Module 1

CONCEPTS

A. SOCIAL JUSTICE

Definition

Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of
laws and the equalization of social and economic forces by the State so that justice in its rational and
objectively secular conception may at least be approximated. Social justice means the promotion of the
welfare of all the people, the adoption by the Government of measures calculated to insure economic
stability of all the competent elements of society, through the maintenance of a proper economic and
social equilibrium in the interrelations of the members of the community, constitutionally, through the
adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers
underlying the existence of all governments on the time-honored principle of salus populi est suprema lex.
Social justice, therefore, must be founded on the recognition of the necessity of interdependence among
divers and diverse units of a society and of the protection that should be equally and evenly extended to
all groups as a combined force in our social and economic life, consistent with the fundamental and
paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing
about "the greatest good to the greatest number." (Calalang v. Williams)

Separation pay as measure of social justice

i. 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. (PLDT v. NLRC)

ii. 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.

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. Compassion for the poor is an imperative of every humane society but only
when the recipient is not a rascal claiming an undeserved privilege. 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. (Toyota
v. NLRC)

iii. If the dismissal is based on a just cause, then the noncompliance with the procedural due process
should not render the termination from employment illegal or ineffectual. Instead, the employer
must indemnify the employee in the form of nominal damages. The law and jurisprudence allow the
award of nominal damages in favor of an employee in a case where a valid cause for dismissal
exists but the employer fails to observe due process in dismissing the employee (DMFP v.
Betonio)

iv. Common application of social justice

(a) Grant of separation pay or financial assistance in favor of a validly dismissed employee
(b) Determining the propriety oof penalty imposed
(c) Construction and implementation of social welfare laws
(d) Compliance with rules and procedure and evidence

Construction and Application of Laws

Conformably, liberal construction of Labor Code provisions in favor of workers is stipulated by Article 4 of
the Labor Code:

Art. 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 (River v.
Genesis).

➢ Applies to all workers, whether in the government or in the private sector.

It is well to recall that the constitutional guarantee of social justice towards labor demands a liberal attitude
in favor of the employee in deciding claims for compensability (Verzonilla v. ECC).

The official agency charged by law to implement the constitutional guarantee of social justice should adopt
a liberal attitude in favor of the employee in deciding claims for compensability, especially in light of the
compassionate policy towards labor which the 1987 Constitution vivifies and enhances (Supra).

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B. Sources

1987 Constitution

Article II

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

SECTION 9. The State shall promote a just and dynamic social order that will ensure the prosperity and
independence of the nation and free the people from poverty through policies that provide adequate social
services, promote full employment, a rising standard of living, and an improved quality of life for all.

SECTION 10. The State shall promote social justice in all phases of national development.

SECTION 13. The State recognizes the vital role of the youth in nation-building and shall promote and
protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth
patriotism and nationalism, and encourage their involvement in public and civic affairs.

SECTION 14. The State recognizes the role of women in nation-building, and shall ensure the
fundamental equality before the law of women and men.

SECTION 18. The State affirms labor as a primary social economic force. It shall protect the rights of
workers and promote their welfare.

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

Article III

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.

➢ Not proper to be invoked in company-level administrative cases leading to imposition of such

sanctions, such as the termination of employment.
➢ Can be invoked ONLY when became full blown case before the LA

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.

➢ Basis of worker's right to picket

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.

SECTION 16. All persons shall have the right to a speedy disposition of their cases before all judicial,
quasi-judicial, or administrative bodies.

➢ What the law prohibits are unreasonable, arbitrary and oppressive delays which render rights
nugatory

SECTION 18. (2) No involuntary servitude in any form shall exist except as a punishment for a crime
whereof the party shall have been duly convicted.

Article XIII

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.

➢ Abhorrence to inequality and discrimination

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

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

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 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 on investments, and
to expansion and growth.

➢ Protection-to-labor clause; not self-executing

Sec. 3, Art. XIII, 1987 Constitution Art. 3, Labor Code

Full protection to Labor
Full employment
Equal Work Opportunities
Right to self-organization
Collective bargaining and negotiation
Peaceful concerted activities
Security of Tenure
Human conditions of work
Living wage
Participation in policy and decision-making
Just share in the fruits of productio

SECTION 13. The State shall establish a special agency for disabled persons for rehabilitation, self-
development and self-reliance, and their integration into the mainstream of society.

SECTION 14. The State shall protect working women by providing safe and healthful working conditions,
taking into account their maternal functions, and such facilities and opportunities that will enhance their
welfare and enable them to realize their full potential in the service of the nation.

Civil Code

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.

Company Practice

➢ Any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued
or eliminated by the employer.

There is diminution of benefits when the following requisites are present: (1) the grant or benefit is founded
on a policy or has ripened into a practice over a long period of time; (2) the practice is consistent and
deliberate; (3) the practice is not due to error in the construction or application of a doubtful or difficult
question of law; and (4) the diminution or discontinuance is done unilaterally by the employer.

To be considered as a regular company practice, the employee must prove by substantial evidence that
the giving of the benefit is done over a long period of time, and that it has been made consistently and
deliberately (Vergara v. Coca-Cola Bottlers).

➢ 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 (Central Azucarera de Tarlac v. CAdT Labor Union -
NLU)

➢ The Court has held that there is diminution of benefits when the following are present:

(1) the grant or benefit is founded on a policy or has ripened into a practice over a long period of time;
(2) the practice is consistent and deliberate;
(3) the practice is not due to error in the construction or application of a doubtful or difficult question of
law; and
(4) the diminution or discontinuance is done unilateral1y by the employer (Kondo v. Toyota

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 (4) the diminution or discontinuance is done unilateral1y by the employer (Kondo v. Toyota
Boshoku).

C. Employer-employee relationship

Tests

1. Four-fold test

➢ It is settled that "to determine the existence of an employer-employee relationship, four elements
generally need to be considered, namely:

(1) the selection and engagement of the employee;

(2) the payment of wages;
(3) the power of dismissal;
(4) the power to control the employee's conduct.

➢ Power to control not only the result of the work, but also as to the means and
method to be used

These elements or indicators comprise the so-called 'four-fold' test of employment relationship
(Fernandez v. Kalookan Slaughterhouse).

➢ To be considered as a corporate officer, the designation must be either provided by the Corporation
Code or the by-laws of the corporation, x x x

In this case, nowhere in the records could the by-laws of CDMC be found. An appointment through
the issuance of a resolution by the Board of Directors does not make the appointee a corporate
officer. It is necessary that the position is provided in the Corporation Code or in the by-laws. In the
absence of the by-laws of CDMC, there is no reason to conclude that petitioner, as Pathologist, is
considered as a corporate officer. In the cases of WPP Marketing Communications, Inc. v.
Galera18 and Marc II Marketing, Inc. v. Joson,19 this Court declared that respondents are not
corporate officers because neither the Corporation Code nor the by-laws of the respective
corporations provided so. In the latter case, this Court treated as employee the respondent whose
position was not expressly mentioned in the Corporation Code or the by-laws.

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The power to control the work of the employee is considered the most significant determinant of the
existence of an employer-employee relationship. 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 (Loreche-Amit v. CDOMC).

2. Economic Reality Test (2-Tiered Test)

➢ 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, to wit:

x x x. In our jurisdiction, 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 (Loreche-Amit v. CDOMC).

➢ In applying the second tier, the determination of the relationship between employer and employee
depends upon the circumstances of the whole economic activity (economic reality or multi-factor
test), such as:

(a) the extent to which the services performed are an integral part of the employer's business;
(b) the extent of the worker's investment in equipment and facilities;
(c) the nature and degree of control exercised by the employer;
(d) the worker's opportunity for profit and loss;
(e) the amount of initiative, skill, judgment or foresight required for the success of the claimed
independent enterprise;
(f) the permanency and duration of the relationship between the worker and the employer; and
(g) the degree of dependency of the worker upon the employer for his continued employment in
that line of business.

NOTE: Under all of these tests, the burden to prove by substantial evidence all of the elements or
factors is incumbent on the employee for he or she is the one claiming the existence of an
employment relationship (Maricalum Mining Corp. v. Florentino).

3. Control Test

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. As applied in the healthcare industry, an employment
relationship exists between a physician and a hospital if the hospital controls both the means and the

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 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. But where a person who works for
another performs his job more or less at his own pleasure, in the manner he sees fit, not subject to definite
hours or conditions of work, and is compensated according to the result of his efforts and not the amount
thereof, no employer-employee relationship exists (Supra).

Who determines

➢ No limitation in the law was placed upon the power of the DOLE to determine the existence of an
employer-employee relationship. No procedure was laid down where the DOLE would only make a
preliminary finding, that the power was primarily held by the NLRC. The law did not say that the
DOLE would first seek the NLRC’s determination of the existence of an employer-employee
relationship, or that should the existence of the employer-employee relationship be disputed, the
DOLE would refer the matter to the NLRC. The DOLE must have the power to determine whether
or not an employer-employee relationship exists, and from there to decide whether or not to issue
compliance orders in accordance with Art. 128(b) of the Labor Code, as amended by RA 7730.

xxx

The determination of the existence of an employer-employee relationship by the DOLE must be

respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would
be rendered nugatory if the alleged employer could, by the simple expedient of disputing the
employer-employee relationship, force the referral of the matter to the NLRC.

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To recapitulate, if a complaint is brought before the DOLE to give effect to the labor standards
provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE that there
is an existing employer-employee relationship, the DOLE exercises jurisdiction to the exclusion of
the NLRC. If the DOLE finds that there is no employer-employee relationship, the jurisdiction is
properly with the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a claim for
reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor
Code, which provides that the Labor Arbiter has original and exclusive jurisdiction over those cases
involving wages, rates of pay, hours of work, and other terms and conditions of employment, if
accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is still an
existing employer-employee relationship, the jurisdiction is properly with the DOLE. The findings of
the DOLE, however, may still be questioned through a petition for certiorari under Rule 65 of the
Rules of Court (People's Broadcasting v. SOLE).

NOTE: In the May 2009 decision, the Court originally held that SOLE has no power to determine
Employer-Employee relationship, hence the clarification by PAO.

➢ The power of the DOLE to determine the existence of an employer-employee relationship between
petitioners and private respondents in order to carry out its mandate under Article 128 has been
established beyond cavil.

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Like the NLRC, the DOLE has the authority to rule on the existence of an employer-employee
relationship between the parties, considering that the existence of an employer-employee
relationship is a condition sine qua non for the exercise of its visitorial power. Nevertheless, it must
be emphasized that without an employer-employee relationship, or if one has already been
terminated, the Secretary of Labor is without jurisdiction to determine if violations of labor standards
provision had in fact been committed,24 and to direct employers to comply with their alleged
violations of labor standards (South Cotabato Comm. v. Hon. Sto. Tomas).

Student assistants

SECTION 14, Rule X, Book III, Omnibus Rules Implementing the Labor Code. Working scholars. —
There is no employer-employee relationship between students on one hand, and schools, colleges or
universities on the other, where there is written agreement between them under which the former agree to
work for the latter in exchange for the privilege to study free of charge, provided the students are given
real opportunities, including such facilities as may be reasonable and necessary to finish their chosen
courses under such agreement.

D. Burden of Proof

Under the Labor Code, there are twin requirements to justify a valid dismissal from employment: (a) the
dismissal must be for any of the causes provided in Article 282 of the Labor Code (substantive aspect);
and (b) the employee must be given an opportunity to be heard and to defend himself (procedural
aspect).17 The onus of proving the validity of dismissal lies with the employer. Thus:

The burden of proof rests upon the employer to show that the disciplinary action was made for
lawful cause or that the termination of employment was valid. In administrative and quasi-judicial
proceedings, the quantum of evidence required is substantial evidence or "such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion." Thus,
unsubstantiated suspicions, accusations, and conclusions of the employer do not provide legal

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 unsubstantiated suspicions, accusations, and conclusions of the employer do not provide legal
justification for dismissing the employee. When in doubt, the case should be resolved in favor of
labor pursuant to the social justice policy of our labor laws and the 1987 Constitution (University of
Manila v. Pinera).

E. Management Prerogative - right and prerogative of the employer to regulate every aspect of their
business, generally without restraint in accordance with their own discretion and judgment (Chan, 2019).

Limitations:

i. Limitations imposed by
(a) Law
(b) CBA
(c) Employment contract
(d) Employer policies
(e) Employer practice
(f) General Principles of fair play and justice
ii. Subject to Police Power
iii. Exercised without abuse of discretion
iv. Done in good faith and with due regard to the rights of labor (Chan, 2019)

a. Definition/Basis

An employer has the prerogative to prescribe reasonable rules and regulations necessary for the
proper conduct of its business, to provide certain disciplinary measures in order to implement said
rules and to assure that the same would be complied with. An employer enjoys a wide latitude of
discretion in the promulgation of policies, rules and regulations on work-related activities of the
employees.

It is axiomatic that appropriate disciplinary sanction is within the purview of management imposition.
Thus, in the implementation of its rules and policies, the employer has the choice to do so strictly or
not, since this is inherent in its right to control and manage its business effectively. Consequently,
management has the prerogative to impose sanctions lighter than those specifically prescribed by
its rules, or to condone completely the violations of its erring employees. Of course, this prerogative
must be exercised free of grave abuse of discretion, bearing in mind the requirements of justice and
fair play (San Miguel Corporation v. NLRC).

b. Transfer; Promotion/Demotion

The management enjoys the discretion to assign and transfer employees to other work stations.
The transfer is valid inasmuch as it does not involve a demotion in rank or diminution in pay or
benefits, and was carried out in good faith and justified by business exigencies.

xxx

Accordingly, the employer may determine, in accordance with its sound business judgment, its
employees work assignments. This discretion to impose work assignments, or corollary, transfer
the employees shall be based on the employer’s assessment of the “qualifications, aptitudes and
competence of its employees." The employer is allowed to move them around various areas of its
business operations to ascertain where they will function with maximum benefit to the company.
After all, the employer is in the best position to determine where its employees will thrive for the
good of the company.

It is imperative, however, to strike balance between the employees’ tenurial security on the one
hand, and the employer’s management prerogative, on the other. In Rural Bank of Cantilan, Inc. v.
Julve, and Peckson v. Robinsons Supermarket Corporation, et al., the Court laid down guidelines
to ensure that both rights are protected:

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.

Accordingly, the Court respects the right of the employer to re-assign its employees to other
stations, provided that the transfer is not unreasonable, inconvenient, prejudicial, or involve
a demotion in rank or a diminution of salaries, benefits, and other privileges. For as long as said
conditions are met, the employee may not complain that the transfer amounts to a
constructive dismissal.

xxx

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 xxx

Jurisprudence holds that the management’s decision to transfer an employee shall not be assailed
as a form of constructive dismissal in the absence of proof that the re-assignment involves a
demotion in rank, diminution in pay, or was an act of discrimination or disdain (Automatic
Appliance v. Deguildo).

Transfer Promotion
Lateral movement from one position to another Denotes a scalar ascent of an officer or
of equivalent level, rank, or salary employee to another position, higher either in
rank or salary
Employee cannot refuse if validly exercised by Employer may refuse
employer
Refusal may amount to insubordination or Refusal cannot be ground for dismissal
willful disobedience of a lawful order of the
employer

A transfer shall be constructive dismissal if

i. Transfer is unreasonable, inconvenient or prejudicial to the employee

ii. Involves a demotion in rank or diminution of salaries, benefits and other privileges
iii. Employer performs a clear act of discrimination, insensibility or disdain towards the
employee, which forecloses any choice by the latter except to forego his continued
employment.

c. Company Policies

Managerial prerogatives are subject to limitations provided by law, collective bargaining

agreements, and the general principles of fair play and justice. In the exercise of its management
prerogative, an employer must therefore ensure that the policies, rules and regulations on work-
related activities of the employees must always be fair and reasonable and the corresponding
penalties, when prescribed, commensurate to the offense involved and to the degree of the
infraction (Mirant Corp. v. Caro).

d. Employment Restrictions

i. Competitor employer

Respondent, as employer, is burdened to establish that a restrictive covenant barring an

employee from accepting a competitive employment after retirement or resignation is not an
unreasonable or oppressive, or in undue or unreasonable restraint of trade, thus,
unenforceable for being repugnant to public policy.

As the Court stated in Ferrazzini v. Gsell, cases involving contracts in restraint of trade are to
be judged according to their circumstances, to wit:

x x x There are two principal grounds on which the doctrine is founded that a contract
in restraint of trade is void as against public policy. One is, the injury to the public by
being deprived of the restricted party’s industry; and the other is, the injury to the party
himself by being precluded from pursuing his occupation, and thus being prevented
from supporting himself and his family.

And in Gibbs vs. Consolidated Gas Co. of Baltimore, supra, the court stated the rule thus:

Public welfare is first considered, and if it be not involved, and the restraint upon one
party is not greater than protection to the other party requires, the contract may be
sustained. The question is, whether, under the particular circumstances of the case
and the nature of the particular contract involved in it, the contract is, or is not,
unreasonable.

In cases where an employee assails a contract containing a provision prohibiting him or her
from accepting competitive employment as against public policy, the employer has to adduce
evidence to prove that the restriction is reasonable and not greater than necessary to protect
the employer’s legitimate business interests. The restraint may not be unduly harsh or
oppressive in curtailing the employee’s legitimate efforts to earn a livelihood and must be
reasonable in light of sound public policy (Rivera v. Solidbank Corp.)

ii. Employment of relatives

If the terms of a CBA are clear and have no doubt upon the intention of the contracting
parties, the literal meaning of its stipulation shall prevail.42 However, if, in a CBA, the parties
stipulate that the hirees must be presumed of employment qualification standards but fail to
state such qualification standards in said CBA, the VA may resort to evidence extrinsic of the
CBA to determine the full agreement intended by the parties.

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 xxx

The parties are in agreement that, on its face, Article XX, Section 1 of their 1997 CBA does
not contain any provision relative to the employment qualification standards of
recommendees of retired/resigned, deceased or disabled employees of respondent who are
members of petitioner. However, in determining the employment qualification standards for
said recommendees, the VA should have relied on the November 7, 1995 Guidelines issued
by respondent (UKCEU v. KCP).

iii. Marriage; Bona Fide Occupational Qualification (BFQF)

➢ As held in a Georgia, U.S.A case, it is a legitimate business practice to guard business

confidentiality and protect a competitive position by even-handedly disqualifying from jobs
male and female applicants or employees who are married to a competitor. Consequently,
the court ruled than an employer that discharged an employee who was married to an
employee of an active competitor did not violate Title VII of the Civil Rights Act of 1964.23
The Court pointed out that the policy was applied to men and women equally, and noted that
the employer’s business was highly competitive and that gaining inside information would
constitute a competitive advantage (Duncan Association of Detailman - PTGWO v. Glaxo
Wellcome).

➢ Jurisprudence has already set the standard of morality with which an act should be gauged -
it is public and secular, not religious. Whether a conduct is considered disgraceful or immoral
should be made in accordance with the prevailing norms of conduct, which refer to those
conducts which are proscribed because they are detrimental to conditions upon which
depend the existence and progress of human society. The fact that a particular act does not
conform to the traditional moral views of a certain sectarian institution is not sufficient reason
to qualify such act as immoral unless it, likewise, does not conform to public and secular
standards. More importantly, there must be substantial evidence to establish that premarital
sexual relations and pregnancy out of wedlock is considered disgraceful or immoral.

xxx

While a marriage or no-marriage qualification may be justified as a "bona fide occupational

qualification," Brent must prove two factors necessitating its imposition, viz:

(1) that the employment qualification is reasonably related to the essential operation of
the job involved; and
(2) that there is a factual basis for believing that all or substantially all persons meeting
the qualification would be unable to properly perform the duties of the job (Capin-
Cadiz v. Brent Hospital and Colleges).

➢ the disparate treatment and the disparate impact. Under the disparate treatment analysis,
the plaintiff must prove that an employment policy is discriminatory on its face. No-spouse
employment policies requiring an employee of a particular sex to either quit, transfer, or be
fired are facially discriminatory. For example, an employment policy prohibiting the employer
from hiring wives of male employees, but not husbands of female employees, is
discriminatory on its face.

On the other hand, to establish disparate impact, the complainants must prove that a facially
neutral policy has a disproportionate effect on a particular class. For example, although most
employment policies do not expressly indicate which spouse will be required to transfer or
leave the company, the policy often disproportionately affects one sex.

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It is significant to note that in the case at bar, respondents were hired after they were found
fit for the job, but were asked to resign when they married a co-employee. Petitioners failed
to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then
an employee of the Repacking Section, could be detrimental to its business operations.
Neither did petitioners explain how this detriment will happen in the case of Wilfreda Comia,
then a Production Helper in the Selecting Department, who married Howard Comia, then a
helper in the cutter-machine. The policy is premised on the mere fear that employees
married to each other will be less efficient. If we uphold the questioned rule without valid
justification, the employer can create policies based on an unproven presumption of a
perceived danger at the expense of an employee’s right to security of tenure.

Petitioners contend that their policy will apply only when one employee marries a co-
employee, but they are free to marry persons other than co-employees. The questioned
policy may not facially violate Article 136 of the Labor Code but it creates a
disproportionate effect and under the disparate impact theory, the only way it could
pass judicial scrutiny is a showing that it is reasonable despite the discriminatory, albeit
disproportionate, effect. The failure of petitioners to prove a legitimate business concern in
imposing the questioned policy cannot prejudice the employee’s right to be free from
arbitrary discrimination based upon stereotypes of married persons working together in one
company (Starpaper Corporation v. Simbol).

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 company (Starpaper Corporation v. Simbol).

Other manner by which employer exercises management prerogative

1. Discipline - covers the following

a) Right to discipline
i) Rules and regulation must be fair and reasonable
ii) Corresponding penalty is commensurate to the offense
b) Right to dismiss
c) Right to determine who to punish
d) Right to promulgate rules and regulation
i) Necessary for the conduct of business
ii) To provide disciplinary measures, and
iii) To assure compliance therewith

2. Productivity standards
3. Bonus - an amount granted and paid ex gratia to the employee

When demandable and enforceable

i. When stipulated in an employment contract or CBA

ii. Company policy or practice
iii. Additional compensation given without any condition
iv. When made part of the wage or compensation

4. Change of Working Hours

F. Quitclaims/Waivers

Courts must undertake a meticulous and rigorous review of quitclaims or waivers, more particularly those
executed by employees. This requirement was clearly articulated by Chief Justice Artemio V. Panganiban
in Land and Housing Development Corporation v. Esquillo:

Quitclaims, releases and other waivers of benefits granted by laws or contracts in favor of workers
should be strictly scrutinized to protect the weak and the disadvantaged. The waivers should be
carefully examined, in regard not only to the words and terms used, but also the factual
circumstances under which they have been executed.

This Court had also outlined in Land and Housing Development Corporation, citing Periquet v. NLRC,64
the parameters for valid compromise agreements, waivers, and quitclaims:

Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily
entered into and represents a reasonable settlement, it is binding on the parties and may not later
be disowned simply because of a change of mind. It is only where there is clear proof that the
waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in to annul the questionable transaction. But where
it is shown that the person making the waiver did so voluntarily, with full understanding of what he
was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must
be recognized as a valid and binding undertaking (EDI-Satffbuilders v. NLRC).

a. Contents

In order to prevent disputes on the validity and enforceability of quitclaims and waivers of
employees under Philippine laws, said agreements should contain the following:

1. A fixed amount as full and final compromise settlement;

2. The benefits of the employees if possible with the corresponding amounts, which the
employees are giving up in consideration of the fixed compromise amount;
3. A statement that the employer has clearly explained to the employee in English, Filipino, or
in the dialect known to the employees—that by signing the waiver or quitclaim, they are
forfeiting or relinquishing their right to receive the benefits which are due them under the law;
and
4. A statement that the employees signed and executed the document voluntarily, and had fully
understood the contents of the document and that their consent was freely given without any
threat, violence, duress, intimidation, or undue influence exerted on their person.

It is advisable that the stipulations be made in English and Tagalog or in the dialect known to the
employee. There should be two (2) witnesses to the execution of the quitclaim who must also sign
the quitclaim. The document should be subscribed and sworn to under oath preferably before any
administering official of the Department of Labor and Employment or its regional office, the Bureau
of Labor Relations, the NLRC or a labor attaché in a foreign country. Such official shall assist the
parties regarding the execution of the quitclaim and waiver.67 This compromise settlement
becomes final and binding under Article 227 of the Labor Code which provides that:

[A]ny compromise settlement voluntarily agreed upon with the assistance of the Bureau of
Labor Relations or the regional office of the DOLE, shall be final and binding upon the
parties and the NLRC or any court "shall not assume jurisdiction over issues involved therein

Page 9
 parties and the NLRC or any court "shall not assume jurisdiction over issues involved therein
except in case of non-compliance thereof or if there is prima facie evidence that the
settlement was obtained through fraud, misrepresentation, or coercion.

It is made clear that the foregoing rules on quitclaim or waiver shall apply only to labor contracts of
OFWs in the absence of proof of the laws of the foreign country agreed upon to govern said
contracts. Otherwise, the foreign laws shall apply (Supra).

b. Valid and binding

Jurisprudence frowns upon waivers and quitclaims forced upon employees. Waivers and quitclaims
are, however, not invalid in themselves. When shown to be freely executed, they validly discharge
an employer from liability to an employee. "[A] legitimate waiver representing a voluntary settlement
of a laborer's claims should be respected by the courts as the law between the parties." In Goodrich
Manufacturing Corporation v. Ativo:

It is true that the law looks with disfavor on quitclaims and releases by employees who have
been inveigled or pressured into signing them by unscrupulous employers seeking to evade
their legal responsibilities and frustrate just claims of employees. In certain cases, however,
the Court has given effect to quitclaims executed by employees if the employer is able to
prove the following requisites, to wit:

(1) the employee executes a deed of quitclaim voluntarily;

(2) there is no fraud or deceit on the part of any of the parties;
(3) the consideration of the quitclaim is credible and reasonable; and
(4) the contract is not contrary to law, public order, public policy, morals or good customs,
or prejudicial to a third person with a right recognized by law.

Our pronouncement in Periquet v. National Labor Relations Commission on this matter cannot be
more explicit:

Not all waivers and quitclaims are invalid as against public policy. If the agreement was
voluntarily entered into and represents a reasonable settlement, it is binding on the parties
and may not later be disowned simply because of a change of mind. It is only where there is
clear proof that the waiver was wangled from an unsuspecting or gullible person, or the
terms of settlement are unconscionable on its face, that the law will step in to annul the
questionable transaction. But where it is shown that the person making the waiver did so
voluntarily, with full understanding of what he was doing, and the consideration for the
quitclaim is credible and reasonable, the transaction must be recognized as a valid and
binding undertaking (Remoticado v. Typical Construction Trading, Corp.).

c. Generally frowned upon

Waivers and quitclaims executed by employees are generally frowned upon for being contrary to
public policy. This is based on the recognition that employers and employees do not stand on equal
footing.

In Land and Housing Development Corporation v. Esquillo:

We have heretofore explained that the reason why quitclaims are commonly frowned upon
as contrary to public policy, and why they are held to be ineffective to bar claims for the full
measure of the workers' legal rights, is the fact that the employer and the employee
obviously do not stand on the same footing. The employer drove the employee to the wall.
The latter must have to get hold of money. Because, out of a job, he had to face the harsh
necessities of life. He thus found himself in no position to resist money proffered. His, then, is
a case of adherence, not of choice. One thing sure, however, is that petitioners did not relent
on their claim. They pressed it. They are deemed not [to] have waived any of their rights.
Renuntiatio non praesumitur.

Along this line, we have more trenchantly declared that quitclaims and/or complete releases
executed by the employees do not estop them from pursuing their claims arising from unfair labor
practices of the employer. The basic reason for this is that such quitclaims and/or complete
releases are against public policy and, therefore, null and void. The acceptance of termination does
not divest a laborer of the right to prosecute his employer for unfair labor practice acts.

Quitclaims do not bar employees from filing labor complaints and demanding benefits to which they
are legally entitled.48 They are "ineffective in barring recovery of the full measure of a worker's
rights, and the acceptance of benefits therefrom does not amount to estoppel."49 The law does not
recognize agreements that result in compensation less than what is mandated by law. These
quitclaims do not prevent employees from subsequently claiming benefits to which they are legally
entitled (Aldovino v. Gold and Green Management and Development Services, Inc.)

G. Attorney's Fees

There are two commonly accepted concepts of attorney's fees - the ordinary and extraordinary. On the
one hand, in its ordinary concept, an attorney's fee is the reasonable compensation paid by the client to
his lawyer in exchange for the legal services rendered by the latter. The compensation is paid for the cost

Page 10
 his lawyer in exchange for the legal services rendered by the latter. The compensation is paid for the cost
and/or results of the legal services, as agreed upon by the parties or as may be assessed by the courts.
On the other hand, as an extraordinary concept, an attorney's fee is deemed an indemnity for damages
ordered by the court to be paid by the losing party to the winning party. In labor cases, attorney's fees
partake of the nature of an extraordinary award granted to the victorious party as an indemnity for
damages. As a general rule, it is payable to the client, not to his counsel, unless the former agreed to give
the amount to the latter as an addition to, or part of the counsel's compensation.

xxx

To recapitulate, both the Labor Code and the Civil Code provide that attorney's fees may be recovered in
the following instances, namely,

(i) in cases involving the unlawful withholding of wages;

(ii) where the defendant's act or omission has compelled the plaintiff to litigate with third persons or the
plaintiff incurred expenses to protect his interest;
(iii) in actions for the recovery of wages of household helpers, laborers and skilled workers;
(iv) in actions for indemnity under workmen's compensation and employer's liability laws; and
(v) in cases where the court deems it just and equitable that attorney's fees and expenses of litigation
should be recovered

In a catena of cases, the Court awarded attorney's fees in favor of illegally dismissed employees who were
compelled to file an action for the recovery of their lawful wages, which were withheld by the employer
without any valid and legal basis. A plain showing that the lawful wages were not paid without justification
was sufficient to warrant an award of attorney's fees.

xxx

The matter of entitlement to attorney's fees by a claimant who was represented by the PAO has already
been settled in Our Haus Realty Development Corporation v. Alexander Parian, et al. The Court, speaking
through Associate Justice Arturo D. Brion ruled that the employees are entitled to attorney's fees,
notwithstanding their availment of the free legal services offered by the PAO. The Court ruled that the
amount of attorney's fees shall be awarded to the PAO as a token recompense to them for their provision
of free legal services to litigants who have no means of hiring a private lawyer

xxx

Thus, the respondents are still entitled to attorney's fees. The attorney's fees awarded to them shall be
paid to the PAO. It serves as a token recompense to the PAO for its provision of free legal services to
litigants who have no means of hiring a private lawyer (Alva v. High Security Force).

LABOR STANDARDS

A. Preliminary Title

1. Rule-making power

Art. 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.

2. Scope/application

Art. 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

➢ Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-

AQD) is an international agency beyond the jurisdiction of public respondent NLRC.

xxx

Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys

functional independence and freedom from control of the state in whose territory its office is located
(SEAFDEC v. NLRC).

➢ From the aforequoted constitutional provision, it is clear that only government-owned or controlled
corporations with original charters are embraced by the civil service.

xxx

Petitioners are government personnel since they are employed by an agency attached to the AFP.
Consequently, as correctly observed by the Court of Appeals, the Labor Arbiter’s decision on their
complaint for illegal dismissal cannot be made to stand since the same was issued without
jurisdiction. Any decision issued without jurisdiction is a total nullity, and may be struck down at any
time (Hidalgo v. Republic).

Page 11
➢ The NLRC erred in dismissing petitioner’s complaint for lack of jurisdiction because the rule now is
that the Civil Service now covers only government-owned or controlled corporations with original
charters. Having been incorporated under the Corporation Law, its relations with its personnel are
governed by the Labor Code and come under the jurisdiction of the National Labor Relations
Commission (Juco v. NLRC).

➢ Thus, in resolving the issue of whether or not the NLRC has jurisdiction over employer-employee
relations in Philippine Amusement and Gaming Corporation (PAGCOR), Philippine Casino
Operators Corporation (PCOC) and Philippine Special Services Corporation (PSSC), the Third
Division made the definitive ruling that "there appears to be no question from the petition and its
annexes that the respondent corporations were created by an original charter." The Court
collectively referred to all respondent corporations, including PCOC and PSSC, and held that in
accordance with the Constitution and jurisprudence, corporations with original charter "fall under the
jurisdiction of the Civil Service Commission and not the Labor Department." The Court stated
further that P.D. 1869 exempts casino employees from the coverage of Labor Code provisions and
although the employees are empowered by the Constitution to form unions, these are "subject to
the laws passed to regulate unions in offices and corporations governed by the Civil Service Law."
Thus, in dismissing the petition, the ruling of the Third Division was clear - - - it is the Civil Service
Commission, and not the NLRC, that has jurisdiction over the employer-employee problems in
PAGCOR, PCOC and PSSC (Casino Labor Association v. CA)

➢ The Constitution provides in its Article IX-B, Section 2(1) that "the Civil Service embraces all
branches, subdivisions, instrumentalities, and agencies of the Government, including government-
owned or controlled corporations with original charters." As the Bank is not owned or controlled by
the Government although it does have an original charter in the form of R.A. No. 3518, it clearly
does not fall under the Civil Service and should be regarded as an ordinary commercial corporation.
Section 28 of the said law so provides. The consequence is that the relations of the Bank with its
employees should be governed by the labor laws, under which in fact they have already been paid
some of their claims (Laya v. Philippine Veterans Bank).

Page 12
Module 2
Wednesday, 30 September 2020 7:31 pm

B. Recruitment and Placement

1. Illegal Recruitment

Labor Code Migrant Workers' Act

Applicable in when recruitment is for local Applicable when recruitment is for overseas
employment employment

a. Definition

➢ "Illegal recruitment" as defined in Section 6 is clear and unambiguous and, contrary to the RTC’s
finding, 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 government 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 the canvassing, enlisting, 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 (Sto. Tomas v. Salac).

➢ As we see it, 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 (People v. Panis)

b. Prohibited acts

i. To charge or accept directly or indirectly any amount greater than the 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;
ii. To furnish or publish any false notice or information or document in relation to recruitment or
employment;
iii. 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 the Labor Code;
iv. To induce or attempt to induce a worker already employed to quit his employment in order to
offer him another unless the transfer is designed to liberate a worker from oppressive terms
and conditions of employment;
v. To influence or attempt to influence any persons or entity not to employ any worker who has
not applied for employment through his agency;
vi. To engage in the recruitment of placement of workers in jobs harmful to public health or
morality or to dignity of the Republic of the Philippines;
vii. To obstruct or attempt to obstruct inspection by the Secretary of Labor and Employment or
by his duly authorized representative;
viii. To fail to submit reports on the status of employment, placement vacancies, remittances of
foreign exchange earnings, separations from jobs, departures and such other matters or
information as may be required by the Secretary of Labor and Employment;
ix. To substitute or alter to the prejudice of the worker, employment contracts approved and
verified by the Department of Labor and Employment 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 Department of Labor and Employment;
x. For an officer or agent of a recruitment or placement agency to become an officer or member
of the Board of any corporation engaged in travel agency or to be engaged directly on
indirectly in the management of a travel agency;
xi. To withhold or deny travel documents from applicant workers before departure for monetary
or financial considerations other than those authorized under the Labor Code and its
implementing rules and regulations;
xii. Failure to actually deploy without valid reasons as determined by the Department of Labor
and Employment*; and
xiii. Failure to reimburse expenses incurred by the workers in connection with his documentation
and processing for purposes of deployment, in cases where the deployment does not

Page 13
 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 as offense involving economic sabotage* (RA
8042, as amended)

*Not included in Art. 34, Labor Code

c. Who may be liable

Illegal recruitment may be undertaken by either non-license or license holders. Non-license holders
are liable by the simple act of engaging in recruitment and placement activities, while license
holders may also be held liable for committing the acts prohibited under Section 6 of RA 8042..

Under RA 8042, a non-licensee or non-holder of authority commits illegal recruitment for overseas
employment in two ways: (1) by any act of canvassing, enlisting, contracting, transporting, utilizing,
hiring, or procuring workers, and includes referring, contract services, promising or advertising for
employment abroad, whether for profit or not; or (2) by undertaking any of the acts enumerated
under Section 6 of RA 8042 (People v. Sison).

d. Elements
i. Offender has no valid license or authority enabling him or her to lawfully engage in
recruitment and placement
ii. Offender undertakes any activity within the meaning of recruitment and placement, or any of
the prohibited practices* enumerated

*Any licensee or holder of authority may be held liable for engaging in any of the prohibited
practices.

e. Simple illegal recruitment - covers any recruitment and placement activity undertaken by a non-
licensee or a non-holder of authority. It also includes the commission of prohibited acts as
enumerated under the law, not only by a non-licensee or a non-holder of authority but also by a
licensee or holder of authority (Chan, 2019)

f. Illegal Recruitment involving economic sabotage

i. 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.
ii. Illegal recruitment is deemed committed in large scale if committed against three (3) or more
persons individually or as a group (People v. Abellanosa).

g. Estafa

It is settled that a person, for the same acts, may be convicted separately for illegal recruitment
under RA 8042 and estafa under Article 315(2) (a) of the RPC. In People v. Daud, the Court
explained:

In this jurisdiction, it is settled that a person who commits illegal recruitment may be charged and
convicted separately of illegal recruitment under the Labor Code and estafa under par. 2(a) of Art.
315 of the Revised Penal Code. The offense of illegal recruitment is malum prohibitum where the
criminal intent of the accused is not necessary for conviction, while estafa is malum in se where the
criminal intent of the accused is crucial for conviction. Conviction for offenses under the Labor Code
does not bar conviction for offenses punishable by other laws. Conversely, conviction for estafa
under par. 2(a) of Art. 315 of the Revised Penal Code does not bar a conviction for illegal
recruitment under the Labor Code. It follows that one's acquittal of the crime of estafa will not
necessarily result in his acquittal of the crime of illegal recruitment in large scale, and vice versa
(Supra).

h. As grounds for termination

i. Venue

The express provision of the law is clear that the filing of criminal actions arising from illegal
recruitment before the R TC of the province or city where the offended party actually resides at the
time of the commission of the offense is allowed.

xxx

It has been found by both the RTC and the CA that the respondent resides in Manila; hence, the
filing of the case before the RTC of Manila was proper. Thus, the trial court should have taken
cognizance of the case, and if it will eventually be shown during trial that the offense was committed
somewhere else, then the court should dismiss the action for want of jurisdiction

xxx

Likewise, with the case of Estafa arising from such illegal recruitment activities, the outright
dismissal thereof due to lack of jurisdiction was not proper, considering that as per the allegations in

Page 14
 dismissal thereof due to lack of jurisdiction was not proper, considering that as per the allegations in
the Information, the same was within the jurisdiction of Manila (David v. Abellanosa).

2. Migrant Workers - a person who is to be engaged, is engaged or has been engaged in a remunerated
activity in a state of which he or she is not a citizen or on board a vessel navigating the foreign seas other
than a government ship used for military or non-commercial purposes or on an installation located offshore
on the high seas

a. Commencement of Employer-Employee relationship

➢ The contract was already perfected on the date of its execution, which occurred when petitioner
and respondent agreed on the object and the cause, as well as on the rest of the terms and
conditions therein. Naturally, contemporaneous with the perfection of the employment contract was
the birth of certain rights and obligations, a breach of which may give rise to a cause of action
against the erring party.16 Also, the POEA Standard Contract must be recognized and respected.
Thus, neither the manning agent nor the employer can simply prevent a seafarer from being
deployed without a valid reason.

xxx

Under the principle of equity and substantial justice, change of mind was not a valid reason for the
non-deployment of respondent. He lost the opportunity to apply for other positions in other agencies
when he signed the contract of employment with petitioner. Simply put, that contract was binding on
the parties and may not later be disowned simply because of a change of mind of either one of
them.

The unilateral and unreasonable failure to deploy respondent constitutes breach of contract, which
gives rise to a liability to pay actual damages. The sanctions provided for non-deployment do not
end with the suspension or cancellation of license or the imposition of a fine and the return of all
documents at no cost to the worker (Abosta Ship Mangement v. Hilario)

➢ However, a distinction must be made between the perfection of the employment contract and the
commencement of the employer-employee relationship. The perfection of the contract, which in this
case coincided with the date of execution thereof, occurred when petitioner and respondent agreed
on the object and the cause, as well as the rest of the terms and conditions therein. The
commencement of the employer-employee relationship, as earlier discussed, would have taken
place had petitioner been actually deployed from the point of hire. Thus, even before the start of
any employer-employee relationship, contemporaneous with the perfection of the employment
contract was the birth of certain rights and obligations, the breach of which may give rise to a cause
of action against the erring party. Thus, if the reverse had happened, that is the seafarer failed or
refused to be deployed as agreed upon, he would be liable for damages (Santiago v. CF Sharp
Crew Management).

b. Money Claims

Money claims of OFW's over which Labor Arbiters have jurisdictions may arise from any of the
following:

a. Arising from employer-employee relationship

b. By virtue of any law or
c. By reason of contract (Chan, 2019)

➢ 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;

xxx

The Court concludes that the subject clause contains a suspect classification in that, in the
computation of the monetary benefits of fixed-term employees who are illegally discharged, it
imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their
contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The
subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage
(Serrano v. Gallant Maritime Services).

c. Liability of principal/agent: Theory of imputed knowledge

➢ Respondents cannot escape liability from petitioner's money claims. Section 10 of RA 8042
provides that the employer and the recruitment or placement agency are jointly liable for money
claims arising from the employment relationship or any contract involving overseas Filipino workers.

Page 15
 claims arising from the employment relationship or any contract involving overseas Filipino workers.
If the recruitment or placement agency is a juridical being, the corporate officers and directors and
partners as the case may be, shall themselves be jointly and solidarity liable with the corporation or
partnership for the aforesaid claims and damages. In providing for the joint and solidary liability of
private recruitment agencies with their foreign principals, RA 8042 precisely affords OFWs with a
recourse and assures them of immediate and sufficient payment of what is due them (Cuartocruz
v. Activve Works).

➢ 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. If the
recruitment/placement agency is a juridical being, the corporate officers and directors and partners
as the case may be, shall themselves be jointly and solidarily liable with the corporation or
partnership for the aforesaid claims and damages (Becmen Service Exporter v. Cuaresma).

➢ The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal,
employer Xiong, not the other way around. The knowledge of the principal-foreign employer cannot,
therefore, be imputed to its agent Sunace.

There being no substantial proof that Sunace knew of and consented to be bound under the 2-year
employment contract extension, it cannot be said to be privy thereto. As such, it and its "owner"
cannot be held solidarily liable for any of Divina’s claims arising from the 2-year employment
extension (Sunace Int'l Manpower Services v. NLRC).

3. Employment of foreign nationals

Any alien seeking admission to the Philippines for employment purposes and any domestic or foreign
employer who desires to engage and alien for employment in the Philippines shall obtain an Alien
Employment Permit.

Alien Employment Permit (AEP) - a document issued by COLE through the DOLE-RD authorizing the
foreign national to work in the Philippines

Those exempt from securing an AEP

1. All members of the diplomatic services and foreign government officials accredited by and with
reciprocity with the PH Government
2. Officers and staff of international organizations of which the Philippine government is a member,
and their legitimate spouses desiring to work in the PH
3. Owners and representatives of foreign principals whose companies are accredited by the POEA,
who come to the PH for a limited period and solely for purpose of interviewing Filipino applicants
4. Foreign nationals to come to PH to teach, present and/or conduct research studies in universities
and colleges as visiting, exchange or adjunct professor under formal agreements between
universities/colleges in the PH and foreign universities/colleges; or between the PH Government
and foreign government
5. Permanent resident foreign nationals and probationary or temporary resident visa holders under
Philippine Immigration Act of 1940
6. Refugees and stateless persons recognized by the DOJ
7. All foreign nationals granted exemption

The following categories of foreign nationals are excluded from securing an AEP

1. Members of the governing board with voting rights only and do not intervene in the management of
the corporation or in the day to day operation of the enterprise
2. President, Treasurer, who are part-owners of the company
3. Those providing consultancy services who do not have employers in the PH
4. Intra-corporate transferee who is a manager, executive or specialist in accordance with Trade
Agreements and an employee of the foreign service supplier for at least 1 year continuous
employment prior to deployment in the PH
5. Contractual service supplier who is a manager, executive or specialist and an employee of a foreign
service supplier which has no commercial presence in the PH
6. Representative of the Foreign Principal/Employer assigned in the Office of the Licensed Manning
Agency in accordance with the POEA law, rules and regulations.

Denial of Application (Grounds)

i. Misrepresentation of facts in the application

ii. Submission of falsified documents
iii. Conviction of criminal offense or a fugitive from justice in the country aboard
iv. Grave misconduct in dealing with or ill treatment of workers
v. Availability of a Filipino who is competent, able and willing to do the job intended for or being
performed by the foreign national based on PEIS, PRC Registry of Professional and TESDA
Registry of workers
vi. Worked without a valid AEO for more than 1 year
vii. Application with expired Visa or with temporary visitor's visa

Page 16
 Cancellation/revocation of AEP

i. Non-compliance with any of the requirements or conditions for which it was issued
ii. Misrepresentation of facts in the application
iii. Submission of falsified or tampered documents
iv. Meritorious objection or information against the employment of the foreign national
v. Foreign national convicted of a criminal offense or a fugitive from justice
vi. Employer terminated the employment of foreign national
vii. Grave misconduct in dealing with or ill-treatment of workers

Effect of cancellation/denial

Conviction of a criminal Disqualification to re-apply within a

offense, fugitive of justice, period of 10 years
grave misconduct in dealing or
ill-treatment of workers
Misrepresentation of facts, Disqualification to re-apply within a
submission of falsified period of 5 years
document

4. Trafficking of persons

Trafficking in Persons Illegal Recruitment

Acts Recruitment, obtaining, hiring, providing, offering, Canvassing, enlisting,
transportation, transfer, maintaining, harboring, receipt contracting, transporting,
utilizing, hiring or procurement
of workers

Illegal recruitment is also done

by engaging in the Prohibited
Acts enumerated
Location Within or across national borders Local or abroad
Offended With or without consent With consent
Party
Means/ Threat, use of force, other forms of coercion, abduction, Fraud or any of the prohibited
Methods fraud, deception, abuse of power, taking advantage of the practices
vulnerability of the person, or giving or receiving of
payments or benefits
Purpose Exploitation: sexual exploitation, forced labor, slavery, Exploitation
servitude, sale of organs

➢ Section 3 (a) of RA 9208 defines the term "Trafficking in Persons" as the "recruitment,
transportation, transfer or harboring, or receipt of persons with or without the victim's consent or
knowledge, within or across national borders by means of threat or use of force, or other forms of
coercion, abduction, fraud, deception, abuse of power or of position, taking advantage of the
vulnerability of the person, or, the giving or receiving of payments or benefits to achieve the consent
of a person having control over another person for the purpose of exploitation which includes at a
minimum, the exploitation or the prostitution of others or other forms of sexual exploitation, forced
labor or services, slavery, servitude or the removal or sale of organs." The same provision further
provides that "[t]he recruitment, transportation, transfer, harboring or receipt of a child for the
purpose of exploitation shall also be considered as 'trafficking in persons' even if it does not involve
any of the means set forth in the preceding paragraph." ." The crime of "Trafficking in Persons"
becomes qualified under, among others, the following circumstances:

Section 6. Qualified Trafficking in Persons. – The following are considered as qualified trafficking:

(a) When the trafficked person is a child;

xxxx

(d) When the offender is an ascendant, parent, sibling, guardian or a person who exercises
authority over the trafficked person or when the offense is committed by a public officer or
employee (People v. XXX and YYY).

➢ The elements of trafficking in persons can be derived from its definition under Section 3 (a) of
Republic Act No. 9208, thus:

(1) The act of "recruitment, transportation, transfer or harbouring, or receipt of persons with or
without the victim's consent or knowledge, within or across national borders."
(2) The means used which include "threat or use of force, or other forms of coercion, abduction,
fraud, deception, abuse of power or of position, taking advantage of the vulnerability of the

Page 17
 fraud, deception, abuse of power or of position, taking advantage of the vulnerability of the
person, or, the giving or receiving of payments or benefits to achieve the consent of a person
having control over another["]; and
(3) The purpose of trafficking is exploitation which includes "exploitation or the prostitution of
others or other forms of sexual exploitation, forced labor or services, slavery, servitude or the
removal or sale of organs."

xxx

Under Republic Act No. 10364, the elements of trafficking in persons have been expanded to
include the following acts:

(1) The act of "recruitment, obtaining, hiring, providing, offering, transportation, transfer,
maintaining, harboring, or receipt of persons with or without the victim's consent or
knowledge, within or across national borders[";]
(2) The means used include "by means of threat, or use of force, or other forms of coercion,
abduction, fraud, deception, abuse of power or of position, taking advantage of the
vulnerability of the person, or, the giving or receiving of payments or benefits to achieve the
consent of a person having control over another person"[;]
(3) The purpose of trafficking includes "the exploitation or the prostitution of others or other
forms of sexual exploitation, forced labor or services, slavery, servitude or the removal or
sale of organs. (People v. Santiago)

➢ There are four punishable acts under RA 9208:

(1) Acts ofTrafficking in Persons under Section 4;

(2) Acts that Promote Trafficking in Persons under Section 5;
(3) Violation of the Confidentiality Rule under Section 730 in relation to Section 10(d);
(4) Use of Trafficked Persons under Section 11.

xxx

As can be gleaned from the above amendment, only violations of Section 4 on Trafficking in
Persons can be qualified. Section 5 on Acts that Promote Trafficking in Persons, being separate
and distinct offenses, cannot be qualified as the law does not expressly provide therefor. The
clarificatory amendment, being beneficial to the accused, must be applied in his favor (People v.
Sayo).

➢ In this regard, case law instructs that "[t]he victim's consent is rendered meaningless due to the
coercive, abusive, or deceptive means employed by perpetrators of human trafficking. Even without
the use of coercive, abusive, or deceptive means, a minor's consent is not given out of his or her
own free will." (Arambulo v. People).

➢ Trafficking in Persons under Sections 3(a) and 4 of RA 9208 is not only limited to transportation of
victims, but also includes the act of recruitment of victims for trafficking. In this case, since it has
been sufficiently proven beyond reasonable doubt, as discussed in Criminal Case No. 21930, that
all the three accused (Aringoy, Lalli and Relampagos) conspired and confederated with one another
to illegally recruit Lolita to become a prostitute in Malaysia, it follows that they are also guilty beyond
reasonable doubt of the crime of Qualified Trafficking in Persons committed by a syndicate under
RA 9208 because the crime of recruitment for prostitution also constitutes trafficking.

When an act or acts violate two or more different laws and constitute two different offenses, a
prosecution under one will not bar a prosecution under the other. The constitutional right against
double jeopardy only applies to risk of punishment twice for the same offense, or for an act
punished by a law and an ordinance. The prohibition on double jeopardy does not apply to an act or
series of acts constituting different offenses (People v. Lalli).

5. Philippine Overseas Employment Agency (POEA)

Sec 3, LC. (b.1) Philippine Overseas Employment Administration. – The Administration shall regulate
private sector participation in the recruitment and overseas placement of workers by setting up a licensing
and registration system. It shall also formulate and implement, in coordination with appropriate entities
concerned, when necessary, a system for promoting and monitoring the overseas employment of Filipino
workers taking into consideration their welfare and the domestic manpower requirements. It shall be
responsible for the regulation and management of overseas employment from the pre-employment stage,
securing the best possible employment terms and conditions for overseas Filipino workers, and taking into
consideration the needs of vulnerable sectors and the peculiarities of sea-based and land-based workers.
In appropriate cases, the Administration shall allow the lifting of suspension of erring recruitment/manning
agencies upon the payment of fine of Fifty thousand pesos (P50,000.00) for every month of suspension.

“In addition to its powers and functions, the Administration shall inform migrant workers not only of their
rights as workers but also of their rights as human beings, instruct and guide the workers how to assert
their rights and provide the available mechanism to redress violation of their rights. It shall also be
responsible for the implementation, in partnership with other law-enforcement agencies, of an intensified
program against illegal recruitment activities. For this purpose, the POEA shall provide comprehensive
Pre-Employment Orientation Seminars (PEOS) that will discuss topics such as prevention of illegal
recruitment and gender-sensitivity.

Page 18
 recruitment and gender-sensitivity.

“The Administration shall not engage in the recruitment and placement of overseas workers except on a
government-to-government arrangement only.

“In the recruitment and placement of workers to service the requirements for trained and competent
Filipino workers of foreign governments and their instrumentalitys, and such other employers as public
interests may require, the Administration shall deploy only to countries where the Philippine has conclude
bilateral labor agreements or arrangements: Provided, That such countries shall guarantee to protect the
rights of Filipino migrant workers; and Provided, further, That such countries shall observe and/or comply
with the international laws and standards for migrant workers.”

C. Special Types of Employees

1. Apprentice v. Learner

Apprentice
Undergoes apprenticeship which is practical
training OTJ supplemented by theoretical
instructions
Involves apprenticeable occupation and trades
as approved by SOLE
Duration is more than 3 months but does not
exceed 6 months
Enterprise is given only the option to hire the
apprentice after lapse of apprenticeship period
Learner
Undergoes learnership which is also a practical training
OTJ
Involves learnable occupations consisting of semi-skill
and other industrial occupation which is not
apprenticeable
Duration is for a period not exceeding 3 months
Enterprise is obliged to hire the learner after lapse of
learnership period.

2. Disabled Workers

PWD - those suffering from restriction or different abilities as a result of a mental, physical or sensory
impairment, to perform an activity in the manner within the range considered as normal for a human being

Impairment - any loss, diminution or aberration of psychological, or anatomical structure or function

Disability - means

i. Physical or mental impairment that limits one or more psychological, physiological or anatomical
function of an individual or activities of such individual
ii. Record of such impairment
iii. Being regarded as having such impairment

Handicap - a disadvantage for a given individual, resulting from an impairment or a disability that limits or
prevents the function or activity that is considered normal given the age and sex of the individual

PWDs are

1) Entitled to equal opportunity for employment

2) Eligible as apprentice or learner, provided that their handicap is not as much as to affect the
performance of the job operations in the particular occupation for which the are hired.
3) Entitled to 100% of the applicable minimum wage

a. Equal protection

The equal protection of the laws clause of the Constitution allows classification. Classification in
law, as in the other departments of knowledge or practice, is the grouping of things in speculation or
practice because they agree with one another in certain particulars. A law is not invalid because of
simple inequality. The very idea of classification is that of inequality, so that it goes without saying
that the mere fact of inequality in no manner determines the matter of constitutionality. All that is
required of a valid classification is that it be reasonable, which means that the classification should
be based on substantial distinctions which make for real differences, that it must be germane to the
purpose of the law; that it must not be limited to existing conditions only; and that it must apply
equally to each member of the class. This Court has held that the standard is satisfied if the
classification or distinction is based on a reasonable foundation or rational basis and is not palpably
arbitrary.

In the exercise of its power to make classifications for the purpose of enacting laws over matters
within its jurisdiction, the state is recognized as enjoying a wide range of discretion. It is not
necessary that the classification be based on scientific or marked differences of things or in their
relation. Neither is it necessary that the classification be made with mathematical nicety. Hence,
legislative classification may in many cases properly rest on narrow distinctions, for the equal
protection guaranty does not preclude the legislature from recognizing degrees of evil or harm, and
legislation is addressed to evils as they may appear.

Page 19
 The equal protection clause recognizes a valid classification, that is, a classification that has a
reasonable foundation or rational basis and not arbitrary. With respect to R.A. No. 9442, its
expressed public policy is the rehabilitation, self-development and self-reliance of PWDs. Persons
with disability form a class separate and distinct from the other citizens of the country. Indubitably,
such substantial distinction is germane and intimately related to the purpose of the law. Hence, the
classification and treatment accorded to the PWDs fully satisfy the demands of equal protection.
Thus, Congress may pass a law providing for a different treatment to persons with disability apart
from the other citizens of the country (Drugstores Association of the Philippines v. National
Council on Disability Affairs).

b. Disability as an evolving concept

Section 4(a) of R.A. No. 7277, the precursor of R.A. No. 94421 defines "disabled persons" as
follows:

(a) Disabled persons are those suffering from restriction or different abilities, as a result of a
mental, physical or sensory impairment, to perform an activity in the manner or within the
range considered normal for a human being[.]

On the other hand, the term "PWDs" is defined in Section 5.1 of the IRR of R.A. No. 9442 as
follows:

5.1. Persons with Disability are those individuals defined under Section 4 of [R.A. No.] 7277
[or] An Act Providing for the Rehabilitation, Self-Development and Self-Reliance of Persons
with Disability as amended and their integration into the Mainstream of Society and for Other
Purposes. This is defined as a person suffering from restriction or different abilities, as a
result of a mental, physical or sensory impairment, to perform an activity in a manner or
within the range considered normal for human being. Disability shall mean (1) a physical 1or
mental impairment that substantially limits one or more psychological, physiological or
anatomical function of an individual or activities of such individual; (2) a record of such an
impairment; or (3) being regarded as having such an impairment.

The foregoing definitions have a striking conformity with the definition of "PWDs" in Article 1 of the
United Nations Convention on the Rights of Persons with Disabilities which reads:

Persons with disabilities include those who have long-term physical, mental, intellectual or sensory
impairments which in interaction with various barriers may hinder their full and effective participation
in society on an equal basis with others.

The seemingly broad definition of the terms was not without good reasons. It recognizes that
"disability is an evolving concept" and appreciates the "diversity of PWDs." The terms were given
comprehensive definitions so as to accommodate the various forms of disabilities, and not confine it
to a particular case as this would effectively exclude other forms of physical, intellectual or
psychological impairments (Southern Luzon Drug Corporations v. DSWD).

3. Women

SECTION 5, RA 9262. Acts of Violence Against Women and Their Children.- The crime of violence
against women and their children is committed through any of the following acts:

(a) Causing physical harm to the woman or her child;

(b) Threatening to cause the woman or her child physical harm;
(c) Attempting to cause the woman or her child physical harm;
(d) Placing the woman or her child in fear of imminent physical harm;
(e) Attempting to compel or compelling the woman or her child to engage in conduct which the woman
or her child has the right to desist from or desist from conduct which the woman or her child has the
right to engage in, or attempting to restrict or restricting the woman’s or her child’s freedom of
movement or conduct by force or threat of force, physical or other harm or threat of physical or
other harm, or intimidation directed against the woman or child. This shall include, but not limited to,
the following acts committed with the purpose or effect of controlling or restricting the woman’s or
her child’s movement or conduct:
(f) Threatening to deprive or actually depriving the woman or her child of custody to her/his family;
(g) Depriving or threatening to deprive the woman or her children of financial support legally due her or
her family, or deliberately providing the woman’s children insufficient financial support;
(h) Depriving or threatening to deprive the woman or her child of a legal right;
(i) Preventing the woman in engaging in any legitimate profession, occupation, business or activity or
controlling the victim’s own mon4ey or properties, or solely controlling the conjugal or common
money, or properties;
(j) Inflicting or threatening to inflict physical harm on oneself for the purpose of controlling her actions
or decisions;
(k) Causing or attempting to cause the woman or her child to engage in any sexual activity which does
not constitute rape, by force or threat of force, physical harm, or through intimidation directed
against the woman or her child or her/his immediate family;
(l) Engaging in purposeful, knowing, or reckless conduct, personally or through another, that alarms or
causes substantial emotional or psychological distress to the woman or her child. This shall include,
but not be limited to, the following acts:

Page 20
 but not be limited to, the following acts:
i. Stalking or following the woman or her child in public or private places;
ii. Peering in the window or lingering outside the residence of the woman or her child;
iii. Entering or remaining in the dwelling or on the property of the woman or her child against
her/his will;
iv. Destroying the property and personal belongings or inflicting harm to animals or pets of the
woman or her child; and
v. Engaging in any form of harassment or violence;
(m) Causing mental or emotional anguish, public ridicule or humiliation to the woman or her child,
including, but not limited to, repeated verbal and emotional abuse, and denial of financial support or
custody of minor children of access to the woman’s child/children.

SEC. 3, RA 7877. Work, Education or Training-related Sexual Harassment Defined. – Work, education or
training-related sexual harassment is committed by an employer, employee, manager, supervisor, agent of
the employer, teacher, instructor, professor, coach, trainor, or any other person who, having authority,
influence or moral ascendancy over another in a work or training or education environment, demands,
requests or otherwise requires any sexual favor from the other, regardless of whether the demand,
request or requirement for submission is accepted by the object of said Act.

(a) In a work-related or employment environment, sexual harassment is committed when:

(1) The sexual favor is made as a condition in the hiring or in the employment, re-employment or
continued employment of said individual, or in granting said individual favorable compensation,
terms, conditions, promotions, or privileges; or the refusal to grant the sexual favor results in
limiting, segregating or classifying the employee which in any way would discriminate, deprive or
diminish employment opportunities or otherwise adversely affect said employee;
(2) The above acts would impair the employee’s rights or privileges under existing labor laws; or
(3) The above acts would result in an intimidating, hostile, or offensive environment for the
employee.

(b) In an education or training environment, sexual harassment is committed:

(1) Against one who is under the care, custody or supervision of the offender;
(2) Against one whose education, training, apprenticeship or tutorship is entrusted to the offender;
(3) When the sexual favor is made a condition to the giving of a passing grade, or the granting of
honors and scholarships, or the payment of a stipend, allowance or other benefits, privileges, or
considerations; or
(4) When the sexual advances result in an intimidating, hostile or offensive environment for the
student, trainee or apprentice.

Any person who directs or induces another to commit any act of sexual harassment as herein defined, or
who cooperates in the commission thereof by another without which it would not have been committed,
shall also be held liable under this Act.

SEC. 4, RA 7877. Duty of the Employer or Head of Office in a Work-related, Education or Training
Environment. – It shall be the duty of the employer or the head of the work-related, educational or training
environment or institution, to prevent or deter the commission of acts of sexual harassment and to provide
the procedures for the resolution, settlement or prosecution of acts of sexual harassment. Towards this
end, the employer or head of office shall:

(a) Promulgate appropriate rules and regulations in consultation with and jointly approved by the
employees or students or trainees, through their duly designated representatives, prescribing the
procedure for the investigation of sexual harassment cases and the administrative sanctions
therefor.

Administrative sanctions shall not be a bar to prosecution in the proper courts for unlawful acts of
sexual harassment.

The said rules and regulations issued pursuant to this subsection (a) shall include, among others,
guidelines on proper decorum in the workplace and educational or training institutions.

(b) Create a committee on decorum and investigation of cases on sexual harassment. The
committee shall conduct meetings, as the case may be, with officers and employees, teachers,
instructors, professors, coaches, trainors and students or trainees to increase understanding and
prevent incidents of sexual harassment. It shall also conduct the investigation of alleged cases
constituting sexual harassment.

In the case of a work-related environment, the committee shall be composed of at least one (1)
representative each from the management, the union, if any, the employees from the supervisory
rank, and from the rank and file employees.

In the case of the educational or training institution, the committee shall be composed of at least
one (1) representative from the administration, the trainors, teachers, instructors, professors or
coaches and students or trainees, as the case may be.

Page 21
 coaches and students or trainees, as the case may be.

The employer or head of office, educational or training institution shall disseminate or post . copy of this
Act for the information of all concerned.

SEC. 5, RA 7877. Liability of the Employer, Head of Office, Educational or Training Institution. – The
employer or head of office, educational or training institution shall be solidarily liable for damages arising
from the acts of sexual harassment committed in the employment, education or training environment if the
employer or head of office, educational or training institution is informed of such acts by the offended party
and no immediate action is taken thereon.

SEC. 14-A, RA 8282. Maternity Leave Benefit. - A female member who has paid at least three (3) monthly
contributions in the twelve-month period immediately preceding the semester of her childbirth or
miscarriage shall be paid a daily maternity benefit equivalent to one hundred percent (100%) of her
average daily salary credit for sixty (60) days or seventy-eight (78) days in case of caesarian delivery,
subject to the following conditions:

(a) That the employee shall have notified her employer of her pregnancy and the probable date of
her childbirth, which notice shall be transmitted to the SSS in accordance with the rules and
regulations it may provide;
(b) The full payment shall be advanced by the employer within thirty (30) days from the filing of the
maternity leave application;
(c) That payment of daily maternity benefits shall be a bar to the recovery of sickness benefits
Provided by this Act for the same period for which daily maternity benefits have been received;
(d) That the maternity benefits Provided under this section shall be paid only for the first four (4)
deliveries or miscarriages;
(e) That the SSS shall immediately reimburse the employer of one hundred percent (100%) of the
amount of maternity benefits advanced to the employee by the employer upon receipt of
satisfactory proof of such payment and legality thereof; and
(f) That if an employee member should give birth or suffer miscarriage without the required
contributions having been remitted for her by her employer to the SSS, or without the latter having
been previously notified by the employer of the time of the pregnancy, the employer shall pay to the
SSS damages equivalent to the benefits which said employee member would otherwise have been
entitled to.

Sec. 4, RA 9710. (b) “Discrimination Against Women” refers to any gender-based distinction, exclusion,
or restriction which has the effect or purpose of impairing or nullifying the recognition, enjoyment, or
exercise by women, irrespective of their marital status, on a basis of equality of men and women, of
human rights and fundamental freedoms in the political, economic, social, cultural, civil, or any other field.

It includes any act or omission, including by law, policy, administrative measure, or practice, that directly or
indirectly excludes or restricts women in the recognition and promotion of their rights and their access to
and enjoyment of opportunities, benefits, or privileges.

A measure or practice of general application is discrimination against women if it fails to provide for
mechanisms to offset or address sex or gender-based disadvantages or limitations of women, as a result
of which women are denied or restricted in the recognition and protection of their rights and in their access
to and enjoyment of opportunities, benefits, or privileges; or women, more than men, are shown to have
suffered the greater adverse effects of those measures or practices.

Provided, finally, that discrimination compounded by or intersecting with other grounds, status, or
condition, such as ethnicity, age, poverty, or religion shall be considered discrimination against women
under this Act.

SECTION 12, RA 9710. Equal Treatment Before the Law. — The State shall take steps to review and,
when necessary, amend and/or repeal existing laws that are discriminatory to women within three (3)
years from the effectivity of this Act.

SECTION 13, RA 9710. Equal Access and Elimination of Discrimination in Education, Scholarships, and
Training. —

(a) The State shall ensure that gender stereotypes and images in educational materials and
curricula are adequately and appropriately revised. Gender-sensitive language shall be used at all
times. Capacity-building on gender and development (GAD), peace and human rights, education for
teachers, and all those involved in the education sector shall be pursued toward this end.
Partnerships between and among players of the education sector, including the private sector,
churches, and faith groups shall be encouraged.
(b) Enrollment of women in nontraditional skills training in vocational and tertiary levels shall be
encouraged.
(c) Expulsion and non-readmission of women faculty due to pregnancy outside of marriage shall be
outlawed. No school shall turn out or refuse admission to a female student solely on the account of
her having contracted pregnancy outside of marriage during her term in school.

SECTION 18, RA 9710. Special Leave Benefits for Women. — A woman employee having rendered
continuous aggregate employment service of at least six (6) months for the last twelve (12) months shall

Page 22
continuous aggregate employment service of at least six (6) months for the last twelve (12) months shall
be entitled to a special leave benefit of two (2) months with full pay based on her gross monthly
compensation following surgery caused by gynecological disorders.

Section 16, RA 11313. Gender-Based Sexual Harassment in the Workplace. -The crime of gender-based
sexual harassment in the workplace includes the following:

(a) An act or series of acts involving any unwelcome sexual advances, requests or demand for
sexual favors or any act of sexual nature, whether done verbally, physically or through the use of
technology such as text messaging or electronic mail or through any other forms of information and
communication systems, that has or could have a detrimental effect on the conditions of an
individual’s employment or education, job performance or opportunities;
(b) A conduct of sexual nature and other conduct-based on sex affecting the dignity of a person,
which is unwelcome, unreasonable, and offensive to the recipient, whether done verbally, physically
or through the use of technology such as text messaging or electronic mail or through any other
forms of information and communication systems;
(c) A conduct that is unwelcome and pervasive and creates an intimidating, hostile or humiliating
environment for the recipient: Provided, That the crime of gender-based sexual harassment may
also be committed between peers and those committed to a superior officer by a subordinate, or to
a teacher by a student, or to a trainer by a trainee; and
(d) Information and communication system refers to a system for generating, sending, receiving,
storing or otherwise processing electronic data messages or electronic documents and includes the
computer system or other similar devices by or in which data are recorded or stored and any
procedure related to the recording or storage of electronic data messages or electronic documents.

Section 17, RA 11313. Duties of Employers. -Employers or other persons of authority, influence or moral
ascendancy in a workplace shall have the duty to prevent, deter, or punish the performance of acts of
gender-based sexual harassment in the workplace. Towards this end, the employer or person of authority,
influence or moral ascendancy shall:

(a) Disseminate or post in a conspicuous place a copy of this Act to all persons in the workplace;
(b) Provide measures to prevent gender-based sexual harassment in the workplace, such as the
conduct of anti-sexual harassment seminars;
(c) Create an independent internal mechanism or a committee on decorum and investigation to
investigate and address complaints of gender-based sexual harassment which shall:

(1) Adequately represent the management, the employees from the supervisory rank, the
rank-and-file employees, and the union, if any;
(2) Designate a woman as its head and not less than half of its members should be women;
(3) Be composed of members who should be impartial and not connected or related to the
alleged perpetrator;
(4) Investigate and decide on the complaints within ten (10) days or less upon receipt
thereof;
(5) Observe due process;
(6) Protect the complainant from retaliation; and
(7) Guarantee confidentiality to the greatest extent possible;

(d) Provide and disseminate, in consultation with all persons in the workplace, a code of conduct or
workplace policy which shall:

(1) Expressly reiterate the prohibition on gender-based sexual harassment;

(2) Describe the procedures of the internal mechanism created under Section 17(c) of this
Act; and
(3) Set administrative penalties.

Section 18, RA 11313. Duties of Employees and Co-Workers. -Employees and co-workers shall have the
duty to:

(a) Refrain from committing acts of gender-based sexual harassment;

(b) Discourage the conduct of gander-based sexual harassment in the workplace;
(c) Provide emotional or social support to fellow employees, co-workers, colleagues or peers who
are victims of gender-based sexual harassment; and
(d) Report acts of gender-based sexual harassment witnessed in the workplace.

Section 19, RA 11313. Liability of Employers.— In addition to liabilities for committing acts of gender-
based sexual harassment, employers may also be held responsible for:

(a) Non-implementation of their duties under Section 17 of this Act, as provided in the penal
provisions; or
(b) Not taking action on reported acts of gender-based sexual harassment committed in the
workplace.

Any person who violates subsection (a) of this section, shall upon conviction, be penalized with a fine of
not less than Five thousand pesos (₱5,000.00) nor more than Ten thousand pesos (₱10,000.00).

Page 23
 Any person who violates subsection (b) of this section, shall upon conviction, be penalized with a fine of
not less than Ten thousand pesos (₱10,000.00) nor more than Fifteen thousand pesos (₱15,000.00).

Section 20, RA 11313. Routine Inspection. -The Department of Labor and Employment (DOLE) for the
private sector and the Civil Service Commission (CSC) for the public sector shall conduct yearly
spontaneous inspections to ensure compliance of employers and employees with their obligations under
this Act.

4. Male Employees

SEC. 2, RA 8187. Notwithstanding any law, rules and regulations to the contrary, every married male
employee in the private and public sectors shall be entitled to a paternity leave of seven (7) days with full
pay for the first four (4) deliveries of the legitimate spouse with whom he is cohabiting. The male employee
applying for paternity leave shall notify his employer of the pregnancy of his legitimate spouse and the
expected date of such delivery.

For purposes of this Act, delivery shall include childbirth or any miscarriage.

SEC. 3, RA 8187. Definition of Term. – For purposes of this Act, Paternity Leave refers to the benefits
granted to a married male employee allowing him not to report for work for seven (7) days but continues to
earn the compensation therefor, on the condition that his spouse has delivered a child or suffered a
miscarriage for purposes of enabling him to effectively lend support to his wife in her period of recovery
and/or in the nursing of the newly-born child.

5. Children

Section 12. RA 7610. 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 14, RA 7610. 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.

Worst form of Child Labor

i. All forms of slavery, including trafficking of children, debt bondage, recruitment of children for armed
conflict
ii. Child prostitution and/or child pornography
iii. Use of child for illegal or illicit activities
iv. Circumstances in which it is carried out, is hazardous, or likely harmful to health, safety or morals of
children, such that it:
i. Debases, degrades or demeans worth and dignity
ii. Exposes child to physical, emotional or sexual abuse
iii. Highly stressful psychologically or may prejudice morals
iv. Underground, underwater or at dangerous heights
v. Use of dangerous machinery, equipment and tools
vi. Exposes child to physical danger
vii. Performed in unhealthy environment exposing child to hazardous working condition

Page 24
 vii. Performed in unhealthy environment exposing child to hazardous working condition
viii. Exposes child to biological agents
ix. Manufacture and handling of explosives

Working hours of a working child

Below 15 years of age 20 hr/week, provided shall not exceed 4 hr/day (6AM - 8PM)
15 yo - 18 yo 40 hr/week, provided shall not exceed 8 hr/day (6AM-10PM)

6. Solo Parents

Section 8, RA 8972. Parental Leave. - In addition to leave privileges under existing laws, parental leave of
not more than seven (7) working days every year shall be granted to any solo parent employee who has
rendered service of at least one (1) year.

"Solo parent" - any individual who falls under any of the following categories:

(1) A woman who gives birth as a result of rape and other crimes against chastity even without a
final conviction of the offender: Provided, That the mother keeps and raises the child;
(2) Parent left solo or alone with the responsibility of parenthood due to death of spouse;
(3) Parent left solo or alone with the responsibility of parenthood while the spouse is detained or is
serving sentence for a criminal conviction for at least one (1) year;
(4) Parent left solo or alone with the responsibility of parenthood due to physical and/or mental
incapacity of spouse as certified by a public medical practitioner;
(5) Parent left solo or alone with the responsibility of parenthood due to legal separation or de facto
separation from spouse for at least one (1) year, as long as he/she is entrusted with the custody of
the children;
(6) Parent left solo or alone with the responsibility of parenthood due to declaration of nullity or
annulment of marriage as decreed by a court or by a church as long as he/she is entrusted with the
custody of the children;
(7) Parent left solo or alone with the responsibility of parenthood due to abandonment of spouse for
at least one (1) year;
(8) Unmarried mother/father who has preferred to keep and rear her/his child/children instead of
having others care for them or give them up to a welfare institution;
(9) Any other person who solely provides parental care and support to a child or children;
(10) Any family member who assumes the responsibility of head of family as a result of the death,
abandonment, disappearance or prolonged absence of the parents or solo parent.

A change in the status or circumstance of the parent claiming benefits under this Act, such that he/she is
no longer left alone with the responsibility of parenthood, shall terminate his/her eligibility for these
benefits.

7. Night Workers - any employed person whose work covers the period from 10PM to 6AM the following
morning provided that the worker performs no less than 7 consecutive hours of work

Right to undergo health assessment

i. Before taking up assignment as night worker

ii. At regular intervals during such assignment
iii. If the experience health problems during such assignment

➢ A night worker who is certified by competent physician, as unfit to render night work due to health
reasons, shall be transferred to a job for which they are fit to work whenever practicable.

Art. 158, Labor Code. Women Night Workers.— Measures shall be taken to ensure that an alternative to
night work is available to women workers who would otherwise be called upon to perform such work:

(a) Before and after childbirth, for a period of at least sixteen (16) weeks, which shall be divided
between the time before and after childbirth;
(b) For additional periods, in respect of which a medical certificate is produced stating that said
additional periods are necessary for the health of the mother or child:

(1) During pregnancy;

(2) During a specified time beyond the period, after childbirth is fixed pursuant to
subparagraph (a) above, the length of which shall be determined by the DOLE after
consulting the labor organizations and employers.

During the periods referred to in this article:

(i) A woman worker shall not be dismissed or given notice of dismissal, except for just or authorized
causes provided for in this Code that are not connected with pregnancy, childbirth and childcare
responsibilities.
(ii) A woman worker shall not lose the benefits regarding her status, seniority, and access to
promotion which may attach to her regular night work position.

Page 25
 promotion which may attach to her regular night work position.

Pregnant women and nursing mothers may he allowed to work at night only if a competent physician,
other than the company physician, shall certify their fitness to render night work, and specify, in the ease
of pregnant employees, the period of the pregnancy that they can safely work.

The measures referred to in this article may include transfer to day work where this is possible, the
provision of social security benefits or an extension of maternity leave.

The provisions of this article shall not have the effect of reducing the protection and benefits connected
with maternity leave under existing laws.

8. Aged Workers

GR: RA 10911 prohibits discrimination against any individual in employment on account of age

Exception.
1. Age is a BFOQ reasonably necessary in the normal operation of a particular business
2. If employee is being retired under the Labor Code, CBA, employment contract or retirement
program.

9. Security Guards

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Module 3.1
Thursday, 8 October 2020 10:30 am

D. Conditions of employment

1. Coverage

GENERAL RULE: The provisions of this title shall apply to employees in all establishments and
undertakings, whether for profit or not (Art. 82, LC).

EXCEPTIONS:
i. Government employees
ii. Managerial employees, if the meet all of the following conditions:

(a) Their primary duty consists of the management of the establishment in which they are
employed or of a department or sub-division thereof
(b) They customarily and regularly direct the work of two or more employees therein.
(c) They have the authority to hire or fire employees of lower rank; or their suggestions and
recommendations as to hiring and firing and as to the promotion or any other change of
status of other employees, are given particular weight (Sec. 2[b], Rule I, Book III, Omnibus
Rules)

This includes officers or members of a managerial staff if they perform the following duties and
responsibilities:

(a) The primary duty consists of the performance of work directly related to management
policies of their employer;
(b) Customarily and regularly exercise discretion and independent judgment; and
(c) (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

(d) Who do not devote more than 20 percent of their hours worked in a work week to activities
which are not directly and closely related to the performance of the work described in
paragraphs (1), (2) and (3) above (Sec. 2[c], Rule I, Book III, Omnibus Rules)

➢ The test of “supervisory” or “managerial status” depends on whether a person possesses

authority to act in the interest of his employer and whether such authority is not merely
routinary or clerical in nature, but requires the use of independent judgment. The position
held by respondent and its concomitant duties failed to hurdle this test.

As a coach or team supervisor, respondent’s main duty was to deal with customer
complaints which could not be handled or solved by call center agents. If the members of his
team could not meet the needs of a customer, they passed the customer’s call to
respondent. x x x This job description does not indicate that respondent can exercise the
powers and prerogatives equivalent to managerial actions which require the customary use
of independent judgment. There is no showing that he was actually conferred or was actually
exercising the following duties attributable to a “member of the managerial staff”
(Clientologic v. Castro).

➢ The test of supervisory or managerial status depends on whether a person possesses

authority to act in the interest of his employer and whether such authority is not merely
routinary or clerical in nature, but requires the use of independent judgment.

In this case, petitioner holds a managerial status since she is tasked to act in the interest of
her employer as she exercises independent judgment when she approves pre-termination of
USD CDs or the withdrawal of deposits. In fact, petitioner admitted the exercise of
independent judgment when she explained that as regards the pre-termination of the USD
CDs of Uymatiao and Caluag, the transactions were approved on the basis of her
independent judgment that the signatures in all the documents presented to her by the
traders matched, as shown in her reply dated April 23, 2002 to respondent's memorandum
asking her to explain the unauthorized pre-terminations/withdrawals of U.S. dollar deposits in
the BPI Ayala Avenue Branch.

iii. Field personnel - refers to non-agricultural employees who regularly perform their duties away from
the principal place of duty or branch office of the employer and whose actual work in the field
cannot be determined with reasonable certainty.

➢ In deciding whether or not an employee’s actual working hours in the field can be determined
with reasonable certainty, query must be made as to whether or not such employee’s time

Page 27
 with reasonable certainty, query must be made as to whether or not such employee’s time
and performance is constantly supervised by the employer.

In the case at bar, during the entire course of their fishing voyage, fishermen employed by
petitioner have no choice but to remain on board its vessel. Although they perform non-
agricultural work away from petitioner’s business offices, the fact remains that throughout the
duration of their work they are under the effective control and supervision of petitioner
through the vessel’s patron or master as the NLRC correctly held (Mercidar Fishing Corp.
v. NLRC)

iv. The determination of whether bus drivers and/or conductors are considered as field personnel was
already threshed out in the case of Auto Bus Transport Systems, Inc. v. Bautista, where the Court
explained that:

As a general rule, [field personnel] are those whose performance of their job/service is
not supervised by the employer or his representative, the workplace being away from
the principal office and whose hours and days of work cannot be determined with
reasonable certainty; hence, they are paid specific amount for rendering specific
service or performing specific work. If required to be at specific places at specific
times, employees including drivers cannot be said to be field personnel despite the
fact that they are performing work away from the principal office of the employee, x x x

xxxx

x x x At this point, it is necessary to stress that the definition of a "field personnel" is not
merely concerned with the location where the employee regularly performs his duties but
also with the fact that the employee's performance is unsupervised by the employer. As
discussed above, field personnel are those who regularly perform their duties away from the
principal place of business of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty. Thus, in order to conclude whether an
employee is a field employee, it is also necessary to ascertain if actual hours of work in the
field can be determined with reasonable certainty by the employer. In so doing, an inquiry
must be made as to whether or not the employee's time and performance are constantly
supervised by the employer.31

Guided by the foregoing norms, the NLRC properly concluded that the petitioners are not field
personnel but regular employees who perform tasks usually necessary and desirable to the
respondents' business. Evidently, the petitioners are not field personnel as defined above and the
NLRC's finding in this regard is supported by the established facts of this case: (1) the petitioners,
as bus drivers and/or conductors, are directed to transport their passengers at a specified time and
place; (2) they are not given the discretion to select and contract with prospective passengers; (3)
their actual work hours could be determined with reasonable certainty, as well as their average trips
per month; and (4) the respondents supervised their time and performance of duties. (Dasco v.
Philtranco).

v. Members of the family of the employer who are dependent on him for support

vi. Domestic servants and persons in the personal service of another if they perform such services in
the employer's home which are usually necessary or desirable for the maintenance and enjoyment
thereof, or minister to the personal comfort, convenience, or safety of the employer as well as the
members of his employer's household. (Sec. 2[d], Rule I, Book III, Omnibus Rules)

The term "househelper" as used herein is synonymous to the term "domestic servant" and shall
refer to any person, whether male or female, who renders services in and about the employer's
home and which services are usually necessary or desirable for the maintenance and enjoyment
thereof, and ministers exclusively to the personal comfort and enjoyment of the employer's family
(Sec. 1[b], Rule XIII, Book III, Omnibus Rules)

➢ The foregoing definition clearly contemplates such househelper or domestic servant who is
employed in the employer’s home to minister exclusively to the personal comfort and
enjoyment of the employer’s family. Such definition covers family drivers, domestic servants,
laundry women, yayas, gardeners, houseboys and similar househelps. x x x The criteria is
the personal comfort and enjoyment of the family of the employer in the home of said
employer.

xxx

In the case at bar, the petitioner itself admits in its position paper that respondent worked at
the company premises and her duty was to cook and prepare its employees’ lunch and
merienda. Clearly, the situs, as well as the nature of respondent’s work as a cook, who
caters not only to the needs of Mr. Tan and his family but also to that of the petitioner’s
employees, makes her fall squarely within the definition of a regular employee under the
doctrine enunciated in the Apex Mining case. That she works within company premises, and
that she does not cater exclusively to the personal comfort of Mr. Tan and his family, is
reflective of the existence of the petitioner’s right of CONTROL over her functions, which is
the PRIMARY indicator of the existence of an employer-employee relationship (Remington
v. Castaneda).

Page 28
 v. Castaneda).

➢ Petitioner is not also liable to the respondent for the payment of holiday pay, 13th month pay
and service incentive leave pay because persons in the personal service of another, such as
family drivers, are exempted from the coverage of such benefits pursuant to Articles 82, 94
and 95 of the Labor Code, and Section 3(d) of the implementing rules of Presidential Decree
No. 851. (Atienza v. Saluta).

SEC. 4, RA 10361. Definition of Terms. – As used in this Act, the term:

xxx

(c) Domestic work refers to work performed in or for a household or households.

(d) Domestic worker or “Kasambahay” refers to any person engaged in domestic work
within an employment relationship such as, but not limited to, the following: general
househelp, nursemaid or “yaya”, cook, gardener, or laundry person, but shall exclude any
person who performs domestic work only occasionally or sporadically and not on an
occupational basis.
The term shall not include children who are under foster family arrangement, and are
provided access to education and given an allowance incidental to education, i.e. “baon”,
transportation, school projects and school activities.
(e) Employer refers to any person who engages and controls the services of a domestic
worker and is party to the employment contract.
(f) Household refers to the immediate members of the family or the occupants of the house
that are directly provided services by the domestic worker.

SEC. 22, RA 10361. Assignment to Non-household Work. – No domestic worker shall be assigned
to work in a commercial, industrial or agricultural enterprise at a wage rate lower than that provided
for agricultural or nonagricultural workers. In such cases, the domestic worker shall be paid the
applicable minimum wage.

SEC. 23, RA 10361. Extent of Duty. – The domestic worker and the employer may mutually agree
for the former to temporarily perform a task that is outside the latter’s household for the benefit of
another household. However, any liability that will be incurred by the domestic worker on account of
such arrangement shall be borne by the original employer. In addition, such work performed outside
the household shall entitle the domestic worker to an additional payment of not less than the
existing minimum wage rate of a domestic worker. It shall be unlawful for the original employer to
charge any amount from the said household where the service of the domestic worker was
temporarily performed.

vii. Workers who are paid by results as determined by SOLE.

➢ There are two categories of employees paid by results:

(A) those whose time and performance are supervised by the employer.

(Here, there is an element of control and supervision over the manner as to how the
work is to be performed. A piece-rate worker belongs to this category especially if he
performs his work in the company premises.); and

(B) those whose time and performance are unsupervised.

(Here, the employer’s control is over the RESULT of the work. Workers on pakyao
and takay basis belong to this group.)

Both classes of workers are paid per unit accomplished. Piece-rate payment is generally
practiced in garment factories where work is done in the company premises, while payment
on pakyao and takay basis is commonly observed in the agricultural industry, such as in
sugar plantations where the work is performed in bulk or in volumes difficult to quantify.
Petitioners belong to the first category, i.e., supervised employees.

In this case, private respondents exercised control over the work of petitioners. As tailors,
petitioners worked in the company’s premises from 8:00 a.m. to 7:00 p.m. daily, including
Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not
negate their status as regular employees of private respondents. Payment by the piece is
just a method of compensation and does not define the essence of the relations. Nor does
the fact that petitioners are not covered by the SSS affect the employer-employee
relationship.

Indeed, the following factors show that petitioners, although piece-rate workers, were regular
employees of private respondents:

(1) within the contemplation of Art. 280 of the Labor Code, their work as tailors was
necessary or desirable in the usual business of private respondents, which is
engaged in the tailoring business;

Page 29
 engaged in the tailoring business;
(2) petitioners worked for private respondents throughout the year, their employment
not being dependent on a specific project or season; and,
(3) petitioners worked for private respondents for more than one year (Lambo v.
NLRC).

2. Hours of work

a. Compensable working hours

SECTION 3, Rule II, DO 118-12. Hours of Work and Hours of Rest. – The normal hours of work of a driver
and conductor shall not exceed eight (8) hours a day.

If the driver/conductor is required to work overtime, the maximum hours of work shall not exceed twelve
(12) hours in any 24-hour period, subject to the overriding safety and operational conditions of the public
utility bus.

SECTION 3, Rule I, Book III, Omnibus Rules. Hours worked. — The following shall be considered as
compensable hours worked:

(a) All time during which an employee is required to be on duty or to be at the employer's premises or
to be at a prescribed work place; and
(b) All time during which an employee is suffered or permitted to work.

b. Principles in determining hours worked

SECTION 4, Rule I, Book III, Omnibus Rules. Principles in determining hours worked. — The following
general principles shall govern in determining whether the time spent by an employee is considered hours
worked for purposes of this Rule:

(a) All hours are hours worked which the employee is required to give his employer, regardless of
whether or not such hours are spent in productive labor or involve physical or mental exertion.
(b) An employee need not leave the premises of the work place in order that his rest period shall not be
counted, it being enough that he stops working, may rest completely and may leave his work place,
to go elsewhere, whether within or outside the premises of his work place.
(c) If the work performed was necessary, or it benefited the employer, or the employee could not
abandon his work at the end of his normal working hours because he had no replacement, all time
spent for such work shall be considered as hours worked, if the work was with the knowledge of his
employer or immediate supervisor.
(d) The time during which an employee is inactive by reason of interruptions in his work beyond his
control shall be considered working time either if the imminence of the resumption of work requires
the employee's presence at the place of work or if the interval is too brief to be utilized effectively
and gainfully in the employee's own interest.

c. Engaged to wait/idle time

SECTION 5, Rule I, Book III, Omnibus Rules. Waiting time. — (a) Waiting time spent by an employee
shall be considered as working time if waiting is an integral part of his work or the employee is required or
engaged by the employer to wait.

➢ It will be noted that, under the law, the idle time that an employee may spend for resting and during which
he may leave the spot or place of work though not the premises of his employer, is not counted as working
time only where the work is broken or is not continuous.

In this case, the CIR’s finding that work in the petitioner company was continuous and did not permit
employees and laborers to rest completely is not without basis in evidence and following our earlier
rulings, shall not disturb the same (NADEVCO v. CIR).

d. On-call

SECTION 5, Rule I, Book III, Omnibus Rules. Waiting time. — (b) An employee who is required to
remain on call in the employer's premises or so close thereto that he cannot use the time effectively and
gainfully for his own purpose shall be considered as working while on call. An employee who is not
required to leave word at his home or with company officials where he may be reached is not working
while on call.

➢ The right to fix the work schedules of the employees rests principally on their employer. In the instant case
petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its business
operations and its improved production. It rationalizes that while the old work schedule included a 30-
minute paid lunch break, the employees could be called upon to do jobs during that period as they were
“on call.” Even if denominated as lunch break, this period could very well be considered as working time
because the factory employees were required to work if necessary and were paid accordingly for working.
Since the employees are no longer required to work during this one-hour lunch break, there is no more
need for them to be compensated for this period. We agree with the Labor Arbiter that the new work
schedule fully complies with the daily work period of eight (8) hours without violating the Labor Code
(Sime Darby Pilipinas, Inc. v. NLRC).

Page 30
 (Sime Darby Pilipinas, Inc. v. NLRC).

e. Assembly time

➢ The 30-minute assembly is a deeply-rooted, routinary practice of the employees, and the proceedings
attendant thereto are not infected with complexities as to deprive the workers the time to attend to other
personal pursuits. They are not new employees as to require the company to deliver long briefings
regarding their respective work assignments. Their houses are situated right on the area where the farms
are located, such that after the roll call, which does not necessarily require the personal presence, they
can go back to their houses to attend to some chores. In short, they are not subject to the absolute control
of the company during this period, otherwise, their failure to report in the assembly time would justify the
company to impose disciplinary measures. The evidence of the case demonstrates that the 30-minute
assembly time was not primarily intended for the interests of the employer, but ultimately for the
employees to indicate their availability or non-availability for work during every working day (Arica v.
NLRC).

f. Commuting time, travel time at lectures, seminars, etc.

SECTION 6, Rule I, Book III, Omnibus Rules. Lectures, meetings, training programs. — Attendance at
lectures, meetings, training programs, and other similar activities shall not be counted as working time if all
of the following conditions are met:

(a) Attendance is outside of the employee's regular working hours;

(b) Attendance is in fact voluntary; and
(c) The employee does not perform any productive work during such attendance.

g. Semestral break

➢ The petitioner’s members are full-time employees receiving their monthly salaries irrespective of the
number of working days or teaching hours in a month. However, they find themselves in a situation where
they are forced to go on leave during semestral breaks. These semestral breaks are in the nature of work
interruptions beyond the employees’ control. As such, these breaks cannot be considered as absences
within the meaning of the law for which deductions may be made from monthly allowances. The “No work,
no pay” principle does not apply in the instant case. The petitioner’s members received their regular
salaries during this period. It is clear from the provision of law that it contemplates a “no work” situation
where the employees voluntarily absent themselves. Petitioners, in the case at bar, do not voluntarily
absent themselves during semestral breaks. Rather, they are constrained to take mandatory leave from
work. For this they cannot be faulted nor can they be begrudged that which is due them under the law.

xxx

Although said to be on forced leave, professors and teachers are, nevertheless, burdened with the task of
working during a period of time supposedly available for rest and private matters. There are papers to
correct, students to evaluate, deadlines to meet, and periods within which to submit grading reports.
Although they may be considered by the respondent to be on leave, the semestral break could not be
used effectively for the teacher’s own purposes for the nature of a teacher’s job imposes upon him further
duties which must be done during the said period of time. Arduous preparation is necessary for the
delicate task of educating our children. Teaching involves not only an application of skill and an imparting
of knowledge, but a responsibility which entails self-dedication and sacrifice. It would be unfair for the
private respondent to consider these teachers as employees on leave without pay to suit its purposes and,
yet, in the meantime, continue availing of their services as they prepare for the next semester or complete
all of the last semester’s requirements.

Thus, the semestral break may also be considered as “hours worked.” For this, the teachers are paid
regular salaries and, for this, they should be entitled to ECOLA (University of Pangasinan Faculty Union
v. University of Pangasinan)

h. Meal break

SECTION 7, Rule I, Book III, Omnibus Rules. Meal and Rest Periods. — Every employer shall give his
employees, regardless of sex, not less than one (1) hour time-off for regular meals, except in the following
cases when a meal period of not less than twenty (20) minutes may be given by the employer provided
that such shorter meal period is credited as compensable hours worked of the employee:

(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than sixteen (16) hours a day;
(c) In case of actual or impending emergencies or there is urgent work to be performed on
machineries, equipment or installations to avoid serious loss which the employer would otherwise
suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.

i. Rest period

SECTION 7, Rule I, Book III, Omnibus Rules. x x x Rest periods or coffee breaks running from five (5) to
twenty (20) minutes shall be considered as compensable working time.

Page 31
 SECTION 2, Rule II, DO 118-12. Minimum Benefits. – The public utility bus drivers and conductors are
entitled to the following benefits: x x x c) Rest day of twenty-four (24) consecutive hours for every six (6)
consecutive working days. If the driver/conductor is required to work on a rest day, he/she shall be paid an
additional premium pay of 30% of me basic wage. If the driver/conductor is required to work on special
days under Republic Act No. 9849, he/she shall also be paid an additional premium pay of 30% of the
basic wage. Whenever work is performed on a rest day, which happens to be also a special day, he/she is
entitled to an additional 50% of the basic wage;

SECTION 3, Rule II, DO 118-12. x x x Drivers and conductors shall be entitled to rest periods of at least
one (1) hour, exclusive of meal breaks, within a 12-hour shift.

SEC. 20, RA 10361. Daily Rest Period. – The domestic worker shall be entitled to an aggregate daily rest
period of eight (8) hours per day.

SEC. 21, RA 10361. Weekly Rest Period. – The domestic worker shall be entitled to at least twenty-four
(24) consecutive hours of rest in a week. The employer and the domestic worker shall agree in writing on
the schedule of the weekly rest day of the domestic worker: Provided, That the employer shall respect the
preference of the domestic worker as to the weekly rest day when such preference is based on religious
grounds. Nothing in this provision shall deprive the domestic worker and the employer from agreeing to
the following:

(a) Offsetting a day of absence with a particular rest day;

(b) Waiving a particular rest day in return for an equivalent daily rate of pay;
(c) Accumulating rest days not exceeding five (5) days; or
(d) Other similar arrangements.

j. Overtime

(a) Seafarers

A seaman, by the very nature of his job, stays on board a ship or vessel beyond the regular eight-
hour work schedule. For the employer to give him overtime pay for the extra hours when he might
be sleeping or attending to his personal chores or even just lulling away his time would be
extremely unfair and unreasonable.

We already resolved the question of overtime pay of worker aboard a vessel in the case of National
Shipyards and Steel Corporation v. CIR (3 SCRA 890). We ruled:1aw library

We cannot agree with the Court below that respondent Malondras should be paid overtime
compensation for every hour in excess of the regular working hours that he was on board his
vessel or barge each day, irrespective of whether or not he actually put in work during those
hours. Seamen are required to stay on board their vessels by the very nature of their duties,
and it is for this reason that, in addition to their regular compensation, they are given free
living quarters and subsistence allowances when required to be on board. It could not have
been the purpose of our law to require their employers to pay them overtime even when they
are not actually working; otherwise, every sailor on board a vessel would be entitled to
overtime for sixteen hours each a day, even if he spent all those hours resting or sleeping in
his bunk, after his regular tour of duty. The correct criterion in determining whether or not
sailors are entitled to overtime pay is not, therefore, whether they were on board and cannot
leave ship beyond the regular eight working hours a day, but whether they actually rendered
service in excess of said number of hours. (Legahi v. NLRC).

(b) Evidence

In Damasco v. NLRC, we held that an employer's formal admission that an employee worked
beyond eight hours should entitle the employee to overtime compensation. In this case, such
admissions, that respondents rendered overtime work and work during their holiday and rest days
on the period specified therein, can be gleaned from the affidavits executed by Lepanto's
managers, Atty. Weldy Manlong, and Capt. Edgar Langeg. Thus, respondents are clearly entitled to
these benefits.

This Court has repeatedly ruled that any doubt arising from the evaluation of evidence as between
the employer and the employee must be resolved in favor of the latter. As an employer, it is
incumbent upon Lepanto to prove payment. In G & M (Phils.), Inc. v. Cruz, we held that the burden
of proving payment of monetary claims rests on the employer since the pertinent personnel files,
payrolls, records, remittances and other similar documents — which will show that overtime,
differentials, service incentive leave, and other claims of workers have been paid — are not in the
possession of the worker but in the custody and absolute control of the employer. Thus, the burden
of showing with legal certainty that the obligation has been discharged with payment falls on the
debtor, in accordance with the rule that one who pleads payment has the burden of proving it. x x x
In this case, Lepanto failed to discharge such burden of proof (Lepanto Consolidated Mining v.
Mamaril).

k. Undertime
l. Night work

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 l. Night work

Every employee shall be paid a night shift diefferential of not less than 10% of his regular wage for each
hpur work performed between 10PM and 6AM (Art. 86, Labor Code).

Read: RA 10151 and DO 119-12

(a) Rationale

It bears pointing out that additional compensation for nighttime work is founded on public policy.
Working at night is violative of the law of nature for it is the period for rest and sleep. An employee
who works at night has less stamina and vigor. Thus, he can easily contract disease. The lack of
sunlight tends to produce anemia and tuberculosis and predispose him to other ills. Night work
brings increased liability to eyestrain and accident. Serious moral dangers also are likely to result
from the necessity of traveling the street alone at night, and from the interference with normal home
life. Hygienic, medical, moral, cultural and socio-biological reasons are in accord that night work has
many inconveniences and when there is no alternative but to perform it, it is but just that the laborer
should earn greater salary than ordinary work so as to compensate the laborer to some extent for
the said inconveniences (Association of International Shipping Lines, Inc. v. United Harbors'
Pilot Association).

(b) Seafarers

Apropos the monetary claims, there is insufficient evidence to prove petitioners' entitlement thereto.
As crew members, petitioners were required to stay on board the vessel by the very nature of their
duties, and it is for this reason that, in addition to their regular compensation, they are given free
living quarters and subsistence allowances when required to be on board. It could not have been
the purpose of our law to require their employers to give them overtime pay or night shift differential,
even when they are not actually working. Thus, the correct criterion in determining whether they are
entitled to overtime pay or night shift differential is not whether they were on board and cannot
leave ship beyond the regular eight working hours a day, but whether they actually rendered
service in excess of said number of hours. In this case, petitioners failed to submit sufficient proof
that overtime and night shift work were actually performed to entitle them to the corresponding pay.
(Dacut v. CA).

m. No off-setting rule

Undertime work on any particular day shall not be offset by overtime work on any other day. Permission
given to the employee to go on leave on some other day of the week shall not exempt the employer from
paying additional compensation required in this Chapter (Art. 88, Labor Code)

n. Brownout / power interruptions

1. Brownouts of short duration, but not exceeding 20 mins, shall be treated as worked or compensable
hours
2. Brownouts for more than 20 mins may not be treated as hours worked, if;
(a) Employees can leave their workplace or go somewhere else
(b) Employees can use the time effectively for their own interest
3. The employer may extend the working hours outside regular schedule to compensate for loss of
productive man-hours without being liable for overtime pay
4. Days when work was not required and no work could be done because of shutdown due to
electrical power interruptions, lack of raw materials and repair of machines, are not deemed hours
of work.

o. Exceptions to 8-hour rule

(a) Compressed work week

Read: DOLE Advisory No. 02-04

The MOA is enforceable and binding against the petitioners. Where it is shown that the person
making the waiver did so voluntarily, with full understanding of what he was doing, and the
consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a
valid and binding undertaking.

D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the
employees will derive from the adoption of a compressed workweek scheme, thus:

The compressed workweek scheme was originally conceived for establishments wishing to
save on energy costs, promote greater work efficiency and lower the rate of employee
absenteeism, among others. Workers favor the scheme considering that it would mean
savings on the increasing cost of transportation fares for at least one (1) day a week; savings
on meal and snack expenses; longer weekends, or an additional 52 off-days a year, that can
be devoted to rest, leisure, family responsibilities, studies and other personal matters, and
that it will spare them for at least another day in a week from certain inconveniences that are
the normal incidents of employment, such as commuting to and from the workplace, travel

Page 33
 the normal incidents of employment, such as commuting to and from the workplace, travel
time spent, exposure to dust and motor vehicle fumes, dressing up for work, etc. Thus, under
this scheme, the generally observed workweek of six (6) days is shortened to five (5) days
but prolonging the working hours from Monday to Friday without the employer being obliged
for pay overtime premium compensation for work performed in excess of eight (8) hours on
weekdays, in exchange for the benefits abovecited that will accrue to the employees.

Moreover, the adoption of a compressed workweek scheme in the company will help temper any
inconvenience that will be caused the petitioners by their transfer to a farther workplace.

Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to
protect the interest of the employees in the implementation of a compressed workweek scheme:

1. The employees voluntarily agree to work more than eight (8) hours a day the total in a
week of which shall not exceed their normal weekly hours of work prior to adoption of the
compressed workweek arrangement;
2. There will not be any diminution whatsoever in the weekly or monthly take-home pay and
fringe benefits of the employees;
3. If an employee is permitted or required to work in excess of his normal weekly hours of
work prior to the adoption of the compressed workweek scheme, all such excess hours shall
be considered overtime work and shall be compensated in accordance with the provisions of
the Labor Code or applicable Collective Bargaining Agreement (CBA);
4. Appropriate waivers with respect to overtime premium pay for work performed in excess of
eight (8) hours a day may be devised by the parties to the agreement.
5. The effectivity and implementation of the new working time arrangement shall be by
agreement of the parties (Bisig Manggagawa sa Tryco v. NLRC).

p. Flexible work hours for solo parents

Section 3, RA 8972. x x x (e) "Flexible work schedule" - is the right granted to a solo parent employee to
vary his/her arrival and departure time without affecting the core work hours as defined by the employer.

Section 6, RA 8972. Flexible Work Schedule. - The employer shall provide for a flexible working schedule
for solo parents: Provided, That the same shall not affect individual and company productivity: Provided,
further, That any employer may request exemption from the above requirements from the DOLE on certain
meritorious grounds.

q. Work from home

Section 5, RA 11165. Fair Treatment. - The employer shall ensure that the telecommuting employee are
given the same treatment as that of comparable employees are given the same treatment as that of
comparable employees working at the time employer's premises. All telecommuting employee shall:

(a) Receive a rate of pay, including overtime and night shift differential, and other similar monetary
benefits not lower than those provided in applicable laws, and collective bargaining agreements.
(b) Have the right to rest periods, regular holidays, and special nonworking days.
(c) Have the same or equivalent workload and performance standards as those of comparable
workerat the employer's premises.
(d) Have the same access to training and career development opportunities as those of comparable
workers at the employer's premises, and be subject to the same appraisal policies covering these
workers.
(e) Receive appropriate training on the technical equipment at their disposal, and the characteristics
and conditions of telecommuting.
(f) Have the same collectible rights as the workers at the employer's premises, and shall not be
barred from communicating with workers' representatives.1âwphi1

The employer shall also ensure that measures are taken to prevent the telecommuting employee from
being isolated from the rest of the working community in the company by giving the telecommuting
employee the opportunity to meet with colleagues on a regular basis, and opportunity to meet with
colleagues on a regular basis, and allowing access to company information.

r. Rest days and holidays

(a) Rest day

It shall be the duty of every employer, whether operating for profit or not, to provide each of his
employees a rest period of not less than twenty-four (24) consecutive hours after every six (6)
consecutive normal work days (Art. 91, Labor Code).

The employer shall determine and schedule the weekly rest day of his employees subject to
collective bargaining agreement and to such rules and regulations as the Secretary of Labor and
Employment may provide.

NOTE: However, the employer shall respect the preference of employees as to their weekly rest
day when such preference is based on religious grounds.

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(b) Compulsory work on rest day

The employer may require his employees to work on any day:

i. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disaster or calamity to prevent loss of life and property, or
imminent danger to public safety;
ii. In cases of urgent work to be performed on the machinery, equipment, or installation, to
avoid serious loss which the employer would otherwise suffer;
iii. In the event of abnormal pressure of work due to special circumstances, where the employer
cannot ordinarily be expected to resort to other measures;
iv. To prevent loss or damage to perishable goods;
v. Where the nature of the work requires continuous operations and the stoppage of work may
result in irreparable injury or loss to the employer; and
vi. Under other circumstances analogous or similar to the foregoing as determined by the
Secretary of Labor and Employment (Art. 92, Labor Code).

(c) Regular v. Special Holiday

i. Rationale/Entitlement; Two (2) Regular Holidays

Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the
State shall afford protection to labor. Its purpose is not merely “to prevent diminution of the
monthly income of the workers on account of work interruptions. In other words, although the
worker is forced to take a rest, he earns what he should earn, that is, his holiday pay.”8 It is
also intended to enable the worker to participate in the national celebrations held during the
days identified as with great historical and cultural significance.

Independence Day (June 12), Araw ng Kagitingan (April 9), National Heroes Day (last
Sunday of August), Bonifacio Day (November 30) and Rizal Day (December 30) were
declared national holidays to afford Filipinos with a recurring opportunity to commemorate
the heroism of the Filipino people, promote national identity, and deepen the spirit of
patriotism. Labor Day (May 1) is a day traditionally reserved to celebrate the contributions of
the working class to the development of the nation, while the religious holidays designated in
Executive Order No. 203 allow the worker to celebrate his faith with his family.

As reflected above, Art. 94 of the Labor Code, as amended, affords a worker the enjoyment
of ten paid regular holidays. The provision is mandatory, regardless of whether an employee
is paid on a monthly or daily basis. Unlike a bonus, which is a management prerogative,
holiday pay is a statutory benefit demandable under the law. Since a worker is entitled to the
enjoyment of ten paid regular holidays, the fact that two holidays fall on the same date
should not operate to reduce to nine the ten holiday pay benefits a worker is entitled to
receive.

From the pertinent provisions of the CBA entered into by the parties, petitioner had obligated
itself to pay for the legal holidays as required by law (Asian Transmission Corp. v. CA).

(d) Teachers paid by the hour

➢ Subject holiday pay is provided for in the Labor Code (Presidential Decree No. 442, as amended),
which reads:

Art. 94. Right to holiday pay — (a) Every worker shall be paid his regular daily wage during
regular holidays, except in retail and service establishments regularly employing less than
ten (10) workers;

(b) The employer may require an employee to work on any holiday but such employee shall
be paid a compensation equivalent to twice his regular rate; … ”

and in the Implementing Rules and Regulations, Rule IV, Book III, which reads:

SEC. 8. Holiday pay of certain employees. — (a) Private school teachers, including faculty
members of colleges and universities, may not be paid for the regular holidays during
semestral vacations. They shall, however, be paid for the regular holidays during Christmas
vacations. …

Under the foregoing provisions, apparently, the petitioner, although a non-profit institution is under
obligation to give pay even on unworked regular holidays to hourly paid faculty members subject to
the terms and conditions provided for therein.

We believe that the aforementioned implementing rule is not justified by the provisions of the law
which after all is silent with respect to faculty members paid by the hour who because of their
teaching contracts are obliged to work and consent to be paid only for work actually done (except
when an emergency or a fortuitous event or a national need calls for the declaration of special

Page 35
 when an emergency or a fortuitous event or a national need calls for the declaration of special
holidays). Regular holidays specified as such by law are known to both school and faculty members
as no class days;” certainly the latter do not expect payment for said unworked days, and this was
clearly in their minds when they entered into the teaching contracts.

On the other hand, both the law and the Implementing Rules governing holiday pay are silent as to
payment on Special Public Holidays.

Wherefore, the decision of respondent National Labor Relations Commission is hereby set aside,
and a new one is hereby RENDERED:

(a) exempting petitioner from paying hourly paid faculty members their pay for regular
holidays, whether the same be during the regular semesters of the school year or during
semestral, Christmas, or Holy Week vacations;

(b) but ordering petitioner to pay said faculty members their regular hourly rate on days
declared as special holidays or for some reason classes are called off or shortened for the
hours they are supposed to have taught, whether extensions of class days be ordered or not;
in case of extensions said faculty members shall likewise be paid their hourly rates should
they teach during said extensions (JRC v. NLRC).

(e) Muslim holidays

➢ Although Article 3 of Presidential Decree 1083 (Code of Muslim Personal Laws) provides that the
provisions of the code shall be applicable only to Muslims, on which the petitioner based its
defense, the same article provides further that nothing in the code shall be construed to the
prejudice of non-Muslims. The Supreme Court stated that there should be no distinction between
Muslims and non-Muslims as regards the payment of benefits for Muslim Holidays. The Court,
quoting the Court of Appeals, “assuming that the SMC is correct, then Muslims throughout the
Philippines are also not entitled to holiday pays on Christian holidays declared by law. We must
remind (SMC) that wages and other emoluments granted by law are determined not on the basis of
the work (SMC v. CA).

s. Service incentive leaves

GENERAL RULE: Every employee who has rendered at least one year of service shall be entitled to a
yearly service incentive leave of five days with pay (Art. 95, Labor Code)

EXCEPTION:

1. those who are already enjoying the benefit herein provided,

2. those enjoying vacation leave with pay of at least five days and
3. those employed in establishments regularly employing less than ten employees or
4. those employed in establishments exempted from granting this benefit by the Secretary of Labor
and Employment after considering the viability or financial condition of such establishment.

NOTE: The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or
any court or administrative action.

(a) When demandable; Commutation

➢ The clear policy of the Labor Code is to grant service incentive leave pay to workers in all
establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules
and Regulations provides that "[e]very employee who has rendered at least one year of service
shall be entitled to a yearly service incentive leave of five days with pay." Service incentive leave is
a right which accrues to every employee who has served "within 12 months, whether continuous or
broken reckoned from the date the employee started working, including authorized absences and
paid regular holidays unless the working days in the establishment as a matter of practice or policy,
or that provided in the employment contracts, is less than 12 months, in which case said period
shall be considered as one year." It is also "commutable to its money equivalent if not used or
exhausted at the end of the year." In other words, an employee who has served for one year is
entitled to it. He may use it as leave days or he may collect its monetary value (Fernandez v.
NLRC).

➢ The Court has already held that company drivers who are under the control and supervision of
management officers — like respondent herein — are regular employees entitled to benefits
including service incentive leave pay. "Service incentive leave is a right which accrues to every
employee who has served 'within 12 months, whether continuous or broken, reckoned from the
date the employee started working, including authorized absences and paid regular holidays unless
the working days in the establishment as a matter of practice or policy, or that provided in the
employment contracts, is less than 12 months, in which case said period shall be considered as
one [(1)] year.' It is also commutable to its money equivalent if not used or exhausted at the end of
the year. In other words, an employee who has served for one (1) year is entitled to it. He may use
it as leave days or he may collect its monetary value."

Petitioner, as the employer of respondent, and having complete control over the records of the

Page 36
 Petitioner, as the employer of respondent, and having complete control over the records of the
company, could have easily rebutted the said monetary claim against it by presenting the vouchers
or payrolls showing payment of the same. However, since petitioner opted not to lift a finger in
providing the required documentary evidence, the ineluctable conclusion that may be derived
therefrom is that it never paid said benefit and must, perforce, be ordered to settle its obligation to
respondent (HSY Marketing Ltd. Co. v. Villastique)

➢ Auto Bus Transport System, Inc. v. Bautista82 clarified the correct reckoning of the prescriptive
period for service incentive leave pay:

It is essential at this point, however, to recognize that the service incentive leave is a curious
animal in relation to other benefits granted by the law to every employee. In the case of
service incentive leave, the employee may choose to either use his leave credits or commute
it to its monetary equivalent if not exhausted at the end of the year. Furthermore, if the
employee entitled to service incentive leave does not use or commute the same, he is
entitled upon his resignation or separation from work to the commutation of his accrued
service incentive leave. As enunciated by the Court in Fernandez v. NLRC:

The clear policy of the Labor Code is to grant service incentive leave pay to workers in
all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the
Implementing Rules and Regulations provides that "[e]very employee who has
rendered at least one year of service shall be entitled to a yearly service incentive
leave of five days with pay." Service incentive leave is a right which accrues to every
employee who has served "within 12 months, whether continuous or broken reckoned
from the date the employee started working, including authorized absences and paid
regular holidays unless the working days in the establishment as a matter of practice
or policy, or that provided in the employment contracts, is less than 12 months, in
which case said period shall be considered as one year." It is also "commutable to its
money equivalent if not used or exhausted at the end of the year." In other words, an
employee who has served for one year is entitled to it. He may use it as leave days or
he may collect its monetary value. To limit the award to three years, as the solicitor
general recommends, is to unduly restrict such right.

Correspondingly, it can be conscientiously deduced that the cause of action of an entitled

employee to claim his service incentive leave pay accrues from the moment the employer
refuses to remunerate its monetary equivalent if the employee did not make use of said
leave credits but instead chose to avail of its commutation.1âwphi1 Accordingly, if the
employee wishes to accumulate his leave credits and opts for its commutation upon his
resignation or separation from employment, his cause of action to claim the whole amount of
his accumulated service incentive leave shall arise when the employer fails to pay such
amount at the time of his resignation or separation from employment.

Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive
leave, we can conclude that the three (3)-year prescriptive period commences, not at the end
of the year when the employee becomes entitled to the commutation of his service incentive
leave, but from the time when the employer refuses to pay its monetary equivalent after
demand of commutation or upon termination of the employee's services, as the case may
be.

The above construal of Art. 291, vis-a-vis the rules on service incentive leave, is in keeping
with the rudimentary principle that in the implementation and interpretation of the provisions
of the Labor Code and its implementing regulations, the workingman's welfare should be the
primordial and paramount consideration. The policy is to extend the applicability of the
decree to a greater number of employees who can avail of the benefits under the law, which
is in consonance with the avowed policy of the State to give maximum aid and protection to
labor.83 (Emphasis supplied).

Thus, the prescriptive period with respect to petitioner's claim for her entire service incentive leave
pay commenced only from the time of her resignation or separation from employment. Since
petitioner had filed her complaint on October 7, 2009, or a few days after her resignation in
September 2009, her claim for service incentive leave pay has not prescribed. Accordingly,
petitioner must be awarded service incentive leave pay for her entire 25 years of service-from 1984
to 2009-and not only three (3) years' worth (2006 to 2009) as determined by the Court of Appeals
(Rodriguez v. Park N' Ride).

(b) Employees not entitled

➢ The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus Transport Systems, Inc., v.
Bautista:

A careful perusal of said provisions of law will result in the conclusion that the grant of
service incentive leave has been delimited by the Implementing Rules and Regulations of
the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule
V. According to the Implementing Rules, Service Incentive Leave shall not apply to
employees classified as “field personnel.” The phrase “other employees whose performance
is unsupervised by the employer” must not be understood as a separate classification of

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 is unsupervised by the employer” must not be understood as a separate classification of
employees to which service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel under the Labor Code as
those “whose actual hours of work in the field cannot be determined with reasonable
certainty.”

The same is true with respect to the phrase “those who are engaged on task or contract
basis, purely commission basis.” Said phrase should be related with “field personnel,”
applying the rule on ejusdem generis that general and unlimited terms are restrained and
limited by the particular terms that they follow.

The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the CA cited in support
of granting Macasio’s petition.

In Serrano, the Court, applying the rule on ejusdem generis declared that “employees engaged on
task or contract basis xxx are not automatically exempted from the grant of service incentive leave,
unless, they fall under the classification of field personnel.” The Court explained that the phrase
“including those who are engaged on task or contract basis, purely commission basis” found in
Section 1(d), Rule V of Book III of the IRR should not be understood as a separate classification of
employees to which SIL shall not be granted. Rather, as with its preceding phrase - “other
employees whose performance is unsupervised by the employer” - the phrase “including those who
are engaged on task or contract basis” serves to amplify the interpretation of the Labor Code
definition of “field personnel” as those “whose actual hours of work in the field cannot be
determined with reasonable certainty.”

In contrast and in clear departure from settled case law, the LA and the NLRC still interpreted the
Labor Code provisions and the IRR as exempting an employee from the coverage of Title I of the
Labor Code based simply and solely on the mode of payment of an employee. The NLRC’s utter
disregard of this consistent jurisprudential ruling is a clear act of grave abuse of discretion. In other
words, by dismissing Macasio’s complaint without considering whether Macasio was a “field
personnel” or not, the NLRC proceeded based on a significantly incomplete consideration of the
case. This action clearly smacks of grave abuse of discretion (David v. Macasio).

(c) At least one year of service; Reckoning period

While computation for the 13th month pay should properly begin from the first day of employment,
the service incentive leave pay should start a year after commencement of service, for it is only
then that the employee is entitled to said benefit. On the other hand, the computation for both
benefits should only be up to 15 August 1996, or the last day that private respondents worked for
JPL. To extend the period to the date of finality of the NLRC resolution would negate the absence
of illegal dismissal, or to be more precise, the want of dismissal in this case. Besides, it would be
unfair to require JPL to pay private respondents the said benefits beyond 15 August 1996 when
they did not render any service to JPL beyond that date. These benefits are given by law on the
basis of the service actually rendered by the employee, and in the particular case of the service
incentive leave, is granted as a motivation for the employee to stay longer with the employer.
There is no cause for granting said incentive to one who has already terminated his relationship
with the employer (JPL Marketing Promotions v. CA).

t. Service charges; Tips

Service charge - refers to amount that is added to the bill for work or service rendered.

Sec. 3, DO 206-19. All service charges actually collected by covered establishments shall be distributed
completely and equally, based on actual hours or days of work or service rendered, among the covered
employees, including those already receiving benefit of sharing in the service charges.

NOTE: In the event that the minimum wage is increased by law or wage order, service charges paid to the
covered employees shall not be considered in determining the covered establishment's compliance with
the increased minimum wage.

Covered employees: all employees, except managerial employees as defined herein, under the direct
employ of the covered establishment, regardless of their positions, designations or employment status,
and irrespective of the method by which their wages are paid.

Frequency of distribution: Once every 2 weeks.

➢ “Tip” is defined as meaning a gratuity; a gift; a present; a fee; money given, as to a servant to secure
better or more prompt service. A tip may range from pure gift out of benevolence or friendship, to a
compensation for a service measured by its supposed value but not fixed by an agreement, although
usually the word is applied to what is paid to a servant in addition to the regular compensation for his
service in order to secure better service or in recognition of it. It has been said that a tip denotes a
voluntary act, but it also has been said that from the very beginning of the practice of tipping it was evident
that, whether considered from the standpoint of the giver or the recipient, a tip lacked the essential
element of a gift, namely, the free bestowing of a gratuity without a consideration, and that, despite its
apparent voluntariness, there is an element of compulsion in tipping.

Page 38
Tipping is done to get the attention and secure the immediate services of a waiter, porter or others for their
services. Since a tip is considered a pure gift out of benevolence or friendship, it cannot be demanded
from the customer. Whether or not tips will be given is dependent on the will and generosity of the giver.
Although a customer may give a tip as a consideration for services rendered, its value still depends on the
giver. They are given in addition to the compensation by the employer. A gratuity given by an employer in
order to inspire the employee to exert more effort in his work is more appropriately called a bonus (Ace
Navigation Co. v. CA).

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Module 3.2
Thursday, 8 October 2020 4:14 pm

E. Wages/Salary

Based on Article 104, as well as the provisions of Section 4, Rule VIII, Book III and considering present-
day circumstances, practices and technology, employers may adopt a system of payment other than in the
workplace, such as through ATMs of banks, provided that the following CONDITIONS are met:

1) The ATM system of payment is with the written consent of the employees concerned.
2) The employees are given reasonable time to withdraw their wages from the bank facilities which
time, if done during working hours, shall be considered as compensable hours worked.
3) The system shall allow workers to receive their wages within the period or frequency and in the
amount prescribed under the Labor Code.
4) There is a bank or ATM facility within a radius of 1 kilometer to the place of work.
5) Upon request of the concerned employee/s, the employer shall issue a record of payment of
wages, benefits and deductions for a particular period.
6) There shall be no additional expenses and no diminution of benefits and privileges as a result of the
ATM system of payment.
7) The employer shall assume responsibility in case the wage protection provisions of law and
regulations are not complied with under the arrangement.

a. No work, no pay
b. Facilities v. supplements

➢ “Supplements,” therefore, constitute extra remuneration or special privileges or benefits given to or

received by the laborers over and above their ordinary earnings or wages. “Facilities,” on the other
hand, are items of expense necessary for the laborer’s and his family’s existence and subsistence
so that by express provision of law (Sec. 2[g]), they form part of the wage and when furnished by
the employer are deductible therefrom, since if they are not so furnished, the laborer would spend
and pay for them just the same.

In short, the benefit or privilege given to the employee which constitutes an extra remuneration
above and over his basic or ordinary earning or wage is supplement; and when said benefit or
privilege is part of the laborers’ basic wages, it is a facility. The distinction lies not so much in the
kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it is
given. In the case at bench, the items provided were given freely by SLL for the purpose of
maintaining the efficiency and health of its workers while they were working at their respective
projects (SLL v. NLRC).

NOTES: Private respondents are entitled to be paid the minimum wage, whether they are regular or
non-regular employees. Section 3, Rule VII of the Rules to Implement the Labor Code specifically
enumerates those who are not covered by the payment of minimum wage. Project employees are
not among them.

➢ As the CA correctly ruled, these requirements, as summarized in Mabeza, are the following:

1.Proof must be shown that such facilities are customarily furnished by the trade; 2.The provision of
deductible facilities must be voluntarily accepted in writing by the employee; and 3.The facilities
must be charged at fair and reasonable value

As the CA correctly ruled, these requirements, as summarized in Mabeza, are the following:

1.Proof must be shown that such facilities are customarily furnished by the trade; 2.The provision of
deductible facilities must be voluntarily accepted in writing by the employee; and 3.The facilities
must be charged at fair and reasonable value

In a string of cases, we have concluded that one of the badges to show that a facility is customarily
furnished by the trade is the existence of a company policy or guideline showing that provisions for
a facility were designated as part of the employees’ salaries (Our Haus Realty v. Parian).

c. 13th month pay

Section 2. Definition of certain terms As used in this issuance.

(a) "Thirteenth-moth pay" shall mean one twelfth (1/12) of the basic salary of an employee within
a calendar year;

(b) "Basic salary" 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 Presidential
Decree No. 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.

Page 40
 the employee at the time of the promulgation of the Decree on December 16, 1975.

Section 3. Employers covered The Decree shall apply to all employers except to:

(a) Distressed employers, such as

(1) those which are currently incurring substantial losses or

(2) in the case of non-profit institutions and organizations, where their income,
whether from donations, contributions, grants and other earnings from any source,
has consistently declined by more than forty (40%) percent of their normal income for
the last two (2) years, subject to the provision of Section 7 of this issuance;

(b) The Government and any of its political subdivisions, including government-owned and
controlled corporations, except those corporations operating essentially as private
subsidiaries of the Government;
(c) Employers already paying their employees 13-month pay or more in a calendar year of its
equivalent at the time of this issuance;
(d) Employers of household helpers and persons in the personal service of another in
relation to such workers; and
(e) Employers of those who are paid on purely commission, boundary, or task basis, and
those who are paid a fixed amount for performing a specific work, irrespective of the time
consumed in the performance thereof, except where the workers are paid on piece-rate
basis in which case the employer shall be covered by this issuance insofar as such workers
are concerned.

d. Bonus

A bonus is an amount granted and paid to an employee for his industry and loyalty which
contributed to the success of the employer’s business and made possible the realization of profits.
It is an act of generosity granted by an enlightened employer to spur the employee to greater efforts
for the success of the business and realization of bigger profits. The granting of a bonus is a
management prerogative, something given in addition to what is ordinarily received by or strictly
due the recipient. Thus, a bonus is not a demandable and enforceable obligation, except when it is
made part of the wage, salary or compensation of the employee.

However, an employer cannot be forced to distribute bonuses which it can no longer afford to pay.
To hold otherwise would be to penalize the employer for his past generosity. (Producers Bank v.
NLRC)

When demandable

1. Stipulated in an employment contract or CBA

2. Company practice or policy
3. When granted as an additional compensation without any condition, hence deemed part of
the wage or salary.

e. Equal pay for work of equal value

Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135, for
example, prohibits and penalizes the payment of lesser compensation to a female employee as
against a male employee for work of equal value. Article 248 declares it an unfair labor practice for
an employer to discriminate in regard to wages in order to encourage or discourage membership in
any labor organization.

Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7
thereof impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay for
equal work." Persons who work with substantially equal qualifications, skill, effort and responsibility,
under similar conditions, should be paid similar salaries. This rule applies to the School, its
"international character" notwithstanding.

xxx

In this case, we find the point-of-hire classification employed by respondent School to justify the
distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There is
no reasonable distinction between the services rendered by foreign-hires and local-hires. The
practice of the School of according higher salaries to foreign-hires contravenes public policy and,
certainly, does not deserve the sympathy of this Court.1avvphi1 (ISAS v. Quisumbing).

f. Withholding of wages

➢ Management prerogative refers "to the right of an 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."12cra1aw Although management prerogative refers to "the right to
regulate all aspects of employment," it cannot be understood to include the right to temporarily
withhold salary/wages without the consent of the employee. To sanction such an interpretation

Page 41
 withhold salary/wages without the consent of the employee. To sanction such an interpretation
would be contrary to Article 116 of the Labor Code, which provides:

ART. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any person,
directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up
any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever
without the workers consent.

Any withholding of an employees wages by an employer may only be allowed in the form of wage
deductions under the circumstances provided in Article 113 of the Labor Code, as set forth below:

ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make
any deduction from the wages of his employees, except:

(a) In cases where the worker is insured with his consent by the employer, and the deduction
is to recompense the employer for the amount paid by him as premium on the insurance;

(b) For union dues, in cases where the right of the worker or his union to check-off has been
recognized by the employer or authorized in writing by the individual worker concerned; and

(c) In cases where the employer is authorized by law or regulations issued by the Secretary
of Labor.

In this case, the withholding of respondents salary does not fall under any of the circumstances
provided under Article 113. Neither was it established with certainty that respondent did not work
from November 16 to November 30, 2005. Hence, the Court agrees with the LA and the CA that the
unlawful withholding of respondents salary amounts to constructive dismissal (SHS v. Diaz).

➢ As a general rule, employers are prohibited from withholding wages from employees. x x x The
Labor Code also prohibits the elimination or diminution of benefits.

However, our law supports the employers’ institution of clearance procedures before the release of
wages. As an exception to the general rule that wages may not be withheld and benefits may not
be diminished, the Labor Code

The Civil Code provides that the employer is authorized to withhold wages for debts. x x x “Debt” in
this case refers to any obligation due from the employee to the employer. It includes any
accountability that the employee may have to the employer. There is no reason to limit its scope to
uniforms and equipment, as petitioners would argue.

More importantly, respondent Solid Mills and NAFLU, the union representing petitioners, agreed
that the release of petitioners’ benefits shall be “less accountabilities.”

“Accountability,” in its ordinary sense, means obligation or debt. The ordinary meaning of the term
“accountability” does not limit the definition of accountability to those incurred in the worksite. As
long as the debt or obligation was incurred by virtue of the employer-employee relationship,
generally, it shall be included in the employee’s accountabilities that are subject to clearance
procedures.

It may be true that not all employees enjoyed the privilege of staying in respondent Solid Mills’
property. However, this alone does not imply that this privilege when enjoyed was not a result of
the employer-employee relationship. Those who did avail of the privilege were employees of
respondent Solid Mills. Petitioners’ possession should, therefore, be included in the term
“accountability.”

Accountabilities of employees are personal. They need not be uniform among all employees in
order to be included in accountabilities incurred by virtue of an employer-employee relationship.

Petitioners do not categorically deny respondent Solid Mills’ ownership of the property, and they do
not claim superior right to it. What can be gathered from the findings of the Labor Arbiter, National
Labor Relations Commission, and the Court of Appeals is that respondent Solid Mills allowed the
use of its property for the benefit of petitioners as its employees. Petitioners were merely allowed to
possess and use it out of respondent Solid Mills’ liberality. The employer may, therefore, demand
the property at will.79chanroblesvirtuallawlibrary

The return of the property’s possession became an obligation or liability on the part of the
employees when the employer-employee relationship ceased. Thus, respondent Solid Mills has the
right to withhold petitioners’ wages and benefits because of this existing debt or liability. In Solas v.
Power and Telephone Supply Phils., Inc., et al., this court recognized this right of the employer
when it ruled that the employee in that case was not constructively dismissed. (Milan v. NLRC).

g. Direct payment principle

h. Non-diminution of benefits

Page 42
➢ The employee benefits contemplated by Article 100 are those which are capable of being measured
in terms of money. Thus, it can be readily concluded from past jurisprudential pronouncements that
these privileges constituted money in themselves or were convertible into monetary equivalents.

In order for there to be proscribed diminution of benefits that prejudiced the affected employees,
CCBPI should have unilaterally withdrawn the 50% premium pay without abolishing Saturday work.
These are not the facts of the case at bar. CCBPI withdrew the Saturday work itself, pursuant, as
already held, to its management prerogative. In fact, this management prerogative highlights the
fact that the scheduling of the Saturday work was actually made subject to a condition, i.e., the
prerogative to provide the company's employees with Saturday work based on the existence of
operational necessity (CCBPI v. ICCPELU).

i. Deductions

Sec. 10, Rule VIII, Book III, Omnibus Rules. Deductions from the wages may be made in any of the
following:

i. Deductions are authorized by law, including:

1) Deductions for the insurance premiums advanced by the employer in behalf of the
employee, as well as
2) Deductions for union dues where right to check off has been recognized by the
employer or authorized in writing by the individual employee himself
ii. When deductions are with the written authorization of the employees for the payment to the
employer, or to third persons, and the employer agrees to do so. Provided that the latter
does not receive any pecuniary benefit from the transaction.

j. Preferential right in case of bankruptcy

This Court has ruled in a long line of cases that under Articles 2241 and 2242 of the Civil Code, a
mortgage credit is a special preferred credit that enjoys preference with respect to a
specific/determinate property of the debtor. On the other hand, the worker’s preference under
Article 110 of the Labor Code is an ordinary preferred credit. While this provision raises the worker’s
money claim to first priority in the order of preference established under Article 2244 of the Civil
Code, the claim has no preference over special preferred credits.

Thus, the right of employees to be paid benefits due them from the properties of their employer
cannot have any preference over the latter’s mortgage credit. In other words, being a mortgage
credit, APT’s lien on BISUDECO’s mortgaged assets is a special preferred lien that must be
satisfied first before the claims of the workers.

Development Bank of the Philippines v. NLRC25 explained the rationale of this ruling as follows:

"x x x. A preference applies only to claims which do not attach to specific properties. A lien
creates a charge on a particular property. The right of first preference as regards unpaid
wages recognized by Article 110 does not constitute a lien on the property of the insolvent
debtor in favor of workers. It is but a preference of credit in their favor, a preference in
application. It is a method adopted to determine and specify the order in which credits should
be paid in the final distribution of the proceeds of the insolvent’s assets. It is a right to a first
preference in the discharge of the funds of the judgment debtor. x x x" (Bayoraga v. Asset
Privatization Trust)

k. Wage order

In ECOP. the Court declared that there are two ways of fixing the minimum wage: the "floor-wage"
method and the "salary-ceiling" method. The "floor-wage" method involves the fixing of a
determinate amount to be added to the prevailing statutory minimum wage rates. On the other
hand, in the "salary-ceiling" method, the wage adjustment was to be applied to employees receiving
a certain denominated salary ceiling. In other words, workers already being paid more than the
existing minimum wage (up to a certain amount stated in the Wage Order) are also to be given a
wage increase.

To illustrate: under the "floor wage method", it would have been sufficient if the Wage Order simply
set ₱15.00 as the amount to be added to the prevailing statutory minimum wage rates, while in the
"salary-ceiling method", it would have been sufficient if the Wage Order states a specific salary,
such as ₱250.00, and only those earning below it shall be entitled to the salary increase.

In the present case, the RTWPB did not determine or fix the minimum wage rate by the "floor-wage
method" or the "salary-ceiling method" in issuing the Wage Order. The RTWPB did not set a wage
level nor a range to which a wage adjustment or increase shall be added. Instead, it granted an
across-the-board wage increase of ₱15.00 to all employees and workers of Region 2. In doing so,
the RTWPB exceeded its authority by extending the coverage of the Wage Order to wage earners
receiving more than the prevailing minimum wage rate, without a denominated salary ceiling. As
correctly pointed out by the OSG, the Wage Order granted additional benefits not contemplated by
R.A. No. 6727 (Metrobank v. NWPC).

Page 43
 R.A. No. 6727 (Metrobank v. NWPC).

l. Wage distortion

➢ W age distortion means the disappearance or virtual disappearance of pay differentials between
lower and higher positions in an enterprise because of compliance with a wage order. The increase
in the wage rates by virtue of R.A. No. 6640 resulted in wage distortion or the elimination of the
intentional quantitative differences in the wage rates of the supervisor employees of petitioner.

However, the wage distortions were cured or remedied when respondent PIMASUFA entered into
the 1987 CBA with petitioner after the effectivity of R.A. No. 6640. The 1987 CBA increased the
monthly salaries of the supervisors by P625.00 and the foremen, by P475.00, effective May 12,
1987. These increases re-established and broadened the gap, not only between the supervisors
and the foremen, but also between them and the rank-and-file employees. Significantly, the 1987
CBA wage increases almost doubled that of the P10.00 increase under R.A. No. 6640.

➢ Wage distortion involves four elements:

i. An existing hierarchy of positions with corresponding salary rates

ii. A significant change in the salary rate of a lower pay class without a concomitant increase in
the salary rate of a higher one
iii. The elimination of the distinction between the two levels
iv. The existence of the distortion in the same region of the country

Petitioner argues that a wage distortion exists, because the implementation of the two Wage Orders
has resulted in the discrepancy in the compensation of employees of similar pay classification in
different regions x x x a disparity in wages between employees holding similar positions but in
different regions does not constitute wage distortion as contemplated by law (Prubankers Assoc.
v. PBTC).

F. Administration and Enforcement

a. Visitorial and enforcement power: See Art. 128, Labor Code

b. Adjudicatory power: See Art. 129, Labor Code

Visitorial and enforcement power Adjudicatory power

(Article 128) (Article 129)
Who may Secretary of Labor, or an authorized officer (Regional Regional Director
exercise Director)
Existence of Employer-employee relationship must exist The claimant is no longer
Ee-Er employed but he/she does
relationship not seek reinstatement.
Amount of It has no required aggregate amount of money claim The aggregate money claims
claim shall not exceed Php 5,000
Where to The Secretary of Labor and Employment, at his own National Labor Relations
appeal initiative or upon request of the employer and/or Commission
employee, may review the order of the Regional
Director

➢ The DOLE Secretary and her authorized representatives such as the DOLE-NCR Regional
Director, have jurisdiction to enforce compliance with labor standards laws under the broad visitorial
and enforcement powers conferred by Article 128 of the Labor Code, and expanded by R.A. No.
7730.

The Court has held that the visitorial and enforcement powers of the Secretary, exercised through
his representatives, encompass compliance with all labor standards laws and other labor
legislation, regardless of the amount of the claims filed by workers. This has been the rule since
R.A. No. 7730 was enacted on June 2, 1994, amending Article 128(b) of the Labor Code, to expand
the visitorial and enforcement powers of the DOLE Secretary. Under the former rule, the DOLE
Secretary had jurisdiction only in cases where the amount of the claim does not exceed P5,000.00.

The records also clearly indicate that the Regional Director and the DOLE Secretary resolved the
case based on violations found by the labor inspection officer, which do not include illegal
dismissal.

The said violations are within the jurisdiction of the DOLE Secretary and his representatives to
address. The questioned Orders dated December 29, 1998, April 18, 2000 and September 19,
2001 did not mention illegal dismissal, and properly so, because there was no such finding in the
inspector’s report.31 Being in the nature of compliance orders, said orders, under Art. 128(b) of the
Labor Code, are strictly based on “the findings of labor employment and enforcement officers x x x
made in the course of inspection,” and not on any complaint filed. Though a complaint may initiate
the case or an inspection, its allegations may not necessarily be upheld by the labor inspector or
the Regional Director.

Page 44
 the Regional Director.

Petitioners fail to persuade. The mere disagreement by the employer with the findings of the labor
officer, or the simple act of presenting controverting evidence, does not automatically divest the
DOLE Secretary or any of his authorized representatives such as the regional directors, of
jurisdiction to exercise their visitorial and enforcement powers under the Labor Code.

Under prevailing jurisprudence, the so-called exception clause in Art. 128(b) of the Labor Code has
the following elements, which must all concur to divest the regional director of jurisdiction over
workers’ claims:

(a) that the 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.

Thus, the key requirement for the Regional Director and the DOLE Secretary to be divested of
jurisdiction is that the evidentiary matters are not verifiable in the course of inspection. Where the
evidence presented was verifiable in the normal course of inspection, even if presented belatedly
by the employer, the Regional Director, and later the DOLE Secretary, may still examine them; and
these officers are not divested of jurisdiction to decide the case.

In the present case, petitioners’ pieces of evidence of the alleged contract of lease, payroll sheets,
and quitclaims were all verifiable in the normal course of inspection and, granting that they were not
examined by the labor inspector, they have nevertheless been thoroughly examined by the
Regional Director and the DOLE Secretary. For these reasons, the exclusion clause of Art. 128(b)
does not apply. (Bay Haven v. Abuan).

➢ The visitorial and enforcement powers of the DOLE Regional Director to order and enforce
compliance with labor standard laws can be exercised even where the individual claim exceeds
P5,000.

If the labor standards case is covered by the exception clause in Article 128(b) of the Labor Code,
then the Regional Director will have to endorse the case to the appropriate Arbitration Branch of the
NLRC.

In order to divest the Regional Director or his representatives of jurisdiction, the following elements
must be present:

(a) that the 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.

The rules also provide that the employer shall raise such objections during the hearing of the case
or at any time after receipt of the notice of inspection results.

But in this case, EBVSAI did not contest the findings of the labor regulations officer during the
hearing or after receipt of the notice of inspection results. It was only in its supplemental motion for
reconsideration before the Regional Director that EBVSAI questioned the findings of the labor
regulations officer and presented documentary evidence to controvert the claims of private
respondents. (Ex-Bataan Veterans v. SOLE).

G. Health and Safety

Labor Code v POEA

➢ Art. 161 of the Labor Code provides:

ART. 161. Assistance of employer. – It shall be the duty of any employer to provide all the
necessary assistance to ensure the adequate and immediate medical and dental attendance and
treatment to an injured or sick employee in case of emergency.

The Implementing Rules of the Code do not enlighten what the phrase “adequate and immediate” medical
attendance means in relation to an “emergency.” It would thus appear that the determination of what it
means is left to the employer, except when a full-time registered nurse or physician are available on-site
as required, also under the Labor Code, specifically Art. 157 which provides:

Article 157. Emergency Medical and Dental Services. ─ It shall be the duty of every employer to
furnish his employees in any locality with free medical and dental attendance and facilities
consisting of:

(a) The services of a full-time registered nurse when the number of employees exceeds fifty
(50) but not more than two hundred (200) except when the employer does not maintain
hazardous workplaces, in which case, the services of a graduate first-aider shall be provided

Page 45
 hazardous workplaces, in which case, the services of a graduate first-aider shall be provided
for the protection of workers, where no registered nurse is available. The Secretary of Labor
and Employment shall provide by appropriate regulations, the services that shall be required
where the number of employees does not exceed fifty (50) and shall determine by
appropriate order, hazardous workplaces for purposes of this Article;

(b) The services of a full-time registered nurse, a part-time physician and dentist, and an
emergency clinic, when the number of employees exceeds two hundred (200) but not more
than three hundred (300); and

(c) The services of a full-time physician, dentist and a full-time registered nurse as well as a
dental clinic and an infirmary or emergency hospital with one bed capacity for every one
hundred (100) employees when the number of employees exceeds three hundred (300).

In the present case, there is no allegation that the company premises are hazardous. Neither is there any
allegation on the number of employees the company has. If Hao’s testimony would be believed, the
company had only seven regular employees and 20 contractual employees ─ still short of the minimum
50 workers that an establishment must have for it to be required to have a full-time registered nurse.

The Court can thus only determine whether the actions taken by petitioners when Bladimir became ill
amounted to the “necessary assistance” to ensure “adequate and immediate medical .attendance” to
Bladimir as required under Art. 161 of the Labor Code.

As found by the trial court and borne by the records, petitioner Hao’s advice for Bladimir to, as he did,
take a 3-day rest and to later have him brought to the nearest hospital constituted “adequate and
immediate medical” attendance that he is mandated, under Art. 161, to provide to a sick employee in an
emergency (Ocean Builders Corporation v. Sps. Cubcub).

➢ Under the foregoing provision, Shangri-la, which employs more than 200 workers, is mandated to "furnish"
its employees with the services of a full-time registered nurse, a part-time physician and dentist, and an
emergency clinic which means that it should provide or make available such medical and allied services to
its employees, not necessarily to hire or employ a service provider.

The term "full-time" in Art. 157 cannot be construed as referring to the type of employment of the person
engaged to provide the services, for Article 157 must not be read alongside Art. 2809 in order to vest
employer-employee relationship on the employer and the person so engaged.

Against the above-listed determinants, the Court holds that respondent doctor is a legitimate independent
contractor. That Shangri-la provides the clinic premises and medical supplies for use of its employees and
guests does not necessarily prove that respondent doctor lacks substantial capital and investment.
Besides, the maintenance of a clinic and provision of medical services to its employees is required under
Art. 157, which are not directly related to Shangri-la’s principal business – operation of hotels and
restaurants (Escasinas v. Shangri-La Mactan Island Resort).

➢ Jurisprudence teaches that in claims for a seafarer's disability benefits, POEA-SEC is deemed
incorporated in the seafarer's employment contract and must be read in light of the relevant provisions on
disability of the Labor Code and its implementing rules. In this case, the 2000 version of the POEA-SEC
applies since respondent was hired in December 2005 and he filed his complaint in 2008.

The 120-day period mandated in Section 20(B) of the POEA-SEC, within which a company-designated
physician should declare a seafarer's fitness for sea duty or degree of disability, should accordingly be
harmonized with Article 198 [192](c)(1) of the Labor Code, in relation with Book IV, Title II, Rule X of the
Implementing Rules of the Labor Code, or the Amended Rules on Employee Compensation. Book IV, Title
II, Article 198 [192](c)(1) of the Labor Code, as amended. x x x

xxx

The seafarer, upon sign-off from his vessel, must report to the company-designated physician within three
(3) days from arrival for diagnosis and treatment. For the duration of the treatment but in no case to
exceed 120 days, the seaman is on temporary total disability as he is totally unable to work. He receives
his basic wage during this period until he is declared fit to work or his temporary disability is acknowledged
by the company to be permanent, either partially or totally, as his condition is defined under the POEA
Standard Employment Contract and by applicable Philippine laws. If the 120 days initial period is
exceeded and no such declaration is made because the seafarer requires further medical attention, then
the temporary total disability period may be extended up to a maximum of 240 days, subject to the right of
the employer to declare within this period that a permanent partial or total disability already exists.

xxx

Subsequent cases, nonetheless, emphasized that there must be a sufficient justification to extend the
medical treatment from 120 days to 240 days. In other words, the 240-day extended period remains to be
an exception, and as such, must be clearly shown to be warranted under the circumstances of the case
before it can be applied.

xxx

Page 46
 In this case, the company-designated physician did not issue a medical assessment within the 120-day
period. Nonetheless, the surgical procedure performed on respondent on January 9, 2008, or 159 days
from his repatriation, shows that his condition required further medical treatment, justifying the extension
of the 120-day period to 240 days. Thus, this Court deems the temporary total disability period to be
accordingly extended up to a maximum of 240 days.

xxx

The POEA-SEC clearly provides the primary responsibility of a company-designated physician to

determine the disability grading or fitness to work of seafarers. To be conclusive, however, company-
designated physicians' medical assessments or reports must be complete and definite to give the proper
disability benefits to seafarers. As explained by this Court: A final and definite disability assessment is
necessary in order to truly reflect the true extent of the sickness or injuries of the seafarer and his or her
capacity to resume work as such. Otherwise, the corresponding disability benefits awarded might not be
commensurate with the prolonged effects of the injuries suffered.

xxx

Without a valid final and definitive assessment from the company-designated physician, respondent's
temporary and total disability, by operation of law, became permanent and total. (Orient Hope Agencies
v. Jara).

➢ A work-related illness is "any sickness resulting to disability or death as a result of an occupational disease
listed under Section 32-A with the conditions set therein satisfied."

Section 32-A provides that for an occupational disease and the resulting disability or death to be
compensable, all of the following conditions must be satisfied:

1. The seafarer's work must involve the risks' described herein;

2. The disease was contracted as a result of the seafarer's exposure to the described risks;
3. The disease was contracted within a period of exposure and under such other factors necessary
to contract it;
4. There was no notorious negligence on the part of the seafarer. The following diseases are
considered as occupational when contracted under working conditions involving the risks described
herein

A sebaceous cyst is not included under Section 32 or 32-A of the 2000 Philippine Overseas Employment
Agency Standard Employment Contract. However, the guidelines expressly provide that those illnesses
not listed in Section 32 "are disputably presumed as work[-]related."

Similarly, for an illness to be compensable, "it is not necessary that the nature of the employment be the
sole and only reason for the illness suffered by the seafarer." It is enough that there is "a reasonable
linkage between the disease suffered by the employee and his work to lead a rational mind to conclude
that his work may have contributed to the establishment or, at the very least, aggravation of any pre-
existing condition he might have had." (Madridejos v. NYK-Fil Ship Management, Inc.)

➢ Petitioners cannot invoke either the exceptional 240-day period for medical treatment because they failed
to provide a sufficient justification in extending the 120-day period. In fact, it was only in their
memorandum,43 filed with the CA, that petitioners raised the 240-day extended period for the first time.
The burden of proof lies in the employer to establish that the company-designated physician had a
reasonable justification to invoke the 240-day period.44 Yet, not an iota of evidence was presented by
petitioners to rationalize the application of the said exceptional period.

It was written in Elburg that, "[c]ertainly, the company-designated physician must perform some significant
act before he can invoke the exceptional 240-day period under the IRR. It is only fitting that the company-
designated physician must provide a sufficient justification to extend the original 120-day period.
Otherwise, under the law, the seafarer must be granted the relief of permanent and total disability benefits
due to such non-compliance."

In the recent case of Carcedo v. Maine Marine Philippines, Inc., the Court proclaimed that "[t]he
determination of the fitness of a seafarer for sea duty is the province of the company-designated
physician, subject to the periods prescribed by law." Should the company-designated physician fail to give
his proper medical assessment and the seafarer's medical condition remains unresolved, then the
seafarer shall be deemed totally and permanently disabled.

Here, as the company-designated physicians failed to provide a proper medical assessment of Ballon's
disability within the authorized 120-day period, then Ballon is deemed by law entitled to permanent and
total disability benefits. (Hanseatic Shipping v. Ballon).

H. Types of Employees

a. Regular

An employee is deemed regular under the following circumstances:

Page 47
 i. When engaged to perform activities which is usually necessary or desirable to the business
or trade of the employer
ii. When allowed to work beyond agreed period of probationary, project, seasonal, casual, or
fixed-term employment.
iii. When no definite kind of employment agreed upon
iv. When no written employment contract prescribing other kinds of employment.

➢ Of the criteria to determine whether there is an employer-employee relationship, the so-called

"control test" is generally regarded as the most crucial and determinative indicator of the said
relationship.

Under this test, an employer-employee relationship is said to exist where the person for whom the
services are performed reserves the right to control not only the end result but also the manner and
means utilized to achieve the same.

Notwithstanding the nomenclature of their Talent Contracts and/or Project Assignment Forms and
the terms and condition embodied therein, petitioners are regular employees of ABS-CBN.

As cameramen, editors and reporters, it appears that Petitioners were subject to the control and
supervision of Respondents which provided them with the equipment essential for the discharge of
their functions. The exclusivity clause and prohibitions in their Talent Contract were likewise
indicative of Respondents' control over them, however obliquely worded.

Also, the presumption is that when the work done is an integral part of the regular business of the
employer and when the worker does not furnish an independent business or professional service,
such work is a regular employment of such employee and not an independent contractor. (Begino
v. ABS-CBN).

b. Project/Seasonal

Project employees are those hired:

i. For a specific project undertaking, and

ii. The completion or termination of such project has been determined at the time of the
engagement

Categories of Project employees

i. Engaged to perform an particular job that is within the regular or usual business of the
employer, but which is distinct and separate, and identifiable as such, from the other
undertakings of the company
ii. Particular job or undertaking that is NOT within the regular business of the corporation

Project Employment Fixed-Term Employment

Requires a particular project Duration is agreed upon by the parties may be a day certain

Project Employment Regular Employment

Service are coterminous with the project or any phase Enjoys security of tenure unless
thereof services is terminated in any of the
allowed modes
If termination is brought about by the completion of the Due process is required. But varies
project, due process is complied with even without notice depending on the ground raised.
of termination

Seasonal employee is one whose work or service to be performed is seasonal in nature and the
employment is for the duration of the season.

Requisites to be considered as Regular Seasonal Employee

i. Employee performs work or service that is seasonal in nature

ii. They must be employed for more than 1 season

➢ Article 295 of the Labor Code defines seasonal employees as those whose work or engagement is
seasonal in nature and the employment is only for the duration of the season. Seasonal
employment becomes regular seasonal employment when the employees are called to work from
time to time. On the other hand, those who are employed only for a single season remain as
seasonal employees. As a consequence of regular seasonal employment, the employees are not
considered separated from service during the off-milling season, but are only temporarily laid off or
on leave until re-employed. Nonetheless, in both regular seasonal employment and seasonal
employment, the employee performs no work during the off-milling season.

Here, the concerned URSUMCO employees are performing work for URSUMCO even during the

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 Here, the concerned URSUMCO employees are performing work for URSUMCO even during the
off-milling season as they are repeatedly engaged to conduct repairs on the machineries and
equipment. Strictly speaking, they cannot be classified either as regular seasonal employees or
seasonal employees as their work extended even beyond the milling season. The nature of the
activities performed by the employees, considering the employer's nature of business, and the
duration and scope of work to be done factor heavily in determining the nature of employment.

xxx

Thus, the concerned employees cannot be categorized as regular seasonal employees as defined
under the law, jurisprudence or even the parties' CBA. First, they perform work for URSUMCO even
during the off-milling season and there is no showing that they were free to work for another during
the same period. Second, the tasks done are reasonably necessary and desirable in URSUMCO's
regular operation or business (URSUMCO v. NAMAURSUMCO-NFL).

➢ For an employee to be considered project-based, the employer must show compliance with two (2)
requisites, namely that:

(a) the employee was assigned to carry out a specific project or undertaking; and
(b) the duration and scope of which were specified at the time they were engaged for such
project.

In this case, the Court held that Sykes was able to prove both requisites.

As regards the first requisite, it held that Sykes adequately informed the petitioners of their
employment status at the time of their engagement. As was shown by their respective employment
contracts, they were hired for the Alltel Project and their positions were “project-based and as such
is co-terminus to the project.”

As regards the second requisite, it held that “the duration of the undertaking begins and ends at
determined or determinable times” which means capable of being determined or fixed. As such,
indicating in the contract that their employment is “co-termius with the project” is sufficient
compliance with this requisite (Gadia v Sykes).

➢ While this Court has recognized the validity of fixed-term employment contracts in a number of
cases,10 it has consistently emphasized that when the circumstances of a case show that the
periods were imposed to block the acquisition of security of tenure, they should be struck down for
being contrary to law, morals, good customs, public order or public policy.

In a feeble attempt to conform to the earlier rulings of this Court in Villanueva and Servidad,
petitioner has reworded its present employment contracts. A close scrutiny of the provisions,
however, show that the double-bladed scheme to block the acquisition of tenurial security still exists
(Innodate v. Quejada-Lopez).

c. Probationary

Probationary Fixed-Term
Parties mutually intend to make No such intention exist and relationship automatically
relationship regular after lapse of period terminates at the expiration of the period

During the probationary employment, employee cannot be dismissed except:

i. For just causes

ii. For authorized causes
iii. Employee fails to qualify as a regular employee in accordance with reasonable standards
made known by the employer to the employee at the start of the employment.

➢ The “Manual of Regulations for Private Schools,” and not the Labor Code, determines whether or
not a faculty member in an educational institution has attained regular or permanent status. Under
Policy Instructions No. 11 issued by DOLE “the probationary employment of professors, instructors
and teachers shall be subject to the standards established by the Department of Education and
Culture.” Said standards are embodied in paragraph 75 (now Section 93) of the Manual of
Regulations for Private Schools.

Section 93 of the 1992 Manual of Regulations for Private Schools provides that full-time teachers
who have satisfactorily completed their probationary period shall be considered regular or
permanent. Moreover, for those teaching in the tertiary level, the probationary period shall not be
more than 6 consecutive regular semesters of satisfactory service. The requisites to acquire
permanent employment, or security of tenure, are (1) the teacher is a full-time teacher; (2) the
teacher must have rendered three consecutive years of service; and (3) such service must have
been satisfactory.

A part-time teacher cannot acquire permanent status. Only when one has served as a full-time
teacher can he acquire permanent or regular status. The petitioner was a part-time lecturer before
she was appointed as a full-time instructor on probation. As a part-time lecturer, her employment

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 she was appointed as a full-time instructor on probation. As a part-time lecturer, her employment
as such had ended when her contract expired. Thus, the three semesters she served as part-time
lecturer could not be credited to her in computing the number of years she has served to qualify her
for permanent status.

Completing the probation period does not automatically qualify her to become a permanent
employee of the university. Petitioner could only qualify to become a permanent employee upon
fulfilling the reasonable standards for permanent employment as faculty member. Consistent with
academic freedom and constitutional autonomy, an institution of higher learning has the prerogative
to provide standards for its teachers and determine whether these standards have been met. At the
end of the probation period, the decision to re-hire an employee on probation, belongs to the
university as the employer alone.

Probationary employees enjoy security of tenure, but only within the period of probation. Likewise,
an employee on probation can only be dismissed for just cause or when he fails to qualify as a
regular employee in accordance with the reasonable standards made known by the employer at the
time of his hiring. Upon expiration of their contract of employment, academic personnel on
probation cannot automatically claim security of tenure and compel their employers to renew their
employment contracts. In the instant case, petitioner, did not attain permanent status and was not
illegally dismissed. As found by the NLRC, her contract merely expired. (Lacuesta v. ADMU).

➢ In the cases of Espiritu Santo Parochial School v. NLRC 8 and Colegio San Agustin v. NLRC, the
court recognized the distinction between a calendar year and a school year. In Espiritu Santo
Parochial School, we held:chanrob1es virtual 1aw library

. . . the petitioners can not talk of a "three-year probationary employment expiring each school
year." If it expires per school year, it is not a three-year period.

Then in Colegio San Agustin, we said:chanrob1es virtual 1aw library

. . . As applied to private school teachers, the probationary period is three years as provided in the
Manual of Regulations for Private Schools. It must be stressed that the law speaks of three years
not three school years. . . .

Needless to say, a calendar year consists of twelve (12) months, while a school year consists only
of ten (10) months. A school year begins in June of one calendar year and ends in March of
succeeding calendar year.

Public respondent therefore erred in finding that private respondent’s probationary employment was
supposed to end in June 1992. The contract clearly states the duration of private respondent’s
term — it shall begin at the opening of school year 1989-1990 (i.e., June 1989) and shall end at the
closing of school year 1991-1992 (i.e., March, 1992). Hence, petitioners are not obliged to pay
private respondent her salary for the months of April, May and June as her employment already
ceased in March, in accordance with the provisions of her employment contract (Mt. Carme
College v. NLRC).

d. Casual

There is casual employment where an employee is engaged to perform a job, work or service which
is merely incidental to the principal business of the employer, and such job, work, or service is for a
definite period made known to the employee at the time of the engagement.

Some principles

• Casual employees becomes regular after 1 year of service by operation of law

• No regular appointment papers necessary to become regular
• Repeated hiring of a casual employee makes him or her a regular employee

e. Fixed-term

Requisites for a valid fixed-term employment

i. Knowingly and voluntarily agreed upon 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
ii. 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 on the
latter.

I. Labor-only v. Legitimate Job Contractor

Requisites for a valid Job-contracting

i. Contractor is engaged in a distinct and independent business and undertakes to perform the job or
work on its own responsibility according to its own manner and method
ii. Contractor has substantial capital to carry out the job farmed by the principal

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 ii. Contractor has substantial capital to carry out the job farmed by the principal
iii. Contractor is free from control and direction of the principal in the performance of the work
i. Corporations, partnerships or cooperative - paid up capital stocks/shares of at least 5 Million
Pesos
ii. Single proprietorship - net worth of at least P 5 Million Pesos

iv. Service agreement ensures compliance with all the rights and benefits for all employees

Job contracting/subcontracting Labor-only contracting

Capital The contractor or subcontractor has The contractor or subcontractor does not have
substantial capital or investment substantial capital or investment to actually
perform the job, work or service under its own
account and responsibility;
Undertaking It undertakes to perform a specific job for It merely provides the personnel to work for
of Contractor the principal employer. the principal employer
Legality It is permissible and legitimate It is a prohibited act
Existence of Employer-Employee exists between the An employer-employee relationship is created
Ee-Er contractor and the employees by law between the principal employer and the
relationship employees of the labor-only contractor
Liability of Only when the contractor fails to pay the The principal employer is responsible to the
Principal employees’ wages and other monetary employees of the labor-only contractor as if
Employer benefits as provided in the Labor Code such employees had been directly employed
by the principal employer.

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