LABOR STANDARDS DISCUSSIONS OF ATTY.

JAZZIE SARONA-LOZARE 1-LOZAR

Article II Section 9 of the 1987 Constitution:
Section 9. The State shall promote a just and dynamic

Labor Standards social order that will ensure the prosperity and
independence of the nation and free the people from
poverty through policies that provide adequate social
FROM THE LECTURES OF: services, promote full employment, a rising standard of
ATTY. JAZZIE SARONA-LOZARE living, and an improved quality of life for all.

Purpose of the Constitution and its Labor Laws

To tilt the balance in favor of individuals who have less in life, so
JUNE 14, 2019 – DELGADO
that they will have more in law.

LABOR LAW ALMIRA V. BF GOODRICH

1. LABOR STANDARDS Doctrine of Compassionate Justice

2. LABOR RELATIONS It would imply at the very least that where a penalty less punitive
3. SOCIAL LEGISLATION would suffice, whatever missteps may be committed by labor
ought not to be visited with a consequence so severe. It is not
LABOR LEGISLATION only because of the law's concern for the workingman.
Consists of statutes, regulations and jurisprudence governing
the relations between capital and labor, employer and employee Cautionary Note
relationship, providing for certain employment standards and a Even if we exercise compassionate justice in favor of labor, the
legal framework for negotiating, adjusting, and administering application thereof must be taken with precaution so that it will
those standards, and other incidents of employment. not be unfair in favor of the employer.

For the benefit of all, otherwise society will disintegrate. Even if

there is social justice purpose under the Constitution, if it cannot ECONOMIC EQUALITY
be implemented, no order shall occur. Should there be equality in the economy? Not necessarily.
Economics is not directly connected to social justice but more of
LABOR STANDARDS a moral obligation to those who have less in life.
Terms and conditions of employment, minimum requirements
that must be complied with. Standards which are established by If the aim of labor law is social justice, what is the basis or
LAW. Compliance of employers in connection to employees foundation of labor law? POLICE POWER.
where the latter is legally entitled to. It is the power to pass laws with due respect to the Constitution
for the welfare of the society – to establish order, among others,
Minimum requirements which are established by law, rules and for the benefit of all.
regulations relating to wages, working hours, leaves, cost of
living allowances and other benefits. LABOR RIGHTS UNDER THE CONSTITUTION
 Labor provisions are not self-executing, that is why we
LABOR RELATIONS have these labor laws. They are a constitutional right
How is it different? Refers to rights, duties, and mechanisms that but only in the secondary sense because there must be
will govern the individuals in an employer-employee legislation – labor standards and labor legislation.
relationship.  Unlike the Bill of Rights which can be readily
implemented. No need for legislation to establish what
Academically, these distinctions are relevant. However, in is considered due process in connection to a violation
practice, it is not really an issue. Also, these labor laws are directly of the Bill of Rights.
connected to social legislation.
Is labor a property right?
SOCIAL LEGISLATION Under the equal protection of the laws, it is a property right. It is
Laws that will provide protection and benefits to the society for also a PRIVILEGE and a PROTECTED RIGHT. It is a property right
the furtherance of social justice. but just below the right to life.

SOCIAL JUSTICE Why is it a privileged right?

Equalization of economic, political and social opportunities with If you talk about a property right, this can be easily waived (e.g.:
regards to the emphasis of duty the state to balance the forces abandon right regarding properties). When it comes to labor
which favors the disadvantaged in life. standards, while it is considered a property right, it is also a
privilege and protected right because for example, if an
employee voluntarily agrees to below minimum wage or

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disagrees to a deduction of SSS or PhilHealth contributions, such and peaceful concerted activities, including the right to
waiver is not recognized under the law. strike in accordance with law.

It is not a defense on the part of the employer that such waiver Protection to Labor Clause
was done voluntarily. He will still be liable for the minimum wage You have to consider the three branches here:
as well as the remittance of the SSS and PhilHealth premiums in 1. Legislative Department – enactment of laws in favor of
connection to such employment. labor
2. Executive Department – exercise of police power,
Since it is a property right, how should consider the role of ensuring the implementation of labor legislation
the State in protecting this right given to these employees? 3. Labor Tribunals (NLRC) – ensure the speedy and
Under the Constitution, you encounter the concept of PARENS inexpensive way of resolving cases
PATRIAE:  Application of labor law provisions is NOT
 State is referred to as the “parents of the nation.” under the jurisdiction of regular courts.
 It is the power of the state to intervene in this case, in
regard to “negligent parents, guardians or caretakers.” In case of illegal dismissal, the employer will be liable to the
employee.
Can this be regarded as the role of the state in regards to
employees? PLDT V. NLRC DAABAY V. COCA COLA
No. When we talk about parens patriae, it is by way of exception. The award based on equity
Because the state will only come into play if nobody will take was unwarranted. Financial
care of the “child.” In the application of parens patriae, Financial assistance was
assistance over and above
everybody stands on equal footing with everybody else, where nevertheless given even if
the separation benefits, is
the state, regardless of your status, the state will only come into there was a valid dismissal.
not anymore mandated to be
play if the circumstances are present with regards to the exercise given to employees, even for
of being the parent. authorized causes.

When it comes to labor, we do not apply this concept of parens

patriae. We go back to social justice. When we talk about social SOLIDBANK V. NLRC
justice, it is permanent and found in the Constitution. It is
granting more in law to those who have less in life. It may create How about government employees which are suspended or
an imbalance, but that is the purpose of social justice. penalized for dishonesty?
The policy of social justice is not intended to countenance
If there is something wrong in the implementation of social wrongdoing, simply because it was committed by the
justice, can you sue the State? underprivileged.
No. What is the remedy? It is there in the Constitution. If you do
not have laws which would properly apply this social justice
CIVIL SERVICE COMMISSION V. VELOSO
principle as provided in the Constitution, you go to Congress,
and ask the Congress to enact laws so that this social justice
concept in connection to labor will be applied. The policy of social justice is not intended to countenance
wrongdoing simply because it is committed by the
underprivileged. At best it may mitigate the penalty but it
certainly will not condone the offense. Compassion for the poor
Article III Section 1 of the 1987 Constitution
is an imperative of every humane society but only when the
Section 1. No person shall be deprived of life, liberty, or
recipient is not a rascal claiming an undeserved privilege. Social
property without due process of law, nor shall any
justice cannot be permitted to be [the] refuge of scoundrels any
person be denied the equal protection of the laws.
more than can equity be an impediment to the punishment of
the guilty. Those who invoke social justice may do so only if their
The equal protection clause is a specific constitutional guarantee
hands are clean and their motives blameless and not simply
of equality of a persons. The equality guarantees the equality of
because they happen to be poor. This great policy of our
all persons under the law. Under it, each individual is dealt as an
Constitution is not meant for the protection of those who have
equal person in law which does not treat a person differently
proved they are not worthy of it, like the workers who have
because of who he is or what he possesses.
tainted the cause of labor with the blemishes of their own
character.
Article XIII Section 3 of the 1987 Constitution
Section 3. The State shall afford full protection to labor,
Dumduma v. CSC
local and overseas, organized and unorganized, and
 Ruling that was overturned by the CSC v. Veloso.
promote full employment and equality of employment
opportunities for all.

It shall guarantee the rights of all workers to self-

organization, collective bargaining and negotiations,

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CEBU ROYAL PLANT V. DEPUTY MINISTER JUNE 21, 2019 – CAMPANER

There was an employee who was under probation. On the last Last meeting, we had discussions on labor legislation and social
day of his probationary period, an X-ray was taken and was justice. We emphasized that, here in the Philippines, we
found to have pulmonary tuberculosis. He was ordered recognize that capital and labor do not stand on equal ground
dismissed for being unfit for work. Four days after, he had been wherein essentially labor is at a disadvantage.
allowed to work beyond his probationary period.
We have this social justice recognizing that those who have less
Was the retention on the ground of social justice demanded in life should have more in law.
by the Labor Code superior to the public health and welfare
requirement of healthy food workers? Now, let’s proceed to Article 3 which is essentially in connection
It reaffirmed the concern for lowly workers who at the mercy of to what we discussed last meeting.
employers, must look up to the law for protection. Fittingly, that
law regards him with tenderness and even favor and always with Art. 3. Declaration of Basic Policy. – The State shall
faith and hope in his capacity to help in shaping the nation's afford protection to labor, promote full employment,
future. It is error to take him for granted. He deserves our ensure equal work opportunities regardless of sex, race
abiding respect. How society treats him will determine whether or creed, and regulate the relations between workers and
the knife in his hands shall be a caring tool for beauty and employers. The State shall assure the rights of workers to
progress or an angry weapon of defiance and revenge. The self-organization, collective bargaining, security of
choice is obvious, of course. If we cherish him as we should, we tenure and just and humane conditions of work.
must resolve to lighten "the weight of centuries" of exploitation
and disdain that bends his back but does not bow his head. This article is not only a statement of goals but a statement of
policy. This is in line with various Constitutional provisions. Last
The employee was allowed to be reinstated upon certification meeting, we have gone through the different constitutional
that he was fit to return to work. provisions that are connected to labor.

So just a quick recall of the constitutional provisions that are

connected to labor:

Art II Sec. 18. The State affirms labor as a primary social

economic force. It shall protect the rights of workers and
promote their welfare.

Art III Sec. 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.

Art IXB Sec. 2(5). The right to self-organization shall not

be denied to government employees.

Art XII Sec. 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.

Art XIII Sec. 3. The State shall afford full protection to

labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment
opportunities for all.

It shall guarantee the rights of all workers to self-

organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike
in accordance with law. They shall be entitled to security
of tenure, humane conditions of work, and a living wage.
They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be
provided by law.

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Labor Code. Hence, a voluntary, instead of compulsory, mode of
The State shall promote the principle of shared dispute settlement is the general rule.
responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, However, the Supreme Court recognized Art 263 of the Labor
including conciliation, and shall enforce their mutual Code with regard to the Secretary of Labor, if it involves national
compliance therewith to foster industrial peace. interest. Nevertheless, the SC ruled that the ruling of Secretary is
in departure from the rule and there was no showing of special
The State shall regulate the relations between workers and circumstances rendering actual reinstatement impracticable.
employers, recognizing the right of labor to its just share
in the fruits of production and the right of enterprises to The secretary must always keep in mind the purpose of the law
reasonable returns to investments, and to expansion and and taking into consideration the constitutional provisions in
growth. connection to law.

The State shall pursue a trade policy that serves the Art XIII Sec. 14. The State shall protect working women by
general welfare and utilizes all forms and arrangements of providing safe and healthful working conditions, taking
exchange on the basis of equality and reciprocity. into account their maternal functions, and such facilities
and opportunities that will enhance their welfare and
As we can see, the Constitution recognizes the interdependent enable them to realize their full potential in the service of
relation between the workers and employers recognizing the the nation.
right of labor – it’s just share in the fruits of production and the
right of enterprises to reasonable return on investments and to
expansion and growth. ARTICLE 3

We have emphasized that the provisions in the Constitution in

connection to labor need an implementing law. Congress is Article 3. Declaration of basic policy. The State shall afford
needed to enact laws that would have the same goals as protection to labor, promote full employment, ensure equal
provided in these provisions. work opportunities regardless of sex, race or creed and regulate
the relations between workers and employers. The State shall
7 Basic Rights of Workers assure the rights of workers to self-organization, collective
In connection to labor, Art XIII Sec. 3 is very important. In fact, it bargaining, security of tenure, and just and humane conditions
emphasizes the 7 basic rights of workers that are guaranteed by of work.
the Constitution:
1. Right to organize Article 3 of the Labor Code essentially requires the State, not just
2. Right to conduct collective bargaining or negotiation to promote full employment, but assure equal work
with management opportunities. In fact, we have special laws which recognize this
3. Right to engage in peaceful concerted activities, promotion of full employment and equal work opportunities.
including strike The most recent is the Anti-Age Discrimination Act (2016).
4. Right to enjoy security of tenure
5. Right to work under humane conditions Under Article 3, we could see the term “full employment.” It may
6. Right to receive a living wage appear then that our policies are geared towards full
7. Right to participate in policy and decision making employment. But can we say that the constitution can guarantee
processes affecting their ranks and benefits. full employment?

Ideally, of course we want full employment but is it attainable?

MANILA DIAMOND V. CA
Economists will tell you that society can never attain full because
the economy’s always changing. Progress from one product
Here the Supreme Court ruled that when the Labor Secretary improvement will always leave a segment of society or workers
exercised jurisdiction over the labor dispute, it was considered wherein they are no longer required. So, labor itself must
as a grave breadth of discretion, more than the jurisdiction that develop to keep up with developing technology.
he should have.
You may be skilled now, but that skill will not be necessary in the
In this case, he ordered compulsory arbitration wherein what is near future, so you have to develop. You may be employed now
preferred under the Constitution is a voluntary mode of dispute but new machineries and new graduates will be there to do what
(resolution), as a general rule. you cannot do. Because of this, there will always be a certain
portion of the society which is not employed. That’s the thing
As a general rule, the State encourages an environment wherein with full employment, its ideal but it’s impossible to attain.
employers and employees themselves must deal with their
problems in a manner that mutually suits them best. This is the
basic policy embodied in Article XIII, Section 3 of the
Constitution, which was further echoed in Article 211 of the

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ARTICLE 4
It was recognized that petitioner had adopted a policy of freely,
voluntarily and consistently granting full benefits to its
Art. 4. Construction in Favor of Labor. – All doubts in employees regardless of the length of service rendered.
the implementation and interpretation of the provisions However, there were only a total of seven (7) employees who
of this Code, including its implementing rules and benefited from such practice, but the Court recognized that it
regulations, shall be resolved in favor of labor. was an established practice nonetheless.

In carrying out and interpreting the labor code provisions and Jurisprudence has not laid down any rule specifying a minimum
its IRR, working men’s welfare should be of primordial and number of years within which a company practice must be
paramount consideration. The policy here is to extend the law’s exercised in order to constitute voluntary company practice.
applicability to a greater number of employees to enable them Thus, it can be six (6) years, three (3) years, or even as short as
to benefit under the law in consonance with the State’s policy to two (2) years. With that, Arco here cannot shirk away from its
give maximum aid and protection to labor. responsibility by merely claiming that it was a mistake that full
benefits were given to the seven employees.
This Article just means that the Supreme Court adopts a liberal
approach which favors the exercise of labor rights. It affirms the As mentioned, if indeed it was a mistake, Arco had not shown
concern for the lowly worker who, more often than not, is at the proof how and why the mistake happened.
mercy of the employer and the employee looks to the law for his
protection. Going back to the principle that those who have less
LEPANTO V. DUMAPIS
in life must have more in law.

With the seven guaranteed rights that is recognized in the What was the evidence against the employees?
Constitution, we must take note that even if there is this in favor It was a joint affidavit of the security personnel. There was this
of labor, the Constitution also has provisions which recognizes issue here of admissibility, when you get to evidence this will be
capital or the employer. relevant.

Art II Sec. 20. The State recognizes the indispensable role The SC said that it is admissible but whether or not it has
of the private sector, encourages private enterprise, and probative value is a different issue. Meaning, it is admitted as
provides incentives to needed investments. evidence, but can it be substantial enough to be proof that there
is a valid or substantive ground for the dismissal of these
We also have Article XIII Section 3 recognizing the shared employees?
responsibility between workers and employers.
The SC said that this affidavit was executed by persons who do
This just means that protection of labor and resolution of not have personal knowledge, meaning they did not actually see
doubts in favor of labor cannot be pursued to the point of these employees doing the act that they committed. Essentially,
committing a miscarriage of justice. there was a doubt here regarding the appreciation of evidence.

In the present case, the Supreme Court reiterates that the

Application of Article 4 evidence is not substantial to hold respondents guilty of
Article 4 is only applicable in case of doubt in the application highgrading so as to warrant the dismissal of respondents.
and interpretation of the Labor Code and its IRR. This only means
that this article does not supersede Article 10 of the New Civil Moreover, it is a well-settled doctrine that if doubts exist
Code. between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the
latter. It is a time-honored rule that in controversies between a
ARCO METAL V. SAMAHAN
laborer and his master, doubts reasonably arising from the
evidence, or in the interpretation of agreements and writing,
There were employees here who claimed that what they received should be resolved in the former’s favor. The policy is to extend
was not the same as that of the other employees received. In the doctrine to a greater number of employees who can avail
other words, they were claiming that there was a violation of the themselves of the benefits under the law, which is in consonance
non-diminution of benefits as provided under the Labor Code. with the avowed policy of the State to give maximum aid and
protection to labor.
The principle of non-diminution of benefits is founded on the
Constitutional mandate to "protect the rights of workers and
promote their welfare," and "to afford labor full protection." Said
mandate is the basis of Article 4 of the Labor Code which states
that "all doubts in the implementation and interpretation of this
Code, including its implementing rules and regulations shall be
rendered in favor of labor."

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SORIANO V. OFFSHORE SHIPPING JUNE 21, 2019 – LOBATON & AMISTAD

Article 4 does not imply that the law will always rule in favor of EMPLOYER-EMPLOYEE RELATIONSHIP
labor. It can only be in favor of labor in case of doubt and it
cannot be applied if there is miscarriage of justice or if the
Before we proceed to Articles 5 and 6, first it will be, very
evidence shows otherwise.
important, to determine whether or not there is an employer-
employee relationship. We have to determine whether or not
Here, in controversies between a laborer and his master, doubts
there is an employer-employee relationship otherwise the Labor
reasonably arising from the evidence or in the interpretation of
Code is not applicable (ie. tenancy is under CARP, principal
agreements and writings should be resolved in the former's
agency is governed by Civil Code provisions).
favor, is not an unreasonable or unfair rule. But to disregard the
employer's own rights and interests solely on the basis of that
What are the requisites for an employer employee
concern and solicitude for labor is unjust and unacceptable.
relationship?
Especially in this case where it is clear that $800 a month salary
Four-Fold test:
already includes the overtime pay, contrary to what was alleged
1. power to select the employees
by the employee.
2. payment of wages
3. power to dismiss
Again, when we talk about Article 4, it is not fixed that the law
4. power to control
will always rule in favor of labor. Read the case of Solidbank, it
was here the SC said that in protecting the rights of laborers, the
law authorizes neither oppression nor destruction of the LVN V. PHILIPPINE MUSICIANS GUILD
employer. While the Constitution is committed to the policy of
social justice and the protection of the working class it should What is the power of control? (How do you know that the
not supposed that every labor dispute will be automatically employer has the power of control over the employee?)
decided in favor of labor. When the person for whom the services are performed
reserves the right to control not only with regard to
The law recognizes that management has its own rights, entitled the ends to be achieved but also to the means to be
to respect and enforcement in the interest of simple fair play. used in reaching the end.
Out of its concern for those with less privileges in life, the SC has
inclined, more often than not, towards the worker and upheld In fact, it would say that even if there is no proof with regard to
his cause in conflicts with the employer. But such favoritism, the other three as long as it can be shown that there is that
however, has not blinded the Court to rule that justice, in every power of control there is an employer-employee relationship.
case for the deserving be dispensed in the light of the
established facts and applicable law and doctrine. In LVN, LVN had that movie director and that director had
control over the musicians.
As the employee has rights, so does the employer or
management. Some of the rights include the right to return of The musicians were given call slips when to report for work, the
investment, to prescribe rules and regulation for its employees, director tells them what to play when to play, among others who
the right to select, transfer and dismiss his employees. furnishes the transportation and meals of these musicians. It is
LVN through their movie director. So the movie director here
Just the same, these rights given to the management are not directly controlled the activities of the musicians. He "says he
absolute. As we know they can be limited by law, contract or wants more drums and the drummer plays more" or "if he wants
general principles of fair play and justice. more violin or he does not like that."

VDA. DE CRUZ V. MANILA HOTEL

The hotel has no control over the musicians. What pieces the
orchestra shall play, and how the music shall be arranged or
directed, the intervals and other details — such are left to the
leader's discretion.

The music instruments, the music papers and other

paraphernalia are not furnished by the Hotel, they belong to the
orchestra, which in turn belongs to Tirso Cruz — not to the Hotel.
The individual musicians, and the instruments have not been
selected by the Hotel. It reserved no power to discharge any
musician. How much salary is given to the individual members is
left entirely to "the orchestra" or the leader. Payment of such

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salary is not made by the Hotel to the individual musicians, but receive instructions as to what to do, how to do, without specific
only a lump-sum compensation is given weekly to Tirso Cruz. instructions.

An independent contractor is one who in rendering services, DY KEH BENG VS. INTERNATIONAL LABOR
exercises an independent employment or occupation and
represents the will of his employer only as to the results of his
work and not as to the means whereby it is accomplished; one We have here the application of the control test, that calls merely
who exercising an independent employment, contracts to do a for the existence of the right to control the manner of doing the
piece of work according to his own methods, without being work and not the actual exercise of the right.
subject to the control of his employer except as to the result of
his work; and who engages to perform a certain service for What about the fact that the employees here were paid on a
another, according to his own manner and methods, without "pakyaw" (piece rate) basis?
being subject to the control of his employer except as to the Piece rate is only a form of payment but not determinative of
result of his work; and who engages to perform a certain service an employer-employee relationship.
for another, according to his own manner and method, free from
the control and direction of his employer in all matters In this case, the SC concluded that there was an employer-
connected with the performance of the service, except as to the employee relationship because there is a control exercised by Dy
result of the work. with regard to the making of the kaing subject to his
specifications. Since the work on the baskets is done at Dy's
Is the rendition of service essential in an employer- establishments and based on his specifications given by him, it
employee relationship? can be inferred that the Dy could easily exercise control on the
It’s common that there is rendition of service. However, legally men he employed.
speaking, we do not take that into consideration because there The control test calls merely for the existence of the right to
are instances wherein even if no service is rendered that person control the manner of doing the work and not the actual
is still an employee of the employer (ie: on-leave). His not exercise of such right.
rendering service to the employer nonetheless the law
recognizes that such person is an employee. RJL MARTINEZ V. NLRC

Also, if we stick to that rendition of service as an element of FACTS: RJL Martinez Fishing Corp. are principally engaged in the
employer-employee relationship, it does not distinguish deep-sea fishing business. Respondents were employed by RJL
employer-employee relationship from other relationships such since 1978 as stevedores at Navotas Fish Port for unloading of
as principal-agent relationship because the agent would also tuna fish catch by said corporation’s vessels and then loading
render service in favor of the principal. them on refrigerated vans for shipment abroad.

STERLING V. SOL On March 27, 1981, private respondents Antonio Boticario, and
thirty (30) others, upon the premise that they are petitioners'
Employee Even If Outside the Workplace regular employees, filed a complaint against petitioners for non-
The Court recognized that there is an employer-employee payment of overtime pay, premium pay, legal holiday pay,
relationship even if Sol the employee is not in the workplace of emergency allowance, service incentive leave pay and night shift
the employer. The rendering of service, as in this case, to differential.
determine an employer-employee relationship is not limited as
to where it is rendered. As long as the employer has control over On April 21, 1981 another complaint was filed against RJL for
the means and method to be done by the employee in order to Illegal Dismissal and for Violation of Article 118 of the Labor
achieve the ends or the goal then there is the power of control Code.
which would establish the existence of an employer-employee
relationship. RJL contended that private respondents are contract laborers
whose work terminated upon completion of each unloading,
Sol was directed to listen to certain broadcasts, directing her, in and that in the absence of any boat arrivals, private respondents
the instructions given her, when to listen and what to listen, did not work for petitioners but were free to work or seek
petitioners herein naming the stations to be listened to, the employment with other fishing boat operators.
hours of broadcasts, and the days when listening was to be done.
Respondent Sol had to follow these directions. The mere fact ISSUE: WON there is an employer-employee relationship
that while performing the duties assigned to her she was not between the parties. YES.
under the supervision of the petitioners does not render her
a contractor, because what she has to do, the hours that she RULING: The SC ruled that there is an existence of employer-
has to work and the report that she has to submit all — these employee relationship between the parties.
are according to instructions given by the employer. It is not
correct to say, therefore, that she was an independent The continuity of employment is not the
contractor, for an independent contractor is one who does not determining factor, but rather whether the work of

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the laborer is part of the regular business or establishment for purposes of labor and social legislation." So
occupation of the employer. not only with regard to wages, but also to benefits (SSS,
PhilHealth, Pag-IBIG). No need for you to prove whether the
The SC discussed that, although it may be that private four-fold test is applicable or present because the law itself
respondents alternated their employment on different vessels establishes the employer-employee relationship that imposes
when they were not assigned to petitioners' boats, that did not for the protection of these women.
affect their employee status. The evidence establishes that
petitioners had a fleet of fishing vessels with about 65 ship
captains, and as private respondents contended, when they
finished with one vessel, they were instructed to wait for the
TONGKO V. MANUFACTURER’S LIFE
next.

NLRC also found that the employer-employee relationship FACTS: The contractual relationship between Tongko and
between the parties herein is not co-terminous with each Manulife had two basic phases. The first or initial phase began
loading and unloading job. As earlier shown, respondents are on July 1, 1977, under a Career Agent’s Agreement (Agreement)
engaged in the business of fishing. For this purpose, they have a that provided:
fleet of fishing vessels. Under this situation, respondents' activity
of catching fish is a continuous process and could hardly be It is understood and agreed that the Agent is an
considered as seasonal in nature. independent contractor and nothing contained herein
shall be construed or interpreted as creating an
The continuity of employment is not the determining factor, but employer-employee relationship between the
rather whether the work of the laborer is part of the regular Company and the Agent.
business or occupation of the employer. So we have here the
employees, who are stevedores, they are actually principally The second phase started in 1983 when Tongko was named Unit
working for the business of RJL which is a deep-sea fishing Manager in Manulife’s Sales Agency Organization. In 1990, he
business, it has a fleet of ships and several captains. became a Branch Manager. Six years later (or in 1996), Tongko
became a Regional Sales Manager.
Can they work for other vessels? They can only do so if there is
nothing more to load or unload in favor of RJL. The SC held Tongko’s gross earnings consisted of commissions, persistency
that the continuity of employment is not the determining factor, income, and management overrides. Since the beginning,
but rather whether the work of the laborer is part of the regular Tongko consistently declared himself self-employed in his
business or occupation of the employer. income tax returns. Thus, under oath, he declared his gross
In fact, RJL here still had control whether or not these stevedores business income and deducted his business expenses to arrive
can work for other which they can only do so if there is no more at his taxable business income.
work for them in favor of RJL. The power of control may be
discontinuous. In 2001, Manulife instituted manpower development programs
at the regional sales management level. Respondent Renato
Vergel de Dios wrote Tongko letters to remind the latter to align
to the direction that the company was taking. Among which is
CLASSIFICATION OF CERTAIN WOMEN WORKERS to recruit agents – this is the first step into transforming Manulife
into a big league player. Failing to do so, de Dios wrote Tongko
ART. 136. [138] Classification of Certain Women Workers. another letter, dated December 18, 2001, terminating Tongko’s
Any woman who is permitted or suffered to work, with or services:
without compensation, in any night club, cocktail lounge,
massage clinic, bar or similar establishments under the “It would appear, however, that despite the series of
effective control or supervision of the employer for a meetings and communications, both one-on-one
substantial period of time as determined by the Secretary meetings between yourself and SVP Kevin O’Connor,
of Labor and Employment, shall be considered as an some of them with me, as well as group meetings with
employee of such establishment for purposes of labor and your Sales Managers, all these efforts have failed in
social legislation. helping you align your directions with Management’s
avowed agency growth policy.”
You have here a comprehensive employer-employee
relationship because the law itself states that there is such Tongko on the other hand responded by filing an illegal
relationship as long as the woman worker falls under Art. dismissal complaint with the National Labor Relations
136. For these women workers, most probably their Commission (NLRC) Arbitration Branch. He essentially alleged –
arrangement is that they get a commission for everything that despite the clear terms of the letter terminating his Agency
they are able to sell. Regardless of how much they are paid in a Agreement – that he was Manulife’s employee before he was
single night, with or without a specific working hours, the Labor illegally dismissed.
Code provides that there is an employer-employee relationship.
The law says "shall be considered as an employee of such

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ISSUE: WON there exists an employer-employee relationship. These codes as well as the insurance industry and the rules and
 NO, it was that of Agency. regulations are not per se indicative of labor law control under
our jurisprudence.
RULING: NO. In the determination of whether an employer-
employee relationship exists between two parties, this court The SC said that we have here a question of law, a disagreement
applies the four-fold test to determine the existence of the on the four corners of the instrument, and it will tell us that this
elements of such relationship. Jurisprudence is firmly settled that is a nominate contract under Civil Code, a contract of agency
whenever the existence of an employment relationship is in and if it is a contract of agency it is not under the jurisdiction
dispute, four elements constitute the reliable yardstick: (a) of the Labor Arbiter because there is no employer-employee
the selection and engagement of the employee; (b) the payment relationship. While they may be control here, this is not the kind
of wages; (c) the power of dismissal; and (d) the of control that is contemplated to establish the existence of an
employer’s power to control the employee’s conduct. It is the employer-employee relationship.
so-called “control test” which constitutes the most important
index of existence of the employer-employee relationship that ROYAL HOMES V. ALCANTARA
is, whether the employer controls or has reserved the right to
control the employee not only as to the result of the work to be
done but also as to the means and methods by which the same FACTS: Royale Homes, a corporation engaged in marketing real
is to be accomplished. Stated otherwise, an employer-employee estates, appointed Alcantara as its Marketing Director for a
relationship exists where the person for whom the services are fixed period of one year. His work consisted mainly of marketing
performed reserves the right to control not only the end to be Royale Homes’ real estate inventories on an exclusive basis.
achieved but also the means to be used in reaching such end. Royale Homes reappointed him for several consecutive years,
the last of which covered the period January 1 to December 31,
In the case at bar, the absence of evidence showing Manulife’s 2003.
control over Tongko’s contractual duties points to the absence
of any employer-employee relationship between Tongko and Alcantara filed a Complaint for Illegal Dismissal against Royale.
Manulife. In the context of the established evidence, Tongko Alcantara alleged that he is a regular employee of Royale Homes
remained an agent all along; although his subsequent duties since he is performing tasks that are necessary and desirable to
made him a lead agent with leadership role, he was nevertheless its business and that the acts of the executive officers of Royale
only an agent whose basic contract yields no evidence of means- Homes amounted to his dismissal from work without any valid
and-manner control. or just cause and in gross disregard of the proper procedure for
dismissing employees.
What, to Tongko, serve as evidence of labor law control are the
codes of conduct that Manulife imposes on its agents in the sale Royale Homes denied that Alcantara is its employee. It argued
of insurance. The mere presentation of codes or of rules and that the appointment paper of Alcantara is clear that it engaged
regulations, however, is not per se indicative of labor law control his services as an independent sales contractor for a fixed term
as the law and jurisprudence teach us. of one year only. He never received any salary, 13th month pay,
overtime pay or holiday pay from Royale Homes as he was paid
You take into consideration, what are these rules and guidelines purely on commission basis. In addition, Royale Homes had no
that are imposed? Will these necessarily impose control with control on how Alcantara would accomplish his tasks and
regard to the means, method and manner in order to achieve responsibilities as he was free to solicit sales at any time and by
the goal? any manner which he may deem appropriate and necessary.
According to Royale Homes, Alcantara decided to leave the
Guidelines indicative of labor law control should not merely company after his wife, who was once connected with it as a
relate to the mutually desirable result intended by the sales agent, had formed a brokerage company that directly
contractual relationship; they must have the nature of competed with its business, and even recruited some of its sales
dictating the means or methods to be employed in attaining the agents. Two months after he relinquished his post, however,
result, or of fixing the methodology and of binding or restricting Alcantara appeared in Royale Homes and submitted a letter
the party hired to the use of these means. claiming that he was illegally dismissed.

IN THIS CASE: Manulife’s instructions regarding the objectives, The Labor Arbiter rendered a Decision holding that Alcantara is
sales targets in connection with the training and engagement of an employee of Royale Homes and that the pre-termination of
other agents are among the directives that the principal his contract was against the law. The NLRC rendered its
(Manulife) may impose on the agent (Tongko) to achieve the Decision, ruling that Alcantara is not an employee but a mere
assigned task. They are targeted results that Manulife wishes to independent contractor of Royale Homes. It based its ruling
attain through its agent, but its code of conduct does not mainly on his employment contract. The CA promulgated its
include to the agent or insurance agents the means and Decision granting Alcantara’s Petition and reversing the NLRC’s
manner of conducting their sales. Decision. Applying the four-fold and economic reality tests, it
held that Alcantara is an employee of Royale Homes.
Codes of conduct are norms or standards of behavior rather than
employer directives into how specific the tasks are to be done.

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ISSUE: WON there exist an employer-employee relationship. to how he would transact business in prospective clients. Take
NO. note in this case that Alcantara is not an employee of Royale
Homes but a mere independent contractor, therefore the Labor
RULING: Alcantara is an independent contractor. The primary Arbiter has no jurisdiction over the case. If Alcantara here has
evidence of the nature of the parties’ relationship in this case is claims, it is cognizable by regular courts.
the written contract that they signed and executed in pursuance
of their mutual agreement. While the existence of employer-
employee relationship is a matter of law, the characterization
made by the parties in their contract as to the nature of their
juridical relationship cannot be simply ignored, particularly in
this case where the parties’ written contract unequivocally states
their intention at the time they entered into it. In this case, the
contract, duly signed and not disputed by the parties,
conspicuously provides that "no employer-employee
relationship exists between" Royale Homes and Alcantara, as
well as his sales agents. It is clear that they did not want to be
bound by employer-employee relationship at the time of the
signing of the contract.

In determining the existence of an employer-employee

relationship, this Court has generally relied on the four-fold test,
to wit: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the
employer’s power to control the employee with respect to the
means and methods by which the work is to be accomplished.

However, not every form of control is indicative of employer-

employee relationship. A person who performs work for another
and is subjected to its rules, regulations, and code of ethics does
not necessarily become an employee. As long as the level of
control does not interfere with the means and methods of
accomplishing the assigned tasks, the rules imposed by the
hiring party on the hired party do not amount to the labor law
concept of control that is indicative of employer-employee
relationship.

There is control but it is not with regard to the means and

methods of accomplishing the assigned tasks. We have here
Alcantara who is essentially a broker/sales agent, wherein he
earns by commission. The rules imposed by the hiring party on
the hired party do not amount to the labor law concept of
control that is indicative of employer-employee relationship. The
SC here took into consideration the agreement that they had
and the actual actuation towards the act of Alcantara. The SC
agrees that the Royale Homes' regulations, code of ethics and
periodic evaluation do not involve the control over the
means and methods by which the employee has to perform
his job or by which would reach the goal that is expected of
him.

Royale Homes, as a real estate company has to fix the price,

impose requirements and lay down the terms and conditions. It
is also necessary for Royale Homes to allocate its inventories
among independent contractors to determine who has priority
in selling, to grant commissions and allowance based on a
predetermined criteria and regularly monitor the result of their
marketing and sales effort. But these do not pertain to the
means of methods of how Alcantara was to perform and to
accomplish his task of soliciting sales. It does not dictate upon
him the details on how he would solicit sales or the manner as

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JULY 05, 2019 – ANIDES, APATAN, BANDIGAN & BRAGA MANILA GOLF CLUB V. IAC

Article 4 of the Labor Code tackles about construction. It states FACTS: The union representing Llamar and Jomok, caddies of
that in case of doubt, the Court shall rule in favor of the labor. Manila Golf Club, aver that the Club is liable for their SSS
While the Constitution is committed to the policy of social justice contributions since there exists an employer-employee
and the protection of the working class, it does not presuppose relationship. The Club asserts that that the petitioners, caddies
that in this article, every labor dispute should be resolved in favor by occupation, were allowed into the Club premises to render
of labor. Because we need to recognize the management of the services as such to the individual members and guests playing
employer have on its own right. While the SC is more often kind the Club's golf course and who themselves paid for such
towards the worker such favoritism should not blind the Court services; that as such caddies, the petitioners were not subject
to rule that in every case, it must be dispensed on the light of to the direction and control of the Club as regards the manner
established facts and applicable law and doctrine. in which they performed their work; and hence, they were not
the Club's employees.
Existence of Employer-Employee relationship
If there is no employer-employee relationship, Labor Code ISSUE: Whether or not there is an employer-employee
provisions do not apply. relationship?
In LVN v. Musician’s Guild, the Supreme Court emphasized the RULING: NO. As to the list of rules and regulations implemented
four requisites to determine whether or not an employer- by the golf club, as long as it is made detailing the various
employee relationship exists: matters of conduct, dress, language, etc., it does not so
1. Selection of employees circumscribe the actions or judgment of the caddies
2. Power to pay wages concerned as to leave them little or no freedom of choice
3. Power to dismiss whatsoever in the manner of carrying out their services. In the
4. Power to control very nature of things, caddies must submit to some
supervision of their conduct while enjoying the privilege of
Power of control is the most important requisite since it is about
pursuing their occupation within the premises and grounds of
the means and methods and not only the goal to be achieved.
whatever club they do their work in. For all that is made to
In this case, the power to control is present as to the control of
appear, they work for the club to which they attach themselves
the musicians.
on sufference but, on the other hand, also without having to
In contrast to Vda de Cruz v. Manila Hotel, the musicians were observe any working hours, free to leave anytime they please, to
not hired by the hotel but by an independent contractor, Tirso stay away for as long they like. It is not pretended that if found
Cruz. remiss in the observance of said rules, any discipline may be
meted them beyond barring them from the premises which, it
In Sterling v. Sol, there was an employr-employee relationship may be supposed, the Club may do in any case even absent any
even if the employee is not working in the workplace of the breach of the rules, and without violating any right to work on
employer. For as long as there is power to control. their part. All these considerations clash frontally with the
concept of employment.
In Dy Keh Beng v. International Labor, piece rate is only a form
of payment. It is not determinative of the existence of employer- While it is true that there is some form of control as to manner
employee relationship. The mere existence of such power to of carrying their services, this not the control contemplated to
control or right is important even if there is no actual exercise establish employer-employee relationship. These rules are also
thereof. those which the members of the Club have to follow. Moreover,
these caddies are free to leave anytime and do not observe any
In RJL Martinez v. NLRC, even if the power of control is
working hours and they can leave any time they want.
discontinuous, we can establish the employer-employee
relationship. The players pay the caddies. As to the fact that the Club suggests
the rate of fees payable by the players to the caddies as still
Article 136 of the Labor Code makes the classification of certain
another indication of the latter's status as employees. It seems
women workers. It is a comprehensive employer-employee
to the Court that the Club has not the measure of control over
relationship because it the law which establishes the
the incidents of the caddies' work and compensation that an
relationship.
employer would possess.
There was no employer-employee relationship in Tongko v.
Group Rotation System
Manufacturers Life and in Royale Homes, since the complainant
The Court agrees with petitioner that the group rotation system
was an agent for Manulife and as to the Royale Homes, he was
so-called, is less a measure of employer control than an
a broker.
assurance that the work is fairly distributed, a caddy who is
absent when his turn number is called simply losing his turn to
serve and being assigned instead the last number for the day.

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VILLAMARIA V. CA Paper, Bustamante alleged that he was employed by Villamaria

in July 1996 under the boundary system.

FACTS: Petitioner Oscar Villamaria, Jr. was the owner of ISSUE: WON there is an employer-employee relationship? YES!
Villamaria Motors, whom Bustamante has been remitting 450.00
per day under the boundary basis. In August 1997, Villamaria
RULING: The existence of an employment relationship did not
verbally agreed to sell the jeepney to Bustamante under the
depend on how the worker was paid but on the presence or
boundary-hulog scheme, where Bustamante would remit to
absence of control over the means and method of the
Villarama P550.00 a day for a period of four years; Bustamante
employee’s work. In this case, Villamaria’s directives (to drive
would then become the owner of the vehicle and continue to
carefully, wear an identification card, don decent attire, park the
drive the same under Villamaria’s franchise. It was also agreed
vehicle in his garage, and to inform him about provincial trips,
that Bustamante would make a downpayment of P10,000.00.
etc.) was a means to control the way in which Bustamante was
to go about his work. In view of Villamaria’s supervision and
On August 7, 1997, Villamaria executed a contract entitled control as employer, the fact that the "boundary" represented
Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng installment payments of the purchase price on the jeepney did
Boundary-Hulog over the passenger jeepney with Plate No. not remove the parties’ employer-employee relationship.
PVU-660. The parties agreed that if Bustamante failed to pay the
boundary-hulog for three days, Villamaria Motors would hold on Is the contract to sell correlative to the existence of
to the vehicle until Bustamante paid his arrears, including a employer-employee relationship?
penalty of P50.00 a day; in case Bustamante failed to remit the NO. The contract to sell is separate from the contract of
daily boundary-hulog for a period of one week, the Kasunduan employment. Despite the termination of the former, the latter
would cease to have legal effect and Bustamante would have to still subsists. This is because the ownership of the jeepney was
return the vehicle to Villamaria Motors. not yet conveyed to Bustamante after he failed to pay the agreed
remittance hence, their operator-driver relationship is still
Under the Kasunduan, Bustamante was prohibited from driving subsisting.
the vehicle without prior authority from Villamaria Motors. Thus,
Bustamante was authorized to operate the vehicle to transport Boundary System
passengers only and not for other purposes. He was also Jurisprudence recognizes that in this kind of system where the
required to display an identification card in front of the operators are engaged in transporting passengers as a common
windshield of the vehicle; in case of failure to do so, any fine that carrier primarily governs the compensation of the driver that is
may be imposed by government authorities would be charged the daily earnings based on the boundary which represents the
against his account. Bustamante further obliged himself to pay driver’s compensation. Here, the owner-operator exercises
for the cost of replacing any parts of the vehicle that would be control and supervision over the driver. It has a complete control
lost or damaged due to his negligence. In case the vehicle over the shuttle and that the lessee is ultimately responsible for
sustained serious damage, Bustamante was obliged to notify the consequences.
Villamaria Motors before commencing repairs. Bustamante was
not allowed to wear slippers, short pants or undershirts while As to the payment of SSS contributions, nowadays, they have
driving. He was required to be polite and respectful towards the their respective associations who will remit the premiums of SSS
passengers. He was also obliged to notify Villamaria Motors in instead of the operator. This is because jurisprudence recognizes
case the vehicle was leased for two or more days and was employer-employee relationship between owner-operators and
required to attend any meetings which may be called from time drivers.
to time. Aside from the boundary-hulog, Bustamante was also
obliged to pay for the annual registration fees of the vehicle and Boundary-Hulog Scheme
the premium for the vehicle’s comprehensive insurance. The boundary shall be considered as the hulog or the installment
Bustamante promised to strictly comply with the rules and payment of the driver with regards to their respective vehicles.
regulations imposed by Villamaria for the upkeep and They have separate contract of lease, contract to sell, option to
maintenance of the jeepney. buy and among others to transfer ownership. This is a separate
contract from employer-employee relationship. For instance, if
Bustamante continued driving the jeepney under the supervision there is a stipulation as the failure of the driver to pay for a
and control of Villamaria. As agreed upon, he made daily period of time and the owner-operator would take possession
remittances of P550.00 in payment of the purchase price of the of the vehicle, the said termination of contract does not
vehicle. Bustamante failed to pay for the annual registration fees necessarily give rise to the valid dismissal of the driver.
of the vehicle, but Villamaria allowed him to continue driving the In this case, the juridical relationship between employer-
jeepney. Villamaria took back the jeepney driven by Bustamante employee is not negated by the stipulation of the Kasunduan
and barred the latter from driving the vehicle. considering that petitioner was in control of respondent’s
conduct when driving the vehicle. What is primordial in this case
On August 15, 2000, Bustamante filed a Complaint for Illegal is that the operator retained conduct of the respondent as driver.
Dismissal against Villamaria and his wife Teresita. In his Position When the driver alleges illegal dismissal, petitioner has the
burden of proof to show that such termination was lawful or due

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to just cause. Failure to pay the hulogan is not considered lawful It is not disputed that these workers have been in the employ of
or just cause. KIMBERLY for more than one year at the time of the filing of the
petition for certification election by KILUSAN-OLALIA.
KIMBERLY-CLARK V. DRILON
Owing to their length of service with the company, these workers
FACTS: Kimberly-Clark Philippines, Inc. (KIMBERLY) executed a became regular employees, by operation of law, one year after
three-year collective bargaining agreement (CBA) with United they were employed by KIMBERLY through RANK. While the
Kimberly-Clark Employees Union-Philippine Transport and actual regularization of these employees entails the mechanical
General Workers’ Organization (UKCEU-PTGWO) which expired act of issuing regular appointment papers and compliance with
on June 30, 1986. Within the 60-day freedom period prior to the such other operating procedures as may be adopted by the
expiration of and during the negotiations for the renewal of the employer, it is more in keeping with the intent and spirit of the
aforementioned CBA, some members of the bargaining unit law to rule that the status of regular employment attaches to the
formed another union called “Kimberly Independent Labor casual worker on the day immediately after the end of his first
Union for Solidarity, Activism and Nationalism-Organized Labor year of service. To rule otherwise, and to instead make their
Association in Line Industries and Agriculture (KILUSAN- regularization dependent on the happening of some
OLALIA).” contingency or the fulfillment of certain requirements, is to
impose a burden on the employee which is not sanctioned by
On April 21, 1986, KILUSAN-OLALIA filed a petition for law.
certification election in Regional Office No. IV, Ministry of Labor
and Employment (MOLE). The law is explicit. As long as the employee has rendered at least
one year of service, he becomes a regular employee with respect
During the pre-election conference, 64 casual workers were to the activity in which he is employed. The law does not provide
challenged by KIMBERLY and UKCEU-PTGWO on the ground the qualification that the employee must first be issued a regular
that they are not employees of KIMBERLY but of RANK. It was appointment or must first be formally declared as such before
agreed by all the parties that the 64 voters shall be allowed to he can acquire a regular status. Obviously, where the law does
cast their votes but that their ballots shall be segregated and not distinguish, no distinction should be drawn.
subject to challenge proceedings. The certification election was
conducted on July 1, 1986, with the following results: Determination of The Employer-Employee Relationship
 KILUSAN-OLALIA – 246 Between KIMBERLY and 64 Casual Employees
 UKCEO-PTGWO – 266 This matter plays an important role in this case since this will
 No union – 1 determine whether these employees are qualified to cast votes
 Spoiled B – 4 for the elections.
 Challenged B – 64 As to the nature of work of these casual employees not being
connected to the nature of business of the employee does not
On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a necessary mean that they are not employees of KIMBERLY. The
Protest and Motion to Open and Count Challenged Votes on Court said that they are still employees and discussed the two
the ground that the 64 workers are employees of KIMBERLY types of regular employees: (1) those which are engaged to
within the meaning of Article 212(e) of the Labor Code. On July perform activities which are usually necessary or desirable in the
7, 1986, KIMBERLY filed an opposition to the protest and motion, usual business of the employer and (2) whether continuous or
asserting that there is no employer-employee relationship broken, as long as that person has rendered at least one year of
between the casual workers and the company. service, he is considered as a regular employee.

ISSUE: WON the 64 casual employees have employer-employee The first one will serve as a guide in determining the four (4)
relationship with KIMBERLY? elements of an employer-employee relationship. As to the
second category, it is not important that he is engaged in
RULING: YES. Pursuant to Art. 280 of the Labor Code, the law activities which is necessary or usual to the operation of the
thus provides for two kinds of regular employees, namely: business.

1. Those who are engaged to perform activities which are In this case, because of the length of time of the service rendered
usually necessary or desirable in the usual business or trade by the casual workers of KIMBERLY, the votes that they cast shall
of the employer; and form part of the election for purposes of determining the
2. Those who have rendered at least one year of service, bargaining representative of the company.
whether continuous or broken, with respect to the activity
in which they are employed.

The individual petitioners herein who have been adjudged to be

regular employees fall under the second category. These are the
mechanics, electricians, machinists, machine shop helpers,
warehouse helpers, painters, carpenters, pipefitters and masons.

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TABAS V. CALIFORNIA MARKETING

Of the four, the right-of-control test has been held to be the
decisive factor. On the other hand, we have likewise held, based
FACTS: The petitioners were employees of Livi Manpower on Article 106 of the Labor Code:
Services, Inc. (Livi), which subsequently assigned them to work
as promotional merchandisers for the former firm pursuant to ART. 106. Contractor or sub-contractor. — Whenever
a manpower supply agreement. Among other things, the an employee enters into a contract with another person
agreement provided that California has no control or for the performance of the former's work, the
supervisions whatsoever over [Livi's] workers with respect to how employees of the contractor and of the latter's sub-
they accomplish their work or perform Californias obligation; the contractor, if any, shall be paid in accordance with the
Livi "is an independent contractor and nothing herein contained provisions of this Code.
shall be construed as creating between California and Livi . . . the
relationship of principal-agent or employer-employee'; that "it is In the event that the contractor or sub-contractor fails to pay
hereby agreed that it is the sole responsibility of Livi to comply wages of his employees in accordance with this Code, the
with all existing as well as future laws, rules and regulations employer shall be jointly and severally liable with his contractor
pertinent to employment of labor" and that "California is free or sub-contractor to such employees to the extent of the work
and harmless from any liability arising from such laws or from performed under the contract, in the same manner and extent
any accident that may befall workers and employees of Livi while that he is liable to employees directly employed by him.
in the performance of their duties for California. The Secretary of Labor may, by appropriate regulations, restrict
It was further expressly stipulated that the assignment of or prohibit the contracting out of labor to protect the rights of
workers to California shall be on a "seasonal and contractual workers established under this Code. In so prohibiting or
basis"; that "cost of living allowance and the 10 legal holidays restricting, he may make appropriate distinctions between
will be charged directly to California at cost "; and that "payroll labor-only contracting and job contracting as well as
for the preceding week shall be delivered by Livi at California's differentiations within these types of contracting and determine
premises." who among the parties involved shall be considered the
employer for purposes of this Code, to prevent any violation or
The petitioners were then made to sign employment contracts circumvention of any provisions of this Code.
with durations of six months, upon the expiration of which they
signed new agreements with the same period, and so on. Unlike Labor-Only Contracting
regular California employees, who received not less than There is 'labor-only' contracting where the person supplying
P2,823.00 a month in addition to a host of fringe benefits and workers to an employer does not have substantial capital or
bonuses, they received P38.56 plus P15.00 in allowance daily. investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed
The petitioners now allege that they had become regular by such person are performing activities which are directly
California employees and demand, as a consequence whereof, related to the principal business of such employer. In such cases,
similar benefits. They likewise claim that pending further the person or intermediary shall be considered merely as an
proceedings below, they were notified by California that they agent of the employer who shall be responsible to the workers
would not be rehired. As a result, they filed an amended in the same manner and extent as if the latter were directly
complaint charging California with illegal dismissal. employed by him.

California admits having refused to accept the petitioners back In the case at bar, Livi is admittedly an "independent contractor
to work but deny liability therefor for the reason that it is not, to providing temporary services of manpower to its client. " When
begin with, the petitioners' employer and that the it thus provided California with manpower, it supplied California
"retrenchment" had been forced by business losses as well as with personnel, as if such personnel had been directly hired by
expiration of contracts. It appears that thereafter, Livi re- California. Hence, Article 106 of the Code applies.
absorbed them into its labor pool on a "wait-in or standby"
status. What is the nature of the work here of Tabas?
He is a promo merchandiser.
ISSUE: Whether the petitioners are California's or Livi's
employees. Is a promo merchandiser necessary to the operations of
California? Yes.
RULING: This Court has consistently ruled that the
determination of whether or not there is an employer-employee Can we say here that California is the employer of Tabas and
relation depends upon four standards: not Livi Manpower Services?
1. manner of selection and engagement of the putative Yes, because they rendered services for California. According to
employee; Article 106, whenever an employee enters into a contract with
2. mode of payment of wages; another person for the performance of the former's work, the
3. presence or absence of a power of dismissal; and employees of the contractor and of the latter's sub-contractor, if
4. presence or absence of a power to control putative any, shall be paid in accordance with the provisions of this Code.
employee's conduct.

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Discussion FONTERRA BRANDS V. LARGADO

First, it emphasized that the existence of an employer-employee
relationship cannot be the subject of an agreement. Here,
California and Livi agreed that the promotional merchandisers FACTS: Petitioner Fonterra Brands Phils., Inc. contracted the
are not employees of California. By that stipulation alone, it services of Zytron Marketing and Promotions Corp. for the
cannot use that as the basis to disregard the existence of marketing and promotion of its milk and dairy products.
employer-employee relationship or the liability of Tabas as a Pursuant to the contract, Zytron provided Fonterra with trade
promotional merchandiser. merchandising representatives (TMRs), including respondents
Leonardo Largado and Teotimo Estrellado. Fonterra sent Zytron
The Supreme Court here emphasized the four essential a letter terminating its promotions contract. Fonterra then
requisites for the existence of the employer-employee entered into an agreement for manpower supply with A.C. Sicat
relationship. In connection to the facts of this case, what is Marketing and Promotional Services. Desirous of continuing
present is labor-only contracting. There is also what we call an their work as TMRs, respondents submitted their job
independent contracting. The SC said that notwithstanding the applications with A.C. Sicat, which hired them for a term of five
absence of a direct employer-employee relationship between (5) months, beginning June 7, 2006 up to November 6, 2006.
the employer and whose favor were contracted out by a labor- When respondents’ 5-month contracts with A.C. Sicat were
only contractor and the employees, the former has the about to expire, they allegedly sought renewal thereof, but were
responsibility together with the labor-only contractor for any allegedly refused. This prompted respondent to file complaints
valid labor claims by operation of law. The reason is that the for illegal dismissal, regularization, non-payment of service
labor-only contractor is considered purely as an agent of the incentive leave and 13th month pay, and actual and moral
employer and liability must be shouldered by either one or damages, against petitioner, Zytron, and A.C. Sicat.
shared by whole.
ISSUES:
What about the stipulation regarding the nature of the 1. Whether or not Zytron and A.C. Sicat are labor-only
activities performed by the petitioners? contractors, making Fonterra the employer of herein
The SC said that we do not agree that the petitioners are needed respondents; and
to perform activities which are not directly related to the general 2. Whether or not respondents were illegally dismissed.
business of manufacturing, which is California’s principal
operation ability. Such merchandising, promotion of sale of RULING:
product is an ability that is an integral part of the manufacturing
business. While Livi is admittedly an independent contractor, the (1) Whether Zytron and A.C. Sicat are labor-only contractors is
SC nevertheless applied Article 281 in ruling whether or not the immaterial to the resolution of the illegal dismissal issue
petitioners are employees of California. They were already because respondents voluntarily terminated their employment
tasked to perform activities connected to the general business with Zytron, contrary to their allegation that their employment
of California, they are considered regular employees. In with Zytron was illegally terminated.
addition to that, applying Article 281, they have been employed (2) No, the respondents were not illegally terminated. The
for an initial 6-month contract and then renewed to another 6 termination of respondents’ employment with Zytron was
months. He was already employed for a year. Either of the two brought about by the cessation of their contracts with the
instances for regular employees would apply in regard to the latter. Respondents were the ones who refused to renew their
petitioners. The petitioners are employees by virtue of the contracts with Zytron, and the NLRC’s finding that they
required 1-year length of service. themselves acquiesced to their transfer to A.C. Sicat. By refusing
With regard to California, it alleged that it cannot pay these to renew their contracts with Zytron, respondents effectively
employees due to serious business losses but it failed to show resigned from the latter. Resignation is the voluntary act of
proof. employees who are compelled by personal reasons to dissociate
themselves from their employment, done with the intention of
Here, a contract cannot fix the legal relationship of the parties. It relinquishing an office, accompanied by the act of
is the law which has the final say. In this case, consumer products abandonment.
are to be promoted and therefore, they are usual and necessary
to the products in this case of California Manufacturing. As regards respondents’ employment with A.C. Sicat and its
termination via non-renewal of their contracts, considering that
It is usual and necessary and therefore, the SC ruled that in labor-only contracting, the law creates an employer-employee
petitioners are employees of California regardless of the nature relationship between the principal and the labor-only
of the contracting ability. contractor’s employee as if such employees are directly
employed by the principal employer, and considers the
Let’s compare this with the case of Fonterra Brands. contractor as merely the agent of the principal, it is proper to
dispose of the issue on A.C. Sicat’s status as a job contractor first
before resolving the issue on the legality of the cessation of
respondents’ employment.

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In this regard, we defer to the findings of the CA anent A.C. to promote FONTERRA BRANDS products xxx which is expected
Sicat’s status as a legitimate job contractor, seeing that it is to be finished on or before Nov. 06, 2006.
consistent with the rules on job contracting and is sufficiently
supported by the evidence on record. What was the nature of the work here of the respondents?
The respondents were trade merchandising representatives. Still
A person is considered engaged in legitimate job contracting or on marketing and promotions, similar with the case of Tabas.
subcontracting if the following conditions concur:
Were they considered as employees of Fonterra brands?
1. The contractor or subcontractor carries on a distinct No, because Fonterra brands did not execute control over A.C.
and independent business and undertakes to perform Sicat. A.C. Sicat is a legitimate job contractor.
the job, work or service on its own account and under
its own responsibility according to its own manner and
method, and free from the control and direction of the What are the similarities and differences between these two
principal in all matters connected with the performance cases?
of the work except as to the results thereof; In both cases, the purported employees were involved in
2. The contractor or subcontractor has substantial capital promotional merchandising. It involved contractors in
or investment; and connection to, respecting clients with job contractors. However,
3. The agreement between the principal and contractor or in the case of Fonterra, it did not have a discussion similar to that
subcontractor assures the contractual employees’ of Tabas. There was no discussion regarding the nature of the
entitlement to all labor and occupational safety and work here of the respondents. There was no mention that they
health standards, free exercise of the right to self- were engaged in a task which are usual and necessary to the
organization, security of tenure, and social and welfare operations of Fonterra.
benefits.
Every company has that marketing representative that is one of
On the other hand, contracting is prohibited when the their usual and necessary business operations to promote their
contractor or subcontractor merely recruits, supplies or places product. In the case of Tabas, usual and necessary, considered
workers to perform a job, work or service for a principal and if as employees of California. Take note that SC noted that Livi is
any of the following elements are present, thus: an independent contractor wherein if you connect it with the
discussion of Fonterra v. Largado, A.C. Sicat was also considered
1. The contractor or subcontractor does not have as an independent contractor. But here, you would also see that
substantial capital or investment which relates to the the SC put emphasis on the nature of the employment of the
job, work or service to be performed and the respondents here. There is a piece of contract where it was
employees recruited, supplied or placed by such stated that it was for a piece of project and that they would only
contractor or subcontractor are performing activities have temporary employment for the duration only of the said
which are directly related to the main business of the project of the client. It is contract-based. If you also noted the
principal; or facts in the case of Tabas, they also had separate 6-month
2. The contractor does not exercise the right to control contracts. But there was no mentions of what was stipulated in
over the performance of the work of the contractual the contract aside from the fact that it was a fixed-term contract.
employee.
Also notable here in this case is that the difference in Fonterra is
The CA correctly found that A.C. Sicat is engaged as a legitimate that they changed, with regard to the respondents, when the
job contractor. previous contractor, Zytron, was not renewed by Fonterra, they
Foremost, respondents were fixed-term employees. As resigned from Zytron and applied to A.C. Sicat. Such fact was not
previously held by this Court, fixed-term employment contracts present in the case of Tabas.
are not limited, as they are under the present Labor Code, to You would see some differences. In the case of Fonterra, it would
those by nature seasonal or for specific projects with appear that it has overturned the ruling in the earlier case of
predetermined dates of completion; they also include those to Tabas with regard to recognizing promotional merchandising
which the parties by free choice have assigned a specific date of activities that are usual and necessary in the operations of a
termination. The determining factor of such contracts is not the business. Therefore, even considering the length of time
duty of the employee but the day certain agreed upon by the employed, they will be considered as regular employees. But in
parties for the commencement and termination of the the case of Fonterra, that was not the conclusion reached by the
employment relationship. Court. Even if they perform activities which are usual and
In the case at bar, it is clear that respondents were employed by necessary to the trade or business, there can be a term agreed
A.C. Sicat as project employees. In their employment contract upon, as in this case, by free individuals. As long as the worker
with the latter, it is clearly stated that “A.C. Sicat is temporarily has really agreed to that. It seems like it was overturned but you
employing respondents as TMRs effective June 6, 2006 under have to be careful with that. In the case of Fonterra, there is
the following terms and conditions: The need for your service nothing herein which stated that it has overruled, overturned the
being only for a specific project, your temporary employment ruling in the earlier case of Tabas. It is more on the factual
will be for the duration only of said project of our client, namely circumstances.

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In this case, they are contractual employees. There is no ruling BURDEN OF PROOF
of the SC that they are employees of Fonterra. Just take note of
the factual circumstances wherein there is 2 employers. One of
which is an indirect employer and the other one is the contractor. Who has the burden of proof?
In determining the existence of employer-employee  With regard to the existence of an employer-employee
relationship, there is not much issue if there is one employee. All relationship, the one who has the burden of proof is the
you have to do is to determine the existence of the 4 essential one who alleges the existence thereof.
requisites and more importantly, the power of control.
What is the standard or quantum of proof required?
What about in these cases of Fontera and Tabas?  Substantial evidence. Such amount of relevant
We have an indirect employer and we have these manpower evidence which a reasonable mind might accept as
agencies. You look at the applicable law as to the extent of the adequate to justify a conclusion.
liabilities of the respective parties. You have to consider whether
or not the contractor is a labor-only contractor and therefore JAVIER V. FLY ACE CORPORATION
merely an agent. The principal is the employer. You also have
independent contracting wherein there is a legitimate,
volunteering contractor with sufficient capital, has sufficient FACTS: Javier filed a complaint before the NLRC for
investments, equipment and registered with the Department of underpayment of salaries and other labor standard benefits. He
Labor. So the employer that would be considered therein is the alleged that he was an employee of Fly Ace since September
contractor. But, the client or customer of the independent 2007, performing various tasks at the respondent’s warehouse
contractor can nevertheless be considered as an indirect such as cleaning and arranging the canned items before their
employer. delivery to certain locations, except in instances when he would
be ordered to accompany the company’s delivery vehicles, as
When we are talking of an indirect employer, there is no pahinante; that he reported for work from Monday to Saturday
employer-employee relationship between that customer of the from 7:00 o’clock in the morning to 5:00 o’clock in the afternoon;
contractor and the worker but the law recognizes that the that during his employment, he was not issued an identification
indirect employer has a liability to such workers especially with card and payslips by the company; that on May 6, 2008, he
regard to underpayment of wages. For other benefits, the reported for work but he was no longer allowed to enter the
independent contractor would be liable. The bona fide company premises by the security guard upon the instruction of
contractor is liable to the employees. Ruben Ong (Mr. Ong), his superior.

Javier presented an affidavit of one Bengie Valenzuela who

alleged that Javier was a stevedore or pahinante of Fly Ace from
September 2007 to January 2008.

Fly Ace averred that it was engaged in the business of

importation and sales of groceries. Sometime in December 2007,
Javier was contracted by its employee, Mr. Ong, as extra helper
on a pakyaw basis at an agreed rate of ₱300.00 per trip, which
was later increased to ₱325.00 in January 2008. Mr. Ong
contracted Javier roughly 5 to 6 times only in a month whenever
the vehicle of its contracted hauler, Milmar Hauling Services, was
not available. On April 30, 2008, Fly Ace no longer needed the
services of Javier. Denying that he was their employee, Fly Ace
insisted that there was no illegal dismissal. Fly Ace submitted a
copy of its agreement with Milmar Hauling Services and copies
of acknowledgment receipts evidencing payment to Javier for
his contracted services bearing the words, "daily manpower
(pakyaw/piece rate pay)" and the latter’s signatures/initials.

ISSUE: Whether or not Javier is a regular employee of Fly Ace.

RULING: No, Javier is not a regular employee of Fly Ace.

It must be noted that the issue of Javier’s alleged illegal dismissal

is anchored on the existence of an employer-employee
relationship between him and Fly Ace.

In sum, the rule of thumb remains: the onus probandi falls on

petitioner to establish or substantiate such claim by the requisite
quantum of evidence. "Whoever claims entitlement to the
benefits provided by law should establish his or her right

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thereto." Sadly, Javier failed to adduce substantial evidence as are an employee. The burden of proof falls to the petitioner to
basis for the grant of relief. establish or substantiate such claims. Claims and entitlements
provided by law should establish his right thereto.
The Court is of the considerable view that on Javier lies the
burden to pass the well-settled tests to determine the existence Here, Javier failed to adduce substantial evidence. The affidavit
of an employer-employee relationship: (1) the selection and showing that he was present or was usually present in the
engagement of the employee; (2) the payment of wages; (3) the workplace is not sufficient or falls short in proving employment
power of dismissal; and (4) the power to control the employee’s therein. Javier’s allegations in here did not establish that his
conduct. Of these elements, the most important criterion is relationship with Fly Ace has the attributes of an employer-
whether the employer controls or has reserved the right to employee relationship on the basis of the four-fold test.
control the employee not only as to the result of the work but
also as to the means and methods by which the result is to be Who has the burden of proof?
accomplished. With regard to the existence of an employer-employee
relationship, the one who has the burden of proof is the one
In this case, Javier was not able to persuade the Court that the who alleges the existence thereof.
above elements exist in his case. He could not submit competent
proof that Fly Ace engaged his services as a regular employee; What is the standard or quantum of proof required?
that Fly Ace paid his wages as an employee, or that Fly Ace could Substantial evidence. Such amount of relevant evidence which
dictate what his conduct should be while at work. In other words, a reasonable mind might accept as adequate to justify a
Javier’s allegations did not establish that his relationship with Fly conclusion.
Ace had the attributes of an employer-employee relationship on
the basis of the above-mentioned four-fold test. Worse, Javier
was not able to refute Fly Ace’s assertion that it had an
agreement with a hauling company to undertake the delivery of Was there a substantial evidence of an employer-employee
its goods. It was also baffling to realize that Javier did not dispute relationship in the case of Tenazas vs. R. Villegas Taxi?
Fly Ace’s denial of his services’ exclusivity to the company. In In the case of Tenazas, there was no substantial evidence to
short, all that Javier laid down were bare allegations without prove that Jaime Francisco was an employee of R. Villegas Taxi
corroborative proof. Transport.

Who has the burden of proof to establish employer-

employee relationship? TENAZAS V. R. VILLEGAS TAXI
The burden of proof lies on the party who raises the illegal
dismissal. FACTS: Bernard A. Tenazas, Jaime M. Francisco and Isidro
Endraca were drivers of R. Villegas Taxi Transport. They filed a
Was there an employer-employee relationship in this case?
complaint for illegal dismissal against the R. Villegas Taxi. R.
No, because Javier was unable to support his claims and
Villegas admitted that Tenazas and Endraca were employees of
allegations that he is an employee of Fly Ace. He did not present
the company, but denied that Francisco was their employee or
any ID nor his payslips. His only documentary evidence was the
that he was able to drive one of the company’s units at any point
affidavit of Villanueva. It was a weak evidentiary evidence
in time.
because in that affidavit, Villanueva stated that he often sees
Javier in the premises of Fly Ace.
Tenazas and Endraca showed their SSS forms which showed that
there were contributions given by R. Villegas for their monthly
Would that not be considered as an evidence in the
contributions. Francisco, however, failed to present evidence of
existence of an employer-employee relationship?
regular employment available to all regular employees, such as
The SC said that we could not deduce the employment of Javier
an employment contract, company ID, SSS, withholding tax
by the mere evidence presented.
certificates, SSS membership and the like.
Discussion
Under the Rules of Procedure of NLRC, there is a relaxation of ISSUE: WON there was substantial evidence presented by Jaime
the rules of procedure in evidence in labor cases. It is not the Francisco to prove the existence of an employer-employee
same of that the cases before the Court. To prove the existence relationship.
of an employer-employee relationship, no particular form is
required. Any competent and relevant evidence will be HELD: NO. In this case, since Francisco is the one who is claiming
admitted. Proving that such relationship exists, however, still the benefits from R. Villegas, he should be the one who will show
rests on some substantial evidence. that there exists an employer-employee relationship, because
for an illegal dismissal case to prosper, there should be an
Who has the burden of proof of the existence of an employer-employee relationship established. He who alleges
employer-employee relationship? the existence of the employer-employee relationship has the
He who alleges. In this case, it was the employee because he burden of proof and the evidence that is required there is
alleges that he was illegally dismissed. How could you be illegally substantial evidence.
dismissed if you are not an employee? So you must prove if you

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In this case, Francisco failed to present any proof that is relationship, it takes cognizance of the matter, to the exclusion
substantial enough to establish his relationship with the of the NLRC. The DOLE would have no jurisdiction only if the
respondents. employer-employee relationship has already been
terminated, or it appears, upon review, that no employer-
Atty. Sarona’s Comments employee relationship existed in the first place.
In employer-employee relationship, if you are an employee, just
make sure that you have sufficient evidence that you are really The DOLE is fully empowered to make a determination as to the
an employee. This is also important because later on you would existence of an employer-employee relationship in the exercise
want to demand your claims for SSS, among others, you have of its visitorial and enforcement power, subject to judicial review,
basis that such relationship exists. not review by the NLRC.

In the cases that we have discussed, it is the Labor Arbiter and Summary
the National Labor Relations Commission that determines the If a complaint is brought before the DOLE to give effect to the
existence of the employer-employee relationship. That is labor standards provisions of the Labor Code or other labor
important because if there is no employer-employee legislation, and there is a finding by the DOLE that there is an
relationship, then the Labor Arbiter has no jurisdiction over the existing employer-employee relationship, the DOLE exercises
issue. jurisdiction to the exclusion of the NLRC. If the DOLE finds that
there is no employer-employee relationship, the jurisdiction is
properly with the NLRC. If a complaint is filed with the DOLE, and
What about the Department of Labor and Employment, does it it is accompanied by a claim for reinstatement, the jurisdiction is
also have the power to determine the existence of an employer- properly with the Labor Arbiter, under Art. 217(3) of the Labor
employee relationship? YES. Code, which provides that the Labor Arbiter has original and
exclusive jurisdiction over those cases involving wages, rates of
pay, hours of work, and other terms and conditions of
PEOPLE’S BROADCASTING V. SECRETARY
employment, if accompanied by a claim for reinstatement. If a
complaint is filed with the NLRC, and there is still an existing
FACTS: Private respondent Jandeleon Juezan filed a complaint employer-employee relationship, the jurisdiction is properly with
against petitioner with the Department of Labor and the DOLE. The findings of the DOLE, however, may still be
Employment (DOLE) for illegal deduction, nonpayment of service questioned through a petition for certiorari under Rule 65 of the
incentive leave, 13th month pay, premium pay for holiday and Rules of Court.
rest day and illegal diminution of benefits, delayed payment of
wages and non-coverage of SSS, PAG-IBIG and PhilHealth In this case, the DOLE had no jurisdiction over the case, as there
against People's Broadcasting. was no employer-employee relationship present. Thus, the
dismissal of the complaint against petitioner is proper.
ISSUE: May the DOLE make a determination of whether or not
an employer-employee relationship exists, and if so, to what In connection to Article 217, it tells us about the jurisdiction of
extent? – YES. the Labor Arbiter. Notwithstanding to the jurisdiction given to
the Labor Arbiter, the DOLE has the power to determine the
Q: Can the determination of the DOLE of an employer-employee existence if the employer-employee relationship.
relationship be overturned by the determination of the NLRC or
the Labor Arbiter? – NO.
Article. 217. Jurisdiction of the Labor Arbiters and the
HELD: No limitation in the law was placed upon the power of Commission. - (a) Except as otherwise provided under
the DOLE to determine the existence of an employer-employee this Code, the Labor Arbiters shall have original and
relationship. The DOLE must have the power to determine exclusive jurisdiction to hear and decide, within thirty (30)
whether there is an employer-employee relationship existing calendar days after the submission of the case by the
and from there to decide whether it has the power to issue parties for decision without extension, even in the absence
compliance orders as provided in the Labor Code. of stenographic notes, the following cases involving all
workers, whether agricultural or non-agricultural:
Same guidelines – the four-fold test – must be used by DOLE in
determining the existence of an employer-employee 1. Unfair labor practice cases;
relationship. This test is not solely limited to the Labor Arbiter
who is under the NLRC. The DOLE Secretary, or his or her 2. Termination disputes;
representatives, can utilize the same test, even in the course of
inspection, making use of the same evidence that would have 3. If accompanied with a claim for reinstatement, those
been presented before the NLRC. cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of
The determination of the existence of an employer-employee employment;
relationship by the DOLE must be respected. If the DOLE makes
a finding that there is an existing employer-employee

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4. Claims for actual, moral, exemplary and other forms of ARTICLE 6

damages arising from the employer-employee relations;

5. Cases arising from any violation of Article 264 of this Article 6 – Applicability. All rights and benefits granted to
Code, including questions involving the legality of strikes workers under this Code shall, except as may otherwise be
and lockouts; and provided herein, apply alike to all workers, whether
agricultural or non-agricultural.
6. Except claims for Employees Compensation, Social
Security, Medicare and maternity benefits, all other claims We have cases under Article 6 in relation to Article 217.
arising from employer-employee relations, including
those of persons in domestic or household service, SAN MIGUEL CORPORATION V. NLRC
involving an amount exceeding five thousand pesos
(P5,000.00) regardless of whether accompanied with a
FACTS: San Miguel Corporation (SMC) sponsored an
claim for reinstatement.
Innovation Program which grants cash rewards to all “SMC
employees who submit to the corporation ideas and suggestions
(b) The Commission shall have exclusive appellate found to beneficial to the corporation.”
jurisdiction over all cases decided by Labor Arbiters.
Rustico Vega, who is a mechanic in the Bottling Department of
(c) Cases arising from the interpretation or
the SMC submitted an innovation proposal which supposed to
implementation of collective bargaining agreements and eliminate certain defects in the quality and taste of the product
those arising from the interpretation or enforcement of
“San Miguel Beer Grande.”
company personnel policies shall be disposed of by the
Labor Arbiter by referring the same to the grievance
SMC did not accept the said proposal and refused Mr. Vega’s
machinery and voluntary arbitration as may be provided subsequent demands for cash award under the innovation
in said agreements.
program. Hence, Vega filed a complaint with the then Ministry
of Labor and Employment in Cebu. He argued that his proposal
had been accepted by the methods analyst and was
implemented by the SMC and it finally solved the problem of the
Corporation in the production of Beer Grande.

The Labor Arbiter dismissed the complaint for lack of jurisdiction

because the claim of Vega is “not a necessary incident of his
employment” and does not fall under Article 217 of the Labor
Code. However, in a gesture of compassion and to show the
government’s concern for the working man, the Labor Arbiter
ordered petitioner to pay Vega P2,000 as “financial assistance.”
Both parties assailed said decision of the Labor Arbiter. The
NLRC set aside the decision of the Labor Arbiter and ordered
SMC to pay complainant P60, 000.

ISSUE: Whether or not the Labor Arbiter and the Commission

has jurisdiction over the money claim filed by private
respondent. – NO.

HELD: No, the Labor Arbiter and the Commission have no

jurisdiction over the money claim of Vega.

Is it not that money claims of workers fall under Article 217?

Does the employee incentive scheme fall under Article 217?
Yes, money claims of workers fall under Art. 217, however the
issue in this case is whether or not there is an enforceable
contract and whether or not there was a breach thereof. These
are issues which are not under the jurisdiction of the Labor
Arbiter and the NLRC.

SMC Innovation Program is an employee incentive scheme

offered and open only to employees of petitioner Corporation,
more specifically to employees below the rank of manager.
Without the existing employer-employee relationship between

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the parties here, there would have been no occasion to consider wanted Arevalo to know of the irregularities for the corporation’s
the petitioner's Innovation Program or the submission by Mr. sake.
Vega of his proposal concerning beer grande; without that
relationship, private respondent Vega's suit against petitioner Apparently, Arevalo failed to act on Cosare’s accusations. Cosare
Corporation would never have arisen. claimed that he was instead called for a meeting by Arevalo on
March 25, 2009, wherein he was asked to tender his resignation
SMC Innovation Program was essentially an invitation from in exchange for "financial assistance" in the amount of ₱
petitioner Corporation to its employees to submit innovation 300,000.00. Cosare refused to comply with the directive, as
proposals, and that petitioner Corporation undertook to grant signified in a letter which he sent to Arevalo.
cash awards to employees who accept such invitation and whose
innovation suggestions, in the judgment of the Corporation's Cosare received from Roselyn Villareal (Villareal), Broadcom’s
officials, satisfied the standards and requirements of the Manager for Finance and Administration, a memo signed by
Innovation Program and which, therefore, could be translated Arevalo, charging him of serious misconduct and willful breach
into some substantial benefit to the Corporation. Such of trust. He was given forty-eight (48) hours from the date of the
undertaking, though unilateral in origin, could nonetheless memo within which to present his explanation on the charges.
ripen into an enforceable contractual obligation on the part He was also "suspended from having access to any and all
of petitioner Corporation under certain circumstances. company files/records and use of company assets effective
immediately." Thus, Cosare claimed that he was precluded from
Thus, whether or not an enforceable contract, albeit implied arid reporting for work and was instead instructed to wait at the
innominate, had arisen between petitioner Corporation and offices receiving section. Upon the specific instructions of
private respondent Vega in the circumstances of this case, and if Arevalo, he was also prevented by Villareal from retrieving even
so, whether or not it had been breached, are preeminently legal his personal belongings from the office until he was totally
questions, questions not to be resolved by referring to labor barred from entering the company premises.
legislation and having nothing to do with wages or other terms
and conditions of employment, but rather having recourse to Cosare filed a labor complaint, claiming that he was
our law on contracts. constructively dismissed from employment by the
respondents. He further argued that he was illegally suspended,
Discussions as he placed no serious and imminent threat to the life or
Nonetheless, the Supreme Court here noted that the issues here property of his employer and co-employees.
are (1) whether or not there was an enforceable contract
between San Miguel and private respondents in this case and (2) In refuting Cosare’s complaint, the respondents argued that
whether or not it had been breached. These are questions not to Cosare was neither illegally suspended nor dismissed from
be resolved by referring to the Labor Arbiter or the NLRC. They employment. They also contended that Cosare committed the
had nothing to do with the wages, and other terms and following acts inimical to the interests of Broadcom.
conditions of the employment. Furthermore, they contended that Cosare abandoned his job by
continually failing to report for work beginning April 1, 2009,
Even if the sale is only available to the employees, the Supreme prompting them to issue on April 14, 2009 a memorandum
Court noted that this is a separate arrangement. These issues accusing Cosare of absence without leave beginning April 1,
are not under the jurisdiction of the Labor Arbiter and the NLRC. 2009.

COSARE V. BROADCOM ASIA The Labor Arbiter dismissed the complaint on the ground of
Cosare’s failure to establish that he was constructively dismissed.
Cosare appealed the LA decision to the NLRC. It reversed the LA
FACTS: In 1993, Cosare was employed as a salesman by Arevalo, decision.
who was then in the business of selling broadcast equipment
needed by television networks and production houses. In The respondents motion for reconsideration was denied.
December 2000, Arevalo set up the company Broadcom, still to Dissatisfied, they filed a petition for certiorari with the CA on the
continue the business of trading communication and broadcast issues of constructive dismissal and intra-corporate controversy
equipment. Cosare was named an incorporator of Broadcom, which was within the jurisdiction of the RTC, instead of the LA.
having been assigned 100 shares of stock with par value of P1.00 They argued that the case involved a complaint against a
per share. In October 2001, Cosare was promoted to the position corporation filed by a stockholder, who, at the same time, was a
of Assistant Vice President for Sales (AVP for Sales) and Head corporate officer.
of the Technical Coordination.
The CA granted the respondents petition. It agreed with the
Sometime in 2003, Alex F. Abiog (Abiog) was appointed as the respondent’s contention that the case involved an intra-
Vice President for Sales and thus, became Cosare’s immediate corporate controversy which, pursuant to Presidential Decree
superior. Cosare sent a confidential memo to Arevalo to inform No. 902-A, as amended, was within the exclusive jurisdiction of
him of the anomalies which were allegedly being committed by the RTC. Hence, this petition filed by Cosare.
Abiog against the company. Cosare ended his memo by
clarifying that he was not interested in Abiog’s position, but only

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ISSUES: two circumstances which must concur in order for an individual

1. Was the case instituted by Cosare an intra-corporate to be considered a corporate officer, as against an ordinary
dispute that was within the original jurisdiction of the employee or officer, namely:
RTC, and not of the LAs? 1. the creation of the position is under the
2. Was Cosare constructively and illegally dismissed corporation’s charter or by-laws; and
from employment by the respondents? 2. the election of the officer is by the directors or
stockholders.
HELD: An intra-corporate controversy, which falls within the
jurisdiction of regular courts, has been regarded in its broad Intra-Corporate Dispute = Trial Courts
sense to pertain to disputes that involve any of the following It is only when the officer claiming to have been illegally
relationships: dismissed is classified as such corporate officer that the issue is
1. between the corporation, partnership or association deemed an intra-corporate dispute which falls within the
and the public; jurisdiction of the trial courts.
2. between the corporation, partnership or association
and the state in so far as its franchise, permit or license The Court disagrees with the respondents and the CA. The only
to operate is concerned; officers who are specifically listed, and thus with offices that are
3. between the corporation, partnership or association created under Broadcom’s by-laws are the following: President,
and its stockholders, partners, members or officers; and Vice-President, Treasurer and Secretary. Although a blanket
4. among the stockholders, partners or associates, authority provides for the Boards appointment of such other
themselves. officers as it may deem necessary and proper, the respondents
failed to sufficiently establish that the position of AVP for Sales
Settled jurisprudence, however, qualifies that when the dispute was created by virtue of an act of Broadcom’s board, and that
involves a charge of illegal dismissal, the action may fall under Cosare was specifically elected or appointed to such position by
the jurisdiction of the LAs upon whose jurisdiction, as a rule, falls the directors. No board resolutions to establish such facts form
termination disputes and claims for damages arising from part of the case records.
employer-employee relations as provided in Article 217 of the
Labor Code. Consistent with this jurisprudence, the mere fact The CA’s heavy reliance on the contents of the General
that Cosare was a stockholder and an officer of Broadcom at the Information Sheets, which were submitted by the respondents
time the subject controversy developed failed to necessarily during the appeal proceedings and which plainly provided that
make the case an intra-corporate dispute. Cosare was an "officer" of Broadcom, was clearly misplaced. The
said documents could neither govern nor establish the nature of
In Matling Industrial and Commercial Corporation v. Coros, the the office held by Cosare and his appointment thereto.
Court distinguished between a "regular employee" and a
"corporate officer" for purposes of establishing the true nature Finally, the mere fact that Cosare was a stockholder of Broadcom
of a dispute or complaint for illegal dismissal and determining at the time of the cases filing did not necessarily make the action
which body has jurisdiction over it. Succinctly, it was explained an intra-corporate controversy. Not all conflicts between the
that "[t]he determination of whether the dismissed officer was a stockholders and the corporation are classified as intra-
regular employee or corporate officer unravels the conundrum" corporate. There are other facts to consider in determining
of whether a complaint for illegal dismissal is cognizable by the whether the dispute involves corporate matters as to consider
LA or by the RTC. "In case of the regular employee, the LA has them as intra-corporate controversies.
jurisdiction; otherwise, the RTC exercises the legal authority to
adjudicate. Constructive Dismissal
Constructive dismissal occurs when there is cessation of work
Applying the foregoing to the present case, the LA had the because continued employment is rendered impossible,
original jurisdiction over the complaint for illegal dismissal unreasonable, or unlikely as when there is a demotion in rank or
because Cosare, although an officer of Broadcom for being its diminution in pay or when a clear discrimination, insensibility, or
AVP for Sales, was not a "corporate officer" as the term is defined disdain by an employer becomes unbearable to the employee
by law. leaving the latter with no other option but to quit.

There are three specific officers whom a corporation must have The Court emphasized in King of Kings Transport, Inc. v. Mamac
under Section 25 of the Corporation Code. These are the the standards to be observed by employers in complying with
president, secretary and the treasurer. The number of officers is the service of notices prior to termination:
not limited to these three. A corporation may have such other
officers as may be provided for by its by-laws like, but not limited The first written notice to be served on the employees should
to, the vice-president, cashier, auditor or general manager. The contain the specific causes or grounds for termination against
number of corporate officers is thus limited by law and by the them, and a directive that the employees are given the
corporation’s by-laws. opportunity to submit their written explanation within a
reasonable period. "Reasonable opportunity" under the
In Tabang v. NLRC, the Court also made the following Omnibus Rules means every kind of assistance that
pronouncement on the nature of corporate offices: there are management must accord to the employees to enable them to

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prepare adequately for their defense. This should be construed Intra-Corporate Dispute
as a period of at least five (5) calendar days from receipt of the An intra-corporate controversy, which falls within the jurisdiction
notice to give the employees an opportunity to study the of regular courts, has been regarded in its broad sense to pertain
accusation against them, consult a union official or lawyer, to disputes that involve any of the following relationships:
gather data and evidence, and decide on the defenses they will 1. between the corporation, partnership or association
raise against the complaint. Moreover, in order to enable the and the public;
employees to intelligently prepare their explanation and 2. between the corporation, partnership or association
defenses, the notice should contain a detailed narration of the and the state in so far as its franchise, permit or license
facts and circumstances that will serve as basis for the charge to operate is concerned;
against the employees. A general description of the charge will 3. between the corporation, partnership or association
not suffice. Lastly, the notice should specifically mention which and its stockholders, partners, members or officers; and
company rules, if any, are violated and/or which among the 4. among the stockholders, partners or associates,
grounds under Art. 282 is being charged against the employees. themselves.

In sum, the respondents were already resolute on a severance In this case, it was alleged that the relationship was under the
of their working relationship with Cosare, notwithstanding third instance – between the corporation and its stockholder or
the facts which could have been established by his explanations officer. The dispute involves a charge of illegal dismissal, which
and the respondents’ full investigation on the matter. In addition falls under the jurisdiction of the Labor Arbiter.
to this, the fact that no further investigation and final disposition
appeared to have been made by the respondents on Cosare’s When is there an intra-corporate dispute?
case only negated the claim that they actually intended to first It involves the corporate officers of the company and it is not
look into the matter before making a final determination as to based on the issues of employment, such as illegal dismissal.
the guilt or innocence of their employee. This also manifested
from the fact that even before Cosare was required to present Did this case involve an intra-corporate dispute?
his side on the charges of serious misconduct and willful breach No, since the issue in this case involves illegal dismissal. It was
of trust, he was summoned to Arevalo’s office and was asked to not an intra-corporate dispute because as an AVP, he was
tender his immediate resignation in exchange for financial alleging that he was illegally dismissed. Moreover, an AVP was
assistance. not considered as a corporate officer under the company.

Charge of Abandonment Although Cosare was an officer of Broadcom as AVP, he was not
The charge of abandonment was inconsistent with this imposed a corporate officer as the term is defined by law, so his position
suspension. "Abandonment is the deliberate and unjustified did not fall under intra-corporate dispute.
refusal of an employee to resume his employment. To constitute
abandonment of work, two elements must concur: As for the definition of corporate officer, take note of this:
1. the employee must have failed to report for work or “‘Corporate officers’ in the context of Presidential
must have been absent without valid or justifiable Decree No. 902-A are those officers of the
reason; and corporation who are given that character by the
2. there must have been a clear intention on the part of Corporation Code or by the corporation’s by-laws.
the employee to sever the employer-employee There are three specific officers whom a corporation
relationship manifested by some overt act. must have under Section 25 of the Corporation Code.
These are the president, secretary and the treasurer.
"Cosare’s failure to report to work beginning April 1, 2009 was The number of officers is not limited to these three. A
neither voluntary nor indicative of an intention to sever his corporation may have such other officers as may be
employment with Broadcom. It was illogical to be requiring him provided for by its by-laws like, but not limited to, the
to report for work, and imputing fault when he failed to do so vice-president, cashier, auditor or general manager.
after he was specifically denied access to all of the company's The number of corporate officers is thus limited by law
assets. and by the corporation’s by-laws."

Hence, the Court held Petitioner was constructively dismissed by Moreover, respondents failed to establish that the position for
respondent. AVP was created by virtue of an act of the board and that Cosare
was specifically elected by the directors. There was no board
Court reiterated that an illegally or constructively dismissed resolution to establish such fact in the case records.
employee is entitled to: (1) either reinstatement, if viable, or
separation pay, if reinstatement is no longer viable; and (2) What about the fact that he was also a stockholder of the
backwages. The award of exemplary damages was also justified company?
given the NLRC's finding that the respondents acted in bad faith He was a stockholder and he was filing a case against the
and in a wanton, oppressive and malevolent manner when they company. Wouldn’t that be considered as an intra-corporate
dismissed Cosare. It is also by reason of such bad faith that dispute?
Arevalo was correctly declared solidarily liable for the monetary
awards.

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Not all conflicts between the stockholders of a corporation can Petitioner filed with the NLRC a complaint for illegal dismissal,
be classified as intra-corporate dispute. There are other facts to damages and underpayment of wages against the PNRC and its
consider in determining whether or not it involves a corporate key officials.
controversy.
ISSUE: Whether or not PNRC is a GOCC.
In this case, the issue here is illegal dismissal. Cosare was a mere
stockholder and not a corporate officer but just a regular officer HELD: YES. The PNRC is a government-owned and controlled
of Broadcom. The mere fact that Cosare was a stockholder and corporation with an original charter under RA No. 95, as
an officer of Broadcom as AVP at the time the subject amended. Those with special charters are government
controversy developed failed to make this an intra-corporate corporations subject to its provisions and its employees are
dispute. under the jurisdiction of the Civil Service Commission (CSC) and
are compulsory members of the Government Service Insurance
System (GSIS). The PNRC was not impliedly converted to a
private sector corporation simply because its character was
ARTICLE 5
amended to vest in it the authority to secure loans, be exempted
from payment of all duties, taxes, fees, and other charges of all
ART. 5. Rules and Regulations. The Department of Labor kinds on all importations and purchases for its exclusive use, on
and other government agencies charged with the donations for its disaster relief work and other services and in its
administration and enforcement of this Code or any of its benefits and fund raising drives, among others.
parts shall promulgate the necessary implementing rules
and regulations. Such rules and regulations shall become Is PNRC a GOCC?
effective fifteen (15) days after announcement of their Yes, the Supreme Court here ruled that PNRC was a GOCC. As
adoption in newspapers of general circulation. such, it was a public corporation.

ARTICLE 6 So, what is the relation to that of this case?

Since the petitioner was an employee of GOCC, he was under
the Civil Service Law and not governed by the Labor Code.
ART. 6. Applicability. All rights and benefits granted to
workers under this Code shall, except as may otherwise
Is it created by its own charter to exercise a public function
be provided herein, apply alike to all workers, whether
or by a corporation under the General Corporation Law?
agricultural or non-agricultural.
If it has a separate charter, separate law, and the Congress
enacted this law for the creation of this GOCC, then, it will be
In relation to that, the definition of a “worker” under Article 13 covered by the Civil Service Law. However, even if it is a
(a) means any member of the labor force, whether employed or government corporation in nature and it is created under the
unemployed. General Corporation Law (Corporation Code of the Philippines),
the applicable law then will be the Labor Code.
In the case of National Housing Authority vs. Juico (1985), the
Supreme Court ruled that the Civil Service embraces every
Public Corporation Private Corporation
branch, agency, subdivision, and instrumentality of the
Created by law or special Created under the General
Government, including every government-owned or controlled
charter Corporation Law
corporation. However, this doctrine has already become
Applicable Law
obsolete because now, we apply the Charter Test.
Civil Service Law Labor Code
What is the Charter Test?
The Charter Test determines whether a certain corporation is
public or private in nature, wherein if a certain corporation is LIBAN V. GORDON
established by a charter which was promulgated by Congress,
then it is considered as a public corporation or a GOCC. As such,
FACTS: Petitioners Liban, et al., who were officers of the Board
it is covered under the Civil Service Law.
of Directors of the Quezon City Red Cross Chapter, filed with the
Supreme Court what they styled as “Petition to Declare Richard
CAMPOREDONDO V. NLRC J. Gordon as Having Forfeited His Seat in the Senate” against
respondent Gordon, who was elected Chairman of the Philippine
FACTS: Petitioner Camporedondo was employed by the National Red Cross (PNRC) Board of Governors during his
Philippine National Red Cross (PNRC) since 1980 until his early incumbency as Senator.
retirement on 1995. On November 21 1995, PNRC Secretary
General Samson required petitioner to restitute the total sum Petitioners alleged that by accepting the chairmanship of the
of Php 135,927.78, representing cash shortages, technical PNRC Board of Governors, respondent Gordon ceased to be a
shortage and unremitted collection. member of the Senate pursuant to Sec. 13, Article VI of the
Constitution, which provides that “No Senator...may hold any
other office or employment in the Government, or any

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subdivision, agency, or instrumentality thereof, including judgment, that course will be adopted and the
government-owned or controlled corporations or their constitutional question will be left for consideration
subsidiaries, during his term without forfeiting his seat.” until such question will be unavoidable.
Petitioners cited the case of Camporedondo vs. NLRC, which
held that the PNRC is a GOCC, in supporting their argument that This Court should not have declared void certain sections of the
respondent Gordon automatically forfeited his seat in the Senate PNRC Charter. Instead, the Court should have exercised judicial
when he accepted and held the position of Chairman of the restraint on this matter, especially since there was some other
PNRC Board of Governors. ground upon which the Court could have based its judgment.
Furthermore, the PNRC, the entity most adversely affected by
Formerly, in its Decision, the Court held that the office of the this declaration of unconstitutionality, which was not even
PNRC Chairman is NOT a government office or an office in a originally a party to this case, was being compelled, as a
GOCC for purposes of the prohibition in Sec. 13, Article VI of the consequence of the Decision, to suddenly reorganize and
1987 Constitution. The PNRC Chairman is elected by the PNRC incorporate under the Corporation Code, after more than sixty
Board of Governors; he is not appointed by the President or by (60) years of existence in this country.
any subordinate government official. Moreover, the PNRC is
NOT a GOCC because it is a privately-owned, privately-funded, Since its enactment, the PNRC Charter was amended several
and privately-run charitable organization and because it is times, particularly on June 11, 1953, August 16, 1971, December
controlled by a Board of Governors four-fifths of which are 15, 1977, and October 1, 1979, by virtue of R.A. No. 855, R.A. No.
private sector individuals. Therefore, respondent Gordon did not 6373, P.D. No. 1264, and P.D. No. 1643, respectively. The
forfeit his legislative seat when he was elected as PNRC passage of several laws relating to the PNRC’s corporate
Chairman during his incumbency as Senator. existence notwithstanding the effectivity of the constitutional
proscription on the creation of private corporations by law is a
The Court however held further that the PNRC Charter, R.A. 95, recognition that the PNRC is not strictly in the nature of a private
as amended by PD 1264 and 1643, is void insofar as it creates corporation contemplated by the aforesaid constitutional ban.
the PNRC as a private corporation since Section 7, Article XIV of
the 1935 Constitution states that “[t]he Congress shall not, A closer look at the nature of the PNRC would show that there
except by general law, provide for the formation, organization, is none like it, not just in terms of structure, but also in terms of
or regulation of private corporations, unless such corporations history, public service and official status accorded to it by the
are owned or controlled by the Government or any subdivision State and the international community. There is merit in PNRC’s
or instrumentality thereof.” The Court thus directed the PNRC to contention that its structure is sui generis. It is in recognition of
incorporate under the Corporation Code and register with the this sui generis character of the PNRC that R.A. No. 95 has
Securities and Exchange Commission if it wants to be a private remained valid and effective from the time of its enactment in
corporation. March 22, 1947 under the 1935 Constitution and during the
effectivity of the 1973 Constitution and the 1987 Constitution.
Respondent Gordon filed a Motion for Clarification and/or for The PNRC Charter and its amendatory laws have not been
Reconsideration of the Decision. The PNRC likewise moved to questioned or challenged on constitutional grounds, not even in
intervene and filed its own Motion for Partial Reconsideration. this case before the Court now.
They basically questioned the second part of the Decision with
regard to the pronouncement on the nature of the PNRC and This Court must recognize the country’s adherence to the
the constitutionality of some provisions of the PNRC Charter. Geneva Convention and respect the unique status of the PNRC
in consonance with its treaty obligations. The Geneva
ISSUE: Was it correct for the Court to have passed upon and Convention has the force and effect of law. Under the
decided on the issue of the constitutionality of the PNRC Constitution, the Philippines adopts the generally accepted
charter? Corollarily: What is the nature of the PNRC? principles of international law as part of the law of the land. This
constitutional provision must be reconciled and harmonized
RULING: NO, it was not correct for the Court to have decided with Article XII, Section 16 of the Constitution, instead of using
on the constitutional issue because it was not the very lis mota the latter to negate the former. By requiring the PNRC to
of the case. The PNRC is sui generis in nature; it is neither strictly organize under the Corporation Code just like any other private
a GOCC nor a private corporation. corporation, the Decision of July 15, 2009 lost sight of the
PNRC’s special status under international humanitarian law and
We have reiterated the rule as to when the Court will consider as an auxiliary of the State, designated to assist it in discharging
the issue of constitutionality in Alvarez v. PICOP Resources, Inc., its obligations under the Geneva Conventions.
thus: The PNRC, as a National Society of the International Red Cross
This Court will not touch the issue of unconstitutionality and Red Crescent Movement, can neither “be classified as an
unless it is the very lis mota. It is a well-established rule instrumentality of the State, so as not to lose its character of
that a court should not pass upon a constitutional neutrality” as well as its independence, nor strictly as a private
question and decide a law to be unconstitutional or corporation since it is regulated by international humanitarian
invalid, unless such question is raised by the parties and law and is treated as an auxiliary of the State.
that when it is raised, if the record also presents some
other ground upon which the court may [rest] its

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Although the PNRC is neither a subdivision, agency, or generis character of PNRC requires us to approach controversies
instrumentality of the government, nor a GOCC or a subsidiary involving the PNRC on a case-to-case basis.
thereof . . . so much so that respondent, under the Decision, was
correctly allowed to hold his position as Chairman thereof Comparing Camporedondo and Liban Rulings
concurrently while he served as a Senator, such a conclusion The case of Liban v. Gordon does not necessarily change the
does not ipso facto imply that the PNRC is a “private earlier ruling in the case of Camporedondo v. NLRC. It just
corporation” within the contemplation of the provision of the emphasizes the sui generis nature of PNRC. It is not a private
Constitution, that must be organized under the Corporation corporation but it is not directly under the government.
Code. The sui generis character of PNRC requires us to approach Nevertheless, the employees of NLRC with regard to
controversies involving the PNRC on a case-to-case basis. employment, the issues are not covered by the Civil Service Law
but the Labor Code.
In sum, the PNRC enjoys a special status as an important ally
and auxiliary of the government in the humanitarian field in POSTIGO V. PHILIPPINE TUBERCULOSIS SOCIETY
accordance with its commitments under international law. This
Court cannot all of a sudden refuse to recognize its existence,
especially since the issue of the constitutionality of the PNRC Take note of the unique instance here:
Charter was never raised by the parties. It bears emphasizing The petitioners are compulsory members of GSIS.
that the PNRC has responded to almost all national disasters
since 1947, and is widely known to provide a substantial portion What are the issues?
of the country’s blood requirements. Its humanitarian work is 1. Whether or not the Philippine Tuberculosis Society is a
unparalleled. The Court should not shake its existence to the public or private corporation;
core in an untimely and drastic manner that would not only have 2. Whether or not the petitioners are entitled to the
negative consequences to those who depend on it in times of benefits of the Retirement Pay Law (RA No. 7641)
disaster and armed hostilities but also have adverse effects on
the image of the Philippines in the international community. The Who are entitled in this retirement pay?
sections of the PNRC Charter that were declared void must RA No. 7641 granted retirement pay to qualified employees in
therefore stay. the private sector, in the absence of any retirement plan or
agreement with the company.
WHEREFORE, we declare that the office of the Chairman of the
Philippine National Red Cross is not a government office or an Is Philippine Tuberculosis Society a private corporation?
office in a government-owned or controlled corporation for Yes. (Remember that the employees here are members of the
purposes of the prohibition in Section 13, Article VI of the 1987 GSIS. So, why is Philippine Tuberculosis Society considered as a
Constitution. private corporation?).

Discussion The respondent PTSI was created under the Corporation Code
The Supreme Court ruled here that the Philippine National Red instead of a special charter. The Supreme Court held that PTSI is
Cross was a sui generis (a class on its own or a class alone). A a private corporation and not a governmental corporation.
closer look at the nature of the PNRC will show that it is not like Although its employees are compulsory members of GSIS, said
it, not just in terms of structure but also in terms of history, public employees are still not covered by the Civil Service Law.
service, and officio status accorded it by the State and Therefore, they are entitled to the benefits under RA No. 7641.
international community.
What is the applicable law – Civil Service or Labor Law?
What was the issue here? Labor Code, because PTSI is a private corporation.
Whether or not Senator Gordon’s assumption of office as PNRC
chairman is valid. Because as a senator, he cannot be an officer
of a private corporation.

However, in this case, he was allowed because of the nature of

PNRC. PNRC does not come within the spirit of the constitutional
commission with regard to private corporation as it does not
grant special privileges to particular individual, family, or group
but creates an entity that strives to serve the common rule.

Take note the sui generis status of the PNRC is now sufficiently
established. Although it is neither a subdivision, agency, or
instrumentality of the government, nor a government-owned or
controlled corporation or a subsidiary, such a conclusion does
not ipso facto imply that the PNRC is a "private corporation"
within the contemplation of the provision of the Constitution,
that must be organized under the Corporation Code. The sui

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JULY 12, 2019 – ABAYON & AMANTE The Court held that the charter test cannot be applied in this
case. Where the charter test doctrine cannot be applied, the
mere fact that a corporation has been created by virtue of a
As a general rule, a government employee is governed by the
special law does not necessarily qualify it as a public corporation.
Civil Service Law. However, when it comes to Government
Owned and Controlled Corporations the charter test must be A reading of PSPCA’s charter shows that it is not subject to
applied. GOCCs with original charters, which refer to control or supervision by any agency of the State unlike GOCCs.
corporations chartered by special law from Congress, are
governed by the Civil Service Law, but those created under the Since there is neither a general law on the formation and
general incorporation statute, which is the Corporation Code, organization of private corporations nor a restriction on the
are covered by the Labor Code. legislature to create private corporations by direct legislation,
the Philippine Commission at that moment in history was well
within its powers in 1905 to constitute PSPCA as a private
BOY SCOUTS OF THE PHILIPPINES V. NLRC juridical entity.

To determine whether a corporation is public or private is found

Esquerra, Malaborbor, Misa, Evangelista and Garcia, all rank- in the totality of the relation of the corporation to the State.
and-file employees of Boy Scouts of the Philippines, were
informed that they will be transferred to BSP Davao. They PSPCA was created through its own charter but it is not
opposed such order, but they were assured that their transfer to considered as a government agency. This is an exception to the
Davao del Norte would not involve any diminution in salary, and rule regarding the charter test.
that each of them would receive a relocation allowance
JURISDICTION OF LABOR ARBITER
equivalent to one month's basic pay. This assurance failed to
Art. 217. Jurisdiction of the Labor Arbiters and the
persuade private respondents to abandon their opposition to
Commission.
the transfer orders. Hence, they filed a complaint.
a. Except as otherwise provided under this Code,
The Labor Arbiter dismissed the case for lack of merit but the the Labor Arbiters shall have original and
NLRC reversed such order and held that private respondents exclusive jurisdiction to hear and decide,
were illegally dismissed. However, the Court notes the within thirty (30) calendar days after the
contentions of BSP before the Labor Arbiter and NLRC that it is submission of the case by the parties for
a civic service, non-stock and non-profit organization, relying decision without extension, even in the
mostly on government and public support, existing under and absence of stenographic notes, the following
by virtue of Commonwealth Act No. 111, as amended, by cases involving all workers, whether
Presidential Decree No. 460. agricultural or non-agricultural:
1. Unfair labor practice cases;
The charter test was applied, and it appears that BSP has an 2. Termination disputes;
original charter and that it is governed by the Civil Service 3. If accompanied with a claim for
Law. Moreover, it is considered an instrumentality of the reinstatement, those cases that workers
government within the meaning of Article 9 of the Constitution. may file involving wages, rates of pay,
Therefore, the employees of BSP are embraced within the Civil hours of work and other terms and
Service and that the Labor Arbiter and the NLRC has no conditions of employment;
jurisdiction over them. 4. Claims for actual, moral, exemplary and
other forms of damages arising from the
It is then not enough that we determine whether or not there is
employer-employee relations;
an employer-employee relationship so that we can apply the
5. Cases arising from any violation of Article
Labor Code provision. We also have to determine whether or not
264 of this Code, including questions
such employees are governed by the Labor Code.
involving the legality of strikes and
lockouts; and
6. Except claims for Employees
PHILIPPINES SOCIETY FOR THE PREVENTION
Compensation, Social Security, Medicare
OF CRUELTY TO ANIMALS V. COA and maternity benefits, all other claims
arising from employer-employee
Philippine Society for the Prevention of Cruelty to Animals was relations, including those of persons in
incorporated as a juridical entity by virtue of Act No. 1285 on domestic or household service, involving
January 19, 1905 by the Philippine Commission. At the time of an amount exceeding five thousand pesos
the enactment of Act No. 1285, the original Corporation Law or (P5,000.00) regardless of whether
Act No. 1459 was not yet in existence. Act No. 1285 antedated accompanied with a claim for
both the Corporation Law and the constitution of the Securities reinstatement.
and Exchange Commission. PSPCA contends that it is a private
entity not under the jurisdiction of COA.

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b. The Commission shall have exclusive appellate Check with the POEA if the employer or the agency is registered.
jurisdiction over all cases decided by Labor An exception is when a person goes outside of the country and
Arbiters. was directly hired in there. In such situation, the employer will
make the necessary arrangement with regard to the rules of the
c. Cases arising from the interpretation or country. Whether or not they will comply with the POEA will be
implementation of collective bargaining different because you are in that country. However, that does
agreements and those arising from the not mean that the Philippine government will be hands off in
interpretation or enforcement of company your case. Nevertheless, the best precaution is go to the POEA.
personnel policies shall be disposed of by the
Labor Arbiter by referring the same to the
grievance machinery and voluntary arbitration
as may be provided in said agreements. (As REPUBLIC ACT NO. 8042
amended by Section 9, Republic Act No. 6715, Migrant Workers and Overseas Filipinos Act of 1995
March 21, 1989) as amended by RA 10022

RECRUITMENT

PRE-EMPLOYMENT
Art. 12. Statement of objectives. It is the policy of the Recruitment
State: 1. Local Recruitment (Art. 34, Labor Code)
a. To promote and maintain a state of full 2. Overseas Recruitment
employment through improved manpower
training, allocation and utilization; License to Recruit Permit to Recruit
Can recruit and charge fees Can place workers without
b. To protect every citizen desiring to work locally accordingly. fee.
or overseas by securing for him the best
possible terms and conditions of employment;
Art. 13. Definitions.
c. To facilitate a free choice of available b. “Recruitment and placement” refers to any
employment by persons seeking work in act of canvassing, enlisting, contracting,
conformity with the national interest; transporting, utilizing, hiring or procuring
workers, and includes referrals, contract
d. To facilitate and regulate the movement of services, promising or advertising for
workers in conformity with the national interest; employment, locally or abroad, whether for
e. To regulate the employment of aliens, including profit or not: Provided, That any person or
the establishment of a registration and/or work entity which, in any manner, offers or promises
permit system; for a fee, employment to two or more persons
shall be deemed engaged in recruitment and
f. To strengthen the network of public placement.
employment offices and rationalize the
participation of the private sector in the
recruitment and placement of workers, locally PEOPLE V. DELA PIEDRA
and overseas, to serve national development
objectives; Carol dela Piedra was convicted of illegal recruitment in large
scale. Nevertheless, she assails the constitutionality of Art. 13(b)
g. To insure careful selection of Filipino workers of the Labor Code by asserting that the definition of “recruitment
for overseas employment in order to protect and placement” is vague and overbreadth since the mere referral
the good name of the Philippines abroad. of a person for employment would already constitute illegal
recruitment.

The Court held that Art. 13(b) of the Labor Code which
The government has to protect the workers. The objectives on encompasses labor or employment referral does not render the
such matter are enshrined in Art. 12 of the Labor Code in line law overbroad. Appellant misapprehends concept of
with the constitutional provisions discussed earlier. overbreadth.
Essentially, with the goal to protect workers, there is a general When is a statute overbroad?
prohibition against a foreign employer from directly hiring or A statute may be said to be overbroad where it operates to
recruiting Filipino workers without going through the POEA. inhibit the exercise of individual freedoms. A generally worded
statute, when construed to punish conduct, is unconstitutionally
vague to the extent that it fails to give adequate warning of the

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boundary between constitutionally permissible and the their plane tickets and travel taxes. Lapis is, in fact, only the live-
constitutionally impermissible applications of the statute. in partner of Mateo.

No violation of equal protection clause! ISSUE: Whether or not the accused-appellants in this case are
As to the allegation of violation of equal protection clause, the guilty beyond reasonable doubt of violating RA 8042?
Supreme Court said that the prosecution of one guilty person
while others equally guilty are not prosecuted is not by itself a RULING: Yes, they are.
denial of the equal protection of the laws. So they have no license, what about the existence of activities
mentioned by law, are they present in this case? Yes.
Elements of Illegal Recruitment
What was the activity that is provided in Article 13(b), or in any
(1) That the offender has no valid license or authority of the prohibited practices enumerated under Article 34 of the
required by law to lawfully engage in recruitment and Labor Code that is present in this case? What were the acts of
placement of workers; and the private respondents?
(2) That the offender undertakes any activity within the
meaning of recruitment and placement under Article The prosecution was able to establish the elements of the
13(b), or any prohibited practices enumerated under offense sufficiently. The case records reveal that appellants did
Article 34 of the Labor Code. in fact engage in recruitment and placement activities by
promising complainants with employment in Japan.
Undisputed is the fact that the former did not have any valid
PEOPLE V. LAPIS authority or license to engage in recruitment and placement
activities. Moreover, the pieces of testimonial and documentary
evidence presented by the prosecution clearly show that, in
Are the respondents guilty of illegal recruitment? Yes!
consideration of their promise of foreign employment, they
indeed received various amounts of money from complainants
The prosecution presented three witnesses, namely, Melchor
totaling P158, 600.
Degsi and Perpetua Degsi (‘Complainants’ for brevity) and
Priscilla Marreo (or Priscilla Marelo). So is it required for a person to be liable for illegal recruitment
that he expressly represents himself to be able to send the
Complainants are husband and wife, residents of Baguio City.
workers abroad? No.
They made a living earning an average of P20,000.00 a month
by selling fish and vegetables in a rented stall in said City, at least The illegal recruiters need not to even expressly represent
until March 24, 1998 when they closed shop for reasons of themselves to the victims as persons who have the ability to send
attending to the demands of the promised jobs for them in workers abroad. It is enough that these recruiters give the
Japan. impression that they have the ability to enlist workers for
job placement abroad in order to induce the latter to tender
Both categorically identified Jane Amamlao (or Jean Am-
payment of fees.
amlaw), their co-vendor in Baguio City Market, as the person
who approached them and assured them that she knew a legal Accused are also liable for Estafa
recruiter, an ex-POEA employee, who had the capacity to send Can a person be held liable for Estafa after being held liable for
them both abroad. illegal recruitment? Yes.
Complainants likewise categorically identified Aida de Leon (‘de In this case, what made the respondents liable also for Estafa?
leon’) as the person who arranged a meeting in her apartment
on March 24, 1998 between complainants and appellant Angel Appellants argue that in a prosecution for estafa under Article
Mateo (‘Mateo’) whom de Leon introduced as their contact 315, paragraph 2(a) of the Revised Penal Code, it is indispensable
person for Japan-bound workers. In said meeting, Mateo that the element of deceit, consisting of fraudulent
represented himself as having the capacity to send people representations or false statements of the accused, be made
abroad and showed complainants various documents to prior to or simultaneous with the delivery of the thing; and that
convince them of his legitimate recruitment operations. such misrepresentations or false statements induce the
complainants to part with the object of the crime. The former
Convinced that Mateo had indeed the capacity to facilitate their allege that the prosecution failed to point out with certainty
employment as an office worker and as a cook or mechanic in whether their misrepresentations or false statements were made
Japan, complainants, on that same day, handed Mateo prior to or at least simultaneous with the latter’s delivery of the
P15,000.00, which Mateo required them to pay for their money.
processing fees.
Under the cited provision of the Revised Penal Code, estafa is
Complainants likewise positively identified appellant Vicenta committed by any person who defrauds another by using a
‘Vicky’ Lapis (‘Lapis’) in Court as the person introduced to them fictitious name; or by falsely pretending to possess power,
by Mateo as his wife on April 29, 1998 at Max’s Restaurant in influence, qualifications, property, credit, agency, business; by
Makati when Lapis required complainants to pay P49,240.00 for imaginary transactions or similar forms of deceit executed prior
to or simultaneous with the fraud. Moreover, these false

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pretenses should have been the very reason that motivated the processing and other fees. She told them that they were
complainants to deliver property or pay money to the scheduled to leave for work abroad but failed to depart on the
perpetrators of the fraud. While appellants insist that these promised dates.
constitutive elements of the crime were not sufficiently shown
by the prosecution, the records of the case prove otherwise. The applicants demanded the return of their money but Rodolfo
failed to do so. Later, they filed a case for illegal recruitment
During almost all of their meetings, complainants paid various against Rodolfo.
amounts of money to appellants only after hearing the feigned In her defense, Rodolfo denied that she recruited the applicant-
assurances proffered by the latter regarding the former’s complainants. She claimed that she only brought them to the
employment prospects in Japan. Even as early as their first agency because she knew Florante Hinahon, the owner of the
meeting in the house of Aida de Leon, the payment by said agency. She clarified that even though she received money
complainants of the initial amount of P15,000 was immediately from them, she received it only in trust for delivery to the agency.
preceded by an onslaught of promises. These enticing, albeit She even presented the provisional receipts she issued indicated
empty, promises were made by Angel Mateo, who even showed that the amounts she collected were turned over to the agency.
them documents purportedly, evincing his connections with She also denied being an employee of the agency.
various foreign companies. Equally important, they relied on Among the acts mentioned in Article 13(b), what was
such misrepresentations, which convinced them to pay the initial committed here in relation to illegal recruitment? What does
amount as “processing fees.” it include?
Discussion The act of referral, which is included in recruitment, is "the act
Take note that a person held liable for illegal recruitment, can of passing along or forwarding of an applicant for employment
also be held liable for Estafa. There is no double jeopardy there. after an initial interview of a selected applicant for employment
You have here illegal recruitment punished under a special law. to a selected employer, placement officer or bureau."
In addition, the Revised Penal Code for Estafa. Moreover, you
also have different elements. Discussion
Take note, mere referral can make you liable for illegal
Of course, it also means that, if a person is held liable for illegal recruitment.
recruitment, he is not automatically liable for Estafa or vice versa. So, it was clear here that there was no license. What about the
In fact, one case can be dismissed, yet still he is still liable for the second element? The act? The act of referral. The act of passing
other crime. along or forwarding of an applicant for employment after an
initial interview of a selected applicant for employment to a
So, in Article 34 of the Labor Code, you have provisions there selected employer, placement officer or bureau.
applicable for local recruitment as well as overseas employment.
Actually, there those specifically intended for overseas Petitioner's admission that she brought private complainants to
employment. the agency whose owner she knows and her acceptance of fees
In this case, take note that the recruiters gave the impression including those for processing betrays her guilt. So, take note of
that they have the ability to enlist the appellees’ job placement that, mere referral. And in fact, look at the provision under Article
abroad, in order to induce the latter to tender payment of fees. 13: “Whether for profit or not.” Because this was alleged in
They don’t need to have an express representation. It is this case. But supposedly, if it’s not for profit, why would the
enough that they said things like “Okay, just give me the money petitioner issue the receipt? Nevertheless, whether Rodolfo here
needed for the process, I got you.” So again, that can fall under accepted fees for her own personal benefit or not, she is still
illegal recruitment under Article 13(b). liable for illegal recruitment under Article 13. Again, whether for
profit or not.
So, by falsely representing themselves as persons who had the
power and the capacity to recruit workers for abroad, appellants Also, I would like to point out, under the last phrase of Article
induced complainants to pay the required fees. There is estafa if, 13(b), you have there: “Employment to two or more persons
through insidious words and machinations, appellants deluded shall be deemed engaged in recruitment and placement.”
complainants into believing that, for a fee, the latter would be
provided overseas jobs. What does it mean? What if you can only prove that there is
only one person recruited, can it fall under Article 13?
Yes, because the number of persons is not an essential
RODOLFO V. PEOPLE ingredient of recruitment or placement found under Article
13(b).
Was there illegal recruitment in this case? Yes.
What is it with the “two or more persons” phrase?
What happened in this case? It is a prima facie evidence that such act constitutes recruitment.
Rosa C. Rodolfo individually approached complainants Villamor Of course, if there’s only one, then you have to prove that there
Alcantara, Narciso Corpus, Necitas Ferre, Gerardo Tapawan and was recruitment that can be placed. However, if only one person
Jovito Cama and invited them to apply for overseas is recruited, it does not mean that he cannot be liable for illegal
employment in Dubai. In her agency office, the applicants paid recruitment because of that phrase under Article 13(b).

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Recruitment Agencies Must be 75% Filipino-Owned stating that he would refund the payment made by the
If you are a recruitment or placement agency, you must apply applicants. The spouses Reichl, however, did not comply with
for a permit or license from the POEA. Only Filipinos can apply. their obligation. The applicants later filed eight Informations for
If you are a partnership or corporation, the required capital syndicated and large scale illegal recruitment and eight
contribution of the Filipinos should be at least 75%. This is a part Informations for estafa against the spouses Karl and Yolanda
of the exception to the general rule, because the general rule for Reichl, together with Francisco.
corporations is that it must be 60% owned. There are also other
exceptions like Mass Media – 100%, and this is another Karl Reichl denied any knowledge about Hernandez’s
exception – 75% for recruitment agencies must be owned by recruitment activities. He further denied that he promised
Filipinos. private complainants that he would give them overseas
employment. As regards the document where Mr. Reichl
This license or permit granted is non-transferable, and in fact it undertook to pay P1,388,924.00 to private complainants, he
specifies the number of offices where you can recruit. So it claimed that he signed said document under duress. Hernandez
doesn’t mean that once you have the license, you can recruit all allegedly told him that the private complainants would harm him
over the Philippines. and his family if he refused to sign it. He signed the document
as he felt he had no other option. Yolanda Gutierrez de Reichl
What if you are only an employee of the recruitment corroborated the testimony of her husband and denied the
agency? Can you be held liable for illegal recruitment under charges against her.
Article 13(b)?
Yes, you can still be held liable. Was there illegal recruitment as economic sabotage here?
Yes, because it has been shown that Karl Reichl, Yolanda Richl,
What if your license has already expired? and Francisco Hernandez conspired with each other in
Of course, you will be more liable under Article 13(b). convicting private complainants to apply for an overseas job and
giving them the guarantee that they would be hired as domestic
Two Kinds of Illegal Recruitment helpers in Italy although they were not licensed to do so. Thus,
1. Ordinary illegal recruitment accused appellants are liable for illegal recruitment committed
2. Illegal recruitment as economic sabotage by a syndicate.

When is there economic sabotage? When is an illegal However, there was no illegal recruitment in large scale
recruitment considered as economic sabotage? committed here because when the Labor Code speaks of illegal
There is economic sabotage if the illegal recruitment is deemed recruitment committed against three (3) or more persons
committed by a syndicate or in large scale. individually or as a group, it must be understood as referring to
the number of complainants in each case. Otherwise,
When is there a syndicated illegal recruitment? When is prosecutions for single crimes of illegal recruitment can be
there illegal recruitment in large scale? cumulated to make out a case of large-scale illegal recruitment.
Each information was filed by only one complainant. Thus, the
Syndicated Illegal Recruitment spouses could not be convicted of illegal recruitment committed
Illegal Recruitment in Large Scale in large scale based on several Information filed by only one
Committed by 3 or more complainant.
persons conspiring and/or
confederating with one Committed against 3 or
another in carrying out any more persons individually or
unlawful or illegal as a group.
transaction, enterprise or
scheme

PEOPLE V. REICHL

The group of Narcisa Hernandez, Analiza Perez, Charito Balmes,

Melanie Bautista and Estela Abel de Manalo were all told by the
spouses Karl and Yolanda Reichl and Francisco Hernandez that
they could find them jobs as domestic helpers in Italy. They all
paid the processing and placement fees required by the spouses
and Francisco. The spouses set several departure dates for the
applicants, but their departures did not push through.

The applicants decided to withdraw their application after

several unfulfilled promises. Karl Reichl signed a document

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JULY 12, 2019 – CARMEN & CLARABAL The Petitioner here is liable for illegal dismissal and non-
payment of wages. It stated that the money claim would not
survive if the issue be ruled in favor of the petitioner VirJen. (The
CONCEPT OF SUBSTITUTION CONTRACT contention of the petitioner was upheld by the Seamen board
and the NLRC).
Any contract between the OFW and the employer must be
registered in the POEA and they have standards that should be However, the Supreme Court said it is not enough. It is not
followed and the agreement must be also approved and supervened by substantial evidence and it said that the wages of
registered at the POEA. the seaman engaged in the international shipping are
shouldered by the foreign principal and the local money
office is only an agent whose primary function is
VIRJEN SHIPPING AND MARINE SERVICES V. NLRC recruitment.

FACTS: Certain seamen entered into a contract of employment Take note of this case because this was mentioned in the
for a 12-month period. Some three months after the succeeding case of Suraza vs Benipayo:
commencement of their employment, the seamen demanded a
50% increase of their salaries and benefits. These seamen SURAZA V. BENIPAYO
demanded this increase while their vessel was on route to a port
in Australia controlled by the International Transport Federation
(ITP) where the ITF could detain the vessels unless it paid its Is there a breach of contract here on the part of the seamen
season ITF rates. The agent of the owner of the vessel agreed to who demanded for the arbitrariness of their wages?
a 25% increase but when the vessel arrived in Japan No, according to the Court such agreement is not immutable
shortly afterwards, the seamen were repatriated to Manila and and therefore can be subject to change.
their contract terminated. Two motions for reconsideration filed
with Second Division were denied by said Division. Another In these two cases, the Supreme Court noted the allegations of
motion for reconsideration was filed with the Supreme Court en the shipping company as well as the ruling of the National
banc which gave its due course after finding that there was need Seamen Board & NLRC which are now non-existent. Essentially,
to reconcile the decision of the Second Division with that of the the NSB in both cases took the side of the foreign shipping
First Division with the Wallen Decision. In that decision, the First owners against Filipino seamen with the phrase “killing the
Division had ruled that the termination of the seamen was goose which lays the golden egg argument”; essentially saying
illegal. that; if we rule in favor of the seamen these companies might
not employ Filipino seamen as their crew members again.
ISSUE: Whether or not the termination of the seamen was However, the Supreme Court held that this is not a sufficient
illegal? reason to bland what should be given to these Filipino seamen.

HELD: The termination of the contract of the seamen was Here, the conclusion of the public respondent that the acts of
illegal. A manning contract involves the interests not only of the the petitioner in demanding and receiving the wages over above
signatories thereto, such as the local Filipino recruiting agent, the ranges appearing in their NSB form approved contract, is in
the foreign owner of vessel and the Filipino seamen, in general, effect, an alteration of a valid and subsisting contract because
as well as the country itself. Conformably to the power vested in the same were not obtained through mutual consent and
the NSB, the law requires that all manning contracts shall be without the prior approval of the NSB and is without basis. Not
approved by said agency. The stringent rules governing Filipino only because private respondent’s consent to pay additional fees
seamen abroad foreign ships are dictated by national interest. and wages was not vitiated by any violence or intimidation on
the part of the petitioners, but because the said NSB approved
Atty. Sarona’s Discussion form of contracts are not unalterable contracts that can have
What was the basis of the dismissal? no room for improvement during their effectivity or which
ban any amendments during them occur.
The crew member did not agree to the suggestion given by
Virjen. It was Virjen who initiated the proposal here to change CHAVEZ V. BONTO-PEREZ
the contract that was initially entered into by the petitioner and
the seamen in this case.
FACTS: Uncounseled entertainment dancer signed a contract
with her Japanese employer calling for a monthly salary of One
Why Virjen was forced to change the contract?
Thousand Five Hundred U.S. Dollars (US$1,500) but later had to
It is because of the ITF because they checked whether or not the
sign an immoral side agreement reducing her salary below the
agreement that was entered to the seamen respondents is in
minimum standard set by the POEA ($750). Petitioner invoked
consonance with the standards of ITF. If they would not follow
the law to collect her salary differentials but incredibly found
the operation, it will be grounded to its designated port.
public respondents straining the seams of our law to disfavor
her.
Since there was dismissal, did the Supreme Court uphold the
validity of respondent’s dismissal?

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Petitioner instituted the case at bench for underpayment of Private respondents Centrum and Times as well as Planning
wages with the POEA on February 21, 1991. She prayed for the Japan Co., Ltd. — the agency’s foreign principal — are solidarily
payment of Six Thousand U.S. Dollars (US$6,000.00), liable to petitioner for her unpaid wages.
representing the unpaid portion of her basic salary for six
months. Charged in the case were private respondent Centrum The parties’ standard employment provides:
Promotions and Placement Corporation, the Philippine 1. agent/promoter/representative (private respondent
representative of Planning Japan, Co., its insurer, Times Surety Centrum Promotions & Placement Corporation) shall
and Insurance Co., Inc., and Jaz Talents Promotion. be jointly and severally responsible for the proper
implementation of the terms and conditions in this
POEA: Favored respondents. Contract.
NLRC: Upheld POEA decision. 2. Power of the agency to sue and be sued jointly and
solidarily with the principal or foreign based
ISSUE: employer for any of the violations of the recruitment
1. Is respondent entitled to the differential pay? agreement and the contracts of employment
2. Is the manning agency solidarily liable with the
principal? Commentary
The solidary liability arises from the provisions of Section 10A
HELD: Rule 5 Book 1 of the Omnibus Rules – the power of the agency
1. Is respondent entitled to the differential pay? YES. to sue jointly and solidarily and for any of the violations of the
recruitment agreement.
First, we hold that the managerial commission agreement
executed by petitioner to authorize her Japanese employer to Our overseas workers constitute an exploited class. Most of
deduct Two Hundred Fifty U.S. Dollars (US$250.00) from her them come from the poorest sector of our society. Those
monthly basic salary is VOID because it is against our existing who have less in life will have more in law.
laws, morals and public policy. It cannot supersede the
standard employment contract of December 1, 1988 SEAGULL V. BALATONGAN
approved by the POEA. Indeed, this side agreement is a
scheme all too frequently resorted to by unscrupulous
employers against our helpless overseas workers who are FACTS: On Oct 6, 1983, Balatongan met an accident and was
compelled to agree to satisfy their basic economic needs. hospitalized and was then repatriated to the Philippines. In his
medical certificate, his disability was declared permanent in
Second, the doctrine of laches or “stale demands” cannot be nature. Balatongan then demanded for the total disability
applied to petitioner. Laches has been defined as the failure or insurance. However, his claim was denied so he filed a complaint.
neglect for an unreasonable and unexplained length of time to
do that which, by exercising due diligence, could or should have ISSUE: WON the second contract was valid? YES.
been done earlier, thus giving rise to a presumption that the
party entitled to assert it either has abandoned or declined to HELD:
assert it. It is not concerned with mere lapse of time; the fact of
delay, standing alone, is insufficient to constitute laches. It What about the allegation that the claim was made beyond
cannot be worked to defeat justice or to perpetrate fraud and the period agreed upon by the parties?
injustice. The SC held that it was not possible for the private respondent
to file the claim for permanent disability with the insurance
In the case at bench, petitioner filed her claim well within the company within one year from the time of injury as his disability
three-year prescriptive period for the filling of money claims set was ascertained to be permanent only thereafter and the
forth in Article 291 of the Labor Code. For this reason, we hold petitioner did not exerted effort to recover payment of his claims
the doctrine of laches inapplicable to petitioner. Laches is a from the insurance company that they did not even care to
doctrine in equity while prescription is based on law. Our courts dispute the said finding that the claim was not filed on time.
are basically courts of law not courts of equity. Thus laches
cannot be invoked to resist the enforcement of an existing legal What we have here is a supplementary agreement – an
right. agreement entered into after the initial agreement was
approved by the POEA. The SC upheld the supplementary
Our overseas workers constitute an exploited class. Most of agreement because the SA contained benefits in favor of the
them come from the poorest sector of our society. They will seamen or employee. The intention of the law when Art 34 of
climb mountains, cross the seas, endure slave treatment in the Labor Code was enacted was to provide for the prohibited
foreign lands just to survive. and unlawful practices labor recruitment and placement. The
reason why the law required for the POEA to approve and verify
2. Is the manning agency solidarily liable with the the contract was to ensure that the employee shall not be
principal? YES. placed as a disadvantaged position and that the same is
within the minimum standards of the terms and conditions
set by POEA.

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(12) months suspension. The POEA decision passed over sub

However, there is no prohibition against a supplementary silentio the counterclaim of private respondent.
contract wherein there are more benefits to the employee than
those required by law although not submitted for approval to On 10 October 1985, private respondent filed a complaint
the POEA. The private respondents agreed on said contracts to against petitioner in which he sought to carry out and enforce
be valid and enforceable. the same award obtained by him in Dubai which provides:

However, with regards to the waiver made by the private “the opponent would pay to the claimant US$1,500.00
respondent, in the said supplementary contract against the in case the wife of the claimant Rantes doesn't agree
petitioner for damages arising from death or permanent with the amount sent to her”
disability, the same is against public policy, and is inconsistent
with the duty of petitioner to insure private respondent Private respondent further claimed that since his wife did not
against contingencies stipulated in the contract. agree with the amount given to, he was entitled to recover the
additional US$1,500.00 as mandated under the Compromise
How about the issue that claim for benefit was made more Agreement which was the basis of the decision of the Dubai Civil
than beyond one year? Court.
The SC held that it was only on August 1985 when he was issued
a medical certificate describing his disability to be permanent. It In its answer, petitioner Pascor argued that the POEA had no
was not possible for him to file for permanent disability prior to jurisdiction over cases for the enforcement of foreign judgments
the issuance thereof as his disability was only ascertained only and that the copy of the Dubai decision relied upon by private
thereafter. respondent could not be considered as evidence, not having
been properly authenticated.
In addition to that, as mentioned earlier, is the solidary liability
with the foreign principal. Take note that even if the agent which In a decision, the POEA held petitioner Pascor liable to pay
made the recruitment has ceased to be the agent of the foreign private respondent Rances the amount of US$1,500.00 at the
employer/principal, such agent is still liable solidarily together prevailing rate of exchange at the time of payment.
with the foreign principal. This is an exception to the law on
agency because when we talk about the law on agency, the ISSUE: WON POEA has no jurisdiction over cases for the
agent has no personal liability because he is merely enforcement of foreign judgments? NO.
representative of the principal. He has personal liability only
when he acts beyond the scope of the authority given. But RULING:
in this case, they are solidarily liable even if the agency has
already been terminated, the law holds such agency liable as POEA has no jurisdiction to hear and decide a claim for
long as the contract was obtained when the employee was enforcement of a foreign judgment.
recruited to the employer through the said agency.
Under Section 1, Rule 1, Book VI of the POEA Rules and
PACIFIC ASIA OVERSEAS Regulations, it will be seen that the POEA has jurisdiction to
decide all cases involving employer-employee relations arising
SHIPPING CORPORATION V. NLRC
out of or by virtue of any law or contract involving Filipino
workers for overseas employment, including seamen.
FACTS: Sometime in March 1984, private respondent Teodoro
Rances was engaged by petitioner Pascor as Radio Operator of However, respondent Rances, relied not upon the employer -
a vessel belonging to Pascor's foreign principal, the Gulf-East employee relationship between himself and petitioner
Ship Management Limited. Four (4) months later, the foreign corporation and the latter's foreign principal, but rather upon
principal terminated the services of private respondent Rances the judgment obtained by him from the Dubai Court which
citing the latter's poor and incorrigible work attitude and had apparently already been partially satisfied by payment to
incitement of others to insubordination. respondent Rances of US$ 5,500.00.

Petitioner Pascor filed a complaint against private respondent Hence, the POEA has no jurisdiction to hear and decide a claim
with the Philippine Overseas Employment Administration (POEA) for enforcement of a foreign judgment. Such a claim must be
for acts unbecoming a marine officer and for, character brought before the regular courts.
assassination. Private respondent denied the charges set out in
the complaint and by way of counterclaim demanded an amount The POEA is not a court; it is an administrative agency
of US$1,500.00 which a court in Dubai had, he contended, exercising, inter alia, adjudicatory or quasi-judicial
awarded in his favor against petitioner's foreign principal. functions. Neither the rules of procedure nor the rules of
evidence which are mandatorily applicable in proceedings
In due course, the POEA found private respondent liable for before courts are observed in proceedings before the POEA.
inciting another officer or seaman to insubordination and
challenging a superior officer to a fist fight and imposed twelve Even assuming (arguendo, merely) that the POEA has
jurisdiction to recognize and enforce a foreign judgment,

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still respondent Rances cannot rely upon the Dubai decision.

The Dubai decision was not properly proved before the On October 15, 1997, Joy filed a complaint with the National
POEA. Labor Relations Commission against petitioner and Wacoal. She
claimed that she was illegally dismissed and asked for the
The Dubai decision purports to be the written act or record of return of her:
an act of an official body or tribunal of a foreign country, and  placement fee
therefore a public writing under Section 20 (a) of Rule 132 of  withheld amount for repatriation costs
the Revised Rules of Court. Sections 25 and 26 of Rules 132  payment of her salary for 23 months
prescribe the manner of proving a public of official record of a  moral and exemplary damages.
foreign country.
She identified Wacoal as Sameer Overseas Placement Agency’s
In the instant case, respondent Rances failed to submit any foreign principal.
attestation issued by the proper Dubai official having legal
custody of the original of the decision of the Dubai Court that Sameer Overseas Placement Agency alleged that respondent's
the copy presented by said respondent is a faithful copy of the termination was due to her inefficiency, negligence in her duties,
original decision, which attestation must furthermore be and her failure to comply with the work requirements of her
authenticated by a Philippine Consular Officer having foreign employer. Petitioner added that Wacoal's accreditation
jurisdiction in Dubai. with petitioner had already been transferred to the Pacific
Manpower & Management Services, Inc. (Pacific) as of August 6,
There is another problem in respect of the admissibility in 1997. Thus, petitioner asserts that it was already substituted by
evidence of the Dubai decision. The Dubai decision is Pacific Manpower.
accompanied by a document which purports to be an English
translation of that decision but that translation is legally Pacific Manpower moved for the dismissal of petitioner’s claims
defective. Section 34 of Rule 132 of the Revised Rules of Court against it. It alleged that there was no employer-employee
requires that documents written in a non-official language like relationship between them. Therefore, the claims against it were
Arabic shall not be admitted as evidence unless accompanied by outside the jurisdiction of the Labor Arbiter. Pacific Manpower
a translation into English or Spanish or Filipino. In the instant further denied that it assumed liability for petitioner’s illegal acts.
case, there is no showing of who effected the English translation
of the Dubai decision which respondent Rances submitted to the ISSUE: WON the ruling finding respondent illegally dismissed
POEA. The English translation does not purport to have been and hence entitled to three months’ worth of salary,
made by an official court interpreter of the Philippine reimbursement of the cost of her repatriation, and attorney’s
Government nor of the Dubai Government. fees is proper despite the alleged existence of just causes of
termination. YES.
SAMEER OVERSEAS PLACEMENT AGENCY V. CABILES
HELD:

FACTS: Petitioner, Sameer Overseas Placement Agency, Inc., is a Sameer Overseas Placement Agency failed to show that
recruitment and placement agency. Responding to an ad it there was just cause for causing Joy’s dismissal.
published, respondent, Joy C. Cabiles, submitted her application Employers have the prerogative to impose productivity and
for a quality control job in Taiwan. quality standards at work. They may also impose reasonable
rules to ensure that the employees comply with these standards.
Joy’s application was accepted and she was later asked to sign a Failure to comply may be a just cause for their dismissal. While
one-year employment contract for a monthly salary of the law acknowledges the plight and vulnerability of workers, it
NT$15,360.00. She alleged that Sameer Overseas Agency does not authorize the oppression or self-destruction of the
required her to pay a placement fee of ₱70,000.00 when she employer.
signed the employment contract.
This prerogative, however, should not be abused. It is tempered
Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) with the employee’s right to security of tenure. Workers are
on June 26, 1997. She alleged that in her employment contract, entitled to substantive and procedural due process before
she agreed to work as quality control for one year. In Taiwan, she termination.
was asked to work as a cutter.
They may not be removed from employment without a valid or
Sameer Overseas Placement Agency claims that on July 14, 1997, just cause as determined by law and without going through the
a certain Mr. Huwang from Wacoal informed Joy, without prior proper procedure. Security of tenure for labor is guaranteed by
notice, that she was terminated and that she should our Constitution (Art. XIII, Sec. 3). Employees are not stripped of
immediately report to their office to get her salary and passport. their security of tenure when they move to work in a different
She was asked to prepare for immediate repatriation. Joy claims jurisdiction.
that she was told that from June 26 to July 14, 1997, she only
earned a total of NT$9,000. According to her, Wacoal deducted With respect to the rights of overseas Filipino workers, we
NT$3,000 to cover her plane ticket to Manila. follow the principle of lex loci contractus. Thus, there is no

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question that the contract of employment in this case was dismissal. The other notice must "[inform] the employee of the
perfected here in the Philippines. Therefore, the Labor Code, its employer’s decision." Aside from the notice requirement, the
implementing rules and regulations, and other laws affecting employee must also be given "an opportunity to be heard."
labor apply in this case.
Petitioner failed to comply with the twin notices and hearing
In the present case, it is not disputed that the Contract of requirements.
Employment entered into by and between petitioners and Respondent started working on June 26, 1997. She was told that
private respondent was executed here in the Philippines with the she was terminated on July 14, 1997 effective on the same day
approval of the Philippine Overseas Employment Administration and barely a month from her first workday. She was also
(POEA). Hence, the Labor Code together with its implementing repatriated on the same day that she was informed of her
rules and regulations and other laws affecting labor apply in this termination. The abruptness of the termination negated any
case. finding that she was properly notified and given the opportunity
to be heard. Her constitutional right to due process of law was
By our laws, overseas Filipino workers (OFWs) may only be violated.
terminated for a just or authorized cause and after compliance
with procedural due process requirements. Respondent, having been illegally dismissed, is entitled to
her salary for the unexpired portion of the employment
Article 282 of the Labor Code enumerates the just causes of contract that was violated together with attorney’s fees and
termination by the employer. Petitioner’s allegation that reimbursement of amounts withheld from her salary.
respondent was inefficient in her work and negligent in her
duties may, therefore, constitute a just cause for termination The clause, or for three (3) months for every year of the
under Article 282 but only if petitioner was able to prove it. unexpired term, whichever is less in Section 7 of Republic Act
No. 10022 amending Section 10 of Republic Act No. 8042 is
The burden of proving that there is just cause for declared unconstitutional.
termination is on the employer. The employer must
affirmatively show rationally adequate evidence that the Section 10 of Republic Act No. 8042, otherwise known as the
dismissal was for a justifiable cause. Failure to show that there Migrant Workers and Overseas Filipinos Act of 1995, states that
was valid or just cause for termination would necessarily mean overseas workers who were terminated without just, valid, or
that the dismissal was illegal. authorized cause shall be entitled to:
 the full reimbursement of his placement fee with
In this case, petitioner merely alleged that respondent failed to interest of twelve (12%) per annum, plus his salaries for
comply with her foreign employer’s work requirements and was the unexpired portion of his employment contract or
inefficient in her work. No evidence was shown to support such for three (3) months for every year of the unexpired
allegations. Petitioner did not even bother to specify what term, whichever is less.
requirements were not met, what efficiency standards were
violated, or what particular acts of respondent constituted Section 15 of Republic Act No. 8042 states that repatriation of
inefficiency. the worker and the transport of his [or her] personal belongings
shall be the primary responsibility of the agency which
There was also no showing that respondent was sufficiently recruited or deployed the worker overseas. The exception is
informed of the standards against which her work efficiency and when termination of employment is due solely to the fault of the
performance were judged. The parties’ conflict as to the position worker, which as we have established, is not the case.
held by respondent showed that even the matter as basic as the .
job title was not clear. The bare allegations of petitioner are not The Labor Code also entitles the employee to 10% of the
sufficient to support a claim that there is just cause for amount of withheld wages as attorney’s fees when the
termination. There is no proof that respondent was legally withholding is unlawful.
terminated.
We uphold the finding that respondent is entitled to all of these
Petitioner failed to comply with the due process awards. The award of the three-month equivalent of
requirements. respondent’s salary should, however, be increased to the
Respondent’s dismissal less than one year from hiring and her amount equivalent to the unexpired term of the employment
repatriation on the same day show not only failure on the part contract.
of petitioner to comply with the requirement of the existence of
just cause for termination. They patently show that the In Serrano v. Gallant Maritime Services, Inc. and Marlow
employers did not comply with the due process requirement. Navigation Co. Inc., this court ruled that the clause or for three
(3) months for every year of the unexpired term, whichever
A valid dismissal requires both a valid cause and adherence is less is unconstitutional for violating the equal protection
to the valid procedure of dismissal. The employer is required clause and substantive due process.
to give the charged employee at least two written notices
before termination. One of the written notices must inform the We are aware that the clause or for three (3) months for every
employee of the particular acts that may cause his or her year of the unexpired term, whichever is less was reinstated in

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Republic Act No. 8042 upon promulgation of Republic Act No. do not apply when the law provides that a different interest rate
10022 in 2010. shall be applied. A Central Bank Circular cannot repeal a law.
Only a law can repeal another law.
When a law is passed, this court awaits an actual case that clearly
raises adversarial positions in their proper context before For example, Section 10 of Republic Act No. 8042 provides that
considering a prayer to declare it as unconstitutional. However, unlawfully terminated overseas workers are entitled to the
we are confronted with a unique situation. The law passed reimbursement of his or her placement fee with an interest of
incorporates the exact clause already declared as 12% per annum. Since Bangko Sentral ng Pilipinas circulars
unconstitutional, without any perceived substantial change in cannot repeal Republic Act No. 8042, the issuance of Circular No.
the circumstances. 799 does not have the effect of changing the interest on awards
for reimbursement of placement fees from 12% to 6%. This is
Upon examination of the arguments, we are not convinced that despite Section 1 of Circular No. 799, which provides that the 6%
the situation has so changed so as to cause us to reverse binding interest rate applies even to judgments.
precedent. Likewise, there are special reasons of judicial
efficiency and economy that attend to these cases. The same cannot be said for awards of salary for the
unexpired portion of the employment contract under
The new law puts our overseas workers in the same Republic Act No. 8042. These awards are covered by Circular
vulnerable position as they were prior to Serrano. We No. 799 because the law does not provide for a specific
observe that the reinstated clause, this time as provided in interest rate that should apply.
Republic Act. No. 10022 violates the constitutional rights to
equal protection and due process. In sum, if judgment did not become final and executory before
July 1, 2013 and there was no stipulation in the contract
Equal protection of the law is a guarantee that persons under providing for a different interest rate, other money claims under
like circumstances and falling within the same class are treated Section 10 of Republic Act No. 8042 shall be subject to the 6%
alike, in terms of privileges conferred and liabilities enforced. It interest per annum in accordance with Circular No. 799. This
is a guarantee against undue favor and individual or class means that respondent is also entitled to an interest of 6% per
privilege, as well as hostile discrimination or the oppression of annum on her money claims from the finality of this judgment.
inequality.
Liabilities of Wacoal as principal and petitioner as the
The reinstated clause does not satisfy the requirement of employment agency that facilitated respondent’s overseas
reasonable classification. In Serrano, we identified the employment
classifications made by the reinstated clause. It distinguished Section 10 of the Migrant Workers and Overseas Filipinos Act of
between fixed-period overseas workers and fixed period local 1995 provides that the foreign employer and the local
workers. It also distinguished between overseas workers with employment agency are jointly and severally liable for money
employment contracts of less than one year and overseas claims including claims arising out of an employer-employee
workers with employment contracts of at least one year. Within relationship and/or damages. This section also provides that the
the class of overseas workers with at least one-year employment performance bond filed by the local agency shall be answerable
contracts, there was a distinction between those with at least a for such money claims or damages if they were awarded to the
year left in their contracts and those with less than a year left in employee.
their contracts when they were illegally dismissed.
This provision is in line with the state’s policy of affording
We also find that the classifications are not relevant to the protection to labor and alleviating workers’ plight.
purpose of the law, which is to establish a higher standard of
protection and promotion of the welfare of migrant workers, In overseas employment, the filing of money claims against the
their families and overseas Filipinos in distress, and for other foreign employer is attended by practical and legal
purposes. complications. The distance of the foreign employer alone
makes it difficult for an overseas worker to reach it and make it
On the interest rate, the Bangko Sentral ng Pilipinas Circular liable for violations of the Labor Code. There are also possible
No. 799 of June 21, 2013, which revised the interest rate for conflicts of laws, jurisdictional issues, and procedural rules that
loan or forbearance from 12% to 6% in the absence of may be raised to frustrate an overseas worker’s attempt to
stipulation, applies in this case. advance his or her claims.
Circular No. 799 is applicable only in loans and forbearance of
money, goods, or credits, and in judgments when there is no It may be argued, for instance, that the foreign employer must
stipulation on the applicable interest rate. Further, it is only be impleaded in the complaint as an indispensable party without
applicable if the judgment did not become final and executory which no final determination can be had of an action.
before July 1, 2013.
The provision on joint and several liability in the Migrant
We add that Circular No. 799 is not applicable when there is a Workers and Overseas Filipinos Act of 1995 assures overseas
law that states otherwise. While the Bangko Sentral ng Pilipinas workers that their rights will not be frustrated with these
has the power to set or limit interest rates, these interest rates complications. The fundamental effect of joint and several

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liability is that "each of the debtors is liable for the entire JULY 19, 2019 – CORPUZ & CUARTERO
obligation." A final determination may, therefore, be achieved
even if only one of the joint and several debtors are impleaded
Employment
in an action.
Rules Regarding Recruitment and Placement
Hence, in the case of overseas employment, either the local  When is there illegal recruitment?
agency or the foreign employer may be sued for all claims  When is illegal recruitment considered economic sabotage?
arising from the foreign employer’s labor law violations. This  Recruits more than 3 persons, the recruiters are in
way, the overseas workers are assured that someone — the conspiracy with 3 or more (considered a
foreign employer’s local agent — may be made to answer for syndicate).
violations that the foreign employer may have committed.  Prohibited practices that are considered as illegal
recruitment as provided in the Labor Code as well in RA
Corollary to the assurance of immediate recourse in law, the 10022.
provision on joint and several liability in the Migrant Workers  Contracts of OFW wherein such is first approved by the
and Overseas Filipinos Act of 1995 shifts the burden of going POEA, then subsequently there is a substitution or
after the foreign employer from the overseas worker to the local alteration.
employment agency. However, it must be emphasized that the  Vir-jen v. NLRC
local agency that is held to answer for the overseas worker’s  Suzara v. Benipayo
money claims is not left without remedy. The law does not  Chavez v. Bonto-Perez
preclude it from going after the foreign employer for  Seagull Maritime v. Balatongan
reimbursement of whatever payment it has made to the  With regard to the recruiter or placement agency, it is
employee to answer for the money claims against the foreign solidarily liable with the foreign principal or the overseas
employer. contract worker, even if the agents is to be as such, such
agency will remain solidarily liable with the principal. This an
A further implication of making local agencies jointly and exception to the law of agency because of the true nature
severally liable with the foreign employer is that an additional of an agency. Why? Who is the person liable? Only the
layer of protection is afforded to overseas workers. Local principal but with regard to recruitment the agency can be
agencies, which are businesses by nature, are inoculated with held liable.
interest in being always on the lookout against foreign  Another measure of protection for OFW is for the placement
employers that tend to violate labor law. Lest they risk their agency to secure a surety bond that indeed there is liability
reputation or finances, local agencies must already have for illegal dismissal and this liability can answer for the
mechanisms for guarding against unscrupulous foreign separation pay or backwages that the worker is entitled to.
employers even at the level prior to overseas employment  With regard to who has jurisdiction over the cases with
applications. regard to recruitment the OFW has the choice because he
can choose to file the action:
With the present state of the pleadings, it is not possible to  Before the Labor Arbiter who has jurisdiction over
determine whether there was indeed a transfer of obligations his residence; or,
from petitioner to Pacific. This should not be an obstacle for the  File it in the LA which has jurisdiction upon the
respondent overseas worker to proceed with the enforcement of place where any essential ingredient of the crime
this judgment. Petitioner is possessed with the resources to was committed, including where the contract is
determine the proper legal remedies to enforce its rights against signed.
Pacific, if any.
PACIFIC V. NLRC

One of the allegations of the employees therein is the foreign

judgment in a case in Dubai.

The SC held that we had no jurisdiction over the enforcement of

the same aside from the fact that there were no evidences that
the foreign employer was impleaded there was also no evidence
regarding the translation of the said decision. In the
enforcement thereof, the employee must go to the Dubai court
which executed the said order.

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SAMEER V. CABILES
The defense of the employer is that this was due to their
deliberate act.
The SC rendered unconstitutional the provisions of RA 10022
even when it was not applicable yet to the case. What was the
HELD: The SC held that there was lack of proof. It said
provision?
that the employer here is liable because there is no
proof that the cause of death is their deliberate or
One who successfully or breach of his employer’s
willful act. The medical findings in this case were
contract shall be entitled to the following:
different. The heirs were entitled to death
reimbursement of the deductions made in interest of
compensation benefits.
12% per annum and the salary of the unexpired portion
of his employment contract or for 3 months every year
for the unexpired term whichever is less. EMPLOYMENT PERMIT OF NON-RESIDENT ALIENS

The SC held that the provision which is exist in RA 80042 and ARTICLE 40. Employment permit of non-resident aliens. –
also in the subsequent RA 10022. Take note that it is not the very Any alien seeking admission to the Philippines for employment
issue of the case. It was not raised by the parties but with regard purposes and any domestic or foreign employer who desires to
to how much the employee therein is entitled to. In this case, the engage an alien for employment in the Philippines shall obtain
provision in RA 80042 was attached which was applicable to that an employment permit from the Department of Labor.
case which still existed in the amendment in RA 10022.
The employment permit may be issued to a non-resident alien
Also discussed is the interest rate – with regard to the or to the applicant employer after a determination of the non-
placement fee, the interest rate of 12% is usually applied not availability of a person in the Philippines who is competent, able
withstanding that there is already the Circular issued by the BSP, and willing at the time of application to perform the services for
which the alien is desired.
stating that legal interest is 6% per annum beginning July 1,
2013.
For an enterprise registered in preferred areas of investments,
said employment permit may be issued upon recommendation
With regard to disability – suppose that the overseas contract
of the government agency charged with the supervision of said
worker had a work related accident.
registered enterprise.

Who will be liable if worker becomes disabled?

ARTICLE 41. Prohibition against transfer of employment. –
If it happened during employment and is in connection with
(a) After the issuance of an employment permit, the alien shall
regard to the duties with the said employee, then the employer not transfer to another job or change his employer without prior
shall shoulder the same. approval of the Secretary of Labor.

Who will determine if the OFW is permanently disabled? (b) An non-resident alien who shall take up employment in
The provision is in RA 10022, it is the company accredited violation of the provision of this Title and its implementing rules
physician although the seamen or contract worker might go and regulations shall be punished in accordance with the
through another physician for second opinion, the first provisions of Articles 289 and 290 of the Labor Code. In addition,
prerogative is to the company’s accredited physician. the alien worker shall be subject to deportation after service of
his sentence.
For example, there is no determination that he is
permanently disabled? ARTICLE 42. Submission of list. – Any employer employing
Another competitive physician not necessarily accredited can non-resident foreign nationals on the effective date of this Code
make the finding of the total permanent disability. Then the shall submit a list of such nationals to the Secretary of Labor
within thirty (30) days after such date indicating their names,
Court, or LA, or POEA will respect the opinion.
citizenship, foreign and local addresses, nature of employment
and status of stay in the country. The Secretary of Labor shall
NFD V. NLRC then determine if they are entitled to an employment permit.

There were seamen who suffered injuries but it was their Article 40-42 of the Labor Code. Non-resident aliens can be
respective acts. It was alleged that these seamen died while given their working visa but that working visa will not entitle
employed in a Norwegian shipping company. The general rule them or give them the right to work because they have to get a
is the death OFW or seamen makes the employer liable to work permit or alien employment permit after paying the fees
the former’s heirs for death compensation if such seamen and passing the necessary requirements they can be given such
died in the course of their employment. work or employment permit.

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competent, able and willing at the time of application to
Employment of Resident Aliens perform the services for which the alien is desired.
They can work here and they do not need a work permit.
For an enterprise registered in preferred areas of investments,
said employment permit may be issued upon
GENERAL MILLING V. TORRES recommendation of the government agency charged with the
supervision of said registered enterprise.”

FACTS: On 1 May 1989, the National Capital Region of the

Department of Labor and Employment issued Alien Employment Was it properly cancelled by the Secretary of Labor? No.
Permit in favor of petitioner Earl Timothy Cone, a United States What was the difference with the case of Norman Black?
citizen, as sports consultant and assistant coach for petitioner Article 40 does not apply because Norman Black is a resident
General Milling Corporation (“GMC”). On 27 December 1989, alien. He does not need an employment permit
petitioners GMC and Cone entered into a contract of
employment whereby the latter undertook to coach GMC’s The permit was eventually issued to Tim Cone. The SC discussed
basketball team. that the requirements required for non-resident alien are still the
same. If it can be shown that no person in the Philippines is
On 15 January 1990, the Board of Special Inquiry of the competent, able, and willing to perform the same services.
Commission on Immigration and Deportation approved
petitioner Cone’s application for a change of admission status Why would this employment permit be also relevant?
EXAMPLE: You are a non-resident alien working here in the
from temporary visitor to prearranged employee.
Philippines and there are issues regarding illegal dismissal or
On 9 February 1990, petitioner GMC requested renewal of violation of the labor standards. Can you file a case? You can file
petitioner Cone’s alien employment permit. GMC also requested a case but will the Labor Arbiter award you backwages,
that it be allowed to employ Cone as full-fledged coach. The separation pay if there is illegal dismissal? No, because you are
DOLE Regional Director, Luna Piezas, granted the request on 15 at fault because there is a necessary permit as provided under
February 1990. our law.

On 18 February 1990, the Alien Employment Permit, valid until Exception:

25 December 1990, was issued. 1. If you are a professional in another country, then you
can be given a special temporary permit; or
2. If you are working in a nationalized (or partially
Private respondent Basketball Coaches Association of the
nationalized) industry, the DOJ, or if it’s mining the
Philippines (“BCAP”) appealed the issuance of said alien
DENR, can issue an authority to employ such agent.
employment permit to the respondent Secretary of Labor who,
on 23 April 1990, issued a decision ordering cancellation of Who are exempted to secure such employment working?
petitioner Cone’s employment permit on the ground that 1. Diplomats
there was no showing that there is no person in the Philippines 2. Employees of International organizations and spouses
who is competent, able and willing to perform the services if they work here in the Philippines
required nor that the hiring of petitioner Cone would redound 3. Foreign principal employers that are accredited by the
to the national interest. POEA
4. Teachers or professors who are here in the PH for
ISSUE: WON the Secretary of Labor was correct in cancelling the research or some exchange program
alien employment permit? NO. 5. Refugees
6. And Others who are exempted under the law. (DIFTRO)
HELD:

Who should be given this alien employment permit? What

are the requirements under the law?
Article 40 of the Labor Code reads as follows:
“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
nonavailability of a person in the Philippines who is

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HUMAN RESOURCES DEVELOPMENT Trade and industry associations may recommend to the
Secretary of Labor appropriate educational requirements for
different occupations.
Republic Act 7796
TESDA (Technical Education and Skills Development Authority) Law
TAKE NOTE: Regarding the age, we have RA 9231, special law
against child abuse, which prohibits employment of children
SECTION 5. Technical Education and Skills Development
below 15 year of age. The 14-year old requirement is now
Authority; Creation. — To implement the policy declared in this
changed to at least 15 years of age.
Act, there is hereby created a Technical Education and Skills
Development Authority (TESDA), hereinafter referred to as the
NOTE: There are certain exceptions like for child artists and this
Authority, which shall replace and absorb the National
is not included in “apprenticeship”.
Manpower and Youth Council (NMYC), the Bureau of Technical
and Vocational Education (BTVE) and the personnel and
functions pertaining to technical-vocational education in the Art. 60. Employment of apprentices. Only employers in the
regional offices of the Department of Education, Culture and highly technical industries may employ apprentices and only in
Sports (DECS) and the apprenticeship program of the Bureau of apprenticeable occupations approved by the Secretary of Labor
Local Employment of the Department of Labor and Employment. and Employment.

TESDA recognizes this tripartite body wherein there is TESDA LAW:

representations in (1) industry, (2) labor, (3) private recruital
vocational educational and training institutions. SECTION 4 (m) – “Apprenticeable Occupation” is an occupation
officially endorsed by a tripartite body and approved for
Section 18 empowers TESDA to administer the apprenticeship apprenticeship by the Authority;
program.
LABOR CODE:
SECTION 18. Transfer of the Apprenticeship Program. — The
Apprenticeship Program of the Bureau of Local Employment of Art. 61. Contents of apprenticeship agreements.
the Department of Labor and Employment shall be transferred Apprenticeship agreements, including the wage rates of
to the Authority which shall implement and administer said apprentices, shall conform to the rules issued by the Secretary
program in accordance with existing laws, rules and regulations. of Labor and Employment. The period of apprenticeship shall
not exceed six months. Apprenticeship agreements providing for
Who is an apprentice? wage rates below the legal minimum wage, which in no case
shall start below 75 percent of the applicable minimum wage,
SECTION 4 (k) – “Apprentice” is a person undergoing training may be entered into only in accordance with apprenticeship
for an approved apprenticeable occupation during an programs duly approved by the Secretary of Labor and
established period assured by an apprenticeship agreement; Employment. The Department shall develop standard model
programs of apprenticeship.
SECTION 4 (j) “Apprenticeship” training within employment
with compulsory related theoretical instructions involving a Apprenticeship Agreement
contract between an apprentice and an employer on an  Includes wage rates
approved apprenticeable occupation;  Shall not be below 75% of the applicable
minimum wage
Qualifications of Apprentice  Conform to the rules of the Secretary of Labor and
Article 59 of the Labor Code: Employment
 Entered into only in accordance with
apprenticeship programs duly approved by
Art. 59. Qualifications of Apprentice. To qualify as an
the Secretary of Labor and Employment
apprentice, a person shall:
 Shall not exceed six (6) months
a. Be at least fourteen (14) years of age;
Article 61 – Contents of the Agreement
b. Possess vocational aptitude and capacity for appropriate tests;
It includes wage rates and shall conform to the rules issued by
c. Possess the ability to comprehend and follow oral and written
the Secretary of Labor and Employment.
instructions.

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These apprenticeship agreements must provide for wage rates. according to the performance evaluation, Palad incurred
It can be below the legal minimum wage, but in no case shall it numerous tardiness and absences. As a consequence, petitioner
be below 75% of the applicable minimum wage. issued a termination notice dated 22 November 1997 to Palad,
informing her of her termination effective at the close of
TAKE NOTE: When it comes to minimum wages, it differs per business hours of 28 November 1997.
region and perhaps in the last ten years or so, the minimum
wage has changed twice or thrice already, here in Region XI. For Palad then filed a complaint for illegal dismissal, underpayment
apprenticeships, it can be less than minimum wage, but not less of wages, and non-payment of pro-rated 13th month pay for the
than 75%. year 1997.

The agreement must be in accordance with the programs as ISSUE:

approved by the Secretary of Labor and Employment. 1. Whether or not Palad was an apprentice?
NO. He is a regular employee.
Section 4 of RA 7796 2. Whether or not Palad was illegally dismissed?
This section contains several definitions, one of which is that of YES. Not accorded due process.
– Apprenticeship Agreement.
HELD:
SEC. 4. Definition of Terms. – As used in this Act:
Registration and Approval by the TESDA of Apprenticeship
j) “Apprenticeship” training within employment with Program Required Before Hiring of Apprentices
compulsory related theoretical instructions involving a The Labor Code defines an apprentice as a worker who is
contract between an apprentice and an employer on an covered by a written apprenticeship agreement with an
approved apprenticeable occupation; employer. One of the objectives of Title II (Training and
Employment of Special Workers) of the Labor Code is to
k) “Apprentice” is a person undergoing training for an
establish apprenticeship standards for the protection of
approved apprenticeable occupation during an established
apprentices. In line with this objective, Articles 60 and 61 of the
period assured by an apprenticeship agreement;
Labor Code provide:
l) “Apprenticeship Agreement” is a contract wherein a
prospective employer binds himself to train the apprentice ART. 60. Employment of apprentices. — Only employers in
who in turn accepts the terms of training for a recognized the highly technical industries may employ apprentices and
only in apprenticeable occupations approved by the Minister
apprenticeable occupation emphasizing the rights, duties
of Labor and Employment.
and responsibilities of each party;

ART. 61. Contents of apprenticeship agreements. —

m) “Apprenticeable Occupation” is an occupation
Apprenticeship agreements, including the wage rates of
officially endorsed by a tripartite body and approved for
apprentices, shall conform to the rules issued by the Minister
apprenticeship by the Authority;
of Labor and Employment. The period of apprenticeship shall
not exceed six months. Apprenticeship agreements providing
for wage rates below the legal minimum wage, which in no
CENTURY CANNING V. CA case shall start below 75 percent of the applicable minimum
wage, may be entered into only in accordance with
apprenticeship programs duly approved by the Minister of
FACTS: On 15 July 1997, Century Canning Corporation hired Labor and Employment. The Ministry shall develop standard
Gloria C. Palad as "fish cleaner" at petitioner’s tuna and sardines model programs of apprenticeship.
factory. Palad signed on 17 July 1997 an apprenticeship
agreement with petitioner. Palad received an apprentice Republic Act No. 7796 (RA 7796), which created the TESDA, has
allowance of ₱138.75 daily. On 25 July 1997, petitioner transferred the authority over apprenticeship programs from the
submitted its apprenticeship program for approval to the Bureau of Local Employment of the DOLE to the TESDA. RA 7796
Technical Education and Skills Development Authority (TESDA) emphasizes TESDA’s approval of the apprenticeship
of the Department of Labor and Employment (DOLE). On 26 program as a pre-requisite for the hiring of apprentices.
September 1997, the TESDA approved petitioner’s Such intent is clear under Section 4 of RA 7796:
apprenticeship program.
m) "Apprenticeable Occupation" is an occupation officially
According to petitioner, a performance evaluation was con- endorsed by a tripartite body and approved for
ducted on 15 November 1997, where petitioner gave Palad a apprenticeship by the Authority [TESDA];
rating of N.I. or "needs improvement" since she scored only
27.75% based on a 100% performance indicator. Furthermore,

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In this case, the apprenticeship agreement was entered into evaluation conducted and that she was not even informed of the
between the parties before petitioner filed its apprenticeship result of the alleged performance evaluation. Palad also claims
program with the TESDA for approval. Petitioner and Palad she did not receive a notice of dismissal, nor was she given the
executed the apprenticeship agreement on 17 July 1997 wherein chance to explain. According to petitioner, Palad did not receive
it was stated that the training would start on 17 July 1997 and the termination notice because Palad allegedly stopped
would end approximately in December 1997. On 25 July 1997, reporting for work after being informed of the result of the
petitioner submitted for approval its apprenticeship program, evaluation.
which the TESDA subsequently approved on 26 September 1997.
Clearly, the apprenticeship agreement was enforced even Under Article 227 of the Labor Code, the employer has the
before the TESDA approved petitioner’s apprenticeship burden of proving that the termination was for a valid or
program. Thus, the apprenticeship agreement is void because authorized cause. Petitioner failed to substantiate its claim that
it lacked prior approval from the TESDA. Palad was terminated for valid reasons. In fact, the NLRC found
that petitioner failed to prove the authenticity of the
Prior approval from the TESDA is necessary to ensure that only performance evaluation which petitioner claims to have
employers in the highly technical industries may employ conducted on Palad, where Palad received a performance rating
apprentices and only in apprenticeable occupations. Thus, under of only 27.75%. Petitioner merely relies on the performance
RA 7796, employers can only hire apprentices for apprenticeable evaluation to prove Palad’s inefficiency. It was likewise not
occupations which must be officially endorsed by a tripartite shown that petitioner ever apprised Palad of the performance
body and approved for apprenticeship by the TESDA. This is to standards set by the company. When the alleged valid cause for
ensure the protection of apprentices and to obviate possible the termination of employment is not clearly proven, as in this
abuses by prospective employers who may want to take case, the law considers the matter a case of illegal dismissal.
advantage of the lower wage rates for apprentices and
circumvent the right of the employees to be secure in their Furthermore, Palad was not accorded due process. Even if
employment. petitioner did conduct a performance evaluation on Palad,
petitioner failed to warn Palad of her alleged poor performance.
Since Palad is not considered an apprentice because the In fact, Palad denies any knowledge of the performance
apprenticeship agreement was enforced before the TESDA’s evaluation conducted and of the result thereof. Petitioner
approval of petitioner’s apprenticeship program, Palad is likewise admits that Palad did not receive the notice of
deemed a regular employee performing the job of a "fish termination because Palad allegedly stopped reporting for work.
cleaner." The records are bereft of evidence to show that petitioner ever
gave Palad the opportunity to explain and defend herself.
Clearly, the job of a "fish cleaner" is necessary in petitioner’s Clearly, the requisites for a valid dismissal are lacking in this case.
business as a tuna and sardines factory. Under Article 280 of the
Labor Code, an employment is deemed regular where the Why is it required that such (apprenticeship) agreement
employee has been engaged to perform activities which are must be first approved by TESDA?
usually necessary or desirable in the usual business or trade of According to the Court, this is to prevent employers from
the employer. abusing their power over these apprentices, with respect to
granting lower wage rates, among others.
Illegal Termination of Palad
Under Article 279 of the Labor Code, an employer may terminate What is now the effect that Palad is not considered an
the services of an employee for just causes or for authorized apprentice because the agreement was not approved by
causes. Furthermore, under Article 277(b) of the Labor Code, the TESDA?
employer must send the employee who is about to be Palad is considered to be a regular employee, and as such, she
terminated, a written notice stating the causes for termination was deemed to have been illegally dismissed by Century
and must give the employee the opportunity to be heard and to Canning.
defend himself. Thus, to constitute valid dismissal from
employment, two requisites must concur: TAKE NOTE: This Apprenticeship Agreement (AA) must be
(1) dismissal must be for a just or authorized cause; and approved by the Department of Labor and Employment,
(2) the employee must be afforded an opportunity to be through TESDA, before an apprentice may be hired. Otherwise,
heard and to defend himself. the person may be considered as a regular employee, as what
happened in this case. The AA here was entered into, true, but
It appears that the Labor Arbiter’s conclusion that petitioner the approval of the Apprenticeship Program (AP) of Century
validly terminated Palad was based mainly on the performance Canning happened after the contract with Palad was already
evaluation allegedly conducted by petitioner. However, Palad entered into. So, the AA here with Palad was enforced even
alleges that she had no knowledge of the performance before the TESDA approved the AP.

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What was the reason for such approval requirement from Those are the important provisions with regard to Apprentices,
TESDA? in the Labor Code – Articles 57 to 72.
To ensure that only employers in the highly technical industries
may employ apprentices, and only in Apprenticeable TAKE NOTE: As you go over the provisions of the Labor Code and
Occupations. some Special Laws, it should be done together with the
Implementing Rules and Regulations (IRRs) of the Labor Code.
This is very important – highly technical industries.
Employers may only hire apprentices for apprenticeable
occupations, which, again, must be officially endorsed by the
tripartite body and approved by TESDA, to ensure protection of
Under the IRR –
apprentices and to avoid possible abuses by respective
employers, who may want to take advantage of the lower wage
BOOK 3, RULE X, Section 14, IRR of the Labor Code
rates for apprentices, and circumvent the right of employees to
be secured in their employment. SECTION 14. Working scholars. — There is no employer-
employee relationship between students on one hand,
In this case, Palad was not an apprentice, but rather, a regular and schools, colleges or universities on the other, where
employee. Therefore, she was considered to have been illegally there is written agreement between them under which the
dismissed. former agree to work for the latter in exchange for the
privilege to study free of charge, provided the students are
Article 62, Labor Code given real opportunities, including such facilities as may be
reasonable and necessary to finish their chosen courses
Signing of apprenticeship agreement. Every under such agreement.
apprenticeship agreement shall be signed by the employer
or his agent, or by an authorized representative of any of
the recognized organizations, associations or groups and If there are Apprentices, we also have LEARNERS under the
by the apprentice. Labor Code, defined under Article 73.

An apprenticeship agreement with a minor shall be signed Article 73, Labor Code
in his behalf by his parent or guardian, if the latter is not
available, by an authorized representative of the Learners defined. Learners are persons hired as trainees
Department of Labor, and the same shall be binding during in semi-skilled and other industrial occupations which are
its lifetime. non-apprenticeable and which may be learned through
practical training on the job in a relatively short period of
Every apprenticeship agreement entered into under this time which shall not exceed three (3) months.
Title shall be ratified by the appropriate apprenticeship
committees, if any, and a copy thereof shall be furnished Under the TESDA Law, Section 4, we also have that definition.
both the employer and the apprentice.
RA 7796 – TESDA Law
Is it possible that you can be an apprentice but you are not SEC. 4. Definition of Terms. – As used in this Act:
compensated? n) “Learners” refer to persons hired as trainees in semi-
That is when Article 72 is applicable. skilled and other industrial occupations which are non-
apprenticeable. Learnership programs must be approved
Article 72, Labor Code by the Authority.

Apprentices without compensation. The Secretary of Article 74, Labor Code

Labor and Employment may authorize the hiring of
apprentices without compensation whose training on the When learners may be hired. Learners may be employed
job is required by the school or training program when no experienced workers are available, the
curriculum or as requisite for graduation or board employment of learners is necessary to prevent
examination. curtailment of employment opportunities, and the
employment does not create unfair competition in terms
In other words, OJT (On the Job Training). A lot of you here of labor costs or impair or lower working standards.
have probably underwent OJTs. You cannot demand that you
get paid. Some are lucky to have been given allowances, but that
is not required under the law. That is voluntary on the part of the
employer.

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If there is an Agreement for apprentices, there is also an TAKE NOTE: A Learner is NOT an Apprentice. But an Apprentice
agreement for Learnership, under Article 75. can be considered as a Learner.

Article 75, Labor Code HANDICAPPED PERSONS OR

PERSONS WITH DISABILITIES (appropriate)
Learnership agreement. Any employer desiring to employ
learners shall enter into a learnership agreement with them,
Handicapped persons, now more appropriately referred to as
which agreement shall include:
PERSONS WITH DISABILITY/IES.
a. The names and addresses of the learners;
b. The duration of the learnership period, which shall Pertinent Laws:
not exceed three (3) months; 1. RA 7727 - AN ACT PROVIDING FOR THE
c. The wages or salary rates of the learners which shall REHABILITATION, SELF-DEVELOPMENT AND SELF-
begin at not less than seventy-five percent (75%) of RELIANCE OF DISABLED PERSONS AND THEIR
the applicable minimum wage; and INTEGRATION INTO THE MAINSTREAM OF SOCIETY
d. A commitment to employ the learners if they so AND FOR OTHER PURPOSES (Magna Carta for
desire, as regular employees upon completion of Disabled Persons)
the learnership. All learners who have been allowed 2. RA 9442 - AN ACT AMENDING REPUBLIC ACT NO.
or suffered to work during the first two (2) months 7277, OTHERWISE KNOWN AS THE “MAGNA CARTA
shall be deemed regular employees if training is FOR DISABLED PERSONS, AND FOR OTHER
terminated by the employer before the end of the PURPOSES”
stipulated period through no fault of the learners.
Article 78, Labor Code
The learnership agreement shall be subject to inspection by
the Secretary of Labor and Employment or his duly Definition. Handicapped workers are those whose
authorized representative. earning capacity is impaired by age or physical or mental
deficiency or injury.

Article 76, Labor Code When we say that a person has disabilities, in connection to
Learners in piecework. Learners employed in piece or labor, it must be in relation to productivity. Their disability
incentive-rate jobs during the training period shall be paid refers to or involves the work which they cannot do.
in full for the work done.
EX: If one cannot walk, but his/her job is that of a telephone
DISTINCTIONS operator, he/she is not considered a handicapped person. It
Between Learnership and Apprenticeship must be in relation to productivity.

Learnership Apprenticeship Article 79, Labor Code

No theoretical concepts With theoretical concepts
Requires training for less Highly skilled job and When employable. Handicapped workers may be employed
than 3 months (semi-skilled technical industry, training when their employment is necessary to prevent curtailment
job) period exceeds 3 months, of employment opportunities and when it does not create
with minimum period of 6 unfair competition in labor costs or impair or lower working
months standards.
Not apprenticeable (involves Apprenticeable occupations
practical skills which may be in a technical industry, with
learned in 3 months or less) training of at least 6 months Article 80, Labor Code
Commitment to hire after No commitment to hire
learnership period Employment agreement. Any employer who employs
No approval needed Requires approval for hiring handicapped workers shall enter into an employment
apprentices, but no agreement with them, which agreement shall include:
requirement of approval 1. The names and addresses of the handicapped
from DOLE for hiring workers to be employed;
Training periods for jobs requiring skills can be acquire 2. The rate to be paid the handicapped workers which
through actual work experience shall not be less than seventy-five (75%) percent
May be paid wages 25% lower than the applicable minimum of the applicable legal minimum wage*;
wage 3. The duration of employment period; and
4. The work to be performed by handicapped workers.

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The employment agreement shall be subject to inspection by HELD:

the Secretary of Labor or his duly authorized representative. The facts, viewed in light of the Labor Code and the Magna Carta
for Disabled Persons, indubitably show that the petitioners,
*not be less than seventy-five (75%) percent of the except sixteen of them, should be deemed regular employees.
applicable legal minimum wage*
This has been amended already. They are to be paid 100% of the As such, they have acquired legal rights that this Court is duty-
applicable minimum wage. bound to protect and uphold, not as a matter of compassion but
as a consequence of law and justice.
BERNARDO V. NLRC
The Employment Contract
The uniform employment contracts of the petitioners stipulated
FACTS: The 43 complainants are deaf-mutes who were hired on
that they shall be trained for a period of one month, after which
various periods from 1988 to 1993 by respondent Far East Bank
the employer shall determine whether or not they should be
and Trust Co. as Money Sorters and Counters through a
allowed to finish the 6-month term of the contract.
uniformly worded agreement called `Employment Contract for
Handicapped Workers’.
Furthermore, the employer may terminate the contract at any
time for a just and reasonable cause. Unless renewed in writing
Far East Bank’s Contention
by the employer, the contract shall automatically expire at the
1. The complainants were not regular employees,
end of the term.
2. Complainants are a special class of workers - the
hearing impaired employees were hired temporarily
under [a] special employment arrangement which was Far East Bank entered into the aforesaid contract with a total of
a result of overtures made by some civic and political 56 handicapped workers and renewed the contracts of 37 of
personalities to the respondent Bank; them. In fact, two of them worked from 1988 to 1993.
3. That complainant[s] were hired due to pakiusap which
must be considered in the light of the context of the Verily, the renewal of the contracts of the handicapped
respondent Bank's corporate philosophy; workers and the hiring of others lead to the conclusion that
4. That the idea of hiring handicapped workers was their tasks were beneficial and necessary to the bank.
acceptable to them only on a special arrangement
basis; More important, these facts show that they were qualified to
5. That the task of counting and sorting of bills which was
perform the responsibilities of their positions. In other words,
being performed by tellers could be assigned to deaf-
their disability did not render them unqualified or unfit for the
mutes;
tasks assigned to them.
6. That the counting and sorting of money are tellering
works which were always logically and naturally part
and parcel of the teller that from the beginning there Section 5 of the Magna Carta provides:
have been no separate items in the respondent Bank
plantilla for sorters or counters; "Section 5. Equal Opportunity for Employment. – No
7. That the tellers themselves already did the sorting and disabled person shall be denied access to opportunities
counting chore as a regular feature and integral part of for suitable employment. A qualified disabled
their duties employee shall be subject to the same terms and
conditions of employment and the same
Petitioners’ Contention compensation, privileges, benefits, fringe benefits,
They should be considered regular employees, because their incentives or allowances as a qualified able bodied
task as money sorters and counters was necessary and desirable person."
to the business of respondent bank.
The fact that the employees were qualified disabled persons
They further allege that their contracts served merely to preclude necessarily removes the employment contracts from the ambit
the application of Article 280 and to bar them from becoming of Article 80.
regular employees.
Since the Magna Carta accords them the rights of qualified able-
ISSUE: bodied persons, they are thus covered by Article 280 of the
Whether the petitioners – money sorters and counters working Labor Code, which provides:
in a bank were regular employees? YES.
ART. 280. Regular and Casual Employment. - The provisions
of written agreement to the contrary not- withstanding and
regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the

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employee has been engaged to perform activities which are Article 81, Labor Code
usually necessary or desirable in the usual business or trade of
the employer, except where the employment has been fixed Eligibility for apprenticeship. Subject to the appropriate
for a specific project or undertaking the completion or provisions of this Code, handicapped workers may be hired
termination of which has been determined at the time of the as apprentices or learners if their handicap is not such as to
engagement of the employee or where the work or services to
effectively impede the performance of job operations in the
be performed is seasonal in nature and the employment is for
particular occupations for which they are hired.
the duration of the season.

What were the disabilities of the petitioners in this case?

 If PWDs are hired as learners or apprentices, their
They were deaf-mutes.
wages may be set at 75% of the prescribed minimum
wage.
What was the nature of their work?
 If PWDs are hired as regular employees, they are
They were sorters and counters of bills/money.
entitled to the prevailing minimum wage rates.

Can they be considered as regular employees despite their

RA 7277, Section 4 – Definition of Terms
disabilities? Yes.
(a) Disabled persons are those suffering from restriction or
What is the effect, since they are considered as regular different abilities, as a result of a mental, physical or sensory
employees? impairment, to perform an activity in the manner or within
They were entitled to benefits and security of tenure, because the range considered normal for a human being;
the issue in this case is that they were illegally dismissed.
(h) Reasonable Accommodation include 1) improvement
They were illegally dismissed because the process in dismissing of existing facilities used by employees in order to render
them – substantive and procedural, were not complied with. these readily accessible to and usable by disabled persons;
and 2) modification of work schedules, reassignment to a
vacant position, acquisition or modification of equipment
TAKE NOTE: With regard to PWDs, they can be considered as
or devices, appropriate adjustments or modifications of
regular employees. In fact, in this case, their disabilities do not
examinations, training materials or company policies, rules
affect their work – sorting and counting money. Their disabilities
and regulations, the provision of auxiliary aids and services,
did not affect the nature of their functions as employees. and other similar accommodations for disabled persons;

FROM FULL TEXT: The noble objectives of Magna Carta for (i) Sheltered Employment refers to the provision of
Disabled Persons are not based merely on charity or productive work for disabled persons through workshops
accommodation, but on justice and the equal treatment providing special facilities, income-producing projects or
of qualified persons, disabled or not. In the present case, the homework schemes with a view to giving them the
handicap of petitioners (deaf-mutes) is not a hindrance to their opportunity to earn a living thus enabling them to acquire
work. The eloquent proof of this statement is the repeated a working capacity required in open industry;
renewal of their employment contracts. Why then should they
be dismissed, simply because they are physically impaired?
These definitions are connected to Section 6 of the same law –
There was illegal dismissal, they are regular employees. As
regular employees, the twenty-seven petitioners are entitled to RA 7277, Section 6
security of tenure; that is, their services may be terminated only
Sheltered Employment — If suitable employment for
for a just or authorized cause, which was not present in this case.
disabled persons cannot be found through open
employment as provided in the immediately preceding
TAKE NOTE: In view of RA 7277, the wage rate now of PWDs is
Section, the State shall endeavor to provide it by means of
100% of the applicable minimum wage. sheltered employment. In the placement of disabled
persons in sheltered employment, it shall accord due
regard to the individual qualities, vocational goals and
inclinations to ensure a good working atmosphere and
efficient production.

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Going back to the definition in Section 4 – (b) Private entities that employ disabled persons who meet
the required skills or qualifications, either as regular
RA 7277, Section 4 – Definition of Terms employee, apprentice or learner, shall be entitled to an
additional deduction, from their gross income, equivalent to
(l) Qualified Individual with a Disability shall mean an twenty-five percent (25%) of the total amount paid as salaries
individual with a disability who, with or without reasonable and wages to disabled persons: Provided, however, That such
accommodations, can perform the essential functions of entities present proof as certified by the Department of Labor
the employment position that such individual holds or and Employment that disabled persons are under their
desires. However, consideration shall be given to the employ: Provided, further, That the disabled employee is
employer's judgment as to what functions of a job are accredited with the Department of Labor and Employment
essential, and if an employer has prepared a written and the Department of Health as to his disability, skills and
description before advertising or interviewing applicants qualifications.
for the job, this description shall be considered evidence of
the essential functions of the job; (c) Private entities that improve or modify their physical
facilities in order to provide reasonable accommodation for
disabled persons shall also be entitled to an additional
This provision is also connected to Section 5 – deduction from their net taxable income, equivalent to fifty
percent (50%) of the direct costs of the improvements or
modifications. This Section, however, does not apply to
RA 7277, Equal Opportunity for Employment
improvements or modifications of facilities required under
Batas Pambansa Bilang 344.
No disable 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, VERY IMPORTANT:
benefits, fringe benefits, incentives or allowances as a That there shall be no discrimination as to the employment of
qualified able-bodied person. this person/ with disabilities, as emphasized in Section 32.

Five percent (5%) of all casual emergency and contractual RA 7277, Section 32
positions in the Departments of Social Welfare and
Development; Health; Education, Culture and Sports; and Discrimination on Employment. — No entity, whether
other government agencies, offices or corporations public or private, shall discriminate against a qualified
engaged in social development shall be reserved for disabled person by reason of disability in regard to job
disabled persons. application procedures, the hiring, promotion, or discharge of
employees, employee compensation, job training, and other
terms, conditions, and privileges of employment. The
RE: Apprenticeship following constitute acts of discrimination:

RA 7277, Section 7. Apprenticeship (a) Limiting, segregating or classifying a disabled job

Subject to the provisions of the Labor Code as amended, applicant in such a manner that adversely affects his work
disabled persons shall be eligible as apprentices or learners: opportunities;
Provided, that their handicap is not as much as to (b) Using qualification standards, employment tests or other
effectively impede the performance of job operations in the selection criteria that screen out or tend to screen out a
particular occupation for which they are hired; Provided, disabled person unless such standards, tests or other
further, That after the lapse of the period of apprenticeship, selection criteria are shown to be job-related for the
if found satisfactory in the job performance, they shall be position in question and are consistent with business
eligible for employment. necessity;
(c) Utilizing standards, criteria, or methods of administration
that:
(1) have the effect of discrimination on the basis of
INCENTIVES FOR EMPLOYERS disability; or
(2) perpetuate the discrimination of others who are
subject to common administrative control.
RA 7277, Section 8 - Incentives for Employers

(d) Providing less compensation, such as salary, wage or

(a) To encourage the active participation of the private sector
other forms of remuneration and fringe benefits, to a
in promoting the welfare of disabled persons and to ensure
qualified disabled employee, by reason of his disability,
gainful employment for qualified disabled persons, adequate
than the amount to which a non-disabled person
incentives shall be provided to private entities which employ
performing the same work is entitled;
disabled persons.

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(e) Favoring a non-disabled employee over a qualified

disabled employee with respect to promotion, training
opportunities, study and scholarship grants, solely on
account of the latter's disability;

(f) Re-assigning or transferring a disabled employee to a job

or position he cannot perform by reason of his disability;

(g) Dismissing or terminating the services of a disabled

employee by reason of his disability unless the employer
can prove that he impairs the satisfactory performance
of the work involved to the prejudice of the business
entity: Provided, however, That the employer first sought
to provide reasonable accommodations for disabled
persons;

(h) Failing to select or administer in the most effective

manner employment tests which accurately reflect the
skills, aptitude or other factor of the disabled applicant
or employee that such tests purports to measure, rather
than the impaired sensory, manual or speaking skills of
such applicant or employee, if any; and
(i)
Excluding disabled persons from membership in labor
unions or similar organizations.

End of First Exam Coverage

SANCHEZ ROMAN 2019-2020