCION, Respondents.
PERLAS-BERNABE, J.:
TOPIC: Rules on Compliance and Non-compete clause
Edwin Babiano was CPI’s Vice President for Sales effective September 1, 2007. His employment
contracthttps://www.lawphil.net/judjuris/juri2016/jul2016/gr_220978_2016.html - fnt7 contained a "Confidentiality of Documents and Non:-
Compete Clause"https://www.lawphil.net/judjuris/juri2016/jul2016/gr_220978_2016.html - fnt8 which, among others, barred him from
disclosing confidential information, and from working in any business enterprise that is in direct competition with CPI "while [he is]
employed and for a period of one year from date of resignation or termination from [CPI]." Should Babiano breach any of the terms thereof,
his "forms of compensation, including commissions and incentives will be forfeited."
Meanwhile, Concepcion was promoted as Project Director effective on September 1, 2007. As such, she signed an employment agreement,
denominated as "Contract of Agency for Project Director"12 which provided, among others, that she would directly report to Babiano.
CPI conducted an investigation after they received reports that Babiano provided a competitor with information regarding CPI's marketing
strategies, spread false information regarding CPI and its projects, recruited CPI's personnel to join the competitor, and for being absent
without official leave (AWOL) for five (5) days.
On February 25, 2009, Babiano tendered his resignation and revealed that he had been accepted as Vice President of First Global BYO
Development Corporation (First Global), a competitor of CPI.https://www.lawphil.net/judjuris/juri2016/jul2016/gr_220978_2016.html -
fnt19
On March 3, 2009, Babiano was served a Notice of Termination for: (a) incurring AWOL;(b) violating the "Confidentiality of Documents
and Non-Compete Clause" when he joined a competitor enterprise while still working for CPI and provided such competitor enterprise
information regarding CPI' s marketing strategies; and (c) recruiting CPI personnel to join a competitor.21
On the other hand, Concepcion resigned as CPI's Project Director through a letter22 dated February 23, 2009, effective immediately.
On August 8, 2011, Babiano and Concepcion filed a complaint23 for non-payment of commissions and damages against CPI and Antonio
before the NLRC, docketed as NLRC Case No. NCR-08-12029-11, claiming that their repeated demands for the payment and release of their
commissions remained unheeded.24
CPI contended that Babiano is merely its agent tasked with selling its projects. Nonetheless, he was afforded due process in the termination of
his employment which was based on just causes.26 It also claimed to have validly withheld Babiano' s commissions, considering that they
were deemed forfeited for violating the "Confidentiality of Documents and Non-Compete Clause."27 On Concepcion's money claims, CPI
asserted that the NLRC had no jurisdiction to hear the same because there was no employer-employee relations between them, and thus, she
should have litigated the same in an ordinary civil action.
LA Ruling: In favor of CPI
NLRC Ruling: Reversed. CPI ordered to pay
CA Ruling: Affirmed
Should they be paid?
On Babiano: NO
Article 1370 of the Civil Code provides that "[i]f the terms of a contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall control."
The foregoing clause in the contract is not only clear and unambiguous in stating that Babiano is barred to "work for whatsoever capacity x x
x with any person whose business is in direct competition with [CPI] while [he is] employed and for a period of one year from date of [his]
resignation or termination from the company," it also expressly provided in no uncertain terms that should Babiano "[breach] any term of [the
employment contract], forms of compensation including commissions and incentives will be forfeited." Here, the contracting parties - namely
Babiano on one side, and CPI as represented by its COO-Vertical, John Victor R. Antonio, and Director for Planning and Controls, Jose
Carlo R. Antonio, on the other - indisputably wanted the said clause to be effective even during the existence of the employer-employee
relationship between Babiano and CPI, thereby indicating their intention to be bound by such clause by affixing their respective signatures to
the employment contract. More significantly, as CPI's Vice President for Sales, Babiano held a highly sensitive and confidential managerial
position as he "was tasked, among others, to guarantee the achievement of agreed sales targets for a project and to ensure that his team has a
qualified and competent manpower resources by conducting recruitment activities, training sessions, sales rallies, motivational activities, and
evaluation programs."57 Hence, to allow Babiano to freely move to direct competitors during and soon after his employment with CPI would
make the latter's trade secrets vulnerable to exposure, especially in a highly competitive marketing environment. As such, it is only
reasonable that CPI and Babiano agree on such stipulation in the latter's employment contract in order to afford a fair and reasonable
protection to CPI.58 Indubitably, obligations arising from contracts, including employment contracts, have the force of law between the
contracting parties and should be complied with in good faith.59 Corollary thereto, parties are bound by the stipulations, clauses, terms, and
conditions they have agreed to, provided that these stipulations, clauses, terms, and conditions are not contrary to law, morals, public order or
public policy,60 as in this case.
A judicious review of the records reveals that in his resignation letter61 dated February 25, 2009, Babiano categorically admitted to CPI
Chairman Jose Antonio that on February 12, 2009, he sought employment from First Global, and five (5) days later, was admitted thereto as
vice president. From the foregoing, it is evidently clear that when he sought and eventually accepted the said position with First Global, he
was still employed by CPI as he has not formally resigned at that time. Irrefragably, this is a glaring violation of the "Confidentiality of
Documents and Non-Compete Clause" in his employment contract with CPI, thus, justifying the forfeiture of his unpaid commissions.
On Concepcion: YES
Anent the nature of Concepcion' s engagement, based on case law, the presence of the following elements evince the existence of an
employer-employee relationship: (a) the power to hire, i.e., the selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employer's power to control the employee's conduct, or the so called "control test." The control test is
commonly regarded as the most important indicator of the presence or absence of an employer-employee relationship.62 Under this test, an
employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end
achieved, but also the manner and means to be used in reaching that end.63
Guided by these parameters, the Court finds that Concepcion was an employee of CPI considering that: (a) CPI continuously hired and
promoted Concepcion from October 2002 until her resignation on February 23, 2009,64 thus, showing that CPI exercised the power of
selection and engagement over her person and that she performed functions that were necessary and desirable to the business of CPI; (b) the
monthly "subsidy" and cash incentives that Concepcion was receiving from CPI are actually remuneration in the concept of wages as it was
regularly given to her on a monthly basis without any qualification, save for the "complete submission of documents on what is a sale
policy";65 (c) CPI had the power to discipline or even dismiss Concepcion as her engagement contract with CPI expressly conferred upon the
latter "the right to discontinue [her] service anytime during the Eeriod of engagement should [she] fail to meet the performance standards,"66
among others, and that CPI actually exercised such power to dismiss when it accepted and approved Concepcion' s resignation letter; and
most importantly, (d) as aptly pointed out by the CA, CPI possessed the power of control over Concepcion because in the performance of her
duties as Project Director - particularly in the conduct of recruitment activities, training sessions, and skills development of Sales Directors -
she did not exercise independent discretion thereon, but was still subject to the direct supervision of CPI, acting through BabiaNo. 67
Besides, while the employment agreement of Concepcion was denominated as a "Contract of Agency for Project Director," it should be
stressed that the existence of employer-employee relations could not be negated by the mere expedient of repudiating it in a contract. In the
case of Insular Life Assurance Co., Ltd. v. NLRC,68 it was ruled that one's employment status is defined and prescribed by law, and not by
what the parties say it should be, viz.:
It is axiomatic that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in the management
contract and providing therein that the "employee" is an independent contractor when the terms of the agreement clearly show otherwise. For,
the employment status of a person is defined and prescribed by law and not by what the parties say it should be. In determining the status of
the management contract, the "four-fold test" on employment earlier mentioned has to be applied.69 (Emphasis and underscoring supplied)
Therefore, the CA correctly ruled that since there exists an employer-employee relationship between Concepcion and CPI, the labor tribunals
correctly assumed jurisdiction over her money claims.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated April 8, 2015 and the Resolution dated October 12, 2015 of the
Court of Appeals (CA) in CA-G.R. SP No. 132953 are hereby MODIFIED in that the commissions of respondent Edwin J. Babiano are
deemed FORFEITED. The rest of the CA Decision stands.

F. Company Practice and Company Policy

1. Central Azucarera De Tarlac v. Central Azucarera De Tarlac Labor Union

G.R. no. 188949

Central Azucarera De Tarlac
-vs-
Central Azucarera De Tarlac Labor Union

Doctrine:

Facts: The controversy of this case stems from the interpretation of the term “basic pay”, essential in the computation of the 13th month pay.

In compliance with Presidential Decree (PD) no. 851, Petitioner (Central Azucarera De Tarlac) granted its employees the mandatory
thirteenth (13th) month pay since 1975. The formula used by the petitioner is Total Basic Annual Salary/ 12 (months). The total basic annual
salary includes the following: Basic monthly salary; first 8 hours overtime pay on Sunday and legal/special holiday; night premium pay; and
vacation and sick leaves for each year. This is how the petitioner computed the said 13th month pay until 2006.

On November 6, 2004, Respondent (Labor Union) staged a strike. Petitioner declared temporary cessation of operation during pendency of
the said strike. In December 2005, all striking union members were allowed to work. Subsequently, petitioner declared, again temporary
cessation of operations for the months of April and May 2006 and suspension of the operation was lifted on 2006 of June. Rank and file
employees were only allowed to work for 15 day per month rotation. When petitioner computed their 13th month pay, they again used the
formula: Total Basic Annual Salary/ 12 (months). Respondent objected to the said computation as they were only allowed to work for 8
months for the year 2006. It also asserted that petitioner did not observe the company practice of giving its employees the guaranteed amount
equivalent to their 1 month pay, in instances where the computed 13th-month pay was less than their basic monthly pay.

In their grievance meeting, Petitioner explained that the change in the computation of the 13th-month pay was intended to rectify an error in
the computation, particularly the concept of basic pay which should have included only the basic monthly pay of the employees.

Respondent applied for preventive mediation before the National Conciliation and Mediation Board (NCMB) but no there was no settlement.

Respondent filed a complaint against petitioner for money claims based on the alleged diminution of benefits/erroneous computation of 13th-
month pay before the Regional Arbitration Branch of the NLRC.

LA favored petitioner. Respondents filed an appeal.

NLRC reversed LA’s decision. Petitioner filed MR which was denied.
Respondent went to CA but it affirmed NLRC’s decision. Hence this petition.

ISSUE:
Whether the company can impose a new computation for the 13th month pay benefit of its employees and its previous practice be withdrawn.

Ruling: Petition Denied.

Discussion: No. The 13th-month pay represents an additional income based on wage but not part of the wage. It is equivalent to 1/12 of the
total basic salary earned by an employee within a calendar year. All rank-and-file employees, regardless of their designation or employment
status and irrespective of the method by which their wages are paid, are entitled to this benefit, if they have worked for at least 1 month
during the calendar year. If the employee worked for only a portion of the year, the 13th-month pay is computed pro rata.
The Rules and Regulations Implementing P.D. No. 851 defines 13th-month pay as “1/12 of the basic salary of an employee within a calendar
year “ and basic salary as “shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not
include cost-of-living allowances granted pursuant to PD. 525 or Letter of Instructions No. 174, profit-sharing payments, and all allowances
and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the
promulgation of the Decree on December 16, 1975.”

The salary-related benefits should be included as part of the basic salary in the computation of the 13th-month pay if, by individual or
collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees.

The practice of petitioner in giving 13th-month pay based on the employees’ gross annual earnings which included the basic monthly salary,
premium pay for work on rest days and special holidays, night shift differential pay and holiday pay continued for almost 30 years and has
ripened into a company policy or practice cannot be unilaterally withdrawn.

Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that benefits given to employees cannot be taken
back or reduced unilaterally by the employer because the benefit has become part of the employment contract, written or unwritten. The rule
against diminution of benefits applies if it is shown that the grant of the benefit is based on an express policy or has ripened into a practice
over a long period of time and that the practice is consistent and deliberate. Nevertheless, the rule will not apply if the practice is due to error
in the construction or application of a doubtful or difficult question of law. But even in cases of error, it should be shown that the correction is
done soon after discovery of the error.

Petitioner’s argument that the said grant of benefit was due to error in the interpretation of what is included in the basic salary is untenable.
No doubtful or difficult question of law is involved in this case. The guidelines set by the law are not difficult to decipher. The voluntariness
of the grant of the benefit was manifested by the number of years the employer had paid the benefit to its employees. Petitioner only changed
the formula in the computation of the 13th-month pay after almost 30 years and only after the dispute between the management and
employees erupted. This act of petitioner in changing the formula at this time cannot be sanctioned, as it indicates bad faith.

2. Metrobank v. NLRC

Metrobank v. NLRC, Felipe Patag, Bienvenido FloraJune 18, 2009

G.R. No. 152928Leonardo-De Castro, J.

FACTS: Felipe and Bienvenido were former employees of petitioner Metrobank as Asst. Manager and Senior Manager, respectively. Both
respondents availed of the bank’s compulsory retirement plan in accordance with the 1995 Officers’ Benefits Memorandum. Both of them
received their respective retirement benefits computed at 185% of their gross monthly salary for every year of service as provided.

Early in 1998, Collective Bargaining Agreement (CBA) negotiations were on-going between Metrobank and its rank and file employees for
the period 1998-2000, which decided upon a new rate for retirement benefits of 200%. Both of them wrote a letter requesting for the
application of the new rates for their retirement benefits, given that both of them retired 1998 after the CBA.

On June 10, 1998, the 1998 Officers’ Benefits Memorandum was issued which increased the rate to 200% effective January 1, 1998, but with
the condition that the benefits shall only be extended to those who remain in service as of June 15, 1998.

After more attempts to ask for the additional benefits, eventually Felipe and Bien filed with the Labor Arbiter (LA) their consolidated
complaint against Metrobank for underpayment of retirement benefits and damages, asserting that pursuant to the 1998 Officers’ Benefits
Memorandum, they were entitled to additional retirement benefits.

LA dismissed the complaint. The NLRC ruled in favor of the Felipe and Bien. CA affirmed the NLRC, giving significance to the company
practice of Metrobank to apply new benefits to retiree employees at the time the CBA was finalized.

ISSUE: Whether respondents can still recover higher benefits under the 1998 Officers’ Benefits
Memorandum despite the fact that they have compulsorily retired prior to the issuance of said memorandum and did not meet the condition
therein requiring them to be employed as of June 15, 1998. – Yes.

HELD: The main issue in this case involves a question of fact. As a rule, the Supreme Court is not a trier of facts and this applies with greater
force in labor cases. Hence, factual findings of quasi-judicial bodies like the NLRC, particularly when they coincide with those of the LA and
if supported by substantial evidence, are accorded respect and even finality by this Court. However, where the findings of the NLRC and the
LA are contradictory, as in this case, the reviewing court may delve into the records and examine for itself the questioned findings.

Metrobank’s Position – CA and NLRC erred when they recognized that there was an established company practice or policy of granting
improved benefits to its officers effective January 1 of the year and without any condition that the officers should remain employees of
Metrobank as of a certain date. Metrobank claims that although its officers were extended the same as or higher benefits than those contained
in its CBA with its rank and file employees from 1986 to 1997, the same cannot be concluded to have ripened into a company practice since
the provisions of the retirement plan itself and the law on retirement should be controlling.

The Court does not agree. To be considered a company practice, the giving of the benefits should have been done over a long period of time,
and must be shown to have been consistent and deliberate. The test or rationale of this rule on long practice requires an indubitable showing
that the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment
thereof.

It was the NLRC’s finding, as affirmed by the CA, that there is a company practice of paying improved benefits to petitioner bank’s officers
effective every January 1 of the same year the improved benefits are granted to rank and file employees in a CBA. We find that the NLRC’s
and CA’s factual conclusions were fully supported by substantial evidence on record.

In other words, for over a decade, Metrobank has consistently, deliberately and voluntarily granted improved benefits to its officers, after the
signing of each CBA with its rank and file employees, retroactive to January 1st of the same year as the grant of improved benefits and
without the condition that the officers should remain employees as of a certain date. This undeniably indicates a unilateral and voluntary act
on Metrobank’s part, to give said benefits to its officers, knowing that such act was not required by law or the company retirement plan.

What constitutes voluntary employer practice – Jurisprudence has not laid down any hard and fast rule. In the following cases, the Court held
that the grant of these benefits has ripened into company practice or policy which cannot be peremptorily withdrawn. The common
denominator in these cases appears to be the regularity and deliberateness of the grant of benefits over a significant period of time.

Davao Fruits Corp. v. Associated Labor Unions – The company practice of including in the computation of the 13th-month pay the maternity
leave pay and cash equivalent of unused vacation and sick leave lasted for 6 years.
Tiangco v. Leogardo Jr. – The employer carried on the practice of giving a fixed monthly emergency allowance from November 1976 to
February 1980, or 3 years and 4 months.
Sevilla Trading v. Semana – The employer kept the practice of including non-basic benefits such as paid leaves for unused sick leave and
vacation leave in the computation of their 13th-month pay for at least 2 years.

In the case at bar, Metrobank favorably adjusted its officers’ benefits, including retirement benefits, after the approval of each CBA with the
rank and file employees, to be effective every January 1st of the same year as the CBA’s approval, and without any condition regarding the
date of employment of the officer, from 1986 to 1997 or for about 11 years. This constitutes voluntary employer practice which cannot be
unilaterally withdrawn or diminished by the employer without violating the spirit and intent of Art. 100 of the Labor Code, to wit:

Art. 100. Prohibition against elimination or diminution of benefits.– Nothing in this Book shall be construed to eliminate or in any way
diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.

The condition that an officer must still be in the service of petitioner bank as of June 15, 1998 effectively reduced benefits of employees who
retired prior to the issuance of the 1998 Officers’ Benefits Memorandum despite the fact in the past no such condition was imposed by the
bank and previous retirees presumably enjoyed the higher benefits regardless of their date of retirement as long as they were still employees
of petitioner as of the January 1st effectivity date.

WHEREFORE, the petition for review is hereby DENIED. The assailed decision and resolution of the CA in CA-G.R. No. 63144 are hereby
AFFIRMED.

3. Pag-asa Steel Works v. CA

PAG-ASA STEEL WORKS, INC., Petitioner, vs. COURT OF APPEALS, FORMER SIXTH DIVISION and PAG-ASA STEEL
WORKERS UNION (PSWU), Respondent. (2006)

Facts:
Petitioner Pag-Asa Steel Works, Inc. is a corporation duly organized and existing under Philippine laws and is engaged in the
manufacture of steel bars and wire rods. Pag-Asa Steel Workers Union is the duly authorized bargaining agent of the rank-and-file
employees of petitioner.

January 8, 1998, the Regional Tripartite Wages and Productivity Board (Wage Board) of NCR issued Wage Order No. NCR-06.
It provided for an increase of P13.00 per day in the salaries of employees receiving the minimum wage, and a consequent
increase in the minimum wage rate to P198.00 per day. Adjustments were negotiated by the Petitioner and the Union in “accordance
with the formula [they] have discussed and [were] designed so as no distortion shall result from the implementation of Wage
Order No. NCR-06.”

On October 14, 1999, Wage Order No. NCR-07 was issued, and on October 26, 1999, its Implementing Rules andRegulations. It provided for
a P25.50 per day increase in the salary of employees receiving the minimum wage andincreased the minimum wage to P223.50 per day.
Petitioner paid the P25.50 per day increase to all of its rank-and-file employees.
On November 1, 2000, Wage Order No. NCR-08 took effect providing that: Upon the effectivity of this Wage Order, private sector workers
and employees in the National CapitalRegion receiving the prescribed daily minimum wage rate of P223.50 shall receive an increase of
TWENTY SIXPESOS and FIFTY CENTAVOS (P26.50) per day, thereby setting the new minimum wage rate in the NationalCapital Region
at TWO HUNDRED FIFTY PESOS (P250.00) per day.

Union president Lucenio Brin requested petitioner to implement the increase under Wage Order No. NCR-08 in favor of the company’s rank-
and-file employees. Petitioner rejected the request, claiming that since none of th eemployees were receiving a daily salary rate lower than
P250.00 and there was no wage distortion, it was not obliged to grant the wage increase.

When the parties failed to settle, they agreed to refer the case to voluntary arbitration. In the Submission Agreement, the parties agreed that
the sole issue is "[w]hether or not the management is obliged to grant wage increase under Wage Order No. NCR #8 as amatter of practice,"
and that the award of the Voluntary Arbitrator (VA) shall be final and binding.

VA ruled in favor of the Petitioner (Company) and CA reversed VA’s ruling.

Issue: WON the company was obliged to grant the wage increase under Wage Order No. NCR-08 as a matter of practice.- NO

Ruling:
The petition is meritorious. We rule that petitioner is not obliged to grant the wage increase under Wage Order No. NCR-08
either by virtue of the CBA, or as a matter of company practice.

Wage Order No. NCR-08 specifically provides that only those in the private sector in the NCR receiving the prescribed daily
minimum wage rate of P 223.00 per day would receive an increase of P26.50 a day, thereby setting the new minimum wage rate
in said region to P250.00 per day. There is no dispute that, when the order was issued, the lowest paid employee of petitioner
was receiving a wage higher than P 250.00 a day. As such, its employees had no right to demand for an increase under said
order.

With the above narration of facts and with the union not having effectively controverted the same, we find no merit to the
complainant’s assertion of such a company practice in the grant of wage order increase applied across-theb oard. The fact that it
was shown the increases granted under the Wage Orders were obtained thru request and negotiations because of the existence of
wage distortion and not as company practice as what the union would want.

Just like any other fact, habits, customs, usage or patterns of conduct must be proved. We have reviewed the records meticulously
and find no evidence to prove that the grant of a wage-order-mandated increase to all the employees regardless of their salary
rates on an agreement collateral to the CBA had ripened into company practice before the effectivity of Wage Order No. NCR-
08. Respondent Union failed to adduce proof on the salaries of the employees prior to the issuance of each wage order to
establish its allegation that, even if the employees were receiving salaries above the minimum wage and there was no wage
distortion, they were still granted salary increase.

Petition is GRANTED. The Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE. The Decision of
the Voluntary Arbitrator is REINSTATED.

4. China Banking Corp. v. Borromeo

G.R. No. 156515 October 19, 2004

CHINA BANKING CORPORATION, petitioner,
vs.
MARIANO M. BORROMEO, respondent.
CALLEJO, SR., J.:
TOPIC: Company practice and Company policy
Mariano M. Borromeo, respondent and employee of China Banking Corporation (CBC), petitioner, rose up the ranks from Manager Level I
with a position of manager to Senior Manager Level II with a position of Assistant Vice-President, having experienced a total of four
promotions in seven years.
Prior to his last promotion and then unknown to CBC, Borromeo, without authority from the Executive Committee or the Board of Directors,
approved several checks "Drawn Against Uncollected Deposits/Bills Purchased" (DAUD/BP) amounting to Php 2,441,375 in favor of Joel
Maniwan. DAUD/BP are checks which are not sufficiently funded by cash and are generally not honored by banks; the grant of such checks
must be accompanied by express authority from CBC's Executive Committee or Board of Directors, pursuant to the bank's standard operating
procedure. Upon knowledge of the bank of the unauthorized DAUD/BP accommodations, a letter was immediately sent to Borromeo for
clarification purposes to which Borromeo answered his readiness to face the consequences of his actions. Thereafter, Borromeo tendered his
resignation from CBC. Subsequently, in a Memorandum issued by CBC, Borromeo was directed to restitute 90% of the amount representing
the losses suffered by CBC, however, in view of Borromeo's resignation, CBC earmarked a portion of Borromeo's separation benefits or pay,
to be withheld until CBC has satisfied its claims from the civil action instituted against Maniwan (restitution).
Consequently, Borromeo filed a complaint before the National Labor Relations Commission (NLRC) for payment of separation pay, mid-
year bonus, profit share and damages against CBC.
Labor Arbiter: promulgated the Decision dismissing Borromeo's complaint.
NLRC: affirmed. Borromeo's reconsideration was likewise denied.
CA: Reversed
ISSUES:
Whether or not the CA erred in remanding the case to the Labor Arbiter
Whether or not restitution may be properly imposed on Borromeo
1) It is settled that administrative bodies like the NLRC, including the Labor Arbiter, are not bound by the technical niceties of the law and
procedure and the rules obtaining in courts of law. Rules of evidence are not strictly observed in proceedings before administrative bodies
like the NLRC, where decisions may be reached on the basis of position papers. The holding of a formal hearing or trial is discretionary with
the Labor Arbiter and is something that the parties cannot demand as a matter of right. As a corollary, trial-type hearings are not even
required as the cases may be decided based on verified position papers, with supporting documents and their affidavits. Hence, the Labor
Arbiter acted well within his authority when he issued the Order dated February 26, 1999 submitting the case for resolution upon finding that
he could judiciously pass on the merits without the necessity of further hearing.
On the other hand, the assailed CA decision’s directive requiring him to conduct further hearings constitutes undue interference with the
Labor Arbiter’s discretion. Moreover, to require the conduct of hearings would be to negate the rationale and purpose of the summary nature
of the proceedings mandated by the Rules and to make mandatory the application of the technical rules of evidence.
The appellate court, therefore, committed reversible error in ordering the remand of the case to the Labor Arbiter for further hearings.
2) In this case, the factual findings of the Labor Arbiter and those of the NLRC concur on the following material points: the respondent was a
responsible officer of the petitioner Bank; by his own admission, he granted DAUD/BP accommodations in excess of the authority given to
him and in violation of the bank’s standard operating procedures; the petitioner Bank’s Code of Ethics provides that restitution/forfeiture of
benefits may be imposed on the employees for, inter alia, infraction of the bank’s standard operating procedures; and, the respondent resigned
from the petitioner Bank on May 31, 1998. These factual findings are amply supported by the evidence on record.
It is well recognized that company policies and regulations are, unless shown to be grossly oppressive or contrary to law, generally binding
and valid on the parties and must be complied with until finally revised or amended unilaterally or preferably through negotiation or by
competent authority. Moreover, management has the prerogative to discipline its employees and to impose appropriate penalties on erring
workers pursuant to company rules and regulations. With more reason should these truisms apply to the respondent, who, by reason of his
position, was required to act judiciously and to exercise his authority in harmony with company policies.
Contrary to the respondent’s contention that the petitioner Bank could not properly impose the accessory penalty of restitution on him
without imposing the principal penalty of "Written Reprimand/Suspension," the latter’s Code of Ethics expressly sanctions the imposition of
restitution/forfeiture of benefits apart from or independent of the other penalties. Obviously, in view of his voluntary separation from the
petitioner Bank, the imposition of the penalty of reprimand or suspension would be futile. The petitioner Bank was left with no other recourse
but to impose the ancillary penalty of restitution. It was certainly within the petitioner Bank’s prerogative to impose on the respondent what it
considered the appropriate penalty under the circumstances pursuant to its company rules and regulations.
Anent the issue that the respondent’s right to due process was violated by the petitioner Bank since no administrative investigation was
conducted prior to the withholding of his separation benefits, the Court rules that, under the circumstances obtaining in this case, no formal
administrative investigation was necessary. Due process simply demands an opportunity to be heard and this opportunity was not denied the
respondent.
It bears stressing that the respondent was not just a rank and file employee. At the time of his resignation, he was the Assistant Vice-
President, Branch Banking Group for the Mindanao area of the petitioner Bank. His position the Assistant Vice- President, Branch Banking
Group for the Mindanao area of the petitioner Bank. His position carried authority for the exercise of independent judgment and discretion,
characteristic of sensitive posts in corporate hierarchy. As such, he was, as earlier intimated, required to act judiciously and to exercise his
authority in harmony with company policies.
On the other hand, the petitioner Bank’s business is essentially imbued with public interest and owes great fidelity to the public it deals with.
It is expected to exercise the highest degree of diligence in the selection and supervision of their employees. As a corollary, and like all other
business enterprises, its prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company
rules and regulations must be respected. The law, in protecting the rights of labor, authorized neither oppression nor self-destruction of an
employer company which itself is possessed of rights that must be entitled to recognition and respect.
WHEREFORE, the petition is GRANTED. The Decision dated July 19, 2002 of the Court of Appeals and its Resolution dated January 6,
2003 in CA-G.R. SP No. 57365 are REVERSED AND SET ASIDE. The Resolution dated October 20, 1999 of the NLRC, affirming the
Decision dated February 26, 1999 of the Labor Arbiter, is REINSTATED.

PRELIMINARY TITLE

A. ARTICLES 1-11 OF THE LABOR CODE

Chapter I
GENERAL PROVISIONS

Article 1. Name of Decree. This Decree shall be known as the "Labor Code of the Philippines".
Article 2. Date of effectivity. This Code shall take effect six (6) months after its promulgation.

Article 3. Declaration of basic policy. The State shall afford protection to labor, promote full employment, ensure equal work opportunities
regardless of sex, race or creed and regulate the relations between workers and employers. The State shall assure the rights of workers to self-
organization, collective bargaining, security of tenure, and just and humane conditions of work.

Article 4. Construction in favor of labor. All doubts in the implementation and interpretation of the provisions of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor.

Article 5. Rules and regulations. The Department of Labor and other government agencies charged with the administration and enforcement
of this Code or any of its parts shall promulgate the necessary implementing rules and regulations. Such rules and regulations shall become
effective fifteen (15) days after announcement of their adoption in newspapers of general circulation.

Article 6. Applicability. All rights and benefits granted to workers under this Code shall, except as may otherwise be provided herein, apply
alike to all workers, whether agricultural or non-agricultural. (As amended by Presidential Decree No. 570-A, November 1, 1974)

Chapter II
EMANCIPATION OF TENANTS

Article 7. Statement of objectives. Inasmuch as the old concept of land ownership by a few has spawned valid and legitimate grievances that
gave rise to violent conflict and social tension and the redress of such legitimate grievances being one of the fundamental objectives of the
New Society, it has become imperative to start reformation with the emancipation of the tiller of the soil from his bondage.

Article 8. Transfer of lands to tenant-workers. Being a vital part of the labor force, tenant-farmers on private agricultural lands primarily
devoted to rice and corn under a system of share crop or lease tenancy whether classified as landed estate or not shall be deemed owner of a
portion constituting a family-size farm of five (5) hectares, if not irrigated and three (3) hectares, if irrigated.

In all cases, the land owner may retain an area of not more than seven (7) hectares if such landowner is cultivating such area or will now
cultivate it.

Article 9. Determination of land value. For the purpose of determining the cost of the land to be transferred to the tenant-farmer, the value of
the land shall be equivalent to two and one-half (2-1/2) times the average harvest of three (3) normal crop years immediately preceding the
promulgation of Presidential Decree No. 27 on October 21, 1972.

The total cost of the land, including interest at the rate of six percent (6%) per annum, shall be paid by the tenant in fifteen (15) years of
fifteen (15) equal annual amortizations.

In case of default, the amortization due shall be paid by the farmers’ cooperative in which the defaulting tenant-farmer is a member, with the
cooperative having a right of recourse against him.

The government shall guarantee such amortizations with shares of stock in government-owned and government-controlled corporations.

Article 10. Conditions of ownership. No title to the land acquired by the tenant-farmer under Presidential Decree No. 27 shall be actually
issued to him unless and until he has become a full-fledged member of a duly recognized farmers’ cooperative.

Title to the land acquired pursuant to Presidential Decree No. 27 or the Land Reform Program of the Government shall not be transferable
except by hereditary succession or to the Government in accordance with the provisions of Presidential Decree No. 27, the Code of Agrarian
Reforms and other existing laws and regulations.

Article 11. Implementing agency. The Department of Agrarian Reform shall promulgate the necessary rules and regulations to implement the
provisions of this Chapter.

B. Article 1700 and 1702 of the NCC

Article 1700. The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor
contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining,
strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.

Article 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the
laborer.

C. DECLARATION OF BASIC POLICY

 1. Philippine Airlines, Inc. v. Santos (G.R. No. 77875, 4 February 1993)

Facts:
Individual respondents are employees of the petitioner. They claim that there were unnecessary deductions from their salary such as handling
losses of inventoried items for alleged mishandling of company properties.

These employees, represented by their union, made a formal notice regarding the deductions thru Mr Abad, the general manager for catering.
No actions were taken. Private respondents filed a formal grievance, questioning the unnecessary salary deductions, in compliance to their
CBA.

The first formal grievance was filed on November 4, 1984 and was submitted on November 21, 1984 to the office of the general manager.
Although the general manager is on leave, his secretary received the formal grievance.

Under their CBA, the petitioner only has 5 days to resolve the grievance, otherwise it will be deemed resolved in favor of their employees.

It is only on Dec 7 1984, the general manager returned from leave. He immediately scheduled a meeting.

The general manager resolved the grievance denying the petition of the employees.

The general manager ordered the conduct of ramp inventory, but individual respondents refused to comply claiming that because of the fact
that no decision was made within 5 days from Nov 21, the case shall be resolved in favor them.

Due to non-compliance, the general manager imposed a penalty of suspension ranging from 7-30 days to the subject employees.

The union filed another grievance asking for lifting or at least hold the execution of suspension against the subject employees.

The union also demanded for the reimbursement of the salaries of individual respondents during the period of suspension.

LA:
In favor the petitioner

NLRC:
In favor of respondents
MR: denied

ISSUE:
W/n the CBA will not apply due to the absence (on leave) of the general manager? NO.

SC RULING:
CBA between the two parties:
The petitioner only has 5 days to resolve the grievance, otherwise it will be deemed resolved in favor of their employees.

The general manager being on leave shall not prevent the application of the CBA. The general manager could have at least assigned an
officer-in charge to look into the grievance.

2. Agabon v. NLRC (GR No. 158693, November 17, 2014)

G.R. No. 158693 November 17, 2004

JENNY M. AGABON and VIRGILIO C. AGABON, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS, INC. and VICENTE ANGELES,
respondents.
https://www.lawphil.net/judjuris/juri2004/nov2004/gr_158693_2004.html

FACTS:
Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials.

It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992 2 until February 23,
1999 when they were dismissed for abandonment of work.

The Agabons then filed a complaint for illegal dismissal and payment of money claims .
Labor Arbiter’s Decision
On December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the
monetary claims.

1. Jenny M. Agabon - P56, 231.93

2. Virgilio C. Agabon - 56, 231.93

NLRC’s Decision
It reversed the Labor Arbiter because it found that the petitioners had abandoned their work, and were not entitled to backwages and
separation pay.
The other money claims awarded by the Labor Arbiter were also denied for lack of evidence.

CA’s Decision
The dismissal of the petitioners was not illegal because they had abandoned their employment but ordered the payment of money claims.

respondents are ordered to pay petitioners holiday pay for four (4) regular holidays in 1996, 1997, and 1998, as well as their service incentive
leave pay for said years, and to pay the balance of petitioner Virgilio Agabon's 13th month pay for 1998 in the amount of P2,150.00.

ISSUE:
Whether or not the petitioners were illegally dismissed.

CONTENTIONS:

Of Petitioners-
1. They were dismissed because the private respondent refused to give them assignments unless they agreed to work on a "pakyaw"
basis

Of Respondent-
1. Petitioners were not dismissed but had abandoned their work

2. Petitioners were frequently absent having subcontracted for an installation work for another company.

3. Respondent sent two letters to the last known addresses of the petitioners advising them to report for work.

4. Private respondent's manager even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him about the
new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice installation work.

5. Petitioners did not report for work because they had subcontracted to perform installation work for another company.

6. Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not granted, petitioners stopped
reporting for work and filed the illegal dismissal case.

7. Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee relationship.

RATIO:

The terminations were for a just and valid cause

To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the employer to give the employee
the opportunity to be heard and to defend himself.

Article 282 of the Labor Code enumerates the just causes for termination by the employer:
(a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latter's representative in
connection with the employee's work;
(b) gross and habitual neglect by the employee of his duties;
(c) fraud or willful breach by the employee of the trust reposed in him by his employer or his duly authorized representative;
(d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly
authorized representative; and
(e) other causes analogous to the foregoing.

Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. 14 It is a form of neglect of duty, hence, a
just cause for termination of employment by the employer. 15 For a valid finding of abandonment, these two factors should be present: (1) the
failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship,
with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employees has no
more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified.

The law imposes many obligations on the employer such as providing just compensation to workers, observance of the procedural
requirements of notice and hearing in the termination of employment. On the other hand, the law also recognizes the right of the employer to
expect from its workers not only good performance, adequate work and diligence, but also good conduct 19 and loyalty. The employer may not
be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests.

Procedures for dismissal

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a
hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for
which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to
dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the
Department of Labor and Employment written notices 30 days prior to the effectivity of his separation.

Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid and authorized causes of
employment termination under the Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process requirements for
dismissal are found in the Implementing Rules of P.D. 442, as amended, otherwise known as the Labor Code of the Philippines in Book VI,
Rule I, Sec. 2, as amended by Department Order Nos. 9 and 10. 27 Breaches of these due process requirements violate the Labor Code.
Therefore statutory due process should be differentiated from failure to comply with constitutional due process.

After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we believe that in cases
involving dismissals for cause but without observance of the twin requirements of notice and hearing, the better rule is to abandon the
Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause but imposing sanctions on the employer. Such
sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve a fair result by dispensing
justice not just to employees, but to employers as well.

The dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the
employer should be held liable for non-compliance with the procedural requirements of due process.

The rule thus evolved: where the employer had a valid reason to dismiss an employee but did not follow the due process requirement, the
dismissal may be upheld but the employer will be penalized to pay an indemnity to the employee. This became known as the Wenphil or
Belated Due Process Rule.

An employer is liable to pay indemnity in the form of nominal damages to an employee who has been dismissed if, in effecting such
dismissal, the employer fails to comply with the requirements of due process.

The violation of the petitioners right to statutory due process by the private respondent warrants the payment of indemnity in the form of
nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant
circumstances. Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of
damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides
a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules.

RULING:
Decision of the CA is affirmed.
And Respondent is ordered to pay each of the petitioners the amount of P30,000.00 as nominal damages for non-compliance with statutory
due process.

D. CONSTRUCTION IN FAVOR OF LABOR

1. Union of Filipro Employees v. Vivar, Jr. (G.R. No. 79255, 20 January 1992)
 2. Wesleyan University Phils. V. Wesleyan University Phils. Faculty and Staff Association (G.R. No. 181806, 12 March 2014)

Facts:

The parties herein entered into a 5-year CBA wherein, petitioner (through its counsel) issued a Memorandum providing for the guidelines on
the implementation of vacation and sick leave credits as well as vacation leave commutation.

VACATION AND SICK LEAVE CREDITS

Vacation and sick leave credits are not automatic. They have to be earned. Monthly, a qualified employee earns an equivalent of 1.25 days
credit each for VL and SL. Vacation Leave and Sick Leave credits of 15 days become complete at the cut off date of May 31 of each year.
(Example, only a total of 5 days credit will be given to an employee for each of sick leave [or] vacation leave, as of month end September,
that is, 4 months from June to September multiplied by 1.25 days). An employee, therefore, who takes VL or SL beyond his leave credits as
of date will have to file leave without pay for leaves beyond his credit.

VACATION LEAVE COMMUTATION

Only vacation leave is commuted or monetized to cash. Vacation leave commutation is effected after the second year of continuous service of
an employee. Hence, an employee who started working June 1, 2005 will get his commutation on May 31, 2007 or thereabout. 12

Upon seeing the guidelines, respondent questioned such for being violative of existing practices and the CBA (specifically, Sections 1 and 2,
Article 12 of it) as it added qualifications or limitations which were not agreed upon by the parties

SECTION 1. VACATION LEAVE - All regular and non-tenured rank-and-file faculty and staff who are entitled to receive shall enjoy fifteen
(15) days vacation leave with pay annually.

1.1 All unused vacation leave after the second year of service shall be converted into cash and be paid to the entitled employee at the end of
each school year to be given not later than August 30 of each year.

SECTION 2. SICK LEAVE - All regular and non-tenured rank-and-file faculty and staff shall enjoy fifteen (15) days sick leave with pay
annually.16

Petitioner also announced its plan of implementing a one-retirement policy, as the CBA and the PERAA Plan are one and the same, which
respondent also opposed, that there is an established practice of giving two retirement benefits, one from the Private Education Retirement
Annuity Association (PERAA) Plan and another from the CBA Retirement Plan.

Voluntary Arbitrator and CA: the one-retirement policy and the Memorandum (the guidelines) are contrary to law.

Issues:

a. Whether x x x the [CA] committed grave and palpable error in sustaining the Voluntary Arbitrator’s ruling that the Affidavits submitted by
Respondent WU-PFSA are substantial evidence as defined by the rules and jurisprudence that would substantiate that Petitioner WU-P has
long been in the practice of granting its employees two (2) sets of Retirement Benefits.

b. Whether x x x the [CA] committed grave and palpable error in sustaining the Voluntary Arbitrator’s ruling that a university practice of
granting its employees two (2) sets of Retirement Benefits had already been established as defined by the law and jurisprudence especially in
light of the illegality and lack of authority of such alleged grant.

Ruling:

*all the contentions of petitioners were not proved*

The Non-Diminution Rule found in Article 10039 of the Labor Code explicitly prohibits employers from eliminating or reducing the benefits
received by their employees. This rule, however, applies only if the benefit is based on an express policy, a written contract, or has ripened
into a practice.40 To be considered a practice, it must be consistently and deliberately made by the employer over a long period of time. An
exception to the rule is when "the practice is due to error in the construction or application of a doubtful or difficult question of law." 42 The
error, however, must be corrected immediately after its discovery;43 otherwise, the rule on Non-Diminution of Benefits would still apply.

Respondents were able to present substantial evidence that there are two retirement benefits. The circumstances, taken together, bolster the
finding that the two-retirement policy is a practice. Thus, petitioner cannot, without the consent of respondent, eliminate the two-retirement
policy and implement a one-retirement policy as this would violate the rule on non-diminution of benefits.

The Court also ruled that the Memorandum providing guidelines is contrary to the existing CBA.
Sections 1 and 2 of Article XII of the CBA provide that all covered employees are entitled to 15 days sick leave and 15 days vacation leave
with pay every year and that after the second year of service, all unused vacation leave shall be converted to cash and paid to the employee at
the end of each school year, not later than August 30 of each year.

The Memorandum, however, states that vacation and sick leave credits are not automatic as leave credits would be earned on a month-to-
month basis. This, in effect, limits the available leave credits of an employee at the start of the school year. For example, for the first four
months of the school year or from June to September, an employee is only entitled to five days vacation leave and five days sick leave. 46
Considering that the Memorandum dated August 16, 2005 imposes a limitation not agreed upon by the parties nor stated in the CBA, we
agree with the CA that it must be struck down.

When the provision of the CBA is clear, leaving no doubt on the intention of the parties, the literal meaning of the stipulation shall govem.
However, if there is doubt in its interpretation, it should be resolved in favor of labor, as this is mandated by no less than the Constitution.

3. San Miguel Foods, Inc. v. San Miguel Corporation Employees Union (G.R. No. 168569, 5 October 2007)

Doctrine/Law: Article 4 of the Labor Code “All doubts in the implementation and interpretation of the provisions of this Code, including
implementing rules and regulations, shall be resolved in favor of labor.”

Facts:
Some employees of petitioner SMFI, through the union, brought a grievance against Finance Manager Gideon Montesa for discrimination,
favouritism, unfair labor practices, harassment, etc. SMFI informed the Union that it planned to address the grievance through a “work
management review”. However, failure of SMFI to act on the matter, the Union filed a complaint before the NLRC for unfair labor practice
and unjust discrimination in matters of promotion (Art. 248, par. (e) and (i) of the Labor Code). SMFI filed a motion to dismiss contending
that the issues raised in the complaint were grievance issues which should be resolved in the grievance machinery provided in the CBA.

Labor Arbiter – granted SMFI’s motion to dismiss and ordered remand of the case to the grievance machinery for completion of the
proceedings.

NLRC – ordered LA to continue the proceedings on the Union’s complaint.

CA – held that the Labor Arbiter has jurisdiction over the complaint of the Union, SMFI having violated the seniority rule under the CBA by
appointing and promoting certain employees amounting to a ULP.

ISSUE: WON the complaint for violation of seniority rule and grievance machinery provision fall within the Labor Arbiter’s jurisdiction.

HELD:
LA has jurisdiction for the violation of seniority rule but not the grievance machinery provision.

Art. 248. Unfair labor practices of employers. - It shall be unlawful for an employer to commit any of the following unfair labor practices:

(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage
membership in any labor organization. x x x

(i)To violate a collective bargaining agreement.

This is a complaint for unfair labor practices pursuant to Art. 248. For Labor Arbiter and NLRC to exercise appellate jurisdiction, the
allegations in the complaint should show that there was: (1) gross violation of the CBA; and (2) violation pertains to the economic provisions
of CBA.

VIOLATION OF GRIEVANCE MACHINERY PROVISION

The Union alleged that SMFI have violated the grievance machinery provision in CBA. However the grievance machinery provision is not an
economic provision, the second element not being present, hence LA has no jurisdiction to this matter.

VIOLATION OF JOB SECURITY PROVISION IN CBA (SENIORITY RULE)

The Union alleged that SMFI violated the seniority rule when SMFI appointed less senior employees to positions at its Finance Department
by-passing more senior employees who deserve said appointment. Since seniority rule has a bearing on the salary and benefits, it may be
considered an “economic provision” of the CBA. The act of SMFI’s bypassing employees who were more senior and equally or more
qualified is considered a gross or flagrant violation of the seniority rule under the CBA. Therefore, Labor Arbiter has jurisdiction.

E. RULE MAKING POWER

 1. Pagpalain Haulers, Inc. v. Trajano (G.R. No. 133215, 15 July 1999)

FACTS:
Respondent Integrated Labor Organization-Pagpalain Haulers Workers Union (ILO-PHILS) filed a petition for certification election with the
Department of Labor and Employment (DOLE) on May 14, 1997.

On July 10, 1997, petitioner Pagpalain Haulers, Inc. (Pagpalain) filed a motion to dismiss ILO-PHILS’s petition, alleging that ILO-PHILS
was not a legitimate labor organization due to its failure to comply with the requirements for registration under the Labor Code, specifically,
ILO-PHILS’s books of account were not verified under oath by its treasurer and attested to by its president, as required by Rule II, Book V of
the Omnibus Rules Implementing the Labor Code.

ILO-PHILS contention: Department Order No. 9 (DPO No. 9), Series of 1997 had dispensed with the requirement that a local or chapter of a
national union submit books of account in order to be registered with the DOLE. (ILO-PHILS’s reply dated August 4, 1997)

On August 27, 1997, finding in favor of ILO-PHILS, the Med-Arbiter ordered the holding of certification elections among the rank-and-file
of Pagpalain Haulers. Pagpalain appealed the decision to the Secretary of Labor and Employment.

Pagpalain’s contention: The Med-Arbiter had gravely abused his discretion in allowing DPO No. 9 to take precedence over rulings of the
Supreme Court in the cases of Protection Technology v. Secretary, DOLE and Progressive Development Corporation v. Secretary of Labor.

On February 27, 1998, declaring that the cases of Protection and Progressive are inapplicable to the case at hand, the Secretary dismissed
Pagpalain’s appeal.

Pagpalain elevated the issue to the Supreme Court claiming that DPO No. 9 issued by the Secretary of Labor cannot alter the requirements of
Articles 241(H) and (J) of the Labor Code of the Philippines, nor can it prevail over the rulings of the Supreme Court, which form part of the
law of the land.

ISSUE:
Whether DPO No. 9 is an invalid exercise of rule-making power by the Secretary of Labor or not.

RULING:
NO.
Pagpalain cannot contend that DPO No. 9 is an invalid exercise of rule-making power by the Secretary of Labor. For an administrative order
to be valid, it must:

i. Be issued on the authority of law

ii. Must not be contrary to the law and Constitution

DPO No. 9 has been issued on authority of law. Under the law, the Secretary is authorized to promulgate rules and regulations to implement
the Labor Code. Specifically, Article 5 of the Labor Code provides that [t]he Department of Labor and other government agencies charged
with the administration and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules and regulations.
Consonant with this article, the Secretary of Labor and Employment promulgated the Omnibus Rules Implementing the Labor Code. By
virtue of this self-same authority, the Secretary amended the above-mentioned omnibus rules by issuing Department Order No. 9, Series of
1997.

Moreover, Pagpalain has failed to show that Department Order No. 9 is contrary to the law or the Constitution. At the risk of being
repetitious, the Labor Code does not require a local or chapter to submit books of account in order for it to be registered as a legitimate labor
organization. There is, thus, no inconsistency between the Labor Code and Department Order No. 9. Neither has Pagpalain shown that said
order contravenes any provision of the Constitution.
Pagpalain cannot also allege that Department Order No. 9 is violative of public policy. As adverted to earlier, the sole function of our courts
is to apply or interpret the laws. 8 It does not formulate public policy, which is the province of the legislative and executive branches of
government. It cannot, thus, be said that the principles laid down by the court in Progressive and Protection Technology constitute public
policy on the matter. They do, however, constitute the Courts interpretation of public policy, as formulated by the executive department
through its promulgation of rules implementing the Labor Code. However, this public policy has itself been changed by the executive
department, through the amendments introduced in Book V of the Omnibus Rules by Department Order No. 9. It is not for us to question this
change in policy, it being a well-established principle beyond question that it is not within the province of the courts to pass judgment upon
the policy of legislative or executive action. 9 Notwithstanding the expanded judicial power under Section 1, Article VIII of the Constitution,
an inquiry on the above-stated policy would delve into matters of wisdom not within the powers of this Court.
Furthermore, the controlling intention in requiring the submission of books of account is the protection of labor through the minimization of
the risk of fraud and diversion in the handling of union funds.

The instant petition was DISMISSED for lack of merit and the resolution of the Secretary of Labor was affirmed

2. Insular Bank of Asia and America Employees’ Union v. Inciong (G.R. No. L-52415, 23 October 1984)

INSULAR BANK OF ASIA and AMERICAN EMPLOYEES UNION v. Hon. AMADO INCIONG G.R. No. L- 52415 October 23,
1984

Facts:
On June 20, 1975, the Union filed a complaint against the bank for the payment of holiday pay before the then Department of
Labor, NLRC, Regional Office IV in Manila. Conciliation having failed, and upon the request of both parties, the case was
certified for arbitration on July 7, 1975. On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision granting
petitioner’s complaint for payment of holiday pay. Respondent bank did not appeal from the said decision. Instead, it complied
with the order of the Labor Arbiter by paying their holiday pay up to and including January 1976.

P.D. 850 was promulgated amending the provisions of the Labor Code on the right to holiday pay. Accordingly by authority of
Article 5 of the Labor Code, the Department of Labor (now Ministry of Labor) promulgated the rules and regulations for the
implementation of holidays with pay.

The section reads: “Status of employees paid by the month. — Employees who are uniformly paid by the month, irrespective of
the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed
to be paid for all days in the month whether worked or not.” Policy Instruction 9 was issued by the then Secretary of Labor on
April 23,1976, interpreting the said rule. The bank, by reason of the ruling laid down by the rule implementing Article 94 of the
Labor Code and by Policy Instruction 9, stopped the payment of holiday pay to an its employees.

On August 30,1976, the Union filed a motion for a writ of execution to enforce the arbiter’s decision dated August 1975, which
the bank opposed. On October 18,1976, the Labor Arbiter, instead of issuing a writ of execution, issued an order enjoining the
bank to continue paying its employees their regular holiday pay. On November 17, 1976, the bank appealed from the order of
the Labor Arbiter to the NLRC. On 20 June 1978, the NLRC promulgated its resolution dismissing the bank’s appeal, and
ordering the issuance of the proper writ of execution. On February 21,1979, the bank filed with the Office of the Minister of
Labor a motion for reconsideration/appeal with urgent prayer to stay execution. On August 13,1979 the NLRC issued an order
directing the Chief of Research and Information of the Commission to compute the holiday pay of the IBAA employees from
April 1976 to the present in accordance with the Labor Arbiter dated August 25,1975.

On November 10, 1979, the Office of the Minister of Labor, through Deputy Minister Amado Inciong, issued an order setting
aside the resolution of the NLRC dated June 20, 1978, and dismissing the case for lack of merit.

Issue: Whether or not the Ministry of Labor is correct in determining that monthly paid employees are excluded from the benefits
of holiday pay?

Ruling: From Article 92 of the Labor CODE, as amended by Presidential Decree 850, and Article 82 of the same Code, it is
clear that monthly paid employees are not excluded from the benefits of holiday pay. However, the implementing rules on holiday
pay promulgated by the then Secretary of Labor excludes monthly paid employees from the said benefits by inserting, under Rule
IV, Book Ill of the implementing rules, Section 2, which provides that: “employees who are uniformly paid by the month,
irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage
shall be presumed to be paid for all days in the month whether worked or not.” Even if contemporaneous construction placed
upon a statute by executive officers whose duty is to enforce it is given great weight by the courts, still if such construction is so
erroneous, the same must be declared as null and void. So long, as the regulations relate solely to carrying into effect the
provisions of the law, they are valid. Where an administrative order betrays inconsistency or repugnancy to the provisions of the
Act, the mandate of the Act must prevail and must be followed. A rule is binding on the Courts so long as the procedure fixed
for its promulgation is followed and its scope is within the statutory authority granted by the legislature, even if the courts are
not in agreement with the policy stated therein or its innate wisdom. Further, administrative interpretation of the law is at best
merely advisory, for it is the courts that finally determine what the law means.

The Supreme Court granted the petition, set aside the order of the Deputy Minister of Labor, and reinstated the decision of the
Labor Arbiter Ricarte T. Soriano

F. APPLICABILITY

I. Overseas Workers
 1. Sim v. NLRC (G.R. No. 157378, 2 October 2007)

FACTS:
Corazon Sim was hired as an Italian Remittance Marketing Consultant (based in Italy) by Equitable PCI-Bank (Philippine Corporation). She
was eventually promoted to a managerial position but was later dismissed for loss of trust and confidence. Sim withdrew P3M from the
bank’s account. She claimed that it was for the Radio Pilipinas sa Roma radio program of the company. However, at the time she withdrew
the amount, the radio program was already off the air. Sim then filed a case for illegal dismissal with the Labor Arbiter, but the case was
dismissed for lack of jurisdiction. The reason was that the labor relations system in the Philippines has no extra-territorial jurisdiction and is
limited to the labor relations within the Philippines.

ISSUES:
1. Does the NLRC have jurisdiction to handle labor cases between a Philippine Corporation and an employee who was hired and
assigned in a foreign country?
2. Can an employer fire a managerial employee for breach of trust and confidence?

HELD:
1. YES.
Art. 217 of the Labor Code – NLRC has jurisdiction over:
1. Unfair labor practice cases
2. Termination disputes
3. Cases involving wage, rates of pay, hours of work, and other terms and conditions of employment (when accompanied with
a claim for reinstatement)
4. Claims for actual moral, exemplary and other forms of damages arising from the employer-employee relations
5. Cases arising from any violation of Art.264 of this Code, including questions involving the legality of strikes and lockouts
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from
employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding
P5,000 regardless of whether accompanied with a claim for reinstatement.

Sec. 10 of RA 8042 – NLRC has jurisdiction over claims arising out of an employer-employee relationship by virtue of any law or
contract involving Filipino workers for overseas deployment

2. YES.
When an employee accepts a promotion to a managerial position or to an office requiring full trust and confidence, he/she gives up
some of the rigid guaranties available to ordinary workers.

Sim is a managerial employee. Loss of trust and confidence is a valid ground for her dismissal.

The mere existence of a basis for believing that a managerial employee has breached the trust of the employer would suffice for
his/her dismissal.

2. Santiago v. CF Sharp Crew Management (G.R. No. 162419, 10 July 2007)

Facts:
○ Paul had been working as a seafarer for Smith Bell Management, Inc. for 5 years
○ On Feb. 3, 1998 Paul signed a new contract (9 months), he was reassured that his salary would be USD515 per month, plus overtime
pay, and benefits.
○ Feb. 4 - POEA approved the contract
○ Paul was deployed on board the MSV Seaspread - which was scheduled to leave for Canada on Feb. 13, 1998.
○ 1 week before the departure, Paul’s wife called the Vice President of CF Sharp Crew, asking not to let her husband be sent to the MVS -
kasi once daw na ansa Canada na, bababa daw ng barko (jump ship).
○ Other unknown callers (hindi nag reveal ng identities) verified the claim, gagaya daw sa brother niya na si Christopher who jumped
ship in Japan last December lang
○ These information were sent by VP Fernandez to MSV, and advised na replace nalang daw since baka ma penalize sila pag nag jump
ship
○ MSV agreed. Sabi wag na daw pabalikin si Paul
○ Feb. 9 he was told na hindi na siya aalis - but was reassured that he will be deployed in some future date
○ Paul filed a complaint for illegal dismissal/damages/attorney’s fees

Labor Arbiter Teresita Lora:

Ruled in favor of Paul - employment contract remained valid but had not commenced since petitioner was not deployed. Violated the rules
and regulations governing overseas employment, which caused damages (lost of income for 9 months, overtime pay). USD7,209.00
NLRC: (Nag appeal kasi)
No employer-employee relationship because under the Standard Terms and Conditions Governing the Employment of Filipino Seafarers on
Board Ocean Going Vessels (POEA Standard Contract): employment contract shall commence upon actual departure of the seafarer from the
airport or seaport at the point of hire and with a POEA-approved contract.
NLRC found that the decision not to deploy petitioner to be a valid exercise of its management prerogative

Court of Appeals:
Paul is not entitled to actual damages because damages are not recoverable by a worker who was not deployed by his agency within the
period prescribed in the POEA rules.
CA agreed with NLRC: non-deployment was a valid exercise of respondent’s management prerogative. Since there was no employer-
employee relationship, then claims for damages have no leg to stand on

Paul’s Arguments:
Violation of the Migrant Workers Act and the POEA Rules when it failed to deploy him within thirty (30) calendar days without a valid
reason
Failure to deploy unilaterally and arbitrarily prevented the consummation of of the POEA-approved contract
Since deployment is a condition for the consummation, and since it did not take place - the contract is deemed consummated which would
necessarily lead to him becoming an employee for all intents and purposes (so ayun entitled nga daw siya sa damages)
Ayaw daw siya ipasakay para hindi siya maging regular employee
Solely relied on alleged phone calls - his wife even executed an affidavit denying the alleged phone call - no substantial evidence

CF Sharp’s Arguments:
Labor arbiter has no jurisdiction sa case, because Paul was not an employee - it is a matter to be resolved by Civil Courts

ISSUES:
Are damages recoverable even when there is no employer-employee relationship???

Supreme Court:
YES!!!! (IN FAVOR OF PAUL)
It is true that an employment contract was entered into by Paul and CF Sharp, but since CF Sharp failed to deploy Paul, there was never an
employer-employee relationship (contract never commenced)

BUT! There is a difference between the perfection of the employment contract and the commencement of the employer-employee
relationship.

The perfection of the employment contract: occurred when petitioner and respondent agreed on the object and the cause, as well as the rest of
the terms and conditions therein

The commencement of the employer-employee relationship: would have taken place had petitioner been actually deployed from the point of
hire.

Doctrine to remember: even before the start of any employer-employee relationship, contemporaneous with the perfection of the employment
contract was the birth of certain rights and obligations, the breach of which may give rise to a cause of action against the erring party.

If the breach was made by Paul, then consequently, he would also be liable for damages
CF Sharp’s act of preventing Paul from boarding MSV is a breach of contract - CF reneged on its obligation to deploy petitioner - so CF must
answer for the actual damages suffered by Paul.

CA’s conclusion that damages are not recoverable by workers not deployed by their agency is incorrect. Even if POEA rules are silent on
damages, it does not necessarily mean that they are precluded from claiming the same.
It actually does not contain provisions regarding damages because POEA rules are for erring agencies, rather, it is the NLRC who has
jurisdiction sa damages

NLRC’s jurisdiction:
the absence of an employer-employee relationship between petitioner and respondent, the Court rules that the NLRC has jurisdiction over
petitioner’s complaint. NLRC’s jurisdiction not limited dyan. (legal basis: Section 10 of R.A. No. 8042 (Migrant Workers Act) Money
Claims: Sec. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of
the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary and other forms of damages.
And since regarding employment contract, under parin ng jurisdiction
9 months salary = granted
Attorney’s fees = granted as damages narin
Overtime pay = not granted (walang assurance)
Moral damages = not granted, walang proof that non-deployment was made in bad faith - CF was only protecting its interest when it made
the hasty decision

3. Sameer Overseas Placement Agency, Inc. v. Cabiles (G.R. No. 170139, 5 August 2014)

II. GOVERNMENT EMPLOYEES

1. Article IX (B), Section 2(1) of the 1987 Constitution: Constitutional Commission

“Section 2. The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including
government-owned or controlled corporations with original charters.”

2. NASECO v. NLRC (G.R. No. L-70295, 29 November 1988)

G.R. No. L-69870, November 29, 1988

NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. LOPEZ vs. THE HONORABLE THIRD DIVISION, NATIONAL
LABOR RELATIONS COMMISSION, MINISTRY OF LABOR AND EMPLOYMENT, MANILA AND EUGENIA C. CREDO--

G.R. No. L-70295, November 29, 1988

EUGENIA C. CREDO vs.NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. LOPEZ

PADILLA, J.:

FACTS: Eugenio Credo was an employee of NASECO since 1975 up to 10 March 1980. She was the Chief of Property and Records.
Sometime before 7 November 1983, Credo was administratively charged by Lloren (Manager of Finance and Special Project and
Reevaluation of NASECO) for not complying with her memorandum to correct certain entries in the company’s Statement of Billings. When
Credo was called by Lloren to explain further said instructions as to the correction, Credo showed resentment and behaved in a scandalous
manner uttering remarks of disrespect in the presence of her co-employees.

On 7 Nov 1983, Arturo Lopez (Acting General Manager of NASECO) called Credo to explain her side and to explain to the NASECO’s
Committee on Personal Affairs regarding the administrative charges against her. After said meeting, Credo was placed on a forced 15 day
leave effective the next day.

Credo filed a complaint before the Labor Arbiter for placing her on forced leave without due process.

While Credo was on forced leave, NASECO’s committee on Personal Affairs deliberated the past acts of respondent. The Committee
recommended for Credo’s termination violating their Code of Discipline, to wit:

1.Any discourteous act to customer, officer, and employees of client company or officer of the Corporation

2.Exhibit marked discourtesy in the course of official duties or use of profane or insulting language to any superior officer.

3.Management has given due consideration to respondent’s scandalous behavior several times

On Dec. 1, 1983, Credo was directed to explain her side however terminated within same day. Notice of Termination given to her was dated
November 24, 1983.

LA dismissed Credo’s complaint.

NLRC reversed LA’s decision. Reinstate Credo and award 6 months backwages.

NASECO claims that NLRC has no jurisdiction over Credo as she is a government employee and NASECO is a government corporation.
Therefore, should be governed by the Civil Service Law and not by the Labor Code as provided by the 1987 Constitution. NASECO is a
subsidiary government corporation under the National Investment and Development Corporation (NIDC), a subsidiary wholly owned by the
Philippine National Bank (PNB). THUS, THIS PETITION.
RELEVANT ISSUE AS TO GOVERNMENT EMPLOYEES (SYLLABUS)

WON THE NLRC HAS JURISDICTION TO ORDER EUGENIA CREDO’S REINSTATEMENT? – YES.

RULING:

The 1987 Constitution provides that: The Civil Service embraces all branches, subdivisions, instrumentalities, and agencies of the
government, including government-owned or controlled corporations with original charters.

At first glance, it would appear as if NASECO is subject to the Civil Service law it being a government corporation. However, NASECO has
no original charter because it is only a subsidiary corporation of NIDC which is a subsidiary corporation of the PNB. It has no original
charter and does not fall under the said provision of the 1987 Constitution. Thus, it is governed by the Labor Code and not the Civil Service
Law.

OTHER ISSUE/S:

(1) WON Petitioners violated the requirements mandated by law on termination - NO

(2) WON Petitioners failed in the burden of proving the termination of Credo was for a valid or authorized cause -YES

(3) WON NASECO condoned the previous alleged infractions committed by Credo

(4) Termination of credo was for a valid or authorized cause.

DISCUSSSION/RULING:

1.Under the rules, two (2) written notices of dismissal before a termination of employment can be legally effected. The idea behind the same
is to give the employee ample time to be apprised by particular acts or omission for which dismissal is sought and to give her a chance to be
heard and defend herself. IN THE CASE AT BAR, NASECO failed to do the same. The termination of Credo was only done within a day.
She was not given ample time to be heard. Supreme Court raised that the notice of termination handed to her was dated 24 November 1983
while the committee meeting with Credo was conducted on December, this action implies that the petitioners already had made their decision
without hearing Credo and said meeting was only done for formality.

2.The reports submitted by Lloren stating that Credo acted with gross discourtesy as well as in a scandalous conduct lacks merit. Reports
failed to show nor describe how the conduct was done by Credo.

3.Supreme Court ruled that NASECO condoned the actions of Credo. There were instances were Credo allegedly reacting in a scandalous
manner an raised her voice and acted in an arrogant manner, however no disciplinary measure was meted against her by the Administration,
but when Credo committed frequent tardiness she was reprimanded. NASECO’s condonation was proven. NASECO even gave Credo salary
adjustment as she was rated very satisfactory as regards to her job performance, particularly in terms of quality of work, quantity of work,
dependability, cooperation, resourcefulness, and attendance.

4.Considering that the acts or omissions for which Credo’s employment was sought to be legally terminated were insufficiently proved, as to
justify dismissal, Credo should be reinstated. Credo’s dismissal was proven to be done without procedural fairness.

PETITION DENIED.

3. Department of Health v. NLRC (G.R. No. 11312, 29 December 1995)

Doctrine

Civil Service Commission is the central personnel agency of the government and is therefore the single arbiter of all contests relating to the
civil service.

Jurisdiction is conferred by law. Where there is none, no agreement of the parties can provide one.

A decision of a tribunal not vested with appropriate jurisdiction is null and void

Facts
Ceferino R. Laur was a patient of the then Tala Leprosarium (now Jose N. Rodriguez Memorial Hospital) for treatment of Hansen's disease,
commonly termed leprosy.

He was then employed at the DJRMH as a patient-assistant

Complaints for Alarm and Scandal, Oral Defamation, Grave Threats, Concealment of Deadly Weapon, Violation of the Code of Ethics of
Policemen, and Conduct Unbecoming of a Police Officer were filed against him.

He was given a penalty of suspension for sixty (60) days

Subsequently, Laur got involved in the mauling of one, Jake Bondoc, along with two policemen

Laur then was dismissed by the Chief of Hospital

Laur filed with the National Labor Relations Commission a complaint for illegal dismissal with additional claims for payment of wage
differentials, holiday pay, overtime pay and 13th month pay, as well as payment of moral and... exemplary damages, attorney's fees and
expenses of litigation and with prayer for reinstatement without loss of seniority rights

Labor Arbiter and NLRC

Labor Arbiter Cornelio Linsangan rendered his Decision in private respondent's favor

LA Linsangan reasoned that Laur was in truth an employee in contemplation of the Labor Code, the existence of an employer-employee
relationship between petitioner hospital and private respondent being evident from the fact that private respondent's work is necessary and
desirable for the operation of the hospital.

LA Linsangan claims that because the parties submitted position papers to him that he has rightfully acquired jurisdiction over the case.

Petition for Certiorari:

Dr. Jose N. Rodriguez Memorial Hospital (DJRMH) assails the decision of the LA because it was rendered with grave abuse of discretion
due to the fact that Laur is a government employee and not a regular employee

DJRMH alleges that the case falls under the jurisdiction of the Civil Service Commission and not the NLRC

Issue

Which Government agency the National Labor Relations Commission or the Civil Service Commission

Ruling

It is the CIVIL SERVICE COMMISSION

DJRMH exercises strictly governmental functions relating to the management and control of the dreaded communicable Hansen's disease,
commonly known as leprosy.

it is clearly an agency of the Government, the DJRMH falls well within the scope and/or coverage of the Civil Service Law

As the central personnel agency of the Government, the Civil Service Commission administers the Civil Service Law.

It is, therefore, the single arbiter of all contests relating to the civil service.

Conformably to the foregoing, it is, indeed, the Civil Service Commission which has jurisdiction over the present controversy.

it was incorrect for the respondent labor arbiter to have proceeded to hear the case, simply because private respondent Ceferino Laur
happened to lodge his complaint before his office

Dispositive: WHEREFORE, finding the Dr. Jose N. Rodriguez Memorial Hospital to be within the scope of the Civil Service Law and not of
the Labor Code
 III. EMPLOYEES OF INTERNATIONAL ORGANIZATIONS

1. International Catholic Migration Commission v. Calleja (G.R. No. 85750, 28 September 1990)

International Catholic Immigration Commission (ICMC) vs. Hon. Pura Calleja (BLR) and Trade Unions of the Philippines and Allied
Services (TUPAS) (Two Consolidated Cases)

1. ICMC Case:

Facts: As an aftermath of the Vietnam War, the Philippine Government and the United Nations High Commissioner for Refugees entered into
an agreement whereby an operating center for processing Indo-Chinese refugees for eventual resettlement to other countries was to be
established in Bataan.

ICMC, petitioner herein, was one of those accredited by the Government to operate, and as an international organization rendering voluntary
and humanitarian services in the Philippines, its activities are parallel to those of the International Committee for Migration and the
International Committee of the Red Cross.

Respondent TUPAS then filed a Petition for Certification Election among the rank and file members employed by ICMC, to which ICMC
opposed stating that it is an international organization, hence, enjoys diplomatic immunity.

Med-Arbiter: dismissed the petition

ICMC Case: Director of the Bureau of Labor Relations (BLR): Reversed, ordered the immediate conduct of a certificate election, citing State
policy and Philippine labor laws to justify such Order; that a certification election is not a litigation but a mere investigation of a non-
adversary fact-finding character

*so bago pa magrule ang Med-Arbiter and BLR, there was a pending request for recognition made by ICMC for them to be recognized as a
specialized agency, to which it was granted by the DFA only after the BLR ruled. The DFA granted ICMC the status of a specialized agency
with corresponding diplomatic privileges and immunities.

Subsequently, ICMC filed a petition for certiorari with preliminary injunction assailing the BLR Order.

2. The International Rice Research Institute Case:

Facts: The Philippine Government and the Ford and Rocketfeller Foundations signed a MOU establishing IRRI to carry out the principal
objective of conducting basic research on the rice plant, on all phases of rice production…

IRRI, respondent herein, was granted privileges and immunities through Presidential Decree No. 1620.

Kapisanan, petitioner in this case, filed a Petition for Direct Certification Election, but IRRI invoked Presidential Decree granting them
immunity. Kapisanan questioned the PD in so far as it deprives the Filipino workers of their fundamental and constitutional right to form
trade unions for the purpose of collective bargaining

Med-Arbiter: dismissed the petition

IRRI Case: Director of the Bureau of Labor Relations (BLR): authorized the calling of a certification election, relying on Article 243 of the
Labor Code and Article XIII, Section 3 of the Consti; that the immunities and privileges granted do not include exemption from coverage of
our Labor Laws.

ISSUE: Whether or not the Secretary of Labor committed grave abuse of discretion in dismissing the Petitions

Ruling:
ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its basic rights, which are guaranteed by Article II,
Section 18, 14 Article III, Section 8, 15 and Article XIII, Section 3 (supra), of the 1987 Constitution; and implemented by Articles 243 and 246
of the Labor Code, 16 relied on by the BLR Director and by Kapisanan.

"International organization" is generally used to describe an organization set up by agreement between two or more states. Under
contemporary international law, such organizations are endowed with some degree of international legal personality such that they are
capable of exercising specific rights, duties and powers. Meanwhile, "Specialized agencies" are international organizations having functions
in particular fields.

The rapid growth of international organizations under contemporary international law has paved the way for the development of the concept
of international immunities. It is now usual for the constitutions of international organizations to contain provisions conferring certain
immunities on the organizations themselves, representatives of their member states and persons acting on behalf of the organizations. The
reason for such immunity is the assurance of unimpeded performance of their functions by the agencies concerned.

There are basically three propositions underlying the grant of international immunities to international organizations. These principles,
contained in the ILO Memorandum are stated thus:

1) international institutions should have a status which protects them against control or interference by any one government in the
performance of functions for the effective discharge of which they are responsible to democratically constituted international bodies in
which all the nations concerned are represented;

2) no country should derive any national financial advantage by levying fiscal charges on common international funds; and

3) the international organization should, as a collectivity of States members, be accorded the facilities for the conduct of its official
business customarily extended to each other by its individual member States.

The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated by their international character and respective
purposes. The objective is to avoid the danger of partiality and interference by the host country in their internal workings. The exercise of
jurisdiction by the Department of Labor in these instances would defeat the very purpose of immunity, which is to shield the affairs of
international organizations, in accordance with international practice, from political pressure or control by the host country to the prejudice of
member States of the organization, and to ensure the unhampered performance of their functions.

For, ICMC employees are not without recourse whenever there are disputes to be settled. Section 31 of the Convention on the Privileges and
Immunities of the Specialized Agencies of the United Nations 17 provides that "each specialized agency shall make provision for appropriate
modes of settlement of: (a) disputes arising out of contracts…” Moreover, pursuant to Article IV of the Memorandum of Agreement between
ICMC the the Philippine Government, whenever there is any abuse of privilege by ICMC, the Government is free to withdraw the privileges
and immunities accorded.

It is also inaccurate to state that a certification election is beyond the scope of that immunity for the reason that it is not a suit against ICMC.
A certification election cannot be viewed as an independent or isolated process. It could tugger off a series of events in the collective
bargaining process together with related incidents and/or concerted activities, which could inevitably involve ICMC in the "legal process,"
which includes "any penal, civil and administrative proceedings."

EMPLOYER-EMPLOYEE RELATIONSHIP

A. Proof of employment

1. Doctor v NII Enterprises

Respondent NII Enterprises is a sole proprietorship engaged in the business of providing car air-conditioning (aircon) services, which is
owned by respondent Ignacio. Petitioners had been employed by respondents, particularly, petitioner Doctor as a clerk since April 3, 1995
and petitioner Lao as an aircon technician since December 5, 1995.

On February 10, 2004, respondent Ignacio and petitioner Doctor had a serious argument, which prompted petitioner Doctor to file a
complaint for slander and threat against respondent Ignacio at Barangay San Antonio, Makati City.
BRGY LUPON: amicable resolution failed

Petitioner Doctor and Lao filed a complaint for illegal dismissal against respondents before the NLRC

LA: In favor of Doctor and Lao. Ignacio ordered to pay backwages and separation pay

Respondent’s contention: Respondents contended that petitioners were not entitled to separation pay since they were not terminated from
employment. Nevertheless, assuming that petitioners were illegally dismissed, respondents maintained that the Labor Arbiter's award of
separation pay in petitioners' favor was excessive because such pay should be computed at only one-half (1/2)-month pay, not one (1)-month
pay, for every year of service and petitioner Lao worked for respondents for eight (8) years, not nine (9) years.

NLRC: MODIFIED to the extent that the award of separation pay to Jaime Lao shall cover only a total of eight (8) years.

CA: REVERSED. The appellate court stressed that while the employer has the burden in illegal dismissal cases of proving that the
termination was for valid or authorized cause, the employee must first establish by substantial evidence the fact of dismissal from service,
and this, petitioners failed to do.

WHETHER THE HONORABLE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION FINDING THAT THE PETITIONERS WERE NOT ILLEGALLY DISMISSED.

NO. The Court recognizes the rule that in illegal dismissal cases, the employer bears the burden of proving that the termination was for a
valid or authorized cause. However, there are cases wherein the facts and the evidence do not establish prima facie that the employee was
dismissed from employment. Before the employer must bear the burden of proving that the dismissal was legal, the employee must first
establish by substantial evidence the fact of his dismissal from service. If there is no dismissal, then there can be no question as to the legality
or illegality thereof.23

Respondents' failure to take any disciplinary action against petitioners between February 10, 2004 (the day of the argument between
respondent Ignacio and petitioner Doctor) and March 11, 2004 (the day respondents received the Labor Arbiter's summons as regards the
illegal dismissal case filed against them by petitioners) does not constitute clear, positive, and convincing evidence that respondents had
already dismissed petitioners from employment. Respondents have satisfactorily explained that they had no opportunity to commence any
disciplinary proceedings against petitioners under the circumstances. It should be noted that during said one-month period, petitioners had
instituted two successive complaints against respondents, one for slander and threat before the barangay, and one for illegal dismissal before
the NLRC. During the several conferences held before the barangay, the parties were still trying to reach an amicable settlement of the
dispute between them; and when the parties' efforts on amicable settlement failed, petitioners, shortly thereafter, already filed the illegal
dismissal case against respondents before the NLRC. As the Court of Appeals opined, "[t]he immediate filing of the case for illegal dismissal
did not give the employer the opportunity to even send show cause notices to [petitioners'] absences. Rather than undergo the normal process
of disciplining [petitioners] for repeated absences, [respondent Ignacio] had no other option but to defend her case."

In sum, petitioners failed to discharge the burden of proving with substantial evidence that they were actually dismissed from work by
respondents. Since the fact of dismissal had not been satisfactorily established by petitioners, then the burden of proving that the dismissal
was legal, i.e., that it was for just and authorized cause/s and in accordance with due process, did not shift to the respondents. Also,
petitioners could not be deemed to have abandoned their work by merely being absent and without clear intention of severing the employer-
employee relationship.

There being no dismissal and no abandonment, the appropriate course of action is to reinstate the employee/s but without the payment of
backwages. Yet, in Dee Jay's Inn and Cafe v. Raneses, 33 the Court ordered therein employers to pay the employee separation pay instead
when reinstatement was no longer possible and reasonable.

In the instant case, petitioners' reinstatement is similarly rendered impossible and unreasonable given the length of time that had passed since
the controversy started on February 10, 2004, as well as respondents' own allegations that they already reduced their workforce and that
petitioners "[have] no more place in the business" of respondents. 34 Therefore, respondents are ordered to pay petitioners separation pay
equivalent to one (1) month salary for every year of service, in lieu of reinstatement.

WHEREFORE, premises considered, the instant Petition for Review on Certiorari is PARTIALLY GRANTED. The Decision dated April
23, 2010 and Resolution dated September 28, 2010 of the Court of Appeals in CA-G.R. SP No. 107497 is AFFIRMED with
MODIFICATION. The complaint for illegal dismissal of petitioners Maria Vilma G. Doctor and Jaime Lao, Jr. against respondents NII
Enterprises and/or Mrs. Nilda C. Ignacio is DISMISSED for lack of merit. Although petitioners are entitled to reinstatement to their former
positions without payment of backwages, petitioners' reinstatement is already impossible and unreasonable under the particular circumstances
of this case. Respondents are, therefore, ORDERED to pay petitioners Doctor and Lao separation pay in lieu of reinstatement in the amounts
of ₱67,500.00 and ₱60,000.00, respectively.

2. Tenaza v R. Villegas Taxi Transport (GR No. 192998, 2 April 2014)

FACTS:
Bernard A. Tenazas and Jaime M. Francisco filed a complaint for illegal dismissal against R. Villegas Taxi Transport and/or
Romualdo Villegas and Andy Villegas. A similar case had already been filed by Isidro G. Endraca against the same respondents. The two (2)
cases were subsequently consolidated. Tenazas, Francisco and Endraca alleged that they were hired and dismissed by the respondents.
Tenazas alleged that the taxi unit assigned to him was sideswiped by another vehicle, causing a dent on the left fender near the driver seat.
Upon reporting the incident to the company, he was scolded by Romualdo and Andy and was told to leave the garage for he is already fired
and was even threatened with physical harm should he ever be seen in the company’s premises again. Francisco, on the other hand, averred
that his dismissal was brought about by the company’s unfounded suspicion that he was organizing a labor union. He was instantaneously
terminated, without the benefit of procedural due process. Endraca, for his part, alleged that his dismissal was when he fell short of the
required boundary for his taxi unit. His driver’s license was even confiscated and was told to settle the deficiency in his boundary first before
his license will be returned to him. Respondents admitted that Tenazas and Endraca were employees of the company, however, denied that
Francisco was an employee of the company or that he was able to drive one of the company’s units at any point in time. The respondents
further alleged that Tenazas was never terminated by the company. That Tenazas only failed to report back to work for no apparent reason.
As for Endraca, the respondents alleged that they hired him as a spare driver in and allowed him to drive a taxi unit whenever their regular
driver will not be able to report for work, however, Endraca stopped reporting for work without informing the company of his reason.
LA ruled that there was no illegal dismissal. It must be noted that the complaint is actual dismissal. But there was no formal
investigations, no show cause memos, suspension memos or termination memos were never issued. Otherwise stated, there is no proof of
overt act of dismissal committed by herein respondents.
NLRC reversed the decision of LA, holding that the additional pieces of evidence belatedly submitted by the petitioners sufficed to
establish the existence of employer-employee relationship and their illegal dismissal.
CA affirmed with modification the decision of the NLRC. Agreed that Tenazas and Endraca were employees of the company, but
ruled otherwise in the case of Francisco for failing to establish his relationship with the company. It also deleted the award of separation pay
and ordered for reinstatement of Tenazas and Endraca.

ISSUE:
WON there was an employer-employee relationship. - NO.

HELD:
The burden of proof rests upon the party who asserts the affirmative of an issue.
Corollarily, as Francisco was claiming to be an employee of the respondents, it is incumbent upon him to proffer evidence to prove
the existence of said relationship.
In determining the presence or absence of an employer-employee relationship, the Court has consistently looked for the following
incidents, to wit:
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the employer’s power to control the employee on the means and methods by which the work is accomplished.
The last element, the so-called control test, is the most important element."
There is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant evidence to prove the
relationship may be admitted. Identification cards, cash vouchers, social security registration, appointment letters or employment contracts,
payrolls, organization charts, and personnel lists, serve as evidence of employee status.

In this case, Francisco failed to present any proof substantial enough to establish his relationship with the respondents. He failed to
present documentary evidence like attendance logbook, payroll, SSS record or any personnel file that could somehow depict his status as an
employee. Anent his claim that he was not issued with employment records, he could have, at least, produced his social security records
which state his contributions, name and address of his employer, as his co-petitioner Tenazas did.

He could have also presented testimonial evidence showing the respondents’ exercise of control over the means and methods by
which he undertakes his work.

The utter lack of evidence is fatal to Francisco’s case especially in cases like his present predicament when the law has been very
lenient in not requiring any particular form of evidence or manner of proving the presence of employer-employee relationship.
 In Opulencia Ice Plant and Storage v. NLRC, this Court emphasized, thus: “No particular form of evidence is required to prove the
existence of an employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. For, if only
documentary evidence would be required to show that relationship, no scheming employer would ever be brought before the bar of justice, as
no employer would wish to come out with any trace of the illegality he has authored considering that it should take much weightier proof to
invalidate a written instrument.“

Here, Francisco simply relied on his allegation that he was an employee of the company without any other evidence supporting his
claim. Unfortunately for him, a mere allegation in the position paper is not tantamount to evidence.

CA correctly ruled that Francisco could not be considered an employee of the respondents.
WHEREFORE, the petition for review on certiorari is DENIED. The Decision of the CA is AFFIRMED.

3. Orozco v Court of Appeals

B. Four-Fold Test

1. South East International Rattan, Inc. v. Coming

Southeast International Rattan, Inc. (SEIR) vs Jesus Coming

(SEIRI) is a domestic corporation engaged in the business of manufacturing and exporting furniture to various countries with principal place of
business at Paknaan, Mandaue City, while petitioner Estanislao Agbay, as per records, is the President and General Manager of SEIRI.

Coming filed a complaint for illegal dismissal, underpayment of wages, non-payment of holiday pay, 13th month pay and service incentive leave
pay, with prayer for reinstatement, back wages, damages and attorney’s fees; that he was hired by petitioners as Sizing Machine Operator. His work
schedule is from 8:00 a.m. to 5:00 p.m. Initially, his compensation was on "pakiao" basis but was later fixed at ₱150.00 per day which was paid
weekly.

In 1990, without any apparent reason, his employment was interrupted as he was told by petitioners to resume work in two months time. Being an
uneducated person, respondent was persuaded by the management as well as his brother not to complain, as otherwise petitioners might decide not to
call him back for work. Fearing such consequence, respondent accepted his fate. Nonetheless, after two months he reported back to work upon order
of management.

Despite being an employee for many years with his work performance never questioned by petitioners, respondent was dismissed on January 1, 2002
without lawful cause. He was told that he will be terminated because the company is not doing well financially and that he would be called back to
work only if they need his services again. Respondent waited for almost a year but petitioners did not call him back to work. When he finally filed
the complaint before the regional arbitration branch, his brother Vicente was used by management to persuade him to withdraw the case.

Petitioners denied having hired respondent asserting that SEIRI was incorporated only in 1986, and that respondent actually worked for SEIRI’s
furniture suppliers because when the company started in 1987 it was engaged purely in buying and exporting furniture and its business operations
were suspended from the last quarter of 1989 to August 1992; that respondent was not included in the list of employees submitted to the Social
Security System (SSS). Moreover, respondent’s brother, Vicente Coming, executed an affidavit 8 in support of petitioners’ position while Allan Mayol
and Faustino Apondar issued notarized certifications9 that respondent worked for them instead.

Respondent also submitted an affidavit signed by five former co-workers stating that respondent was one of the pioneer employees who worked in
SEIRI for almost twenty years.

LA: termination was illegal; that respondent’s work as sizing machine operator is usually necessary and desirable to the rattan furniture business of
petitioners and their failure to include respondent in the employment report to SSS is not conclusive proof that respondent is not their employee.

In appeal, petitioners submitted additional evidence: (1) copies of SEIRI’s payrolls and individual pay records of employees; (2) affidavit of SEIRI’s
Treasurer, Angelina Agbay; and (3) second affidavit of Vicente Coming.

NLRC: reversed; it appears that complainant first worked with Allan Mayol and later with Faustino Apondar upon the proddings of his brother
Vicente. Vicente’s affidavit as to complainant’s employment history was more detailed and forthright.

There is likewise substantial evidence to support our findings that complainant was not an employee of respondents. Thus:
1. Complainant’s name does not appear in the list of employees reported to the SSS.
2. His name does not also appear in the sample payrolls of respondents’ employees.
 3. The certification of Allan Mayol and Fasutino Apondar[,] supplier of finished rattan products[,] that complainant had at one time or another
worked with them.
4. The Affidavit of Vicente Coming, complainant’s full brother[,] attesting that complainant had never been an employee of respondent. The only
connection was that their employer Faustino Apondar supplies finished rattan products to respondents.

CA: affirmed LA’s decision; gave more credence to the declarations of the five former employees of petitioners that respondent was their co-worker
in SEIRI; that there existed an employer-employee relationship between petitioners and respondent who was dismissed without just cause.

As to the absence of respondent’s name in the payroll and SSS employment report, the CA observed that the payrolls submitted were only from
January 1, 1999 to December 29, 2000 and not the entire period of eighteen years when respondent claimed he worked for SEIRI. It further noted that
the names of the five affiants, whom petitioners admitted to be their former employees, likewise do not appear in the aforesaid documents.

x x x As to the "control test", the following facts indubitably reveal that respondents wielded control over the work performance of petitioner, to wit:
(1) they required him to work within the company premises; (2) they obliged petitioner to report every day of the week and tasked him to usually
perform the same job; (3) they enforced the observance of definite hours of work from 8 o’clock in the morning to 5 o’clock in the afternoon; (4) the
mode of payment of petitioner’s salary was under their discretion, at first paying him on pakiao basis and thereafter, on daily basis; (5) they
implemented company rules and regulations; (6) [Estanislao] Agbay directly paid petitioner’s salaries and controlled all aspects of his employment
and (7) petitioner rendered work necessary and desirable in the business of the respondent company.

ISSUES:

Whether under the facts and evidence on record, the finding of the honorable court of appeals that there exists employer-employee relationship
between petitioners and respondent is in accord with law and applicable decisions of this honorable court.

Whether under the facts and evidence presented, the finding of the honorable court of appeals that petitioners are liable for illegal dismissal of
respondent is in accord with applicable law and jurisprudence.

RULING:

COURT AFFIRMED CA’S RULING

To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the four-fold test, to wit: (1) the selection
and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct, or the
so-called "control test." In resolving the issue of whether such relationship exists in a given case, substantial evidence – that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion – is sufficient. Although no particular form of evidence is
required to prove the existence of the relationship, and any competent and relevant evidence to prove the relationship may be admitted, a finding that
the relationship exists must nonetheless rest on substantial evidence.

The fact that a worker was not reported as an employee to the SSS is not conclusive proof of the absence of employer-employee relationship. Nor
does the fact that respondent’s name does not appear in the payrolls and pay envelope records submitted by petitioners negate the existence of
employer-employee relationship. For a payroll to be utilized to disprove the employment of a person, it must contain a true and complete list of the
employee.37 In this case, the exhibits offered by petitioners before the NLRC consisting of copies of payrolls and pay earnings records are only for the
years 1999 and 2000; they do not cover the entire 18-year period during which respondent supposedly worked for SEIRI.

While they claim that respondent was the employee of their suppliers Mayol and Apondar, they did not submit proof that the latter were indeed
independent contractors; clearly, petitioners failed to discharge their burden of proving their own affirmative allegation.

In any controversy between a laborer and his master, doubts reasonably arising from the evidence are resolved in favor of the laborer. As a regular
employee, respondent enjoys the right to security of tenure under Article 279 of the Labor Code and may only be dismissed for a just or authorized
cause, otherwise the dismissal becomes illegal.

2. Hijos De F. Escano, Inc. v. NLRC

HIJOS DE F. ESCAÑO INC., vs. NLRC

FACTS:
National Organization of Workingmen ("NOWM") PSSLU-TUCP is a labor organization that counts among its members a majority of the laborers of
petitioner Pier 8 Arrastre & Stevedoring Services, Inc. ("PIER 8 A&S") consisting, among others, of stevedores, dockworkers, sweepers and forklift
operators (hereinafter collectively referred to as "the stevedores").

PIER 8 A&S is a corporation providing Arrastre and stevedoring services to vessels docked at Pier 8 of the Manila North Harbor. Prior to the
incorporation of PIER 8 A&S two (2) stevedoring companies had been servicing vessels docking at Pier 8.

One of these was the Manila Integrated Services, Inc. MISI which was servicing Escaño vessels, then berthing at Pier 8. The other was the San
Nicolas Stevedoring and Arrastre Services, Inc. (SNSASI) which was servicing Compania Maritima vessels. Aside, of course, from MISI and
SNSASI there were individual contractors known as the "cabos" who were operating in Pier 8.

Philippine Port Authority ("PPA") was created pursuant to the policy of the State to implement an integrated program of port development for the
entire country. Towards this end, the PPA issued Administrative Order No. 1377 specifically adopting the policy of "one pier, one Arrastre and/or
stevedoring company."

MISI and SNSASI merged to form the Pier 8 Arrastre and Stevedoring Services, Inc.

Escaño had transferred berth to Pier 16 with the approval of the PPA. PIER 8 A&S then started to encounter problems; it found its business severely
reduced with only Compania Maritima vessels to service. Even if it had wanted to continue servicing the vessels of Escaño at Pier 16 that was simply
not possible as there was another company exclusively authorized to handle and render Arrastre and stevedoring services at Pier 16.

Because of its resulting manpower surplus, PIER 8 A&S altered the work schedule of its stevedores by rotating them. The rotation scheme was
resisted by the stevedores, especially those formerly assigned to service Escaño vessels. It appears that the employees formerly belonging to MISI
continued to service Escaño vessels in like manner that those employees formerly belonging to SNSASI continued to service Compania Maritima
vessels, although MISI and SNSASI had already merged to form PIER 8 A&S The affected stevedores boycotted Pier 8 leading to their severance
from employment by PIER 8 A&S on 10 August 1978. Their refusal to work continued even after they were served with a return-to-work order.

NOWM PSSLU-TUCP and about 300 stevedores filed with the then Ministry of Labor and Employment ("MOLE") a complaint for unfair labor
practice ULP and illegal dismissal against PIER 8 A&S.

NOWM PSSLU-TUCP amended its complaint to include the monetary claims of the stevedores for overtime compensation, legal holiday pay,
emergency cost of living allowance, 13th month pay, night shift differential pay, and the difference between the salaries they received and that
prescribed under the minimum wage law. The complaint was also amended to implead Hijos de F. Escaño, Inc. (Escaño) as respondent before the
MOLE.

The MOLE Director in the National Capital Region certified for compulsory arbitration only the claims for illegal dismissal and ULP Considering
that NOWM PSSLU-TUCP wanted to include as well the other issues it had raised in the amended complaint, it filed a motion for reconsideration.

MR was denied because money claims, according to the MOLE Director, should be brought against Escaño and PIER 8 A&S in a separate complaint.

LABOR ARBITER:

- Hijos de F. Escaño and Pier 8 Arrastre and Stevedoring Services, Inc. are guilty of committing acts of unfair labor practice and are ordered
to jointly and severally reinstate all of the petitioners named in the amended complaint, with payment of full backwages counted from the
time they were illegally dismissed up to March 27, 1979.
- PIER 8 A&S was a labor only contractor and held that Escaño was the principal employer of the stevedores. For that reason, the Labor
Arbiter adjudged the petitioner is solidarily liable for payment of backwages to the stevedores as well as for reinstatement.

NLRC: affirmed the decision of the Labor Arbiter.

ESCAÑO’S CONTENTION:

- Denies the existence of an employer-employee relationship between it and the stevedores

- Stevedores are included in the payroll of PIER 8 A&S and that the SSS and Medicare contributions of the stevedores are paid by PIER 8
A&S as well.
- Liability, if any, should attach only to PIER 8 A&S.stevedores’ claim: since they had long been servicing Escaño vessels, i.e. from the time
Escaño was exclusively serviced by MISI until the time MISI was merged with SNSASI to form PIER 8 A&S they should also be
considered as employees of Escaño. Escaño disclaimed any employment relationship with the stevedores.
STEVEDORES’ CONTENTION:

- PIER 8 A&S is not an independent contract but a labor only contractor

- They perform their duties or work assignments under the close supervision of supervisors of respondent Hijos de F. Escaño Inc.;
- The machineries, equipment, tools and other facilities complainants used, while in the performance of their jobs, are owned by respondent
Hijos de F. Escaño, Inc.;
- The jobs they were performing from the time they were first employed, until their dismissals, are principal phases of respondent's
operations; and
- The so-called Pier 8 Arrastre & Stevedoring Services, Inc. is a mere middleman; its vital role is purely one of supplying workers to
respondent Hijos de F. Escaño, Inc. in short, a mere recruiting agent. Plainly, said contractor can be categorized as an agent of respondent
Hijos de F. Escaño, Inc. as it performs activities directly related to the principal business of said Hijos de F. Escaño, Inc.

ISSUE:

- WON there is the existence of employer-employee relationship between stevedores and Escaño – NONE.

HELD:

Existence or non-existence of the employer-employee relationship is commonly to be determined by examination of certain factors or aspects of that
relationship. These include:

1. the manner of selection and engagement of the putative employee;

2. the mode of payment of wages;
3. the presence or absence of the power of dismissal; and
4. the presence or absence of a power to control the putative employee's conduct.

The stevedores attached to their amended complaint a list of their daily wages set forth opposite their individual names under the heading "Hijos de
F. Escaño Inc. and/or Pier 8 Arrastre and Stevedoring Services, Inc. apparently to show that they are paid for their services by either or both of
petitioners, however, they did not submit direct evidence, e.g., copies of payrolls and remittances to the SSS and Medicare, establishing this fact.

The stevedores failed to substantiate their allegation that the supervisors of Escaño had control over them while discharging their (stevedores') duties.
Also, their Position Paper submitted to the Labor Arbiter disclosed that the supervisors of Escaño "merely supervised" them.

The letters written by the National President of NOWM PSSLU-TUC— to which the stevedores belong-relating to collective bargaining and other
operating matters, were all addressed to the management of PIER 8 A&S indicating that they recognized PIER 8 A&S as their employer.
Specifically, in the letter dated 21 May 1977, the stevedores proposed that PIER 8 A&S recognize their union as the sole and exclusive representative
of the stevedores for the purpose of collective bargaining. They also sought to submit for collective bargaining with PIER 8 A&S such other labor
standard issues as wage increases, 13th month pay and vacation and sick leave pay.

Although the record does not show that the stevedores had submitted any evidence to fortify their claim that PIER 8 A&S is a labor only contractor,
the Labor Arbiter simply conceded that claim to be factual. The Labor Arbiter added that the business of PIER 8 A&S is "desirable and indispensable
in the business of Hijos de F. Escaño and without [the stevedores], its vessels could not be operated."

Considering that a shipping company is not normally or customarily engaged in stevedoring and arrastre activities either for itself or other vessels, it
contracts with other companies offering those services. The employees, however, of the stevedoring and/or arrastre company should not be deemed
the employees of the shipping company, in the absence of any showing, that the arrastre and/or stevedoring company in fact acted as an agent only of
the shipping company. No such showing was made in this case.

WHEREFORE, considering the absence of an employer-employee relationship between Hijos de F. Escaño, Inc. and private respondents, the
Decision of the Labor Arbiter and NLRC are MODIFIED so that only Pier 8 Arrastre & Stevedoring Services, Inc. shall be liable for reinstatement
and payment of backwages.

3. Marsman & Company, Inc. v. Sta. Rita

G.R. No. 194765

Topic: III. Employer-employee relationship b. Four-fold test

Facts:

Marsman, a domestic corporation, was formerly engaged in the business of distribution and sale of pharmaceutical and consumer products for
different manufacturers. Marsman purchased Metro Drug Distribution, Inc. (Metro Drug), now Consumer Products Distribution Services,
Inc. (CPDSI). The business transition from Marsman to CPDSI generated confusion as to the actual employer of Sta. Rita at the time of his
dismissal.
Marsman temporarily hired Sta. Rita on November 16, 1993 as a warehouse helper with a contract that was set to expire on April 16, 1994,
and paid him a monthly wage of ₱2,577.00. After the contract expired, Marsman rehired Sta. Rita as a warehouseman and placed him on
probationary status on April 18, 1994 with a monthly salary of ₱3,166.00. Marsman then confirmed Sta. Rita's status as a regular employee
on September 18, 1994 and adjusted his monthly wage to ₱3,796.00. Later, Sta. Rita joined Marsman Employees Union (MEU), the
recognized sole and exclusive bargaining representative of Marsman's employees.
Marsman administered Sta. Rita's warehouse assignments in multiple different warehouses.
The similarity in Marsman's and Metro Drug's business led to the integration of their employees which was formalized in a Memorandum of
Agreement, dated June 1996, which provides:
Concomitant to the integration of employees is the transfer of all office, sales and warehouse personnel of Marsman to Metro Drug and the
latter's assumption of obligation with regard to the affected employees' labor contracts and Collective Bargaining Agreement. Metro Drug
amended its Articles of Incorporation by changing its name to "Consumer Products Distribution Services, Inc." (CPDSI) which was approved
by the Securities and Exchange Commission.
In the meantime, on an unspecified date, CPDSI contracted its logistic services to EAC Distributors (EAC). CPDSI and EAC agreed that
CPDSI would provide warehousemen to EAC's tobacco business which operated in EAC-Libis Warehouse. A letter issued by Marsman
confirmed Sta. Rita's appointment as one of the warehousemen for EAC-Libis Warehouse.
Parenthetically, EAC's use of the EAC-Libis Warehouse was dependent upon the lease contract between EAC and Valiant Distribution
(Valiant), owner of the EAC-Libis Warehouse.
This sequence of events left CPDSI with no other option but to terminate the employment of those assigned to EAC-Libis Warehouse,
including Sta. Rita. A letter dated January 14, 2000, issued by Michael Leo T. Luna, CPDSI's Vice-President and General Manager, notified
Sta. Rita that his services would be terminated on February 28, 2000 due to redundancy.
Aggrieved, Sta. Rita filed a complaint in the NLRC, National Capital Region-Quezon City against Marsman on January 25, 2000 for illegal
dismissal with damages in the form of moral, exemplary, and actual damages and attorney's fees. Sta. Rita alleged that his dismissal was
without just or authorized cause and without compliance with procedural due process.

Petitioner’s Argument:
Marsman filed a Motion to Dismiss on March 16, 2000 on the premise that the Labor Arbiter had no jurisdiction over the complaint for
illegal dismissal because Marsman is not Sta. Rita's employer. Marsman averred that the MOA effectively transferred Sta. Rita's employment
from Marsman and Company, Inc. to CPDSI. Said transfer was further verified by Sta. Rita's: 1) continued work in CPDSI's premises; 2)
adherence to CPDSI's rules and regulations; and 3) receipt of salaries from CPDSI. Moreover, Marsman asserted that CPDSI terminated Sta.
Rita.

Respondents Argument:

1). He was employed with Marsman on November 16, 1993, with offices and address at Manalac Avenue, Taguig, Metro Manila, as
warehouseman with a basic salary ₱3,790.00 more (sic); 2.) As a regular employee, his salary was increased by ₱1,600.00 in 1995; in 1996
was increased by ₱1,300.00; in 1997 was increased by ₱1,050.00, making a total of ₱7,740.00 up to his separation from employment on
January 18, 2000 x xx; 3.) He cannot fathom to know why he was terminated from employment, save the better (sic) of Mr. Michael Leo T.
Luna, Vice President and General Manager of Marsman Company (Consumer Products Distribution Services, Inc.) on January 14, 2000 4.)
His termination from employment is in diametric opposition to Art VI. Sec. 3(d) of the CBA and to Art. 282 of the Labor Code, as amended,
i.e., he was no[t] given the 30-day period prior to his termination, making his dismissal as illegal per se; 5.) In the absence of any derogatory
record of Mr. Rodil Sta. Rita for six (6) years, he is entitled to moral and exemplary damages, in addition to back wages and separation pay,
short of reinstatement and without loss of seniority rights.

LA Ruling: in favor of the complainant. Article 167 of the Labor Code defines employer, to wit: "Employer means any person, natural or
juridical, employing the services of the employee. "Likewise, Article 212 of the Labor Code defines employer in this wise: "Employer
includes any person acting in the interest of an employer directly or indirectly."
NLRC Ruling: Applying the four-fold test in determining the existence of employer-employee relationship fails to convince Us that
complainant is respondent Marsman's employee.

CA Ruling: he instant petition for certiorari is GRANTED. The assailed Decision and Resolution of the public respondent National Labor
Relations Commission are ANNULLED and SET ASIDE. Judgment is rendered declaring petitioner Rodil C. [Sta. Rita's] dismissal from
work as illegal and accordingly, private respondent Marsman and Company, Inc. is ordered to pay said respondent.

Issue: WON there is an employer employee relationship bet. Marsman and Sta. Rita, when Sta. Rita was terminated as an employee?

SC Ruling: No. -To prove the element on the payment of wages, Sta. Rita submitted forms for leave application, with either Marsman's logo
or CPDSI's logo. Significantly, the earlier leave forms bore Marsman's logo but the latest leave application of Sta. Rita already had CPDSI's
logo. As to the power of dismissal, the letter dated January 14, 2000 clearly indicated that CPDSI, and not Marsman, terminated Sta. Rita's
services by reason of redundancy. Sta. Rita failed to prove that Marsman had the power of control over his employment at the time of his
dismissal.

Control Test

1. Fuji Television Network, Inc. v. Espiritu

Arlene Espiritu was engaged by Fuji TV as a news correspondent/producer tasked to report Ph news to Fuji thru its Manila Bureau field office. Her
employment contract initially provided for a term of 1yr but was successively renewed on a yearly basis with salary adjustment upon every renewal.
Sometime in Jan 2009, Arlene was diagnosed with lung cancer so she informed Fuji about this. In turn, the Chief of News Agency of Fuji informed
her that the company will have a problem renewing her contract since it would be difficult for her to perform her job. She insisted that she was still fit
to work as certified by her attending physician.

After that, Arlene and Fuji signed a non-renewal contract where it was stipulated that her contract would no longer be renewed after its expiration.
The contract also provided that the parties release each other from liabilities and responsibilities under the employment contract. In consideration of
the non-renewal contract, Arlene "acknowledged receipt of the total amount of US$18,050.00 representing her monthly salary from March 2009 to
May 2009, year-end bonus, mid-year bonus, and separation pay." However, Arlene affixed her signature on the non renewal contract with the initials
"U.P." for "under protest."

The day after Arlene signed the non-renewal contract, she filed a complaint for illegal dismissal and attorney’s fees with the National Capital Region
Arbitration Branch of the NLRC. She alleged that she was forced to sign the nonrenewal contract when Fuji came to know of her illness and that it
withheld her salaries and other benefits when she refused to sign. Arlene claimed that she was left with no other recourse but to sign the non-renewal
contract, and it was only upon signing that she was given her salaries and bonuses, in addition to separation pay.

LA – dismissed the complaint and in applying the four-fold test, held that she was no Fuji’s employee but an independent contractor.

NLRC – reversed LA ruling and held that she was a regular employee with respect to the activities for which she was employed since she
continuously rendered services that were deemed necessary and desirable to Fuji’s business.

CA – affirmed NLRC ruling and ordered for her reinstatement. It held that Arlene was a regular employee because she was engaged to perform work
that was necessary in the business and the successive renewals of her fixed-term contract resulted in regular employment. CA also held that Arlene
was illegally dismissed because Fuji failed to comply with the requirements of substantive and procedural due process necessary for her dismissal
since she was a regular employee. She was left with no choice since Fuji was decided on severing her employment.

Fuji points out that Arlene was hired as a stringer, and it informed her that she would remain one. She was hired as an independent contractor as
defined in Sonza. Fuji had no control over her work. It added that the signing of the non-renewal contract was not necessary to terminate her
employment since "such employment terminated upon expiration of her contract." Fuji alleges that it did not need a permanent reporter since the
news reported by Arlene could easily be secured from other entities or from the internet. Fuji "never controlled the manner by which she performed
her functions." In sum, it alleged these facts: (1) she was hired because of her skills; (2) her salary was US$1,900.00, which is higher than the normal
rate; (3) she had the power to bargain with her employer; and (4) her contract was for a fixed term.

Issue: WON there exists an employer-employee relationship between the parties.

Ruling: YES. Arlene was a regular employee with a fixed-term contract. First, SC determines if the relationship existed, then the status of Arlene’s
employment. In doing so, SC scrutinized whether the nature of Arlene’s work was necessary and desirable to Fuji’s business or whether Fuji only
needed the output of her work. If the circumstances show that Arlene’s work was necessary and desirable to Fuji, then she is presumed to be a regular
employee.

The burden of proving that she was an independent contractor lies with Fuji. In labor cases, the quantum of proof required is substantial evidence.
"Substantial evidence" has been defined as "such amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion." Once the employee establishes the fact of dismissal, supported by substantial evidence, the burden of proof shifts to the employer to
show that there was a just or authorized cause for the dismissal and that due process was observed.

Art 280 of the Labor Code classifies employees into regular, project, seasonal, and casual. It further classifies regular employees into two kinds: (1)
those "engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer"; and (2) casual
employees who have "rendered at least one year of service, whether such service is continuous or broken." Another classification of employees, i.e.,
employees with fixed-term contracts, was recognized in Brent School, Inc. v. Zamora.

SC further discussed that there are employment contracts where "a fixed term is an essential and natural appurtenance" such as overseas employment
contracts and officers in educational institutions. As to the validity of fixed term contracts, SC ruled that where from the circumstances it is apparent
that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down as contrary to public
policy or morals. There are guidelines laid down in the case of Brent that must be satisfied to recognize the validity of fixed-term contracts. Contracts
of employment for a fixed period are not unlawful. What is objectionable is the practice of some scrupulous employers who try to circumvent the law
protecting workers from the capricious termination of employment.

On the other hand, an independent contract is defined as one who carries on a distinct and independent business and undertakes to perform the job,
work, or service on its own account and under one’s own responsibility according to one’s own manner and method, free from the control and
direction of the principal in all matters connected with the performance of the work except as to the results thereof. In view of the "distinct and
independent business" of independent contractors, no employer-employee relationship exists between independent contractors and their principal.
Independent contractors are recognized under Article 106 of the Labor Code.

Jurisprudence has recognized another kind of independent contractor: individuals with unique skills and talents that set them apart from ordinary
employees. Since no employer-employee relationship exists between independent contractors and their principals, their contracts are governed by the
Civil Code provisions on contracts and other applicable laws. On the other hand, contracts of employment are different and have a higher level of
regulation because they are impressed with public interest. Article XIII, Section 3 of the 1987 Constitution provides full protection to labor.

Fuji’s argument that Arlene was an independent contractor under a fixed-term contract is contradictory. Employees under fixed-term contracts cannot
be independent contractors because in fixed-term contracts, an employer-employee relationship exists. The test in this kind of contract is not the
necessity and desirability of the employee’s activities, "but the day certain agreed upon by the parties for the commencement and termination of the
employment relationship." For regular employees, the necessity and desirability of their work in the usual course of the employer’s business are the
determining factors. On the other hand, independent contractors do not have employer-employee relationships with their principals. Hence, before the
status of employment can be determined, the existence of an employer-employee relationship must be established.

Existence of employer-employee relationship – In determining the existence of employer-employee relationship, SC used the four-fold test. The
elements of the four-fold test are the following: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power of control, which is the most important element. The power to control refers to the existence of the power and not
necessarily to the actual exercise thereof, nor is it essential for the employer to actually supervise the performance of duties of the employee. It is
enough that the employer has the right to wield that power. SC held that in this case, there exists an employer-employee relationship between Fuji
and Arlene.

Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without
dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the
use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both
the result and the means used to achieve it.

Relying on the ruling in Dumpit-Murillo case, Arlene was hired by Fuji as a news producer, but there was no showing that she was hired because of
unique skills that would distinguish her from ordinary employees. Neither was there any showing that she had a celebrity status.

Her monthly salary amounting to US$1,900.00 appears to be a substantial sum, especially if compared to her salary when she was still connected
with GMA. Indeed, wages may indicate whether one is an independent contractor. Wages may also indicate that an employee is able to bargain with
the employer for better pay. However, wages should not be the conclusive factor in determining whether one is an employee or an independent
contractor.

Fuji had the power to dismiss Arlene, as provided for in paragraph 5 of her professional employment contract. Her contract also indicated that Fuji
had control over her work because she was required to work for eight (8) hours from Monday to Friday, although on flexible time. On the power to
control, Arlene alleged that Fuji gave her instructions on what to report. Even the mode of transportation in carrying out her functions was controlled
by Fuji. Paragraph 6 of her contract states.

6. During the travel to carry out work, if there is change of place or change of place of work, the train, bus, or public transport shall be used
for the trip. If the Employee uses the private car during the work and there is an accident the Employer shall not be responsible for the
damage, which may be caused to the Employee.

Determining her status of employment (regular with fixed-term contract) – The test for determining regular employment is whether there is a
reasonable connection between the employee’s activities and the usual business of the employer. Article 280 provides that the nature of work must be
"necessary or desirable in the usual business or trade of the employer" as the test for determining regular employment. It is distinguished from a
specific undertaking that is divorced from the normal activities required in carrying on the particular business or trade. However, there may be a
situation where an employee’s work is necessary but is not always desirable in the usual course of business of the employer. In this situation, there is
no regular employment.

In this case, Fuji is engaged in the business of broadcasting, including news programming. It is based in Japan and has overseas office to cover
international news. Based on the record, Fuji’s Mnaila Office is a small unit and has a few employees. As such, Arlene had to do all activities related
to news gathering. Her designation was “News Talent/Reporter/Producer.” A news producer plans and supervises newscast and works with reporters
in the field planning and gathering info. Her tasks included monitoring and gathering news stories, reporting, interviewing subjects in front of a
vidcam, timely submission of news related to Philippines, and traveling to Fuji’s regional office in Thailand. She also had to report for work in Fuji’s
office in Manila from Mondays to Fridays, eight (8) hours per day. She had no equipment and had to use the facilities of Fuji to accomplish her tasks.
She was not contracted on account of any peculiar ability or special talent and skill that she may possess which the network desires to make use of.

Moreover, fixed-term contracts are strictly construed. Where an employee’s contract "had been continuously extended or renewed to the same
position, with the same duties and remained in the employ without any interruption," then such employee is a regular employee. The continuous
renewal is a scheme to prevent regularization. Arlene’s contract indicating a fixed term did not automatically mean that she could never be a regular
employee. This is precisely what Article 280 seeks to avoid.

Regarding the issue of illegal dismissal – As a regular employee, Arlene was entitled to security of tenure and could be dismissed only for just or
authorized causes and after the observance of due process. The expiration of Arlene’s contract does not negate the finding of illegal dismissal by Fuji.
The manner by which Fuji informed Arlene that her contract would no longer be renewed is tantamount to constructive dismissal.

To make matters worse, Arlene was asked to sign a letter of resignation prepared by Fuji. The existence of a fixed-term contract should not mean that
there can be no illegal dismissal. Due process must still be observed in the pre-termination of fixed-term contracts of employment. In addition, it was
found that she was dismissed because of her health condition. Disease as a ground for termination is recognized under Article 284 of the Labor Code.

For dismissal under Article 284 to be valid, two requirements must be complied with: (1) the employee’s disease cannot be cured within six (6)
months and his "continued employment is prohibited by law or prejudicial to his health as well as to the health of his co-employees"; and (2)
certification issued by a competent public health authority that even with proper medical treatment, the disease cannot be cured within six (6) months.
There is no evidence showing that Arlene was accorded due process. After informing her employer of her lung cancer, she was not given the chance
to present medical certificates. Fuji immediately concluded that Arlene could no longer perform her duties because of chemotherapy. What Fuji did
was to inform her that her contract would no longer be renewed, and when she did not agree, her salary was withheld.

2. Reyes v. Glaucoma Research Foundation, Inc.

G.R. No. 189255. June 17, 2015

FACTS:

1. Jesus Reyes filed a complaint for illegal dismissal against Glaucoma.

2. He allegedthat he was hired by Glaucoma as Administratorfor its Eye Referral Center (ERC) and has been receiving salaries of
P20,000 till January 2005.
 3. Beginning Feb 2005 Glaucoma withheld his salary but he still reported for work.

4. He then wrote a letter to Manuel Agulto (Exec Director of Glaucoma) that he has not been receiving salaries since Feb 2005 and
14thmonth pay for 2004, he didn’t receive a response.

5. On April 21, 2005 he was informed that he was no longer the Admin of ERC, his office was padlocked without notice and was not
allowed by the guard to enter the premise of ERC.

6. Glaucoma’s contentionthat there is no employer-employee relationship between them because Glaucoma had no control over Reyes in
terms of working hours as he reports for work at anytime of the day and leaves as he pleases; Glaucoma also had no control as to the
manner in which he performs his alleged duties as consultant.

7. LA– Dismissed the complaint on the ground that:

a. Reyes failed to establish that the elements of employee-employer relationship existed between them.

b. He also failed to deny that during his stint with Glaucoma he was also a consultant of various government agencies.

c. And that his actions were neither supervised nor controlled by the management of ERC, did not observe working hours (his
reporting for work and leaving the same as he pleased)

d. He was receiving allowance not salaries as consultant.

8. NLRC– Reversed. He was illegally dismissed and ordered to reinstate him with full backwages.

9. CA– Reinstated the ruling of LA.

ISSUE:WON employer-employee relationship existed between Glaucoma and Reyes.

HELD:NO. Under the control test and economic control test, no employer-employee relationship existed between Glaucoma and Reyes.

There are four standards in determining the existence of an employer-employee relationship, namely: (a) the manner of selection and engagement of
the putative employee; (b) the mode of payment of wages; (c) the presence or absence of power of dismissal; and, (d) the presence or absence of
control of the putative employee's conduct.

1. Most determinative among these factors is the so- called "control test." This test is premised on whether the person for whom the services are
performed reserves the right to control both the end achieved and the manner and means used to achieve that end.

Reyes argument: As evidence of respondents' supposed control over him, the organizational plans he has drawn were subject to the approval of
respondent corporation's Board of Trustees.

The court ruled that the Glaucoma’s power to approve or reject the organizational plans drawn by Reyes cannot be the control contemplated in the
"control test”. The important factor to consider in the "control test" is still the element of control over how the work itself is done, not just the end
result thereof.

2. Aside from the control test, the Supreme Court has also used the “economic reality test” in determining whether an employer-employee
relationship exists between the parties. Under this test, the economic realities prevailing within the activity or between the parties are examined,
taking into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. The benchmark of
economic reality in analyzing possible employment relationships for purposes of applying the Labor Code ought to be the economic dependence of
the worker on his employer.

Reyes argument: He draws attention to the pay slips he supposedly received from respondent corporation.

However, he does not dispute the findings of the CA that there are no deductions for SSS and withholding tax from his compensation, which are the
usual deductions from employees' salaries. Thus, the alleged pay slips may not be treated as competent evidence of petitioner's claim that he is
respondents' employee. The designation of the payments to petitioner as salaries, is not determinative of the existence of an employer-employee
relationship.
 3. Sonza v. ABS-CBN

G.R. No. 138051 June 10, 2004

JOSE Y. SONZA, petitioner,
vs.
ABS-CBN BROADCASTING CORPORATION, respondent.

Facts:

● Mel and Jay Management and Development Corp. (MJMDC) acting as Agent of Mr. Jay Y. Sonza, entered into Agreement with ABS-
CBN for the services of hosting Radio and TV programs in ABS-CBN as follows:
a. For “Mel & Jay” radio program, 8:00 to 10:00 a.m., Mondays to Fridays
b. For “Mel & Jay” television program, 5:30 to 7:00 p.m., Sundays

● The Parties agreed to pay Sonza directly P310,000 on 1st year and P317,000 on the 2-3rd year.
● On 1996, an event concerning Sonza’s program resulted Sonza to irrevocably resigned. A letter dated April 1, 1996 was sent to ABS-
CBN by MJMC. Such letter was singed also by Sonza as President and Manager of MJMDC.
● Sonza alleged that ABS-CBN did not pay his salary, separation pay, service incentive pay and 13 th month pay.
● Sonza filed a complaint in before the Labor Arbiter.
● Labor Arbiter, NLRC and CA ruled in favor of ABS-CBN as there is no employer-employee relationship exist in both Parties and the
that the claim of Sonza is covered by Labor laws but by Civil Code due to the alleged breach of the contract.
● Sonza’s argued that he is considered as employee of ABS-CBN.

Issue: WON there is employer-employee relationship between Sonza and ABS-CBN.

Ruling:

Sonza is not an employee of ABS-CBN.

4 Fold Test:

1. Selection and Engagement of Employee

Sonza contended that the "discretion used by respondent in specifically selecting and hiring complainant over other broadcasters of possibly
similar experience and qualification as complainant belies respondent’s claim of independent contractorship.” The SC ruled that The specific
selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a
circumstance indicative, but not conclusive, of an independent contractual relationship.

2. Payment of Wages

ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA asserts that this mode of fee
payment shows that he was an employee of ABS-CBN. The SC ruled that ₱317,000 monthly in the second and third year, are so huge and out
of the ordinary that they indicate more an independent contractual relationship rather than an employer-employee relationship. SONZA
acting alone possessed enough bargaining power to demand and receive such huge talent fees for his services. The power to bargain
talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of an independent contractual
relationship. The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as an independent
contractor.

3. Power of Dismissal
SONZA failed to show that ABS-CBN could terminate his services on grounds other than breach of contract, such as retrenchment to prevent
losses as provided under labor laws. Whether SONZA rescinded the Agreement or resigned from work does not determine his status as
employee or independent contractor.

4. Control Test
a. SONZA contended that ABS-CBN exercised control over the means and methods of his work. The SC ruled that ABS-
CBN engaged SONZA’s services specifically to co-host the "Mel & Jay" programs. ABS-CBN did not assign any other
work to SONZA. How SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-
CBN’s control. SONZA did not have to render eight hours of work per day. The Agreement required SONZA to attend
only rehearsals and tapings of the shows, as well as pre- and post-production staff meetings. 31 ABS-CBN could not dictate
the contents of SONZA’s script. ABS-CBN merely reserved the right to modify the program format and airtime schedule
"for more effective programming." 38Even though ABS-CBN provided SONZA with the place of work and the necessary
equipment, SONZA was still an independent contractor since ABS-CBN did not supervise and control his work.
b. SONZA further argued he was ABS-CBN’s employee because ABS-CBN subjected him to its rules and standards of
performance. The SC ruled that The code of conduct imposed on SONZA under the Agreement refers to the "Television
and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been adopted by the COMPANY
(ABS-CBN) as its Code of Ethics."
c. SONZA insists that the "exclusivity clause" in the Agreement is the most extreme form of control which ABS-CBN
exercised over him. The SC ruled that the hiring of exclusive talents is a widespread and accepted practice in the
entertainment industry. This practice is not designed to control the means and methods of work of the talent, but simply to
protect the investment of the broadcast station.

4. R. Transport v. Ejandra
G.R. NO. 148508 : May 20, 2004

FACTS:Private respondent Rogelio Ejandra worked as a bus driver (Muntilupa-Alabang-Malanday-Monumento-UE-Letre-Sangandaan

route) of petitioner R Transport Corporation for almost six years and was paid on a 10% commission basis. On January 31, 1996, an officer
of the Land Transportation Office (LTO), Guadalupe Branch, Makati City, apprehended him for obstruction of traffic for which his license
was confiscated. Upon his arrival at petitioners garage, he immediately reported the incident to his manager, Mr. Oscar Pasquin, who gave
him P500 to redeem his license.

The following day, he went to LTO, Guadalupe Branch, to claim it but he was told that it had not yet been turned over by the officer who
apprehended him. He was able to retrieve his license only after a week.

On February 8, 1996, private respondent informed Mr. Pasquin that he was ready to report for work. However, he was told that the company
was still studying whether to allow him to drive again. Private respondent was likewise accused of causing damage to the bus he used to
drive. The manager asked Ejandra to take a rest from work but he did not give a definite time.

Respondent filed a case against the Petitioner before the labor arbiter holding petitioner liable for illegal dismissal and directing private
respondents reinstatement.

Petitioner:

· Petitioner claimed that Ejandra is a habitual absentee, and has abandoned his job.

· Ejandra did not present an apprehension report and informed petitioner of his problems with the LTO.

· Petitioner further argued that private respondent was not an employee because theirs was a contract of lease and not of
employment, with petitioner being paid on commission basis.

(No employer-employee relationship)

In disputing petitioners claim that private respondent was not its employee and was not therefore entitled to notice and hearing before
termination.
Respondent:

· His absence was justified because the LTO, Guadalupe Branch, did not release his license until after a week.

LA:

· Labor arbiter Rogelio Yulo rendered his decision in favor of private respondent.

a. Ejandra’s one-week absence did not constitute abandonment of work considering that it took him the whole week
to reclaim his license.

b. Due process was not accorded to private respondent who was never given the opportunity to contest the charge
of abandonment.

c. Assuming actual abandonment, petitioner should have reported such fact to the nearest employment office of the
Department of Labor and Employment. But no such report was ever made.

NLRC:

· NLRC rendered a decision affirming the decision of the labor arbiter.

a. Appellants defense of denying the existence of employer-employee relationship with the complainant based on the manner
by which complainant was being paid his salary, cannot hold water.

x x x

While employees paid on piece-rate and commission basis are not covered by the provisions of the Labor Code, as amended,
on hours of work, these employees however, for all intents and purposes, are employees of their employers.

CA

Petitioner filed in the Court of Appeals a Petition for Certiorari on the ground that the NLRC committed grave abuse of discretion in
affirming the decision of the labor arbiter. However, the instant petition was DENIED for lack of merit.

a. Petitioner was barred from denying the existence of an employer-employee relationship because petitioner invoked its
rights under the law and jurisprudence as an employer in dismissing private respondent.

Hence, this Petition for Review of the decision1 of the Court of Appeals2 dated December 22, 2000.

ISSUE & RULING:

· Whether there is an employer-employee relationship between Petitioner and Respondent.

Yes. Denying the existence of an employer-employee relationship, petitioner insists that the parties agreement was for a contract of
lease of services. We disagree. Petitioner is barred to negate the existence of an employer-employee relationship. In its petition filed
before this Court, petitioner invoked our rulings on the right of an employer to dismiss an employee for just cause. 12 Petitioner
maintained that private respondent was justifiably dismissed due to abandonment of work. By adopting said rulings, petitioner
impliedly admitted that it was in fact the employer of private respondent. According to the control test, the power to dismiss an
employee is one of the indications of an employer-employee relationship. 13 Petitioners claim that private respondent was legally
dismissed for abandonment was in fact a negative pregnant: 14 an acknowledgement that there was no mutual termination of the
alleged contract of lease and that private respondent was its employee. The fact that petitioner paid private respondent on
commission basis did not rule out the presence of an employee-employer relationship. Article 97(f) of the Labor Code clearly
provides that an employees wages can be in the form of commissions.

· Whether respondent, an employee of petitioner, dismissed for just cause?

 On the ground of abandonment

No. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable
reason and (2) a clear intention to sever the employer-employee relationship. Of the two, the second element is the more
determinative factor and should be manifested by some overt acts. Mere absence is not sufficient. It is the employer who has the
burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment without any intention of
returning.

In the instant case, petitioner fell short of proving the requisites. To begin with, petitioners absence was justified because the LTO,
Guadalupe Branch, did not release his license until after a week. This was the unanimous factual finding of the labor tribunals and the Court
of Appeals. As aptly held by labor arbiter Yulo, the process of redeeming a confiscated license, based on common experience, depended on
when the apprehending officer turned over the same. Second, private respondent never intended to sever his employment as he in fact
reported for work as soon as he got his license back. Petitioner offered no evidence to rebut these established facts. Third, labor arbiter Yulo
correctly observed that, if private respondent really abandoned his work, petitioner should have reported such fact to the nearest Regional
Office of the Department of Labor and Employment.

Respondent’s right to procedural due process

In addition to the fact that petitioner had no valid cause to terminate private respondent from work, it violated the latters right to procedural
due process by not giving him the required notice and hearing. Section 2, Rule XXIII, Book V of Department Order No. 9 provides for the
procedure for dismissal for just or authorized cause. (*Read in full case)

WHEREFORE, premises considered, the petition is hereby DENIED. Costs against the petitioner.

5. Jardin v. NLRC

Facts: Jardin, et al. were taxi drivers of Philjama International Inc. under a “boundary system”, wherein the driver takes out his unit and pays
the owner/operator a few commonly called “boundary” for the use of the unit. The taxi drivers earned an average of P400 daily. Nevertheless,
Philjama International still deducts P30 from that P400 supposedly for the washing of the taxi units. Jardin, et al. believed the deduction to be
illegal and planned to form a labor union. When Philjama International learned about their plan, they stopped allowing them to drive their
taxicabs. Jardin et al. then filed a complaint with the labor arbiter for unfair labor practice, illegal dismissal, and illegal deduction of washing
fees.

Petitioner’s argument: They are employees of Philjama International Inc., and therefore protected from illegal dismissal under the Labor
Code.

Respondent’s argument: Under the “boundary system”, the taxi drivers relationship with Philjama International is more of a lessor-lessee
relationship rather than an employer-employee relationship and should therefore be governed under the Civil Code rather than the Labor
Code.

4 requisites:
1. Selection and engagement of the employee
2. Payment of wages
3. Power of dismissal
4. Power of control over employees conduct

Control being most important – not only as to the result of the work done but also as to the means and methods by which the same is to be
accomplished.
NLRC claims that the control element is lacking. Drivers are free to choose whatever manner they conduct their trade and are beyond the
physical control of the owner/operator; they themselves determine the amount of revenue they would want to earn in a day’s driving; and,
more significantly aside from the fact that they pay for the gasoline they consume, they likewise shoulder the cost of repairs on damages
sustained by the vehicles they are driving.

Rulings: Labor arbiter dismissed the initial complaint; NLRC reversed; Philjama filed motion for reconsideration; NLRC granted and ruled in
favor of Philjama – lack of jurisdiction – no employer-employee relationship.

Relevant Issue: WON an EER exists under this “boundary system”

SC Ruling: YES. The NLRC’s decision goes against prevailing jurisprudence.

6. Abante v. Lamadrid Bearing and Parts

G.R. No. 159890 May 28, 2004

EMPERMACO B. ABANTE, JR., petitioner, vs. LAMADRID BEARING & PARTS CORP. and JOSE LAMADRID, President,
respondents.
TOPIC: Employer-employee relationship>Four-Fold Test>Control Test
FACTS:
•Petitioner was employed by respondent company Lamadrid Bearing and Parts Corporation sometime in June 1985 as a salesman earning a
commission of 3% of the total paid-up sales covering the whole area of Mindanao.
•Aside from selling the merchandise of respondent corporation, he was also tasked to collect payments from his various customers.
•Respondent corporation had complete control over his work because its President, respondent Jose Lamadrid, frequently directed him to
report to a particular area for his sales and collection activities, and occasionally required him to go to Manila to attend conferences regarding
product competition, prices, and other market strategies.
•Sometime in 1998, petitioner encountered five customers/clients with bad accounts that owed the company PHP600,000+ worth of debt.
•Petitioner was confronted by respondent Lamadrid over the bad accounts and warned that if he does not issue his own checks to cover the
said bad accounts, his commissions will not be released and he will lose his job.
•On March 22, 2001, counsel for respondent corporation sent a letter to petitioner demanding that he make good the dishonored checks or
pay their cash equivalent.
•Petitioner responded to the letter conveying his willingness to continue working with he company and asking for consideration from his
employers.
•A few weeks after, petitioner sent another letter to respondent informing him that if he pursues the case against him, he will refer the issue at
hand to Mr. Paul Dominguez and Atty. Jesus Dureza to solicit proper legal advice.
• While doing his usual rounds as commission salesman, petitioner was handed by his customers a letter from the respondent company
warning them not to deal with petitioner since it no longer recognized him as a commission salesman.
•Petitioner thus filed a complaint for illegal dismissal with money claims against respondent company and its president, Jose Lamadrid,
before the NLRC Regional Arbitration Branch No. XI, Davao City.
LA: ruled in favor of the petitioner
NLRC: reversed LA’s decision
CA: denied Petitioner’s appeal
PETITIONER’S ARGUMENT:
•he must be a regular employee pursuant to Article 280 of the Labor Code because 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.
•disputes the finding of the appellate court that no employer-employee relationship exists between him and respondent corporation since the
power of control, which is the most decisive element to determine such relationship, is wanting.

RESPONDENT’S ARGUMENT: respondents countered that petitioner was not its employee but a freelance salesman on commission basis,
procuring and purchasing auto parts and supplies from the latter on credit, consignment and installment basis and selling the same to his
customers for profit and commission of 3% out of his total paid-up sales. Respondents cite the following as indicators of the absence of an
employer-employee relationship between them:
(1) petitioner constantly admitted in all his acts, letters, communications with the respondents that his relationship with the latter was strictly
commission basis salesman;
(2) he does not have a monthly salary nor has he received any benefits accruing to regular employment;
(3) he was not required to report for work on a daily basis but would occasionally drop by the Manila office when he went to Manila for some
other purpose;
(4) he was not given the usual pay-slip to show his monthly gross compensation;
(5) neither has the respondent withheld his taxes nor was he enrolled as an employee of the respondent under the Social Security System and
Philhealth;
(6) he was in fact working as commission salesman of five other companies, which are engaged in the same line of business as that of
respondent, as shown by certifications issued by the said companies;
(7) if respondent owed petitioner his alleged commissions, he should not have executed the Promissory Note and the Deed of Real Estate
Mortgage.
ISSUE: WON there is an employer-employee relationship
RULING:
To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied the four-fold test, namely: (1) the
manner of selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or
absence of the power of control. Of these four, the last one is the most important. The so-called "control test" is commonly regarded as the
most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an
employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end
achieved, but also the manner and means to be used in reaching that end.
Applying the aforementioned test, an employer-employee relationship is notably absent in this case. It is undisputed that petitioner Abante
was a commission salesman who received 3% commission of his gross sales. Yet no quota was imposed on him by the respondent; such that
a dismal performance or even a dead result will not result in any sanction or provide a ground for dismissal.
•He was not required to report to the office at any time or submit any periodic written report on his sales performance and activities.
•Although he had the whole of Mindanao as his base of operation, he was not designated by respondent to conduct his sales activities at any
particular or specific place.
•He pursued his selling activities without interference or supervision from respondent company and relied on his own resources to perform
his functions.
•Respondent company did not prescribe the manner of selling the merchandise; he was left alone to adopt any style or strategy to entice his
customers.
•While it is true that he occasionally reported to the Manila office to attend conferences on marketing strategies, it was intended not to control
the manner and means to be used in reaching the desired end, but to serve as a guide and to upgrade his skills for a more efficient marketing
performance.
•As correctly observed by the appellate court, reports on sales, collection, competitors, market strategies, price listings and new offers relayed
by petitioner during his conferences to Manila do not indicate that he was under the control of respondent. Moreover, petitioner was free to
offer his services to other companies engaged in similar or related marketing activities as evidenced by the certifications issued by various
customers

All told, we sustain the factual and legal findings of the appellate court and accordingly, find no cogent reason to overturn the same.
WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals dated March 7, 2003 in CA-G.R. SP No. 73102, which denied
the petition of Empermaco B. Abante, is AFFIRMED in toto.

7. Manila Golf and Country Club v. IAC

FACTS:

The respondent Club filed answer praying for the dismissal of the petition, alleging in substance that the petitioners,
caddies by occupation, were allowed into the Club premises to render services that as such caddies, the petitioners were
not subject to the direction and control of the Club as regards the manner in which they performed their work; and hence,
they were not the Club's employees.
Two of the seventeen petitioners of their own accord withdrew their claim for social security coverage, avowedly coming
to realize that indeed there was no employment relationship between them and the Club.
Social Security Commission dismissed the petition for lack of merit:- IN FAVOR OF THE CLUB
. . . that the caddy's fees were paid by the golf players themselves and not by respondent club.
 Records show the respondent club had reported for SS coverage Graciano Awit and Daniel Quijano, as
bat unloader and helper, respectively, including their ground men, house and administrative personnel, a
situation indicative of the latter's concern with the rights and welfare of its employees under the SS law,
as amended. The unrebutted testimony of Col. Generoso A. Alejo (Ret.) that the ID cards issued to the
caddies merely intended to identify the holders as accredited caddies of the club.

Intermediate appellate Court:- IN FAVOR OF THE CADIES

IAC drew basis for the reversal from this Court's ruling in Investment Planning Corporation of the Philippines vs. Social
Security System, supra 9 and declared that upon the evidence, the questioned employer-employee relationship between the
Club and Fermin Llamar passed the so-called "control test," establishment in the case — i.e., "whether the employer
controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the
means and methods by which the same is to be accomplished," — the Club's control over the caddies encompassing:
(a) the promulgation of no less than twenty-four (24) rules and regulations just about every aspect of the
conduct that the caddy must observe, or avoid, when serving as such, any violation of any which could
subject him to disciplinary action, which may include suspending or cutting off his access to the club
premises;
(b) the devising and enforcement of a group rotation system whereby a caddy is assigned a number which
designates his turn to serve a player;
(c) the club's "suggesting" the rate of fees payable to the caddies.

Deemed of title or no moment by the Appellate Court was the fact that the caddies were paid by the players, not by the
Club, that they observed no definite working hours and earned no fixed income. It quoted with approval from an
American decision 10 to the effect that: "whether the club paid the caddies and afterward collected in the first instance, the
caddies were still employees of the club."

Petitioner’s argument:
the petitioner Club now contends that the decision of the Med-Arbiter in the certification case had never become final,
being in fact the subject of three pending and unresolved motions for reconsideration, as well as of a later motion for early
resolution. 11 Unfortunately, none of these motions is incorporated or reproduced in the record before the Court.

Private respondent argument:

PTCCEA being recognized as the sole bargaining agent of the caddies of the Manila Golf and Country Club with respect
to wages, hours of work, terms of employment, etc. The more controlling consideration would seem to be that, however,
final it may become, the decision in a certification case, by the very nature of that proceedings, is not such as to foreclose
all further dispute between the parties as to the existence, or non-existence, of employer-employee relationship between
them.

ISSUE:
Whether or not caddies (private respondent) is an employee of the petitioner Club, which shall entitle the former with SSS
benefits.

SC RULING:
The Court does not agree that said facts necessarily or logically point to such a relationship, and to the exclusion of any
form of arrangements, other than of employment, that would make the respondent's services available to the members and
guest of the petitioner.
As long as it is, the list made in the appealed decision detailing the various matters of conduct, dress, language, etc.
covered by the petitioner's regulations, does not, in the mind of the Court, so circumscribe the actions or judgment of the
caddies concerned as to leave them little or no freedom of choice whatsoever in the manner of carrying out their services.
In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of
pursuing their occupation within the premises and grounds of whatever club they do their work in. For all that is made to
appear, they work for the club to which they attach themselves on sufference but, on the other hand, also without having
to observe any working hours, free to leave anytime they please, to stay away for as long they like. It is not pretended that
if found remiss in the observance of said rules, any discipline may be meted them beyond barring them from the premises
which, it may be supposed, the Club may do in any case even absent any breach of the rules, and without violating any
right to work on their part. All these considerations clash frontally with the concept of employment.

The Court agrees with petitioner that the group rotation system so-called, is less a measure of employer control than an
assurance that the work is fairly distributed, a caddy who is absent when his turn number is called simply losing his turn to
serve and being assigned instead the last number for the day. 17
By and large, there appears nothing in the record to refute the petitioner's claim that:
(Petitioner) has no means of compelling the presence of a caddy. A caddy is not required to exercise his
occupation in the premises of petitioner. He may work with any other golf club or he may seek
employment a caddy or otherwise with any entity or individual without restriction by petitioner. . . .
. . . In the final analysis, petitioner has no was of compelling the presence of the caddies as they are not
required to render a definite number of hours of work on a single day. Even the group rotation of caddies
is not absolute because a player is at liberty to choose a caddy of his preference regardless of the caddy's
order in the rotation.

WHEREFORE, private respondent, Fermin Llamar, is not an employee of petitioner Manila Golf and Country Club and
that petitioner is under no obligation to report him for compulsory coverage to the Social Security System.

8. PRC v. Court of Appeals

Facts: The Philippine Refining Company (PRC) is engaged in the business of extracting and refining oil from copra and using the refined oil the
manufacture of various products.

Respondent Vicente Garcia (Garcia) was employed to PRC since 1922. He started as a copra carrier. He was promoted in 1931 as a foremen with 21
or 22 men working under him. By 1948, these men were employed under pakiao arrangements. The pakiao workers unload copra from trucks or
carriers and stores it in the company and delivers it to the mill. Such work is essential, permanent, and indispensable to the company (being
one who is engaged in the business of extracting and refining oil from copras). Such work is not an incidental or one time operation such as
construction a company facility or repairing a plant or machinery where the workers' job ends upon completion of the project. Copra is the basic raw
material in the manufacture of lard, cooking oil, soap, and various other products of the employer company and its handling, storage, and distribution
are an integral part of company operations. - (Note: This will be raised as contention of laborers in their petition)

In 1955, their pakiao arrangement were formalized in writing. Garcia was given the authority to choose and hire the men to do the work assigned to
him. However, instead of the company directly paying Garcia and allowing him to distribute the wages of his subordinates, their work was only
compensated on a volume basis at so many centavos per metric ton handled by all of them in the various phases of the job - receipt, storage, and
distribution of copra - with the money being given to Garcia.

When Social Security Act was implemented on September 1, 1957, 22 workers under Garcia as rep by Respondent Labor Union filed a petition
for compulsory coverage with Social Security Commission. PRC took no steps as to said petition as they contended that Garcia was an
independent contractor and his workers was his own employees pursuant to the pakiao agreements, and they were not accountable to them in any
manner.
The Philippine Refining Company contends that the petitioners are not its laborers, because: (i) It did not select, much less hire them; (ii) Vicente
Garcia pays their wages; (iii) Vicente Garcia has control and supervision over them; (iv) They do not have any service record on file with the
company; (v) They are not in the payrolls of the company; and (vi) They are not members of the union with whom the company had entered into a
collective bargaining.

The Social Security Commission maintains that: (i) Vicenta Garcia is not a bona fide contractor; he cannot carry on the burden of social security;
(ii) He is subject to the control of the company as to result; (iii) He has no investment of his own; he assumes no risk of loss. (iv) He merely sells his
labor to the company. (v) The equipment used by the petitioners belong to the company. (vi) He collects from the company the salary of petitioners;
(vii) The service rendered constitutes an integral part of the business operation of the company; and (viii)He services nobody but the company

SSC ruled in favor of respondents.

CA affirmed.

RELEVANT ISSUE: WHETHER OR NOT THERE EXISTS AN EMPLOYEE-EMPLOYER RELATIONSHIP BETWEEN VICENTA GARCIA
AND HIS WORKERS AND THE PETITIONER.- YES.

The Court of Appeals applied the “control test” to ascertain whether or not Garcia is a bonafide independent contractor who bears obligation of
registering his workers and paying their SSS contributions.

Under the control test, we ascertain whether the employer controls or has reserved the right to control the employee not only as to the result of the
work to be done but also as to the means and methods by which the same is accomplished.

The Supreme Court hereby affirms the finding of the CA. Court finds that:

Copra is the basic raw material of the petitioner-appellant's business. The facts show that the company has, positive and direct control over the
handling of copra immediately prior to its being fed into the manufacturing process. The conveyor is owned by the company. They load it may carry
and the time and manner of its operation are controlled by the appellant. A company employee ordered the supposed independent contractor
where to store copra, when to bring out copra, how much to load and where, and what class of copra to handle. The appellant limited the
number of workers which Mr. Garcia could hire to assure that statutory minimum wages were paid from the lump sum payments, given for the
"pakiao " work. Mr. Garcia had no office of his own. He had no independent funds to pay the men working under him. He could not work for
any other company but was completely dependent on the appellant. Mr. Vicente Garcia denies that he is an independent contractor. The
control test is more than satisfactorily met.

WHEREFORE, the petition is hereby dismissed for lack of merit. The September 12, 1968 decision of the Court of Appeals is affirmed with costs
against the petitioner-appellant.

9. Royale Homes Marketing Corporation v. Alcantara

Facts:
- Royale Homes employed Alcantara as a Marketing Director for a fixed period of one year
- Alcantara was reappointed several times and for his last appointment he held the position of Division 5 Vice-President Sales
- Alcantara filed a complaint for illegal dismissal against Royale Homes and its officers.
Alcantara’s argument:
- Alcantara alleged that the executive officers of Royale Homes told him that they were wondering why he still had the gall to come
to office and sit at his table and that this amounted to illegal dismissal.
- Alcantara alleged that he is a regular employee since he is performing tasks that are necessary and desirable to its business
Royale Homes’ argument:
- Royale Homes denied that Alcantara is its employee and asserts that it only engaged his services as an independent sales contractor
for a fixed term of 1 year and the contract provides that "no employer-employee relationship exists between" Royale Homes and
Alcantara
- That its contract with Alcantara is clear and unambiguous
- That Alcantara does not have working hours and may solicit sales whenever he deems appropriate and necessary,
LA ruling:
- Ruled that Alcantara is an employee of Royale Homes
 - Alcantara is entitled to backwages
NLRC ruling:
- Reversed the LA ruling, saying that Alcantara is only an independent contractor based on its contract which does not require
Alcantara to work regular hours.
CA ruling:
- Reversed the NLRC ruling saying that Alcantara is an employee of Royale Homes based on the Four-fold test.
- It held that Alcantara is an employee of Royale Homes because it exercised some degree of control over Alcantara since his job, as
observed by the CA, is subject to company rules, regulations, and periodic evaluations.
- He was also bound by the company code of ethics.
- Moreover, the exclusivity clause of the contract has made Alcantara economically dependent on Royale Homes, supporting the
theory that he is an employee of said company.
- It held that Alcantara was illegally terminated.
- That CA is wrong in saying Alcantara is subject to company’s control because he has to follow company rules and regulations, code
of ethics, periodic evaluation, and exclusivity clause of the contract.
RELEVANT issue
- W/N there is an employer-employee relationship between Royale Homes and Alcantara using the Four-fold test
SUPREME COURT ruling
- PETITION GRANTED.
- While the existence of employer-employee relationship is a matter of law, the Court cannot ignore when the parties' written contract
unequivocally states their intention at the time they entered into it.
- In this case, the contract provides that "no employer-employee relationship exists between" Royale Homes and Alcantara
- Since "the terms of the contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its
stipulations should control."
- No construction is even needed as they already expressly state their intention.
- Finds it is rather strange on the part of Alcantara, an educated man and a veteran sales broker who claimed to be receiving P1.2
million as his annual salary, not to have contested the portion of the contract expressly indicating that he is not an employee of
Royale Homes if their true intention were otherwise.
Four-fold test:a
- (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer's
power to control the employee with respect to the means and methods by which the work is to be accomplished.
- Among the four, the most determinative factor in ascertaining the existence of employer-employee relationship is the "right of
control test"
- Not every form of control is equal to employer-employee relationship. Just because one is subjected to company rules, regulations,
and code of ethics does not necessarily mean they’re an employee.
- Just because Alcantara is subject to the regulations, code of ethics, and periodic evaluation does not mean Royale Homes exercises
control over him. Control means the company dictating the means and methods of how Alcantara was to perform and accomplish
his task of soliciting sales.
- Royale Homes only fixes the price, imposes requirements on prospective buyers, and lays down the terms and conditions of the
sale, including the mode of payment, which the independent contractors must follow. Does not constitute as control.
- Alcantara not having specific working hours and being free to solicit sales whenever is indicator of lack of control.
- The element of payment of wages being absent is another indicator of the lack of employer-employee relationship in this case.
Alcantara did not receive a fixed monthly salary
- As the party claiming the existence of employer-employee relationship, it behoved upon Alcantara to prove the elements thereof
- Alcantara failed to prove that he is an employee of Royale Homes. He is only an independent contractor.

Doctors and Hospitals

1. UERMMC v. Usec. Laguesma

CALAMBA MEDICAL CENTER, INC. v. NLRC

Facts:
Petitioner engaged the services of doctor-spouses Dr. Ronaldo Lanzanas and Merceditha Lanzanas as resident physicians. They report
twice-a-week on 24 hour shifts and were paid monthly retainer. A certain Dr. Trinidad overheard Dr. Lanzanas discussing with
another employee about the low admission of patients to the hospital. Dr. Lanzanas received a Memorandum from petitioner
suspending him for 30-day for allegedly committing acts inimical to the interest of the hospital. Petitioner filed a complaint for illegal
suspension. Rank-and-file employees union of petitioner went on a strike due to unresolved grievances over terms and conditions of
employment. DOLE Secretary issued a return-to-work Order to the striking union officers pending resolution of the labor dispute.
Petitioner sent a notice of termination to Dr. Lanzanas for failure to report back to work despite DOLE order and for unlawfully
participating in the striking union despite his managerial position. Dr. Lanzanas amended his complaint to include illegal dismissal.
Dr. Merceditha was also dismissed.

Labor Arbiter – dismissed complaint and held that there was no employer-employee relationship between the parties.

NLRC – reversed the Decision.

CA – finding existence of employer-employee relationship between the parties considering that the Medical Director still has the
direct supervision and control over the respondents. Respondents were illegally dismissed.

ISSUE:

(1) WON there exists an employer-employee relationship between petitioner and spouses respondents.

(2) WON respondents were illegally dismissed.

PETITIONER’S CONTENTION:

Respondents are free to practice their profession elsewhere the rest of the week considering that they only report twice a week. They
are entitled to ½ of all admitting, consultation fees, etc. These indicates absence of any employment relationship between them. Dr.
Merceditha was dismissed because of her marriage to Dr. Lanzanas which has given the presumption that her sympathies are with her
husband.

HELD:

(1) Yes, there exists an employer-employee relationship between the parties.

Under the control test, an employer-employee relationship exists between a physician and a hospital if the hospital controls both the
means and the details of the process by which the physician is to accomplish his task. Respondents maintained specific work-
schedules which consists of 24-hour shifts. Respondents’ work are monitored through its nursing supervisors, charge nurses and
orderlies. Without approval of the Medical Director, no operations can be undertaken. In addition, the fact that petitioner enrolled
respondents in SSS and Medicare program reflect their status as employees. Mandatory coverage under SSS Law is premised on the
existence of employer-employee relationship. As to the sharing of hospital fees, the same is considered as another form of
compensation. An employer-employee relationship exists between resident physicians and the training hospitals, unless there is a
training agreement between them, and the training program is duly accredited or approved by the appropriate government agency. In
this case, respondents are not undergoing any specialization training.

(2) Yes, respondents were illegally dismissed.

Petitioner failed to prove that Dr. Lanzanas indeed participated in the strike. Petitioner failed to observe the two requirements before
dismissal can be effected: Notice and hearing – which is essential. The termination notice sent and received by Dr. Lanzanas was the
first and only time that he was informed of the reason of his dismissal. He was not afforded the opportunity to explain his side as his
termination was a “termination upon receipt” situation. Dr. Merceditha’s dismissal was without any just or authorized cause and
without observance of due process.
 2. Ramos v. Court of Appeals

C. Economic Reality Test

1. Reyes v. Glaucoma Research Foundation, Inc.

G.R. No. 189255. June 17, 2015

FACTS:

1. Jesus Reyes filed a complaint for illegal dismissal against Glaucoma.

2. He allegedthat he was hired by Glaucoma as Administratorfor its Eye Referral Center (ERC) and has been receiving salaries of
P20,000 till January 2005.

3. Beginning Feb 2005 Glaucoma withheld his salary but he still reported for work.

4. He then wrote a letter to Manuel Agulto (Exec Director of Glaucoma) that he has not been receiving salaries since Feb 2005 and
14thmonth pay for 2004, he didn’t receive a response.

5. On April 21, 2005 he was informed that he was no longer the Admin of ERC, his office was padlocked without notice and was not
allowed by the guard to enter the premise of ERC.

6. Glaucoma’s contentionthat there is no employer-employee relationship between them because Glaucoma had no control over Reyes in
terms of working hours as he reports for work at anytime of the day and leaves as he pleases; Glaucoma also had no control as to the
manner in which he performs his alleged duties as consultant.

7. LA– Dismissed the complaint on the ground that:

a. Reyes failed to establish that the elements of employee-employer relationship existed between them.

b. He also failed to deny that during his stint with Glaucoma he was also a consultant of various government agencies.

c. And that his actions were neither supervised nor controlled by the management of ERC, did not observe working hours (his
reporting for work and leaving the same as he pleased)

d. He was receiving allowance not salaries as consultant.

8. NLRC– Reversed. He was illegally dismissed and ordered to reinstate him with full backwages.

9. CA– Reinstated the ruling of LA.

ISSUE:WON employer-employee relationship existed between Glaucoma and Reyes.

HELD:NO. Under the control test and economic control test, no employer-employee relationship existed between Glaucoma and Reyes.

There are four standards in determining the existence of an employer-employee relationship, namely: (a) the manner of selection and engagement of
the putative employee; (b) the mode of payment of wages; (c) the presence or absence of power of dismissal; and, (d) the presence or absence of
control of the putative employee's conduct.

1. Most determinative among these factors is the so- called "control test." This test is premised on whether the person for whom the services are
performed reserves the right to control both the end achieved and the manner and means used to achieve that end.

Reyes argument: As evidence of respondents' supposed control over him, the organizational plans he has drawn were subject to the approval of
respondent corporation's Board of Trustees.
The court ruled that the Glaucoma’s power to approve or reject the organizational plans drawn by Reyes cannot be the control contemplated in the
"control test”. The important factor to consider in the "control test" is still the element of control over how the work itself is done, not just the end
result thereof.

2. Aside from the control test, the Supreme Court has also used the “economic reality test” in determining whether an employer-employee
relationship exists between the parties. Under this test, the economic realities prevailing within the activity or between the parties are examined,
taking into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. The benchmark of
economic reality in analyzing possible employment relationships for purposes of applying the Labor Code ought to be the economic dependence of
the worker on his employer.

Reyes argument: He draws attention to the pay slips he supposedly received from respondent corporation.

However, he does not dispute the findings of the CA that there are no deductions for SSS and withholding tax from his compensation, which are the
usual deductions from employees' salaries. Thus, the alleged pay slips may not be treated as competent evidence of petitioner's claim that he is
respondents' employee. The designation of the payments to petitioner as salaries, is not determinative of the existence of an employer-employee
relationship.

2. Legatona v. Skycable Corporation

G.R. No. 202015, July 13, 2016

ANTONIO VALEROSO AND ALLAN LEGATONA, Petitioners, v.
SKYCABLE CORPORATION, Respondent.

Topic: Economic Reality Test

Facts:
○ Petitioners Valeroso and Legatona allegedly started working on November 1, 1998 and July 13,1998 - account executives tasked to
solicit cable subscriptions for Skycable
○ This is evidenced by Certifications issued by Michael T. De la Cuesta Skycable’s Sales Territory Manager.
○ From 2001-2006: they received Php 15,000 to Php 530,000 each (depending on the quotas they reach every month)
○ January 2007: they were transferred to Skill Plus Manpower Services
○ February 2009: they were informed na medyo liliit yung commission nila due to prepaid cards promo ng Skycable which would
lessen monthly subscription.
○ So ayaw nila, and they informed their manager (Marlon Pasta. Pasta haha) na mag file sila ng case sa NLRC
○ Also in 2009: na terminate yung Sales Agency Agreement with Armada (Skill Plus)
○ Feb. 25, 2009: they filed a case
○ Pasta haha informed them that they will be dropped from the roster of its account executives
☺ Petitioners: “unfair labor practice yan”

Petitioners’ allegations:
○ Walang 13th month pay nung 2007 and 2008

Respondent’s allegations:
○ Hindi na terminate services because walang employer-employee relationship from the beginning
○ “Independent contractors lang kayo”
○ No cause of action against Skycable because employees kayo ng Armada Resources & Marketing Solutions, Inc. (kasi diba na
transfer sila - refer to facts)
○ Armada’s president, Navasa, verified naman na they were engaged in the services of petitioners

Labor Arbiter’s RULING:

○ Dismissed - petitioners failed to prove that Skycable was their employer
○ Failed to prove that Pasta (haha) even had the authority to “dismiss” them

NLRC Ruling:
 ○ Reversed ruling of Labor Arbiter.
○ Petitioners are account executives for more than one year, even if not continuous and merely intermittent- still needed yung jobs
nila para sa business ni Skycable
○ Termination of Sales Agency Agreement with Armada means na terminate din sila petitioners

Court of Appeals Ruling:

○ Reversed nanaman - no proof of employer-employee relationship

Issue: Where they illegally dismissed???

Supreme Court:
○ No No No No No
○ To prove employer-employee relationship - the following should be established by competent evidence:
1. the selection and engagement of the employee;
2. the payment of wages;
3. the power of dismissal; and
4. the employer's power to control the employee with respect to the means and methods by which the work is to be
accomplished
○ Under this control test, the person for whom the services are performed reserves the right to control not only the end to be achieved,
but also the means by which such end is reached.
☺ Sending of new promos, new price listings, meetings and trainings of new account executives; imposing quotas and
penalties by Skycable does not prove control test - only indicates that respondent regularly monitors the result of
petitioners' work but in no way dictate upon them the manner in which they should perform their duties
○ Certifications provided for by petitioners: merely certifications, for loans lang, does not certify that they were employees
○ Payslips: “kulang payslips niyo, hanggang 2006 lang” - like hello 2007 to 2009 yung issue dito???
○ Two-tiered test in order to determine the true relationship between the employer and employee:
1. the putative employer's power to control the employee with respect to the means and methods by which the work is to be
accomplished; and
2. the underlying economic realities of the activity or relationship
○ For cases where there is no written agreement to base the relationship on and where the various tasks performed
by the worker brings complexity to the relationship with the employer.
○ “In addition to the control test, the totality of the economic circumstances of the worker is taken into light to
determine the existence of employment relationship.”
○ Sales Agency Agreement: a duly executed and signed agreement, petitioners and respondent unequivocally agreed that petitioners'
services were to be engaged on an agency basis as sales account executives and that no employer-employee relationship is created
but an independent contractorship.
○ Sa Quitclaim ni Legatona: stated therein that he was performing sales activities as sales agent/independent contractor and not an
employee of respondent.
○ Petitioners’ contention that they perform functions necessary and desirable to the business operation: provision used by petitioners
(Art. 280) does not distinguish if meron or wala e-e relationship, only distinguishes regular and casual employees
○ IN FAVOR OF SKYCABLE.

D. Kinds of Employment

I. Regular

1. Article 295 of the Labor Code

Article 295. "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, except where
the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment
is for the duration of the season.
 An employment shall be deemed to be casual if it is not covered by the preceding paragraph:

Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such
activity exists."

2. Universal Robina Sugar Milling Corporation v. NLRC

UNIVERSAL ROBINA SUGAR MILLING CORPORATION and RENE CABATI, Petitioners,

vs.
FERDINAND ACIBO, ROBERTO AGUILAR, EDDIE BALDOZA, RENE ABELLAR, DIOMEDES ALICOS, MIGUEL ALICOS,
ROGELIO AMAHIT, LARRY AMASCO, FELIPE BALANSAG, ROMEO BALANSAG, MANUEL BANGOT, ANDY BANJAO,
DIONISIO BENDIJO, JR., JOVENTINO BROCE, ENRICO LITERAL, RODGER RAMIREZ, BIENVENIDO RODRIGUEZ, DIOCITO
PALAGTIW, ERNIE SABLAN, RICHARD PANCHO, RODRIGO ESTRABELA, DANNY KADUSALE and ALLYROBYL OLPUS,
Respondents.

G.R. No. 186439 January 15, 2014

Subject Matter: Kinds of Employment > Regular
Nature of Action: petition for review on certiorari

FACTS:
URSUMCO is a domestic corporation engaged in the sugar cane milling business;
Cabati is URSUMCO’s Business Unit General Manager.

Complainants were employees of URSUMCO.

They were hired on various dates (between February 1988 and April 1996) and on different capacities, 8 i.e., drivers, crane operators, bucket
hookers, welders, mechanics, laboratory attendants and aides, steel workers, laborers, carpenters and masons, among others.

At the start of their respective engagements, the complainants signed contracts of employment for a period of one (1) month or for a given
season. URSUMCO repeatedly hired the complainants to perform the same duties and, for every engagement, required the latter to sign new
employment contracts for the same duration of one month or a given season.

The complainants filed before the LA complaints for regularization, entitlement to the benefits under the existing Collective Bargaining
Agreement (CBA),

LA’s Ruling
LA dismissed the complaint for lack of merit.
The LA held that the complainants were seasonal or project workers and not regular employees of URSUMCO.
As the complainants were project employees, they could not be regularized since their respective employments were coterminous with the
phase of the work or special project to which they were assigned and which employments end upon the completion of each project.

The seven appealed the LA’s ruling before the NLRC

NLRC’s Ruling
The NLRC reversed the LA’s ruling
NLRC pointed out that the complainants performed activities which were usually necessary and desirable in the usual trade or business of
URSUMCO, and had been repeatedly hired for the same undertaking every season.

Thus, pursuant to Article 280 of the Labor Code, the NLRC declared that the complainants were regular employees

CA’s Ruling
CA granted in part the petition;
it affirmed the NLRC’s ruling finding the complainants to be regular employees of URSUMCO,
but deleted the grant of monetary benefits under the CBA.

CA pointed out that the primary standard for determining regular employment is the reasonable connection between a particular activity
performed by the employee vis-à-vis the usual trade or business of the employer.
This connection, in turn, can be determined by considering the nature of the work performed and the relation of this work to the business or
trade of the employer in its entirety.

CONTENTIONS:

URC
The respondents are contractual or project/seasonal workers and not regular employees of URSUMCO.

The legal standards – length of the employee’s engagement and the desirability or necessity of the employee’s work in the usual trade or
business of the employer – apply only to regular employees under paragraph 1, Article 280 of the Labor Code

By the nature of their engagement, the respondents’ employment legally ends upon the end of the predetermined period; thus, URSUMCO
was under no legal obligation to rehire the respondents.

Acibo/ Employees
They point out that they have been continuously working for URSUMCO for more than one year, performing tasks which were necessary and
desirable to URSUMCO’s business

ISSUES:
(1) whether the respondents are regular employees of URSUMCO; and
(2) whether affirmative relief can be given to the fifteen (15) of the complainants who did not appeal the LA’s decision.

RATIO:
We resolve to partially GRANT the petition.

On the issue of the status of the respondents’ employment

We find the respondents to be regular seasonal employees of URSUMCO.
Article 280 of the Labor Code provides for three kinds of employment arrangements, namely: regular, project/seasonal and casual.

Regular employment refers to that arrangement whereby the employee "has been engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer[.]" 19

Under the definition, the primary standard that determines regular employment is the reasonable connection between the particular activity
performed by the employee and the usual business or trade of the employer; 20 the emphasis is on the necessity or desirability of the
employee’s activity.

Thus, when the employee performs activities considered necessary and desirable to the overall business scheme of the employer, the law
regards the employee as regular.

Paragraph 2, Article 280 of the Labor Code also considers regular a casual employment arrangement when the casual employee’s
engagement has lasted for at least one year, regardless of the engagement’s continuity.

The controlling test in this arrangement is the length of time during which the employee is engaged.

Clearly, therefore, the nature of the employment does not depend solely on the will or word of the employer or on the procedure for hiring
and the manner of designating the employee. Rather, the nature of the employment depends on the nature of the activities to be performed by
the employee, considering the nature of the employer’s business, the duration and scope to be done, 33 and, in some cases, even the length of
time of the performance and its continued existence.

First, the respondents were made to perform various tasks that did not at all pertain to any specific phase of URSUMCO’s strict milling
operations that would ultimately cease upon completion of a particular phase in the milling of sugar; rather, they were tasked to perform
duties regularly and habitually needed in URSUMCO’s operations during the milling season.

Second, the respondents were regularly and repeatedly hired to perform the same tasks year after year.
Third, while the petitioners assert that the respondents were free to work elsewhere during the off-season, the records do not support this
assertion.

KINDS OF EMPLOYMENT

Regular employment refers to that arrangement whereby the employee "has been engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer[.]" 19

A project employment, on the other hand, contemplates on arrangement whereby "the employment has been fixed for a specific project or
undertaking whose completion or termination has been determined at the time of the engagement of the employee[.]" 21 Two requirements,
therefore, clearly need to be satisfied to remove the engagement from the presumption of regularity of employment, namely: (1) designation
of a specific project or undertaking for which the employee is hired; and (2) clear determination of the completion or termination of the
project at the time of the employee’s engagement. 22 The services of the project employees are legally and automatically terminated upon the
end or completion of the project as the employee’s services are coterminous with the project.

Seasonal employment operates much in the same way as project employment, albeit it involves work or service that is seasonal in nature or
lasting for the duration of the season.25 As with project employment, although the seasonal employment arrangement involves work that is
seasonal or periodic in nature, the employment itself is not automatically considered seasonal so as to prevent the employee from attaining
regular status. To exclude the asserted "seasonal" employee from those classified as regular employees, the employer must show that: (1) the
employee must be performing work or services that are seasonal in nature; and (2) he had been employed for the duration of the season. 26
Hence, when the "seasonal" workers are continuously and repeatedly hired to perform the same tasks or activities for several seasons or even
after the cessation of the season, this length of time may likewise serve as badge of regular employment.

Casual employment, the third kind of employment arrangement, refers to any other employment arrangement that does not fall under any of
the first two categories, i.e., regular or project/seasonal.

HELD:
Complainants are declared regular employees of respondent. As such, they are entitled to the monetary benefits granted to regular employees
of respondent company based on the CBA, reckoned three (3) years back from the filing of the above-entitled case on 23 August 2002 up to
the present

II. Project

1. Leyte Geothermal Power Progressive Employees Union v. PNOC

FACTS:

Respondent is a GOCC while petitioner is a legitimate labor organization. Among [respondent’s] geothermal projects is the Leyte
Geothermal Power Project located at the Greater Tongonan Geothermal Reservation in Leyte. Thus, the [respondent] hired and employed
hundreds of employees on a contractual basis, whereby, their employment was only good up to the completion or termination of the project
and would automatically expire upon the completion of such project.

Majority of the employees hired by [respondent] in its Leyte Geothermal Power Projects had become members of petitioner. In view of that
circumstance, the petitioner demands from the [respondent] for recognition of it as the collective bargaining agent of said employees and for
a CBA negotiation with it. However, the [respondent] did not heed such demands of the petitioner. Sometime in 1998 when the project was
about to be completed, the [respondent] proceeded to serve Notices of Termination of Employment upon the employees who are members of
the petitioner.

On December 28, 1998, the petitioner filed a Notice of Strike with DOLE against the [respondent] on the ground of purported commission by
the latter of unfair labor practice for “refusal to bargain collectively, union busting and mass termination.” On the same day, the petitioner
declared a strike and staged such strike.

Secretary of Labor intervened and ordered all workers to return to work. However, petitioner did not abide.

NLRC: ruled that the employees are PROJECT EMPLOYEES, and the strike as ILLEGAL

Petitioner Union contends that its officers and members performed activities that were usually necessary and desirable to respondent’s usual
business.
ISSUE:

Whether they are project employees or not.

HELD:

They are PROJECT EMPLOYEES.

Article 280 of the Labor Code contemplates four (4) kinds of employees:

a) regular employees or those who have been “engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer”;

b) project employees or those “whose employment has been fixed for a specific project or undertaking[,] the completion or
termination of which has been determined at the time of the engagement of the employee”;

c) seasonal employees or those who work or perform services which are seasonal in nature, and the employment is for the
duration of the season; and

d) casual employees or those who are not regular, project, or seasonal employees.

Jurisprudence has added a fifth kind— a fixed-term employee.

By entering into such a contract, an employee is deemed to understand that his employment is coterminous with the project. He may not
expect to be employed continuously beyond the completion of the project. It is of judicial notice that project employees engaged for manual
services or those for special skills like those of carpenters or masons, are, as a rule, unschooled. However, this fact alone is not a valid reason
for bestowing special treatment on them or for invalidating a contract of employment. Project employment contracts are not lopsided
agreements in favor of only one party thereto. The employer’s interest is equally important as that of the employee[s’] for theirs is the interest
that propels economic activity. While it may be true that it is the employer who drafts project employment contracts with its business interest
as overriding consideration, such contracts do not, of necessity, prejudice the employee. Neither is the employee left helpless by a prejudicial
employment contract. After all, under the law, the interest of the worker is paramount.

Union’s own admission, both parties had executed the contracts freely and voluntarily without force, duress or acts tending to vitiate the
worker[s’] consent. Thus, we see no reason not to honor and give effect to the terms and conditions stipulated therein.

The litmus test to determine whether an individual is a project employee lies in setting a fixed period of employment involving a specific
undertaking which completion or termination has been determined at the time of the particular employee’s engagement.

NOTES:

WHAT IS A PROJECT? In the realm of business and industry, we note that “project” could refer to one or the other of at least two (2)
distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that is within the regular or usual business of
the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times. The typical example of this first type of project is a particular construction
job or project of a construction company. A construction company ordinarily carries out two or more [distinct] identifiable construction
projects: e.g., a twenty-five-storey hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo
City. Employees who are hired for the carrying out of one of these separate projects, the scope and duration of which has been determined
and made known to the employees at the time of employment, are properly treated as “project employees,” and their services may be lawfully
terminated at completion of the project.

The term “project” could also refer to, secondly, a particular job or undertaking that is not within the regular business of the corporation.
Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer.
The job or undertaking also begins and ends at determined or determinable times.

2. FVR Skills and Services Exponents, Inc. v. Seva

The twenty-eight (28) respondents were employees of petitioner FVR Skills and Services Exponents, Inc. (petitioner), an independent contractor
engaged in the business of providing janitorial and other manpower services to its clients. As early as 1998, some of the respondents had already been
under the petitioner's employ. The respondents were employed as Janitor, Supervisor, Leadman, Service, Sanitation Aide.

Petitioner entered into a Contract of Janitorial Service (service contract) with Robinsons Land Corporation (Robinsons). Both agreed that the
petitioner shall supply janitorial, manpower and sanitation services to Robinsons Place Ermita Mall for a period of one year - from January 1, 2008 to
December 31, 2008. Halfway through the service contract, the petitioner asked the respondents to execute individual contracts which stipulated that
their respective employments shall end on December 31, 2008, unless earlier terminated.

Since the contract was not extended, the respondents were then dismissed as they were “project employees” whose duration of employment was
dependent on the petitioner’s service contract with Robinsons.

This prompted respondents to file a complaint for illegal dismissal saying they were not project employees but rather regular employees who may
only be dismissed for just or authorized causes. Respondents reiterate that even before the execution of the petitioner’s service contract with
Robinsons, they had already been performing janitorial and other manpower activities that were necessary or desirable to the petitioner’s business.

LA: respondents were not regular employees. They were project employees whose employment was dependent on the petitioner's service contract
with Robinsons. Since this contract was not renewed, the respondents' employment contracts must also be terminated.

NLRC: reversed decisions of LA; that the respondents had been under the petitioner's employ for more than a year already, some of them as early as
1998. Thus, as regular employees, the respondents may only be dismissed for just or authorized causes, which the petitioner failed to show.

CA: affirmed decision of NLRC; that the petitioner individually hired the respondents on various dates from 1998 to 2007, to work as janitors,
service crews and sanitation aides. These jobs were necessary or desirable to the petitioner's business of providing janitorial, manpower and
sanitation services to its clients. The continuing need for the respondents' services, which lasted for more than a year, validated that the respondents
were regular and not project employees.

The CA also ruled that the fixed term employment contracts signed by the respondents had no binding effect. The petitioner only used these contracts
to justify the respondents' illegal dismissal; the petitioner never asked the respondents to execute any contract since their initial hiring. Only after it
became apparent that the petitioner's service contract with Robinsons would not be renewed did the petitioner ask the respondents to sign their
employment contracts.

Lastly, the CA held that petitioners Fulgencio V. Rana (Rana) and Monina R. Burgos (Burgos), the president and general manager of FVR Skills and
Services Exponents, Inc., respectively, are solidarily liable with the corporation for the payment of the respondents' monetary awards.

RULING:

As to the Issue of Whether or Not Respondents are Project Employees

Respondents are regular employees, not project employees. Article 280 (now Article 294) of the Labor Code governs the determination of whether an
employee is a regular or a project employee. Under this provision, there are two kinds of regular employees, namely: (1) those who were engaged to
perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who
became regular after one year of service, whether continuous or broken, but only with respect to the activity for which they have been hired.

While project employees are those whose employment was fixed for a specific project or undertaking, whose completion or termination had been
determined at the time of engagement.

The primary standard in determining regular employment is the reasonable connection between the particular activity performed by the employee and
the employer's business or trade. This connection can be ascertained by considering the nature of the work performed and its relation to the scheme of
the particular business, or the trade in its entirety.

Guided by this test, we conclude that the respondents' work as janitors, service crews and sanitation aides, are necessary or desirable to the
petitioner's business of providing janitorial and manpower services to its clients as an independent contractor. Also, the respondents had already been
working for the petitioner as early as 1998. Even before the service contract with Robinsons, the respondents were already under the petitioner's
employ. They had been doing the same type of work and occupying the same positions from the time they were hired and until they were dismissed

Under Department Order (DO) 18-02, it grants contractual employees all the rights and privileges due a regular employee, including the following:
(a) safe and healthful working conditions;(b) labor standards such as service incentive leave, rest days, overtime pay, holiday pay, 13th month pay
and separation pay; (c) social security and welfare benefits; (d) self-organization, collective bargaining and peaceful concerted action; and (e)
security of tenure.

Although the respondents were assigned as contractual employees to the petitioner's various clients, under the law, they remain to be the petitioner's
regular employees, who are entitled to all the rights and benefits of regular employment.

As to the issue of respondents’ employment contracts

At the time of respondents' dismissal, they had already been continuously working for the petitioner for more than a year. Despite this, they never
signed any employment contracts with the petitioner, except the contracts they belatedly signed when the petitioner's own contract of janitorial
services with Robinsons neared expiration.

As already discussed, for an employee to be validly categorized as a project employee, it is necessary that the specific project or undertaking had
been identified and its period and completion date determined and made known to the employee at the time of his engagement. This provision
ensures that the employee is completely apprised of the terms of his hiring and the corresponding rights and obligations arising from his undertaking.

If the petitioner really intended the respondents to be project employees, then the contracts should have been executed right from the time of hiring,
or when the respondents were first assigned to Robinsons, not when the petitioner's service contract was winding up. The terms and conditions of the
respondents' engagement should have been disclosed and explained to them from the commencement of their employment. The petitioner's failure to
do so supports the conclusion that it had been in bad faith in evading the respondents' right to security of tenure.

As to the legality of their dismissal: [[petitioner argues that these substantive and procedural requisites do not apply to the respondents’ case since
they were employed under fixed term contracts]]

The respondents were illegally dismissed. To be valid, an employee's dismissal must comply with the substantive (supported by just/authorized
cause) and procedural requirements of due process (notice and hearing).

Having already determined that the respondents are regular employees and not project employees, and that the respondents' belated employment
contracts could not be given any binding effect for being signed under duress, we hold that illegal dismissal took place when the petitioner failed to
comply with the substantive and procedural due process requirements of the law.

3. William Construction Corp. v. Trinidad

WILLIAM UY CONSTRUCTION CORP vs. JORGE R. TRINIDAD

FACTS:

Jorge R. Trinidad filed a complaint for illegal dismissal and unpaid benefits against William Uy Construction Corporation.

Trinidad claimed that he had been working with the latter company for 16 years since 1988 as driver of its service vehicle, dump truck, and transit
mixer. He had signed several employment contracts with the company that identified him as a project employee although he had always been
assigned to work on one project after another with some intervals.

Trinidad further alleged that in December 2004 WCC terminated him from work after it shut down operations because of lack of projects. He learned
later, however, that although it opened up a project in Batangas, it did not hire him back for that project.

WCC countered that it was in the construction business. By the nature of such business, it had to hire and engage the services of project construction
workers, including Trinidad, whose employments had to be co-terminous with the completion of specific company projects. For this reason, every
time the company employed Trinidad, he had to execute an employment contract with it, called Appointment as Project Worker.

WCC stressed that employment intervals or gaps were inherent in the construction business. Consequently, after it finished its Boni Serrano-
Katipunan Interchange Project in December 2004, Trinidad’s work ended as well. In compliance with labor rules, the company submitted an
establishment termination report to the Department of Labor and Employment (DOLE).

LABOR ARBITER:

- dismissed Trinidad’s complaint for unjust dismissal.

- ordered WCC company to pay Trinidad ₱1,500.00 in unpaid service incentive leave, taking into consideration the three-year prescriptive
period for money claims.
 - held that, since Trinidad was a project employee and since his company submitted the appropriate establishment termination report to
DOLE, his loss of work cannot be regarded as unjust dismissal.
- found no basis for granting Trinidad overtime pay, holiday pay, and 13th month pay.

NLRC: affirmed the LA’s ruling

CA: reversed NLRC’s findings.

ISSUE:

- WON CA correctly ruled that WCC’s repeated rehiring of Trinidad over several years as project employee for its various projects (35) that
lasted 16 years automatically entitled him to the status of a regular employee. – NO.

HELD:

The test for distinguishing a "project employee" from a "regular employee" is whether or not he has been assigned to carry out a "specific project or
undertaking," with the duration and scope of his engagement specified at the time his service is contracted.

In this case, it is not disputed that WCC contracted Trinidad’s service by specific projects with the duration of his work clearly set out in his
employment contracts. He remained a project employee regardless of the number of years and the various projects he worked for the company.

Generally, length of service provides a fair yardstick for determining when an employee initially hired on a temporary basis becomes a permanent
one, entitled to the security and benefits of regularization. But this standard will not be fair, if applied to the construction industry, simply because
construction firms cannot guarantee work and funding for its payrolls beyond the life of each project. And getting projects is not a matter of course.
Construction companies have no control over the decisions and resources of project proponents or owners. There is no construction company that
does not wish it has such control but the reality, understood by construction workers, is that work depended on decisions and developments over
which construction companies have no say.

Repeated and successive rehiring of project employees do not qualify them as regular employees, as length of service is not the controlling
determinant of the employment tenure of a project employee, but whether the employment has been fixed for a specific project or undertaking, its
completion has been determined at the time of the engagement of the employee.

In this case, Trinidad’s series of employments with WCC were co-terminous with its projects. When its Boni Serrano-Katipunan Interchange Project
was finished in December 2004, Trinidad’s employment ended with it. He was not dismissed. His employment contract simply ended with the project
for which he had signed up. His employment history belies the claim that he continuously worked for the company. Intervals or gaps separated one
contract from another.

The CA noted that DOLE Order 19 required employers to submit a report of termination of employees every completion of construction project.
And, since WCC submitted at the hearing before the Labor Arbiter only the termination report covering respondent Trinidad’s last project, it failed to
satisfy such requirement.

But Trinidad did not say in his complaint that he had been illegally dismissed after each of the projects for which he had been signed up. His
complaint was essentially that he should have been rehired from the last project since he had already acquired the status of a regular employee.

Consequently, WCC needed only to show the last status of Trinidad’s employment, namely, that of a project employee under a contract that had
ended and the company’s compliance with the reporting requirement for the termination of that employment. Indeed, both the Labor Arbiter and the
NLRC were satisfied that the fact of WCC’s compliance with DOLE Order 19 had been proved in this case.

III. Casual

1. Dealco Farms, Inc. v. NLRC

G.R. No. 153192

Topic: III. Employer-employee Relationship d. Kinds of Employment -Casual

Facts:
Petitioner is a corporation engaged in the business of importation, production, fattening and distribution of live cattle for sale in Mindanao
and in Metro Manila. Petitioner imports cattle by the boatload from Australia into the ports of General Santos City, Subic, Batangas, or
Manila. These cattle were kept for fattening until the cattle individually reach the market weight of 430 to 450 kilograms.
Respondents Albert Caban and Chiquito Bastida were hired by petitioner on June 25, 1993 and October 29, 1994, respectively, as escorts or
"comboys" for the transit of live cattle from General Santos City to Manila. Respondents’ work entailed tending to the cattle during
transportation. It included feeding and frequently showering the cattle to prevent dehydration and to develop heat resistance. On the whole,
respondents ensured that the cattle would be safe from harm or death caused by a cattle fight or any such similar incident.
Upon arrival in Manila, the cattle are turned over to customers of petitioner, at which point, respondents’ work ceases. For every round trip
travel which lasted an average of 12 days, respondents were each paid ₱1,500.00. In a month, respondents usually made two trips.
On October 15, 1999, respondents Bastida and Caban, together with Ramon Maquinsay and Roland Parrocha, filed a Complaint for illegal
dismissal with claims for separation pay with full backwages, salary differentials, service incentive leave pay, 13th month pay, damages, and
attorney’s fees against petitioner, Delfin Alcoriza and Paciano Danilo Ramis before the NLRC. Although the four complainants collectively
filed a case against petitioner, Maquinsay and Parrocha never appeared in any of the conferences and/or hearings before the Labor Arbiter.
Neither did they sign the verification page of complainants’ position paper. Most importantly, Maquinsay and Parrocha executed affidavits in
favor of petitioner praying for the dismissal of the complaint insofar as they were concerned.
It appears that, on August 19, 1999, respondents were told by a Jimmy Valenzuela, a hepe de viaje, that he had been instructed by Ramis to
immediately effect their replacement. Valenzuela proffered no reason for respondents’ replacement. Respondents’ repeated attempts to see
and meet with Ramis, as well as to write Alcoriza, proved futile, compelling them to file an illegal dismissal case against petitioner and its
officers.

Petitioners Arguments:
Petitioner denies the existence of an employer-employee relationship with respondents. Petitioner posits that: (a) respondents are independent
contractors who offer "comboy" services to various shippers and traders of cattle, not only to petitioner; (b) in the performance of work on
board the ship, respondents are free from the control and supervision of the cattle owner since the latter is interested only in the result thereof;
(c) in the alternative, respondents can only be considered as casual employees performing work not necessary and desirable to the usual
business or trade of petitioner, i.e., cattle fattening to market weight and production; and (d) respondents likewise failed to complete the one-
year service period, whether continuous or broken, set forth in Article 2804 of the Labor Code, as petitioner’s shipments were substantially
reduced in 1998-1999, thereby limiting the escort or "comboy" activity for which respondents were employed.

Respondent’s Argument:
In all, respondents alleged in their position paper that: (1) they were illegally dismissed, as they never violated any of petitioner’s company
rules and policies; (2) their dismissal was not due to any just or authorized cause; and (3) petitioner did not observe due process in effecting
their dismissal, failing to give them written notice thereof. Thus, respondents prayed for money claims, i.e., salary differentials, service
incentive leave pay, cost of living allowance (COLA) and 13th month pay.
Petitioner, however, paints a different picture. Petitioner asserts that the finished cattle are sold to traders and middlemen who undertake
transportation thereof to Manila for distribution to the wet markets. In fact, according to petitioner, the buyers and end-users of their finished
cattle actually purchase the cattle as soon as they are considered ready for the market. Petitioner claims that once the finished cattle are
bought by the buyers, these buyers act separately from, and independently of, petitioner’s business. In this regard, the buyers themselves
arrange, through local representatives, for the (a) hauling from petitioner’s farm to the port area; (b) shipment of the finished cattle to Manila;
and (c) escort or "comboy" services to feed and water the cattle during transit.

LA Ruling: Labor Arbiter found that respondents were employees of petitioner with all the four elements in the determination of an
employer-employee relationship being present.

NLRC Ruling: On appeal to the NLRC, the Fifth Division affirmed the Labor Arbiter’s ruling on the existence of an employer-employee
relationship between the parties and the total monetary award of ₱41,580.00 representing respondents’ separation pay, COLA and union
service fees.

CA Ruling: Undaunted, petitioner filed a petition for certiorari before the CA. As previously adverted to, the CA denied due course and
dismissed the petition for the following procedural flaws: 1) other material portions of the record referred to in the petition are not attached
thereto such as the Complaint for illegal dismissal and position papers of the parties, in violation of Sec. 3, Rule 46 of the 1997 Rules of Civil
Procedure; and 2) there is no written explanation why personal service was not resorted to, as required under Sec. 11, Rule 13.

Issue: WON the respondents were mere Casual Employees?

SC Ruling: Even assuming that respondents’ task is not part of petitioner’s regular course of business, this does not preclude their attainment
of regular employee status. (see Art. 280. Regular and Casual Employment.)
Undoubtedly, respondents were regular employees of petitioner with respect to the escort or "comboy" activity for which they had been
engaged since 1993 and 1994, respectively, without regard to continuity or brokenness of the service.
Lastly, considering that we have sustained the Labor Arbiter’s and the NLRC’s finding of an employer-employee relationship between the
parties, we likewise sustain the administrative bodies’ finding of respondents’ illegal dismissal. Accordingly, we are not wont to disturb the
award of separation pay, claims for COLA and union service fees fixed at 10% of the total monetary award, as these were based on the
finding that respondents were dismissed without just or authorized cause.

2. Kimberly Clark, Inc. v. Secretary of Labor

In 1986, the CBA executed by and between Kimberly Clark Phils. and United Kimberly-Clark Employees Union-Philippine Transport and General
Workers’ Organization (UKCEO-PTGWO) expired. Within the freedom period, KILUSAN-OLALIA, then a newly-formed labor organization,
challenged the incumbency of UKCEO-PTGWO, by filing a petition for certification election with the Ministry of Labor Regional Office in Quezon
City. A certification election was subsequently conducted with UKCEO-PTGWO winning by a margin of 20 votes over KILUSAN-OLALIA.
Remaining as uncounted were 64 challenged ballots cast by 64 casual workers whose regularization was in question. KILUSAN-OLALIA filed a
protest.

The Ministry issued an order stating, among others, that the casual workers not performing janitorial and yard maintenance services had attained
regular status on even date. UKCEO-PTGWO was then declared as the exclusive bargaining representative of Kimberly’s employees, having
garnered the highest number of votes in the certification election. KILUSAN filed a petition for certiorari assailing said order.

During the pendency of this case, Kimberly dismissed from service several employees and refused to heed the workers’ grievances, impelling
KILUSAN-OLALIA to stage a strike. Kimberly filed an injunction case with NLR which was granted by the same. This was challenged before the
Supreme Court by KILUSAN. The Supreme Court ordered the payment of differential pay with respect to minimum wage, cost of living allowance,
13th month pay, and benefits provided for under the applicable collective bargaining agreement from the time they became regular employees to
those workers who have been regularized. It likewise ordered to open and count the 64 challenged votes.

As a consequence, KILUSAN and 76 individual complainants filed a motion for execution with the DOLE. But DOLE considered as physically
impossible, and moot and academic the opening and counting of the 64 challenged ballots because they could no longer be located despite diligent
efforts but ordered the payment of the differential wages and other benefits of the regularized workers.

The Bureau of Working Conditions (BWC) submitted its report finding 47 out of the 76 complainants as entitled to be regularized. Kimberly filed a
MR of said order arguing that the main decision of the Supreme Court cases only pertained to casuals who had rendered one year of service as of
April 21, 1986, the filing date of KILUSAN-OLALIA’s petition for certification election. This was denied. On appeal, CA dismissed the petition of
Kimberly. Hence, this petition.

Kimberly, in this case, contends that the reckoning point in determining who among its casual employees are entitled to regularization should be
April 21, 1986, the date KILUSAN-OLALIA filed a petition for certification election to challenge the incumbency of UKCEO-PTGWO. It posits
that in the implementation of the May 9, 1990 Decision of the Supreme Court, the DOLE should then exclude the employees who had not rendered at
least one (1) year of service from the said date.

Kimberly also argues that the employees who are not parties in said case should not be included in the implementation orders. For DOLE to declare
this group of employees as regular and to order the payment of differential pay to them is to amend a final and executory decision of this Court.

ISSUE: WON the employees are entitled to regularization.

RULING: YES. The law provides for two kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether
continuous or broken, with respect to the activity in which they are employed. The individual petitioners herein who have been adjudged to be
regular employees fall under the second category. These are the mechanics, electricians, machinists, machine shop helpers, warehouse helpers,
painters, carpenters, pipefitters and masons. It is not disputed that these workers have been in the employ of KIMBERLY for more than one year at
the time of the filing of the petition for certification election by KILUSAN-OLALIA.
Owing to their length of service with the company, these workers became regular employees, by operation of law, one year after they were employed
by KIMBERLY through RANK. While the actual regularization of these employees entails the mechanical act of issuing regular appointment papers
and compliance with such other operating procedures as may be adopted by the employer, it is more in keeping with the intent and spirit of the law to
rule that the status of regular employment attaches to the casual worker on the day immediately after the end of his first year of service. To rule
otherwise, and to instead make their regularization dependent on the happening of some contingency or the fulfillment of certain requirements, is to
impose a burden on the employee which is not sanctioned by law.

That the first stated position is the situation contemplated and sanctioned by law is further enhanced by the absence of a statutory limitation before
regular status can be acquired by a casual employee. The law is explicit. As long as the employee has rendered at least one year of service, he
becomes a regular employee with respect to the activity in which he is employed. The law does not provide the qualification that the employee must
first be issued a regular appointment or must first be formally declared as such before he can acquire a regular status. Obviously, where the law does
not distinguish, no distinction should be drawn.

Considering that an employee becomes regular with respect to the activity in which he is employed one year after he is employed, the reckoning date
for determining his regularization is his hiring date. Therefore, it is error for Kimberly to claim that it is from April 21, 1986 that the one-year period
should be counted. While it is a fact that the issue of regularization came about only when KILUSAN-OLALIA filed a petition for certification
election, the concerned employees attained regular status by operation of law.

Further, the grant of the benefit of regularization should not be limited to the employees who questioned their status before the labor tribunal/court
and asserted their rights; it should also extend to those similarly situated. There is, thus, no merit in petitioner's contention that only those who
presented their circumstances of employment to the courts are entitled to regularization.

As to Kimberly’s assertions that some of the employees were already recalled, reassigned or replaced by the RANK Manpower Services, and that
some did not return to work, the Court notes that these are questions of fact. Basic is the rule that, in petitions for review on certiorari under Rule 45
of the Rules of Court, only questions of law may be raised, except, if the factual findings of the appellate court are mistaken, absurd, speculative,
conjectural, conflicting, tainted with grave abuse of discretion, or contrary to the findings culled by the court of origin, which is not so in the instant
case. The DOLE and CA are uniform in their findings.

IV. Fixed-Term

1. Brent School v. Zamora

G.R. No. L-48494. February 5, 1990

FACTS:

1. Doroteo R. Alegre was engaged as athletic director by Brent School, Inc. at a yearly compensation of P20,000.00.

2. The contract fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the agreement,
to July 17, 1976.

3. 3 months before the expiration of the stipulated period, Alegre was given a copy of the report filed by Brent School with the
Department of Labor advising of the termination of his services effective on July 16, 1976.

4. On May 16, 1976 , Alegre accepted the amount of P3,177.71, and signed a receipt therefor containing the phrase, "in full
payment of services for the period May 16, to July 17, 1976 as full payment of contract”.

5. However at the investigation conducted by a Labor Conciliator (LC) of said report of termination of his services, Alegre,
protested the announced termination of his employment.

Alegre’s argument:Although his contract did stipulate that the same would terminate on July 17, 1976, since his services were
necessary and desirable in the usual business of his employer, and his employment had lasted for five years, he had acquired the status
of a regular employee and could not be removed except for valid cause.

6. The Regional Director (RD) considered Brent School's report as an application for clearance to terminate employment (not a
report of termination), and accepting the recommendation of the Labor Conciliator, refused to give such clearance and instead
required the reinstatement of Alegre, as a "permanent employee," to his former position without loss of seniority rights and with
full back wages.
 7. Brent filed a motion, but was denied and forwarded the case to Secretary of Labor for review.

8. Secretary of Labor sustained the RD. Brent appealed to the Office of the President, but affirmed the decision of LC.

ISSUE: Whether or not the provisions of the Labor Code, as amended, have anathematized "fixed period employment" or employment for a term.

HELD:NO.

The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the Labor Code of the Philippines (P.D.
442) had not yet been promulgated. At that time, the validity of term employment was impliedly recognized by the Termination Pay Law, R.A. 1052,
as amended by R.A. 1787. Prior, thereto, it was the Code of Commerce (Article 302) which governed employment without a fixed period, and also
implicitly acknowledged the propriety of employment with a fixed period. The Civil Code of the Philippines, which was approved on June 18, 1949
and became effective on August 30,1950, itself deals with obligations with a period. No prohibition against term-or fixed-period employment is
contained in any of its articles or is otherwise deducible therefrom.

It is plain then that when the employment contract was signed between Brent School and Alegre, it was perfectly legitimate for them to include in it a
stipulation fixing the duration thereof Stipulations for a term were explicitly recognized as valid by this Court.

The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor Code (PD 442), which went into effect on
November 1, 1974.

Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly
appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein
should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter.

Alegre's employment was terminated upon the expiration of his last contract with Brent School on July 16, 1976 without the necessity of any notice.
The advance written advice given the Department of Labor with copy to said petitioner was a mere reminder of the impending expiration of his
contract, not a letter of termination, nor an application for clearance to terminate which needed the approval of the Department of Labor to make the
termination of his services effective. In any case, such clearance should properly have been given, not denied.

Alegre's contract of employment with Brent School having lawfully terminated with and by reason of the expiration of the agreed term of period
thereof, he is declared not entitled to reinstatement

2. Fuji Television Network , Inc. v. Espiritu

V. Seasonal

1. Hacienda Bino v. Cuenca

G.R. No. 150478. April 15, 2005
HACIENDA BINO/HORTENCIA STARKE, INC./HORTENCIA L. STARKE, Petitioners,
Vs
CANDIDO CUENCA, Et.Al., Respondents

Facts:
● Hacienda Bino is a 236-hectare sugar plantation in Negros Occidental. Hortencia L. Starke is the owner and operator of the said
Hacienda.
● Hacienda consist of 220 workers, performing various works, such as cultivation, planting of cane points, fertilization, watering,
weeding, harvesting, and loading of harvested sugarcanes to cargo trucks. 76 of the said workers are the Respondents.
 ● Starke issued Order or Notice to the workers stating “Please bear in mind that all those who signed in favor of CARP are expressing
their desire to get out of employment on their own volition. Wherefore, beginning today, July 18, only those who did not sign for CARP
will be given employment by Hacienda Bino”
● Respondents regarded such notice as a termination being regular employees. They filed a complaint for illegal dismissal, wage
differentials, 13th month pay, holiday pay and premium pay for holiday, service incentive leave pay, and moral and exemplary damages
with the NLRC.
● Petitioner argued that in Mercado vs NLRC (Mercado) case, the Court held that petitioners therein who were sugar workers, are
seasonal employees and their employment legally ends upon completion of the project or the season.
● Petitioner also asserts that the respondents, who are also sugar workers, are seasonal employees; hence, their employment can be
terminated at the end of the season and such termination cannot be considered an illegal dismissal.
● The Labor Arbiter, NLRC and CA ruled that Petitioner is guilty Illegal Dismissal.
● Petitioner argued that the CA violated the doctrine of stare decisis by not applying the ruling in the Mercado case that sugar workers
are seasonal employees.

Issue: WON the Respondents be considered as Regular Employees.

Ruling:

Respondents are classified as Regular Employees and not Seasonal Employees.

● The CA correctly found that the facts involved in this case are different from the Mercado case. Therefore, doctrine of stare decisis is
not applicable.
● In the Mercado case, the Supreme Court held the petitioners who were sugar workers not to be regular but seasonal workers,
nevertheless, the same does not operate to abandon the settled doctrine of the High Court that sugar workers are considered regular and
permanent farm workers of a sugar plantation owner, the reason being that there are facts present that are peculiar to the Mercado case.
The disparity in facts between the Mercado case and the instant case is best exemplified by the fact that the former decision ruled on the
status of employment of farm laborers, who, as found by the labor arbiter, work only for a definite period for a farm worker, after
which they offer their services to other farm owners, considering the area in question being comparatively small, comprising of
seventeen and a half (17½) hectares of land, such that the planting of rice and sugar cane thereon could not possibly entail a whole year
operation. The herein case presents a different factual condition as the enormity of the size of the sugar hacienda of petitioner, with an
area of two hundred thirty-six (236) hectares, simply do not allow for private respondents to render work only for a definite period.
● The petitioners did not present any evidence that the respondents were required to perform certain phases of agricultural work for a
definite period of time.
● The primary standard for 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. There is no doubt that the respondents were
performing work necessary and desirable in the usual trade or business of an employer. Hence, they can properly be classified as
regular employees.
● For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are
seasonal in nature. They must have been employed only for the duration of one season. While the records sufficiently show that the
respondents’ work in the hacienda was seasonal in nature, there was, however, no proof that they were hired for the duration of one
season only. In fact, the payrolls, submitted in evidence by the petitioners, show that they availed the services of the respondents since
1991.

2. Universal Robina Sugar Milling Corp. v. Acibo

G.R. No. 186439 January 15, 2014

UNIVERSAL ROBINA SUGAR MILLING CORPORATION and RENE CABATI, Petitioners, vs.

FERDINAND ACIBO, ROBERTO AGUILAR, EDDIE BALDOZA, RENE ABELLAR, DIOMEDES ALICOS, MIGUEL
ALICOS, ROGELIO AMAHIT, LARRY AMASCO, FELIPE BALANSAG, ROMEO BALANSAG, MANUEL BANGOT,
ANDY BANJAO, DIONISIO BENDIJO, JR., JOVENTINO BROCE, ENRICO LITERAL, RODGER RAMIREZ,
BIENVENIDO RODRIGUEZ, DIOCITO PALAGTIW, ERNIE SABLAN, RICHARD PANCHO, RODRIGO ESTRABELA,
DANNY KADUSALE and ALLYROBYL OLPUS, Respondents.
FACTS: URSUMCO is a domestic corporation engaged in the sugar cane milling business; Cabati is URSUMCO’s Business Unit General
Manager.

The complainants were employees of URSUMCO. They were hired on various dates (between February 1988 and April 1996) and on
different capacities, i.e., drivers, crane operators, bucket hookers, welders, mechanics, laboratory attendants and aides, steel workers,
laborers, carpenters and masons, among others. At the start of their respective engagements, the complainants signed contracts of
employment for a period of one (1) month or for a given season. URSUMCO repeatedly hired the complainants to perform the same duties
and, for every engagement, required the latter to sign new employment contracts for the same duration of one month or a given season.

On August 23, 2002, the complainants filed before the LA complaints for regularization, entitlement to the benefits under the existing
Collective Bargaining Agreement (CBA),and attorney’s fees.

Petitioner:

Petitioner contend that the legal standards – length of the employee’s engagement and the desirability or necessity of the employee’s work in
the usual trade or business of the employer – apply only to regular employees under paragraph 1, Article 280 of the Labor Code, and, under
paragraph 2 of the same article, to casual employees who are deemed regular by their length of service.

Respondent:

Respondents maintain that they are regular employees of URSUMCO. They point out that they have been continuously working for
URSUMCO for more than one year, performing tasks which were necessary and desirable to URSUMCO’s business. Hence, under the
above-stated legal parameters, they are regular employees.

LA

LA dismissed the complaint for lack of merit. The LA held that the complainants were seasonal or project workers and not regular employees
of URSUMCO. The LA pointed out that the complainants were required to perform, for a definite period, phases of URSUMCO’s several
projects that were not at all directly related to the latter’s main operations.

Of the 22 original complainants before the LA, 7 appealed the LA’s ruling before the NLRC, namely: respondents Ferdinand Acibo, Eddie
Baldoza, Andy Banjao, Dionisio Bendijo, Jr., Rodger Ramirez, Diocito Palagtiw, Danny Kadusale and Allyrobyl Olpus.

NLRC

The NLRC reversed the LA’s ruling; it declared the complainants as regular URSUMCO employees and granted their monetary claims under
the CBA. The NLRC pointed out that the complainants performed activities which were usually necessary and desirable in the usual trade or
business of URSUMCO, and had been repeatedly hired for the same undertaking every season. Thus, pursuant to Article 280 of the Labor
Code, the NLRC declared that the complainants were regular employees and were entitled to the benefits granted, under the CBA, to the
regular URSUMCO employees.

CA

The CA granted in part the petition; it affirmed the NLRC’s ruling finding the complainants to be regular employees of URSUMCO, but
deleted the grant of monetary benefits under the CBA.

The CA pointed out that the primary standard for determining regular employment is the reasonable connection between a particular activity
performed by the employee vis-à-vis the usual trade or business of the employer. It held that the various activities that the complainants were
tasked to do were necessary, if not indispensable, to the nature of URSUMCO’s business.
On the claim for CBA benefits, the CA, however, ruled that the complainants were not entitled to receive them. The complainants did not
belong to and could not be grouped together with the regular employees of URSUMCO, for collective bargaining purposes; they constitute a
bargaining unit separate and distinct from the regular employees.

ISSUE: Whether the respondents are regular employees of URSUMCO.

RULING:

YES. The respondents to are regular seasonal employees of URSUMCO.

As the CA has explained in its challenged decision, Article 280 of the Labor Code provides for three kinds of employment arrangements,
namely: regular, project/seasonal and casual. Regular employment refers to that arrangement whereby the employee "has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade of the employer[. "Under the definition, the primary
standard that determines regular employment is the reasonable connection between the particular activity performed by the employee and the
usual business or trade of the employer; the emphasis is on the necessity or desirability of the employee’s activity. Thus, when the employee
performs activities considered necessary and desirable to the overall business scheme of the employer, the law regards the employee as
regular.

xxx

A project employment, on the other hand, contemplates on arrangement whereby "the employment has been fixed for a specific project or
undertaking whose completion or termination has been determined at the time of the engagement of the employee[.]" Two requirements,
therefore, clearly need to be satisfied to remove the engagement from the presumption of regularity of employment, namely: (1) designation
of a specific project or undertaking for which the employee is hired; and (2) clear determination of the completion or termination of the
project at the time of the employee’s engagement. The services of the project employees are legally and automatically terminated upon the
end or completion of the project as the employee’s services are coterminous with the project.

Unlike in a regular employment under Article 280 of the Labor Code, however, the length of time of the asserted "project" employee’s
engagement is not controlling as the employment may, in fact, last for more than a year, depending on the needs or circumstances of the
project. Nevertheless, this length of time (or the continuous rehiring of the employee even after the cessation of the project) may serve as a
badge of regular employment when the activities performed by the purported "project" employee are necessary and indispensable to the usual
business or trade of the employer. In this latter case, the law will regard the arrangement as regular employment.

Seasonal employment operates much in the same way as project employment, albeit it involves work or service that is seasonal in nature or
lasting for the duration of the season. As with project employment, although the seasonal employment arrangement involves work that is
seasonal or periodic in nature, the employment itself is not automatically considered seasonal so as to prevent the employee from attaining
regular status. To exclude the asserted "seasonal" employee from those classified as regular employees, the employer must show that: (1) the
employee must be performing work or services that are seasonal in nature; and (2) he had been employed for the duration of the season.
Hence, when the "seasonal" workers are continuously and repeatedly hired to perform the same tasks or activities for several seasons or even
after the cessation of the season, this length of time may likewise serve as badge of regular employment. In fact, even though denominated as
"seasonal workers," if these workers are called to work from time to time and are only temporarily laid off during the off-season, the law does
not consider them separated from the service during the off-season period. The law simply considers these seasonal workers on leave until re-
employed.

In Brent School, Inc. v. Zamora, the Court, for the first time, recognized and resolved the anomaly created by a narrow and literal
interpretation of Article 280 of the Labor Code that appears to restrict the employee’s right to freely stipulate with his employer on the
duration of his engagement. In this case, the Court upheld the validity of the fixed-term employment agreed upon by the employer, Brent
School, Inc., and the employee, Dorotio Alegre, declaring that the restrictive clause in Article 280 "should be construed to refer to the
substantive evil that the Code itself x x x singled out: agreements entered into precisely to circumvent security of tenure. It should have no
application to instances where [the] fixed period of employment was agreed upon knowingly and voluntarily by the parties x x x absent any x
x x circumstances vitiating [the employee’s] consent, or where [the facts satisfactorily show] that the employer and [the] employee dealt with
each other on more or less equal terms[.]"The indispensability or desirability of the activity performed by the employee will not preclude the
parties from entering into an otherwise valid fixed term employment agreement; a definite period of employment does not essentially
contradict the nature of the employees duties as necessary and desirable to the usual business or trade of the employer.
Nevertheless, "where the circumstances evidently show that the employer imposed the period precisely to preclude the employee from
acquiring tenurial security, the law and this Court will not hesitate to strike down or disregard the period as contrary to public policy, morals,
etc." In such a case, the general restrictive rule under Article 280 of the Labor Code will apply and the employee shall be deemed regular.

Clearly, therefore, the nature of the employment does not depend solely on the will or word of the employer or on the procedure for hiring
and the manner of designating the employee. Rather, the nature of the employment depends on the nature of the activities to be performed by
the employee, considering the nature of the employer’s business, the duration and scope to be done, and, in some cases, even the length of
time of the performance and its continued existence.

In light of the above legal parameters laid down by the law and applicable jurisprudence, the respondents are neither project, seasonal nor
fixed-term employees, but regular seasonal workers of URSUMCO.

HOWEVER, as the CA itself opined when it declared that "private respondents who are regular workers with respect to their seasonal tasks
or activities and while such activities exist, cannot automatically be governed by the CBA between petitioner URSUMCO and the authorized
bargaining representative of the regular and permanent employees." Citing jurisprudential standards, it then proceeded to explain that the
respondents cannot be lumped with the regular employees due to the differences in the nature of their duties and the duration of their work
vis-a-vis the operations of the company.

In sum, we find the complaint to be devoid of merit. The issue of granting affirmative relief to the complainants who did not appeal the CA
ruling has become academic.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. Except for the denial of the respondents' claim for CBA
benefits, the November 29, 2007 decision and the January 22, 2009 resolution of the Court of Appeals are SET ASIDE. The complaint is
DISMISSED for lack of merit.

SO ORDERED.

VI. Probationary

1. Abbott Laboratories v. Alcaraz

Facts: Abbot Laboratories, a pharmaceutical company, published a job posting for a Medical and Regulatory Affairs Manager in a major
broadsheet newspaper. Alcaraz was a Regulatory Affairs and Information Manager at Aventis Pasteur Philippines when she saw Abbott
Laboratories’ job posting in a newspaper. Alcaraz applied as a Regulatory Affairs Manager with Abbott Laboratories. The employment
contract that was entered into stated that Alcaraz would be employed on a probationary basis, to be placed on probation for a period of 6
months. She was later briefed on her duties and responsibilities during her pre-employment orientation. The HR director also sent her an e-
mail containing an explanation of the procedure for evaluating the performance of probationary employees (job performance should be
formally reviewed and discussed with the employees on the third and fifth month from the date of employment; the necessary improvement
plan should also be made during the third-month review in case of gap between the employee’s performance and the standards set; these
performance standards should be discussed in detail within the first 2 weeks on the job ). Alcaraz was also informed that Abbott only had one
evaluation system for all of its employees.

Only 3 months after the signing of the employment contract, Alcaraz was requested to resign for failure to meet the standards for
regularization (failed to manage her time efficiently; failed to gain the trust of her staff and to build an effective rapport with them; failed to
train her staff effectively; and was not able to obtain the knowledge and ability to make sound judgements on case processing and article
review which were necessary for the proper performance of her duties).

She was told that regardless of her choice to resign, she should no longer report for work and was asked to surrender her office identification
cards.

The next day, she told her admin assistant that she would be on leave but her admin assistant said that it was already announced to the whole
staff that Alcaraz had resigned due to health reasons. Feeling aggrieved, Alcaraz filed a complaint for illegal dismissal.
Petitioner’s Argument: Alcaraz claimed that Abbott failed to inform her of the reasonable standards for her regularization pursuant to Art 295
of the Labor Code. She was informed of her duties; she was informed of the evaluation procedure; but she was NOT informed of the exact
metrics like how exactly her performance would be measured.

Respondent’s Argument: Abbot claimed that they sufficiently complied with the requirement. Her employment contract stated that she would
be placed on probation for a period of 6 months; she was sent copies of Abbott’s organizational structure and her job description through e-
mail; she was made to undergo a pre-employment orientation where she was informed that she had to implement Abbott’s Code of Conduct
and office policies; she was required to undergo a training program as part of her orientation; she received copies of Abbott’s Performance
Modules from the HR Director who explained to her the procedure for evaluating the performance of probationary employees & that Abbott
had only one evaluation system for all its employees; and Alcaraz had previously worked for another pharmaceutical company and had
admitted to have an “extensive training and background” to acquire the necessary skills for her job.

Rulings: Labor Arbiter ruled in favor of Abbott; NLRC reversed; CA affirmed the NLRC decision

Relevant Issue: WON Alcaraz was sufficiently informed of the reasonable standards to qualify her as a regular employee

SC Ruling: YES. Alcaraz was well-appraised of her employer’s expectations that would, in turn, determine her regularization. Verily, basic
knowledge and common sense dictate that the adequate performance of one’s duty is, by and of itself, an inherent and implied standard for a
probationary employee to be regularized. Such standard for regularization need not be literally spelled out or mapped into technical indicators
in every case.

An employer is deemed to have made known the standards that would qualify a probationary employee to be a regular employee when it has
exerted reasonable efforts to apprise the employee of what he/she is expected to do to accomplish during the trial of probation.

The exception to the foregoing is when the job is self-descriptive in nature, for instance, in the case of maids, cooks, drivers, or messengers.

The dismissal was based on just cause under Art 297 of the Labor Code, but the employer in this case failed to comply with the notice
requirement – Valid dismissal + nominal damages

2. Woodridge School v. Pe-Benito

GR No. 160240, Oct 29, 2008

WOODRIDGE SCHOOL v. JOANNE C. PE BENITO
TOPIC: Kinds of Employment> Probationary

FACTS:
•Petitioner Woodridge School is a private educational institution located at Woodwinds Village, Molino 6, Bacoor, Cavite.
Respondents Joanne C. Pe Benito (Pe Benito) and Randy T. Balaguer (Balaguer) were hired as probationary high school teachers
effective June 1998 and June 1999, respectively. ] Their contracts of employment covered a three (3) year probationary period. Pe
Benito handled Chemistry and Physics while Balaguer taught Values Education and Christian Living.
•On February 19, 2001, respondents, together with twenty other teachers, presented petitioner with a Manifesto Establishing
Relevant Issues Concerning the School raising various issues:
oNSAT/NEAT ANOMALY
oTEACHER'S RIGHT FOR A DUE PROCESS
oISSUANCE OF INDIVIDUAL CONTRACTS
oNON-CLEAR-CUT SCHOOL POLICIES
•For failure of the parties to resolve the issues, especially the alleged NSAT/NEAT anomaly, respondents filed a formal complaint
against petitioner with the Department of Education, Culture and Sports (DECS) [9] [8] requesting the latter to undertake a formal
investigation, institute appropriate charges, and impose proper sanctions against petitioner. During the pendency of the DECS case,
and for lack of a positive action from petitioner, respondents appeared on television and spoke over the radio on the alleged
NEAT/NSAT anomaly
•On February 28, 2001, petitioner sent two separate Memoranda [10] to respondents placing them under preventive suspension for
a period of thirty days on the following grounds: 1) uttering defamatory remarks against the school principal in the presence of
their co-teachers; 2) announcing to the students and teachers their alleged immediate termination from service; 3) tardiness; 4)
spreading false accusations against petitioner; 5) absence without official leave; and 6) appearing on television and speaking over
the radio to malign petitioner. In the same memoranda, respondents were required to explain in writing within seventy-two (72)
hours why they should not be terminated from their employment.
•This prompted respondents to commence an action for illegal suspension before the NLRC.
•March 19, 2001, petitioner issued respondents their Notice of Termination, each to take effect similarly on March 31, 2001,
informing respondents that they did not qualify as regular employees for their failure to meet the performance standards made
known to them at the start of their probationary period.
•Respondents then amended their initial complaint, to include illegal dismissal

LA: Labor Arbiter Vicente R. Layawen rendered a Decision dismissing the complaint.
NLRC: On appeal to the NLRC, the Commission affirmed [16] the Labor Arbiter's disposition in its entirety.
CA: CA granted the petition and set aside the NLRC ruling in a decision

PETITIONER’S ARGUMENT: Petitioner insists that respondents' dismissal from service was lawful and justified by the following
grounds: 1) as probationary employees, respondents failed to meet the reasonable standards for their permanent employment; and
2) in publicly accusing petitioner on radio and national television, of dishonesty and wrongdoing, during the pendency of the
administrative investigation of the alleged dishonest acts, undertaken by the proper government agency.

RESPONDENT’S ARGUMENT: Their dismissal is illegal because they are still in the probationary period.

ISSUE: WON the dismissal of respondents (in their probationary status) illegal. YES.

RULING:
On March 31, 2001, the effective date of their dismissal, respondents were not regular or permanent employees; they had not yet
completed three (3) years of satisfactory service as academic personnel which would have entitled them to tenure as permanent
employees in accordance with the Manual of Regulations for Private Schools. [34] On that date, Pe Benito's contract of employment
still had two months to run, while Balaguer's probationary employment was to expire after one year and two months. A
probationary employee is one who, for a given period of time, is being observed and evaluated to determine whether or not he is
qualified for permanent employment. A probationary appointment affords the employer an opportunity to observe the skill,
competence and attitude of a probationer. The word "probationary," as used to describe the period of employment, implies the
purpose of the term or period. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain
whether he is qualified for permanent employment, the probationer at the same time, seeks to prove to the employer that he has
the qualifications to meet the reasonable standards for permanent employment. [35] Probationary employees enjoy security of tenure
in the sense that during their probationary employment, they cannot be dismissed except for cause or when he fails to qualify as a
regular employee. [36] However, upon expiration of their contract of employment, probationary employees cannot claim security of
tenure and compel their employers to renew their employment contracts. In fact, the services of an employee hired on probationary
basis may be terminated when he fails to qualify as a regular employee in accordance with reasonable standards made known by
the employer to the employee at the time of his engagement. There is nothing that would hinder the employer from extending a
regular or permanent appointment to an employee once the employer finds that the employee is qualified for regular employment
even before the expiration of the probationary period.

However, nowhere in the notices did petitioner explain the details of said "failure to qualify" and the standards not met by
respondents. We can only speculate that this conclusion was based on the alleged acts of respondents in uttering defamatory
remarks against the school and the school principal; failure to report for work for two or three times; [40] without wearing proper
uniform; [41] going to class delay in the submission of class records; and non-submission of class syllabi.

WHEREFORE, premises considered, the petition is hereby DENIED. The Court of Appeals Decision and Resolution dated June 30,
2003 and September 26, 2003, respectively, in CA-G.R. SP No. 75249, are AFFIRMED.

3. A Prime Security Services, Inc. v. NLRC

CAUSE OF ACTION:
On February 23, 1989,private respondent Othello C. Moreno filed a complaintwith the Department of Labor and
Employment, Arbitration Branch, National Capital Region, against the petitioner,A' Prime Security Agency, Inc., for
illegal dismissal, illegal deduction, and underpayment of wages.

The complaint alleged, among others, that complainant (private respondent herein) had been working as a security guard
for a year with the Sugarland Security Services, Inc., a sister company of petitioner;that he was rehired as a security guard
on January 30, 1988 by the petitioner and assigned to the same post at the U.S. Embassy Building along Roxas Boulevard,
Manila;

He was among those absorbed by the petitioner when it took over the security contracts of its sister company, Sugarland
Security Services, Inc., with the U.S. Embassy

Private respondent’s argument:

He was forced by petitioner to sign new probationary contracts of employment for six (6) months; that on August 1, 1988,
his employment was terminated; that during his employment, the amount of P20.00 per month was deducted from his
salary allegedly for withholding tax, although no withholding tax receipt was given to him, and the salary he was
receiving was only P2,187.00 a month, which was way below the P2,410.17 stipulated in the PADPAO memorandum of
agreement.

Petitioner’s argument:
Petitioner, for its part, alleged that the private respondent was hired on January 30, 1988,on a probationary basis, and he
signed an authority to deduct from his salary any reimbursement for any loss or damage caused to properties of the client;
that he was given a copy of petitioner's rules and regulations which provide that sleeping on post is punishable by
warning, suspension and dismissal and he was caught sleeping on poston March 17, 1988, for which he was sent a
memorandum giving him a last warning; that on March 25, 1988, he figured in a quarrel with another security guard,
which resulted in a near shootout; that at the end of his probationary employment, he was given a psychological test and
on the basis of the foregoing, petitioner told him that his probationary employment had come to an end as he did not pass
the company standard and therefore, he could not be hired as a regular employee.

LA:- In favor of the complainant (security guard)

NLRC:- affirmed the decision of LA Guanio; MR: Denied

ISSUE:
1. Whether private respondent is a regular or probationary employee of petitioner; and
2. Whether private respondent's dismissal is illegal

SC Ruling:
On the issue as to whether the private respondent is a probationary or regular employee, the Court holds that the latter
became a regular employee upon completion of his six-month period of probation. Private respondent started working on
January 30, 1988 and completed the said period of probation on July 27, 1988. Thus, at the time private respondent was
dismissed on August 1, 1988, he was already a regular employee with a security of tenure. He could only be dismissed for
a just and authorized cause.
There is no basis for subjecting private respondent to a new probationary or temporary employmenton January 30, 1988,
considering that he was already a regular employee when he was absorbed by A' Prime from Sugarland, its sister
company.

On the issue of whether the dismissal of private respondent was unjust and illegal, the Court rules in the affirmative.
The dismissal of private respondent was presumably based on the results of his behavioral and neuropsychological tests
and on his violation of a company rule on sleeping on post. With respect to the behavioral and neuropsychological tests,
the Court agrees with NLRC's assessment, to wit:

Complainant's result of his behavioral research and neuropsychological test to our mind, is of no moment, considering that
the said test appeared to have been conveniently contrived to be conducted, and the result produced on the very day of his
dismissal, in question.

There is also a discrepancy in the results of the test

So also, private respondent's alleged violations of sleeping on post, and quarreling with a co-worker, may not be proper
grounds for dismissal, as the same were first infractions. Circular No. 1 dated March 16, 1983 of A' Prime Security
Services, Inc.,11governing discipline, suspension and separation from the service of security guards, provides:

SECTION VIII SLEEPING ON POST

Any Security/Lady guard who is found sleeping while on post shall be punished as follows:
1st Offense Warning
2nd Offense 30 days suspension without pay
3rd Offense Dismissal

SECTION IX CHALLENGING A POSTED SECURITY/LADY GUARD AND SUPERIORS

Any Security/Lady guard who challenges, assaults, provokes and insults an officially posted Security/Lady guard shall be
punished:
1st Offense One (1) month suspension
2nd Offense Dismissal

As the infractions of Sections VIII and IX of Circular No. 1 by private respondent were first offenses,they were not
punishable by dismissal. They were not valid grounds for terminating the employment of private respondent.

WHEREFORE, the petition is DISMISSED; in favor of private respondent

4. Phil. Federation v. NLRC
G.R. No. 121071 December 11, 1998
PHIL. FEDERATION OF CREDIT COOPERATIVES, INC, (PFCCI) and FR. BENEDICTO JAYOMA, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION (First Division) and VICTORIA APRIL,
Philippine Federation of Credit Cooperatives, Inc. (PFCCI), a corporation engaged in organizing services to credit and cooperative
entities

It is an elementary rule in the law on labor relations that a probationary employee who is engaged to work beyond the probationary period of
six months, as provided under Art. 281 of the Labor Code, as amended, or for any length of time set forth by the employer, shall be
considered a regular employee.

FACTS: Private Respondent Victoria Abril was employed by petitioner Philippine Federation of Credit Cooperatives, Inc. (PFCCI) in
September 1982. She was employed as Junior Auditor/Field Examiner. She has also held positions in different capacities, to wit: office
secretary (1985) and as cashier designate for four (4) months (ending in April 1988). After resuming her position as secretary, Respondent
went on leave until she gave birth to a baby girl. When she returned she found out that Vangie Santos had been permanently appointed to her
position in November 1989; She, nevertheless, accepted the position of Regional Field Officer as evidenced by a contract which stipulated,
among other things, that respondent's employment status shall be probationary for a period of six (6) months. Said period having elapsed,
Abril was allowed to work until PFCCI presented to her another employment contract for a period of one year commencing on January 2,
1991 until December 31, 1991, after which period, her employment was terminated. Thus, a complaint was filed against PFCCI for illegal
dismissal.
LA RULING:
Labor Arbiter Cornelio L. Linsangan rendered a decision on March 10, 1993 dismissing the same for lack of merit but ordered PFCCI to
reimburse her the amount of P2,500.00 which had been deducted from her salary.
NLRC Ruling (APPEAL):
The LA decision was reversed. The PFCCI was ordered to reinstate complainant to her position of Regional Field Officer with full
backwages computed from Jan. 1, 1992.
Thus, this petition.
ISSUE: WON Abril was a probationary employee. – NO.
DISCUSSION:
Petitioner alleges that Abril abandoned her secretarial position for eight months (pertaining to leave) and that she accepted the position of
Regional Field Officer where there was a stipulation that her employment status shall be probationary for a period of six (6) months.
Petitioner likewise manifested that respondent's employment for a period of one year, from January until December 1991, having been fixed
for a specified period, could not have converted her employment status to one of regular employment. Conversely, it likewise insisted that
respondent was employed to perform work related to a project funded by the World Council of Credit Unions (WOCCU) and hence, her
status is that of a project employee. The Court is, thus, confronted with a situation under which the terms of the contract are so ambiguous as
to preclude a precise application of the pertinent labor laws. Therefore, she is considered as a casual or contractual employment under Article
280 of the Labor Code.

The court rules that this allegation is utterly misplaced. The Labor Code comprehends three kinds of employees:
(a) regular employees or those whose work is necessary or desirable to the usual business of the employer;
(b) project employees or those whose employment has been fixed for a specific project or undertaking the completion or termination of which
has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and
the employment is for the duration of the season; and
(c) casual employees or those who are neither regular nor project employees.

With regard to contractual employees, the Court in the leading case of Brent School, Inc. v. Zamora, laid down the guidelines before a
contract of employment may be held as valid, to wit:
"stipulations in employment contracts providing for term employment or fixed period employment are valid when the period were
agreed upon knowingly and voluntarily by the parties without force, duress or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over
the latter."

The Court reviews the contract of employment entered into by the parties, the contract reads:

That the employer hires the employee on contractual basis to the position of Regional Field Officer of Region 4 under
PFCCI/WOCCU/Aid Project No. 8175 and to do the function as stipulated in the job description assigned to him (her): on
probationary status effective February 17/90 for a period not to exceed six (6) months from said effectivity, subject to renewal of
this contract should the employee's performance be satisfactory.

While the initial statements of the contract show that Abril's employment was for a fixed period/project, the succeeding provisions
contradicted the same when it provided that respondent shall be under probationary status commencing on February 17, 1990 and ending six
(6) months thereafter. The employment should be subject to the project’s completion.

The Court ruled that where a contract of employment, being a contract of adhesion, is ambiguous, any ambiguity therein should be
construed strictly against the party who prepared it. Furthermore, Article 1702 of the Civil Code provides that, in case of doubt, all labor
contracts shall be construed in favor of the laborer. It added:

The contention of the petitioner that Abril is under probationary status is untenable, as it would result in a violation of her right to security of
tenure guaranteed in Section 3 of Article XIII of the Constitution and in Articles 279 and 281 of the Labor Code.
Regardless of the designation petitioner may have conferred upon Abril’s employment status, it is, however, undeniable that Abril having
completed the probationary period and allowed to work thereafter, became a regular employee who may be dismissed only for just
or authorized causes under Articles 282, 283 and 284 of the Labor Code, as amended. Therefore, the dismissal, premised on the alleged
expiration of the contract, is illegal and entitles respondent to the reliefs prayed for.

RULING:
WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED and the decision of the National Labor Relations Commission
dated November 28, 1994 is AFFIRMED. No costs

5. Mercado v. AMA Computer College

Facts:
- The petitioners Mercado et al are all former faculty members of AMA Computer College-Paranaque City.
- The petitioners executed individual Teacher's Contracts for each of the trimesters that they were engaged to teach with the following
stipulation:
“The TEACHER has agreed to accept a non-tenured appointment to work in the College of xxx effective xxx to xxx or for
the duration of the last term that the TEACHER is given a teaching load based on the assignment duly approved by the
DEAN/SAVP-COO.”
- AMACC implemented new faculty screening guidelines
- The performance standards under the new screening guidelines were also used to determine the present faculty members'
entitlement to salary increases.
- The petitioners failed to obtain a passing rating based on the performance standards; hence AMACC did not give them any salary
increase.
- Because of this, the petitioners filed an action against AMACC for underpayment, non-payment of overtime, and discriminatory
practices.
- Afterwards, AMACC sent them a Notice of Non-Renewal of Contract
- Petitioners amended their complaint to include illegal dismissal.
Mercado et al’s arguments:
- AMACC’s acts amounted to illegal dismissal
- It was retaliatory for the complaint they filed for monetary benefits and discriminatory practices
- AMACC didn’t give adequate notice so their dismissal was ineffectual.
- The applicable law on probationary employment, as explained by the LA, is Article 281 of the Labor Code which mandates a period
of six (6) months as the maximum duration of the probationary period unless there is a stipulation to the contrary;
AMACC’s arguments:
- petitioners worked under a contracted term under a non-tenured appointment and were still within the three-year probationary
period for teachers
- Their contracts were not renewed because they failed to pass the Performance Appraisal System for Teachers (PAST) while others
failed to comply with the other requirements for regularization, promotion, or increase in salary.
- This move, according to AMACC, was justified since the school has to maintain its high academic standards.
- Asserts that the petitioners knew very well that the applicable standards would be revised and updated from time to time given the
nature of the teaching profession.
LA ruling:
- Petitioners illegally dismissed and AMACC should reinstate
- The LA ruled that Article 281 of the Labor Code on probationary employment applied to the case
- That AMACC did not specify who among the petitioners failed to pass the PAST and who among them did not comply with the
other requirements of regularization, promotions or increase in salary; and that the petitioners' dismissal could not be sustained on
the basis of AMACC's "vague and general allegations" without substantial factual basis.
NLRC ruling:
- Affirmed the LA ruling
- Observed that the applicable law is Section 92 of the Manual of Regulations for Private Schools (which mandates a probationary
period of nine consecutive trimesters of satisfactory service for academic personnel in the tertiary level where collegiate courses are
offered on a trimester basis), not Article 281 of the Labor Code.
 - The NLRC ruled that the new screening guidelines for the school year 2000-20001 cannot be imposed on the petitioners and their
employment contracts since the new guidelines were not imposed when the petitioners were first employed in 1998.
CA ruling:
- Granted AMACC's petition for certiorari and dismissed petitioners' complaint for illegal dismissal.
- Ruled that in accordance with the Manual for Regulations for Private Schools (required 3 consecutive years of service), the
petitioners were still within their probationary period.
Relevant Issue:
- W/N petitioners are given due process in their non-renewal even if they’re probationary employees
- (An issue that came up in the ruling is that w/n the petitioners are probationary or under fixed-term per semester contracts)
SC Ruling:
- GRANTS the petition.
- CA decision must be reversed.
- The main reason is because the standards which would be used to judge the performance of the teachers was not communicated to
them.
On which law governs:
- Teaching personnel are not governed purely by the Labor Code. The Labor Code is supplemented with respect to the period of
probation by special rules found in the Manual of Regulations for Private Schools.
- On the matter of probationary period , Section 92 of the Manual provides:
- Section 92. Probationary Period. - Subject in all instances to compliance with the Department and school requirements, the
probationary period for academic personnel shall not be more than three (3) consecutive years of satisfactory service for
those in the elementary and secondary levels, six (6) consecutive regular semesters of satisfactory service for those in the
tertiary level, and nine (9) consecutive trimesters of satisfactory service for those in the tertiary level where collegiate
courses are offered on a trimester basis.
- But the portion of Article 281 of the Labor Code still fully applies:
- “The services of an employee who has been engaged on a probationary basis may be terminated for a just cause when he
fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement . An employee who is allowed to work after a probationary period shall be
considered a regular employee.”
On probationary employment:
- Employment on probationary status affords management the chance to fully scrutinize the true worth of hired personnel before the
full force of the security of tenure guarantee of the Constitution comes into play.
- Labor, for its part, is given the protection during the probationary period
- Under the Labor Code, the standards a probationary employee is to be judged must be made known to them at the START of their
probationary period, or at the very least under the circumstances of the present case, at the start of the semester or the trimester
during which the probationary standards are to be applied.
- Of critical importance in invoking a failure to meet the probationary standards, is that the school should show - as a matter of due
process - how these standards have been applied.
- in furtherance, too, of the basic rule in employee dismissal that the employer carries the burden of justifying a dismissal.
On the probationary nature of the contract vs fixed-term:
- In a situation where the probationary status overlaps with a fixed-term contract not specifically used for the fixed term it offers,
Article 281 should assume primacy and the fixed-period character of the contract must give way.
- The employment contract is a fixed-term contract conveniently used by the school to define and regulate its relations with its
teachers during their probationary period.
- This means that the school can conveniently limit the period of their relationship to any fixed term and to finish this relationship at
the end of that term. (Sasabihin ng school na tapos na yung term ng contract as a convenient way to terminate their relationship with
the employee.)
- The system of fixed-term contract is a system that operates during the probationary period and for this reason is subject to the terms
of Article 281 of the Labor Code.
- If the school is allowed to go on with this scheme, the inevitable effect of course is to wreck the scheme that the Constitution and
the Labor Code established to balance relationships between labor and management.
(This case compared with the Brent case):
- We have long settled the validity of a fixed-term contract in the case Brent School, Inc. v. Zamora that AMACC cited. Significantly,
Brenthappened in a school setting. Care should be taken, however, in reading Brent in the context of this case as Brent did not
involve any probationary employment issue; it dealt purely and simply with the validity of a fixed-term employment under the
terms of the Labor Code, then newly issued and which does not expressly contain a provision on fixed-term employment.
(On procedure, in case itanong ni Ma’am):
- Petitioners correct that as a rule in certiorari proceedings under Rule 65 of the Rules of Court, the CA does not assess and weigh
each piece of evidence introduced in the case. The CA only examines the factual findings of the NLRC to determine whether or not
the conclusions are supported by substantial evidence whose absence points to grave abuse of discretion amounting to lack or
excess of jurisdiction.
- CA erred in recognizing that grave abuse of discretion attended the NLRC's conclusion
(On acedemic freedom and management prerogative):
- A school enjoys academic freedom - a guarantee that enjoys protection from the Constitution no less. AMACC has the inherent
right to establish high standards of competency and efficiency for its faculty members in order to achieve and maintain academic
excellence. The authority to hire is likewise covered and protected by its management prerogative

E. When Terminated

RECRUITMENT AND PLACEMENT OF WORKERS

A. Recruitment Defined

1. People v. Panis

PEOPLE VS. PANIS

G.R. No. L-58674-77, July 11, 1990

Facts:

Four informations were filed against Serapio Abug alleging that he operates an employment agency by changing fees and expenses and
promising employment in Saudi Arabia to four (4) individuals without first securing a license from Ministry of Labor in violation of Art. 16
in relation to Art. 39 of Labor Code. Abug filed a Motion to Quash on the ground that the informations did not charge an offense because he
was accused of illegally recruiting only one person in each 4 informations. He claimed that under Art. 13(b) of Labor Code there would be
illegal recruitment only "whenever two or more persons are in any manner promised or offered any employment for a fee. " The Motion to
Quash was subsequently denied.

Petitioner’s contention:

Abug is being prosecuted under Art. 39 in relation to Art. 16 of Labor Code, hence, Art. 13(b) is not applicable. The requirement of two or
more persons is imposed only where the recruitment and placement consists of an offer or promise of employment to such persons and
always in consideration of a fee. The other acts mentioned in the body of the article may involve even only one person and are not necessarily
for profit.

Abug’s contention:

To constitute recruitment and placement, all the acts mentioned in this article should involve dealings with two or more persons as an
indispensable requirement.

HELD:

The proviso was intended neither to impose a condition on the basic rule nor to provide an exception thereto but merely to create a
presumption. The presumption is that the individual or entity is engaged in recruitment and placement whenever he or it is dealing with two
or more persons to whom, in consideration of a fee, an offer or promise of employment is made in the course of the "canvassing, enlisting,
contracting, transporting, utilizing, hiring or procuring (of) workers. "

The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of workers. Any of the acts
mentioned in the basic rule in Article 13(b) win constitute recruitment and placement even if only one prospective worker is involved. The
proviso merely lays down a rule of evidence that where a fee is collected in consideration of a promise or offer of employment to two or more
prospective workers, the individual or entity dealing with them shall be deemed to be engaged in the act of recruitment and placement. The
words "shall be deemed" create that presumption. Art. 13 (b) of Labor Code:

(b) Recruitment and placement' refers to any act of canvassing, enlisting, contracting, transporting, hiring, or procuring
workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for
profit or not: Provided, That any person or entity which, in any manner, offers or promises for a fee employment to two or
more persons shall be deemed engaged in recruitment and placement.

These are only speculations for lack of records of debates and deliberation since Labor Code has been enacted as a Presidential
Decree and not as a statute.

2. People v. Velasco

B. Articles 13 to 38 of the Labor Code

Chapter I
GENERAL PROVISIONS

ART. 13. Definitions. - (a) "Worker" means any member of the labor force, whether employed or unemployed.

(b) "Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers,
and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not: Provided, That
any person or entity which, in any manner, offers or promises for a fee, employment to two or more persons shall be deemed engaged in
recruitment and placement.

(c) "Private fee-charging employment agency" means any person or entity engaged in recruitment and placement of workers for a fee which
is charged, directly or indirectly, from the workers or employers or both.

(d) "License" means a document issued by the Department of Labor authorizing a person or entity to operate a private employment agency.

(e) "Private recruitment entity" means any person or association engaged in the recruitment and placement of workers, locally or overseas,
without charging, directly or indirectly, any fee from the workers or employers.

(f) "Authority" means a document issued by the Department of Labor authorizing a person or association to engage in recruitment and
placement activities as a private recruitment entity.

(g) "Seaman" means any person employed in a vessel engaged in maritime navigation.

(h) "Overseas employment" means employment of a worker outside the Philippines. chanroblesvirtuallawlibrary

(i) "Emigrant" means any person, worker or otherwise, who emigrates to a foreign country by virtue of an immigrant visa or resident permit
or its equivalent in the country of destination.

ART. 14. Employment promotion. - The Secretary of Labor shall have the power and authority:

(a) To organize and establish new employment offices in addition to the existing employment offices under the Department of Labor as the
need arises;

(b) To organize and establish a nationwide job clearance and information system to inform applicants registering with a particular
employment office of job opportunities in other parts of the country as well as job opportunities abroad;

(c) To develop and organize a program that will facilitate occupational, industrial and geographical mobility of labor and provide assistance
in the relocation of workers from one area to another; and

(d) To require any person, establishment, organization or institution to submit such employment information as may be prescribed by the
Secretary of Labor.
ART. 15. Bureau of Employment Services. - (a) The Bureau of Employment Services shall be primarily responsible for developing and
monitoring a comprehensive employment program. It shall have the power and duty:

1. To formulate and develop plans and programs to implement the employment promotion objectives of this Title;

2. To establish and maintain a registration and/or licensing system to regulate private sector participation in the recruitment and placement of
workers, locally and overseas, and to secure the best possible terms and conditions of employment for Filipino contract workers and
compliance therewith under such rules and regulations as may be issued by the Minister of Labor;

3. To formulate and develop employment programs designed to benefit disadvantaged groups and communities; chanroblesvirtuallawlibrary

4. To establish and maintain a registration and/or work permit system to regulate the employment of aliens;

5. To develop a labor market information system in aid of proper manpower and development planning;

6. To develop a responsive vocational guidance and testing system in aid of proper human resources allocation; and

7. To maintain a central registry of skills, except seamen.

(b) The regional offices of the Ministry of Labor shall have the original and exclusive jurisdiction over all matters or cases involving
employer-employee relations including money claims, arising out of or by virtue of any law or contracts involving Filipino workers for
overseas employment except seamen: Provided, That the Bureau of Employment Services may, in the case of the National Capital Region,
exercise such power, whenever the Minister of Labor deems it appropriate. The decisions of the regional offices of the Bureau of
Employment Services, if so authorized by the Minister of Labor as provided in this Article, shall be appealable to the National Labor
Relations Commission upon the same grounds provided in Article 223 hereof. The decisions of the National Labor Relations Commission
shall be final and inappealable. (Superseded by Exec. Order 797, May 1, 1982).

(c) The Minister of Labor shall have the power to impose and collect fees based on rates recommended by the Bureau of Employment
Services. Such fees shall be deposited in the National Treasury as a special account of the General Fund, for the promotion of the objectives
of the Bureau of Employment Services, subject to the provisions of Section 40 of Presidential Decree No. 1177.

ART. 16. Private recruitment. - Except as provided in Chapter II of this Title, no person or entity other than the public employment offices,
shall engage in the recruitment and placement of workers.

ART. 17. Overseas Employment Development Board. - An Overseas Employment Development Board is hereby created to undertake, in
cooperation with relevant entities and agencies, a systematic program for overseas employment of Filipino workers in excess of domestic
needs and to protect their rights to fair and equitable employment practices. It shall have the power and duty:

1. To promote the overseas employment of Filipino workers through a comprehensive market promotion and development program;

2. To secure the best possible terms and conditions of employment of Filipino contract workers on a government-to-government basis and to
ensure compliance therewith;

3. To recruit and place workers for overseas employment on a government-to-government arrangement and in such other sectors as policy
may dictate; and chanroblesvirtuallawlibrary

4. To act as secretariat for the Board of Trustees of the Welfare and Training Fund for Overseas Workers.

ART. 18. Ban on direct-hiring. - No employer may hire a Filipino worker for overseas employment except through the Boards and entities
authorized by the Secretary of Labor. Direct-hiring by members of the diplomatic corps, international organizations and such other employers
as may be allowed by the Secretary of Labor is exempted from this provision.

ART. 19. Office of Emigrant Affairs. - (a) Pursuant to the national policy to maintain close ties with Filipino migrant communities and
promote their welfare as well as establish a data bank in aid of national manpower policy formulation, an Office of Emigrant Affairs is
hereby created in the Department of Labor. The Office shall be a unit at the Office of the Secretary and shall initially be manned and operated
by such personnel and through such funding as are available within the Department and its attached agencies. Thereafter, its appropriation
shall be made part of the regular General Appropriations Decree.

(b) The office shall, among others, promote the well-being of emigrants and maintain their close link to the homeland by:

1) serving as a liaison with migrant communities;

2) provision of welfare and cultural services;

3) promote and facilitate re-integration of migrants into the national mainstream;

4) promote economic; political and cultural ties with the communities; and

5) generally to undertake such activities as may be appropriate to enhance such cooperative links.

ART. 20. National Seamen Board. - (a) A National Seamen Board is hereby created which shall develop and maintain a comprehensive
program for Filipino seamen employed overseas. It shall have the power and duty:

1. To provide free placement services for seamen;

2. To regulate and supervise the activities of agents or representatives of shipping companies in the hiring of seamen for overseas
employment and secure the best possible terms of employment for contract seamen workers and secure compliance therewith;

3. To maintain a complete registry of all Filipino seamen.

(b) The Board shall have original and exclusive jurisdiction over all matters or cases including money claims, involving employer-employee
relations, arising out of or by virtue of any law or contracts involving Filipino seamen for overseas employment. The decisions of the Board
shall be appealable to the National Labor Relations Commission upon the same grounds provided in Article 223 hereof. The decisions of the
National Labor Relations Commission shall be final and inappealable.

ART. 21. Foreign service role and participation. - To provide ample protection to Filipino workers abroad, the labor attaches, the labor
reporting officers duly designated by the Secretary of Labor and the Philippine diplomatic or consular officials concerned shall, even without
prior instruction or advice from the home office, exercise the power and duty: chanroblesvirtuallawlibrary

(a) To provide all Filipino workers within their jurisdiction assistance on all matters arising out of employment;

(b) To insure that Filipino workers are not exploited or discriminated against;

(c) To verify and certify as requisite to authentication that the terms and conditions of employment in contracts involving Filipino workers
are in accordance with the Labor Code and rules and regulations of the Overseas Employment Development Board and National Seamen
Board;

(d) To make continuing studies or researches and recommendations on the various aspects of the employment market within their
jurisdiction;

(e) To gather and analyze information on the employment situation and its probable trends, and to make such information available; and

(f) To perform such other duties as may be required of them from time to time.

ART. 22. Mandatory remittance of foreign exchange earnings. - It shall be mandatory for all Filipino workers abroad to remit a portion of
their foreign exchange earnings to their families, dependents, and/or beneficiaries in the country in accordance with rules and regulations
prescribed by the Secretary of Labor.

ART. 23. Composition of the Boards. - (a) The OEDB shall be composed of the Secretary of Labor and Employment as Chairman, the
Undersecretary of Labor as Vice-Chairman, and a representative each of the Department of Foreign Affairs, the Department of National
Defense, the Central Bank, the Department of Education, Culture and Sports, the National Manpower and Youth Council, the Bureau of
Employment Services, a workers’ organization and an employers’ organization and the Executive Director of the OEDB as members.

(b) The National Seamen Board shall be composed of the Secretary of Labor and Employment as Chairman, the Undersecretary of Labor as
Vice-Chairman, the Commandant of the Philippine Coast Guard, and a representative each of the Department of Foreign Affairs, the
Department of Education, Culture and Sports, the Central Bank, the Maritime Industry Authority, the Bureau of Employment Services, a
national shipping association and the Executive Director of the NSB as members.

The members of the Boards shall receive allowances to be determined by the Board which shall not be more than P2,000.00 per month.

(c) The Boards shall be attached to the Department of Labor for policy and program coordination. They shall each be assisted by a Secretariat
headed by an Executive Director who shall be a Filipino citizen with sufficient experience in manpower administration, including overseas
employment activities. The Executive Director shall be appointed by the President of the Philippines upon the recommendation of the
Secretary of Labor and shall receive an annual salary as fixed by law. The Secretary of Labor shall appoint the other members of the
Secretariat.

(d) The Auditor General shall appoint his representative to the Boards to audit their respective accounts in accordance with auditing laws and
pertinent rules and regulations. chanroblesvirtuallawlibrary

ART. 24. Boards to issue rules and collect fees. - The Boards shall issue appropriate rules and regulations to carry out their functions. They
shall have the power to impose and collect fees from employers concerned, which shall be deposited in the respective accounts of said Boards
and be used by them exclusively to promote their objectives.

Chapter II
REGULATION OF RECRUITMENT AND PLACEMENT ACTIVITIES

ART. 25. Private sector participation in the recruitment and placement of workers. - Pursuant to national development objectives and in order
to harness and maximize the use of private sector resources and initiative in the development and implementation of a comprehensive
employment program, the private employment sector shall participate in the recruitment and placement of workers, locally and overseas,
under such guidelines, rules and regulations as may be issued by the Secretary of Labor.

ART. 26. Travel agencies prohibited to recruit. - Travel agencies and sales agencies of airline companies are prohibited from engaging in the
business of recruitment and placement of workers for overseas employment whether for profit or not.

ART. 27. Citizenship requirement. - Only Filipino citizens or corporations, partnerships or entities at least seventy-five percent (75%) of the
authorized and voting capital stock of which is owned and controlled by Filipino citizens shall be permitted to participate in the recruitment
and placement of workers, locally or overseas.

ART. 28. Capitalization. - All applicants for authority to hire or renewal of license to recruit are required to have such substantial
capitalization as determined by the Secretary of Labor.

ART. 29. Non-transferability of license or authority. - No license or authority shall be used directly or indirectly by any person other than the
one in whose favor it was issued or at any place other than that stated in the license or authority be transferred, conveyed or assigned to any
other person or entity. Any transfer of business address, appointment or designation of any agent or representative including the
establishment of additional offices anywhere shall be subject to the prior approval of the Department of Labor.

ART. 30. Registration fees. - The Secretary of Labor shall promulgate a schedule of fees for the registration of all applicants for license or
authority.

ART. 31. Bonds. - All applicants for license or authority shall post such cash and surety bonds as determined by the Secretary of Labor to
guarantee compliance with prescribed recruitment procedures, rules and regulations, and terms and conditions of employment as may be
appropriate.

ART. 32. Fees to be paid by workers. - Any person applying with a private fee-charging employment agency for employment assistance shall
not be charged any fee until he has obtained employment through its efforts or has actually commenced employment. Such fee shall be
always covered with the appropriate receipt clearly showing the amount paid. The Secretary of Labor shall promulgate a schedule of
allowable fees.

ART. 33. Reports on employment status. - Whenever the public interest requires, the Secretary of Labor may direct all persons or entities
within the coverage of this Title to submit a report on the status of employment, including job vacancies, details of job requisitions,
separation from jobs, wages, other terms and conditions and other employment data.

ART. 34. Prohibited practices. - It shall be unlawful for any individual, entity, licensee, or holder of authority:

(a) To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the
Secretary of Labor, or to make a worker pay any amount greater than that actually received by him as a loan or advance;

(b) To furnish or publish any false notice or information or document in relation to recruitment or employment;

(c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license
or authority under this Code.

(d) To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another unless the transfer is
designed to liberate the worker from oppressive terms and conditions of employment;
(e) To influence or to attempt to influence any person or entity not to employ any worker who has not applied for employment through his
agency;

(f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the
Philippines; chanroblesvirtuallawlibrary

(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized representatives;

(h) To fail to file reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs,
departures and such other matters or information as may be required by the Secretary of Labor.

(i) To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by
the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor;

(j) To become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the
management of a travel agency; and

(k) To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations other than those
authorized under this Code and its implementing rules and regulations.

ART. 35. Suspension and/or cancellation of license or authority. - The Minister of Labor shall have the power to suspend or cancel any
license or authority to recruit employees for overseas employment for violation of rules and regulations issued by the Ministry of Labor, the
Overseas Employment Development Board, or for violation of the provisions of this and other applicable laws, General Orders and Letters of
Instructions.

Chapter III
MISCELLANEOUS PROVISIONS

ART. 36. Regulatory power. - The Secretary of Labor shall have the power to restrict and regulate the recruitment and placement activities of
all agencies within the coverage of this Title and is hereby authorized to issue orders and promulgate rules and regulations to carry out the
objectives and implement the provisions of this Title.

ART. 37. Visitorial Power. - The Secretary of Labor or his duly authorized representatives may, at any time, inspect the premises, books of
accounts and records of any person or entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on
violation of any provisions of this Title.

ART. 38. Illegal recruitment. -

(a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees
or non-holders of authority, shall be deemed illegal and punishable under Article 39 of this Code. The Department of Labor and Employment
or any law enforcement officer may initiate complaints under this Article.

(b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage and shall
be penalized in accordance with Article 39 hereof.

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating
with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal
recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group.

(c) The Secretary of Labor and Employment or his duly authorized representatives shall have the power to cause the arrest and detention of
such non-licensee or non-holder of authority if after investigation it is determined that his activities constitute a danger to national security
and public order or will lead to further exploitation of job-seekers. The Secretary shall order the search of the office or premises and seizure
of documents, paraphernalia, properties and other implements used in illegal recruitment activities and the closure of companies,
establishments and entities found to be engaged in the recruitment of workers for overseas employment, without having been licensed or
authorized to do so.

C. Migrant Workers and Overseas Filipino Act of 19959

I. See Definitions - RA 8042

SEC. 3. DEFINITIONS. - For purposes of this Act:

(a) "Migrant worker" refers to a person who is to be engaged, is engaged or has been engaged in a renumerated activity in a state of which he
or she is not a legal resident to be used interchangeably with overseas Filipino worker.

(b) "Gender-sensitivity" shall mean cognizance of the inequalities and inequities prevalent in society between women and men and a
commitment to address issues with concern for the respective interests of the sexes.

(c) "Overseas Filipinos" refers to dependents of migrant workers and other Filipino nationals abroad who are in distress as mentioned in
Sections 24 and 26 of this Act.

SEC. 24. LEGAL ASSISTANT FOR MIGRANT WORKERS AFFAIRS. - There is hereby created the position of Legal Assistant for
Migrant Workers Affairs under the Department of Foreign Affairs who shall be primarily responsible for the provision and overall
coordination of all legal assistance services to be provided to Filipino migrant workers as well as overseas Filipinos in distress. He shall have
the rank, salary and privileges equal to that of an undersecretary of said Department.

The said Legal Assistant for Migrant Workers Affairs shall be appointed by the President and must be of proven competence in the field of
law with at least ten (10) years of experience as a legal practitioner and must not have been a candidate to an elective office in the last local or
national elections.

Among the functions and responsibilities of the aforesaid Legal Assistant are:

(a) To issue the guidelines, procedures and criteria for the provisions of legal assistance services to Filipino migrant workers;

(b) To establish close linkages with the Department of Labor and Employment, the POEA, the OWWA and other government agencies
concerned, as well as with non-governmental organizations assisting migrant workers, to ensure effective coordination and cooperation in the
provision of legal assistance to migrant workers;

(c) To tap the assistance of reputable law firms and the Integrated Bar of the Philippines and other bar associations to complement the
government's efforts to provide legal assistance to migrant workers;

(d) To administer the legal assistance fund for migrant workers established under Section 25 hereof and to authorize disbursements there
from in accordance with the purposes for which the fund was set up; and

(e) To keep and maintain the information system as provided in Section 20.

The legal Assistant for Migrant Workers Affairs shall have authority to hire private lawyers, domestic or foreign, in order to assist him in the
effective discharge of the above functions.

SEC. 26. USES OF THE LEGAL ASSISTANCE FUND. - The Legal Assistance Fund created under the preceeding section shall be used
exclusively to provide legal services to migrant workers and overseas Filipinos in distress in accordance witht the guidelines, criteria and
procedures promulgated in accordance with Section 24 (a) hereof. The expenditures to be charged against the Fund shall include the fees for
the foreign lawyers to be hired by the Legal Assistance for Migrant Workers Affairs to represent migrant workers facing charges abroad, bail
bonds to secure the temporary release of workers under detention, court fees and charges and other litigation expenses.

II. Direct Hires (walang naka lagay sa syllabus)

III. Solidary Liability

1. Pentagon International Shipping Services, Inc. v. CA

G.R. No. 169158 July 1, 2015

PENTAGON INTERNATIONAL SHIPPING SERVICES, INC., Petitioner,
vs.
THE COURT OF APPEALS, FILOMENO V. MADRIO, LUISITO G. RUBIANO, JDA INTER-PHIL. MARITIME SERVICES
CORPORATION, Respondent.

Topic: Solidary Liability

Facts:
○ Pentagon International Shipping Services, Inc. (domestic corp) was a private manning agency licensed by the Philippine Overseas
Employment Administration (POEA) to engage in the recruitment of seafarers to service the crewing and personnel management
needs of shipping companies accredited to it.
○ JDA Inter-Phil (domestic corp) ganon same sila so medyo gaya gaya
 ○ March 1998: Pentagon hired Madrio (chief officer) and Rubiano (2nd engineer) for Baleen Marine (corpo based in Singapore)
○ After their 10-month contract, pinauwi na sila

Madrio and Rubiano’s Allegations:

○ Non-payment of Baleen from No. 1998 - March 1999
○ Underpayment
○ Reduced gross monthly salary by 20% kahit walang approval ni POEA

Pentagon’s Allegations:
○ “Hindi na kami manning agency ni Baleen, since October 1, 1998 pa”
○ “Baleen had appointed JDA Inter-Phil as its new local agent on October 9, 1998”

JDA’s allegations:
○ Nag apply kami with POEA for the transfer and accreditation of Baleen’s vessels, but na withdraw the application and did not
execute an affidavit of assumption and responsibility (which is required)
○ So Pentagon continued to be jointly and severally liable with Baleen Marine for the money claims of Madrio and Rubiano

Sa mga rulings nila, wala talagang explanation (SKL baka ma-judge ang digesting skills ko)
Labor Arbiter:
○ JDA Inter-Phil jointly and solidarily liable with Baleen

NLRC:
○ Reversed. In favor of JDA
○ Nag appeal si Pentagon - so NLRC reversed itself hahaha and naging in favor of Pentagon na

Court of Appeals:
○ In favor of JDA

Issue: who is solidarily liable with Baleen Marine for the money claims and other benefits of Madrio and Rubiano ba talaga???

Supreme Court:
○ Pentagon.
○ Sabi ni Court. Wala daw nag ayos between the manning companies, nag tuturuan lang daw sila (SKL)

Law:
Section 2. Requirements for Accreditation. An agency applying for the accreditation of its principals or projects shall submit the following:
b. For a Manning Agency for its Principals
(1) Authenticated special power of attorney and manning agreement;
(2) Crew complement and wages;
(3) List of vessels and their particulars; and
(4) Other documents which the Administration may find necessary.

Section 6. Transfer of Accreditation. The accreditation of a principal may be transferred to another agency provided that transfer shall not
involve any diminution of wages and benefits of workers

The transferee agency in these instances shall comply with the requirements for accreditation and shall assume full and complete
responsibility to all contractual obligations of the principals to its workers originally recruited and processed by the former agency.

Prior to the transfer of accreditation, the Administration shall notify the previous agency and principal of such application.

○ As per the laws, before a transfer of accreditation can be effected, the transferee agency should likewise have to comply with the
requirements for accreditation contained in Section 2
○ there was no effective transfer of agency from Pentagon to JDA Inter-Phil.
○ Even assuming na hindi nag withdraw si JDA, wala paring transfer because hindi sila nag pasa nung requirements - JDA Inter-Phil
did not submit the required authenticated special power of attorney and manning agreement
 ○ the special power of attorney and manning agreement were necessary for the validity or enforceability of the transfer of
accreditation - hindi siya ma su supply ng minutes of meetings lang (as argued by Pentagon)
○ The provisions of the POEA Rules and Regulations to the effect that the manning agreement extends up to and until the expiration
of the employment contracts of the employees recruited and employed pursuant to the recruitment agreement are also clear enough.
○ Pentagon is not exempt from its liabilities and responsibilities towards Madrio and Rubiano.
○ Joint and solidary liability is meant to assure aggrieved workers of immediate and sufficient payment of what is due them.
Review from Obli ☺: solidary liability (of debtors) allows the creditors to collect the whole obligation from either (Pentagon
or Baleen). Subject to reimbursement nalang kung sino nag shoulder ng buong cost.
○ The fact that petitioner and its principal have already terminated their agency agreement does not relieve the former of its liability.
☺ Reasoning: “the manning agreement between the local agent and its foreign principal are not coterminous with the term of
such agreement so that if either or both of the parties decide to end the agreement, the responsibilities of such parties
towards the contracted employees under the agreement do not at all end, but the same extends up to and until the
expiration of the, employment contracts of the employees recruited “
○ Madrio and Rubiano should not be prejudiced by any; purported transfer of accreditation or agreement that they were not privy to.
○ IN FAVOR OF JDA.

2. Datuman v. First Cosmopolitan Manpower

SANTOSA B. DATUMAN, petitioner,

vs. FIRST COSMOPOLITAN MANPOWER AND PROMOTION SERVICES, INC., respondent.

G.R. No. 156029 November 14, 2008

https://lawphil.net/judjuris/juri2008/nov2008/gr_156029_2008.html

Subject Matter: Recruitment and Placement of Workers > Migrant Workers and Overseas Filipino Act > Solidary Liability

Nature of the Action: Petition for review on certiorari under Rule 45

FACTS:

In 1989, respondent First Cosmopolitan Manpower & Promotion Services, Inc. recruited petitioner Santosa B. Datuman to work abroad under
the following terms and conditions:

Site of employment - Bahrain

Employees Classification/Position/Grade - Saleslady
Basic Monthly Salary - US$370.00
Duration of Contract - One (1) year
Foreign Employer - Mohammed Sharif Abbas Ghulam Hussain

Datuman was deployed to Bahrain after paying the required placement fee. However, her employer Mohammed Hussain took her passport
when she arrived there; and instead of working as a saleslady, she was forced to work as a domestic helper with a salary of Forty Bahrain
Dinar (BD40.00), equivalent only to One Hundred US Dollars (US$100.00)

On September 1, 1989, her employer compelled her to sign another contract, transferring her to another employer as housemaid with a salary
of BD40.00 for the duration of two (2) years.4

She pleaded with him to give her a release paper and to return her passport but her pleas were unheeded.

Left with no choice, she continued working against her will. Worse, she even worked without compensation from September 1991 to April
1993 because of her employer's continued failure and refusal to pay her salary despite demand.

In May 1993, she was able to finally return to the Philippines through the help of the Bahrain Passport and Immigration Department.

Petitioner filed a complaint before the POEA Adjudication Office against respondent for underpayment and nonpayment of salary, vacation
leave pay and refund of her plane fare

LA’s Ruling
Labor Arbiter Jovencio Mayor, Jr. rendered a Decision finding respondent liable for violating the terms of the Employment Contract and
ordering it to pay petitioner: (a) the amount of US$4,050.00, or its equivalent rate prevailing at the time of payment, representing her salary
differentials for fifteen (15) months; and, (b) the amount of BD 180.00 or its equivalent rate prevailing at the time of payment, representing
the refund of plane ticket

When respondent agency deviated from the terms of the contract by assigning the position of a housemaid to complainant instead of a
saleslady as agreed upon in the POEA-approved Contract of Employment, respondent Agency committed a breach of said Employment
Contract

NLRC’s Ruling
The NLRC, Second Division, issued a Decision 10 affirming with modification the Decision of Labor Arbiter Mayor, Jr., by reducing the
award of salary differentials from US$4,050.00 to US$2,970.00

The Commission found that the claims for salary differentials accruing earlier than April of 1993 had indeed prescribed.

CA’s Ruling
CA reversed the NLRC and Labor Arbiter’s decision.

The local agency shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with
the implementation of the contract. Which contract? Upon a judicious consideration, we so hold that it is only in connection with the first
contract.

ISSUE:
Whether the CA erred in not holding respondent liable for petitioner's money claims pursuant to their Contract of Employment.

CONTENTIONS:

Of Respondent –
CA is correct in ruling that it is not liable for the monetary claims of petitioner as the claim had already prescribed and had no factual basis.

it was petitioner herself who violated their Contract of Employment when she signed another contract in Bahrain

RATIO:

On whether respondent is solidarily liable for petitioner's monetary claims

Section 1 of Rule II of the POEA Rules and Regulations states that:

Section 1. Requirements for Issuance of License. - Every applicant for license to operate a private employment agency or manning
agency shall submit a written application together with the following requirements:
xxx
f. A verified undertaking stating that the applicant:
xxx
(3) Shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the
implementation of the contract; including but not limited to payment of wages, death and disability compensation and repatriation.

The above provisions are clear that the private employment agency shall assume joint and solidary liability with the employer.

This Court has, time and again, ruled that private employment agencies are held jointly and severally liable with the foreign-based employer
for any violation of the recruitment agreement or contract of employment.

This joint and solidary liability imposed by law against recruitment agencies and foreign employers is meant to assure the aggrieved worker
of immediate and sufficient payment of what is due him. This is in line with the policy of the state to protect and alleviate the plight of the
working class.

The CA disregarded the aforecited provision of the law and the policy of the state when it reversed the findings of the NLRC and the Labor
Arbiter. As the agency which recruited petitioner, respondent is jointly and solidarily liable with the latter's principal employer abroad for her
(petitioner's) money claims. Respondent cannot, therefore, exempt itself from all the claims and liabilities arising from the implementation of
their POEA-approved Contract of Employment.

The signing of the "substitute" contracts with the foreign employer/principal before the expiration of the POEA-approved contract and any
continuation of petitioner's employment beyond the original one-year term, against the will of petitioner, are continuing breaches of the
original POEA-approved contract.

To be sure, Republic Act 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 diminution in the salary of petitioner from US$370.00 to US$100 (BD 40.00) per month is void for violating the POEA-approved
contract which set the minimum standards, terms, and conditions of her employment. Consequently, the solidary liability of respondent with
petitioner's foreign employer for petitioner's money claims continues although she was forced to sign another contract in Bahrain.

On whether petitioner's claims for underpaid salaries have prescribed

We find that the NLRC correctly computed the salary differential due to petitioner at US$2,970.00 (US$370.00 as approved salary rate -
US$100.00 as salary received = US$290 as underpaid salary per month x 11 months). However, it should be for the period May 31, 1992 to
April 1993 and not May 1993 to April 1994 as erroneously stated in the NLRC's Decision.

RULING:

The assailed Decision of the Court of Appeals dated August 7, 2002 and Resolution dated November 14, 2002 in CA-G.R. SP No. 59825 are
REVERSED AND SET ASIDE.

The Decision of the National Labor Relations Commission dated February 24, 2000 is REINSTATED with a qualification with respect to the
award of salary differentials, which should be granted for the period May 31, 1992 to April 1993 and not May 1993 to April 1994.

D. Prohibited Entries

1. Articles 16, 18, 25, 26 of the Labor Code (please refer dun sa provisions sa letter B)

2. Part II, Rule 1, Section 2 of the 2002 POEA Rules and Regulations (Land-based)

PART II
LICENSING AND REGULATION

RULE I
PARTICIPATION OF THE PRIVATE SECTOR IN THE
OVERSEAS EMPLOYMENT PROGRAM

Section 2. Disqualification. The following are not qualified to engage in the business of recruitment and placement of Filipino workers
overseas:

a. Travel agencies and sales agencies of airline companies;

b. Officers or members of the Board of any corporation or members in a partnership engaged in the business of a travel agency;

c. Corporations and partnerships, when any of its officers, members of the board or partners, is also an officer, member of the board or
partner of a corporation or partnership engaged in the business of a travel agency;

d. Persons, partnerships or corporations which have derogatory records, such as but not limited to the following:
1) Those certified to have derogatory record or information by the National Bureau of Investigation or by the Anti-Illegal Recruitment
Branch of the POEA;

2) Those against whom probable cause or prima facie finding of guilt for illegal recruitment or other related cases exists;

3) Those convicted for illegal recruitment or other related cases and/or crimes involving moral turpitude; and

4) Those agencies whose licenses have been previously revoked or cancelled by the Administration for violation of RA 8042, PD 442 as
amended and their implementing rules and regulations as well as these rules and regulations.

All applicants for issuance/renewal of license shall be required to submit clearances from the National Bureau of Investigation and Anti-
illegal Recruitment Branch, POEA, including clearances for their respective officers and employees.

e. Any official or employee of the DOLE, POEA, OWWA, DFA and other government agencies directly involved in the implementation of
R.A. 8042, otherwise known as Migrant Workers and Overseas Filipino Act of 1995 and/or any of his/her relatives within the fourth civil
degree of consanguinity or affinity; and

f. Persons or partners, officers and Directors of corporations whose licenses have been previously
cancelled or revoked for violation of recruitment laws.

3. Part II, Rule 1, Section 2 of the 2003 POEA Rules and Regulations (Seafarers)

PART II
LlCENSING AND REGULATION

RULE I
PARTICIPATION OF PRIVATE SECTOR IN THE
MARITIME EMPLOYMENT PROGRAM

Section 2. Disqualification. The following are not qualified to engage in the business of recruitment and placement of Filipino seafarers.
a. Travel agencies and sales agencies of airline companies;

b. Officers or members of the Board of any corporation or members in a partnership engaged in the business of a travel agency;

c. Corporations and partnerships, when any of its officers, members of the board or partners, is also an officer, member of the board or
partner of a corporation or partnership engaged in the business of a travel agency;

d. Persons, partnerships or corporations which have derogatory records, such as but not limited to the following:

1. Those certified to have a derogatory record by the National Bureau of Investigation or by the Anti-Illegal Recruitment Branch of the
POEA;

2. Those against whom probable cause or prima facie finding of guilt for illegal recruitment or other related cases exists;

3. Those convicted for illegal recruitment or other related cases and/or crimes involving moral turpitude;

4. Those agencies whose licenses have been previously revoked or cancelled by the Administration for violation of RA 8042, PD 442, as
amended, and their implementing rules and regulations as well as these rules and regulations.

All applicants for issuance/renewal of license shall be required to submit clearances from the National Bureau of Investigation and Anti-
illegal Recruitment Branch, POEA, including clearances for their respective officers and employees.

e. Any official or employee of the DOLE, POEA, OWWA, DFA and other government agencies directly involved in the implementation of
R.A. 8042 and/or any of his/her relatives within the fourth civil degree of consanguinity or affinity; and

f. Persons, partners, officers and directors of corporations whose licenses have been previously cancelled or revoked for violation of
recruitment laws.

E. Government Regulations

I. Licensing
 1. Articles 27 to 31 of the Labor Code (please refer nalang sa provisions under letter B)

2. 2002 POEA Rules, Part II, Rule II, Sections 1, 4, 6, and 7

PART II
Licensing and Regulation

RULE II
Issuance of License

SECTION 1. Requirements for Licensing. — Every applicant for license to operate a private employment agency shall submit a written
application together with the following requirements:

a. A certified copy of the Articles of Incorporation or of Partnership duly registered with the Securities and Exchange Commission (SEC),
in the case of corporation or partnership or Certificate of Registration of the firm or business name with the Department of Trade and
Industry (DTI), in the case of a single proprietorship;

b. Proof of financial capacity: In the case of a single proprietorship or partnership, verified income tax returns of the proprietors or partners
for the past two (2) years and a savings account certificate showing a maintaining balance of not less than P500,000.00, provided that the
applicant should submit an authority to examine such bank deposit.

c. In the case of a newly organized corporation, savings account certificate showing a maintaining balance of not less than P500,000.00
with authority to examine the same. For an existing corporation, submission of a verified financial statement, corporate tax returns for the
past two (2) years and savings account certificate showing a maintaining balance of not less than P500,000.00 with the corresponding
authority to examine such deposit.

d. Proof of marketing capability

1. A duly executed Special Power of Attorney and/or a duly concluded Recruitment/Service Agreement;

2. Manpower request(s) or visa certification from new employer(s)/principal(s) for not less than one hundred (100) workers; and

3. Certification from Pre-Employment Services Office of POEA on the existence of new market.

e. Clearance of all members of the Board of Directors, partner, or proprietor of the applicant agency from the National Bureau of
Investigation (NBI) and other government agencies as may be required; appropriate clearance in case of persons with criminal cases;
provided that where the member or partner concerned is a foreigner, clearance from his country of origin shall be required.

f. A verified undertaking stating that the applicant:

1. Shall select only medically and technically qualified recruits;

2. Shall assume full and complete responsibility for all claims and liabilities which may arise in connection with the use of the license;

3. Shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the
implementation of the contract, including but not limited to payment of wages, death and disability compensation and repatriations;

4. Shall guarantee compliance with the existing labor and social legislations of the Philippines and of the country of employment of the
recruited workers;

5. Shall assume full and complete responsibility for all acts of its officials, employees and representatives done in connection with
recruitment and placement;

6. Shall negotiate for the best terms and conditions of employment;

7. Shall disclose the full terms and conditions of employment to the applicant workers;

8. Shall deploy at least 100 workers to its new markets within one (1) year from the issuance of its license;

9. Shall provide orientation on recruitment procedures, terms and conditions and other relevant information to its workers and provide
facilities therefor; and

10. Shall repatriate the deployed workers and his personal belongings when the need arises.
For the purpose of compliance with item (1), the agency may require the worker to undergo trade testing and medical examination only after
the worker has been pre-qualified for employment.

g. In case of corporation or partnership, verified undertaking by its officers, directors, partners that they will be jointly and severally liable
with the company over claims arising from employer-employee relationship.

h. Individual income tax return of the proprietor, partners, stockholders/incorporators, as the case may be, for the past two (2) years.

i. Proof of possession by the sole proprietor, partner or chief executive officer, as the case may be, of a bachelor's degree and three years
business experience.

j. List of all officials and personnel involved in the recruitment and placement, together with their appointment, bio-data and two (2) copies
of their passport-size pictures as well as their clearances from the National Bureau of Investigation and the Anti-illegal Recruitment Branch
of the Administration.

k. Copy of contract of lease or proof of building ownership, indicating the office address, providing for an office space of at least one
hundred (100) square meters.

l. Proof of publication of notice of the application with the names of the proprietor, partners, incorporators and officers.

m. Certificate of attendance of owner and/or chief executive officer in a pre-application seminar conducted by the Administration.

Only applications with complete supporting documents shall be processed. (Section 1, Rule II, Part II, Ibid.).

SECTION 4. Payment of Fees and Posting of Bonds. — Upon approval of the application, the applicant shall pay a license fee of
P50,000.00. It shall submit an Escrow Agreement in the amount of P1,000,000.00, confirmation of escrow deposit with an accredited
reputable bank and a surety bond of P100,000.00 from a bonding company acceptable to the Administration and accredited with the
Insurance Commission.
Agencies with existing licenses shall, within four years from effectivity hereof, increase their Escrow Deposit to One Million Pesos

The bonds and escrow shall answer for all valid and legal claims arising from violations of the conditions for the grant and use of the license,
and/or accreditation and contracts of employment. The bonds and escrow shall likewise guarantee compliance with the provisions of the
Code and its implementing rules and regulations relating to recruitment and placement, the Rules of the Administration and relevant
issuances of the Department and all liabilities which the Administration may impose. The surety bonds shall include the condition "that
notice to the principal is notice to the surety and that any judgment against the principal in connection with matters falling under
POEA's/NLRC's jurisdiction shall be binding and conclusive on the surety. The surety bonds shall cover the validity period of the license.
(Section 4, Rule II, Part II, Ibid.).

SECTION 6. Validity of the License. — Except in case of a provisional license, every license shall be valid for four (4) years from the date
of issuance unless sooner cancelled, revoked or suspended for violation of applicable Philippine law, these rules and other pertinent
issuances. Such license shall be valid only at the place/s stated therein and when used by the licensed person, partnership or corporation.
(Section 6, Rule II, Part II, Ibid.).

SECTION 7. Non-Transferability of License. — No license shall be transferred, conveyed or assigned to any person, partnership or
corporation. It shall not be used directly or indirectly by any person, partnership or corporation other than the one in whose favor it was
issued.
In case of death of the sole proprietor and to prevent disruption of operation to the prejudice of the interest of legitimate heirs, the license may
be extended upon request of the heirs, to continue only for the purpose of winding up business operations. (Section 7, Rule II, Part II, Ibid.).

3. Republic v. Humanlink Manpower Consultants, Inc.

Aware that overseas workers are vulnerable to exploitation, the State sought to protect the interests and well-being of these workers with
creation of specialized bodies such as the POEA under the direct supervision of the DOLE Secretary

FACTS:

Renelson Carlos applied at Worldview Internation Services Corporation as a heavy equipment driver with a salary of U$700 in Doha, Qatar.
His recruiting agency Humanlink Manpower Consultants, Inc. made him sign an employment contract stating that he was going to work as a
duct man instead of the position he applied for but he was told that this is only for purposes of entering the country. Humanlink promised that
he would work as a heavy equipment driver as applied for. However, upon his arrival in Doha, he worked as a duct installer with a salary of
U$400. Carlos filed a complaint with the Philippine Overseas Labor Office but the complaint was not acted upon. This prompted him to
speak with the Qatar Labor Office where he discussed his grievance. Consequently, Carlos was informed that his visa was cancelled and that
he was being repatriated at his own expense.

POEA Adjudication Office found Carlos’ assertions credible. POEA cancelled Humanlink’s license and automatically disqualified it from
participating in any overseas employment program.

ISSUE:

Whether the POEA can automatically disqualify officers and directors from participating in the government's overseas employment program
upon the cancellation of a license.

RULING:

Yes. One of the roles of the POEA is the regulation and adjudication of private sector participation in the recruitment and placement of
overseas workers. Article 25 of the Labor Code, as amended, reads that pursuant to national development objectives and in order to harness
and maximize the use of private sector resources and initiative in the development and implementation of a comprehensive employment
program, the private employment sector shall participate in the recruitment and placement of workers, locally and overseas, under such
guidelines, rules and regulations as may be issued by the Secretary of Labor.

This is echoed in Article 35 of the Labor Code, as amended, and Section 23(b.l), R.A. No. 8042 as amended by R.A. No. 9422, where the
legislature empowered the DOLE and POEA to regulate private sector participation in the recruitment and overseas placement of workers, to
wit: The Secretary of Labor shall have the power to suspend or cancel any license or authority to recruit employees for overseas employment
for violation of rules and regulations issued by the Secretary of Labor, the Overseas Employment Development Board, and the National
Seamen Board, or for violation of the provisions of this and other applicable laws, General Orders and Letters of Instruction.

Section 23 (b.1) states that the Philippine Overseas Employment Administration shall regulate private sector participation in the recruitment
and overseas placement of workers by setting up a licensing and registration system.

Sections 1 and 2, Rule I, Part II of the POEA Rules and Regulations provide the qualifications and disqualifications for private sector
participation in the overseas employment program. Section 1 of this rule provides that for persons to participate in recruitment and placement
of land-based overseas Filipino workers, they must not possess any of the disqualifications as provided in Section

2. xxx

Section 2. Disqualification. The following are not qualified to engage in the business of recruitment and placement of Filipino
workers overseas.

d. Persons, partnerships or corporations which have derogatory records, such as but not limited to the following:

xxx Those agencies whose licenses have been previously revoked or cancelled by the Administration for violation of RA 8042, PD
442 as amended and their implementing rules and regulations as well as these rules and regulations.

f. Persons or partners, officers and Directors of corporations whose licenses have been previously cancelled or revoked for violation
of recruitment laws. (Emphases supplied)

Thus, upon the cancellation of a license, persons, officers and directors of the concerned corporations are automatically prohibited from
engaging in recruiting and placement of land-based overseas Filipino workers. The grant of a license is a privilege and not a right thus
making it a proper subject of its regulatory powers.

II. Workers’ Fee

III. Reports and employment information

F. Prohibited Acts

G. Illegal Recruitment

1. People v. Mateo
Sometime during the period from January to March 1998, the five private complainants, (Abel), (Emilio), (Victorio), (Manuel) and (Virgiiio), met
appellants on separate occasions at Plaza Ferguzon, Malate to apply for overseas employment. Appellant Mateo, representing himself to have a tie-up
with some Japanese firms, promised them employment in Japan as conversion mechanics, welders, or fitters for a fee. Appellants also promised that
they could facilitate private complainants' employment as direct hires and assured their departure within three weeks. However, after the private
complainants paid the required fees ranging from P18,555.00 to P25,000.00, appellants failed to secure any overseas employment for them.
Appellants likewise failed to return private complainants' money. This prompted Manuel to go to POEA where he was issued a Certification stating
that appellants are not licensed to recruit applicants for overseas employment. Thereupon, the private complainants filed their Complaint and
executed their respective affidavits with NBI, who referred the charges to DOJ which subsequently found probable cause against appellants for large
scale illegal recruitment and estafa and accordingly filed the corresponding Informations

Appellants proffered denials. Mateo claimed that he is a legitimate car importer and not a recruiter. Lapiz, on the other hand, denied knowing any of
the private complainants whom she claimed to have met for the first time at the Prosecutor's Office.

RTC, CA: guilty of (1) ILLEGAL RECRUITMENT IN LARGE SCALE and (2) five (5) counts of ESTAFA

Appellants essentially claimed that the prosecution failed to prove the elements of the crimes for which they were charged. They contended that Abel
has not shown any receipt to prove that they received money from him; that there is likewise no proof that Virgilio borrowed money from a friend of
his aunt which money he, in turn, gave to them; that the testimony of Emilio that appellants were holding office inside the van of Abel cannot be
easily accepted; and that their transactions with Manuel and Victorio were limited to the processing of their travel documents.

RULING:

As to Illegal Recruitment in Large Scale: ALL ELEMENTS WERE PROVEN

The offense of illegal recruitment in large scale has the following elements:
(1) the person charged undertook any recruitment activity as defined under Section 6 of RA 8042;
- proved when RTC found appellants to have undertaken a recruitment activity when they promised private complainants employment in Japan
for a fee.
(2) accused did not have the license or the authority to lawfully engage in the recruitment of workers; and,
- the Certification issued by POEA unmistakably reveals that appellants neither have a license to recruit workers for overseas employment.
(3) accused committed the same against three or more persons individually or as a group.
- it was established that there were five complainants

As to the argument that there was no proof that they received money from the complainants:

Money is not material to a prosecution for illegal recruitment considering that the definition of "illegal recruitment" under the law includes the phrase
"whether for profit or not." Besides, even if there is no receipt for the money given by the private complainants to appellants, the former's respective
testimonies and affidavits clearly narrate the latter's involvement in the prohibited recruitment.

As to the charge of estafa: ALL ELEMENTS FOR ESTAFA, ARTICLE 315, par. 2(a) WERE PROVEN

Well-settled is the rule that a person convicted for illegal recruitment under the [law] may, for the same acts, be separately convicted for estafa under
Article 315, par. 2(a) of the [Revised Penal Code]. The elements of estafa are:

(1) the accused defrauded another by abuse of confidence or by means of deceit; and
- appellants committed deceit against the private complainants by making it appear as though they had the authority and resources to send them
to Japan for employment; that there were available jobs for them in Japan for which they would be hired although, in truth, there were none.
(2) the offended party or a third party suffered damage or prejudice capable of pecuniary estimation."
- that by reason or on the strength of such assurance, the private complainants parted with their money in payment of the placement fee,
documentation and hotel accommodations.

2. People v. Gallo

PEOPLE OF THE PHILIPPINES vs. GALLO

FACTS:
Gallo and accused Fides Pacardo and Pilar Manta, together with Mardeolyn Martir and nine (9) others, were charged with syndicated illegal
recruitment and eighteen (18) counts of estafa committed against 18 complainants.

Dela Caza was told that Mardeolyn was the President of MPM Agency, while Nelmar Martir was one of the incorporators. Also, that Marcelino
Martir, Norman Martir, Nelson Martir and Ma. Cecilia Ramos were its board members. Lulu Mendanes acted as the cashier and accountant, while
Pacardo acted as the agency’s employee who was in charge of the records of the applicants. Manta, on the other hand, was also an employee who was
tasked to deliver documents to the Korean embassy.

Gallo then introduced himself as a relative of Mardeolyn and informed Dela Caza that the agency was able to send many workers abroad. Together
with Pacardo and Manta, he also told Dela Caza about the placement fee of PhP 150,000 with a down payment of PhP 45,000 and the balance to be
paid through salary deduction.

Dela Caza, together with the other applicants, were briefed by Mardeolyn about the processing of their application papers for job placement in Korea
as a factory worker and their possible salary. Accused Yeo Sin Ung also gave a briefing about the business and what to expect from the company and
the salary.

With Gallo’s assurance that many workers have been sent abroad, as well as the presence of the two (2) Korean nationals and upon being shown the
visas procured for the deployed workers, Dela Caza was convinced to part with his money. Thus, he paid PhP 45,000 to MPM Agency through Gallo
who, while in the presence of Pacardo, Manta and Mardeolyn, issued and signed.

Dela Caza went back to the agency’s office at Manila only to discover that the office had moved to a new location at Makati.

He proceeded to the new address and found out that the agency was renamed to New Filipino Manpower Development & Services, Inc. ("New
Filipino"). At the new office, he talked to Pacardo, Manta, Mardeolyn, Lulu Mendanes and Gallo. He was informed that the transfer was done for
easy accessibility to clients and for the purpose of changing the name of the agency.

Dela Caza decided to withdraw his application and recover the amount he paid but Mardeolyn, Pacardo, Manta and Lulu Mendanes talked him out
from pursuing his decision. On the other hand, Gallo even denied any knowledge about the money.

After two (2) more months of waiting in vain to be deployed, Dela Caza and the other applicants decided to take action. The first attempt was
unsuccessful because the agency again moved to another place. However, with the help of the Office of Ambassador Señeres and the Western Police
District, they were able to locate the new address at 500 Prudential Building, Carriedo, Manila. The agency explained that it had to move in order to
separate those who are applying as entertainers from those applying as factory workers. Gallo, together with Pacardo and Manta, were then arrested.

DEFENSE OF GALLO:

- denied having any part in the recruitment of Dela Caza.

- he also applied with MPM Agency for deployment to Korea as a factory worker.
- in order to facilitate the processing of his papers, he agreed to perform some tasks for the agency, such as taking photographs of the visa
and passport of applicants, running errands and performing such other tasks assigned to him, without salary except for some allowance.
- he only saw Dela Caza once or twice at the agency’s office when he applied for work abroad
- he was also promised deployment abroad but it never materialized.

RTC: convicted Gallo of syndicated illegal recruitment and estafa.

CA: affirmed the decision of RTC

ISSUE:

- Is Gallo guilty of illegal recruitment? – YES.

HELD:

- To commit syndicated illegal recruitment, three elements must be established:

1. the offender undertakes either any activity within the meaning of "recruitment and placement" defined under Article 13(b), or any
of the prohibited practices enumerated under Art. 34 of the Labor Code;
2. he has no valid license or authority required by law to enable one to lawfully engage in recruitment and placement of workers;
3. the illegal recruitment is committed by a group of three (3) or more persons conspiring or confederating with one another.
- When illegal recruitment is committed by a syndicate or in large scale, i.e., if it is committed against three (3) or more persons individually
or as a group, it is considered an offense involving economic sabotage.
- Under Art. 13(b) of the Labor Code, "recruitment and placement" refers to "any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad,
whether for profit or not".
 - The prosecution was able to establish the elements of the offense sufficiently. The evidence readily reveals that MPM Agency was never
licensed by the POEA to recruit workers for overseas employment.
- Even with a license, however, illegal recruitment could still be committed under Section 6 of Republic Act No. 8042 ("R.A. 8042"),
otherwise known as the Migrants and Overseas Filipinos Act of 1995, viz:

Sec. 6. Definition. – For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for
employment abroad, whether for profit or not, when undertaken by a non-licensee or non-holder of authority contemplated under
Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That
any such non-licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons
shall be deemed so engaged. It shall, likewise, include the following act, whether committed by any person, whether a non-
licensee, non-holder, licensee or holder of authority:
(a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed
by the Secretary of Labor and Employment, or to make a worker pay any amount greater than that actually received by him as a
loan or advance;
xxxx
(l) Failure to actually deploy without valid reason as determined by the Department of Labor and Employment; and
(m) Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of
deployment and processing for purposes of deployment, in cases where the deployment does not actually take place without the
worker’s fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving
economic sabotage.

- Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring or confederating
with one another. It is deemed committed in large scale if committed against three (3) or more persons individually or as a group
- The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of juridical persons, the
officers having control, management or direction of their business shall be liable.
- In the instant case, accused-appellant committed the acts enumerated in Sec. 6 of R.A. 8042. Testimonial evidence presented by the
prosecution clearly shows that, in consideration of a promise of foreign employment, accused-appellant received the amount of Php
45,000.00 from Dela Caza. When accused-appellant made misrepresentations concerning the agency’s purported power and authority to
recruit for overseas employment, and in the process, collected money in the guise of placement fees, the former clearly committed acts
constitutive of illegal recruitment. Such acts were accurately described in the testimony of prosecution witness, Dela Caza, to wit:
- Essentially, Dela Caza appeared very firm and consistent in positively identifying accused-appellant as one of those who induced him and
the other applicants to part with their money. His testimony showed that accused-appellant made false misrepresentations and promises in
assuring them that after they paid the placement fee, jobs in Korea as factory workers were waiting for them and that they would be
deployed soon. In fact, Dela Caza personally talked to accused-appellant and gave him the money and saw him sign and issue an official
receipt as proof of his payment. Without a doubt, accused-appellants’ actions constituted illegal recruitment.
- His active participation in the illegal recruitment is unmistakable. The fact that he was the one who issued and signed the official receipt
belies his profession of innocence.
- This Court likewise finds the existence of a conspiracy between the accused-appellant and the other persons in the agency who are
currently at large, resulting in the commission of the crime of syndicated illegal recruitment.
- In this case, it cannot be denied that the accused-appellant together with Mardeolyn and the rest of the officers and employees of MPM
Agency participated in a network of deception. Verily, the active involvement of each in the recruitment scam was directed at one single
purpose – to divest complainants with their money on the pretext of guaranteed employment abroad.

3. People v. Sison

Topic: III. Employer-employee relationship g. Illegal recruitment

Facts:
Sometime in November or December 1999, Darvy M. Castuera (Castuera) was introduced to Sison by her husband, a certain Col. Alex Sison
(Col. Sison), a police officer assigned at Camp Crame, Quezon City. Castuera's aunt, Edna Magalona, was then teaching police officers at
Camp Crame and Col. Sison was one of her students. Col. Sison happened to mention that his wife can facilitate papers for workers in
Australia. Castuera and Magalona then proceeded to Col. Sison's home in Las Piñas. There, they met Erlinda Sison and she briefed Castuera
on the requirements for working as a fruit picker in Australia.
During that meeting, Sison introduced Castuera to another man who related that he was able to go to Australia with Sison's help. She also
showed Castuera pictures of other people she had supposedly helped to get employment in Australia. Sison further narrated that a couple she
had helped had given her their car as payment. Because of Sison's representations, Castuera believed in her promise that she could send him
to Australia.
Sison asked Castuera for ₱180,000 for processing his papers. After some negotiations, Sison agreed to lower the fee to ₱160,000. Castuera
was to pay half before he leaves the Philippines and the other half will be taken from his salary in Australia.
On 16 June 2000, Castuera met Sison at McDonald's in SM Megamall to give the ₱80,000 down payment. Sison issued a signed document as
proof of payment. Castuera's companions, his aunt Edna Magalona and cousin Mark Magalona, also signed the document as witnesses. Sison
promised Castuera that she would personally process his visa application.
Sison, however, failed to secure an Australian visa for Castuera. She told him that it was difficult to get an Australian visa in the Philippines
so they had to go to Malaysia to get one. She also said that Castuera's Australian visa was already in Malaysia and his personal appearance
was required there.
On 28 June 2008, Sison and Castuera left Manila for Zamboanga City by plane and from there, rode a boat to Sandakan, Malaysia. Sison told
Castuera that he only needed to stay in Malaysia for a week then he would proceed to Australia.
Twice, they nearly overstayed in Malaysia. Each time, Sison and Castuera would leave for Brunei, stay there for three days, and then go back
to Malaysia. The second time they returned to Malaysia, they met several of Sison's other recruits well as Sison' s co-accused, Rea Dedales
(Dedales) and Leonardo Bacomo (Bacomo). Castuera was told that the group would be proceeding to Indonesia to process their Australian
visas there.
Subsequently, Castuera's application for an Australian visa in Indonesia was denied. Dedales said it was harder to get an Australian visa from
Indonesia and told Castuera to apply for a U.S. visa instead. Dedales asked for US$1,000 for the processing of his U.S. visa, which he paid.
However, when his U.S. visa came, Castuera saw that it was in an Indonesian passport bearing an Indonesian name. Because of this, Castuera
decided to just return to the Philippines. He asked for his US$1,000 back but Dedales would not return it. His Philippine passport was also
not returned immediately causing him to overstay in Indonesia. He found out then that the extension papers that Dedales and Bacomo
procured for him were fake. Castuera sought the help of the Philippine Embassy in Indonesia and was able to return to the Philippines using
his own funds. Upon returning to the Philippines, Castuera filed a complaint against Sison, Dedales, and Bacomo at the Philippine Overseas
Employment Administration (POEA). The agency verified that Sison, Dedales, and Bacomo did not have any license or permit to hire and
recruit for overseas employment.

Petitioners Argument: (As found in the beginning in the facts of the case.)

Respondents Argument: During the trial, Sison denied that she recruited Castuera for employment. She maintained she was also a victim of
illegal recruitment by Dedales. She claimed that it was Dedales, then working for a travel agency, who was processing her visa and ticket to
Australia.

RTC Ruling: RTC found Sison guilty of illegal recruitment constituting economic sabotage and estafa. The RTC stated it was clear that Sison
convinced Castuera to apply for employment as fruit picker in Australia and induced him to pay the fees needed for overseas employment.
The RTC also held that Castuera was indeed "a victim of illegal recruitment committed by a syndicate" since it was committed by a group of
three persons acting "in conspiracy" with one another.

CA Ruling: CA DISMISSED for lack of merit. The decision of the RTC is AFFIRMED.
The Court of Appeals held that all the elements of illegal recruitment were sufficiently proven in the case.
First, Sison herself did not dispute that she is not licensed or authorized to engage in recruitment or placement activities. This fact was
unknown to Castuera at the time of their transaction.
Second, the Court of Appeals held that even if Sison did not directly recruit Castuera, her actions led him to believe that she was engaged in
the recruitment business. Castuera was able to prove that it was Sison who promised him a job as fruit picker in Australia and even
accompanied him to Malaysia, Brunei, and Indonesia in the guise of processing his visa application. However, the Court of Appeals noted
that this process was actually part of "defrauding [Castuera] and inveigling him with false or fraudulent promises of employment in a foreign
land."
Further, the Court of Appeals found that Sison made representations about her purported power and authority to recruit for employment in
Australia and, in the process, collected various. amounts of money from Castuera as placement and processing fees. The Court of Appeals
stated that it was "enough that these recruiters give the impression that they have the ability to enlist workers for job placement abroad in
order to induce the latter to tender payment of fees."

Issue: WON Sison was guilty of illegal recruitment beyond reasonable doubt?

SC Ruling: The appeal has no merit. The assailed decision of the Court of Appeals is affirmed, with modification as to the penalty imposed in
the estafa case.
The acts of Sison, Dedales, and Bacomo show a common purpose and and each undertook a part to reach their objective. Since it was proven
that the three accused were acting in concert and conspired with one another, their illegal recruitment activity is considered done by a
syndicate, making the offense illegal recruitment involving economic sabotage.

4. People v. Matheus

Matheus was charged with six counts of Estafa under Article 315 (2) (a) RPC and one count of Large Scale Illegal Recruitment under RA 8042,
based on the affidavit-complaints made by the following: Thelma N. Suratos (Suratos); Glenda R. Guillarte (Guillarte); Merly 0. Alayon (Alayon);
Celso J. Bagay, Jr. (Bagay, Jr.); Rogelio Duldulao (Duldulao); and Doriza P. Gloria (Gloria).

Suratos alleged that she went to an office in Cubao, Quezon City where she met Matheus who promised her a job in Cyprus as a caretaker. She
returned to Matheus’ office a month later and gave her an amount totaling to PhP55,000, inclusive of her passport and medical examination report.
Matheus gave her a machine copy of her visa to prove that there was a good job waiting for her in Cyprus and that she would leave in three months
upon payment. After three months, Suratos became suspicious so she demanded the return of her money, but she was told to wait. A month later,
Suratos learned that Matheus was detained so she filed a complaint for illegal recruitment.

For her part, Alayon alleged that she met Matheus at the All Care Travel Agency located at 302 Escueta Bldg., Cubao, Quezon City where she was
offered a job in Cyprus as a part of the laundry staff and asked her to pay the total amount of PhP55,000, to submit her resume and transcript of
records, among others, and promised to deploy her abroad by June. She also partially paid but when she returned, she found out that Matheus was
also detained by the police. She then demanded the return of her money to no avail. Thus, she filed a complaint for illegal recruitment.

On the other hand, Duldulao testified that when Duldulao mentioned that she had a sister working in Spain, Matheus promised a tourist visa for him
in exchange for PhP 45,000. Altogether, Duldulao paid the her a total of PhP 29,000. When he discovered that she was arrested in April 2003,
Duldulao went to Camp Panopio and demanded that the return of his money but to no avail. He subsequently filed a complaint against her.

For his part, Bagay, Jr. alleged that Matheus also offered him a job as a dentist in London. She assured him that with an initial payment of
PhP30,000, he would leave in three months. After paying the said amount, Bagay, Jr. gave her his resume, transcript of records, diploma, passport,
and I.D. pictures. Unfortunately, he was not able to leave for London because in less than three months, Bagay, Jr. learned that Matheus was detained
at Camp Panopio for illegal recruitment. Failure to get his money back, he filed a criminal complaint against Matheus.

Guillarte was also promised a work in Cyprus as a hotel staff member. She gave her an amount totaling PhP 55,000 as full payment for her
deployment abroad. But the promise of deployment never materialized. Guillarte's demand for the return of her money to no avail. Hence, the filing
of the criminal complaint. Doria, however, did not testify.

In answer, Matheus admitted that she was the Overseas Marketing Director of All Care Travel & Consultancy (Hongkong), with All Care Travel &
Consultancy (Philippines) as its affiliate. She said that sometime in 1990, she was issued a professional license as an Electronics Communication
Engineer. She left the country in 2003 and was not in the Philippines from January 2003 to February 2003. She returned to the country on June 4,
2003 and left the country in the same month. She claimed that she did not know Suratos, Guillarte, Alayon, Bagay, Jr., and Gloria. Although she
knew Duldulao, she did not promise him any job. She likewise claimed that she neither signed nor issued any receipt using the name "Manzie delos
Reyes" in favor of the complainants. She further claimed that she was not engaged in any recruitment and placement activities. During the pre-trial,
she admitted that she had no license to recruit workers for overseas employment.

Perla D. Sayana, Chief, Registration Division of the Professional Regulation Commission (PRC), testified that the name of Matheus does not appear
in the books of PRC's database. She issued a certification to the effect that "Merceditas Matheus" is not a Licensed Electronics Communication
Engineer. Confidential agent of the Bureau of Immigration (BOI), Rustico B. Romero also testified that based on the BOI's database, the name
"Merceditas Matheus" did not leave the country from January 31, 2003 to June 18, 2003.

RTC convicted him. CA affirmed. Hence, this appeal. She maintains that she could not be held liable for the crimes of illegal recruitment and Estafa
since she never made any promise or gave the impression of having the ability to send the complainants abroad. She avers that the cash vouchers and
letters acknowledging receipt of complainants' payments were not signed by her, but by a certain Manzie Delos Reyes. She likewise avers that she
did not engage in recruitment activities as defined by law since All Care Travel & Consultancy (Philippines)is engaged in visa applications. She
further avers that she did not know complainants Suratos, Guillarte, Alayon, and Bagay, Jr.

ISSUE: WON Matheus is guilty of large scale illegal recruitment.

RULING: YES. The offense of illegal recruitment in large scale has the following elements: (1) the person charged undertook any recruitment
activity as defined under Section 6 of RA 8042; (2) accused did not have the license or the authority to lawfully engage in the recruitment of workers;
and, (3) accused committed the same against three or more persons individually or as a group. These elements are obtaining in this case.

First, the RTC found Matheus to have undertaken recruitment activity when she promised the private complainants overseas employment for a fee.
This factual finding was affirmed by the CA. As consistently adhered to by this Court, the matter of assigning values to declarations on the witness
stand is best and most competently performed by the trial judge, who had the unmatched opportunity to observe the witnesses and to assess their
credibility by the various indicia available but not reflected on the record. And when his findings have been affirmed by the CA, these are generally
binding and conclusive upon this Court.

She, in fact, had stipulated at pre-trial that not only did she know the complainants, she also received money from them for their deployment abroad,
as she even issued receipts to them. At any rate, absence of receipts cannot defeat a criminal prosecution for illegal recruitment. They positively
identified appellant as the person who asked money from them in consideration for their deployment abroad. She impressed on complainants that she
had the power or ability to send them abroad for employment so much so that the latter got convinced to part with their money in exchange therefor.
Illegal recruiters need not even expressly represent themselves to the victims as persons who have the ability to send workers abroad. It is enough that
these recruiters give the impression that they have the ability to enlist workers for job placement abroad in order to induce the latter to tender
payment of fees.

Second, the March 1, 2004 Certification issued by POEA unmistakably reveals that Matheus neither had a license nor authority to recruit workers for
overseas employment. Notably, instead of assailing the certification, she admitted during the pre-trial that she did not have a license or authority to
lawfully engage in recruitment and placement of workers.

Third, it was established that there were five complainants, i.e., Suratos, Guillarte, Alayon, Bagay, Jr., and Duldulao. Their individual testimonies
were so replete with details on how appellant convincingly, albeit deceptively, enticed them to pay all her demands in case, how she provided for
their fake documents, and how she manipulated their thoughts and dreams for a better life, ending up in the cruel realization that she was nothing but
a fraud.

Indeed, the existence of the offense of illegal recruitment in large scale was duly proved by the prosecution.

The Court likewise affirms her conviction for five counts of estafa under Article 315(2)(a) of the RPC. It is settled that a person, for the same acts,
may be convicted separately of illegal recruitment under RA 8042 or the Labor Code, and estafa under Article 315 (2) (a) of the RPC. The elements
of estafa are: (1) the accused defrauded another by abuse of confidence or by means of deceit; and (2) the offended party or a third party suffered
damage or prejudice capable of pecuniary estimation.

Here, the prosecution proved beyond reasonable doubt that she deceived the complainants into believing that she had the authority and capability to
send them abroad for employment, despite her not being licensed by the POEA to recruit workers for overseas employment. Because of the
assurances given by Matheus, the complainants parted with their hard-earned money for the payment of the agreed placement fee, for which accused-
appellant issued petty cash vouchers and used fictitious names evidencing her receipt of the payments.

In this case, she committed estafa by using fictitious names, i.e., 'Manzie Delos Reyes', 'Manzie Matheus' in her transactions with private
complainants, falsely pretending that she possessed power, influence, capacity to employ abroad or procure visas for them, making it appear that she
had made transactions to acquire their entry permits and visas, thus, successfully inducing them to part with their money, albeit, knowing fully well
she had no authority or license to do so. Clearly, these acts of Mathues constitute estafa punishable under Article 315 (2)(a) of the RPC.

5. People v. Estrada
G.R. No. 225730. February 28, 2018

FACTS:

1. Julia Estrada was indicted for the crime of Illegal Recruitment in Large Scale and Estafa under four (4) separate Informations:

a. 3 counts of Estafa:

That the accused did then and there willfully, unlawfully and feloniously defraud NOEL SEVILLENA, JANICE ANTONIO AND
ALBERT CORTEZ by means of false manifestations and fraudulent representations which she made to said NOEL SEVILLENA, JANICE
ANTONIO AND ALBERT CORTEZ prior to and even simultaneously with the commission of the fraud, to the effect that she had the
power and capacity to recruit and deploy the complainants in Dubai, induced and succeeded to give to the accused amounting to P61,500,
P25,000 and P37,000, respectively, which amount once in her possession, with intent to defraud, misappropriated, and misapplied and
converted the same to her own personal use and benefit,

b. Illegal Recruitment (Large Scale)

The said accused, representing herself to have the capacity to contract, enlist and transport Filipino workers for employment abroad, did
then and there willfully and unlawfully for a fee, recruit and promise employment/job placement abroad to ALBERT M. CORTEZ, NOEL
SEVILLENA and JANICE A. ANTONIO as Waiter, Master Baker and Service Crew,respectively, in Dubai, without first having secured
the required license or authority from the Department of Labor and Employment, and without valid reason and without the fault of the said
ALBERT M. CORTEZ, NOEL SEVILLENA and JANICE A. ANTONIO failed to actually deploy them and failed to reimburse expenses
incurred by them in connection with their documentation and processing for purposes of their deployment.

2. 3 complainants testified that they met Estrada separately on various dates between Feb to April 2009. Jacinto came to know Estrada
after she chanced upon a tarpaulin advertisement for overseas work on which Estrada's number and address were posted. Sevillena
was encouraged by his father and Cortez through his aunt, both of them knew Estrada to be a recruiter for overseas work.
 Mildred Versoza, Labor and Employment Officer of POEA also testified that Estrada as not included in the list of employees submitted by
ABCA International Corporation (ABCA) for acknowledgment
3. During these meeting Estrada represented herself as having power and authority to deploy persons abroad for overseas employment
and offered them a job in Dubai.

4. They have submitted their documents necessary for the overseas placement and individually paid P25,000 as processing fee and
placement fee and medical fees. They mentioned that they paid personally to Estrada however Estrada did not issue a single receipt.

5. Estrade further required the complainants to under Pre-Departure Orientation Seminar (PDOS) and paid the necessary fees.

6. Estrada Failed to deploy them abroad.

Estrada’s Defense:The complainants went to her house and asked for her help for them to work abroad but she answered in the negative. She denied
the allegations that she misrepresented herself as a recruiter, that she worked as a secretary in Riyadh, that the owner of recruitment agency was her
friend and the complainants went to one of the recruitment agency where they got her number. She denied that her number was posted on a tarpaulin
advertisement. And that she introduced Worldview to Antonio, which handles her documents everytime she departs abroad for work. That she was
informed that Antonio and her friends already submitted their applications to another agency (ABCA), but Sevillena and Cortez did not sign the
contract because they were offered low salary. Sevillena and Cortez went to her house to ask for the return of the money they paid to ABCA. She
insisted that she did not receive any money from the private complainants and that she did not recruit them for overseas work.

7. RTC – Estrada found guilty beyond reasonable doubt of the crimes of illegal recruitment and 3 counts of estafa.

8. CA – Affirmed.

ISSUE: WON the elements constituting illegal recruitment in large scale have been sufficiently established.

HELD: YES.

Under Section 6 of R.A. No. 8042, illegal recruitment, when undertaken by a non- licensee or non-holder of authority as contemplated under Article
13 (f) of the Labor Code, shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, procuring workers, and including
referring, contract services, promising or advertising for employment abroad, whether for profit or not.

Further, to sustain a conviction for illegal recruitment under R.A. No. 8042, the prosecution must establish two (2) elements: first,the offender has no
valid license or authority required by law to enable one tolawfully engage in the recruitment and placement of workers ; and second, the offender
undertakes any of the activities within the meaning of recruitment and placement defined in Article 13 (b) of the Labor Code, or any of the prohibited
practices enumerated under Section 6 of R.A. No. 8042. Further, in case the illegal recruitment was committed in large scale, a third elementmust be
established, that is, the offender commits the illegal recruitment activities against three or more persons, individually or as a group.

The Court is convinced that the prosecution was able to establish the essential elements of the crime of illegal recruitment in large scale.

First, it is not disputed that Estrada is not licensed or authorized to recruit workers for overseas placement.

Second, the prosecution was able to establish that Estrada unlawfully engaged in activities which refer to recruitment and placement under Article 13
(b) of the Labor Code and Section 6 of R.A. No. 8042.

Finally, it is clear that Estrada committed illegal recruitment activities against the three (3) private complainants. Thus, the trial and appellate courts
properly convicted Estrada of the crime of illegal recruitment in large scale.

H. Enforcement and Santion

1. Salazar v. Achacoso

G.R. No. 81510 March 14, 1990

HORTENCIA SALAZAR, petitioner,
vs.
HON. TOMAS D. ACHACOSO, in his capacity as Administrator of the Philippine Overseas Employment Administration, and
FERDIE MARQUEZ, respondents
Facts:
● Rosalie Tesoro filed a complaint before POEA against Hortencia Salazar (Salazar) for not returning Tesoro’s PECC Card. The purpose
of Salazar in getting PECC Card of Tesoro is for the former to find booking for Tesoro to Japan and to find job for her. However, after
9 months Salazar failed to fulfill her promise.
● POEA Administrator Achacoso issued Closure and Seizure order No. 1205 to Salazar ascertaining that Salazar had no license to
operate a recruitment agency and committed acts prohibited under Art. 34 of the New Labor Code in relation to Art. 38 of the same
code.
● On Jan. 26, 1988, POEA Director ordered a team which task is to implement the Closure and Seizure Order No. 1205. POEA Team
found that Salazar was operating Hannalie Dance Studio. Before entering the place, the team served said Closure and Seizure order on a
certain Mrs. Flora Salazar who voluntarily allowed them entry into the premises. Mrs. Flora Salazar informed the team that Hannalie
Dance Studio was accredited with Moreman Development (Phil.). However, when required to show credentials, she was unable to
produce any. Inside the studio, the team chanced upon twelve talent performers — practicing a dance number and saw about twenty
more waiting outside, the team confiscated assorted costumes which were duly receipted for by Mrs. Asuncion Maguelan and
witnessed by Mrs. Flora Salazar.
● Salazar requested POEA to return the personal properties confiscated as the seizure conducted by POEA Team was contrary to law as
the 1987 Constitution provides as follows:

a. Art. 3, Sec. 1 “xxx due process of law xx”

b. Art. 3, Sec. 2 “right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches
and seizures of whatever nature and for any purpose."

● POEA however filed a Criminal Complaint against Salazar with the Pasig Provincial Fiscal.
● Salazar filed petition for prohibition.

Issue:

WON the Philippine Overseas Employment Administration (or the Secretary of Labor) may validly issue warrants of search and seizure (or
arrest) under Article 38 of the Labor Code.

Ruling:

NO.
● Under the 1987 Constitution, which states:
“…. no search warrant or warrant of arrest shall issue except upon probable cause to be determined personally by the judge after
examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to
be searched and the persons or things to be seized.”

● The Secretary of Labor, not being a judge, may no longer issue search or arrest warrants. Hence, the authorities must go through the
judicial process. To that extent, we declare Article 38, paragraph (c), of the Labor Code, unconstitutional and of no force and effect.

[Art. 38, par. C - The Secretary of Labor and Employment or his duly authorized representatives shall have the
power to cause the arrest and detention of such non-licensee or non-holder of authority if after investigation it is
determined that his activities constitute a danger to national security and public order or will lead to further
exploitation of job-seekers. The Secretary shall order the search of the office or premises and seizure of
documents, paraphernalia, properties and other implements used in illegal recruitment activities and the closure
of companies, establishments and entities found to be engaged in the recruitment of workers for overseas
employment, without having been licensed or authorized to do so.]

● The Solicitor General's reliance on the case of Morano v. Vivo is not well-taken. Vivo involved a deportation case, governed by Section
69 of the defunct Revised Administrative Code and by Section 37 of the Immigration Law. We have ruled that in deportation cases, an
arrest (of an undesirable alien) ordered by the President or his duly authorized representatives, in order to carry out a final decision of
deportation is valid. It is valid, however, because of the recognized supremacy of the Executive in matters involving foreign affairs.
The power of the President to order the arrest of aliens for deportation is, obviously, exceptional.
● The Closure and Seizure order No. 1205 is clearly in the nature of a general warrant which is no valid because it does not clearly
identify the things to be seized.
● For the guidance of the bench and the bar, the SC reaffirm the following principles:

a. Under Article III, Section 2, of the l987 Constitution, it is only judges, and no other, who may issue warrants of arrest and
search.
 b. The exception is in cases of deportation of illegal and undesirable aliens, whom the President or the Commissioner of
Immigration may order arrested, following a final order of deportation, for the purpose of deportation.

2. Serrano v. Gallant Maritime Services, Inc.

3. Sameer Overseas Placement Agency, Inc. v. Cabiles

4. Eastern Assurance and Surety Corp. v. Secretary of Labor

G.R. No. L-79436-50 January 17, 1990

EASTERN ASSURANCE & SURETY CORPORATION, petitioner, vs.

SECRETARY OF LABOR, PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION, ELVIRA VENTURA, ESTER

TRANGUILLAN, et al., respondents.

FACTS:

1. On January 2, 1985, J & B Manpower Specialist, Inc. and the Eastern Assurance and Surety Corporation, herein petitioner, filed a
surety bond in connection with the application with the Philippine Overseas Employment Administration (POEA) for a license to
engage in business as a recruitment agency, in virtue of which they both held themselves —

. . . firmly bound unto (said) Philippine Overseas Employment Administration, Ministry of Labor in the penal sum of PESOS ONE
HUNDRED FIFTY THOUSAND ONLY . . . (Pl50,000.00) for the payment of which will and truly to be made, . . . (they bound
themselves, their) heirs, executors, administrators, successors and assigns, jointly and severally .

2. From June 1983 to December 1985, 33 persons applied for overseas employment with (J & B). In consideration of promised
deployment, complainants paid respondent various amounts for various fees. Most of' the receipts issued were sighed by Mrs.
Baby Bundalian, Executive Vice-President of . . . (J & B).

3. Because of non-deployment, the applicants filed separate complaints with the Licensing and Regulation Office of POEA against J
& B for violation of Articles 32 and 34 (a) of the Labor Code between the months of April to October 1985.

4. Despite summons/notices of hearing, J & B failed to file Answer nor appear in the hearings conducted.

EASCO

In its separate Answer, . . . EASCO essentially disclaimed liability on the ground that the claims were not expressly covered by the
bond, that POEA had no jurisdiction to order forfeiture of the bond, that some of the claims were paid beyond or prior to the period of
effectivity of the bond.

EASCO contends that the POEA had no "adjudicatory jurisdiction" over the monetary claims in question because the same "did not
arise from employer-employee relations." Invoked in support of the argument is Section 4 (a) of EO 797 providing in part 8 that the
POEA has —

. . . original and exclusive jurisdiction over all cases, including money claims, involving employer-employee relations arising out of
or by virtue of any law or contract involving Filipino workers for overseas employment including seamen . . .

POEA

The POEA Administrator issued the Order in favor of complainants ruling that Complainants' non-deployment strongly indicates that
there was no employment obtained for them. Hence, violation of Articles 32 and 34 (a) of the Labor Code, as amended, is established
against respondent. The claims of complainants having arose (arisen) out of acts of the principal covered under the surety (bond), the
respondent surety is equally liable therefor. Except for complainants Ramos, Samson, de Leon and Rizada, whose claims were
 transacted prior to the effectivity of the bond, . . . EASCO was declared jointly and severally liable with . . . (J & B) to twenty-nine (29)
complainants.

LABOR ARBITER

On appeal by EASCO — J & B having as aforestated taken no part in the proceeding despite due service of summons — the Secretary
of Labor affirmed but modified the Order of the POEA Administrator MODIFIED. Respondent J & B Manpower Specialist is directed
to refund all thirty-three (33) complainants as listed in the Order of September 8, 1986 in the amounts listed thereto with the
modification that complainants Lucena Cabasal and Felix Rivero are both entitled only to P15,980 and not P15,980 each. Respondent
Eastern Assurance and Surety Corporation is hereby found jointly and severally liable with respondent J & B Manpower Specialist to
refund nineteen (19) complainants in the modified amounts . . . (particularly specified).

Hence, this special civil action of certiorari at bar was thereafter instituted by EASCO praying for the nullification of the POEA
Administrator's Order.

ISSUE:

Whether POEA Administrator and the Secretary of Labor had jurisdiction over the claims for refund filed by non-employee.

RULING:

YES.

The penalties of suspension and cancellation of license or authority are prescribed for violations of the above quoted provisions, among
others. And the Secretary of Labor has the power under Section 35 of the law to apply these sanctions, as well as the authority,
conferred by Section 36, not only, to "restrict and regulate the recruitment and placement activities of all agencies," but also to
"promulgate rules and regulations to carry out the objectives and implement the provisions" governing said activities . Pursuant to this
rule-making power thus granted, the Secretary of Labor gave the POEA "on its own initiative or upon filing of a complaint or report or
upon request for investigation by any aggrieved person, . . . (authority to) conduct the necessary proceedings for the suspension or
cancellation of the license or authority of any agency or entity" for certain enumerated offenses including —

1) the imposition or acceptance, directly or indirectly, of any amount of money, goods or services, or any fee or bond in excess of what
is prescribed by the Administration, and

2) any other violation of pertinent provisions of the Labor Code and other relevant laws, rules and regulations.

The Administrator was also given the power to "order the dismissal of the case or the suspension of the license or authority of the
respondent agency or contractor or recommend to the Minister the cancellation thereof."

Implicit in these powers is the award of appropriate relief to the victims of the offenses committed by the respondent agency or
contractor, specially the refund or reimbursement of such fees as may have been fraudulently or otherwise illegally collected, or such
money, goods or services imposed and accepted in excess of what is licitly prescribed. It would be illogical and absurd to limit the
sanction on an offending recruitment agency or contractor to suspension or cancellation of its license, without the concomitant
obligation to repair the injury caused to its victims. It would result either in rewarding unlawful acts, as it would leave the victims
without recourse, or in compelling the latter to litigate in another forum, giving rise to that multiplicity of actions or proceedings which
the law abhors.

“WHEREFORE, the petition is DISMISSED for lack of merit, and this decision is declared to be immediately executory. Costs against
petitioner.”

5. Sto. Tomas v. Salac

Sto Tomas v. Salac – CONSOLIDATED CASES:

Background:

Constitutionality of Sections 29 and 30 of RA 8042)

Congress enacted RA 8042 or the Migrant Workers and Overseas Filipinos Act of 1995 that, for among other purposes, sets the
Government’s policies on overseas employment and establishes a higher standard of protection and promotion of the welfare of migrant
workers, their families, and overseas Filipinos in distress.

GR 152642 and GR 152710 (Constitutionality of Sections 29 and 30 of RA 8042)

Facts: Sections 29 and 30 of the Act commanded the Dept. of Labor (DOLE) to begin deregulating within 1 year of its passage the business
of handling the recruitment and migration of overseas Filipino workers and phase out within 5 years the regulatory functions of the Philippine
Overseas Employment Administration (POEA).

1st case: Salac et al. filed a petition to stop the implementation of the rules and regulations that would regulate the recruitment and placement
of OFW’s.

2nd case: Acrophil et al. filed a petition to stop the implementation of the rules and regulations that would regulate the recruitment,
employment, and placement of the OFW’s.

“Paralyzed the deployment abroad of OFWs and performing artists”

Ruling: GMA signed into law RA 9422 which expressly repealed Sections 29 and 30 of RA 8042
MOOT & ACADEMIC.

GR 167590 (Constitutionality of Sections 6, 7, and 9 of RA 8042)

Facts: Philippine Association of Services Exporters, Inc (PASEI) assailed the constitutionality of Sections 6 (for being vague as it fails to
distinguish licensed & non-licensed recruiters), 7 (for being sweeping in its application of penalties), and 9 (for allowing the offended parties
to file the criminal case in their place of residence instead of filing it at the place where the crime or any of its essential elements were
committed) of RA 8042.

For Section 6: Valid. It is clear and unambiguous, and it actually makes a distinction between licensed and non-licensed recruiters. By its
terms, persons who engage in “canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers” without the
appropriate govt. license or authority are guilty of illegal recruitment whether or not they commit the wrongful acts enumerated in that
section. On the other hand, recruiters who engage in canvassing, elisting, etc. of OFWs, although with the appropriate government license or
authority, are guilty of illegal recruitment only if they commit any of the wrongful acts enumerated in Section 6.

For Section 7: Valid. Congress was within its prerogative to determine what individual acts are equally reprehensible, consistent with the
State policy of according full protection to labor, and deserving of the same penalties. It is not within the power of the Court to question the
wisdom of this kind of choice.

For Section 9: Valid. There is nothing arbitrary or unconstitutional in Congress fixing an alternative venue for violations of Section 6 of R.A.
8042 that differs from the venue established by the Rules on Criminal Procedure.

Rule 110 Sec. 15 (a) of the Rules of Court allows exceptions:

SEC. 15. Place where action is to be instituted.— (a) Subject to existing laws, the criminal action shall be instituted and tried in the court of
the municipality or territory where the offense was committed or where any of its essential ingredients occurred.

Section 9 of R.A. 8042, as an exception to the rule on venue of criminal actions is, consistent with that law’s declared policy of providing a
criminal justice system that protects and serves the best interests of the victims of illegal recruitment.

GR 167590, GR 182978-79, and GR 184298-99 (Constitutionality of Section 10, last sentence of 2nd paragraph)

GR 182978-79 & GR 184298-99: Spouses Simpicio and Mila Cuaresma (the Cuaresmas) filed a claim for death and insurance benefits and
damages against petitioners Becmen Service Exporter and Promotion, Inc. (Becmen) and White Falcon Services, Inc. (White Falcon) for the
death of their daughter Jasmin Cuaresma while working as staff nurse in Saudi Arabia.
NLRC ruled in favor of the Cuaresmas – making Becmen and White Falcon jointly and severally liable.

SC found Jasmin’s death is not work-related or work-connected since her rape and death did not occur while she was on duty at the hospital
or doing acts incidental to her employment. Becmen was made solidarily liable for failure to investigate true nature of her death.

Becmen then questioned the constitutionality of the last sentence of the second paragraph of Section 10, RA 8042 which holds the corporate
directors, officers and partners jointly and solidarily liable with their company for money claims filed by OFWs against their employers and
the recruitment firms – violation of due process.

In GR 16590 (the PASAI case above), the Quezon City RTC held as unconstitutional the last sentence of the 2nd paragraph of Section 10 of
R.A. 8042. It pointed out that, absent sufficient proof that the corporate officers and directors of the erring company had knowledge of and
allowed the illegal recruitment, making them automatically liable would violate their right to due process of law.

However, The liability of corporate directors and officers is not automatic. To make them jointly and solidarily liable with their company,
there must be a finding that they were remiss in directing the affairs of that company, such as sponsoring or tolerating the conduct of illegal
activities (MAM Realty Development Corp. v. National Labor Relations Commission, 314 Phil. 838, 845 (1995).

Therefore, valid and constitutional.

***Basically, everything was held valid and constitutional... Sec 29 & 30 naman – moot & academic… WTH :( ***

I. Jurisdiction

1. Regional Trial Court for criminal action - Section 9, RA 8042

SEC. 9. VENUE. – A criminal action arising from illegal recruitment as defined herein shall be filed with the Regional Trial Court
of the province or city where the offense was committed or where the offended party actually resides at the same time of the
commission of the offense: Provided, That the court where the criminal action is first filed shall acquire jurisdiction to the exclusion
of other courts. Provided, however, That the aforestated provisions shall also apply to those criminal actions that have already been
filed in court at the time of the effectivity of this Act.

2. NLRC for money claims - Section 10, RA 8042

SEC. 10. MONEY CLAIMS. – Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor
Relations Commission (NLRC) shall have original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days
after filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages.

3. POEA for Administrative and Disciplinary Actions - Section 28, Omnibus Implementing Rules of RA 8042

IX.
PRE-EMPLOYMENT AND DISCIPLINARY ACTION CASES

Section 28. Jurisdiction of the POEA. –

The POEA shall exercise original and exclusive jurisdiction to hear and decide:

(a) all cases, which are administrative in character, involving or arising out of violations of rules and regulations relating to
licensing and registration of recruitment and employment agencies or entities; and

(b) disciplinary action cases and other special cases, which are administrative in character, involving employers, principals,
contracting partners and Filipino migrant workers.

ALIEN EMPLOYMENT

A. Articles 39-42 of the Labor Code

Chapter III
MISCELLANEOUS PROVISIONS
ART. 39. Penalties. -

(a) The penalty of life imprisonment and a fine of One Hundred Thousand Pesos (P1000,000.00) shall be imposed if illegal recruitment
constitutes economic sabotage as defined herein;

(b) Any licensee or holder of authority found violating or causing another to violate any provision of this Title or its implementing rules and
regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than two years nor more 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 the court;

(c) Any person who is neither a licensee nor a holder of authority 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 nor more than P100,000 or both such imprisonment and fine, at the discretion of the court;

(d) If the offender is a corporation, partnership, association or entity, the penalty shall be imposed upon the officer or officers of the
corporation, partnership, association or entity responsible for violation; and if such officer is an alien, he shall, in addition to the penalties
herein prescribed, be deported without further proceedings;

(e) In every case, conviction shall cause and carry the automatic revocation of the license or authority and all the permits and privileges
granted to such person or entity under this Title, and the forfeiture of the cash and surety bonds in favor of the Overseas Employment
Development Board or the National Seamen Board, as the case may be, both of which are authorized to use the same exclusively to promote
their objectives.

Title II
EMPLOYMENT OF NON-RESIDENT
ALIENS

ART. 40. Employment permit of non-resident aliens. - Any alien seeking admission to the Philippines for employment purposes and any
domestic or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the
Department of Labor.

The employment permit may be issued to a non-resident alien or to the applicant employer after a determination of the non-availability of a
person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired.

For an enterprise registered in preferred areas of investments, said employment permit may be issued upon recommendation of the
government agency charged with the supervision of said registered enterprise.

ART. 41. Prohibition against transfer of employment. - (a) After the issuance of an employment permit, the alien shall not transfer to another
job or change his employer without prior approval of the Secretary of Labor.

(b) Any non-resident alien who shall take up employment in violation of the provision of this Title and its implementing rules and regulations
shall be punished in accordance with the provisions of Articles 289 and 290 of the Labor Code.

In addition, the alien worker shall be subject to deportation after service of his sentence.

ART. 42. Submission of list. - Any employer employing non-resident foreign nationals on the effective date of this Code shall submit a list
of such nationals to the Secretary of Labor within thirty (30) days after such date indicating their names, citizenship, foreign and local
addresses, nature of employment and status of stay in the country. The Secretary of Labor shall then determine if they are entitled to an
employment permit.

B. Article XII of the 1987 Constitution

ARTICLE XII
NATIONAL ECONOMY AND PATRIMONY

Section 1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in
the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising the
quality of life for all, especially the underprivileged.

The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through
industries that make full of efficient use of human and natural resources, and which are competitive in both domestic and foreign markets.
However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices.
In the pursuit of these goals, all sectors of the economy and all region s of the country shall be given optimum opportunity to develop. Private
enterprises, including corporations, cooperatives, and similar collective organizations, shall be encouraged to broaden the base of their
ownership.

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all
other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control
and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-
sharing agreements with Filipino citizens, or corporations or associations at least 60 per centum of whose capital is owned by such citizens.
Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms
and conditions as may provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of waterpower, beneficial use may be the measure and limit of the grant.

The State shall protect the nations marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use
and enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with
priority to subsistence fishermen and fish workers in rivers, lakes, bays, and lagoons.

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale
exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions
provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall
promote the development and use of local scientific and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.

Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands and national parks. Agricultural lands of
the public domain may be further classified by law according to the uses to which they may be devoted. Alienable lands of the public domain
shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by
lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares
in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof, by
purchase, homestead, or grant.

Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the
Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the
conditions therefor.

Section 4. The Congress shall, as soon as possible, determine, by law, the specific limits of forest lands and national parks, marking clearly
their boundaries on the ground. Thereafter, such forest lands and national parks shall be conserved and may not be increased nor diminished,
except by law. The Congress shall provide for such period as it may determine, measures to prohibit logging in endangered forests and
watershed areas.

Section 5. The State, subject to the provisions of this Constitution and national development policies and programs, shall protect the rights of
indigenous cultural communities to their ancestral lands to ensure their economic, social, and cultural well-being.

The Congress may provide for the applicability of customary laws governing property rights or relations in determining the ownership and
extent of ancestral domain.

Section 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private
groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate
economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands.

Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain.

Section 8. Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the Philippines who has lost his Philippine
citizenship may be a transferee of private lands, subject to limitations provided by law.

Section 9. The Congress may establish an independent economic and planning agency headed by the President, which shall, after
consultations with the appropriate public agencies, various private sectors, and local government units, recommend to Congress, and
implement continuing integrated and coordinated programs and policies for national development.
Until the Congress provides otherwise, the National Economic and Development Authority shall function as the independent planning agency
of the government.

Section 10. The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to
citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such
higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the
formation and operation of enterprises whose capital is wholly owned by Filipinos.

In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified
Filipinos.

The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national
goals and priorities.

Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens
of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is
owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years.
Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by
the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The
participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its
capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines.

Section 12. The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures
that help make them competitive.

Section 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the
basis of equality and reciprocity.

Section 14. The sustained development of a reservoir of national talents consisting of Filipino scientists, entrepreneurs, professionals,
managers, high-level technical manpower and skilled workers and craftsmen in all fields shall be promoted by the State. The State shall
encourage appropriate technology and regulate its transfer for the national benefit. The practice of all professions in the Philippines shall be
limited to Filipino citizens, save in cases prescribed by law.

Section 15. The Congress shall create an agency to promote the viability and growth of cooperatives as instruments for social justice and
economic development.

Section 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations.
Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and
subject to the test of economic viability.

Section 17. In times of national emergency, when the public interest so requires, the State may, during the emergency and under reasonable
terms prescribed by it, temporarily take over or direct the operation of any privately-owned public utility or business affected with public
interest.

Section 18. The State may, in the interest of national welfare or defense, establish and operate vital industries and, upon payment of just
compensation, transfer to public ownership utilities and other private enterprises to be operated by the Government.

Section 19. The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or
unfair competition shall be allowed.

Section 20. The Congress shall establish an independent central monetary authority, the members of whose governing board must be natural-
born Filipino citizens, of known probity, integrity, and patriotism, the majority of whom shall come from the private sector. They shall also
be subject to such other qualifications and disabilities as may be prescribed by law. The authority shall provide policy direction in the areas of
money, banking, and credit. It shall have supervision over the operations of banks and exercise such regulatory powers as may be provided
by law over the operations of finance companies and other institutions performing similar functions.

Until the Congress otherwise provides, the Central Bank of the Philippines operating under existing laws, shall function as the central
monetary authority.

Section 21. Foreign loans may only be incurred in accordance with law and the regulation of the monetary authority. Information on foreign
loans obtained or guaranteed by the Government shall be made available to the public.
Section 22. Acts which circumvent or negate any of the provisions of this Article shall be considered inimical to the national interest and
subject to criminal and civil sanctions, as may be provided by law.

C. Anti Dummy Law

COMMONWEALTH ACT No. 108

AN ACT TO PUNISH ACTS OF EVASION OF THE LAWS ON THE NATIONALIZATION OF CERTAIN RIGHTS, FRANCHISES OR
PRIVILEGES

Be it enacted by the National Assembly of the Philippines

Section 1. Penalty — In all cases in which any constitutional or legal provisions requires Philippine or any other specific citizenship as a
requisite for the exercise or enjoyment of a right, franchise or privilege, any citizen of the Philippines or of any other specific country who
allows his name or citizenship to be used for the purpose of evading such provision, and any alien or foreigner profiting thereby, shall be
punished by imprisonment for not less than five nor more than fifteen years, and by a fine of not less than the value of the right franchise or
privilege, which is enjoyed or acquired in violation of the provisions hereof but in no case less than five thousand pesos.

The fact that the citizen of the Philippines or of any specific country charged with a violation of this Act had, at the time of the acquisition of
his holdings in the corporations or associations referred to in section two of this Act, no real or personal property, credit or other assets the
value of which shall at least be equivalent to said holdings, shall be evidence of a violation of this Act.1

Section 2. Simulation of minimum capital stock — In all cases in which a constitutional or legal provision requires that, in order that a
corporation or association may exercise or enjoy a right, franchise or privilege, not less than a certain per centum of its capital must be owned
by citizens of the Philippines or of any other specific country, it shall be unlawful to falsely simulate the existence of such minimum stock or
capital as owned by such citizens, for the purpose of evading said provision. The president or managers and directors or trustees of
corporations or associations convicted of a violation of this section shall be punished by imprisonment of not less than five nor more than
fifteen years, and by a fine not less than the value of the right, franchise or privilege, enjoyed or acquired in violation of the provisions hereof
but in no case less than five thousand pesos.2

Section 2-A. Unlawful use, Exploitation or enjoyment — Any person, corporation, or association which, having in its name or under its
control, a right, franchise, privilege, property or business, the exercise or enjoyment of which is expressly reserved by the Constitution or the
laws to citizens of the Philippines or of any other specific country, or to corporations or associations at least sixty per centum of the capital of
which is owned by such citizens, permits or allows the use, exploitation or enjoyment thereof by a person, corporation or association not
possessing the requisites prescribed by a the Constitution or the laws of the Philippines; or leases, or in any other way, transfers or conveys
said right, franchise, privilege, property or business to a person, corporation or association not otherwise qualified under the Constitution, or
the provisions of the existing laws; or in any manner permits or allows any person, not possessing the qualifications required by the
Constitution, or existing laws to acquire, use, exploit or enjoy a right, franchise, privilege, property or business, the exercise and enjoyment of
which are expressly reserved by the Constitution or existing laws to citizens of the Philippines or of any other specific country, to intervene in
the management, operation, administration or control thereof, whether as an officer, employee or laborer therein with or without
remuneration except technical personnel whose employment may be specifically authorized by the Secretary of Justice, and any person who
knowingly aids, assists or abets in the planning consummation or perpetration of any of the acts herein above enumerated shall be punished
by imprisonment for not less than five nor more than fifteen years and by a fine of not less than the value of the right, franchise or privilege
enjoyed or acquired in violation of the provisions hereof but in no case less than five thousand pesos: Provided, however, That the president,
managers or persons in charge of corporations, associations or partnerships violating the provisions of this section shall be criminally liable in
lieu thereof: Provided, further, That any person, corporation or association shall, in addition to the penalty imposed herein, forfeit such right,
franchise, privilege, and the property or business enjoyed or acquired in violation of the provisions of this Act: And provided, finally, That
the election of aliens as members of the board of directors or governing body of corporations or associations engaging in partially
nationalized activities shall be allowed in proportion to their allowable participation or share in the capital of such entities.3

Section 2-B. Any violation of the provisions of this Act by the spouse of any public official, if both live together, shall be cause for the
dismissal of such public official. 4itc@lawphil

Section 2-C. The exercise, possession or control by a Filipino citizen having a common-law relationship with an alien of a right, privilege,
property or business, the exercise or enjoyment of which is expressly reserved by the Constitution or the laws to citizens of the Philippines,
shall constitute a prima facie evidence of violation of the provisions of Section 2-A hereof.5

Section 3. Any corporation or association violating any of the provisions of this Act shall, upon proper court proceedings, be dissolved.

Section 3-A. Reward to informer. — In case of conviction under the provisions of this Act, twenty-five per centum of any fine imposed shall
accrue to the benefit of the informer who furnishes to the Government original information leading to said conviction and who shall be
ascertained and named in the judgment of the court. If the informer is a dummy, who shall voluntarily take the initiative of reporting to the
proper authorities any violation of the provisions of this Act and assist in the prosecution, resulting in the conviction of any person or
corporation profiting thereby or involved therein, he shall be entitled to the reward hereof in the sum equivalent to twenty-five per centum of
the fine actually paid to or received by the Government, and shall be exempted from the penal liabilities provided for in this Act. 6

Section 4. This Act shall take effect upon its approval.

Approved, October 30, 1936.

D. Department Order 146015, Section 11 (CAN’T LOCATE PA)

E. Almodiel v. NLRC

Facts: Farle P. Almodiel is a certified public accountant who was hired in October, 1987 as Cost Accounting Manager (CAM) of respondent
Raytheon Philippines, Inc. through John Clements Consultants, Inc. with a starting salary of P18,000.00. He was previously employed before
as an accounts executive of Integrated Microelectronics. Almodiel started as a probationary employee. As a CAM his major duties were: (1)
plan, coordinate and carry out year and physical inventory; (2) formulate and issue out hard copies of Standard Product costing and other
cost/pricing analysis if needed and required and (3) set up the written Cost Accounting System for the whole company. He was regularized
after a few months and his salary increased.

On August 17, 1988, he recommended and submitted a Cost Accounting/Finance Reorganization, affecting the whole finance group but the
same was disapproved by the Controller. Almodiel was assured by the Controller that should his position or department which was
apparently a one-man department with no staff becomes untenable or unable to deliver the needed service due to manpower constraint, he
would be given a three (3) year advance notice. In the meantime, the standard cost accounting system was installed and used at the Raytheon
plants and subsidiaries worldwide. As a consequence, the work of Cost Accounting Manager entailed only the submission of periodic reports
that would use computerized forms prescribed and designed by the international head office of the Raytheon Company in California, USA.

On January 27, 1989, Almodie was told of the abolition of his position on the ground of redundancy. He pleaded with management to defer
its action or transfer him to another department, but he was told that the decision of management was final and that the same has been
conveyed to the Department of Labor and Employment. Thus, he was constrained to file the complaint for illegal dismissal before the NLRC.

LA RULING: In favor of Almodiel.

NLRC: reversed.

PETITIONER CLAIMS: His functions as CAM was absorbed by the Payroll/Mis/Finance Department under the management of resident
alien Danny Ang Tan Chai without any working permit from the Department of Labor and Employment as required by law. He claims that he
is better qualified than Ang Tan Chai, a B.S. Industrial Engineer, hired merely as a Systems Analyst Programmer or its equivalent in early
1987, promoted as MIS Manager only during the middle part of 1988 and a resident alien.

RAYTHEON: Almodiel as Cost Accounting Manager had not been absorbed by Ang Tan Chai, a permanent resident born in this country. It
claims to have established below that Ang Tan Chai did not displace petitioner or absorb his functions and duties as they were occupying
entirely different and distinct positions requiring different sets of expertise or qualifications and discharging functions altogether different and
foreign from that of petitioner's abolished position.

ISSUES: (1) WHETHER OR NOT NLRC committed grave abuse of discretion amounting to (lack of) or in excess of jurisdiction in
declaring as valid and justified the termination of petitioner on the ground of redundancy in the face of clearly established finding that
petitioner's termination was tainted with malice, bad faith and irregularity. – NO.

(2) WHETHER bad faith, malice and irregularity crept in the abolition of petitioner's position of Cost Accounting Manager on the ground of
redundancy. – NO.

HELD:

1. Termination of an employee's services because of redundancy is governed by Article 283 of the Labor Code which provides as
follows:

Art. 283. Closure of establishment and reduction of personnel. — The employer may also terminate the employment
of any employee due to installation of labor-saving devices, redundancy, retrenchment to prevent losses or the
closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the worker and the Department of Labor
and Employment at least one (1) month before the intended date thereof. In case of termination due to installation of
labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at
 least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and
in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to at least one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as
one (1) whole year.

Court finds that there is no dispute that Almodiel was advised one month before of his termination on the ground of redundancy in a written
notice. He was also issued a check which he refused to receive. Said check was sent to him via registered mail. DOLE was even sent a copy
of said notice of termination which is in accordance with the pertinent provisions of the labor code.

(2) Finding Almodiel’s work as CAM have been dispensed with or merely absorbed by another is however immaterial. The Court said that
redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the
enterprise. The characterization of an employee's services as no longer necessary or sustainable, and therefore, properly terminable, was an
exercise of business judgment on the part of the employer. The wisdom or soundness of such characterization or decision was not subject to
discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and
malicious action is not shown.

An employer has no legal obligation to keep more employees than are necessary for the operation of its business. Petitioner does not dispute
the fact that a cost accounting system was installed and used at Raytheon subsidiaries and plants worldwide; and that the functions of his
position involve the submission of periodic reports utilizing computerized forms designed and prescribed by the head office with the
installation of said accounting system. Petitioner attempts to controvert these realities by alleging that some of the functions of his position
were still indispensable and were actually dispersed to another department. What these indispensable functions that were dispersed, he failed
however, to specify and point out. Besides, the fact that the functions of a position were simply added to the duties of another does not affect
the legitimacy of the employer's right to abolish a position when done in the normal exercise of its prerogative to adopt sound business
practices in the management of its affairs.

Considering that Almodiel held a position which was managerial in character, Raytheon had a broad latitude of discretion in abolishing his
position. An employer has a much wider discretion in terminating employment relationship of managerial personnel compared to rank and
file employees. The reason obviously is that officers in such key positions perform not only functions which by nature require the employer's
full trust and confidence but also functions that spell the success or failure of an enterprise.

Almodiel claims that he is better qualified for the position. It should be noted, however, that Ang Tan Chai was promoted to the position.
Besides the fact that Ang Tan Chai's promotion thereto is a settled matter, it has been consistently held that an objection founded on the
ground that one has better credentials over the appointee is frowned upon so long as the latter possesses the minimum qualifications for the
position. In the case at bar, since petitioner does not allege that Ang Tan Chai does not qualify for the position, the Court cannot substitute its
discretion and judgment for the clearly and exclusively management prerogative. To do so would take away from the employer what rightly
belongs to him as aptly explained in National Federation of Labor Unions v. NLRC:

It is a well-settled rule that labor laws do not authorize interference with the employer's judgment in the conduct of his business.
The determination of the qualification and fitness of workers for hiring and firing, promotion or reassignment are exclusive
prerogatives of management. The Labor Code and its implementing Rules do not vest in the Labor Arbiters nor in the different
Divisions of the NLRC (nor in the courts) managerial authority. The employer is free to determine, using his own discretion and
business judgment, all elements of employment, "from hiring to firing" except in cases of unlawful discrimination or those which
may be provided by law. There is none in the instant case.

Finding no grave abuse of discretion on the part of the National Labor Relations Commission in reversing and annulling the decision of the
Labor Arbiter and that on the contrary, the termination of petitioner's employment was anchored on a valid and authorized cause under
Article 283 of the Labor Code, the instant petition for certiorari must fail. SO ORDERED.

F. WPP Marketing Communications, Inc. v. Galera

FACTS: Jocelyn Galera is an American citizen who was recruited from the United States of America by John Steedman, Chairman-WPP
Worldwide and Chief Executive Officer of Mindshare, Co., a corporation based in Hong Kong, China, to work in the Philippines for WPP
Marketing Communications, Inc. (WPP), a corporation registered and operating under the laws of Philippines.

Employment of GALERA with WPP became effective on September 1, 1999 solely on the instruction of the CEO and upon signing of the
contract, without any further action from the Board of Directors of private respondent WPP. Four months had passed when private
respondent WPP filed before the Bureau of Immigration an application for GALERA to receive a working visa, wherein she was designated
as Vice President of WPP. Galera alleged that she was constrained to sign the application in order that she could remain in the Philippines
and retain her employment.

On December 14, 2000, GALERA alleged she was verbally notified by private respondent STEEDMAN that her services had been
terminated from private respondent WPP. A termination letter followed the next day. Thus, a complaint for illegal dismissal was filed against
WPP.

LA held that WPP, Steedman, Webster, and Lansang liable for illegal dismissal and damages. Arbiter Madriaga stated that Galera was not
only illegally dismissed but was also not accorded due process. The NLRC reversed the LA decision. The NLRC stressed that Galera was
WPPs Vice-President, and therefore, a corporate officer at the time she was removed by the Board of Directors. Such being the case, the
imperatives of law require that we hold that the Arbiter below had no jurisdiction over Galeras case as, again, she was a corporate officer at
the time of her removal.

CA reversed the NLRC decision. It ruled that a person could be considered a "corporate officer" only if appointed as such by a corporations
Board of Directors, or if pursuant to the power given them by either the Articles of Incorporation or the By-Laws.

ISSUES: (1) Whether Galera is an Employee or Corporate Officer; and (2) Whether the Labor Arbiter and the NLRC have jurisdiction over
the present case.

HELD: Under Section 25 of the Corporation Code, the corporate officers are the president, secretary, treasurer and such other officers as
may be provided in the by-laws.

An examination of WPPs by-laws resulted in a finding that Galeras appointment as a corporate officer (Vice-President with the operational
title of Managing Director of Mindshare) during a special meeting of WPP's Board of Directors is an appointment to a non-existent corporate
office. WPPs by-laws provided for only one Vice-President. At the time of Galeras appointment on 31 December 1999, WPP already had one
Vice-President in the person of Webster. Galera cannot be said to be a director of WPP also because all five directorship positions provided
in the by-laws are already occupied. Finally, WPP cannot rely on its Amended By-Laws to support its argument that Galera is a corporate
officer. The Amended By-Laws provided for more than one Vice-President and for two additional directors. Even though WPPs stockholders
voted for the amendment on 31 May 2000, the SEC approved the amendments only on 16 February 2001. Galera was dismissed on 14
December 2000. WPP, Steedman, Webster, and Lansang did not present any evidence that Galeras dismissal took effect with the action of
WPP's Board of Directors.

Galera being an employee, then the Labor Arbiter and the NLRC have jurisdiction over the present case.

WPPs dismissal of Galera lacked both substantive and procedural due process. Apart from Steedman's letter dated 15 December 2000 to
Galera, WPP failed to prove any just or authorized cause for Galeras dismissal.

The law further requires that the employer must furnish the worker sought to be dismissed with two written notices before termination of
employment can be legally effected: (1) notice which apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the subsequent notice which informs the employee of the employers decision to dismiss him. Failure to comply with the
requirements taints the dismissal with illegality. WPPs acts clearly show that Galeras dismissal did not comply with the two-notice rule.

The employment permit must be acquired prior to employment. The law and the rules are consistent in stating that the employment permit
must be acquired prior to employment. The Labor Code states: "Any alien seeking admission to the Philippines for employment purposes and
any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from
the Department of Labor."

Galera cannot come to this Court with unclean hands. To grant Galeras prayer is to sanction the violation of the Philippine labor laws
requiring aliens to secure work permits before their employment. We hold that the status quo must prevail in the present case and we leave
the parties where they are. Hence, Galera is not entitled to monetary awards. This ruling, however, does not bar Galera from seeking relief
from other jurisdictions.

WHEREFORE, we PARTIALLY GRANT the petitions in G.R. Nos. 169207 and 169239. We SET ASIDE the Decision of the Court of
Appeals promulgated on 14 April 2005 as well as the Resolution promulgated on 1 August 2005 in CA-G.R. SP No. 78721.

G. General Milling, Corp. v. Torres

GENERAL MILLING CORPORATION vs. TORRES

Facts:

DOLE issued Alien Employment Permit in favor of petitioner Earl Timothy Cone, a US
citizen, employed as sports consultant & assistant coach for petitioner GMC. Petitioner
Cone’s application for a change of admission status from temporary visitor to pre-
arranged employee was approved by Bureau of Immigration. Thereafter, GMC requested
renewal of Cone’s AEP and that he be allowed to be employed as full-fledged coach which
was granted by DOLE. Private respondents Basketball Coaches Association of the
Philippines (BCAP) appealed the issuance of said AEP. DOLE Secretary eventually
ordered cancellation of Cone’s AEP on the ground that there was no showing that there is
no person willing to perform the services required nor that hiring of Cone would redound
to the national interest.

GMC – alleged that Sec. 6 (c) Rule XIV Book 1 of the Omnibus Rules Implementing the
Labor Code is null and void as it is in violation of the enabling law as the labor code does
not empower secretary to determine if the employment of an alien would redound to the
national interest.

Under Art. 40 of the Labor Code, respondent Secretary is empowered to make

determination as to the availability of the services of a person in the Philippines who is
competent, able and willing at the time of application to perform the services for which an
alien is desired. However, in the implementing rules, it empowers the Secretary to assess
as to whether or not the employment of the applicant will redound to the national interest.

Issue:

WON DOLE Secretary is empowered to make assessment as to WON the employment of

the applicant will redound to national interest.

Held:

In the first place, the second paragraph of Article 40 says: "[t]he employment permit may
be issued to a non-resident alien or to the applicant employer after a determination of the
non-availability of a person in the Philippines who is competent, able and willing at the
time of application to perform the services for which the alien is desired."

The permissive language employed in the Labor Code indicates that the authority granted
involves the exercise of discretion on the part of the issuing authority (DOLE Secretary).
This is in accordance also to the statement of objectives set forth in Article 12 of the Labor
Code that the Secretary of Labor must take into account in exercising his authority:

e) To regulate the employment of aliens, including the establishment of a registration

and/or work permit system;
The petition is dismissed in view of petitioner’s manifestation that AEP has already been
issued to petitioner Cone rendering the matter moot and academic.

HUMAN RESOURCES DEVELOPMENT

A. ARTICLES 57-81 OF THE LABOR CODE

BOOK TWO
HUMAN RESOURCES DEVELOPMENT PROGRAM

Title II
TRAINING AND EMPLOYMENT OF SPECIAL WORKERS

Chapter I
APPRENTICES

Art. 57. Statement of objectives. This Title aims:

To help meet the demand of the economy for trained manpower;

To establish a national apprenticeship program through the participation of employers, workers and government and non-government
agencies; and

To establish apprenticeship standards for the protection of apprentices.

Art. 58. Definition of Terms. As used in this Title:

“Apprenticeship” means practical training on the job supplemented by related theoretical instruction.

An “apprentice” is a worker who is covered by a written apprenticeship agreement with an individual employer or any of the entities
recognized under this Chapter.

An “apprenticeable occupation” means any trade, form of employment or occupation which requires more than three (3) months of practical
training on the job supplemented by related theoretical instruction.

“Apprenticeship agreement” is an employment contract wherein the employer binds himself to train the apprentice and the apprentice in turn
accepts the terms of training.
Art. 59. Qualifications of apprentice. To qualify as an apprentice, a person shall:

Be at least fourteen (14) years of age;

Possess vocational aptitude and capacity for appropriate tests; and

Possess the ability to comprehend and follow oral and written instructions.
Trade and industry associations may recommend to the Secretary of Labor appropriate educational requirements for different occupations.

Art. 60. Employment of apprentices. Only employers in the highly technical industries may employ apprentices and only in apprenticeable
occupations approved by the Secretary of Labor and Employment. (As amended by Section 1, Executive Order No. 111, December 24, 1986)

Art. 61. Contents of apprenticeship agreements. Apprenticeship agreements, including the wage rates of apprentices, shall conform to the
rules issued by the Secretary of Labor and Employment. The period of apprenticeship shall not exceed six months. Apprenticeship
agreements providing for 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 programs duly approved by the Secretary of Labor and
Employment. The Department shall develop standard model programs of apprenticeship. (As amended by Section 1, Executive Order No.
111, December 24, 1986)
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 recognized organizations, associations or groups and by the apprentice.

An apprenticeship agreement with a minor shall be signed in his behalf by his parent or guardian, if the latter is not available, by an
authorized representative of the Department of Labor, and the same shall be binding during its lifetime.

Every apprenticeship agreement entered into under this Title shall be ratified by the appropriate apprenticeship committees, if any, and a copy
thereof shall be furnished both the employer and the apprentice.

Art. 63. Venue of apprenticeship programs. Any firm, employer, group or association, industry organization or civic group wishing to
organize an apprenticeship program may choose from any of the following apprenticeship schemes as the training venue for apprentice:

Apprenticeship conducted entirely by and within the sponsoring firm, establishment or entity;
Apprenticeship entirely within a Department of Labor and Employment training center or other public training institution; or
Initial training in trade fundamentals in a training center or other institution with subsequent actual work participation within the sponsoring
firm or entity during the final stage of training.

Art. 64. Sponsoring of apprenticeship program. Any of the apprenticeship schemes recognized herein may be undertaken or sponsored by a
single employer or firm or by a group or association thereof or by a civic organization. Actual training of apprentices may be undertaken:

In the premises of the sponsoring employer in the case of individual apprenticeship programs;
In the premises of one or several designated firms in the case of programs sponsored by a group or association of employers or by a civic
organization; or
In a Department of Labor and Employment training center or other public training institution.

Art. 65. Investigation of violation of apprenticeship agreement. Upon complaint of any interested person or upon its own initiative, the
appropriate agency of the Department of Labor and Employment or its authorized representative shall 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. 66. Appeal to the Secretary of Labor and Employment. The decision of the authorized agency of the Department of Labor and
Employment may be appealed by any aggrieved person to the Secretary of Labor and Employment within five (5) days from receipt of the
decision. The decision of the Secretary of Labor and Employment shall be final and executory.

Art. 67. Exhaustion of administrative remedies. No person shall institute any action for the enforcement of any apprenticeship agreement or
damages for breach of any such agreement, unless he has exhausted all available administrative remedies.

Art. 68. Aptitude testing of applicants. Consonant with the minimum qualifications of apprentice-applicants required under this Chapter,
employers or entities with duly recognized apprenticeship programs shall have primary responsibility for providing appropriate aptitude tests
in the selection of apprentices. If they do not have adequate facilities for the purpose, the Department of Labor and Employment shall
perform the service free of charge.

Art. 69. Responsibility for theoretical instruction. Supplementary theoretical instruction to apprentices in cases where the program is
undertaken in the plant may be done by the employer. If the latter is not prepared to assume the responsibility, the same may be delegated to
an appropriate government agency.

Art. 70. Voluntary organization of apprenticeship programs; exemptions.

The organization of apprenticeship program shall be primarily a voluntary undertaking by employers;

When national security or particular requirements of economic development so demand, the President of the Philippines may require
compulsory training of apprentices in certain trades, occupations, jobs or employment levels where shortage of trained manpower is deemed
critical as determined by the Secretary of Labor and Employment. Appropriate rules in this connection shall be promulgated by the Secretary
of Labor and Employment as the need arises; and

Where services of foreign technicians are utilized by private companies in apprenticeable trades, said companies are required to set up
appropriate apprenticeship programs.

Art. 71. Deductibility of training costs. An additional deduction from taxable income of one-half (1/2) of the value of labor training expenses
incurred for developing the productivity and efficiency of apprentices shall be granted to the person or enterprise organizing an
apprenticeship program: Provided, That such program is duly recognized by the Department of Labor and Employment: Provided, further,
That such deduction shall not exceed ten (10%) percent of direct labor wage: and Provided, finally, That the person or enterprise who wishes
to avail himself or itself of this incentive should pay his apprentices the minimum wage.
Art. 72. Apprentices without compensation. The Secretary of Labor and Employment may authorize the hiring of apprentices without
compensation whose training on the job is required by the school or training program curriculum or as requisite for graduation or board
examination.

Chapter II
LEARNERS

Art. 73. Learners defined. Learners are persons hired as trainees in semi-skilled and other industrial occupations which are non-
apprenticeable and which may be learned through practical training on the job in a relatively short period of time which shall not exceed three
(3) months.

Art. 74. When learners may be hired. Learners may be employed when no experienced workers are available, the employment of learners is
necessary to prevent curtailment of employment opportunities, and the employment does not create unfair competition in terms of labor costs
or impair or lower working standards.

Art. 75. Learnership agreement. Any employer desiring to employ learners shall enter into a learnership agreement with them, which
agreement shall include:

The names and addresses of the learners;

The duration of the learnership period, which shall not exceed three (3) months;

The wages or salary rates of the learners which shall begin at not less than seventy-five percent (75%) of the applicable minimum wage; and

A commitment to employ the learners if they so desire, as regular employees upon completion of the learnership. All learners who have been
allowed or suffered to work during the first two (2) months shall be deemed regular employees if training is terminated by the employer
before the end of the stipulated period through no fault of the learners.
The learnership agreement shall be subject to inspection by the Secretary of Labor and Employment or his duly authorized representative.

Art. 76. Learners in piecework. Learners employed in piece or incentive-rate jobs during the training period shall be paid in full for the work
done.

Art. 77. Penalty clause. Any violation of this Chapter or its implementing rules and regulations shall be subject to the general penalty clause
provided for in this Code.

Chapter III
HANDICAPPED WORKERS

Art. 78. Definition. Handicapped workers are those whose earning capacity is impaired by age or physical or mental deficiency or injury.

Art. 79. When employable. Handicapped workers may be employed when their employment is necessary to prevent curtailment of
employment opportunities and when it does not create unfair competition in labor costs or impair or lower working standards.

Art. 80. Employment agreement. Any employer who employs handicapped workers shall enter into an employment agreement with them,
which agreement shall include:

The names and addresses of the handicapped workers to be employed;

The rate to be paid the handicapped workers which shall not be less than seventy five (75%) percent of the applicable legal minimum wage;

The duration of employment period; and

The work to be performed by handicapped workers.

The employment agreement shall be subject to inspection by the Secretary of Labor or his duly authorized representative.

Art. 81. Eligibility for apprenticeship. Subject to the appropriate provisions of this Code, handicapped workers may be hired as apprentices or
learners if their handicap is not such as to effectively impede the performance of job operations in the particular occupations for which they
are hired.

B. RA 7796
C. RA 7686
D. RA 7277

TRAINING AND EMPLOYMENT OF SPECIAL WORKERS

A. Apprentice

I. Article 58 of the Labor Code

Art. 58. Definition of Terms. As used in this Title:

“Apprenticeship” means practical training on the job supplemented by related theoretical instruction.

An “apprentice” is a worker who is covered by a written apprenticeship agreement with an individual employer or any of the entities
recognized under this Chapter.

An “apprenticeable occupation” means any trade, form of employment or occupation which requires more than three (3) months of practical
training on the job supplemented by related theoretical instruction.

“Apprenticeship agreement” is an employment contract wherein the employer binds himself to train the apprentice and the apprentice in turn
accepts the terms of training.

II. RA 7796, Section 4 (j-m)

SECTION 4. Definition of Terms. — As used in this Act:

j. “Apprenticeship” training within employment with compulsory related theoretical instructions involving a contract between an
apprentice and an employer on an approved apprenticeable occupation;
k. “Apprentice” is a person undergoing training for an approved apprenticeable occupation during an established period assured by an
apprenticeship agreement;
l. “Apprenticeship Agreement” is a contract wherein a prospective employer binds himself to train the apprentice who in turn accepts
the terms of training for a recognized apprenticeable occupation emphasizing the rights, duties and responsibilities of each party;
m. “Apprenticeable Occupation” is an occupation officially endorsed by a tripartite body and approved for apprenticeship by the
Authority;

III. Child Abuse Law (Article VIII Sections 12-16) (no particular provisions provided for sa syllabus, but since ito yung related
sa employment.)
ARTICLE VIII
Working Children

Section 12. Employment of Children. – Children below fifteen (15) years of age may be employed except:

1. When a child works directly under the sole responsibility of his parents or legal guardian and where only members of the employer's
family are employed: Provided, however, That his employment neither endangers his life, safety and health and morals, nor impairs
his normal development: Provided, further, That the parent or legal guardian shall provide the said minor child with the prescribed
primary and/or secondary education; or

2. When a child's employment or participation in public & entertainment or information through cinema, theater, radio or television is
essential: Provided, The employment contract concluded by the child's parent or guardian, with the express agreement of the child
concerned, if possible, and the approval of the Department of Labor and Employment: Provided, That the following requirements in
all instances are strictly complied with:

a. The employer shall ensure the protection, health, safety and morals of the child;

b. the employer shall institute measures to prevent the child's exploitation or discrimination taking into account the system
and level of remuneration, and the duration and arrangement of working time; and;

c. The employer shall formulate and implement, subject to the approval and supervision of competent authorities, a
continuing program for training and skill acquisition of the child.
In the above exceptional cases where any such child may be employed, the employer shall first secure, before engaging such child, a work
permit from the Department of Labor and Employment which shall ensure observance of the above requirement.

The Department of Labor Employment shall promulgate rules and regulations necessary for the effective implementation of this Section.

Section 13. Non-formal Education for Working Children. – The Department of Education, Culture and Sports shall promulgate a course
design under its non-formal education program aimed at promoting the intellectual, moral and vocational efficiency of working children who
have not undergone or finished elementary or secondary education. Such course design shall integrate the learning process deemed most
effective under given circumstances.

Section 14. Prohibition on the Employment of Children in Certain Advertisements. – No person shall employ child models in all commercials
or advertisements promoting alcoholic beverages, intoxicating drinks, tobacco and its byproducts and violence.

Section 15. Duty of Employer. – Every employer shall comply with the duties provided for in Articles 108 and 109 of Presidential Decree
No. 603.

Section 16. Penalties. – Any person who shall violate any provision of this Article shall suffer the penalty of a fine of not less than One
thousand pesos (P1,000) but not more than Ten thousand pesos (P10,000) or imprisonment of not less than three (3) months but not more
than three (3) years, or both at the discretion of the court; Provided, That, in case of repeated violations of the provisions of this Article, the
offender's license to operate shall be revoked.

IV. Century Canning Corp. v. Court of Appeals

CENTURY CANNING CORPORATION V. COURT OF APPEALS

Facts:

Century Canning Corp. hired Gloria C. Palad as fish cleaner at its tuna and sardines
factory. Palad signed on July 17, 1997 an apprenticeship agreement with petitioner and
received apprenticeship allowance. On July 25, 1997, petitioner Century submitted its
apprenticeship program for approval of TESDA of DOLE. TESDA approved the
apprenticeship’s program.

Eventually, performance evaluation was conducted wherein Palad received a rating of

“NI” or “Needs Improvement” since she scored only 27.75% based on a 100%
performance indicator. Considering as well that Palad incurred numerous tardiness and
absences. Petitioner issued a termination notice. Palad filed a complaint for illegal
dismissal.

LA – dismissed complaint for lack of merit

NLRC – affirmed

CA – held that apprenticeship agreement which Palad signed was not valid and binding
because it was executed more than two months before TESDA approved petitions for
apprenticeship program.

Issue: WON Palad is considered an apprentice.

Held:
Labor Code defines an apprentice as a worker who is covered by a written apprenticeship
agreement with an employer. One of the objectives of Title II (Training and Employment
of Special Workers) of the Labor Code is to establish apprenticeship standards for the
protection of apprentices.

ART. 60. Employment of apprentices. - Only employers in the highly technical industries
may employ apprentices and only in apprenticeable occupations approved by the Minister
of Labor and Employment.

ART. 61. Contents of apprenticeship agreements. - Apprenticeship agreements, including

the wage rates of apprentices, shall conform to the rules issued by the Minister of Labor
and Employment. The period of apprenticeship shall not exceed six months.
Apprenticeship agreements providing for 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 programs duly approved by the
Minister of Labor and Employment. The Ministry shall develop standard model programs
of apprenticeship.

The apprenticeship agreement between petitioner and private respondent was executed on
July 17, 1997 and the training started on the same day. Petitioner submitted its
apprenticeship program for approval only on July 25, 1997 and was approved on
September 26, 1997. Clearly, the apprenticeship agreement was enforced even before the
TESDA approved petitioner's apprenticeship program. Thus, the apprenticeship
agreement is void because it lacked prior approval from the TESDA. Prior approval from
the TESDA is necessary to ensure that only employers in the highly technical industries
may employ apprentices and only in apprenticeable occupations. Thus, under RA 7796,
employers can only hire apprentices for apprenticeable occupations which must be
officially endorsed by a tripartite body and approved for apprenticeship by the TESDA.

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 qua non before an apprenticeship
agreement can be validly entered into.

AS TO ILLEGAL TERMINATION:
The Labor Arbiter held that petitioner terminated Palad for habitual absenteeism and
poor efficiency of performance. Under Section 25, Rule VI, Book II of the Implementing
Rules of the Labor Code, habitual absenteeism and poor efficiency of performance are
among the valid causes for which the employer may terminate the apprenticeship
agreement after the probationary period.

What clearly appears is that complainant already passed the probationary status of the
apprenticeship agreement of 200 hours at the time she was terminated on 28 November
1997 which was already the fourth month of the apprenticeship period of 1000 hours. As
such, under the Code, she can only be dismissed for cause, in this case, for poor efficiency
of performance on the job or in the classroom for a prolonged period despite warnings
duly given to the apprentice.

Held:

There was no clear and sufficient evidence exist to warrant her dismissal. Absence of any
written warnings given to complainant reminding her of “poor performance”, the same is
of doubtful authenticity since the signature and date appearing therein are speculative. It
seems that the evaluation was made belatedly after the filing of the case. Palad was not
accorded due process as petitioner failed to warn her of alleged poor performance.

V. Nitto Enterprises v. NLRC

VI. Atlanta Industries v. Sebolino

VII. Conditions of Employment

A. Articles 61, 72, 124 of the Labor Code

Art. 61. Contents of apprenticeship agreements. Apprenticeship agreements, including the wage rates of apprentices, shall conform to the
rules issued by the Secretary of Labor and Employment. The period of apprenticeship shall not exceed six months. Apprenticeship
agreements providing for 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 programs duly approved by the Secretary of Labor and
Employment. The Department shall develop standard model programs of apprenticeship. (As amended by Section 1, Executive Order No.
111, December 24, 1986)

Art. 72. Apprentices without compensation. The Secretary of Labor and Employment may authorize the hiring of apprentices without
compensation whose training on the job is required by the school or training program curriculum or as requisite for graduation or board
examination.

BOOK THREE
CONDITIONS OF EMPLOYMENT

Title I
WORKING CONDITIONS AND REST PERIODS

Chapter V
WAGE STUDIES, WAGE AGREEMENTS AND WAGE DETERMINATION
Art. 124. Standards/Criteria for minimum wage fixing. The regional minimum wages to be established by the Regional Board shall be as
nearly adequate as is economically feasible to maintain the minimum standards of living necessary for the health, efficiency and general well-
being of the employees within the framework of the national economic and social development program. In the determination of such
regional minimum wages, the Regional Board shall, among other relevant factors, consider the following:

a. The demand for living wages;

b. Wage adjustment vis-à-vis the consumer price index;

c. The cost of living and changes or increases therein;

d. The needs of workers and their families;

e. The need to induce industries to invest in the countryside;

f. Improvements in standards of living;

g. The prevailing wage levels;

h. Fair return of the capital invested and capacity to pay of employers;

i. Effects on employment generation and family income; and

j. The equitable distribution of income and wealth along the imperatives of economic and social development.

The wages prescribed in accordance with the provisions of this Title shall be the standard prevailing minimum wages in every region. These
wages shall include wages varying with industries, provinces or localities if in the judgment of the Regional Board, conditions make such
local differentiation proper and necessary to effectuate the purpose of this Title.

Any person, company, corporation, partnership or any other entity engaged in business shall file and register annually with the appropriate
Regional Board, Commission and the National Statistics Office, an itemized listing of their labor component, specifying the names of their
workers and employees below the managerial level, including learners, apprentices and disabled/handicapped workers who were hired under
the terms prescribed in the employment contracts, and their corresponding salaries and wages.

Where the application of any prescribed wage increase by virtue of a law or wage order issued by any Regional Board results in distortions of
the wage structure within an establishment, the employer and the union shall negotiate to correct the distortions. Any dispute arising from
wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved,
through voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrators
within ten (10) calendar days from the time said dispute was referred to voluntary arbitration.

In cases where there are no collective agreements or recognized labor unions, the employers and workers shall endeavor to correct such
distortions. Any dispute arising therefrom shall be settled through the National Conciliation and Mediation Board and, if it remains
unresolved after ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the National Labor Relations
Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the dispute within twenty (20) calendar
days from the time said dispute is submitted for compulsory arbitration.

The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any increase in prescribed wage rates
pursuant to the provisions of law or wage order.

As used herein, a wage distortion shall mean a situation where an increase in prescribed wage rates results in the elimination or severe
contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to
effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of
differentiation.

All workers paid by result, including those who are paid on piecework, takay, pakyaw or task basis, shall receive not less than the prescribed
wage rates per eight (8) hours of work a day, or a proportion thereof for working less than eight (8) hours.

All recognized learnership and apprenticeship agreements shall be considered automatically modified insofar as their wage clauses are
concerned to reflect the prescribed wage rates. (As amended by Republic Act No. 6727, June 9, 1989)

VIII. Enforcement

A. Articles 65-67 of the Labor Code

Art. 65. Investigation of violation of apprenticeship agreement. Upon complaint of any interested person or upon its own initiative, the
appropriate agency of the Department of Labor and Employment or its authorized representative shall 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. 66. Appeal to the Secretary of Labor and Employment. The decision of the authorized agency of the Department of Labor and
Employment may be appealed by any aggrieved person to the Secretary of Labor and Employment within five (5) days from receipt of the
decision. The decision of the Secretary of Labor and Employment shall be final and executory.

Art. 67. Exhaustion of administrative remedies. No person shall institute any action for the enforcement of any apprenticeship agreement or
damages for breach of any such agreement, unless he has exhausted all available administrative remedies.

B. Learners

C. Handicapped Workers

I. Articles 78-81 of the Labor Code

Chapter III
HANDICAPPED WORKERS

Art. 78. Definition. Handicapped workers are those whose earning capacity is impaired by age or physical or mental deficiency or injury.

Art. 79. When employable. Handicapped workers may be employed when their employment is necessary to prevent curtailment of
employment opportunities and when it does not create unfair competition in labor costs or impair or lower working standards.

Art. 80. Employment agreement. Any employer who employs handicapped workers shall enter into an employment agreement with them,
which agreement shall include:

1. The names and addresses of the handicapped workers to be employed;

2. The rate to be paid the handicapped workers which shall not be less than seventy five (75%) percent of the applicable legal
minimum wage;

3. The duration of employment period; and

4. The work to be performed by handicapped workers.

The employment agreement shall be subject to inspection by the Secretary of Labor or his duly authorized representative.

Art. 81. Eligibility for apprenticeship. Subject to the appropriate provisions of this Code, handicapped workers may be hired as apprentices or
learners if their handicap is not such as to effectively impede the performance of job operations in the particular occupations for which they
are hired.

II. RA 7277: An Act Providing For The Rehabilitation, Self-Development And Self-Reliance Of Disabled Person And Their
Integration Into The Mainstream Of Society And For Other Purposes.
Note: (masyadong mahaba, so link nalang)

https://www.ncda.gov.ph/disability-laws/republic-acts/republic-act-7277/

III. Bernardo v. NLRC

Facts:
1. 43 deaf-mute complainants filed illegal dismissal cases against Far East Bank and Trust Co. Said bank has hired 56 deaf-mutes by
the time the complaint was filed. They all worked as Money Sorters and Counters. They all had the same format of Employment
Contract for Handicapped Workers. It stated that “The EMPLOYEE shall undergo a training period of one (1) month, after which
the BANK shall determine whether or not he/she should be allowed to finish the remaining term of this Contract.” The contract also
stipulated that the bank could terminate the employment at any time. Their employments were renewed every six months.
2. The complainants claim that they were all regular workers insofar as their work was desirable and necessary for the regular
operations of the bank. They also claim that the Magna Carta for Disabled Persons mandates that the bank treat them as regular
 employees and give them equal opportunity in employment in accordance with its provision regarding qualified able-bodied
workers (Section 5) and that they are also entitled to the same benefits and security of tenure.
3. As defense, Far East Bank argued that the complainants were a “special class” of workers and as such not regular workers. They
also argued that the complainants were hired only because of “pakiusap” and the special program was created to help tide over
handicapped workers who could do manual work for the bank. The bank also argued that they could not be classified as regular
workers because there were no plantilla positions for "money sorters," whose task used to be performed by tellers (that the work
they do is not a separate position on its own, that it is part of a teller’s job, and therefore, they could not be considered as regular
workers). Another argument that the bank posited is that it terminated them when the BSP required that money counting cannot be
done during the regular working hours (8am-5pm) and a nighttime schedule would be unsafe for handicapped people like the
complainants.
4. The bank also cites Brent School vs. Zamora wherein fixed-term employments were allowed.
5. The NLRC ruled that complainants could not be deemed regular employees under Article 280 of the Labor Code. The NLRC also
declared that the Magna Carta for Disabled Persons was not applicable, "considering the prevailing circumstances/milieu of the
case." Hence, the complainants filed a petition for certiorari to the Supreme Court

Issue: W/N the complainants are regular employees and W/N the Magna Carta for Disabled Persons applies
Ruling:
1. The petition is meritorious. However, only the employees who worked for more than six months and whose contracts were renewed
are deemed regular. Hence, their dismissal from employment was illegal.
2. The facts, viewed in light of the Labor Code and the Magna Carta for Disabled Persons, indubitably show that the petitioners,
except sixteen of them, should be deemed regular employees. As such, they have acquired legal rights that this Court is duty-bound
to protect and uphold, not as a matter of compassion but as a consequence of law and justice. 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.
3. 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. 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."
4. Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus covered by Article 280 of the Labor
Code
5. Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of respondent bank
6. With the exception of sixteen of them, petitioners performed these tasks for more than six months. Thus, the following twenty-
seven petitioners should be deemed regular employees
7. Articles 280 and 281 of the Labor Code put an end to the pernicious practice of making permanent casuals of our lowly employees
by the simple expedient of extending to them probationary appointments, ad infinitum."
8. Brent School vs. Zamora does not apply to this case.
9. A contract of employment is impressed with public interest. Parties are not at liberty to keep themselves and their relationships from
the effect of labor laws and regulations by stipulation. The agreement of the parties regarding the period of employment cannot
prevail over the provisions of the Magna Carta for Disabled Persons. Not only the constitutional bias in favor of the working class,
but also the concern of the State for the plight of the disabled. The noble objectives of Magna Carta for Disabled Persons are not
based merely on charity or accommodation, but on justice and the equal treatment of qualified persons, disabled or not.
10. In the present case, the handicap of petitioners (deaf-mutes) is not a hindrance to their work. The eloquent proof of this statement is
the repeated renewal of their employment contracts. Why then should they be dismissed, simply because they are physically
impaired?

VIII. Working Conditions and Rest Period

a. Exempt from Coverage
i. Government Employees
ii. Managerial Employee

NATIONAL SUGAR REFINERIES CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION and NBSR
SUPERVISORY UNION, (PACIWU) TUCP
G.R. No. 101761. March 24, 1993
https://lawphil.net/judjuris/juri1993/mar1993/gr_101761_1993.html
Subject Matter: Working Conditions and Rest Period > Exempt from Coverage > Managerial Employee

FACTS:
National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned and controlled by the Government, operates 3
sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation
No. 50.

NBSR supervisory union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery, namely, the Technical Assistant
to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor, Senior Financial/Budget Analyst, General, Cost, and Sugar
Accountants, other shift supervisors, among others.

NASUREFCO implemented a Job Evaluation (JE) Program affecting all employees, from rank-and-file to department heads. The JE
Program was designed to rationalize the duties and functions of all positions, reestablish levels of responsibility, and recognize both wage and
operational structures. Jobs were ranked according to effort, responsibility, training and working conditions and relative worth of the job. As
a result, all positions were re-evaluated, and all employees including the members of respondent union were granted salary adjustments and
increases in benefits commensurate to their actual duties and functions.

About ten years prior to the JE Program, the members of Union were treated in the same manner as rank-and file employees. As such, they
used to be paid overtime, rest day and holiday pay.

With the implementation of the JE Program, the following adjustments were made:
(1) they were re-classified under levels S-5 to S-8 which are considered managerial staff for purposes of compensation and benefits;
(2) there was an increase in basic pay of the average of 50% of their basic pay;
(3) longevity pay was increased on top of alignment adjustments;
(4) they were entitled to increased company COLA of P225.00 per month;
(5) there was a grant of P100.00 allowance for rest day/holiday work.

Two years after the implementation of the JE Program, specifically on June 20, 1990, the Union filed a complainant with the executive labor
arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code.

LA’s Decision
NASUREFCO was directed to pay the individual members of complainant union the usual overtime pay, rest day pay and holiday pay

That the along span of time during which the benefits were being paid to the supervisors has accused the payment thereof to ripen into
contractual obligation

Complainants cannot be estopped from questioning the validity of the new compensation package despite the fact that they have been
receiving the benefits therefrom

NLRC’s Decision
Affirmed the decision of the labor arbiter

That the members of respondent union are not managerial employees, as defined under Article 212 (m) of the Labor Code and, therefore,
they are entitled to overtime, rest day and holiday pay. These supervisory employees are merely exercising recommendatory powers subject
to the evaluation, review and final action by their department heads;

CONTENTIONS

NASUREFCO
That for purposes of determining whether or not the members of respondent union are entitled to overtime, rest day and holiday pay, said
employees should be considered as "officers or members of the managerial staff" as defined under Article 82, Book III of the Labor Code on
"Working Conditions and Rest Periods" and amplified in Section 2, Rule I, Book III of the Rules to Implement the Labor Code

For purposes of forming and joining unions, certification elections, collective bargaining, and so forth, the union members are supervisory
employees. In terms of working conditions and rest periods and entitlement to the questioned benefits, however, they are officers or members
of the managerial staff, hence they are not entitled thereto.
ISSUE:
Whether supervisory employees, as defined in Article 212 (m), Book V of the Labor Code, should be considered as officers or members of
the managerial staff under Article 82, Book III of the same Code, and hence are not entitled to overtime rest day and holiday pay.

Whether the members of respondent union are entitled to overtime, rest day and holiday pay

RATIO:

Issue # 1

It is not disputed that the members of respondent union are supervisory employees, as defined employees, as defined under Article 212(m),
Book V of the Labor Code on Labor Relations, which reads:
"(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire,
transfer, suspend, lay-off, recall, discharged, assign or discipline employees. Supervisory employees are those who, in the interest of the
employer effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but
requires the use of independent judgment. All employees not falling within any of those above definitions are considered rank-and-file
employees of this Book."

Issue # 2:

The question whether a given employee is exempt from the benefits of the law is a factual one dependent on the circumstances of the
particular case, In determining whether an employee is within the terms of the statutes, the criterion is the character of the work performed,
rather than the title of the employee's position.

it is apparent that the members of respondent union discharge duties and responsibilities which ineluctably qualify them as officers or
members of the managerial staff, as defined in Section 2, Rule I Book III of the aforestated Rules to Implement the Labor Code, viz.:

(1) their primary duty consists of the performance of work directly related to management policies of their employer;
(2) they customarily and regularly exercise discretion and independent judgment;
(3) they regularly and directly assist the managerial employee whose primary duty consist of the management of a department of the
establishment in which they are employed
(4) they execute, under general supervision, work along specialized or technical lines requiring special training, experience, or
knowledge;
(5) they execute, under general supervision, special assignments and tasks; and
(6) they do not devote more than 20% of their hours worked in a work-week to activities which are not directly and clearly related
to the performance of their work hereinbefore described.

It is admitted that these union members are supervisory employees and this is one instance where the nomenclatures or titles of their jobs
conform with the nature of their functions.

That Payment had Ripened in Contractual Obligation

After the JE Program there was an ascent in position, rank and salary. This in essence is a promotion which is defined as the advancement
from one position to another with an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in
salary.

With the promotion of the members of respondent union, they occupied positions which no longer met the requirements imposed by law.
Their assumption of these positions removed them from the coverage of the law, ergo, their exemption therefrom.

RULING:
The impugned decision and resolution of respondent National Labor Relations Commission promulgated on July 19, 1991 and August 30,
1991, respectively, are hereby ANNULLED and SET ASIDE for having been rendered and adopted with grave abuse of discretion, and the
basic complaint of private respondent union is DISMISSED.
Penarada v. Baganga Plywood, GR. No. 159577
CHARLITO PEÑARANDA, vs. BAGANGA PLYWOOD CORPORATION and HUDSON CHUA
G.R. No. 159577 May 3, 2006

https://www.lawphil.net/judjuris/juri2006/may2006/gr_159577_2006.html

Subject Matter: Working Conditions and Rest Period > Exempt from Coverage > Managerial Employee

Nature of Action: Petition for Review1 under Rule 45 of the Rules of Court

FACTS:

BPC is a domestic corporation duly organized and existing under Philippine laws and is represented herein by its General Manager HUDSON
CHUA

Charlito Peñaranda was hired as Foreman/Boiler Head/Shift Engineer of Baganga Plywood Corporation (BPC) to take charge of the
operations and maintenance of its steam plant boiler.6 In May 2001, Peñaranda filed a Complaint for illegal dismissal with money claims
against BPC and its general manager, Hudson Chua, before the NLRC.

CONTENTIONS:
Penarada
His services [were] terminated without the benefit of due process and valid grounds in accordance with law. Furthermore, he was not paid his
overtime pay, premium pay for working during holidays/rest days, night shift differentials and finally claims for payment of damages and
attorney’s fees having been forced to litigate the present complaint.

BPC
Separation from service was done pursuant to Art. 283 of the Labor Code

BPC] was on temporary closure due to repair and general maintenance and it applied for clearance with the DOLE Region. XI to shut down
and to dismiss employees

When respondent [BPC] partially reopened in January 2001, [Peñaranda] failed to reapply. He opted to severe employment when he insisted
payment of his separation benefits.

He is entitled to overtime pay, premium pay for working on rest days, and attorney’s fees

LA’s Decision
There was no illegal dismissal and that petitioner’s Complaint was premature because he was still employed by BPC.

Penarada’s money claims for illegal dismissal was also weakened by his quitclaim and admission during the clarificatory conference that he
accepted separation benefits, sick and vacation leave conversions and thirteenth month pay.

NLRC’s Decision
Commission deleted the award of overtime pay and premium pay for working on rest days. According to the Commission, petitioner was not
entitled to these awards because he was a managerial employee.

CA’s Decision
CA dismissed Peñaranda’s Petition for failing to comply with procedure

ISSUE:

Whether or not Penarada is a regular, common employee entitled to monetary benefits under Art. 82 [of the Labor Code].
Whether or not Penarada is entitled to the payment of OVERTIME PAY and OTHER MONETARY BENEFITS."
RATIO:

Nature of Employment - Managerial Employee

Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Labor standards provide the working
conditions of employees, including entitlement to overtime pay and premium pay for working on rest days. 29 Under this provision,
managerial employees are "those whose primary duty consists of the management of the establishment in which they are employed or of a
department or subdivision."
The Implementing Rules of the Labor Code state that managerial employees are those who meet the following conditions:
"(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."

Managerial Staff

The Court disagrees with the NLRC’s finding that petitioner was a managerial employee. However, petitioner was a member of the
managerial staff, which also takes him out of the coverage of labor standards. Like managerial employees, officers and members of the
managerial staff are not entitled to the provisions of law on labor standards. 32 The Implementing Rules of the Labor Code define members of
a managerial staff as those with the following duties and responsibilities:

"(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."

Petitioner 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. As supervisor, petitioner is deemed a member of the managerial staff.

In his Position Paper, he stated that he was the foreman responsible for the operation of the boiler. 36 The term foreman implies that he was the
representative of management over the workers and the operation of the department.

RULING:
The Petition is DENIED.