I.
GENERAL PRINCIPLES
A. Basic policy on labor (Labor Code (“LC”), Art. 3;
1987 Constitution, Art. XIII, Section 3)
Article 3.
The State shall afford protection to labor, promote full
employment, ensure equal work opportunities regardless of
sex, race or creed and regulate the relations between workers
and employers.
[1] International School v. Quisumbing,  333 SCRA
13/G.R. No. 128845 (2000)
No.  The Constitution directs the State to promote "equality of
employment opportunities for all." Similarly, the Labor Code
provides that the State shall "ensure equal work opportunities
regardless of sex, race or creed." It would be an affront to both
the spirit and letter of these provisions if the State, in spite of
its primordial obligation to promote and ensure equal
employment opportunities, closes its eyes to unequal and
discriminatory terms and conditions of employment.
Discrimination, particularly in terms of wages, is frowned
upon by the Labor Code. 
Institutionalized in this jurisdiction is 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.
There is no evidence that foreign-hires perform 25% more
efficiently or effectively than the local-hires. Both groups have
similar functions and responsibilities, which they perform
under similar working conditions.  While We recognize the
need of the School to attract foreign-hires, salaries should not
be used as an enticement to the prejudice of local- hires. The
local-hires perform the same services as foreign-hires and they
ought to be paid the same salaries as the latter.
The "dislocation factor" and the foreign-hires’ limited tenure
also cannot serve as valid bases for the distinction in salary
rates. The dislocation factor and limited tenure affecting
foreign-hires are adequately compensated by certain benefits
accorded them which are not enjoyed by local-hires, such as
housing, transportation, shipping costs, taxes and home leave
travel allowances.
The Constitution enjoins the State to "protect the rights of
workers and promote their welfare," "to afford labor full
protection." The State, therefore, has the right and duty to
regulate the relations between labor and capital. These
relations are not merely contractual but are so impressed with
public interest that labor contracts, collective bargaining
agreements included, must yield to the common good. Should
such contracts contain stipulations that are contrary to public
policy, courts will not hesitate to strike down these
stipulations.
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.
[2] Philippine Airlines v NLRC 
To achieve industrial peace, the employees must be granted
their just participation in the discussion of matters affecting
their rights. It is the policy of the State to promote the
enlightenment of workers concerning their rights and
obligations as employees. The New Code of Discipline
containing disciplinary measures cannot be implemented in
the absence of full cooperation of the employees as it affects
their rights, duties and welfare. Management cannot exclude
labor in the deliberation and adoption of rules and regulations
that will affect them. Workers have the right to participate in
decision and policy making process affecting their rights,
duties and welfare.
Participation in Decision-Making Process –
A line must be drawn between management prerogatives
regarding business operations per se and those which affect
the rights of the employees. In treating the latter, management
should see to it that its employees are at least properly
informed of its decisions or modes of action. Indeed, industrial
peace cannot be achieved if the employees are denied their just
participation in the discussion of matters affecting their rights.
B. Construction in favor of labor (LC, Art. 4; Civil Code,
Art. 1702)
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.
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.
[3] PCL Shipping v. NLRC and Rusel, G.R. No. 153031
(2000)
Petitioners admit that they did not inform private respondent
in writing of the charges against him and that they failed to
conduct a formal investigation to give him opportunity to air
his side. However, petitioners contend that the twin
requirements of notice and hearing applies strictly only when
the employment is within the Philippines and that these need
not be strictly observed in cases of international maritime or
overseas employment.  Buenaobra. Thus, they would be evidence supporting the
The Court does not agree. The provisions of the Constitution
as well as the Labor Code which afford protection to labor
apply to Filipino employees whether working within the
Philippines or abroad. Moreover, the principle of lex loci
contractus (the law of the place where the contract is made)
governs in this jurisdiction. In the present case, it is not
disputed that the Contract of Employment entered into by and
between petitioners and private respondent was executed here
in the Philippines with the approval of the Philippine Overseas
Employment Administration (POEA). Hence, the Labor Code
together with its implementing rules and regulations and other
laws affecting labor apply in this case. Accordingly, as to the
requirement of notice and hearing in the case of a seafarer, the
Court has already ruled in a number of cases that before a
seaman can be dismissed and discharged from the vessel, it is
required that he be given a written notice regarding the
charges against him and that he be afforded a formal
investigation where he could defend himself personally or
through a representative. Hence, the employer should strictly
comply with the twin requirements of notice and hearing
without regard to the nature and situs of employment or the
nationality of the employer. Petitioners failed to comply with
these twin requirements.  Labor Code, be considered an "economic provision" of the
[4] Peñaflor v. Outdoor Clothing Manufacturing, G.R. No.
177114 (2010)
ISSUE: WON the petitioner was constructively dismissed?
 
HELD: YES. While the letter states that Peñaflor’s
resignation was irrevocable, it does not necessarily signify that
it was also voluntarily executed. Precisely because of the
attendant hostile and discriminatory working environment,
Peñaflor decided to permanently sever his ties with Outdoor
Clothing. 
This falls squarely within the concept of
constructive dismissal that jurisprudence defines, among
others, as involuntary resignation due to the harsh, hostile, and
unfavorable conditions set by the employer. It arises when a
clear discrimination, insensibility, or disdain by an employer
exists and has become unbearable to the employee. The gauge
for constructive dismissal is whether a reasonable person in
the employee’s position would feel compelled to give up his
employment under the prevailing circumstances. With the
appointment of Buenaobra to the position he then still
occupied, Peñaflor felt that he was being eased out and this
perception made him decide to leave the company
 
The fact of filing a resignation letter alone does not
shift the burden of proving that the employee’s dismissal was
for a just and valid cause from the employer to the employee.
In Mora v. Avesco, we ruled that should the employer
interpose the defense of resignation, it is still incumbent upon
the employer to prove that the employee voluntarily resigned.
To our mind, Outdoor Clothing did not discharge this burden
by belatedly presenting the three memoranda it relied on. If
these memoranda were authentic, they would have shown that
Peñaflor’s resignation preceded the appointment of
claim of voluntariness of Peñaflor’s resignation and should
have been presented early on in the case – any lawyer or
layman by simple logic can be expected to know this.
Whatever doubts that remain in our minds on the
credibility of the parties’ evidence should, by the law’s
dictate, be settled in favor of the working man. Our ruling
that Peñaflor was constructively dismissed from his
employment with Outdoor Clothing therefore stands.
[5] San Miguel Foods vs. San Miguel Corp. Employees
Union, G.R. NO. 168569 (2007)
Article 4 of the Labor Code provides that "All doubts in the
implementation and interpretation of the provisions of this
Code, including implementing rules and regulations, shall be
resolved in favor of labor." Since the seniority rule in the
promotion of employees has a bearing on salary and benefits,
it may, following a liberal construction of Article 261 of the
CBA.
As above-stated, the Union charges SMFI to have promoted
less senior employees, thus bypassing others who were more
senior and equally or more qualified. It may not be seriously
disputed that this charge is a gross or flagrant violation of the
seniority rule under the CBA, a ULP over which the Labor
Arbiter has jurisdiction.
Therefore, at all events, questions why the Court of Appeals
came out with a finding that it (SMFI) disregarded the
seniority rule under the CBA when its petition before said
court merely raised a question of jurisdiction. The Court of
Appeals having affirmed the NLRC decision finding that the
Labor Arbiter has jurisdiction over the Union's complaint.
C. Burden of proof and quantum of evidence in labor cases
1. Technical rules, not binding; Exceptions (LC, Art.
227)
 Technical rules not binding and prior resort to amicable
settlement. In any proceeding before the Commission or any
of the Labor Arbiters, the rules of evidence prevailing in
courts of law or equity shall not be controlling and it is the
spirit and intention of this Code that the Commission and its
members and the Labor Arbiters shall use every and all
reasonable means to ascertain the facts in each case speedily
and objectively and without regard to technicalities of law or
procedure, all in the interest of due process. In any proceeding
before the Commission or any Labor Arbiter, the parties may
be represented by legal counsel but it shall be the duty of the
Chairman, any Presiding Commissioner or Commissioner or
any Labor Arbiter to exercise complete control of the
proceedings at all stages.
Any provision of law to the contrary notwithstanding, the
Labor Arbiter shall exert all efforts towards the amicable
settlement of a labor dispute within his jurisdiction on or
before the first hearing. The same rule shall apply to the
Commission in the exercise of its original jurisdiction.
[6] MERALCO v. Jan Carlo Gala; GRs 191288 & 191304
(2012)
Issue: Whether the case should be dismissed outright on
procedural grounds on the basis of non-adherence to existing
rules on procedure.
 
Held: No.
 
Ratio: The court stressed that it is the spirit and intention of
labor legislation that the NLRC and the labor arbiters shall use
every reasonable means to ascertain the facts in each case
speedily and objectively, without regard to technicalities of
law or procedure, provided due process is duly observed. (Art
221)
 
In keeping with the policy and in the interest of substantial
justice, the court deemed it proper to give due course to the
petition, especially in view of the conflict between the findings
of the labor arbiter, on the one hand, and the NLRC and the
CA, on the other.
As ruled in S.S. Ventures International, Inc. v. S.S. Ventures
Labor Union, the application of technical rules of procedure in
labor cases may be relaxed to serve the demands of substantial
justice.
[7] Azuelo v. Zameco II Electric Cooperative Inc., G.R. No.
192573 (2014)
Issue: Whether the dismissal of a complaint for illegal
dismissal due to the unreasonable failure of the complainant to
submit his position paper amounts to a dismissal with
prejudice
Ruling:
         Yes. The dismissal of the complaint was with
prejudice.
         The 2005 Revised Rules of Procedure of the NLRC,
the rules applicable at the time of the controversy, is silent as
to the nature of the dismissal of a complaint on the ground of
unreasonable failure to submit a position paper by the
complainant. However, Section 3, Rule I thereof, provides for
the suppletory application of the Rules of Court to arbitration
proceedings before the LAs and the NLRC in the absence of
any applicable provisions therein. Which means that in order
to effectuate the objectives of the Labor Code, the pertinent
provisions of the Rules of Court of the Philippines may, in the
interest of expeditious dispensation of labor justice and
whenever practicable and convenient, be applied by analogy
or in a suppletory character and effect.
         Pursuant to the rules of court, the general rule is that
dismissal of a case for failure to prosecute is to be regarded as
an adjudication on the merits and with prejudice to the filing
of another action. Exception to the rule is when the order of
dismissal expressly contains a qualification that the dismissal
is without prejudice.
         Applying in arbitration proceedings before the LA,
the dismissal of a complaint on account of the unreasonable
failure of the complainant to submit his position paper is
likewise regarded as an adjudication on the merits and with
prejudice to the filing of another complaint, except when the
LA's order of dismissal expressly states otherwise.
         Technical rules of procedure are not binding in labor
cases because LAs and the NLRC are mandated to use every
and all reasonable means to ascertain the facts in each case
speedily and objectively, without regard to technicalities of the
law or procedure. However, non-applicability of technical
rules of procedure in labor cases should not be made a license
to disregard the rights of employers against unreasonable
and/or unjustified claims.
In the case at bar, Azuelo was given sufficient
chances to establish his claim against ZAMECO, which he
failed to do when he did not submit his position paper despite
several extensions granted him. Hence, the dismissal of his
complaint for illegal dismissal amounts to adjudication on the
merits and with prejudice which bars the filing of a subsequent
complaint based on the same allegations.
[8] Luna v. Allado, G.R. No. 175251, May 30, 2011
The 2002 Rules of Procedure of the NLRC, which was in
effect at the time respondents appealed the Labor Arbiters
decision, provided that the NLRC shall limit itself only to the
specific issues that were elevated for review. Here, the NLRC
passed upon the issue of illegal dismissal although this was
not brought up in the appeal. Therefore, by considering the
arguments and issues in the reply/opposition to appeal which
were not properly raised by timely appeal nor comprehended
within the scope of the issue raised in petitioners appeal,
public respondent committed grave abuse of discretion
amounting to excess of jurisdiction.
The contention that the NLRC may nevertheless look into
other issues although not raised on appeal since it is not bound
by technical rules of procedure, is likewise devoid of merit.
The law does not provide that the NLRC is totally free
from "technical rules of procedure", but only that the
rules of evidence prevailing in courts of law or equity shall
not be controlling in proceedings before the NLRC [Art.
221, Labor Code]. This is hardly license for the NLRC to
disregard and violate the implementing rules it has itself
promulgated. Having done so, the NLRC committed grave
abuse of discretion.
2. Burden of proof in termination/illegal dismissal cases
and quantum of evidence

[9] Gurango v. Best Chemicals, GR No. 174593, August 25,
2010
n termination cases, the employer has the burden of proving,
by substantial evidence, that the dismissal is for just cause. 
If the employer fails to discharge the burden of proof, the
dismissal is deemed illegal. In AMA Computer College —
East Rizal v. Ignacio, the Court held that:
In termination cases, the burden of proof rests on
the employer to show that the dismissal is for just
cause.  When there is no showing of a clear, valid
and legal cause for the termination of employment,
the law considers the matter a case of illegal
dismissal and the burden is on the employer to
prove that the termination was for a valid or
authorized cause.  And the quantum of proof which
the employer must discharge is substantial evidence.
An employee’s dismissal due to serious misconduct
must be supported by substantial evidence.
Substantial evidence is that amount of relevant
evidence as a reasonable mind might accept as
adequate to support a conclusion, even if other
minds, equally reasonable, might conceivably opine
otherwise.
In the present case, aside from Albao’s statement, BCPI did
not present any evidence to show that Gurango engaged in a
fistfight. Moreover, there is no showing that Gurango’s actions
were performed with wrongful intent.
[10] Watchman v. Lumahan, GR No. 212096 October 14,
2015
In every employee dismissal case, the employer bears the
burden of proving the validity of the employee's dismissal, i.e.,
the existence of just or authorized cause for the dismissal and
the observance of the due process requirements. The
employer's burden of proof, however, presupposes that the
employee had in fact been dismissed, with the burden to prove
the fact of dismissal resting on the employee. Without any
dismissal action on the part of the employer, valid or
otherwise, no burden to prove just or authorized cause arises.
the CA erred in disregarding the NLRC's conclusion that there
had been no dismissal, and in immediately proceeding to
tackle Nightowl's defense that Lumahan abandoned his work.
The CA should have first considered whether there had been a
dismissal in the first place. It merely presumed that Lumahan
had actually been dismissed.
In cases before administrative and quasi-judicial agencies like
the NLRC, the degree of evidence required to be met is
substantial evidence, or such amount of relevant evidence that
a reasonable mind might accept as adequate to justify a
conclusion. In a situation where the word of another party is
taken against the other, as in this case, we must rely on
substantial evidence because a party alleging a critical fact
must duly substantiate and support its allegation.
Burden of proof in money claims and labor standard cases
[11] Abduljuahid Pigcaulan v. Security and Credit
Investigation, Inc., GR 173648 (2012)
There was no substantial evidence to support the grant of
overtime pay.
We find that both the Labor Arbiter and the NLRC erred in
this regard. The handwritten itemized computations are self-
serving, unreliable and unsubstantial evidence to sustain the
grant of salary differentials, particularly overtime pay.
Unsigned and unauthenticated as they are, there is no way of
verifying the truth of the handwritten entries stated therein.
Written only in pieces of paper and solely prepared by Canoy
and Pigcaulan, these representative daily time records, as
termed by the Labor Arbiter, can hardly be considered as
competent evidence to be used as basis to prove that the two
were underpaid of their salaries.
D. Legal basis under the 1987 Constitution, Civil Code,
and Labor Code
  1. 1987 Constitution 
a. Article II, Secs. 9, 10, 11, 13, 14, 18, 20
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 11. The State values the dignity of every human
person and guarantees full respect for human rights.
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.
b. Article III, Secs. 1, 4, 7, 8, 10, 16, 18(2)
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.
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.
Section 7. The right of the people to information on matters of
public concern shall be recognized. Access to official records,
and to documents and papers pertaining to official acts,
transactions, or decisions, as well as to government research
data used as basis for policy development, shall be afforded
the citizen, subject to such limitations as may be provided by
law.
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 10. No law impairing the obligation of contracts shall
be passed.
Section 16. All persons shall have the right to a speedy
disposition of their cases before all judicial, quasi-judicial, or
administrative bodies.
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.
c. Article XII, Secs. 1, 6, 12
Section 1. The goals of the national economy are a more
equitable distribution of opportunities, income, and wealth; a
sustained increase in the amount of goods and services
produced by the nation for the benefit of the people; and an
expanding productivity as the key to raising the quality of life
for all, especially the underprivileged.
The State shall promote industrialization and full employment
based on sound agricultural development and agrarian reform,
through industries that make full and efficient use of human
and natural resources, and which are competitive in both
domestic and foreign markets. However, the State shall protect
Filipino enterprises against unfair foreign competition and
trade practices.
In the pursuit of these goals, all sectors of the economy and all
regions of the country shall be given optimum opportunity to
develop. Private enterprises, including corporations,
cooperatives, and similar collective organizations, shall be
encouraged to broaden the base of their ownership.
Section 6. The use of property bears a social function, and all
economic agents shall contribute to the common good.
Individuals and private groups, including corporations,
cooperatives, and similar collective organizations, shall have
the right to own, establish, and operate economic enterprises,
subject to the duty of the State to promote distributive justice
and to intervene when the common good so demands.
Section 12. The State shall promote the preferential use of
Filipino labor, domestic materials and locally produced goods,
and adopt measures that help make them competitive.
d. Article XIII, Secs. 1, 2, 3, 13, 14
Section 1. The Congress shall give highest priority to the
enactment of measures that protect and enhance the right of all
the people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by
equitably diffusing wealth and political power for the common
good.
To this end, the State shall regulate the acquisition, ownership,
use, and disposition of property and its increments.
Section 2. The promotion of social justice shall include the
commitment to create economic opportunities based on
freedom of initiative and self-reliance.
Section 13. The State shall establish a special agency for
disabled persons for their 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.
  2. Civil Code
a. Article 1700
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.
b. Article 1702
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.
3. Labor Code
a. Article 3
Article 3. Declaration of basic policy. The State shall afford
protection to labor, promote full employment, ensure equal
work opportunities regardless of sex, race or creed and
regulate the relations between workers and employers. The
State shall assure the rights of workers to self-organization,
collective bargaining, security of tenure, and just and humane
conditions of work.
b. Books I, II, III, IV, V, VI and VII
II. RECRUITMENT AND PLACEMENT OF WORKERS
A. Recruitment and placement (LC, Art. 13(b) and R. A.
No. 8042, as amended by R.A. No. 10022) CECTUHP-
RCPA
Article 13(b) of the Labor Code, defines “recruitment and
placement” as referring:
xxx to any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring workers, and
includes referrals, contract services, promising or advertising
for employment, locally or abroad, whether for profit or not;
Provided, That any person or entity which, in any manner,
offers or promises for a fee employment to two or more
persons shall be deemed engaged in recruitment and
placement.
[1] People v. Panis, G.R. No. 58674 (1988)
RULING :Yes. The number of persons dealt with is not
essential ingredient of the act of recruitment and placement
workers.
Art 13(b) Recruitment and placement’ refers to any act of
canvassing, enlisting, contracting, transporting, hiring, or
procuring workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad,
whether for profit or not: Provided, That any person or entity
which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged
in recruitment and placement.
Any of the acts in the basic rule in Art 13(b) will constitute
recruitment and placement even if only one prospective
worker is involved. The proviso merely lays down a rule in
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 engaged in the act of recruitment and placement.
The words “ shall deemed “ create that presumption. In the
instant case , the word “ shall deemed “ should by the same
taken be given the force of a disputable presumption or prima
facie evidence in recruitment and placement.
Illegal recruitment and other prohibited activities (LC,
Art. 34, Art. 38)
Art. 34. Prohibited practices. It shall be unlawful for any
individual, entity, licensee, or holder of authority:
a. To charge or accept, directly or indirectly, any
amount greater than that specified in the schedule of
allowable fees prescribed by the Secretary of Labor,
or to make a worker pay any amount greater than that
actually received by him as a loan or advance;
-to charge or accept any amount greater than the fees
prescribed by Sec of Labor or to make a worker pay
an amount greater than received by him as a loan or
advance
b. To furnish or publish any false notice or information
or document in relation to recruitment or
employment;
to furnish any false information in relation to
recruitment or employment
c. To give any false notice, testimony, information or
document or commit any act of misrepresentation for
the purpose of securing a license or authority under
this Code.
To give false information or any act of
misinterpretation for the purpose of securing a license
under this Code
d. To induce or attempt to induce a worker already
employed to quit his employment in order to offer
him to another unless the transfer is designed to
liberate the worker from oppressive terms and
conditions of employment;
To induce a worker to quit his employment in order
to offer him to another unless the transfer is designed
to liberate the worker from oppressive terms and
conditions of employment;
e. To influence or to attempt to influence any person or
entity not to employ any worker who has not applied
for employment through his agency;
To influence another not to employ any worker who
has not applied through his agency
f. To engage in the recruitment or placement of workers
in jobs harmful to public health or morality or to the
dignity of the Republic of the Philippines;
To engage in recruitment of workers in jobs harmful
to public health or morality or to the dignity of the
Philippines
g. To obstruct or attempt to obstruct inspection by the
Secretary of Labor or by his duly authorized
representatives;
h. To fail to file reports on the status of employment,
placement vacancies, remittance of foreign exchange
earnings, separation from jobs, departures and such
other matters or information as may be required by
the Secretary of Labor.
To fail to file reports or any other matters or
information as may be required by the Secretary of
Labor
i. To substitute or alter employment contracts approved
and verified by the Department of Labor from the
time of actual signing thereof by the parties up to and
including the periods of expiration of the same
without the approval of the Secretary of Labor;
 j. To become an officer or member of the Board of any
corporation engaged in travel agency or to be
engaged directly or indirectly in the management of a
travel agency; and
To become an officer or member of the Board of any
corporation engaged in travel agency or to manage a
travel agency
k. To withhold or deny travel documents from applicant
workers before departure for monetary or financial
considerations other than those authorized under this
Code and its implementing rules and regulations.
Art. 38. Illegal recruitment.
a. Any recruitment activities, including the prohibited
practices enumerated under Article 34 of this Code,
to be undertaken by non-licensees or non-holders of
authority, shall be deemed illegal and punishable
under Article 39 of this Code. The Department of
Labor and Employment or any law enforcement
officer may initiate complaints under this Article.
 
b. Illegal recruitment when committed by a syndicate or
in large scale shall be considered an offense
involving economic sabotage and shall be penalized
in accordance with Article 39 hereof.
Illegal recruitment is deemed committed by a
syndicate if carried out by a group of three (3) or
more persons conspiring and/or confederating with
one another in carrying out any unlawful or illegal
transaction, enterprise or scheme defined under the
first paragraph hereof. Illegal recruitment is deemed
committed in large scale if committed against three
(3) or more persons individually or as a group.
 
c. The Secretary of Labor and Employment or his duly
authorized representatives shall have the power to
cause the arrest and detention of such non-licensee or
non-holder of authority if after investigation it is
determined that his activities constitute a danger to
national security and public order or will lead to
further exploitation of job-seekers. The Secretary
shall order the search of the office or premises and
seizure of documents, paraphernalia, properties and
other implements used in illegal recruitment activities
and the closure of companies, establishments and
entities found to be engaged in the recruitment of
workers for overseas employment, without having
been licensed or authorized to do so.
RA 8042
Sec. 6. DEFINITIONS. – For purposes of this Act, illegal
recruitment shall mean any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring, procuring workers
and includes referring, contact services, promising or
advertising for employment abroad, whether for profit or not,
when undertaken by a non-license or non-holder of authority
contemplated under Article 13(f) of Presidential Decree No.
442, as amended, otherwise known as the Labor Code of the
Philippines. Provided, that such non-license or non-holder,
who, in any manner, offers or promises for a fee employment
abroad to two or more persons shall be deemed so engaged. It
shall likewise include the following acts, whether committed
by any persons, whether a non-licensee, non-holder, licensee
or holder of authority.
(a) 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;
(b) To furnish or publish any false notice or information or
document in relation to recruitment or employment;
(c) To give any false notice, testimony, information or
document or commit any act of misrepresentation for the
purpose of securing a license or authority under the Labor
Code;
(d) 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;
(e) To influence or attempt to influence any persons or entity
not to employ any worker who has not applied for
employment through his agency;
(f) 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;
(g) To obstruct or attempt to obstruct inspection by the
Secretary of Labor and Employment or by his duly authorized
representative;
(h) 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;
(i) 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;
(j) 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;
(k) 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;
(l) Failure to actually deploy without valid reasons as
determined by the Department of Labor and Employment; and
(m) 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 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.
Illegal recruitment is deemed committed by a syndicate carried
out by a group of three (3) or more persons conspiring or
confederating with one another. It is deemed committed in
large scale if committed against three (3) or more persons
individually or as a group.
The persons criminally liable for the above offenses are the
principals, accomplices and accessories. In case of juridical
persons, the officers having control, management or direction
of their business shall be liable.
a. Elements
[2] People v. Sison, G.R. No. 187160 (2017) cabrera
(landmark case)
Issue: whether there is an illegal recruitment in the case at
bar?
Held: Yes, illegal recruitment committed by a syndicate, as in
the present case, has the following elements: (a) the offender
does not have the valid license or authority required by law to
engage in recruitment and placement of workers; (b) the
offender undertakes any of the "recruitment and placement"
activities defined in Article 13(b) of the Labor Code, or
engages in any of the prohibited practices enumerated under
now Section 6 of RA 8042; and (c) the illegal recruitment is
"carried out by a group of three or more persons conspiring
and/or confederating with one another in carrying out any
unlawful or illegal transaction, enterprise or scheme." In the
third element, it "is not essential that there be actual proof that
all the conspirators took a direct part in every act. It is
sufficient that they acted in concert pursuant to the same
objective."
The acts of Sison, Dedales, and Bacomo show a common
purpose and and each undertook a part to reach their objective.
Their concerted action is evident in that either Sison or
Dedales was receiving payments from the recruits; that
Dedales signed the acknowledgment receipt from Sison; and
that the three accompanied their recruits together in seeking
out their visas in Malaysia and Indonesia. Further, the
impression given to Castuera and other recruits was that the
three were indeed working together.
Since it was proven that the three accused were acting in
concert and conspired with one another, their illegal
recruitment activity is considered done by a syndicate, making
the offense illegal recruitment involving economic sabotage.
[3] Sto. Tomas v. Salac, G.R. No. 152642 (2012)
ISSUE: Is RTC correct in declaring sections 6,7 and 9  of RA
8042 unconstitutional?
SEC. 7. PENALTIES –
(a) Any person found guilty of illegal recruitment shall suffer
the penalty of imprisonment of not less than six (6) years and
one (1) day but not more than twelve (12) years and a fine not
less than two hundred thousand pesos (P200,000.00) nor more
than five hundred thousand pesos (P500,000.00).
(b) The penalty of life imprisonment and a fine of not less than
five hundred thousand pesos (P500,000.00) nor more than one
million pesos (P1,000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as defined herein.
Provided, however, that the maximum penalty shall be
imposed if the person illegally recruited is less than eighteen
(18) years of age or committed by a non-licensee or non-
holder of authority.
SEC. 9. VENUE. – A criminal action arising from illegal
recruitment as defined herein shall be filed with the Regional
Trial Court of the province or city where the offense was
committed or where the offended party actually resides at the
same time of the commission of the offense: Provided, That
the court where the criminal action is first filed shall acquire
jurisdiction to the exclusion of other courts. Provided,
however, That the aforestated provisions shall also apply to
those criminal actions that have already been filed in court at
the time of the effectivity of this Act.
Ruling:
No.
For section 6, "illegal recruitment" as defined in this section 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.
Section 7 is constitutional because in fixing uniform penalties
for each of the enumerated acts under Section 6, Congress was
within its prerogative to determine what individual acts are
equally reprehensible, consistent with the State policy of
according full protection to labor, and deserving of the same
penalties. It is not within the power of the Court to question
the wisdom of this kind of choice.
Lastly, section 9 is constitutional because there is nothing
arbitrary or unconstitutional in Congress fixing an alternative
venue for violations of Section 6 of R.A. 8042 that differs
from the venue established by the Rules on Criminal
Procedure. Section 9 of R.A. 8042, as an exception to the rule
on venue of criminal actions is, consistent with that law’s
declared policy of providing a criminal justice system that
protects and serves the best interests of the victims of illegal
recruitment.
As a final note, R.A. 8042 is a police power measure intended
to regulate the recruitment and deployment of OFWs. The rule
is settled that every statute has in its favor the presumption of
constitutionality. Hence, in the absence of a clear and
unmistakable case that the statute is unconstitutional, the
Court must uphold its validity.
b. Types of illegal recruitment
[4] People v. Ocden, G.R. No. 173198 (2011)
In People v. Hu, SC held that a conviction for large scale
illegal recruitment must be based on a finding in each case of
illegal recruitment of three or more persons, whether
individually or as a group. While it is true that the law does
not require that at least three victims testify at the trial,
nevertheless, it is necessary that there is sufficient evidence
proving that the offense was committed against three or more
persons.  Mrs. Ganura. Accused-appellant failed to present evidence to
In this case, there is conclusive evidence that Ocden recruited
Mana-a, Ferrer, and Golidan’s sons, Jeffries and Howard, for
purported employment as factory workers in Italy.
Illegal recruitment is deemed committed by a syndicate
carried out by a group of three (3) or more persons conspiring
or confederating with one another. It is deemed committed in
large scale if committed against three (3) or more persons
individually or as a group.
[5] People v. Sadiosa, G.R. No. 107084 (1998)
Issue: Whether Sadiosa committed the crime of illegal
recruitment?
Ruling. Yes.
 The Supreme Court elucidated that there are four kinds of
illegal recruitment under the law.
One is simple illegal recruitment committed by a licensee or
holder of authority. Any person who is neither a licensee nor a
holder of authority commits the second type of illegal
recruitment. The third type of illegal recruitment refers to
offenders who either commit the offense alone or with another
person against three or more persons individually or as a
group. A syndicate or a group of three or more persons
conspiring and confederating with one another in carrying out
the act circumscribed by the law commits the fourth type of
illegal recruitment by the law. For the third and fourth types of
illegal recruitment the law prescribes the penalty of life
imprisonment and a fine of P100,000.
Under the Labor Code, the essential elements of the crime of
illegal recruitment in large scale are as follows:
(1) the accused engages in the recruitment and placement of
workers, as defined under Article 13 (b) or in any prohibited
activities under Article 34 of the Labor Code;
(2) accused has not complied with the guidelines issued by the
Secretary of Labor and Employment, particularly with respect
to the securing of a license or an authority to recruit and
deploy workers, whether locally or overseas; and
(3) accused commits the same against three (3) or more
persons, individually or as a group.
All these elements of the crime of illegal recruitment in large
scale have been established. The accused-appellant, knowing
fully well that she was not a duly licensed job recruiter, falsely
represented that she could secure employment as domestic
helpers abroad for the four complainants. The prosecution
clearly established the fact that accused-appellant had no
license to recruit from the POEA. Yet, the latter entertained
the four complainants when they applied, promised them jobs
as domestic helpers in Kuwait, and collected fees from them
for processing travel documents only to renege on her promise
and fail to return the money she collected from complainants
despite several demands.
The Supreme Court casted serious doubts regarding accused-
appellants claim that she was only acting in behalf of a certain
corroborate her testimony. Neither did she present Mrs.
Ganura despite several opportunities given her by the trial
court. The undisputed fact is that appellant was positively
identified as the person who transacted with the four
complainants, promised them jobs and received money from
them. 
For engaging in recruitment of the four complainants without
first obtaining the necessary license from the POEA, accused-
appellant, therefore, is guilty of illegal recruitment in large
scale, an offense involving economic sabotage. She should,
accordingly, be punished with life imprisonment and a fine of
P100,000 under Article 39 (a) of the Labor Code, as amended.
c. Illegal recruitment vs. estafa
[6] People v. Cortez, G.R. Nos. 115719-26, October 5, 1999
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.
YES, the appellant be convicted of illegal recruitment in large
scale despite his acquittal of the crime of estafa.
 
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.
The elements of illegal recruitment in large scale are: "(1) the
accused undertakes any recruitment activity defined under Art.
13, par. (b), or any prohibited practice enumerated under Art.
34 of the Labor Code; (2) he does not have a license or
authority to lawfully engage in the recruitment and placement
of workers; and, (3) he commits the same against three (3) or
more persons, individually or as a group.
2. Liability of local recruitment agency and foreign
employer
a. Solidary liability (Sec. 10, RA 8042, as amended)
SEC. 10. MONEY CLAIMS. – Both withstanding any
provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the
0riginal and exclusive jurisdiction to hear and decide, within
ninety (90) calendar days after filing of the complaint, the
claims arising out of an employer-employee relationship or by
virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral,
exemplary and other forms of damages.
The liability of the principal/employer and the
recruitment/placement agency for any and all claims under this
section shall be joint and several. This provisions shall be
incorporated in the contract for overseas employment and shall
be a condition precedent for its approval. The performance
bond to be filed by the recruitment/placement agency, as
provided by law, shall be answerable for all money claims or
damages that may be awarded to the workers. 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.
Such liabilities shall continue during the entire period or
duration of the employment contract and shall not be affected
by any substitution, amendment or modification made locally
or in a foreign country of the said contract.
Any compromise/amicable settlement or voluntary agreement
on money claims inclusive of damages under this section shall
be paid within four (4) months from the approval of the
settlement by the appropriate authority.
In case of termination of overseas employment without just,
valid or authorized cause as defined by law or contract, the
workers shall be entitled to the full reimbursement of his
placement fee with interest of twelve percent (12%) per
annum, plus his salaries for the unexpired portion of his
employment contract or for three (3) months for every year of
the unexpired term, whichever is less.-unconsti!!
Non-compliance with the mandatory periods for resolutions of
cases provided under this section shall subject the responsible
officials to any or all of the following penalties:
(a) The salary of any such official who fails to render his
decision or resolutions within the prescribed period shall be, or
caused to be, withheld until the said official complies
therewith;
(b) Suspension for not more than ninety (90) days; or
(c) Dismissal from the service with disqualifications to hold
any appointive public office for five (5) years.
Provided, however, that the penalties herein provided shall be
without prejudice to any liability which any such official may
have incurred under other existing laws or rules and
regulations as a consequence of violating the provisions of this
paragraph.
[7] OSM Shipping Phil, Inc. v. NLRC, G.R. No. 138193
(2003)
On behalf of its principal, OSM does not deny hiring
Guerrero as master mariner. Petitioner was the
legitimate manning agent of PS-SASCO and it was
allowed to recruit, hire and deploy seamen on board
the vessel.
a.     It argues that since Guerrero was never
deployed overseas, his employment contract
became ineffective because its object was
allegedly absent. – Employment contract
like any contract is perfected upon the
concurrence of essential elements such as
consent of the parties, object certain (subject
matter of the contract) and the cause of the
obligation. Contrary to petitioner’s
contention, the object of the contract was
the rendition of service by Guerrero on
board the vessel. The non-deployment
overseas of the ship did not affect the
validity of the perfected employment
contract.
b.    OSM also contends that there was a
novation of the contract when Concorde
decided to use the ship for coastwide trade. –
A contract cannot be novated solely by the
will of one party.
 3) Joint and solidary liability is meant to assure
aggrieved workers of immediate and sufficient
payment of what is due them.
b. Theory of imputed knowledge  [9] Serrano v. Gallant Maritime Services, Inc., G.R. No.
The theory of imputed knowledge is a doctrine in
agency stating that the principal is chargeable with
and bound by the knowledge of or notice to his agent
received while the agent was acting as such. Notice to
the agent is notice to the principal.
[8] Sunace International Management Services, Inc. v.
NLRC G.R. 161757 (2006)
The act of the foreigner-principal in renewing the contract of
Divina is not attributable to 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.
Furthermore, as Sunace correctly points out, there was an
implied revocation of its agency relationship with its foreign
principal when, after the termination of the original
employment contract, the foreign principal directly negotiated
with Divina and entered into a new and separate employment
contract in Taiwan.
3. Entities prohibited from recruiting (LC, Art. 26)
Art. 26. Travel agencies prohibited to recruit. Travel
agencies and sales agencies of airline companies are
prohibited from engaging in the business of recruitment and
placement of workers for overseas employment whether for
profit or not.
4. Cancellation of license or authority (LC, Art. 35)
Art. 35. Suspension and/or cancellation of license or
authority. The Minister of Labor shall have the power to
suspend or cancel any license or authority to recruit employees
for overseas employment for violation of rules and regulations
issued by the Ministry of Labor, the Overseas Employment
Development Board, or for violation of the provisions of this
and other applicable laws, General Orders and Letters of
Instructions.
5. Termination of contract of migrant worker without just
or
valid cause (Sec. 10, RA 8042, as amended by RA 10022)
In case of termination of overseas employment without just,
valid or authorized cause as defined by law or contract, the
workers shall be entitled to the full reimbursement of his
placement fee with interest of twelve percent (12%) per
annum, plus his salaries for the unexpired portion of his
employment contract or for three (3) months for every year of
the unexpired term, whichever is less.
167614 (2009)
It is plain that prior to R.A. No. 8042, all OFWs, regardless
of contract periods or the unexpired portions thereof, were
treated alike in terms of the computation of their monetary
benefits in case of illegal dismissal. Their claims were
subjected to a uniform rule of computation: their basic
salaries multiplied by the entire unexpired portion of their
employment contracts.
The enactment of the subject clause in R.A. No. 8042
introduced a differentiated rule of computation of the
money claims of illegally dismissed OFWs based on their
employment periods, in the process singling out one category
whose contracts have an unexpired portion of one year or
more and subjecting them to the peculiar disadvantage of
having their monetary awards limited to their salaries for 3
months or for the unexpired portion thereof, whichever is less,
but all the while sparing the other category from such
prejudice, simply because the latter’s unexpired contracts fall
short of one year.
Prior to R.A. No. 8042, a uniform system of computation of
the monetary awards of illegally dismissed OFWs was in
place. This uniform system was applicable even to local
workers with fixed-term employment.
The subject clause does not state or imply any definitive
governmental purpose; and it is for that precise reason that
the clause violates not just petitioner’s right to equal
protection, but also her right to substantive due process
under Section 1, Article III of the Constitution.
The subject clause being unconstitutional, petitioner is
entitled to his salaries for the entire unexpired period of
nine months and 23 days of his employment contract,
pursuant to law and jurisprudence prior to the enactment
of R.A. No. 8042.
Third Issue
Petitioner contends that his overtime and leave pay should
form part of the salary basis in the computation of his
monetary award, because these are fixed benefits that have
been stipulated into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime
and leave pay. For seafarers like petitioner, DOLE Department
Order No. 33, series 1996, provides a Standard Employment
Contract of Seafarers, in which salary is understood as the
basic wage, exclusive of overtime, leave pay and other
bonuses; whereas overtime pay is compensation for all
work “performed” in excess of the regular eight hours, and
holiday pay is compensation for any work “performed” on
designated rest days and holidays.
In the same vein, the claim for the day’s leave pay for the
unexpired portion of the contract is unwarranted since the
same is given during the actual service of the seamen.
[10] Sameer Overseas Placement Agency v. Cabiles, G.R.
No. 170139, (August 05, 2014)
ISSUE: WON Joy was validly dismissed
RULING: No. SOA and Wacoal failed to show that there was
just cause for terminating Joy. An allegation of inefficiency
and neglect of duties may constitute just cause for termination
under Art. 282 (b), but only if SOA was able to prove it.  6. Ban on direct hiring, exceptions (LC, Art. 18; Sec. 123-
The burden of proving that there is just cause for termination
is on the ER, who must affirmatively show rationally adequate
evidence of that the dismissal was for a justifiable cause.
Failure to show that there was valid or just cause for
termination would necessarily mean that the dismissal was
illegal.  international organizations and such other employers as may
To show that dismissal resulting from inefficiency in work is
valid, it must be shown that:
1. The ER has set standards of conduct and
workmanship against which the EE will be judged;
2. The standards of conduct and workmanship must
have been communicated to the EE;
3. The communication was made at a reasonable time
prior to the EE’s performance assessment.
Joy’s dismissal less than one year from hiring and her
repatriation on the same day show not only failure on the part
of SOA to comply with the requirement of the existence of
just cause for termination. They patently show that the ERs
did not comply with the due process requirement.
A valid dismissal requires both a valid cause and adherence to
the valid procedure of dismissal. The ER is required to give
the charged EE at least 2 written notices before termination.
One of the written notices must inform the EE of the particular
acts that may cause hir or her dismissal. The other notice must
inform the EE of the the ER’s decision. Aside from the notice
of requirement, the EE must also be given an opportunity to be
heard.
Having been illegally dismissed, Joy is entitled to her salary
for the unexpired portion of the employment contract that was
violated, together with attorney’s fees and reimbursement of
amounts withheld from her salary.
Section 10 of Republic Act No. 8042, otherwise known as
the Migrant Workers and Overseas Filipinos Act of 1995,
states that overseas workers who were terminated without
just, valid, or authorized cause “shall be entitled to the full
reimbursement of his placement fee with interest of twelve
(12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months
for every year of the unexpired term, whichever is less.”
Sameer Overseas Placement Agency, Inc. vs. Cabiles, 732
SCRA 22, G.R. No. 170139 August 5, 2014
  Section 15 of Republic Act No. 8042 states that
s“repatriation of the worker and the transport of his [or
her] personal belongings shall be the primary
responsibility of the agency which recruited or deployed
the worker overseas.” The exception is when “termination
of employment is due solely to the fault of the worker,”80
which as we have established, is not the case. It reads: 
Sameer Overseas Placement Agency, Inc. vs. Cabiles, 732
SCRA 22, 
G.R. No. 170139 August 5, 2014
124, 2016 Revised POEA Rules and Regulations)
Art. 18. Ban on direct-hiring. No employer may hire a
Filipino worker for overseas employment except through the
Boards and entities authorized by the Secretary of Labor.
Direct-hiring by members of the diplomatic corps,
be allowed by the Secretary of Labor is exempted from this
provision.
SECTION 123. Ban on Direct Hires. — No employer shall
directly hire an Overseas Filipino Worker for overseas
employment.
SECTION 124.Exemption from the Ban on Direct Hiring. —
The following are exempted from the ban on direct hiring:
a. Members of the diplomatic corps;
b. International organizations;
c. Heads of state and government officials with the rank of at
least deputy minister; or
d. Other employers as may be allowed by the Secretary of
Labor and Employment, such as:
1. Those provided in (a), (b) and (c) who bear a lesser rank, if
endorsed by the POLO, or Head of Mission in the absence of
the POLO;
2. Professionals and skilled workers with duly
executed/authenticated contracts containing terms and
conditions over and above the standards set by the POEA. The
number of professional and skilled Overseas Filipino Workers
hired for the first time by the employer shall not exceed five
(5).
For the purpose of determining the number, workers hired as a
group shall be counted as one; or
3.Workers hired by a relative/family member who is a
permanent resident of the host country.
B. Employment of non-resident aliens (LC, Art. 40; D.O.
No. 186-17)
Art. 40. Employment permit of non-resident aliens. Any
alien seeking admission to the Philippines for employment
purposes and any domestic or foreign employer who desires to
engage an alien for employment in the Philippines shall obtain
an employment permit from the Department of Labor.
The employment permit may be issued to a non-resident alien
or to the applicant employer after a determination of the non-
availability of a person in the Philippines who is competent,
able and willing at the time of application to perform the
services for which the alien is desired.
For an enterprise registered in preferred areas of investments,
said employment permit may be issued upon recommendation
of the government agency charged with the supervision of said
registered enterprise.
[11] Andrew James McBurnie v. Eulalio Ganzon, 707
SCRA 646 MCBURNIE VS GANZON
Considering that McBurnie, an Australian, alleged illegal
dismissal and sought to claim under our labor laws, it was
necessary for him to establish, first and foremost, that he was
qualified and duly authorized to obtain employment within our
jurisdiction. A requirement for foreigners who intend to work
within the country is an employment permit, as provided under
Article 40, Title II of the Labor Code.
McBurnie failed to present other competent evidence to prove
his claim of an employer-employee relationship. Even the
parties conflicting claims on their true intention in executing
the agreement, it was necessary to resort to the established
criteria for the determination of an employer-employee
relationship, namely: (1) the selection and engagement of
the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employee
conduct. The rule of thumb remains: the onus probandi falls
on the claimant to establish or substantiate the claim by the
requisite quantum of evidence. Whoever claims entitlement to
the benefits provided by law should establish his or her right
thereto. McBurnie failed in this regard. As previously
observed by the NLRC, McBurnie even failed to show through
any document such as payslips or vouchers that his salaries
during the time that he allegedly worked for the respondents
were paid by the company. In the absence of an employer-
employee relationship between McBurnie and the respondents,
McBurnie could not successfully claim that he was dismissed,
much less illegally dismissed, by the latter. Even granting that
there was such an employer-employee relationship, the records
are barren of any document showing that its termination was
by the respondents dismissal of McBurnie.
III. LABOR STANDARDS
[1] Maternity Children’s Hospital v. Secretary of Labor,
G.R. 78909
Issue: whether or not the Regional Director had jurisdiction
over the case and if so, the extent of coverage any award that
should be forthcoming, arising from his visitorial and
enforcement powers under Article 128 of the Labor Code.
Ruling: Labor standards refer to the minimum requirements
prescribed by existing laws, rules, and regulations relating to
wages, hours of work, cost of living allowance and other
monetary and welfare benefits, including occupational, safety,
and health standards (Section 7, Rule I, Rules on the
Disposition of Labor Standards Cases in the Regional Office,
dated September 16, 1987). 1 Under the present rules, a
Regional Director exercises both visitorial and enforcement
power over labor standards cases, and is therefore empowered
to adjudicate money claims, provided there still exists an
employer-employee relationship, and the findings of the
regional office is not contested by the employer concerned.
The Regional Director correctly applied the award with
respect to those employees who signed the complaint, as well
as those who did not sign the complaint, but were still
connected with the hospital at the time the complaint was filed
(See Order, p. 33 dated August 4, 1986 of the Regional
Director, Pedrito de Susi, p. 33, Rollo).
The justification for the award to this group of employees who
were not signatories to the complaint is that the visitorial and
enforcement powers given to the Secretary of Labor is
relevant to, and exercisable over establishments, not over the
individual members/employees, because what is sought to be
achieved by its exercise is the observance of, and/or
compliance by, such firm/establishment with the labor
standards regulations. Necessarily, in case of an award
resulting from a violation of labor legislation by such
establishment, the entire members/employees should benefit
therefrom.
The enforcement power of the Regional Director cannot
legally be upheld in cases of separated employees. Article 129
of the Labor Code, cited by petitioner (p. 54, Rollo) is not
applicable as said article is in aid of the enforcement power of
the Regional Director; hence, not applicable where the
employee seeking to be paid underpayment of wages is
already separated from the service. His claim is purely a
money claim that has to be the subject of arbitration
proceedings and therefore within the original and exclusive
jurisdiction of the Labor Arbiter.
1. Employer-employee relationship
[1] SSS v. CA and Ayalde, G.R. No. 100388, (2000)
Doctrine: The essential elements of an employer-employee
relationship are: 
(a) the selection and engagement of the employee; 
(b) the payment of wages; 
(c) the power of dismissal; and 
(d) the power of control with regard to the means and
methods by which the work is to be accomplished, with the
power of control being the most determinative factor.
Issue: Whether or not an agricultural laborer who was hired on
"pakyaw" basis can be considered an employee entitled to
compulsory coverage and corresponding benefits under the
Social Security Law. 
Held: The Supreme Court reversed and set aside the decision
of the Court of Appeals and the resolution of the Social
Security Commission was reinstated. There was no shared of
evidence to show that Tana was only a seasonal worker. All
witnesses, including Ayalde, testified that Tana and his family
resided in the plantation. The only logical explanation for this
set up was that Tana was working for most part of the year
exclusively for Ayalde. A closer scrutiny of the records
revealed that while Ayalde may not have directly imposed on
Tana the manner and methods to follow in performing his
tasks, she did exercise control through her overseer. Under the
circumstances, the relationship between Ayalde and Tana has
more of the attributes of employer-employee than that of an
independent contractor hired to perform a specific project.
[2] Tenazas, et al., v. R. Villegas Taxi Transport, G.R. No.
192998 (2014)
ISSUE:
 
Whether or not Francisco is an employee of respondent.
 
HELD:
 
NO. There was no employer-employee relationship. Francisco
was claiming to be an employee of the respondents, it is
incumbent upon him to proffer evidence to prove the existence
of said relationship. Any competent and relevant evidence to
prove the relationship may be admitted. Identification cards,
cash vouchers, social security registration, appointment letters
or employment contracts, payrolls, organization charts, and
personnel lists, serve as evidence of employee status. In this
case, however, Francisco failed to present any proof
substantial enough to establish his relationship with the
respondents. Francisco simply relied on his allegation that he
was an employee of the company without any other evidence
supporting his claim. Unfortunately for him, a mere allegation
in the position paper is not tantamount to evidence. Bereft of
any evidence, the CA correctly ruled that Francisco could not
be considered an employee of the respondents.
2. Test to determine existence
[3] Felicilda v. Uy, G.R. No. 221241, September 14, 2016
The Court agrees with the labor tribunals that all the four
(4) elements are present in this case:
First. It is undisputed that respondent hired petitioner to
work as a truck driver for his private enterprise.
Second. Petitioner received compensation from respondent
for the services he rendered. Contrary to the findings of
the CA, while the wages paid was determined on a "per
trip" or commission basis, it has been constantly ruled that
such does not negate employment relationship. Article 97
(f) of the Labor Code broadly defines the term "wage" as
"the remuneration or earnings, however designated,
capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same, which is
payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be
done, or for services rendered or to be rendered x x x."
That petitioner was paid on a "per trip" or commission
basis is insignificant as this is merely a method of
computing compensation and not a basis for determining
the existence or absence of an employer-employee
relationship.
Third. Respondent's power to dismiss was inherent in the
selection and engagement of petitioner as truck driver.
Fourth. The presence of the element of control, which is
the most important element to determine the existence or
absence of employment relationship, can be safely deduced
from the fact that: (a) respondent owned the trucks that
were assigned to petitioner; (b) the cargoes loaded in the
said trucks were exclusively for respondent's clients; and
(c) the schedule and route to be followed by petitioner were
exclusively determined by respondent. The latter's claim
that petitioner was permitted to render service to other
companies was not substantiated and there was no showing
that he indeed worked as truck driver for other companies.
Given all these considerations, while petitioner was free to
carry out his duties as truck driver, it cannot be pretended
that respondent, nonetheless, exercised control over the
means and methods by which the former was to
accomplish his work. To reiterate, the power of control
refers merely to the existence of the power. It is not
essential for the employer to actually supervise the
performance of duties of the employee, as it is sufficient
that the former has a right to wield the power, as in this
case.
[4] Orozco v. CA, G.R. No. 155207 (2008)
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. Rules which serve as general guidelines towards the
achievement of the mutually desired result are not indicative
of the power of control. A line must be drawn somewhere
between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating
the means or methods to be employed in attaining it, and those
that control or fix the methodology and bind or restrict the
party hired to the use of such means.
In the case at bar, the control exercised by PDI pertains only to
the end results, i.e., the submitted articles. It has no control
over petitioner as to the means and methods used by her in the
preparation of her articles. Aside from the constraints
presented by the space allocation of her column, there was no
restraints on her creativity; petitioner was free to write her
column in the manner and style she was accustomed to and to
use whatever research method she deemed suitable for her
purpose. The limitation that she had to write only on subjects
for Lifestyle section did not translate control, but was simply a
logical consequence of the fact that her column appeared in
that section. Therefore, the control that PDI exercised over
petitioner was only as to the finished product of her
efforts, i.e., the column itself, by way of either shortening
or outright rejection of the column.
Even if we apply the economic reality test, petitioner is still
not an employee. Her main occupation is as a women’s rights
advocate working in various women’s organizations. She also
contributes articles to other publications. It cannot be said that
petitioner was dependent on PDI for her continued
employment in respondent’s line of business. She is an
independent contractor, engaged to do independent work. An
independent contractor is one who carries on a distinct and
independent business and undertakes to perform the job, work,
or service on one’s own account and under one’s own
responsibility according to one’s own manner and method,
free from the control and direction of the principal in all
matters connected with the performance of the work except as
to the results thereof..
3. Employee vs. independent contractor
[5] Fuji Television Network Inc v. Espiritu, G.R. No.
204944-45 (2014)
Ruling:
Employees under fixed-term contracts cannot be independent
contractors because in fixed-term contracts, an employer-
employee relationship exists. The test in this kind of contract
is not the necessity and desirability of the employee’s
activities, "but the day certain agreed upon by the parties for
the commencement and termination of the employment
relationship."
For regular employees, the necessity and desirability of their
work in the usual course of the employer’s business are the
determining factors. On the other hand, independent
contractors do not have employer-employee relationships with
their principals. Hence, before the status of employment can
be determined, the existence of an employer-employee
relationship must be established.
The four-fold test can be used in determining whether an
employer-employee relationship exists. The elements of the
four-fold test are the following: (1) the selection and
engagement of the employee; (2) the payment of wages; (3)the
power of dismissal; and (4) the power of control, which is the
most important element.
1. Arlene is not an independent contractor.
Arlene was hired by Fuji as a news producer, but
there was no evidence that she was hired for her
unique skills that would distinguish her from ordinary
employees. Her monthly salary appeared to be a
substantial sum. Fuji had the power to dismiss
Arlene, as provided for in her employment contract.
The contract also indicated that Fuji had control over
her work as she was required to report for 8 hours
from Monday to Friday. Fuji gave her instructions on
what to report and even her mode of transportation in
carrying out her functions was controlled.
2. Arlene was a regular employee with a fixed-term
contract.
In determining whether an employment should be
considered regular or non-regular, the applicable test
is the reasonable connection between the particular
activity performed by the employee in relation to the
usual business or trade of the employer. The standard,
supplied by the law itself, is whether the work
undertaken is necessary or desirable in the usual
business or trade of the employer, a fact that can be
assessed by looking into the nature of the services
rendered and its relation to the general scheme under
which the business or trade is pursued in the usual
course. It is distinguished from a specific undertaking
that is divorced from the normal activities required in
carrying on the particular business or trade
A. Conditions of employment
1. Covered employees/workers (LC, Art. 82)
Art. 82. Coverage. The provisions of this Title shall apply to
employees in all establishments and undertakings whether for
profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the
employer who are dependent on him for support, domestic
helpers, persons in the personal service of another, and
workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.
As used herein, “managerial employees” refer to those whose
primary duty consists of the management of the establishment
in which they are employed or of a department or subdivision
thereof, and to other officers or members of the managerial
staff.
“Field personnel” shall refer to non-agricultural employees
who regularly perform their duties away from the principal
place of business or branch office of the employer and whose
actual hours of work in the field cannot be determined with
reasonable certainty.
[6] Peñarada v. Baganga Plywood Corp., G.R. No.
159577 (2006)
Issue:
Whether or not Penaranda is a regular employee entitled to
monetary benefits under Art. 82 of the Labor Code.
Ruling:
NO. Penaranda is part of the managerial staff which takes him
out of the coverage of labor standards. The Implementing
Rules define members of a managerial staff as those with the
ff. responsibilities:
(1) The primary duty consists of the performance of work
directly related to management policies of the employer;
(2) Customarily and regularly exercise discretion and
independent judgment;
(3) (i) Regularly and directly assist a proprietor or a
managerial employee whose primary duty consists of the
management of the establishment in which he is employed or
subdivision thereof; or (ii) execute under general supervision
work along specialized or technical lines requiring special
training, experience, or knowledge; or (iii) execute under
general supervision special assignments and tasks; and
(4) who do not devote more than 20 percent of their hours
worked in a workweek to activities which are not directly and
closely related to the performance of the work described in
paragraphs (1), (2), and (3) above."
Petitioner supervised the engineering section of the steam
plant boiler. His work involved overseeing the operation of the
machines and the performance of the workers in the
engineering section. This work necessarily required the use of
discretion and independent judgment to ensure the proper
functioning of the steam plant boiler. As supervisor, petitioner
is deemed a member of the managerial staff.
Even Penaranda admitted that he was a supervisor. In his
Position Paper, he stated that he was the foreman responsible
for the operation of the boiler. The term foreman implies that
he was the representative of management over the workers and
the operation of the department. His classification as
supervisor is further evident from the manner his salary was
paid. He belonged to the 10% of respondent’s 354 employees
who were paid on a monthly basis; the others were paid only
on a daily basis.
The court finds no justification to award overtime pay and
premium pay for rest days to Penaranda.
2. Hours of work
a. Normal hours of work; hours worked (LC, Art. 83-
84)
Art. 83. Normal hours of work. The normal hours of work of
any employee shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population
of at least one million (1,000,000) or in hospitals and clinics
with a bed capacity of at least one hundred (100) shall hold
regular office hours for eight (8) hours a day, for five (5) days
a week, exclusive of time for meals, except where the
exigencies of the service require that such personnel work for
six (6) days or forty-eight (48) hours, in which case, they shall
be entitled to an additional compensation of at least thirty
percent (30%) of their regular wage for work on the sixth day.
For purposes of this Article, “health personnel” shall include
resident physicians, nurses, nutritionists, dietitians,
pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives, attendants
and all other hospital or clinic personnel.
Art. 84. Hours worked. Hours worked shall include (a) all
time during which an employee is required to be on duty or to
be at a prescribed workplace; and (b) all time during which an
employee is suffered or permitted to work.
Rest periods of short duration during working hours shall be
counted as hours worked.
c. Meal periods (Art. 85)
Art. 85. Meal periods. Subject to such regulations as the
Secretary of Labor may prescribe, it shall be the duty of every
employer to give his employees not less than sixty (60)
minutes time-off for their regular meals.
d. Night-shift differential (Art. 86)
Art. 86. Night shift differential. Every employee shall be
paid a night shift differential of not less than ten percent (10%)
of his regular wage for each hour of work performed between
ten o’clock in the evening and six o’clock in the morning.
e. Overtime work (Art. 87-88)
f. Art. 87. Overtime work. Work may be performed
beyond eight (8) hours a day provided that the
employee is paid for the overtime work, an additional
compensation equivalent to his regular wage plus at
least twenty-five percent (25%) thereof. Work
performed beyond eight hours on a holiday or rest
day shall be paid an additional compensation
equivalent to the rate of the first eight hours on a
holiday or rest day plus at least thirty percent (30%)
thereof.
g. Art. 88. Undertime not offset by
overtime. 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 the additional compensation
required in this Chapter.
e. Compressed work week, flexible work arrangement
alternative work arrangements, telecommuting
program (DOLE Advisory No 02-04)
3. Rest periods (Art. 91)
Art. 91. Right to weekly rest day.
a. It shall be the duty of every employer, whether
operating for profit or not, to provide each of his
employees a rest period of not less than twenty-four
(24) consecutive hours after every six (6) consecutive
normal work days.
 
b. 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. However, the employer
shall respect the preference of employees as to their
weekly rest day when such preference is based on
religious grounds.
4. Holidays (Art. 94 (c), as superseded by E.O. 203, which
was subsequently amended by RA 9177, 9256, 9492, and
9849)
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
 
c. As used in this Article, “holiday” includes: New
Year’s Day, Maundy Thursday, Good Friday, the
ninth of April, the first of May, the twelfth of June,
the fourth of July, the thirtieth of November, the
twenty-fifth and thirtieth of December and the day
designated by law for holding a general election.
2. Service charges (Art. 96)
Art. 96. Service charges. All service charges collected by
hotels, restaurants and similar establishments shall be
distributed at the rate of eighty-five percent (85%) for all
covered employees and fifteen percent (15%) for management.
The share of the employees shall be equally distributed among
them. In case the service charge is abolished, the share of the
covered employees shall be considered integrated in their
wages.
3. 13th month pay (PD 851 (The 13th-Month Pay
Law) and the Revised Guidelines on the
Implementation of the 13th Month Pay Law)
[7] Philippine Duplicators vs NLRC 241 SCRA 380
(1995)- 
ISSUE: Whether commissions should be included as basis for
the 13th month pay 
RULING: Article 97 of the Labor Code defines the term
“wage” to mean the “remuneration or earnings, however
designated, capable of being expressed in terms of money,
whether fixed or ascertained on time, task, piece, or
commission basis, or other method of calculating the same,
which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or
to be done, or for services rendered or to be rendered, and
included the fair and reasonable value, as determined by the
Secretary of Labor, of board, lodging, or other facilities
customarily furnished by the employer to the employee. In the
instant case, there is no question that the sales commissions
earned by salesmen who make or close a sale of
duplicating machines distributed by petitioner
3.
corporation, constitute part of the compensation or
remuneration paid to salesmen for serving as salesmen,
and hence as part of the “wage” or “salary” of petitioner’s
salesmen. In San Miguel Corporation v. Inciong, the catch-all
phrase “allowances” and “monetary benefits” which are
deemed not considered or integrated as part of “basic salary”
was construed to refer to “any and all additions which
may be in the form of allowances or ‘fringe’ benefits.”
These fringe benefits include payments for sick leave,
vacation leave or maternity leave; premium pay for work
performed on rest day and special holidays; premium pay for
regular holidays and night differential pay; and cost of living
allowances. Sales commissions form part of the “wage” or
“salary” of salesmen and are not in the nature of an
“allowance” or “additional fringe” benefit. 
In Songco v. NLRC, the Court, in declaring that sales
commission must be included in the salary base of salesmen
for purposes of computing separation pay, stressed that salary
and wages generally refer to one and the same meaning, that
is, a reward or recompense for services performed.
Furthermore, the Court said that the commissions were in the
form of incentives or encouragement, so that the petitioners
would be inspired to put a little more industry on the jobs
particularly assigned to them, still these commissions are
direct remunerations for services rendered which contributed
to the increase of income of Zuellig. The nature of the work
of a salesman and the reason for such type of
remuneration for services rendered demonstrate clearly
that commissions are part of petitioners’ wage or salary.
B. Wages
1. Payment of wages
[8] Sugue v. Triumph International, G.R. No. 164804
(2009)
ISSUE: Whether Triumph rightfully charged the absence due
to Pre-Conf to their VL
RULING: With respect to the alleged discriminatory act,
Triumph is justified in charging Sugue and Valderrama’s half-
day absence to their vacation leave credits. It is fair and
reasonable for Triumph to do so considering that Sugue
and Valderrama did not perform work for one-half day on
June 19, 2000.
The age-old rule governing the relation between labor and
capital or management and employee is that a “fair day’s
wage for a fair day’s labor.” If there is no work performed
by the employee there can be no wage or pay, unless of
course, the laborer was able, willing and ready to work but
was illegally locked out, dismissed or suspended. It is
hardly fair or just for an employee or laborer to fight or
litigate against his employer on the employer’s time.”
In a case where a laborer absents himself from work because
of a strike or to attend a conference or hearing in a case or
incident between him and his employer, he might seek
reimbursement of his wages from his union which had
declared the strike or filed the case in the industrial court. Or,
in the present case, he might have his absence from his work
charged against his vacation leave.
Prohibitions regarding wages (LC, Art. 112-119)
Art. 112. Non-interference in disposal of wages. No
employer shall limit or otherwise interfere with the freedom of
any employee to dispose of his wages. He shall not in any
manner force, compel, or oblige his employees to purchase
merchandise, commodities or other property from any other
person, or otherwise make use of any store or services of such
employer or any other person.
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 and
Employment.
Art. 114. Deposits for loss or damage. No employer shall
require his worker to make deposits from which deductions
shall be made for the reimbursement of loss of or damage to
tools, materials, or equipment supplied by the employer,
except when the employer is engaged in such trades,
occupations or business where the practice of making
deductions or requiring deposits is a recognized one, or is
necessary or desirable as determined by the Secretary of Labor
and Employment in appropriate rules and regulations.
Art. 115. Limitations. No deduction from the deposits of an
employee for the actual amount of the loss or damage shall be
made unless the employee has been heard thereon, and his
responsibility has been clearly shown.
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 worker’s consent.
Art. 117. Deduction to ensure employment. It shall be
unlawful to make any deduction from the wages of any
employee for the benefit of the employer or his representative
or intermediary as consideration of a promise of employment
or retention in employment.
Art. 118. Retaliatory measures. It shall be unlawful for an
employer to refuse to pay or reduce the wages and benefits,
discharge or in any manner discriminate against any employee
who has filed any complaint or instituted any proceeding
under this Title or has testified or is about to testify in such
proceedings.
Art. 119. False reporting. It shall be unlawful for any person
to make any statement, report, or record filed or kept pursuant
to the provisions of this Code knowing such statement, report
or record to be false in any material respect.
3. Facilities vs. supplements
[9] Our Haus Realty Development Corp. v. Parian, GR
No. 204651
ISSUE:
Whether or not there is substantial distinction between
deducting and charging a facility’s value from the employee’s
wage
HELD:
The Court ruled that there is no substantial distinction between
deducting and charging a facility’s value from the employee’s
wage; the legal requirements for creditability apply to both.
Herein petitioner’s argument is a vain attempt to circumvent
the minimum wage law by trying to create a distinction where
none exists because in reality, deduction and charging both
operate to lessen the actual take-home pay of an employee.
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 for
the purpose of maintaining the efficiency and health of its
workers while they were working at their respective
projects.
Ultimately, the real difference lies not on the kind of the
benefit but on the purpose why it was given by the employer.
If it is primarily for the employee's gain, then the benefit is
a facility; if its provision is mainly for the employer's
advantage, then it is a supplement. Again, this is to ensure
that employees are protected in circumstances where the
employer designates a benefit as deductible from the wages
even though it clearly works to the employer's greater
convenience or advantage.
Under the purpose test, substantial consideration must be
given to the nature of the employer's business in relation to the
character or type of work performed by the employees
involved.
Based on these considerations, we conclude that even under
the purpose test, the subsidized meals and free lodging
provided by Our Haus are actually supplements. Although
they also work to benefit the respondents, an analysis of the
nature of these benefits in relation to Our Haus’ business
shows that they were given primarily for Our Haus’ greater
convenience and advantage. If weighed on a scale, the balance
tilts more towards Our Haus’ side. Accordingly, their values
cannot be considered in computing the total amount of the
respondents’ wages.
4. Minimum wage (LC, Art. 99)
Art. 99. Regional minimum wages. The minimum wage
rates for agricultural and non-agricultural employees and
workers in each and every region of the country shall be those
prescribed by the Regional Tripartite Wages and Productivity
Boards. (As amended by Section 3, Republic Act No. 6727,
June 9, 1989).
5. Wage distortion
 [10] Prubankers Assn. v. Prudential Bank and
Co., G.R. No. 131247
Issue: WON there is wage distortion.
Held: NO
The statutory definition of wage distortion is found in Article
124 of the Labor Code, as amended by Republic Act No.
6727, which reads:
Art. 124. Standards/Criteria for Minimum Wage Fixing — . . .
As used herein, a wage distortion shall mean a situation where
an increase in prescribed wage results in the elimination of
severe contraction of intentional quantitative differences in
wage or salary rates between and among employee groups in
an establishment as to effectively obliterate the distinctions
embodied in such wage structure based on skills, length of
service, or other logical bases of differentiation.
 
 MEMO: Wage “distortion” occurs when the usual
differentials in wage rates between groups of employees in
an establishment are drastically reduced or eliminated due
to mandated wage increases.
Wage distortion involves four elements:
1.     An existing hierarchy of positions with
corresponding salary rates
2.     A significant change in the salary rate of a
lower pay class without a concomitant increase
in the salary rate of a higher one
3.     The elimination of the distinction between the
two levels
4.     The existence of the distortion in the same
region of the country
In the present case, it is clear that no wage distortion resulted
when respondent implemented the subject Wage Orders in the
covered branches. In the said branches, there was an increase
in the salary rates of all pay classes. Furthermore, the
hierarchy of positions based on skills, length of service and
other logical bases of differentiation was preserved. In other
words, the quantitative difference in compensation between
different pay classes remained the same in all branches in the
affected region. Put differently, the distinction between Pay
Class 1 and Pay Class 2, for example, was not eliminated as a
result of the implementation of the two Wage Orders in the
said region. Hence, it cannot be said that there was a wage
distortion.
 
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. Hence, petitioner maintains
that, as a result of the two Wage Orders, the employees in the
affected regions have higher compensation than their
counterparts of the same level in other regions. Several tables
are presented by petitioner to illustrate that the employees in
the regions covered by the Wage Orders are receiving more
than their counterparts in the same pay scale in other regions.
 
The Court is not persuaded. A wage parity between employees
in different rungs, is not at issue here, but a wage disparity
between employees in the same rung but located in different
regions of the country.
 
Contrary to petitioner’s postulation, a disparity in wages
between employees holding similar positions but in different
regions does not constitute wage distortion as contemplated by
law. As previously enunciated, it is the hierarchy of positions
and the disparity of their corresponding wages and other
emoluments that are sought to be preserved by the concept of
wage distortion. Put differently, a wage distortion arises when
a wage order engenders wage parity between employees in
different rungs of the organizational ladder of the same
establishment. It bears emphasis that wage distortion involves
a parity in the salary rates of different pay classes which, as a
result, eliminates the distinction between the different ranks in
the same region.
4. Non-diminution of benefits (LC, Art. 100)
Art. 100. Prohibition against elimination or diminution of
benefits. Nothing in this Book shall be construed to eliminate
or in any way diminish supplements, or other employee
benefits being enjoyed at the time of promulgation of this
Code.
[11] Vergara Jr. v. Coca-Cola Bottlers Phils, G.R. No.
176985 (2013)
ISSUE:
Whether SMI should be included in the computation of
Ricardo's retirement benefits on the ground of consistent
company practice.
RULING:
NO. 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.
Jurisprudence has not laid down any hard-and-fast rule as to
the length of time that company practice should have been
exercised in order to constitute voluntary employer practice.
The common denominator in previously decided cases
appears to be the regularity and deliberateness of the grant
of benefits over a significant period of time. It requires an
indubitable showing that the employer agreed to continue
giving the benefit knowing fully well that the employees are
not covered by any provision of the law or agreement
requiring payment thereof. In sum, the benefit must be
characterized by regularity, voluntary and deliberate
intent of the employer to grant the benefit over a
considerable period of time.
We find no substantial evidence to prove that the grant of SMI
to all retired DSSs regardless of whether or not they qualify to
the same had ripened into company practice. Despite more
than sufficient opportunity given him while his case was
pending before the NLRC, the CA, and even to this Court,
petitioner utterly failed to adduce proof to establish his
allegation that SMI has been consistently, deliberately and
voluntarily granted to all retired DSSs without any
qualification or conditions whatsoever. The only two pieces of
evidence that he stubbornly presented throughout the entirety
of this case are the sworn statements of Renato C. Hidalgo
(Hidalgo) and Ramon V. Velazquez (Velasquez), former
DSSs of respondent who retired in 2000 and 1998,
respectively. They claimed that the SMI was included in their
retirement package even if they did not meet the sales and
collection qualifiers. However, juxtaposing these with the
evidence presented by respondent would reveal the frailty of
their statements.
The respondent's isolated act of including the SMI in the
retirement package of Velazquez could hardly be classified as
a company practice that may be considered an enforceable
obligation. To repeat, the principle against diminution of
benefits is applicable only if the grant or benefit is founded
on an express policy or has ripened into a practice over a
long period of time which is consistent and deliberate; it
presupposes that a company practice, policy and tradition
favorable to the employees has been clearly established;
and that the payments made by the company pursuant to
it have ripened into benefits enjoyed by them. Certainly, a
practice or custom is, as a general rule, not a source of a
legally demandable or enforceable right. Company practice,
just like any other fact, habits, customs, usage or patterns of
conduct, must be proven by the offering party who must
allege and establish specific, repetitive conduct that might
constitute evidence of habit or company practice.
C. Leaves
1. Service incentive leave (LC, Art. 95(a))
Art. 95. Right to service incentive leave.
a. 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.
 
b. This provision shall not apply to those who are
already enjoying the benefit herein provided, those
enjoying vacation leave with pay of at least five days
and those employed in establishments regularly
employing less than ten employees or in
establishments exempted from granting this benefit
by the Secretary of Labor and Employment after
considering the viability or financial condition of
such establishment.
 
c. The grant of benefit in excess of that provided herein
shall not be made a subject of arbitration or any court
or administrative action.
[1] Auto Bus Transport v. NLRC, G.R. No. 156367 (2005)
HELD: Yes, Bautista is entitled to Service Incentive Leave.
The Supreme Court emphasized that it does not mean that just
because an employee is paid on commission basis he is
already barred from receiving service incentive leave pay. The
question actually boils down to whether or not Bautista is a
field employee. 
According to Article 82 of the Labor Code, 'field personnel
shall refer to non-agricultural employees who regularly
perform their duties away from the principal place of business
or branch office of the employer and whose actual hours of
work in the field cannot be determined with reasonable
certainty. 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. 
Certainly, Bautista is not a field employee. He has a specific
route to traverse as a bus driver and that is a specific place that
he needs to be at work. There are inspectors hired by Auto
Bus to constantly check him. There are inspectors in bus stops
who inspects the passengers, the punched tickets, and the
driver. Therefore he is definitely supervised though he is away
from the Auto Bus main office. 
2. Expanded Maternity leave (Sec. 14-A of RA 1161 (Social
Security Law) as amended by RA 7322 and RA 8282)
The Expanded Maternity Leave under R.A. No. 11210 is an
act increasing the maternity leave period to one hundred
and five (105) days for female workers with pay and an
option to extend for an additional thirty (30) days without
pay.
3. Paternity leave (RA 8187 (Paternity Leave Act of 1996))
4. Parental leave for solo parents (RA 8972 (Solo Parents’
Welfare Act of 2000)
Section 8. 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.
5. Leave benefits for women workers under R.A. No. 9710
(Sec. 2, D.O. No. 112), and Sec. 43, R.A. No. 9262
SECTION 43. Entitled to Leave. – Victims under this Act
shall be entitled to take a paid leave of absence up to ten (10)
days in addition to other paid leaves under the Labor Code and
Civil Service Rules and Regulations, extendible when the
necessity arises as specified in the protection order.
Any employer who shall prejudice the right of the person
under this section shall be penalized in accordance with the
provisions of the Labor Code and Civil Service Rules and
Regulations. Likewise, an employer who shall prejudice any
person for assisting a co-employee who is a victim under this
Act shall likewise be liable for discrimination.
D. Special groups of employees
1. Women
a. Discrimination (LC, Art. 133)
Art. 133. Maternity leave benefits.
a. Every employer shall grant to any pregnant woman
employee who has rendered an aggregate service of
at least six (6) months for the last twelve (12)
months, maternity leave of at least two (2) weeks
prior to the expected date of delivery and another
four (4) weeks after normal delivery or abortion with
full pay based on her regular or average weekly
wages. The employer may require from any woman
employee applying for maternity leave the production
of a medical certificate stating that delivery will
probably take place within two weeks.
b. The maternity leave shall be extended without pay on
account of illness medically certified to arise out of
the pregnancy, delivery, abortion or miscarriage,
which renders the woman unfit for work, unless she
has earned unused leave credits from which such
extended leave may be charged.
 
c. The maternity leave provided in this Article shall be
paid by the employer only for the first four (4)
deliveries by a woman employee after the effectivity
of this Code.
b. Stipulation against marriage (LC, Art. 134; Sec. 13(e),
Rule XII)
[2] Duncan Assoc of Detailman – PTGWO v. Glaxo
Wellcome, G.R. No. 162994 (2004)
ISSUE: Whether there was prohibition on marriage?
HELD: There is none.
Glaxo insists that as a company engaged in the promotion and
sale of pharmaceutical products, it has a genuine interest in
ensuring that its employees avoid any activity, relationship or
interest that may conflict with their responsibilities to the
company. Thus, it expects its employees to avoid having
personal or family interests in any competitor company which
may influence their actions and decisions and consequently
deprive Glaxo of legitimate profits. The policy is also aimed at
preventing a competitor company from gaining access to its
secrets, procedures and policies.
It likewise asserts that the policy does not prohibit marriage
per se but only proscribes existing or future relationships with
employees of competitor companies, and is therefore not
violative of the equal protection clause. It maintains that
considering the nature of its business, the prohibition is based
on valid grounds.
Glaxo also points out that Tecson can no longer question the
assailed company policy because when he signed his contract
of employment, he was aware that such policy was stipulated
therein. In said contract, he also agreed to resign from
respondent if the management finds that his relationship with
an employee of a competitor company would be detrimental to
the interests of Glaxo.
Glaxo has a right to guard its trade secrets, manufacturing
formulas, marketing strategies and other confidential programs
and information from competitors, especially so that it and
Astra are rival companies in the highly competitive
pharmaceutical industry.
The prohibition against personal or marital relationships with
employees of competitor companies upon Glaxos employees
is reasonable under the circumstances because relationships of
that nature might compromise the interests of the company. In
laying down the assailed company policy, Glaxo only aims to
protect its interests against the possibility that a competitor
company will gain access to its secrets and procedures.
In any event, from the wordings of the contractual provision
and the policy in its employee handbook, it is clear that Glaxo
does not impose an absolute prohibition against relationships
between its employees and those of competitor companies. Its
employees are free to cultivate relationships with and marry
persons of their own choosing. What the company merely
seeks to avoid is a conflict of interest between the employee
and the company that may arise out of such relationships.
The policy being questioned is not a policy against
marriage. An employee of the company remains free to
marry anyone of his or her choosing. The policy is not
aimed at restricting a personal prerogative that belongs
only to the individual. However, an employee’s personal
decision does not detract the employer from exercising
management prerogatives to ensure maximum profit and
business success
c. Prohibited acts (LC, Art. 135, 137)
Art. 135. Discrimination prohibited. It shall be unlawful for
any employer to discriminate against any woman employee
with respect to terms and conditions of employment solely on
account of her sex.
The following are acts of discrimination:
a. Payment of a lesser compensation, including wage,
salary or other form of remuneration and fringe
benefits, to a female employees as against a male
employee, for work of equal value; and
b. Favoring a male employee over a female employee
with respect to promotion, training opportunities,
study and scholarship grants solely on account of
their sexes.
Criminal liability for the willful commission of any unlawful
act as provided in this Article or any violation of the rules and
regulations issued pursuant to Section 2 hereof shall be
penalized as provided in Articles 288 and 289 of this Code:
Provided, That the institution of any criminal action under this
provision shall not bar the aggrieved employee from filing an
entirely separate and distinct action for money claims, which
may include claims for damages and other affirmative reliefs.
The actions hereby authorized shall proceed independently of
each other.  assigned to them.
Art. 137. Prohibited acts.
a. It shall be unlawful for any employer:
 
1. To deny any woman employee the benefits
provided for in this Chapter or to discharge
any woman employed by him for the
purpose of preventing her from enjoying any
of the benefits provided under this Code.
 
2. To discharge such woman on account of her
pregnancy, or while on leave or in
confinement due to her pregnancy;
 
3. To discharge or refuse the admission of such
woman upon returning to her work for fear
that she may again be pregnant.
2. Minors (R.A. No. 7610, as amended by R.A. No. 9231)
a. Child labor vs. working child
“Working children” are children allowed to work, but not in
child labor or in hazardous economic activity.
b. Allowed working hours and industries of a working
child
c. Prohibited acts
3. Kasambahay (R.A. No. 10361)
4. Homeworkers (D.O. No. 5, DOLE (February 4, 1992),
now Rule XIV, Book III of the IRR)
5. Night workers (Art. 154, as amended by RA 10151)
6. Persons with Disabilities (RA 7277 - Magna Carta for
Disabled Persons, as amended by RA 9442)
a. Discrimination
[3] Bernardo v. NLRC, G.R. No. 122917 (1999)
ISSUE: Whether or not the petitioners have become regular
employees.
HELD: YES.
Respondent bank entered into the aforesaid contract with a
total of 56 handicapped workers and renewed the contracts of
37 of them. In fact, two of them worked from 1988 to 1993.
Verily, the renewal of the contracts of the handicapped
workers and the hiring of others lead to the conclusion that
their tasks were beneficial and necessary to the bank. More
important, these facts show that they were qualified to perform
the responsibilities of their positions. In other words, their
disability did not render them unqualified or unfit for the tasks
Section 5 of the Magna Carta provides:
Sec. 5. Equal Opportunity for Employment.
— No disabled person shall be denied access
to opportunities for suitable employment. A
qualified disabled employee shall be subject
to the same terms and conditions of
employment and the same compensation,
privileges, benefits, fringe benefits,
incentives or allowances as a qualified able
bodied person.
The primary standard, therefore, of determining regular
employment is the reasonable connection between the
particular activity performed by the employee in relation to the
usual trade or business of the employer. The test is whether the
former is usually necessary or desirable in the usual business
or trade of the employer.
Without a doubt, the task of counting and sorting bills is
necessary and desirable to the business of respondent bank.
With the exception of sixteen of them, petitioners performed
these tasks for more than six months.
The contract signed by petitioners is akin to a probationary
employment, during which the bank determined the
employees' fitness for the job. When the bank renewed the
contract after the lapse of the six-month probationary period,
the employees thereby became regular employees. No
employer is allowed to determine indefinitely the fitness of its
employees.
Petitioners proved themselves to be qualified disabled persons
who, under the Magna Carta for Disabled Persons, are entitled
to terms and conditions of employment enjoyed by qualified
able-bodied individuals; hence, Article 80 does not apply
because petitioners are qualified for their positions. The
validation of the limit imposed on their contracts, imposed by
reason of their disability, was a glaring instance of the very
mischief sought to be addressed by the new law.
The well-settled rule is that the character of employment is
determined not by stipulations in the contract, but by the
nature of the work performed.
Where an employee has been engaged to perform activities
which are usually necessary or desirable in the usual business
of the employer, such employee is deemed a regular employee
and is entitled to security of tenure notwithstanding the
contrary provisions of his contract of employment.
The noble objectives of Magna Carta for Disabled Persons are
not based merely on charity or accommodation, but on justice
and the equal treatment of qualified persons, disabled or not.
In the present case, the handicap of petitioners (deaf-mutes) is
not a hindrance to their work. The eloquent proof of this
statement is the repeated renewal of their employment
contracts.
Therefore, the petition is meritorious. However, only the
employees, who worked for more than six months and whose
contracts were renewed are deemed regular. Hence, their
dismissal from employment was illegal.
b. Incentives for employers
E. Sexual Harassment in the work environment
1. Anti-Sexual Harassment Act (R.A. No. 7877)
[4] Phil. Aelous Automotive United Corp. v. NLRC, G.R.
No. 124617 (2000)
ISSUES:
1. W/N petitioner was illegally dismissed.
2. If such dismissal was illegal, W/N petitioner should be
entitled to damages.
HELD:
1. Yes. The grounds by which an employer may validly
terminate the services of an employee must be strictly
construed. As to the first charge, respondent claims that plant
manager William Chua had been making sexual advances on
her since her first year of employment and that when she
would not accede to his requests, he threatened that he would
cause her termination from service. As to the second charge,
the money entrusted to her was not lost, but given to the
personnel-in-charge for proper transmittal as evidence by a
receipt signed by the latter. As to the third charge, she explains
that she asked someone to punch in her card as she was doing
an errand for one of the company’s officers and with the
permission of William Chua. As to the fourth charge, she
asserts that she had no knowledge thereof. To constitute
serious misconduct to justify dismissal, the acts must be done
in relation to the performance of her duties as would show her
to be unfit to continue working for her employer. The acts of
did not pertain to her duties as a nurse nor did they constitute
serious misconduct. However due to the strained relations, in
lieu of reinstatement, she is to be awarded separation pay of
one month for every year of service until finality of this
judgment.
2. Yes. Private respondent admittedly allowed four years to
pass before coming out with her employer’s sexual
impositions; but the time to do such varies depending upon the
needs, circumstances and emotional threshold of
the employee. It is clear that respondent has suffered anxiety,
sleepless nights, besmirched reputation and social humiliation
by reason of the act complained of. Thus, she should be
entitled to moral and exemplary damages for the oppressive
manner with which petitioner’s effected her dismissal and to
serve as a warming to officers who take advantage of their
ascendancy over their employees.
ADDITIONAL BAR QS
2017
 What are the accepted tests to determine the existence
of an employer-employee relationship? (5%)
SUGGESTED ANSWER: The accepted tests to determine the
existence of an employer-employee relationship are the four-
fold test and the economic reality test. The four-fold test
requires the following requisites:
(a) the power to hire employees;
(b) the power of dismissal;
(c) payment of wages;
 (d) power to control employee’s conduct, which is the most
important requisite.
The economic reality test examines the economic realities
prevailing within the activity or between the parties, taking
into consideration the totality of circumstances surrounding
the true nature of the relationship between the parties.
 Applying the tests to determine the existence of an
employer-employee relationship, is a jeepney driver
operating under the boundary system an employee of
his jeepney operator or a mere lessee of the jeepney?
Explain your answer. (3%)
SUGGESTED ANSWER: The jeepney driver
operating under the boundary system is an employee
of the jeepney operator. Applying the four-fold test:
(a) the jeepney operator has the power to
choose the jeepney drivers who can drive
his vehicles
(b) the jeep operator has the power to dismiss the
jeepney driver by refusing to let the latter drive;
(c) the jeepney driver’s wage is the excess of the
boundary; and
(d) most importantly, the jeepney operator
exercises control over the jeepney driver, since
the owner must see to it that the driver follows
the route prescribed under the certificate of
public convenience. Applying the economic
reality test, the jeepney driver is dependent
solely on his income from driving the jeepney
operator’s vehicle. The jeepney driver operating
under the boundary system is an employee of the
jeepney operator
 Procopio was dismissed from employment for
stealing his co-employee Raul’s watch. Procopio
filed a complaint for illegal dismissal. The Labor
Arbiter ruled in Procopio’s favor on the ground that
Raul’s testimony was doubtful, and, therefore, the
doubt should be resolved in favor of Procopio. On
appeal, the NLRC reversed the ruling because Article
4 of the Labor Code – which states that all doubts in
the interpretation and implementation of the
provisions of the Labor Code, including the
implementing rules and regulations, shall be resolved
in favor of labor – applied only when the doubt
involved the “implementation and interpretation” of
the Labor Code; hence, the doubt, which involved the
application of the rules on evidence, not the Labor
Code, could not necessarily be resolved in favor of
Procopio. Was the reversal correct? Explain your
answer. (3%)
SUGGESTED ANSWER: No, the reversal was not
correct. Adjudication of labor disputes, which
includes appreciation of evidence, is subsumed in the
implementation of the Labor Code. Consequently,
any doubt with respect to evidence should also be
resolved in favor of labor. Hence, the NLRC’s
reversal due to its erroneous interpretation of Article
4 of the Labor Code was not correct.
 III. A. Andrew Manning Agency (AMA) recruited
Feliciano for employment by Invictus Shipping, its
foreign principal. Meantime, AMA and Invictus
Shipping terminated their agency agreement. Upon
his repatriation following his premature termination,
Feliciano claimed from AMA and Invictus Shipping
the payment of his salaries and benefits for the
unserved portion of the contract. AMA denied
liability on the 3 ground that it no longer had an
agency agreement with Invictus Shipping. Is AMA
correct? Explain your answer. (3%)
SUGGESTED ANSWER: AMA is not correct.
Under Section 10 of RA No. 8042, the solidary
liability of the principal and the recruitment agency
exists for the whole duration of the employment
contract and shall not be affected by any substitution,
amendment or modification made locally or in a
foreign country. Here, AMA recruited Feliciano for
employment by Invictus Shipping. Hence, AMA
remains solidary liable with Invictus for any breach
of the Feliciano’s employment contract, even if AMA
and Invictus had already terminated their agency
contract
 As a rule, direct hiring of migrant workers is not
allowed. What are the exceptions? Explain your
answer. (2.5%)
SUGGESTED ANSWER: The exceptions to the
prohibition on direct hiring of migrant workers are:
(a) Those hired by international organizations;
(b) Those hired by members of the diplomatic corps;
and
(c) Name hires or workers who are able to secure
overseas employment opportunity with an employer
without the assistance or participation of any agency.
 Phil, a resident alien, sought employment in the
Philippines. The employer, noticing that Phil was a
foreigner, demanded that he first secures an
employment permit from the DOLE. Is the employer
correct? Explain your answer. (2.5%)
SUGGESTED ANSWER: No, the employer is not
correct. Only non-resident aliens who are seeking
employment in the Philippines are required to secure
first an Alien Employment Permit. Here, Phil is a
resident alien, who is exempted from Alien
Employment Permit requirement. Hence, the
employer is not correct in demanding that Phil first
secure an employment permit from the DOLE.
 Percival was a mechanic of Pacific Airlines. He
enjoyed a meal break of one hour. However, during
meal breaks, he was required to be on stand-by for
emergency work. During emergencies, he was made
to forego his meals or to hurry up eating. He
demanded payment of overtime for work done during
his meal periods. Is Percival correct? Explain your
answer. (3%)
SUGGESTED ANSWER: Yes, Percival is correct. Meal
break is compensable when the employees are required to
stand by for emergency work and is considered overtime
work. Here, Percival is required to be on. stand-by for
emergency work during his meal break. Hence, he is
correct to demand overtime for work done during his meal
periods.
 Are there differences between a househelper and a
homeworker? Explain your answer. (4%)
SUGGESTED ANSWER: As to persons included,
household include those who minister exclusively to
the personal comfort and enjoyment of the
employer’s family; whereas homeworkers include
those who work in a system of production under an
employer or contractor whose job is carried out at his
or her home.
As to applicable law, house helpers are covered by
the Kasambahay Law; whereas homeworkers are
covered by Book III of the Labor Code.
As to place of work, house helpers work in their
employers’ homes; whereas homeworkers work in
their own homes.
As to existence of definite employers, house helpers
work for a definite employer; whereas homeworkers
have none.
As to security of tenure, house helpers have security
of tenure; whereas homeworkers have none.
 One of Pacific Airline’s policies was to hire only
single applicants as flight attendants and considered
as automatically resigned the flight attendants at the
moment they got married. Is the policy valid?
Explain your answer. (2.5%)
SUGGESTED ANSWER: No, the policy is not valid.
Under the Labor Code, stipulations against marriage
are not allowed. Here, Pacific Airline’s policy of
automatic resignation of the flight attendants at the
moment of marriage is a stipulation against marriage.
Hence, Pacific Airline’s policy is not valid.
 Tarcisio was employed as operations manager and
received a monthly salary of ₱25,000.00 through his
payroll account with DB Bank. He obtained a loan
from Roberto to purchase a car. Tarcisio failed to pay
Roberto when the loan fell due. Roberto sued to
collect, and moved to garnish Tarcisio’s payroll
account. The latter vigorously objected and argued
that salaries were exempt from garnishment. Is
Tarcisio correct? Explain your answer. (3%)
SUGGESTED ANSWER: No, Tarcisio is not correct.
Under Article 1708 of the Civil Code, only wages, which
are the compensation paid for manual skilled or unskilled
labor, are exempt from garnishment. Here, the subject of
garnishment is Tarcisio’s salary as a managerial
employee, which is not considered as wages. Hence,
Tarcisio’s salary may be garnished.
 Dr. Crisostomo entered into a retainer agreement with
AB Hotel and Resort whereby he would provide
medical services to the guests and employees of AB
Hoteland Resort, which, in turn, would provide the
clinic premises and medical supplies. He received a
monthly retainer fee of ₱60,000.00, plus a 70% share
in the service charges from AB Hotel and Resort’s
guests availing themselves of the clinic’s services.
The clinic employed nurses and allied staff, whose
salaries, SSS contributions and other benefits he
undertook to pay. AB Hotel and Resort issued
directives giving instructions to him on the
replenishment of emergency kits and forbidding the
clinic staff from receiving cash payments from the
guests. In time, the nurses and the clinic staff claimed
entitlement to rights as regular employees of AB
Hoteland Resort, but the latter refused on the ground
that Dr. Crisostomo, who was their employer, was an
independent contractor. Rule, with reasons. (4%) 8
SUGGESTED ANSWER 1: I will rule in favor of the
employees. In labor contracting, the party with the power
to control is considered the employer of the contracted
employees. Here, AB Hoteland Resort exercises the
power to control by requiring replenishment of emergency
kits and forbidding the clinic staff from receiving cash
payments from the guests. Hence, the employees are
correct in arguing that they are regular employees of AB
Hoteland Resort.
SUGGESTED ANSWER 2: I will rule in favor of AB
Hoteland Resort. An employer-employee relationship
exists when the four-fold test is satisfied, namely, the
power to hire, dismiss, pay wages, and control, which is
the most important requirement. Here, Dr. Crisostomo
pays the medical staff their wages. As the doctor, he also
has control over the employees in performing their
medical duties. Hence, AB Hoteland Resort is correct in
arguing that Dr. Crisostomo is the employer of the
medical staff.
 VIII. Marciano was hired as Chief Engineer on board
the vessel MN Australia. His contract of employment
was for nine months. After nine months, he was re-
hired. He was hired a third time after another nine
months. He now claims entitlement to the benefits of
a regular employee based on his having performed
tasks usually necessary and desirable to the
employer’s business for a continuous period of more
than one year. Is Marciano’s claim tenable? Explain
your answer. (3%)
 SUGGESTED ANSWER: No, Marciano’s claim is not
tenable. Seafarers are contractual employees for a fixed
term and cannot attain regular status. Here, Marciano is a
considered a seafarer since he is hired as Chief Engineer
on board a vessel. Hence, Marciano’s claim that he is a
regular employee is not tenable.
2018
 Nelda worked as a chambermaid in Hotel Neverland
with a basic wage of PhP560.00 for an eight-hour
workday. On Good Friday, she worked for one (1)
hour from 10:00 PM to 11:00 PM. Her employer paid
her only PhP480 for each 8-hour workday, and
PhP70.00 for work done on Good Friday. She sued
for underpayment of wages and non-payment of
holiday pay and night shit differential for working on
a Good Friday. Hotel Neverland denied the alleged
underpayment, arguing that based on long-standing
unwritten tradition, food and lodging costs were
partially shouldered by the employer and partially
paid for by the employee through salary deduction.
According to the employer, such valid deduction
caused the payment of Nelda’s wage to be below the
prescribed minim m. The hotel also claimed that she
was not entitled to holiday pay and night shift
differential pay hotel workers have to work on
holidays and may be be assigned to work at night. (a)
Does the hotel have valid legal grounds to deduct
food and lodging costs from Nelda's basis salary?
(2.5%)
SUGGESTED ANSWER: As held in Mabeza v. National
Labor Relations Commission, G.R. No. 118506, April 18,
1997: Granting that meals and lodging were provided and
indeed constituted facilities, such facilities could not be
deducted without the employer complying first with
certain legal requirements. Without satisfying these
requirements, the employer simply cannot deduct the
value from the employee’s wages. First, proof must be
shown that such facilities are customarily furnished by the
trade. Second, the provision of deductible facilities must
be voluntarily accepted in writing by the employee.
Finally, facilities must be charged at fair and reasonable
value. (Labor Code, Art. 97 [f]) Applying the above,
unless the hotel can comply with the legal requirements it
has no valid legal grounds to deduct food and lodging
costs from Nelda's basis salary. NOTE: The foregoing
answer can be found in page 502 of the book entitled
Principles and Cases Labor Standards and Social
Legislation, Second Edition 2018, by Atty. Voltaire T.
Duano. Questions involving the same subject matter were
given during the 2013 and 2010 Bar Examinations.
 Nico is a medical representative engaged in the
promotion of Pharmaceutical products and medical
devices for North Pharmaceuticals, Inc. He regularly
visits. physicians' clinics to inform them of the
chemical composition and benefits of his employer's
products. A the end of everyday, he receives a basis
wage of PhP700.00 plus a PhP150.00 "productivity
allowance." For purposes of computing Nico's 13th
month pay, should the daily "productivity allowance"
be included? (2.5%)
SUGGESTED ANSWER: For purposes of computing
Nico's 13th month pay his daily "productivity allowance"
cannot be included. In Philippine Spring Water
Resources, Inc. v. Court of Appeals, G.R. No. 205278,
June 11, 2014, clarified as to when a commission forms
part of basic salary to be considered in the computation of
13th month pay. The High Court said: It is well-
established in jurisprudence that the determination of
whether or not a commission forms part of the basic
salary depends upon the circumstances or conditions for
its payment. In Phil Duplicators, Inc. v. NLRC, G.R. No.
110068, November 11, 1993, 227 SCRA 747, the Court
held that commissions earned by salesmen form part of
their basic salary. The salesmen’s commissions,
comprising a pre-determined percentage of the selling
price of the goods sold by each salesman, were properly
included in the term basic salary for purposes of
computing the 13th month pay. The salesmen’s
commissions are not overtime payments, nor profitsharing
payments nor any other fringe benefit, but a portion of the
salary structure which represents an automatic increment
to the monetary value initially assigned to each unit of
work rendered by a salesman. On the other hand, in Boie-
Takeda Chemicals, Inc. v. De la Serna, G.R. Nos. 92174
and 102552, December 10, 1993, 228 SCRA 329, the so-
called commissions paid to or received by medical
representatives were excluded from the term basic salary
because these were paid to the medical representatives
and rank-and-file employees as productivity bonuses,
which were generally tied to the productivity, or capacity
for revenue production, of a corporation and such bonuses
closely resemble profit-sharing payments and had no clear
direct or necessary relation to the amount of work actually
done by each individual employee.
 Nonato had been continuously employed and
deployed as a seaman who performed services that
were necessary and desirable to the business of N-
Train hipping, through its local agent, Narita
Maritime Services (Agency), in accordance with the
2010 Philippine Overseas Employment
Administration Standard Employment Contract (2010
POEA-SEC). Nonato's last contract (for ye months)
expired on November 15, 2016. Nonato was then
repatriated due to "finished contract." He
immediately reported to the Agency and complained
that e had been experiencing dizziness, weakness,
and difficulty in breathing. The agency referred him
to Dr. Neri, who examined, treated, and prescribed
him with medications. After a few months of
treatment and consultations, Nonato was declared fit
to resume work as a seaman. Nonato went back to the
Agency to ask for re-deployment but the Agency
rejected his application. Nonato filed an illegal
dismissal case against the Agency and its principal,
with a claim for total disability benefits based on the
ailments that he developed on board N-Train hipping-
vessels. The claim was based on the certification of
 his own physician, Dr. Nunez, that he was unfit for
sea duties because of his hypertension and diabetes.
Was Nonato a regular employee of N-Train Shipping? (2.5%)
SUGGESTED ANSWER: Nonato is not a regular employee of
N-Train Shipping. The fact that seafarers are not regular
employees is already a settled rule. In Petroleum Shipping
Limited (formerly Esso International Shipping (Bahamas) Co.,
Ltd.) v. NLRC, G.R. No. 148130, June 16,2006, the Supreme
Court said that the issue on whether seafarers are regular
employees is already a settled matter. Thus, the High Court
said: It was in Ravago v. Esso Eastern Marine, Ltd., G.R. No.
158324, 14 March 2005, 453 SCRA 381 where the Honorable
Supreme Court traced its ruling in a number of cases that
seafarers are contractual, not regular, employees. Thus, in
Brent School, Inc. v. Zamora, G.R. No. 48494, 5 February
1990, 181 SCRA 702 the Supreme Court cited overseas
employment contract as an example of contracts where the
concept of regular employment does not apply, whatever the
nature of the engagement and despite the provisions of Article
280 of the Labor Code. In Coyoca v. NLRC, G.R. No. 113658
March 31, 1995, the Supreme Court held that the agency is
liable for payment of a seaman’s medical and disability
benefits in the event that the principal fails or refuses to pay
the benefits or wages due the seaman although the seaman
may not be a regular employee of the agency.
 Your favorite relative, Tita Nilda, approaches you
and seeks your advice n her treatment of her
kasambahay, Noray. Tita Nilda shows you a
document called a “Contract of Engagement” for
your review. Under the Contract of Engagement,
Noray shall be entitled to a rest day every week,
provided that she may be requested to work on a rest
day if Tita Nilda should need her services that day.
Tita Nilda also claims that this Contract of
Engagement should embody the terms and conditions
of Noray’s work as the engagement of a kasambahay
is a private matter and should not be regulated by the
State. a) Is Tita Nilda correct in saying that this is a
private matter and should not be regulated by the
State? (2.5%)
SUGGESTED ANSWER: Tita Nilda is not correct in saying
that engagement of a kasambahay is a private matter and
should not be regulated by the State. This is a valid subject
matter of the exercise of police power to give effect to the
declared policy of the law such as the need to protect the rights
of domestic workers against abuse, harassment, violence,
economic exploitation and performance of work that is
hazardous to their physical and mental health; and in
protecting domestic workers and recognizing their special
needs to ensure safe and healthful working conditions,
promotes gender-sensitive measures in the formulation and
implementation of policies and programs affecting the local
domestic work. (Section 2, Article I, Republic Act No. 10361)
NOTE: The foregoing answer can be found in page 759 of the
book entitled Principles and Cases Labor Standards and Social
Legislation, Second Edition 2018. This is the first time that
this type of question was asked in the Bar Examination.
b) is the stipulation that she may be requested to work on a
rest day legal? (2.5%)
SUGGESTED ANSWER: The stipulation that Noray may be
requested to work on a rest day is legal. The law provides that,
“ 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. (Section 21, Article
IV, Republic Act No. 10361) NOTE: The foregoing answer
can be found in page 778 of the book entitled Principles and
Cases Labor Standards and Social Legislation, Second Edition
2018. This is the first time that this type of question was asked
in the Bar Examination.
c) Are stay-in family drivers included under the
Kasambahay Law?(2.5%)
SUGGESTED ANSWER: Stay-in family drivers are not
included under the Kasambahay Law. This was very clear in
the Rules Implementing the Kasambahay Law providing as
follows: The following are not covered: (a) Service providers;
(b) Family drivers; (c) Children under foster family
arrangement; and (d) Any other person who performs work
occasionally or sporadically and not on an occupational basis.
(Section 2, Rule I, Implementing Rules and Regulations of
Republic Act 10361)
 Nena worked as an Executive Assistant for Nesting,
CEO of Now Corporation. One day, Nesting called
Nena into his office and showed her lewd pictures of
women in seductive poses which Nena found
offensive. Nena complained before the General
Manager who, in turn, investigated the matter and
recommended the dismissal of Nesting to the Board
of Directors. Before the Board of Directors, Nesting
argued, that-since the Anti-Sexual Harassment Law
requires the existence of “sexual favors,” he should
not be dismissed from the service since he did not ask
for any-sexual favor from Nena. Is Nesting correct?
(2.5%)
SUGGESTED ANSWER: Nesting is not correct. The law
penalizing sexual harassment in our jurisdiction is RA
7877. Section 3 thereof defines workrelated sexual
harassment in this wise: Sec. 3. Work, Education or
Training-related Sexual Harassment Defined.—Work,
education or training-related sexual harassment is
committed by an employer, 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: xxx (3) The above acts
would result in an intimidating, hostile, or offensive
environment for the employee. Contrary to Nesting’s
claim, it is enough that his acts result in creating an
 intimidating, hostile or offensive environment for the
employee.
2019
A, B, and C were hired as resident-doctors by MM Medical
Center, Inc. In the course of their engagement, A, B, and C
maintained specific work schedules as determined by the
Medical Director. The hospital also monitored their work
through supervisors who gave them specific instructions on
how they should perform their respective tasks, including
diagnosis, treatment, and management of their patients. One
day, A, B, and C approached the Medical Director and
inquired about the non-payment of their employment benefits.
In response, the Medical Director told them that they are not
entitled to any because they are mere "independent
contractors" as expressly stipulated in the contracts which they
admittedly signed. As such, no employeremployee relationship
exists between them and the hospital. (a) What is the control
test in determining the existence of an employer-employee
relationship? (2%)
This test is premised on the exercise or the
reservation of the right to control the manner and method
to do a job. The important factor to consider is how the
work itself is done, not just the end result thereof. [Reyes v.
Glaucoma, June 17, 2015, G.R. No. 189255]
(b)Is the Medical Director's reliance on the contracts signed by
A, B, and C to refute the existence of an employer-employee
relationship correct? If not, are A, B, and C employees of MM
Medical Center, Inc.? Explain. (3%)
No, the Medical Director’s reliance on the contracts signed by
A,B & C to refute the existence of an employer-employee
relationship is not correct. A, B & C are employees of MM
Medical Center, Inc. Under the “control test” the employment
relationship existed between the physicians and the hospital
because the hospital controlled the means and the details of the
process by which the resident doctors accomplished their task.
In this case, the hospital maintained the specific work
schedules of A, B, & C. Moreover, the hospital monitored
their specific instructions on how they should perform their
respective tasks, including diagnosis, treatment and
management of their patients. The element of control having
been established, A, B, & C are employees of MM Medical
Center, Inc. [Calamba Medical Center, Inc. v. NLRC, et al.,
G.R. No. 176484, 25 November 2008]
 Mrs. B, the personal cook in the household of X, filed
a monetary claim against her employer, X, for
denying her service incentive leave pay. X argued
that Mrs. B did not avail of any service incentive
leave at the end of her one (1) year of service and
hence, not entitled to the said monetary claim.
(a) Is the contention of X tenable? Explain. (2.5%)
SUGGESTED ANSWER: No, the contention of X is not
tenable. Mrs. B being a kasambahay is entitled to service
incentive leave under R.A. 10361 as clarified by Labor
Advisory No. 010-18. As such, she has the prerogative to
use it, monetize it after 12 months of service, or commute
it until separation from service. If she elects the second,
she has three (3) years to demand for payment to avail of
the benefit. Hence, not being a prescribed claim, it’s
withholding is unlawful. [Lourdes Rodriguez v. Park N
Ride, G.R. No. 222980, March 20, 2017
 (b)Assuming that Mrs. B is instead a clerk in X's
company with at least 30 regular employees, will her
monetary claim prosper? Explain. (2.5%)
SUGGESTED ANSWER: Yes, the money claim will
prosper. A clerk is not one of those exempt
employees in Article 82 of the Labor Code which
refers to government employees, managerial
employees, field personnel members of the family
who are dependent on him for support, domestic
helpers, persons in the personal service of another
and persons who are paid by results.
 Ms. F, a sales assistant, is one of the eight (8)
workers regularly employed by ABC Convenience
Store. She was required to report on December 25
and 30. Should ABC Convenience Store pay her
holiday pay? Explain. (2.5%)
SUGGESTED ANSWER: No. As provided by
Article 94 of the Labor Code of the Philippines (PD
No. 442), every employee is entitled to the payment
of his regular daily basic wage (100%) during holiday
except employees working in retail and service
establishments regularly employing less than ten (10)
workers. In the case at bar, Ms. F is working as a
sales assistant in ABC Convenience Store which is
engaged in retail business with only eight (8)
workers. As such, ABC Convenience Store falls
under the exception and hence, is not obliged to pay
Mrs. F her holiday pay.
 D, one of the sales representatives of OP, Inc., was
receiving a basic pay of P50,000.00 a month, plus a 1
% overriding commission on his actual sales
transactions. In addition, beginning three (3) months
ago, or in August 2019, D was able to receive a
monthly gas and transportation allowance of
P5,000.00 despite the lack of any company policy
therefor. In November 2019, D approached his
manager and asked for his gas and transportation
allowance for the month. The manager declined his
request, saying that the company had decided to
discontinue the aforementioned allowance
considering the increased costs of its overhead
expenses. In response, D argued that OP, Inc.' s
removal of the gas and transportation allowance
amounted to a violation of the rule on nondiminution
of benefits.
Is the argument of D tenable? Explain. (2.5%)
SUGGESTED ANSWER: No, the argument of D is not
tenable. The principle of non- diminution of benefits,
which has been incorporated in Article 100 of the Labor
Code, forbids an employer from unilaterally reducing,
diminishing, discontinuing or eliminating compensation
or privilege which are given as a company practice. In
Netlink v. Delmo (G.R. No. 160827, June 18, 2014), the
Supreme Court said that the length of time has not been
laid out on what constitutes a company practice.
However, there are Supreme Court decisions that say a
period of two years, more or less, is deemed a company
practice (Sevilla Trading Company v. Semana, G.R. No.
152456, April 28, 2004). In the question, the monthly gas
and transportation allowance was given to D for three
months only. Such a short period appears not to fall under
the category of company practice using the above
decisions as a basis.
 W Gas Corp. is engaged in the manufacture and
distribution to the general public of various
petroleum products. On January 1,20 I 0, W Gas
Corp. entered into a Service Agreement with Q
Manpower Co., whereby the latter undertook to
provide utility workers for the maintenance of the
former's manufacturing plant. Although the workers
were hired by Q Manpower Co., they used the
equipment owned by W Gas Corp. in performing
their tasks, and were likewise subject to constant
checking based on W Gas Corp.' s procedures. On
February 1, 2010, Mr. R, one of the utility workers,
was dismissed from employment in line with the
termination of the Service Agreement between W
Gas Corp. and Q Manpower Co. Thus, Mr. R filed a
complaint for illegal dismissal against W Gas Corp.,
claiming that Q Manpower Co. is only a labor-only
contractor. In the course of the proceedings, W Gas
Corp. presented no evidence to prove Q Manpower
CO.'s capitalization.
(a)Is Q Manpower Co. a labor-only contractor? Explain.
(2.5%) SUGGESTED ANSWER: Yes, Q Manpower Co.
is a labor-only contractor. Article 106 of the Labor Code
provides that there is “labor-only” contracting where the
person supplying workers to an employer does not have
substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others
and the workers recruited and placed by such contractor
are performing activities which are directly related to the
business. In the question posed, the equipment belonged
to W Gas Corp. In the course of the proceedings, no
evidence was presented to prove Q Manpower Co’s
substantial capitalization.
(b)Will Mr. R's complaint for illegal dismissal against W
Gas Corp. prosper? Explain. (2.5%) SUGGESTED
ANSWER: Yes, Mr. R's complaint for illegal dismissal
against W Gas Corp will prosper as it is solidarily liable
with Q Manpower Corp. under Article 106 of the Labor
Code. Having proved that Q Manpower is only a labor-
only contractor, it is considered merely as an agent of W
Gas Corp. Consequently, there exists an employer-
employee relationship between Mr. R and W Gas Corp. It
cannot terminate Mr. R on the pretext that the service
contract it had entered with Q Manpower Co. has already
lapsed, but must prove just or authorized cause after due
process.
 Ms. T was caught in the act of stealing the company
property of her employer. When Ms. T admitted to
the commission of the said act to her manager, the
latter advised her to just tender her resignation;
otherwise, she would face an investigation which
would likely lead to the termination of her
employment and the filing of criminal charges in
court. Acting on her manager's advice, Ms. T
submitted a letter of resignation. Later on, Ms. T filed
a case for constructive dismissal against her
employer. While Ms. T conceded that her manager
spoke to her in a calm and unforceful manner, she
claimed that her resignation was not completely
voluntary because she was told that should she not
resign, she could be terminated from work for just
cause, and worse, criminal charges could be filed
against her. (a) What is the difference between
resignation and constructive dismissal? (2%)
SUGGESTED ANSWER: Resignation is at the instance
of the employee, whereas constructive dismissal is at the
instance of the employer. Resignation is voluntary,
whereas in constructive dismissal there is vitiated consent.
Resignation means no separation pay, whereas
constructive dismissal means payment of separation pay
and damages. Resignation must be at least with 30 days’
notice on the part of the employee, whereas in
constructive dismissal the employee can leave anytime.
(b)Will Ms. T's claim for constructive dismissal prosper?
Explain.(3%) SUGGESTED ANSWER: No. The
Supreme Court ruled that “... the employer did not violate
any law when it gave the employee the option to resign
because there is nothing illegal with the practice of
allowing an employee to resign instead of being separated
for cause, so as not to smear her employment…” This
case applies to Ms. T as she was caught stealing and her
resignation gives her a chance not to smear her records.
[Sicangco v. NLRC, G.R. No. 110261, August 4, 1994]
 For purposes of prescription, within what periods
from the time the cause of action accrued should the
following cases be filed:
(a) Money claims arising from employer-employee
relations (1 %) SUGGESTED ANSWER: All
money claims arising from employer-employee
relations accruing during the effectivity of this Code
shall be filed within three (3) years from the time
the cause of action accrued; otherwise they shall be
forever barred. [Labor Code, Article 306 (291)]
(b) Illegal dismissal (1%) SUGGESTED ANSWER:
The prescriptive period for filing an illegal dismissal
complaint is four years from the time the cause of
action accrued. [Teekay Shipping Philippines, Inc.,
vs. Ramier Concha, G.R. No. 185463, February 22,
2012; Civil Code, Article 1146]
(c) Illegal recruitment (1%) SUGGESTED ANSWER:
Illegal recruitment cases under this Act shall
prescribe in five (5) years: Provided, however, that
illegal recruitment cases involving economic
sabotage as defined herein shall prescribe in twenty
(20) years. [Migrant Workers and Overseas
Filipinos Act of 1995, Republic
 Mr. A signed a one (1)-year contract with XYZ
Recruitment Co. for deployment as welding
supervisor for DEF, Inc. located in Dubai. The
employment contract, which the Philippine Overseas
Employment Administration (POEA) approved,
stipulated a salary ofUS$600.00 a month. Mr. A had
only been in his job in Dubai for six (6) months when
DEF, Inc. announced that it was suffering from
severe financial losses and thus intended to retrench
some of its workers, among them Mr. A. DEF, Inc.
hinted, however, that employees who would accept a
lower salary could be retained Together with some
other Filipino workers, Mr. A agreed to a reduced
salary of US$400.00 a month and thus, continued
with his employment. (a)Was the reduction of Mr.
A's salary valid? Explain. (2.5%)
SUGGESTED ANSWER: Wage distortion shall mean a
situation where an increase in prescribed wage rates
results in the elimination or severe contraction of
intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment
as to effectively obliterate the distinctions embodied in
such wage structure based on skills, length of service, or
other logical bases of differentiation. [Labor Code, Art.
124, par. 7]
Did a wage distortion arise under the circumstances which
legally obligated K Corporation to rectify the wages of its old
employees? Explain. (3%)
SUGGESTED ANSWER: No. In Prubankers
Association v. Prudential Bank and Trust
Company, the Court laid down the four elements
of wage distortion, to wit: An existing hierarchy
of positions with corresponding salary rates; (2)
A significant change in the salary rate of a lower
pay class without a concomitant increase in the
salary rate of a higher one; (3) The elimination of
the distinction between the two levels; and (4)
The existence of the distortion in the same region
of the country [G.R. No. 131247, January 25,
1999]. The first, third and fourth requisites do
not obtain in this case.

SUGGESTED ANSWER: No, the reduction of Mr. A’s

salary is invalid. All the Terms and Conditions in the
POEA contract remain in force until such changes are
approved by the POEA. 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 constitutes a prohibited practice. [Sec. 6, RA
8042]

 Upon a review of the wage rate and structure

pertaining to its regular rank and file employees, K
Corporation found it necessary to increase its hiring
rates for employees belonging to the different job
classification levels to make their salary rates more
competitive in the labor market. After the
implementation of the new hiring salary, Union X,
the exclusive bargaining agent of the rank and file
employees, demanded a similar salary adjustment for
the old employees. It argued that the increase in
hiring rates resulted in wage distortion since it erased
the wage gap between the new and old employees. In
other words, new employees would enjoy almost the
same salary rates as K Corporation's old employees.
(a) What is wage distortion? (2%)