Labor Law

Last Minute Tips

Fundamental Principles and Concepts

State Policy Towards Labor
Construction in favor of labor

Q: What is the Presumption of Inherent Inequality?

A: The presumption is that the employer and the employee are on unequal footing, so the State has the responsibility to protect
the employee.

This presumption, however, must be taken on a case-to-case basis. In situations where special qualifications are required for
employment, such as a Master’s degree, prospective employees are in a better position to bargain with the employer. Employees
with special qualifications would be on equal footing with their employers, and thus, would need a lesser degree of protection
from the State than an ordinary rank-and-file worker. [Perfecto Pascua v. Bank Wise Inc., G.R. No. 191460 & 191464 (2018)]

Q: Blue Corp. hired Juan as a rank-and-file employee on probationary status for six (6) months. One (1) week before the end
of Juan's probationary period, he received a letter notifying him of the termination of his employment on account of his
unsatisfactory performance during said period. However, the letter was silent on the specific acts or instances of Juan’s subpar
performance. Juan filed for illegal dismissal against Blue Corp. Blue Corp., on the other hand, contended that it had the right to
terminate Juan especially since the latter was still on probationary status. Further, Blue Corp. argued that employers are
empowered by law to choose workers based on their own standards. As the judge, rule on the foregoing case.

A: Blue Corp.’s argument is untenable. Article 4 of the Labor Code provides that all doubts in the implementation and
interpretation of the provisions of the Labor Code shall be resolved in favor of labor. Although a probationary or temporary
employee has a limited tenure, he still enjoys the constitutional protection of security of tenure. During his tenure of employment
or before his contract expires, he cannot be removed except for cause as provided for by law. Furthermore, while it is recognized
that employers indeed have the right to select and discharge employees freely, such right is subject to regulation by the State in
its exercise of police power. In view of Blue Corp.’s failure to substantiate its allegation that Juan performed poorly and failed
to meet the standards of the company, the termination resulting therefrom must be declared illegal. [Euro-Linea v. NLRC, G.R.
No. 75782, December 1, 1987]

Q: How are the provisions of the Labor Code construed?

A: Art. 4 of the Labor Code mandates that all doubts in the implementation and interpretation of the provisions thereof,
including its implementing rules and regulations, shall be resolved in favor of labor. This is merely in keeping with the spirit of
our Constitution and laws which lean over backwards in favor of the working class, and mandate that every doubt must be
resolved in their favor. Thus, if doubts exist between the evidence presented by the employer and that of the employee, the
scales of justice must be tilted in favor of the latter. [LC, Art. 4; Hocheng Philippines Corporation v. Farrales, G.R. No. 211497, March
18, 2015]
 Pre-Employment
Recruitment and Placement of Local and Migrant Workers
Regulation of Recruitment and Placement Activities: Ban on Direct Hiring

Q: What is the rule on direct hiring and does it admit of exceptions?

A: As a general rule, Article 18 of the Labor Code provides that no employer may directly hire an OFW, except for the following:
a) Members of the diplomatic corps;
b) International organizations;
c) Heads of state and government officials with the rank of at least deputy minister; or
d) Other employers as may be allowed by the Secretary of Labor and Employment, such as:
1. Those provided in (a), (b) and (c) who bear a lesser rank, if endorsed by the Philippine Overseas Employment Office
(POLO), or Head of mission in the absence of the POLO;
2. Professionals and skilled workers with duly executed/authenticated contracts containing terms and conditions over and
above the standards set by the POEA. The number of professional and skilled OFW hired for the first time by the employer
shall not exceed 5 persons. For the purpose of determining the number, workers hired as a group shall be counted as one;
or
3. Workers hired by a relative/family member who is a permanent resident of the host country, except domestic workers (live-
in caregiver/care worker or household service workers) [Art. 18, Labor Code POEA Memorandum Circular No. 08 Series of 2018
- Implementing Guidelines on the Registration of Direct-Hire Overseas Filipino Workers (OFWs)]

Illegal Recruitment [Labor Code and the Migrant Workers and Overseas Employment Act of 1995 (RA 8042), as
amended by RA 10022]: Elements

Q: Peter, Paul, and James are desperate to find a job. During their search, they saw a small office with a sign that says: “Apply
here, work abroad.” They immediately went to the office and saw Tony at the desk. Tony promised the three a job in Brazil,
and, in exchange, the three paid Tony a lump sum of money. A year has passed, and Peter, Paul, and James have not yet been
able to work abroad. They also found out that Tony does not have the necessary license to employ Filipinos overseas. You are
a newly licensed lawyer and they approached you. What would be your advice?

A: I would advise them to file a case of illegal recruitment in large scale against Tony. Under R.A. No. 8042 in relation to the
Labor Code, the elements of illegal recruitment are: (1) Offender has no valid license or authority required by law to enable one
to lawfully engage in the recruitment and placement of workers; and (2) 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. 10022. A third element needs to be proved to establish large-scale illegal recruitment:
(3) Offender commits the illegal recruitment activities against three or more persons, individually or as a group. In the case at
bar, all elements are present since it was found out that: 1) Tony does not have the required license; 2) Tony promised and
recruited the three for employment abroad for a fee which is technically illegal recruitment and placement under Article 13 (b)
of the Labor Code and Section 6 of R.A. No. 10022, and; 3) Tony committed illegal recruitment activities against three persons.
Thus, all three elements being present in the instant case, Tony committed illegal recruitment in large scale in violation of RA
8042. [People vs. Julia Regalado Estrada, G.R. No. 225730, February 28, 2018]

Illegal Recruitment [Labor Code and the Migrant Workers and Overseas Employment Act of 1995 (RA 8042), as
amended by RA 10022]: Illegal Recruitment v. Estafa
Q: Differentiate illegal recruitment and estafa.
A: The offense of illegal recruitment is malum prohibitum where the criminal intent of the accused is not necessary for conviction, while
estafa is malum in se where the criminal intent of the accused is crucial for conviction. Conviction for offenses under the Labor Code does
not bar conviction for offenses punishable by other laws. Conversely, conviction for estafa under par. 2(a) of Art. 315 of the Revised Penal
Code does not bar a conviction for illegal recruitment under the Labor Code. It follows that one's acquittal of the crime of estafa will not
necessarily result in his acquittal of the crime of illegal recruitment in large scale, and vice versa. [People v. Dolores Ocden, G.R. No. 173198, June
01, 2011.]
 Employment Proper
Management Prerogative
Transfer of Employees

Q: Eden’s Garden is a resort complex in Pampanga where Joy works as an Account Manager. She failed to comply with a
directive from her superior and after compliance with due process, she was found to have committed acts of insubordination.
She was suspended. Later on, after finding out that the company plans to transfer her to its Manila office with an alleged
relocation allowance which she deemed was insufficient, she filed a complaint for constructive dismissal. She refused to transfer
because her family lives in Pampanga. Did the transfer amount to constructive dismissal?

A: No. A transfer constitutes constructive dismissal when it is unreasonable, inconvenient, or prejudicial to the employee, or
involves a demotion in rank or diminution of salaries, benefits, and other privileges, or when the acts of discrimination,
insensibility or disdain on the part of the employer become unbearable for the employee, forcing her to forego her employment.

Proceeding from the foregoing, though the transfer might be potentially inconvenient, it was neither unreasonable nor
oppressive. There was no demotion in rank as she retained her position. Likewise, there was no diminution of benefits and
salaries, to the contrary, the company even offered relocation allowance as an added benefit. Lastly, there is no showing that the
transfer was done in bad faith, and neither was it alleged. Thus, the transfer subject of the instant case does not amount to
constructive dismissal. [Chateau Royale Sports & Country Club v. Balba, G. R. No. 197492, Jan. 18, 2017]

Labor Standards
Conditions of Employment - Holidays

Q: DOLE discovered that Company A underpays its employees of regular Muslim holiday pay and so the DOLE issued a
compliance order directing Company A to consider Muslim holidays as regular holidays. Company A insists that said holidays
should only be applicable to Muslims. Is Company A correct?

A: NO. Muslim holidays are provided under the Code of Muslim Personal Laws and should be read in conjunction with Article
94 of the Labor Code. There should be no distinction between Muslims and non-Muslims as regards payment of benefits for
Muslim holidays. Wages and other emoluments granted by law to the working man are determined on the basis of the criteria
laid down by laws and certainly not on the basis of the worker's faith or religion. [San Miguel Corp. v. CA, G.R. No. 146775, Jan.
30, 2002]

Conditions of Employment - Hours of Work: Overtime Work

Q: Does work constituted on a Saturday automatically entitle an employee to Overtime Work Compensation?

A: No. Overtime work consists of hours worked on a given day in excess of the applicable work period, which here is eight
(8) hours. It is not enough that the hours worked fall on disagreeable or inconvenient hours. In order that work may be
considered as overtime work, the hours worked must be in excess of and in addition to the eight (8) hours worked during the
prescribed daily work period, or the forty (40) hours worked during the regular work week Monday thru Friday. [Caltex Regular
Employees, etc. v. Caltex (Phils.) Inc., G.R. No. 111359, August 15, 1995]
 Special Groups of Employees - Persons with Disabilities

Q: Pera, Inc. employs Carlito Sanza, a disabled person. Sanza complained with the management that their office facility is not
conducive for him due to existing physical and structural barriers. The management, after evaluating the importance of Carlito
as a valued employee, decided to make improvements to the office facilities to make it more accessible to Sanza. The
improvements which Pera, Inc. made were in accordance with the required improvements and modifications of facilities required
under Batas Pambansa Bilang 344. The total direct cost of all the improvements amounted to PHP 500,000.

The legal team of Pera, Inc. advised the management that they can further deduct PHP 250,000 from their net taxable income,
in accordance with Republic Act 7277, which specifically states that “[p]rivate entities that improved or modify their physical
facilities in order to provide reasonable accommodation for disabled persons shall also be entitled to an additional deduction
from their net taxable income, equivalent to fifty percent (50%) of the direct costs of the improvements or modifications.” The
accounting team agreed with this advice.

Is the legal team correct?

A: No, the legal team is incorrect in saying that the company can deduct fifty percent (50%) of the direct cost of the
improvements from the net taxable income. Section 8(c) of Republic Act 7277 is clear that the deduction from the net taxable
income does not apply to improvements or modifications of facilities required under Batas Pambansa Bilang 344. In this case,
the improvements made by Pera, Inc. were all in accordance with Batas Pambansa Bilang 344. Thus, they cannot claim further
deductions from their net taxable income. [Republic Act No. 7277, Sec. 8(c)]

Social Welfare Legislation

Disability and Death Benefits - POEA Standard Employment Contract

Q: What are the guidelines for claim of Permanent and Total Disability Benefits?

A: 1. The company-designated physician must issue a final medical assessment on the seafarer's disability grading within a period
of 120 days from the time the seafarer reported to him;

2. If the company-designated physician fails to give his/her assessment within the period of 120 days, without any justifiable
reason, then the seafarer's disability becomes permanent and total;

3. If the company-designated physician fails to give his/her assessment within the period of 120 days with a sufficient
justification (e.g. seafarer required further medical treatment or seafarer was uncooperative), then the period of diagnosis and
treatment shall be extended to 240 days. The employer has the burden to prove that the company-designated physician has
sufficient justification to extend the period; and

4. If the company-designated physician still fails to give his assessment within the extended period of 240 days, then the
seafarer’s disability becomes permanent and total, regardless of any justification. [Jebsens Maritime Inc. v. Rapiz, G.R. No. 218871
(2017)]
 Post-Employment
Employer-Employee Relationship
Employer-Employee Relationship: Tests to Determine Employer-Employee Relationship

Q: Rivers, a well-known and talented news anchor, was contracted by XYZ Corporation to be its talent newscaster. He was
paid by XYZ Corp on a monthly basis and executed his job as he pleases. XYZ Corp, then, issued a memo prohibiting its talents
from appearing in commercial advertisements. Despite the memo, Rivers appeared in a commercial advertisement promoting
“Wave Powdered Detergent”. Rivers was given a verbal warning but was subsequently suspended. Rivers filed for illegal
dismissal, illegal suspension, and money claims against XYZ Corp. XYZ Corp asserts that it has no employer-employee
relationship with Rivers to avoid payment of Rivers' money claims. Is XYZ Corp correct?

A: Yes. In the case of Tiangco v. ABS-CBN, the court reiterated the test in determining the existence of an employer- employee
relationship. It held that there exists an employer-employee relationship when it passes the four-fold test, namely:
(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. In the case at hand, it is clear from the facts that XYZ Corp does not control the
means and method by which Rivers’ work is accomplished as “he executed his job as he pleases”. Thus, Rivers is not an employee
of XYZ Corp but merely an independent contractor. Possession of unique skills, expertise, or talent is a persuasive element of
an independent contractor. It becomes conclusive if it is established that the worker performed the work according to his/her
own manner and method and free from the principal's control except to the result.[Carmela Tiangco v. ABS CBN Broadcasting
Corporation, G.R. No. 200434, 6 December 2021]

Legitimate Subcontracting v. Labor-Only Contracting: Elements

Q: What are the elements of a legitimate contracting or subcontracting?

A: The elements of a legitimate contracting or subcontracting are as follows:
1. The contractor or subcontractor is engaged in a distinct and independent business and undertakes to perform the job or
work on its own responsibility according to its own method;
2. The contractor or subcontractor has substantial capital to carry out the job farmed out by the principal on his account,
manner and method, investment in the form of tools, equipment, machinery and supervision;
3. In performing the work farmed out, the contractor or subcontractor is free from control and/or discretion of the principal
in all matters connected with the performance of the work except as to the result thereto; and
4. The service agreement ensures compliance with all the rights and benefits for all the employees of the contractor or
subcontractor under the labor laws. [DO 174-17, Sec. 8]

Q: What are the elements of a labor-only contracting?

A: The elements of a legitimate contracting or subcontracting are as follows:
1. (i) The contractor or subcontractor does not have substantial capital, or
(ii) The contractor or subcontractor does not have investments in the form of tools, equipment, machineries,
supervision, work premises, among others, and
(iii) The contractor’s or subcontractor’s employees recruited and placed are performing activities which are directly
related to the main business operation of the principal;

or
2. The contractor or subcontractor does not exercise the right to control over the performance of the work of the
employees. [DO 174-17, Sec. 5]
 Termination of Employment by Employee

Q: Differentiate constructive dismissal from resignation.

A: Resignation is defined as a formal pronouncement or relinquishment of an office, with the intention of relinquishing the
office accompanied by the act of relinquishment. The fact of resignation is supported by the concurrence of the following: (1)
the intent to relinquish one’s office; and (2) the overt act of relinquishment. In illegal dismissal cases, fundamental is the rule
that when an employer interposes the defense of resignation, on him necessarily rests the burden to prove that the employee
indeed voluntarily resigned. On the other hand, there is constructive dismissal where “there is cessation of work because
‘continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a
diminution in pay’ and other benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made to appear
as if it were not, constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or disdain by an employer
becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued
employment.” [Villola v. United Philippine Lines, Inc. and Fernando T. Lising, G.R. No. 230047, Oct. 9, 2019. - On resignation; Regala v.
Manila Hotel Corporation, G.R. No. 204684, Oct. 5, 2020. - on constructive dismissal]

Jurisdiction and Remedies

Labor Arbiter
Jurisdiction of Labor Arbiter v. Jurisdiction of Regional Director

Q: Jack and Jill were hired by Bus Two’s in 2010. They averred that since the start of their employment, they have yet to receive
their 13th month pay, holiday pay, five-day service incentive leave pay, rest day pay, overtime pay, and ECOLA. They further
claimed that their daily salaries were at P337.00, below the prevailing daily minimum wage of P466.00 at that time in NCR.

A complaint was lodged in the NLRC for underpayment of wages, non-payment of holiday pay, holiday premium, rest day
premium, service incentive leave, 13th month pay, and attorney’s fees was filed by the respondents against Bus Two’s. It however
assailed the jurisdiction of the labor tribunal alleging that they have no jurisdiction over the subject matter. Is Bus Two’s
argument correct?

A: Yes. DOLE, pursuant to Article 128 of the Labor Code, has the purview of the jurisdiction. If a complaint is filed with the
NLRC, and there is still an existing employer-employee relationship, the jurisdiction is properly with the DOLE. In the present
case, the employee-employer relationship was not denied by Bus Two’s and neither was it alleged that it has already been
terminated. Therefore, there being an existing employer-employee relationship, the case is within the jurisdiction of the DOLE
and not of the NLRC. [Del Monte Land Transport Bus, Co. v. Renante A. Armenta etl al., G.R. No. 240144, February 3, 2021, (Hernando,
J.)]

Requisites to Perfect an Appeal with the NLRC

Q: A group of employees filed a complaint for illegal dismissal against Company X. The Labor Arbiter (LA) ruled in their favor,
leading to Company X filing an appeal to the NLRC. Company X also filed a motion to reduce bond and tendered a cash bond
in a reduced amount.

The motion to reduce bond was never acted upon by the NLRC, but the latter acted on the appeal and reversed the LA’s
decision. Decide whether the NLRC’s disposal of the appeal decision suffices as a grant of Company X’s motion to reduce
bond.

A: No, the appeal decision did not amount to the grant of the motion to reduce bond.

In the case of Pacific Royal Basic Foods, Inc. v. Noche et al., the Supreme Court ruled that, before an aggrieved employer
appealing before the NLRC may be allowed to post a bond in a reduced amount, the NLRC should first issue an express ruling
on the motion to reduce bond.
Whether the NLRC accepts or rejects the appellant’s motion to reduce bond, the ruling must be unequivocal, and such ruling
must be issued before or at the time the NLRC resolves the appeal by final judgment. Failure to do so shall render the NLRC
liable for grave abuse of discretion for having ruled on an appeal without acquiring jurisdiction over the same, and the judgment
it had issued shall be vacated as null and void. [Pacific Royal Basic Foods, Inc. v. Violeta Noche, et al., G.R. No. 202392, October 4,
2021]

DOLE Secretary
Jurisdiction

Q: What condition/s must be present in order for the Secretary of Labor to assume jurisdiction over a labor dispute that causes
or will likely cause a strike or lockout in an industry indispensable to the national interest?
A: 1. Both parties have requested the Secretary of Labor and Employment to assume jurisdiction over the labor dispute; OR
2. After a conference called by the Office of the Secretary of Labor and Employment on the propriety of its issuance, motu
proprio or upon a request or petition by either party to the labor dispute [Labor Code, IRR, Book V, Rule XXII, Sec. 15, as amended
by D.O. No. 40-H-13]

National Conciliation and Mediation Board

Conciliation vs. Mediation

Q: What is the difference between Mediation and Conciliation?

A: A preventive mediation case is one wherein, by virtue of a formal or informal request from either or both of the parties or
on the NCMB’s own initiative for conciliation and mediation assistance, potential labor disputes are sought to be mediated to
prevent it from further becoming an actual labor dispute.

On the other hand, a conciliation case is one where actual and existing labor disputes subject of a notice of strike or lockout are
subject to conciliation by the NCMB. [NCMB Manual of Procedures, Rule III, Section 1 (3); NCMB Manual of Procedures, Rule III,
Section 1 (20)]

DOLE Regional Directors

Q: When does a money claim prescribe and with whom must such claim be filed?

A: As provided in Article 291 of the Labor Code, a money claim arising from an employer-employee relationship must be filed
within three (3) years from the time the cause of action had occurred. Furthermore, under Article 292 of the Labor Code
provides that such money claim must also be instituted with the appropriate entity independent of any criminal action; and
pending the final determination of the money claim, no civil action from the same cause of action shall be instituted in any
court, except employees’ compensation cases which shall be governed by the provisions of the Labor Code. [Labor Code, Art.
291; Labor Code, Art. 292]